<PAGE>
As filed with the Securities and Exchange Commission on February 21, 1995.
File No. 33-56781
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
___________________
Wal-Mart Stores, Inc.
(Exact name of registrant as specified in its charter)
Delaware 71-0415188
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
_____________________
702 S.W. Eighth Street
Bentonville, Arkansas 72716
(501) 273-4000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
______________________
ROBERT K. RHOADS
Wal-Mart Stores, Inc.
702 S.W. Eighth Street
Bentonville, Arkansas 72716
(501) 273-4000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPIES TO:
LYNNWOOD R. MOORE, JR. ALBERTO L. TORO SAMUEL SUSI
Conner & Winters, Fiddler Gonzalez & Rodriguez 1900 Glades Road
A Professional Corporation Chase Manhattan Bank Bldg., Suite 280
2400 First National Tower Fifth Floor Boca Raton, Florida 33431
Tulsa, Oklahoma 74103 254 Munoz Rivera Avenue (407) 394-0777
(918) 586-5711 Hato Rey, Puerto Rico 00918
(809) 753-3113
_____________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
_____________________
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, please check the following box. [ ]
_______________________________
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such a date as the Commission, acting pursuant to said
Section 8(a), may determine.
================================================================================
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THAT A FINAL PROSPECTUS SUPPLEMENT+
+IS DELIVERED. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL+
+NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR +
+SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER +
+SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION +
+UNDER THE SECURITIES LAWS OF ANY STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED FEBRUARY 21, 1995
PROSPECTUS
WAL-MART STORES, INC.
Guaranty of payment of up to
$43,473,608.75
of Principal of and Interest on
Puerto Rico Industrial, Tourist, Educational, Medical and
Environmental Control Facilities Financing Authority,
Industrial Revenue Bonds, 1995 Series A
(Plaza Palma Real Project)
Puerto Rico Industrial, Tourist, Educational, Medical and Environmental
Control Facilities Financing Authority, a public corporation and governmental
instrumentality of the Commonwealth of Puerto Rico (the "Authority"), is
offering $43,450,000 in aggregate principal amount of Industrial Revenue
Bonds, 1995 Series A (Plaza Palma Real Project) (the "Bonds"), the proceeds
of which will be loaned to Palma Real Associates, S.E., a partnership formed
under the laws of the Commonwealth of Puerto Rico (the "Borrower"), to
finance the cost of the acquisition, construction, development and equipping
of a shopping center to be located in the Municipality of Humacao, Puerto
Rico (the "Project"). Wal-Mart Stores, Inc. ("Wal-Mart" or the "Company")
will execute an unconditional guaranty (the "Guaranty") in the initial amount
of $43,473,608.75 in favor of the Authority with respect to a certain amount
of the indebtedness owed by the Borrower to the Authority. To secure the
indebtedness evidenced by the Bonds, the Authority will assign its rights
under the Guaranty to Banco Popular de Puerto Rico (the "Trustee") for the
benefit of the bondholders. At any time while the Bonds are outstanding, the
amount of the Guaranty may be less than the aggregate outstanding principal
amount of the Bonds and the accrued interest thereon. The Guaranty will be an
unsecured obligation of Wal-Mart and will rank on a parity with all other
unsecured and unsubordinated debt of, and all other unsecured guaranties of
the indebtedness of others by, Wal-Mart. At October 31, 1994, the Company had
outstanding unsecured and unsubordinated debt obligations in the aggregate
amount of approximately $10.1 billion and outstanding guaranties of the
indebtedness of certain affiliated partnerships of approximately $33 million.
The Guaranty may be subsequently reduced in part or completely eliminated
upon the Project's attainment of certain conditions that satisfy the criteria
prescribed by the Rating Agency. The Guaranty may also be substituted at any
time by another guaranty, a letter of credit or cash subject to the
fulfillment of certain conditions. See "Description of Guaranty -- Release or
Partial Release of Guaranty" and "-- Substitution of Guaranty."
(Cover page continued on following page.)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
________________________
PaineWebber Incorporated of Puerto Rico Smith Barney Inc.
________________________
The date of this Prospectus is _____________, 1995
(Cover page continued)
The Bonds are limited obligations of the Authority and, except to the
extent payable from the Bond proceeds and income from the investments
thereof, are payable solely from and secured by a pledge of revenues derived
by the Authority under a Loan Agreement with the Borrower, primarily from
funds derived by the Borrower from the operation of the Project or otherwise
available to the Borrower, and from funds deposited with the Trustee under
the Trust Agreement (described herein), which funds will be used for the
timely payment (whether at maturity, upon redemption, acceleration or
otherwise) of the principal of, premium, if any, and interest on the Bonds.
The Bonds will be issued only as fully registered Bonds without coupons
in denominations of $5,000 and integral multiples thereof. Interest on the
Bonds will accrue at the rates described or set forth under "Description of
Bonds" from February 1, 1995 and will be payable monthly on the first day of
each month (subject to earlier redemption, acceleration or otherwise),
commencing on March 1, 1995. The principal of the Bonds is payable at the
corporate trust office of the Trustee, Hato Rey, Puerto Rico. The Bonds will
be subject to mandatory and optional redemption prior to maturity as more
fully described herein.
The Bonds are offered, subject to prior sale, when, as and if issued by
the Authority and accepted by the Underwriters, subject to the approval of
legality by Martinez Odell & Calabria, San Juan, Puerto Rico, counsel for the
Authority, and certain other conditions. It is expected that delivery of the
Bonds will be made on or about February 23, 1995, in San Juan, Puerto Rico,
against payment therefor.
<PAGE>
AVAILABLE INFORMATION
Wal-Mart Stores, Inc. (the "Company" or "Wal-Mart"), is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and, in accordance therewith, files reports, proxy and
information statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission, at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60621-2511 and 7 World Trade
Center, 13th Floor, New York, New York 10048. Copies of such materials can
be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, upon payment of prescribed rates. Such
reports, proxy statements and other information concerning the Company can
also be inspected and copied at the New York Stock Exchange, 20 Broad Street,
New York, New York 10005 and the Pacific Stock Exchange, 301 Pine Street, San
Francisco, California 94104.
Wal-Mart has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all of the information
set forth in the Registration Statement, certain parts of which are omitted
in accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement. The
Registration Statement may be inspected without charge at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and copies thereof may be obtained from
the Commission upon payment of prescribed rates.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission (File No. 1-6991)
pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year
ended January 31, 1994;
2. The Company's Quarterly Report on Form 10-Q for the quarter
ended April 30, 1994;
3. The Company's Quarterly Report on Form 10-Q for the quarter
ended July 31, 1994, together with Amendment No. 1 thereto on Form 10-
Q/A dated July 27, 1994;
4. The Company's Quarterly Report on Form 10-Q for the quarter
ended October 31, 1994, together with Amendment No. 1 thereto on Form
10-Q/A dated December 13, 1994; and
-2-
<PAGE>
5. All other documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the offering of the
Guaranty.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for all purposes to the extent
that a statement contained in this Prospectus, or in any other subsequently
filed document which is also, or is deemed to be, incorporated by reference,
modifies or replaces such statement. Any such statement so modified or
superseded shall not be deemed to constitute a part of this Prospectus,
except as so modified or superseded. The Company will provide without charge
to each person to whom this Prospectus has been delivered, on written or oral
request of such person, a copy (without exhibits, unless such exhibits are
specifically incorporated by reference into such documents) of any or all
documents incorporated by reference in this Prospectus. Requests for such
copies should be addressed to Allison D. Garrett, Assistant Secretary, Wal-
Mart Stores, Inc., Corporate Offices, 702 S.W. Eighth Street, Bentonville,
Arkansas 72716, telephone number (501) 273-4505.
-3-
<PAGE>
WAL-MART STORES, INC.
Wal-Mart is one of the nation's largest retailers, measured in total
sales, and operates stores in 49 states, Canada and Puerto Rico. At October
31, 1994, the Company operated 1,983 discount department stores, 119
supercenter stores, 437 warehouse clubs, 81 warehouse outlets and four
hypermarkets in the United States and Puerto Rico and 122 discount department
stores in Canada. The average size of a Wal-Mart discount department store
is approximately 83,900 square feet and store sizes range generally from
30,000 to 210,000 square feet of building area. The Company's warehouse
clubs are primarily located in larger population centers and range in size
from 90,000 to 150,000 square feet of building area.
Through a joint venture with CIFRA, Mexico's largest retailer, Wal-Mart
also operated at October 31, 1994, 18 warehouse clubs, 19 discount stores,
three supermarkets, seven supercenter stores and five combination stores in
Mexico. Through a joint venture with Ek Chor Distribution System Company
Limited, an affiliate of the largest agro-industrial organization in Asia,
Wal-Mart operated three warehouse clubs in Hong Kong at October 31, 1994.
Additionally, through its subsidiary, McLane Company, Inc., Wal-Mart provides
products and distribution services to retail industry and institutional
foodservice customers.
The mailing address of the Company's principal executive offices is 702
S.W. 8th Street, Bentonville, Arkansas 72716, and its telephone number is
(501) 273-4000.
THE AUTHORITY
Puerto Rico Industrial, Tourist, Educational, Medical and Environmental
Control Facilities Financing Authority (the "Authority"), is a body corporate
and politic constituting a public corporation and governmental
instrumentality of the Commonwealth of Puerto Rico (the "Commonwealth"). The
Authority was created under Act No. 121 of June 27, 1977 of the Legislature
of the Commonwealth, as amended ("Act No. 121"), for the purpose of promoting
the economic development, health, welfare and safety of the citizens of the
Commonwealth. The Authority is authorized to borrow money through the
issuance of revenue bonds and to loan the proceeds thereof to finance the
acquisition, construction, development and equipping of industrial, tourist,
educational, medical and environmental control and solid waste disposal
facilities.
THE BORROWER
The proceeds from the sale of the Bonds will be loaned by the Authority
to Palma Real Associates, S.E., a partnership organized under the laws of the
Commonwealth of Puerto Rico (the "Borrower"), to provide for the financing
for the acquisition, construction, development and equipping of a retail
shopping center in Humacao, Puerto Rico (the "Project"). The partners of the
Borrower (and their corresponding partnership interests) are Wal-Mart Puerto
Rico, Inc. (1/3), Mark B. Davis (1/3), Mark H. Greene (1/6) and Luis Alberto
Rubi (1/6). The managing partner of the Borrower is Mark B. Davis. Under
the partnership agreement, the managing partner is responsible for the day-
to-day management of the Borrower. Wal-Mart Puerto Rico, Inc. has the right
under the partnership agreement to approve all management decisions of the
Borrower other than the day-to-day management decisions.
-4-
<PAGE>
The construction, development, leasing and management of the Project
will be administered on behalf of the Borrower by TJAC, Inc., an entity owned
by Mark B. Davis, Mark Greene and Luis Alberto Rubi who are partners of the
Borrower, which entity is experienced in administering the development,
construction, leasing and management of shopping centers in Puerto Rico.
TJAC, Inc. will receive fees from the Borrower for such services.
THE PROJECT
The Project will consist of a strip shopping center expected to contain
approximately 385,000 square feet of gross leasable area upon full
completion, which, as currently contemplated, will occur in two phases
(respectively, "Phase I" and "Phase II"). The Project includes a discount
department store, a supermarket, a theater and other retail space and four
out-parcels or land pads located in the Municipality of Humacao, Puerto Rico.
Phase I is currently expected to contain approximately 317,000 square feet of
gross leasable area, plus the four out-parcels or land pads. Phase II
currently is expected to contain approximately 68,000 square feet of gross
leasable area. To date, the Borrower has entered into lease agreements with
the following Phase I anchor tenants: Pueblo International, Inc., for a
Pueblo or Xtra supermarket; Theater Acquisitions of Puerto Rico, Inc., for a
multi-screen theater; The Pep Boys-Manny, Moe & Jack, for a Pep Boys auto
parts store and service center; and Wal-Mart Puerto Rico, Inc., for a
Wal-Mart store. Wal-Mart, the parent company of Wal-Mart Puerto Rico, Inc.,
will guaranty the payment and performance of its subsidiary's obligations
under its lease agreement with the Borrower. In addition to the spaces
available for the Phase I anchor tenants, Phase I of the Project will include
numerous individual tenant spaces and the four out-parcels or land pads.
Phase II of the Project is currently expected to include an as yet
unidentified junior department store as an additional anchor for the Project,
as well as additional non-anchor tenant spaces.
The shopping center, upon full completion of both Phase I and Phase II
as currently contemplated, is expected to be occupied approximately 61.97% by
the above-described Phase I anchor tenants (which are anticipated by the
Borrower to produce approximately 45% of the Project's projected base rental
revenues) and 38.03% by other tenants (plus the out-parcels or land-pads).
The spaces available for other tenants are expected to be leased to stores
providing retail, as well as service related uses. It is anticipated that
the Project (upon such full completion) will have over 2,500 parking spaces.
Portions of Phase I may be constructed in Phase II and portions of
Phase II may be constructed in Phase I. No assurance can be given that the
Project (either Phase I or Phase II) will be developed or leased as currently
contemplated, or at all. In addition, the Project and each of Phase I and II
may increase or decrease in size.
The total costs of acquiring, constructing, developing and equipping
the shopping center is estimated at approximately $40,117,096.25. Proceeds
from the sale of the Bonds will be
-5-
<PAGE>
applied toward the payment of these costs, as well as toward payment of
certain costs associated with the issuance of the Bonds and for funding the
Reserve Fund as described below. See "Use of Proceeds" and "Description of
the Bonds -- Reserve Fund."
After the Enhancement Amount (as defined under "Description of the
Guaranty -- Release or Partial Release of Guaranty") has been reduced to an
amount which is less than or equal to 25% of the then current Exposure Amount
(also as defined under "Description of the Guaranty --Release or Partial
Release of Guaranty") and upon compliance with certain other conditions set
forth in the Loan Agreement, the Borrower may sell or transfer any of the
out-parcels or land-pads of the Project. Upon any such sale or transfer,
such property will be released from, and will no longer be encumbered by, the
lien of the Security Agreements (as defined herein under "Description of the
Bonds -- Source of Payment and Security for the Bonds") and will no longer be
included in the Project. Fifty percent of the net proceeds from any such
sale or transfer of an out-parcel or land pad must be (i) utilized by the
Borrower to redeem the Bonds or (ii) deposited in the Reserve Fund (defined
below), at the election of the Borrower. See "Description of the Bonds --
Optional Redemption."
USE OF PROCEEDS
The Company will not receive any of the proceeds from, or any other
payments in connection with, the offer and sale of the Bonds or the issuance
of the Guaranty. The proceeds from the sale of the Bonds, excluding accrued
interest on the Bonds from February 1, 1995 to the Date of Issuance (as
defined under "Description of the Bonds -- Source of Payment and Security for
the Bonds"), will be loaned by the Authority to the Borrower pursuant to the
loan agreement dated as of February 1, 1995 (the "Loan Agreement"), between
the Borrower and the Authority and applied by the Borrower (together with
cash contributed by the Borrower) to: (i) pay the costs of the Project,
including the repayment of interim loans utilized to fund such costs to date
and interest on the Bonds up to the date of completion of the Project
(estimated to be approximately $40,117,096.25); (ii) deposit approximately
$2,029,403.75 to fund the Reserve Fund; (iii) pay the costs incurred in
connection with the issuance of the Bonds (estimated to be approximately
$869,000); and (iv) pay a fee to the Authority (estimated to be approximately
$434,500).
SELECTED FINANCIAL INFORMATION OF WAL-MART
The following is a summary of certain selected consolidated financial
information of the Company. This summary should be read in conjunction with
the related consolidated financial statements and notes thereto included or
incorporated by reference in the Company's Annual Report on Form 10-K for the
fiscal year ended January 31, 1994 and Quarterly Report on Form 10-Q, as
amended, for the quarter ended October 31, 1994 incorporated herein by
reference. See "Incorporation of Certain Documents by Reference" in the
Prospectus. The information presented below for, and as of the end of, each
of the fiscal years in the five-year period ended January 31, 1994 (except
for numbers of stores, supercenters and warehouse clubs) is derived from the
consolidated financial statements of the Company, which financial statements
have been audited by Ernst & Young LLP, independent auditors. In the opinion
of the Company, the unaudited financial information presented for the nine
months ended October 31, 1993 and 1994 contains all adjustments (consisting
only of normal recurring adjustments) necessary to present fairly the
financial information included therein. Results for interim periods are not
necessarily indicative of results for the full year.
-6-
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended January 31, October 31,
1990 1991 1992 1993 1994 1993 1994
----------- ----------- ----------- ----------- ----------- ------------ -----------
(Unaudited)
(Dollars in thousands) (Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Net sales........................ $25,810,656 $32,601,594 $43,886,902 $55,483,771 $67,344,574 $46,983,983 $58,046,166
Rentals from licensed
departments and other
income--net...................... 174,644 261,814 402,521 500,793 640,970 466,173 654,213
----------- ----------- ----------- ----------- ----------- ----------- -----------
25,985,300 32,863,408 44,289,423 55,984,564 67,985,544 47,450,156 58,700,379
Costs and Expenses:
Cost of sales.................... 20,070,034 25,499,834 34,786,119 44,174,685 53,443,743 37,287,662 46,225,180
Operating, selling and
general administrative
expenses....................... 4,069,695 5,152,178 6,684,304 8,320,842 10,333,218 7,484,816 9,355,576
Interest costs:
Debt............................. 20,346 42,716 113,305 142,649 331,308 227,419 358,144
Capital leases................... 117,725 125,920 152,558 180,049 185,697 139,572 156,817
----------- ----------- ----------- ----------- ----------- ----------- -----------
24,277,800 30,820,648 41,736,286 52,818,225 64,293,966 45,139,469 56,095,717
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before income taxes......... 1,707,500 2,042,760 2,553,137 3,166,339 3,691,578 2,310,687 2,604,662
Provision for federal and state
income taxes..................... 631,600 751,736 944,661 1,171,545 1,358,301 845,423 953,306
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income......................... $ 1,075,900 $ 1,291,024 $ 1,608,476 $ 1,994,794 $ 2,333,277 $ 1,465,264 $ 1,651,356
=========== =========== =========== =========== =========== =========== ===========
Number of discount department
stores in operation at the end
of the period/(1)/............... 1,399 1,568 1,714 1,850 1,953 1,922 1,983
=========== =========== =========== =========== =========== =========== ===========
Number of supercenter stores
at the end of the period/(1)/.... 3 5 6 30 68 67 119
=========== =========== =========== =========== =========== =========== ===========
Number of warehouse clubs in
operation at the end of the
period/(1)/...................... 123 148 208 256 419 326 437
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
__________________
(1) Does not include warehouse outlets, Hypermart* USA stores or discount
department stores located in Canada.
DESCRIPTION OF THE BONDS
The Bonds will be issued pursuant to a trust agreement (the "Trust
Agreement") between the Authority and Banco Popular de Puerto Rico, as
trustee (the "Trustee"). The following statements relating to the Bonds and
the Trust Agreement are summaries of provisions contained therein and do not
purport to be complete. The provisions of the Trust Agreement referred to in
the following summaries are incorporated herein by reference and the
summaries are qualified in their entirety thereby.
General
The Bonds will be issued in the initial aggregate principal amount of
$43,450,000, consisting of $3,510,000 aggregate principal amount of 7.3% Term
Bonds maturing July 1, 2000, $3,885,000 aggregate principal amount of 7.6%
Term Bonds maturing July 1, 2004, $6,880,000 aggregate principal amount of
8.0% Term Bonds maturing July 1, 2009, $10,205,000 aggregate principal amount
of 8.05% Term Bonds maturing July 1, 2014, and $18,970,000 aggregate
principal amount of 8.1% Term Bonds maturing July 1, 2020. The
-7-
<PAGE>
Bonds are issuable as registered bonds without coupons in denominations of
$5,000 and multiples thereof.
Interest on the Bonds will be computed on the basis of a 360-day year
consisting of twelve 30-day months. The Bonds will accrue interest at the
rates set forth above from February 1, 1995. Interest on the Bonds is
payable monthly, commencing March 1, 1995, and on the first day of each month
thereafter (each an "interest payment date") until their respective
maturities, subject to earlier redemption, acceleration or otherwise. The
Bonds are subject to mandatory redemption. See "Description of the Bonds--
Mandatory Redemption." Interest on the Bonds will be paid on each interest
payment date to the persons shown as the registered owners on the books of
the Trustee on the 15th day immediately preceding an interest payment date by
check mailed to the address of such registered owner as set forth in the
books of the Trustee, except in certain circumstances where registered owners
may elect to have interest paid on each interest payment date by wire
transfer.
The principal of any Bond as of any date of calculation is defined in
the Trust Agreement to mean the principal of each such Bond payable at
maturity. Payment of principal will be made on each January 1 and July 1,
commencing January 1, 1996 (each, a "principal payment date"), upon surrender
of such Bonds at the office of the Trustee located at Hato Rey, Puerto Rico.
Source of Payment and Security for the Bonds
The Bonds will be limited obligations of the Authority and except to
the extent payable from Bond proceeds and certain other funds assigned
therefor, will be payable solely from and secured by an assignment of
revenues derived by the Authority pursuant to the Loan Agreement and from
such other amounts as may be available to the Trustee under the Trust
Agreement, Security Agreements (defined below) and Guaranty. The primary
source for the payment of the Bonds will be the funds deposited with the
Trustee under the Trust Agreement derived by the Borrower from the operation
of the Project, which funds will be used for the timely payment (whether at
maturity, upon redemption, acceleration or otherwise) of the principal of,
premium, if any, and interest on the Bonds. Pursuant to the Trust Agreement,
the Authority will assign its interest in the Loan Agreement and the Pledge
Agreement (defined below) (except certain rights of the Authority to
indemnification, exemption from liabilities, notices, and the payment of
costs and expenses) to the Trustee as security for the Bonds. The Bonds will
not constitute a charge against the general credit of the Authority and will
not constitute an indebtedness of the Commonwealth of Puerto Rico or any of
its political subdivisions other than the Authority.
The Bonds will be additionally secured by a mortgage note in the amount
of $43,450,000 (the "Mortgage Note"), which Mortgage Note will in turn be
secured by a first
-8-
<PAGE>
mortgage lien on the real property constituting the Project (the "Mortgage"),
subject to the lease agreements or non-disturbance agreements that have been
or will be entered into with certain tenants and to other permitted title
exceptions incident to the development of the Project. The Mortgage Note will
be given in pledge to the Authority pursuant to the terms of a pledge
agreement between the Authority and the Borrower (the "Pledge Agreement").
Under the terms of the Trust Agreement, the Authority will assign its rights
under the Pledge Agreement to the Trustee for the benefit of the bondholders.
The Pledge Agreement will provide that if the Borrower should fail to
make any payment at any time on the Bonds, the Trustee, as assignee of the
Authority's interest under the Pledge Agreement, may enforce the Authority's
rights thereunder, which may include the institution of proceedings to cause
the foreclosure of the Pledge Agreement and the Mortgage and a sale of the
Project. As further security for the Bonds, the Borrower will collaterally
assign, when executed, the leases of the Project. Lessees will be furnished
with notice of the assignment, but so long as no event of default exists
under the Trust Agreement, the Loan Agreement, the Mortgage or the Pledge
Agreement, all sums due under the assigned leases will be paid to the
Borrower. The Mortgage, Mortgage Note, Pledge Agreement and assignments may
be collectively referred to herein as the "Security Agreements."
In addition, on or prior to the date of delivery of the Bonds to the
Underwriter (such date hereinafter referred to as the "Date of Issuance"),
Wal-Mart will execute a Guaranty in favor of the Authority guaranteeing the
repayment of up to $43,473,608.75 (the "Initial Enhancement Amount") of the
principal of and interest on the Bonds owed by the Borrower under the Loan
Agreement. The Authority will assign its rights under the Guaranty to the
Trustee for the benefit of the bondholders. Upon satisfaction of certain
conditions, the Guaranty will be subject to reduction, substitution or
elimination. See "Description of the Guaranty."
Upon a happening and continuance of an Event of Default under the Trust
Agreement (see "Description of the Bonds -- Events of Default"), subject to
grace, notice and cure periods, if any, the Trustee may, and in certain
circumstances shall, accelerate the Bonds and take such necessary actions
(including, without limitation, collecting under the Guaranty or Substitute
Guaranty (as defined herein under "Description of the Guaranty --
Substitution of Guaranty"), if any, and foreclosing and enforcing the
Security Agreements) for the payment of the principal of, premium, if any,
and interest on the Bonds.
Deposit of Funds
Under the Loan Agreement, the Borrower has agreed to deposit in a bond
fund maintained with the Trustee (the "Bond Fund"), on the fifteenth (15th)
day of each month:
(a) the amount of interest on the Bonds to become due and payable
on the next ensuing interest payment date; and
-9-
<PAGE>
(b) one-sixth of the amount of principal of the Bonds to become
due and payable (whether at maturity or upon mandatory redemption of
the Bonds as described below) on the next ensuing principal payment
date;
provided, however, that with respect to the payments described in paragraphs
(a) and (b) above, the payment to be made on the 15th day of the month
immediately preceding an interest payment date or principal payment date
shall be for an aggregate amount, if any, that, together with the monies then
on deposit in, or available to be transferred to, the Bond Fund, shall be
sufficient to pay the interest and principal of the Bonds to become due and
payable on such date.
In addition, the following funds will also be deposited to the credit
of the Bond Fund to be utilized solely for the payment of principal of,
premium, if any, and interest on the Bonds: (i) accrued interest, if any, on
the Bonds paid by the purchasers thereof; (ii) all amounts paid as repayment
or optional or mandatory redemption of the Bonds under the Loan Agreement;
(iii) any amounts in the Project Fund or the Reserve Fund required to be
transferred to the Bond Fund in accordance with the provisions of the Trust
Agreement; (iv) any amounts realized from a claim or draw under the Guaranty
or Substitute Guaranty, or from the Collateral (as defined under "Description
of the Guaranty--Substitution of Guaranty"), upon the acceleration of the
Bonds due to the occurrence and continuation of an Event of Default under the
Trust Agreement; (v) all amounts derived from the Security Agreements; and
(vi) all other monies received by the Trustee pursuant to any of the
provisions of the Loan Agreement or otherwise which are permitted or
required, or accompanied by directions from the Borrower or Authority that
such monies are, to be paid into the Bond Fund.
Reserve Fund
Pursuant to the Loan Agreement, on the Date of Issuance the Borrower
will deposit, from the proceeds of the Bonds, approximately $2,029,403.75
(the "Reserve Fund Amount") in a reserve fund maintained with the Trustee
(the "Reserve Fund"). The funds held for the credit of the Reserve Fund will
be used for the purpose of paying the principal of, and interest on, the
Bonds, whenever and to the extent that the funds held to the credit of the
Bond Fund shall be insufficient for such purposes.
The Borrower may direct the funds in the Reserve Fund to be invested in
such permitted government obligations as the Borrower elects subject to the
terms and conditions of the Trust Agreement, including obligations with long-
term maturities which have a greater risk of adverse market fluctuations.
Any decrease in value of such investments will not require the deposit of
additional funds to reconstitute the Reserve Fund until such time as actual
losses in value are, in fact, realized by the sale of such investments, in
which case the Borrower is obligated to replenish the Reserve Fund up to the
Reserve Fund Amount in accordance with the Trust Agreement. Any interest
paid or accrued on, or any gain realized from, the investment of such monies,
regardless of the unliquidated value of such investments, will be transferred
to the credit of the Bond Fund and may be used by the Borrower for the
payment of sums due on the Bonds.
-10-
<PAGE>
However, prior to being so transferred, such interest and gains will retain
their character as part of the Reserve Fund.
If the amount of funds on deposit in the Reserve Fund fall below the
Reserve Fund Amount due to disbursements to the Bond Fund for payment of
principal of and interest on the Bonds or otherwise, the Borrower is
obligated to replenish the Reserve Fund up to the Reserve Fund Amount within
ten business days after notice from the Trustee. The failure by the Borrower
to so replenish the Reserve Fund will constitute an Event of Default. See
"Description of the Bonds--Events of Default."
Project Fund
The proceeds from the sale of the Bonds, other than amounts to be
deposited to the credit of the Reserve Fund and accrued interest on the
Bonds, if any, paid by the purchasers thereof which will be deposited to the
credit of the Bond Fund, will be deposited with the Trustee in the project
fund established under the Trust Agreement (the "Project Fund").
Payments of the costs of the acquisition, construction, development,
and equipping of the Project will be made from the Project Fund upon
requisitions signed by the Borrower and presented to the Trustee. Any
amounts remaining in the Project Fund on the earlier of (i) the final
completion date of the Project (as certified by the Borrower to the Trustee)
(the "Completion Date"), (ii) three years following the Date of Issuance (the
"Mandatory Project Termination Date") or (iii) the date of receipt by the
Trustee of a certificate of the Borrower to the effect that the Project will
not be completed, will be transferred to the Bond Fund and used to redeem
Bonds pursuant to the Trust Agreement. See "Description of the Bonds --
Mandatory Redemption" below.
Mandatory Redemption
The Bonds are subject to mandatory redemption at a price equal to the
principal thereof, without premium, plus accrued and unpaid interest to the
redemption date (a) in whole, upon the cessation of operation of the Project
as Industrial Facilities (as defined in Act No. 121); (b) in whole, if the
Borrower fails for two of its taxable years to satisfy the requirements of
the United States Internal Revenue Code of 1986, as in effect on the Date of
Issuance, with respect to the derivation of its income from sources within
the Commonwealth such that interest received on the Bonds by bondholders
would fail to qualify as income from sources within the Commonwealth and
would, therefore, become subject to United States income tax; (c) in whole,
in the event of a total condemnation of the Project; (d) in whole or in part,
in the event of a substantial casualty or a condemnation that is not a total
condemnation and the Borrower elects not to restore the Project under the
conditions set forth in the Loan Agreement; and (e) in part, to the extent of
any funds remaining in the Project Fund, on the earlier of (i) the Completion
Date, (ii) the Mandatory Project Termination Date or (iii) the Trustee's
receipt of a certificate of the Borrower to the effect that the Project will
not be completed. See "Description of the Bonds -- Selection and Notice of
Redemption" below.
-11-
<PAGE>
In addition, the Bonds are subject to mandatory redemption in part as
follows: (i) the Term Bonds maturing on July 1, 2000 are subject to
redemption commencing January 1, 1996, and on each principal payment date
through and including July 1, 2000 (the maturity date of such Term Bonds);
(ii) the Term Bonds maturing on July 1, 2004 are subject to redemption
commencing January 1, 2001, and on each principal payment date through and
including July 1, 2004 (the maturity date of such Term Bonds); (iii) the Term
Bonds maturing on July 1, 2009 are subject to redemption commencing January
1, 2005, and on each principal payment date through and including July 1,
2009 (the maturity date of such Term Bonds) (iv) the Term Bonds maturing on
July 1, 2014 are subject to redemption commencing January 1, 2010, and on
each principal payment date through and including July 1, 2014 (the maturity
date of such Term Bonds); and (v) the Term Bonds maturing on July 1, 2020 are
subject to redemption commencing January 1, 2015, and on each principal
payment date through and including July 1, 2020 (the maturity date of such
Term Bonds), in the principal amounts set forth in the table below (subject
to earlier purchase, redemption, acceleration or otherwise and adjustment
therefore as provided in the Trust Agreement), without premium, plus accrued
interest to the principal payment date fixed for redemption. See "Description
of Bonds -- Selection and Notice of Redemption."
$3,510,000 7.3% Term Bonds
Due July 1, 2000
Principal
Date of Redemption Redemption Amount
------------------ -----------------
January 1, 1996 $ 295,000
July 1, 1996 310,000
January 1, 1997 320,000
July 1, 1997 330,000
January 1, 1998 345,000
July 1, 1998 355,000
January 1, 1999 370,000
July 1, 1999 380,000
January 1, 2000 395,000
July 1, 2000 410,000
-12-
<PAGE>
$3,885,000 7.6% Term Bonds
Due July 1, 2004
Principal
Date of Redemption Redemption Amount
------------------ -----------------
January 1, 2001 $ 425,000
July 1, 2001 440,000
January 1, 2002 460,000
July 1, 2002 475,000
January 1, 2003 495,000
July 1, 2003 510,000
January 1, 2004 530,000
July 1, 2004 550,000
$6,880,000 8.0% Term Bonds
Due July 1, 2009
Principal
Date of Redemption Redemption Amount
-------------------- -----------------
January 1, 2005 $ 575,000
July 1, 2005 595,000
January 1, 2006 620,000
July 1, 2006 645,000
January 1, 2007 670,000
July 1, 2007 695,000
January 1, 2008 725,000
July 1, 2008 755,000
January 1, 2009 785,000
July 1, 2009 815,000
-13-
<PAGE>
$10,205,000 8.05% Term Bonds
Due July 1, 2014
Principal
Date of Redemption Redemption Amount
------------------ -----------------
January 1, 2010 $ 850,000
July 1, 2010 880,000
January 1, 2011 920,000
July 1, 2011 955,000
January 1, 2012 995,000
July 1, 2012 1,035,000
January 1, 2013 1,075,000
July 1, 2013 1,120,000
January 1, 2014 1,165,000
July 1, 2014 1,210,000
$18,970,000 8.1% Term Bonds
Due July 1, 2020
Principal
Date of Redemption Redemption Amount
------------------ -----------------
January 1, 2015 $1,260,000
July 1, 2015 1,310,000
January 1, 2016 1,365,000
July 1, 2016 1,420,000
January 1, 2017 1,475,000
July 1, 2017 1,535,000
January 1, 2018 1,595,000
July 1, 2018 1,660,000
January 1, 2019 1,730,000
July 1, 2019 1,800,000
January 1, 2020 1,870,000
July 1, 2020 1,950,000
-14-
<PAGE>
However, if on the 60th day immediately preceding each principal
payment date occurring after July 1, 1995 (each such day a "Determination
Date"), the Trustee determines that the total principal amount of the Term
Bonds of the same Maturity Date as the Term Bonds to be redeemed on the
related principal payment date which have been canceled (including those
purchased by the Borrower and delivered to the Trustee for cancellation),
called for redemption or deemed paid prior to such Determination Date, is
greater than the total aggregate amount of Term Bonds required to be redeemed
on or prior to such principal payment date, then the principal amount of Term
Bonds so required to be redeemed shall be reduced by the amount of such
excess.
Optional Redemption
At any time on or after January 1, 2005, the Bonds maturing after such
date may be redeemed by the Borrower, in whole or in part, on any date
selected by the Borrower (which will not be less than 45 days from the date
written notice of such redemption is provided to the Trustee) at the
redemption prices (expressed as percentages of the principal of the Bonds so
redeemed) set forth in the table below, together with interest thereon up to
the date set for redemption:
<TABLE>
<CAPTION>
Period During Which Redeemed
(All Dates Inclusive) Redemption Price
----------------------------------- ----------------
<S> <C>
January 1, 2005 - December 31, 2005 103%
January 1, 2006 - December 31, 2006 102%
January 1, 2007 - December 31, 2007 101%
January 1, 2008 and thereafter 100%
</TABLE>
The Bonds will be subject to optional redemption, in whole or in part,
at any time prior to January 1, 2005, at a redemption price of 104%
(expressed as a percentage of the principal of the Bonds), together with
interest up to the date set for redemption (which date will not be less than
45 days from the date the notice of redemption is received by the Trustee),
in the event of a sale, transfer, assignment or disposition of 50% or more of
the Project or of the partnership interests in the Borrower.
The Bonds will be subject to optional redemption, in part, from 50% of
the net proceeds of any sale of an out-parcel or land pad by the Borrower if
the Borrower elects not to deposit such net proceeds with the Trustee to the
credit of the Reserve Fund. The Bonds will be redeemed on any date selected
by the Borrower (which will not be less than 45 days from the date of written
notice of such redemption is provided to the Trustee) at the redemption
prices
-15-
<PAGE>
(expressed as percentages of the principal of the Bonds so redeemed) set
forth in the table below, together with interest thereon up to the date of
redemption:
<TABLE>
<CAPTION>
Period During Which Redeemed
(All Dates Inclusive) Redemption Price
------------------------------------- ----------------
<S> <C>
Prior to January 1, 2005 104%
January 1, 2005 - December 31, 2005 103%
January 1, 2006 - December 31, 2006 102%
January 1, 2007 - December 31, 2007 101%
January 1, 2008 and thereafter 100%
</TABLE>
To exercise any of the foregoing optional redemptions, the Borrower is
required to deposit with the Trustee the foregoing redemption prices
(including premium, if any), together with interest up to the date set for
redemption, not less than 45 days prior to the date fixed for redemption.
Selection and Notice of Redemption
Except with respect to the mandatory redemption of the Bonds as
described above, if less than all of the outstanding Bonds are redeemed by
the Borrower, such Bonds will be called for redemption in inverse order of
maturity. If less than all Bonds of one maturity are to be redeemed, the
Bonds, or portions thereof, to be redeemed will be selected by the Trustee by
such method as it deems fair and appropriate; provided, however, that the
portion of any Bonds to be redeemed will be in denominations of $5,000 in
principal (as of the redemption date), or multiples thereof. In selecting
Bonds for redemption, the Trustee will treat each Bond as representing that
number of Bonds which is obtained by dividing the principal (as of the
redemption date) of such Bond, by $5,000. The Trust Agreement provides that
if any Bond is to be redeemed in part only, the notice which relates to such
Bond shall state the portion of the principal to be redeemed and shall state
that on and after the redemption date, upon surrender of such Bond, a new
bond or bonds in principal amount equal to the unredeemed portion thereof
will be issued.
Notice of a call for redemption must be given by the Trustee at least
30 days, but no more than 60 days, before the redemption date to the
registered holders of the outstanding Bonds. Any failure to give such notice
or any defect in the notice to the registered holder of any Bond designated
for redemption will not affect the validity of the redemption of such Bond.
After the date specified in the notice of redemption, Bonds called for
redemption will cease to accrue interest and will no longer be entitled to
the benefit of the Trust Agreement, provided that sufficient funds for their
payment must be in the possession of the Trustee and held by the Trustee for
payment of the redeemed Bonds.
-16-
<PAGE>
Maintenance of Source of Income; Indemnity Upon Event of Taxability
The Borrower has covenanted under the Loan Agreement that at all times
while the Bonds are outstanding, it will conduct its business in a manner and
take all steps necessary to ensure that the interest paid or payable on the
Bonds will constitute income from sources within the Commonwealth for
purposes of the United States Internal Revenue Code of 1986, as amended (the
"Code").
In the event that any portion of the interest on the Bonds is subject
to United States federal income taxation as a result of the Borrower's
failure to meet the applicable requirements of the Code (as in effect on the
Date of Issuance) for interest paid or accrued on the Bonds to constitute
income from sources within the Commonwealth (an "Event of Taxability"), the
Borrower will indemnify each holder of a Bond who demonstrates that solely as
a consequence of such Event of Taxability such holder has paid or is required
to pay federal income taxes under the Code on the interest received or to be
received on the Bonds. Such indemnity will consist of an amount, after
deducting any federal income taxes payable with respect to such indemnity,
equal to the federal income taxes such bondholder was required or will be
required to pay as a result of the Event of Taxability, plus any penalties
and interest that have been or will be assessed against such holder with
respect to such federal income taxes not attributable to any act or omission
of such holder. Any bondholder seeking indemnification as a result of an
Event of Taxability must submit a written claim therefor to the Trustee and
the Borrower within 90 days from the date such bondholder receives written
notice from the Trustee that an Event of Taxability has occurred.
Events of Default
Each of the following will be considered an Event of Default under the
Trust Agreement:
(a) failure by the Borrower to pay the principal of, and premium, if
any, on the Bonds when the same becomes due and payable at maturity, upon
redemption or otherwise, or to pay interest on the Bonds when the same
becomes due and payable;
(b) failure by the Borrower for two consecutive months to make the
required monthly deposit of principal to the Bond Fund;
(c) failure by the Borrower to replenish the Reserve Fund within ten
business days from the date that the Trustee notifies the Borrower that the
balance in the Reserve Fund has fallen below the Reserve Fund Amount;
(d) failure by the Borrower to make other payments (excluding payments
with respect to (a), (b) and (c) above) required by the Loan Agreement if
such failure continues for a period of 30 days after written notice thereof,
unless a written extension is granted by the Authority or the Trustee prior
to its expiration;
-17-
<PAGE>
(e) failure by the Borrower to observe or perform any other material
covenant, condition or agreement under the Loan Agreement or applicable
Security Agreements (other than (a), (b), (c) and (d) above), which failure
shall continue for 60 days after written notice thereof, unless a written
extension thereof is granted by the Authority or the Trustee prior to its
expiration; provided, however, that if such failure cannot be corrected
within such 60-day period, it will not constitute an Event of Default if
corrective action is instituted by the Borrower during such period and
diligently pursued until such failure is corrected;
(f) certain events of bankruptcy, liquidation or similar proceedings
involving the Borrower or, if a Guaranty or Substitute Guaranty is then
securing the Bonds, Wal-Mart or an issuer of a Substitute Guaranty; provided,
the Borrower shall have a period of 180 days to deliver to the Trustee a
Substitute Guaranty in the event Wal-Mart or the issuer of a Substitute
Guaranty is subject to the foregoing events;
(g) a court having jurisdiction in the premises shall enter a decree or
order for relief in respect of the Borrower, Wal-Mart or the issuer of a
Substitute Guaranty (if a Guaranty or Substitute Guaranty is then securing
the Bonds) in an involuntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or appointing a receiver,
custodian, liquidator, assignee, trustee or sequestrator (or other similar
official) of the Borrower, Wal-Mart or the issuer of a Substitute Guaranty or
of any substantial part of their property or ordering the winding up or
liquidation of their respective affairs, and the continuance of such decree
or order unstayed and in effect for a period of 180 consecutive days;
provided, the Borrower shall have a period of 180 days to deliver to the
Trustee a Substitute Guaranty in the event Wal-Mart or the issuer of the
Substitute Guaranty is subject to the foregoing events;
(h) the occurrence of an event of default under any lien junior to the
Mortgage which results in the commencement of foreclosure proceedings
involving any property which is part of the Project and subject to such
Mortgage, which proceedings shall have remained unstayed for 120 days; or
(i) the failure by Wal-Mart or the issuer of a Substitute Guaranty to
pay a claim or honor a draft duly presented under the Guaranty or any
Substitute Guaranty.
If by reason of Force Majeure (as defined in the Loan Agreement), the
Borrower is unable to perform any of its obligations under (d) and (e) above,
the Borrower will not be deemed to be in default during the continuance of
such inability, including a reasonable time for the removal of the effect
thereof.
The Authority will have no power to waive any default under the Loan
Agreement or extend the time for the correction of any default which could
become an Event of Default without the consent of the Trustee.
The Trust Agreement provides that upon the occurrence and continuance
of an Event of Default specified in (c) above, the Trustee shall, immediately
after the occurrence of such Event
-18-
<PAGE>
of Default, give notice thereof to the Authority and the bondholders
declaring the principal of all the Bonds then outstanding to be due and
payable immediately after the date of such notice and, if a Guaranty or
Substitute Guaranty is then securing the Bonds, shall present a claim or make
a draw, as the case may be, under such Guaranty or Substitute Guaranty or
realize on the Collateral, as applicable.
The Trust Agreement provides that in case an Event of Default (other
than the Event of Default specified in (c) above) shall have occurred and be
continuing, the Trustee may, and upon the direction of the holders of not
less than 25% in aggregate principal amount of the Bonds then outstanding, it
shall, by notice to the Authority, declare the principal of all the Bonds
then outstanding (if not then due and payable) to be due and payable
immediately after the date of such notice and, if a Guaranty or Substitute
Guaranty is then securing the Bonds, shall present a claim or make a draw, as
the case may be, under such Guaranty or Substitute Guaranty or realize on the
Collateral, as applicable.
The holders of a majority in aggregate principal of the Bonds then
outstanding may, on behalf of all respective bondholders, waive any past
Event of Default and its consequences. If such a waiver is obtained, such
default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of the Trust Agreement,
but no such waiver shall extend to any subsequent or other default or impair
any right consequent thereon.
The Trustee may require indemnification before taking any action under
the Trust Agreement other than (i) accelerating the principal of the Bonds as
required by the Trust Agreement and (ii) making a draw or presenting a claim
under the Guaranty or Substitute Guaranty, if a Guaranty or Substitute
Guaranty is then securing the Bonds, if the Trust Agreement so requires. The
Trustee may commence suit, or appear in and defend suit, or take any action
deemed proper in its sole judgment without prior indemnity, and in such case
the Borrower or the Authority shall be obligated to indemnify the Trustee.
If the Borrower or Authority fails to indemnify or reimburse the Trustee for
its costs and expenses, counsel fees and other disbursements incurred in
connection with its actions taken under the Trust Agreement, the Trustee will
be entitled to reimburse or indemnify itself from any moneys in its
possession under the provisions of the Trust Agreement and to a preference
over any of the Bonds then outstanding.
The holders of a majority of the aggregate principal of the Bonds then
outstanding will have, subject to certain limitations, the right to direct
the time, method and place of conducting any proceeding for any remedy
available to the Trustee. Except as to the indemnity provided in the Loan
Agreement with respect to an Event of Taxability, no bondholder will have any
right to institute any suit, action or proceeding in equity or at law on any
Bond or for the execution of any trust under the Trust Agreement, or for any
other remedy under the Trust Agreement unless: (i) such holder has
previously given to the Trustee notice of the event of default on account of
which such suit, action or proceeding is to be instituted; (ii) the holders
of not less than 25% of the aggregate principal of the Bonds then outstanding
have requested of the Trustee,
-19-
<PAGE>
after the right to exercise such powers or right of action, as the case may
be, has accrued, and have afforded the Trustee a reasonable opportunity,
either to proceed to exercise such powers or to institute such action, suit
or proceeding in its or their name; (iii) the Trustee has been offered
reasonable security and indemnity against the costs, expenses and liabilities
to be incurred; and (iv) the Trustee has refused or neglected to comply with
such request within a reasonable time. No one or more bondholders will have
any right, in any manner, to affect, disturb or prejudice any rights under
the Trust Agreement, or to enforce any right thereunder, except in the manner
therein provided. All suits, actions and proceedings at law or in equity
must be instituted, had and maintained in the manner provided in the Trust
Agreement and for the benefit of the bondholders. Any individual right of
action or other right given to one or more bondholders by law is restricted
by the Trust Agreement to the rights and remedies therein provided.
Supplemental Trust Agreements
The Trust Agreement may be amended or supplemented at any time without
the consent or approval of any of the bondholders: (a) to cure any ambiguity
or to make any other provisions with respect to matters or questions arising
under the Trust Agreement; or (b) to grant or confer upon the Trustee for the
benefit of the bondholders any additional rights, remedies, powers, benefits,
authority or security that may lawfully be so granted or conferred; or (c) to
correct any description of, or to reflect changes in, any properties
comprising the Project; or (d) to add to the covenants of the Authority for
the benefit of the bondholders or to surrender any right or power conferred
upon the Authority under the Trust Agreement; or (e) to modify, amend or
supplement the Trust Agreement or any amendment or supplement thereto in such
manner as to facilitate or permit payments to be made under the Guaranty in
the manner contemplated therein; or (f) to permit qualification of the Trust
Agreement under the Trust Indenture Act of 1939, as amended, or any similar
federal statute in effect or to permit the qualification of the Bonds for
sale under the securities laws of any of the States of the United States or
the Commonwealth, and, if they so determine, to add to the Trust Agreement,
or any amendment or supplement thereto, such other terms, conditions and
provisions as may be required by the Trust Indenture Act of 1939, as amended,
or similar federal statute; or (g) to make any other changes which, in the
reasonable judgment of the Trustee, will not restrict, limit or reduce the
obligation to pay the principal of, premium, if any, or interest on the Bonds
or otherwise impair the security of the bondholders under the Trust
Agreement; or (h) to add to the covenants of the Borrower or surrender any
rights conferred upon the Borrower.
The Trust Agreement may be amended or supplemented with the consent of
the holders of over 50% of the principal of the Bonds at the time
outstanding, except with respect to: (a) an extension of the time for the
payment of the principal of, premium, if any, or the interest on any Bond; or
(b) a reduction in the principal of any Bond or the redemption premium, if
any, or the rate of interest thereon; or (c) the creation of any lien or
security interest with respect to the Loan Agreement or the payments
thereunder other than as created pursuant to the Security Agreements; or (d)
a preference or priority of any Bond or Bonds over any other Bond or Bonds;
(e) a reduction in the aggregate principal of the Bonds required for consent
to such
-20-
<PAGE>
supplement or amendment or any waiver thereunder; or (f) any modification
relating in any way to the Guaranty or Substitute Guaranty, other than
modifications that do not effect the substantive rights of the Trustee to use
the Guaranty or Substitute Guaranty.
The Trustee is not obligated to execute any proposed supplement or
amendment if its rights, obligations and interests would be affected thereby.
Any amendment or supplement to the Trust Agreement will not become
effective without the consent of the Borrower and, under certain
circumstances, of Wal-Mart or the issuer or depositor of a Substitute
Guaranty (if the Guaranty or a Substitute Guaranty is then securing the
Bonds).
DESCRIPTION OF THE GUARANTY
On or prior to the Date of Issuance, the Borrower will cause to be
delivered to the Trustee a Guaranty (the "Guaranty") by Wal-Mart in favor of
the Authority, unconditionally guaranteeing the repayment of up to
$43,473,608.75 (the "Initial Enhancement Amount") of the amount owed by the
Borrower under the Loan Agreement. Prior to any release or reduction in the
Initial Enhancement Amount of the Guaranty as set forth below, the amount of
the Guaranty will initially equal the highest aggregate principal of the
Bonds scheduled to be outstanding at any time plus 210 days' interest thereon
at a rate of 8.1% (the highest interest rate payable on any of the Bonds),
less the Reserve Fund Amount (the "Enhancement Amount"). The Authority will
assign its rights under the Guaranty to the Trustee for the benefit of the
bondholders. The Guaranty will be an unsecured obligation of Wal-Mart and
will rank on a parity with all other unsecured and unsubordinated debt of,
and all other unsecured guaranties of the indebtedness of others by, Wal-
Mart. At October 31, 1994, the Company had outstanding unsecured and
unsubordinated debt obligations in the aggregate amount of approximately
$10.1 billion and outstanding guaranties of the indebtedness of certain
affiliated partnerships of approximately $33 million.
Pursuant to the Guaranty, Wal-Mart will unconditionally guarantee to
the Authority the full payment (subject to reduction, release or substitution
as described in "--Release or Partial Release of Guaranty" and "--
Substitution of Guaranty" below) of the Exposure Amount (which shall mean the
difference between the aggregate principal amount of and accrued interest on
the Bonds outstanding at such time and the aggregate amount of funds
deposited with the Trustee under the Trust Agreement for the payment of
principal of and interest on the Bonds (other than Collateral, if any))
within ten days of the written demand by the Authority; provided, however, in
no event will Wal-Mart be obligated to make payment under the Guaranty of an
amount in excess of the then current Enhancement Amount.
Release or Partial Release of Guaranty
The Guaranty will be subject to reduction or elimination upon receipt
by the Trustee of a determination (an "Enhancement Amount Reduction
Determination"), at any time, from Duff &
-21-
<PAGE>
Phelps Credit Rating Co. or any other nationally recognized securities rating
service (the "Rating Agency") which sets forth the following: (a) that the
Enhancement Amount may be reduced or eliminated, (b) the new Enhancement
Amount, if any, (c) that the Bonds will not be rated lower than "A" at the
new Enhancement Amount, if any, set forth in such determination, and (d) to
the extent that the Enhancement Amount has been reduced to an amount less
than or equal to 25% of the then current Exposure Amount, the establishment
of the Maximum Loan to Value Ratio (as defined below) and the Minimum Debt
Service Coverage Ratio (as defined below). Upon delivery of an Enhancement
Amount Reduction Determination, the Enhancement Amount (and, therefore, the
Guaranty) will automatically and permanently be reduced to the new
Enhancement Amount set forth in such Enhancement Amount Reduction
Determination.
If after the issuance of any Enhancement Amount Reduction
Determination, and the corresponding reduction in the Guaranty (or, if
applicable, the Substitute Guaranty (as defined under "--Substitution of
Guaranty" below)), the Enhancement Amount is greater than zero but less than
or equal to 25% of the then current Exposure Amount, further reductions in,
or elimination of, the Guaranty may occur upon additional Enhancement Amount
Reduction Determinations or upon the receipt by the Trustee of a
certification (the "Enhancement Amount Reduction Certification") from an
independent accountant (the "Independent Accountant") (i) confirming the then
current "Lower Net Operating Income" (defined as the lowest net operating
income for either of the two twelve-month periods immediately preceding any
reduction or elimination of the Guaranty, as audited by the Independent
Accountant and determined within 180 days of the date presented for use),
(ii) setting out the then current Unenhanced Amount (defined below), (iii)
calculating the difference between the then current Exposure Amount and the
then current Unenhanced Amount, and (iv) to the extent the amount in (iii) is
positive, certifying that such amount plus 210 days' interest thereon at 8.1%
is the new Enhancement Amount.
The Unenhanced Amount is defined in the Trust Agreement to mean the
lower of the following calculations: (a) the then current appraised value of
the Project as reflected in the most recent appraisal (the "Appraised Value")
multiplied by the "Maximum Loan to Value Ratio" (which shall mean such ratio
as the Rating Agency may deem appropriate in its sole discretion at or after
the time the then current Enhancement Amount is reduced to an amount that is
less than or equal to 25% of the then current Exposure Amount pursuant to an
Enhancement Amount Reduction Determination, or any higher ratio which the
Rating Agency may deem appropriate at any time thereafter, and which it shall
confirm in writing to the Trustee); or (b) the Lower Net Operating Income
divided by the "Debt Service Factor" set forth in the Trust Agreement (9.34),
with the result thereof then being divided by the "Minimum Debt Service
Coverage Ratio" (such ratio which the Rating Agency may deem appropriate in
its sole discretion at or after the time the then current Enhancement Amount
is reduced to an amount that is less than or equal to 25% of the then current
Exposure Amount pursuant to an Enhancement Amount Reduction Determination, or
any lower ratio which the Rating Agency may deem appropriate at any time
thereafter, and which it shall confirm in writing to the Trustee).
-22-
<PAGE>
Upon delivery of an Enhancement Amount Reduction Determination or
Enhancement Amount Reduction Certification to the Trustee, the Enhancement
Amount (and, therefore, the Guaranty) will automatically and permanently be
reduced to the Enhancement Amount set forth in such Enhancement Amount
Reduction Determination or Enhancement Amount Reduction Certification. If
the Enhancement Amount is zero or less than zero, the Trustee will, unless a
Substitute Guaranty has previously been substituted for the Guaranty, cancel
and deliver the Guaranty to Wal-Mart, and Wal-Mart's obligations under the
Guaranty will permanently terminate.
The Borrower may cause to be delivered to the Trustee at any time and
from time to time until the Enhancement Amount is reduced to zero, additional
Enhancement Amount Reduction Determinations or Enhancement Amount Reduction
Certifications.
The Enhancement Amount (and, therefore, the Guaranty) will be
automatically and permanently reduced from time to time on each principal
payment date (if no event of default shall then exist and be continuing under
the Trust Agreement) to an amount (if not already lower in accordance with
the foregoing) equal to the then outstanding principal amount of the Bonds,
plus 210 days' interest thereon at the rate of 8.1% per annum, less the
Reserve Fund Amount (the "Automatic Reduction").
Claims on the Guaranty
In the event of a default (a) in the payment of the principal of the
Bonds when and as the same shall become due, whether at the stated maturity
thereof, by acceleration, by redemption prior to maturity or otherwise; or
(b) in the payment of any interest on the Bonds when and as the same shall
become due; or (c) in the payment of the redemption price upon the redemption
of any portion of the Bonds; or (d) any event of default under the Guaranty,
the Trustee may proceed first and directly against Wal-Mart under the
Guaranty without proceeding against or exhausting any remedies which it may
have and without resorting to any other security held by it.
In the event that the Trustee should make a claim against the Guaranty
and the Bonds are paid in full, Wal-Mart will be entitled to receive from the
Trustee: (i) any funds or securities held by the Trustee in any fund or
account existing under the Trust Agreement; and (ii) an assignment of all of
the Trustee's interest, if any, in the Security Agreements, to be applied to
sums then owed by the Borrower to Wal-Mart.
If on the business day immediately preceding an interest payment date
or principal payment date, and any other date when any of the principal of or
interest on the Bonds shall become due by acceleration, redemption or
otherwise, there shall not otherwise be available to the Trustee sufficient
funds to the credit of the Bond Fund and/or Reserve Fund to pay the principal
of and interest on the Bonds due on such payment date, the Trustee will on
such day send a notice to Wal-Mart (if the Guaranty is still effective)
requesting payment of the then
-23-
<PAGE>
current Enhancement Amount in full. Payment is required to be made by Wal-
Mart under the Guaranty within ten days of such notice.
Substitution of Guaranty
The Loan Agreement provides that, at any time, and from time to time,
so long as an event of default under the Loan Agreement has not been
declared and be continuing and the Reserve Fund Amount is available, the
Borrower may provide for the delivery to the Trustee of a new guaranty, a
letter of credit, cash collateral (the cash collateral is herein referred to
as "Collateral") (individually and interchangeably, a "Substitute Guaranty")
to substitute for the Guaranty or any Substitute Guaranty then held by the
Trustee. The Borrower may direct the Trustee to invest any Collateral in
permitted government obligations subject to certain conditions set forth in
the Trust Agreement. The Trustee will accept a Substitute Guaranty if the
following conditions are met:
(a) the Substitute Guaranty is for a stated amount, or is cash,
equal to the then current Enhancement Amount on the date of
substitution;
(b) other than in the case of a deposit of Collateral, the issuer
of the Substitute Guaranty is an entity whose long term debt
obligations are rated in one of the three highest rating categories
(without regard to gradations within any category by numerical
qualifier or otherwise) by the Rating Agency at the time of delivery of
such Substitute Guaranty, and the Trustee receives an opinion of
counsel that delivery of the Substitute Guaranty will not require: (i)
registration of the Bonds or the Substitute Guaranty under the
Securities Act or the Uniform Securities Act of Puerto Rico (or if
registration is required, that such registration has taken place); or
(ii) compliance as to the Trust Agreement with the Trust Indenture Act
of 1939, as amended;
(c) other than in the case of a deposit of Collateral, the Trustee
receives an opinion of counsel to the effect that the Substitute
Guaranty is a legal, valid and binding obligation of the issuer
thereof;
(d) the Substitute Guaranty, or in the event of a deposit of
Collateral, the agreement providing for the delivery thereof is in a
form satisfactory to the Trustee and its counsel and grants to the
Trustee an unconditional right to receive payment under the Substitute
Guaranty or to apply the Collateral;
(e) in the case of Collateral, the Trustee receives an opinion of
counsel to the effect that payment to the Bondholders of such
Collateral will not constitute a voidable transfer under applicable
bankruptcy or insolvency laws in the event of an act of bankruptcy or
insolvency; and
(f) the Trustee receives such other documents and opinions as the
Trustee may reasonably request.
-24-
<PAGE>
Upon the fulfillment of such conditions, the Trustee shall return the
Guaranty or Substitute Guaranty substituted by the Substitute Guaranty to its
issuer or depositor.
The renewal of an existing letter of credit by the bank or trust
company, or branch or agency thereof, which issued such letter of credit will
not require the delivery of the documents and opinions set forth above.
Prior to the expiration of a letter of credit, unless renewed or substituted
as provided above, the Trustee shall deposit in a collateral account the
entire amount available under such letter of credit through a drawing on such
letter of credit immediately prior to the expiration thereof.
Events of Default
Each of the following will be an event of default under the Guaranty:
(a) failure by Wal-Mart to make any payment when and as due on the
Guaranty;
(b) certain events of voluntary bankruptcy, insolvency or other
similar proceedings involving Wal-Mart; and
(c) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of Wal-Mart in an involuntary
case under any applicable bankruptcy, insolvency or similar law, or
appointing a receiver, custodian, liquidator, assignee, trustee,
sequestrator or other similar official of Wal-Mart or of any
substantial part of its affairs, and the continuance of such decree or
order unstayed and in effect for a period of 180 consecutive days.
Upon the occurrence of an event of default under the Guaranty, the
Trustee, as assignee of the Authority's rights, may declare all unpaid
amounts payable under the Loan Agreement in respect of the Bonds to be
immediately due and payable and may take any action at law or equity
necessary to enforce any obligation of Wal-Mart under the Guaranty. In the
case of an event of default specified in (b) or (c) above, the Borrower shall
have the right to deliver to the Trustee, within 180 days of such event of
default, a Substitute Guaranty.
-25-
<PAGE>
PLAN OF DISTRIBUTION
The Bonds will be offered by the Authority pursuant to an exemption
from the registration provisions of the Securities Act. The Bonds will not
be registered under the Securities Act or under the Uniform Securities Act of
the Commonwealth, or any state securities law and will be offered for sale
only to individuals who have their principal residence, and to corporations
or other entities that have their principal office and their principal place
of business, within the Commonwealth.
Subject to the terms and conditions set forth in the Bond Purchase
Agreement among the Authority, the Borrower and PaineWebber Incorporated of
Puerto Rico, on behalf of itself and Smith Barney Inc. as underwriters (the
"Underwriters"), the Authority has agreed to sell to the Underwriters, and
the Underwriters have agreed to purchase from the Authority, all of the Bonds
at an aggregate discount of $820,453 of the initial aggregate principal
amount of such Bonds.
The Bond Purchase Agreement provides that the obligations of the
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions. The Underwriters are committed to
purchase all of the Bonds if any are purchased.
The Borrower has agreed to indemnify the Underwriter and the Authority
against certain civil liabilities, including liabilities under the Securities
Act.
LEGAL OPINIONS
Certain legal matters with respect to the issuance of the Guaranty
offered hereby will be passed upon for Wal-Mart by Conner & Winters, A
Professional Corporation, Tulsa, Oklahoma. Certain members and other lawyers
in the firm of Conner & Winters, A Professional Corporation, and members of
their immediate families beneficially own, in the aggregate, approximately
118,000 shares of the common stock of Wal-Mart.
EXPERTS
The consolidated financial statements and schedules of Wal-Mart Stores,
Inc. and subsidiaries appearing in or incorporated by reference in the
Company's Annual Report on Form 10-K for the year ended January 31, 1994,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their reports thereon included therein and incorporated herein by reference.
Such consolidated financial statements and schedules are, and audited
financial statements to be included in subsequently filed documents will be,
incorporated herein by reference in reliance upon the reports of Ernst &
Young LLP pertaining to such financial statements (to the extent covered by
consents filed with the Securities and Exchange Commission) given upon the
authority of such firm as experts in accounting and auditing.
-26-
<PAGE>
No person is authorized to give any information or to make any
representation other than those contained or incorporated by reference in
this Prospectus, and if given or made, such information or representation
must not be relied upon as having been authorized. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any
securities other than the Guaranty to any person in any jurisdiction where
such offer or solicitation would be unlawful. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that there has been no change in the affairs of the Company
since the date of this Prospectus or that the information herein is correct
as of any time subsequent to its date.
TABLE OF CONTENTS
Page
----
AVAILABLE INFORMATION.................................................. 2
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE...................... 2
WAL-MART STORES, INC................................................... 4
THE AUTHORITY.......................................................... 4
THE BORROWER........................................................... 4
THE PROJECT............................................................ 5
USE OF PROCEEDS........................................................ 6
SELECTED FINANCIAL INFORMATION OF WAL-MART............................. 6
DESCRIPTION OF THE BONDS............................................... 7
General.......................................................... 7
Source of Payment and Security for the Bonds..................... 8
Deposit of Funds................................................. 9
Reserve Fund..................................................... 10
Project Fund..................................................... 11
Mandatory Redemption............................................. 11
Optional Redemption.............................................. 15
Selection and Notice of Redemption............................... 16
Maintenance of Source of Income; Indemnity Upon Event of
Taxability...................................................... 17
Events of Default................................................ 17
Supplemental Trust Agreements.................................... 20
DESCRIPTION OF THE GUARANTY............................................ 21
Release or Partial Release of Guaranty........................... 21
Claims on the Guaranty........................................... 23
Substitution of Guaranty......................................... 24
Events of Default................................................ 25
PLAN OF DISTRIBUTION................................................... 26
LEGAL OPINIONS......................................................... 26
EXPERTS................................................................ 26
WAL-MART STORES, INC.
Guaranty of Payment of up to
$43,473,608.75
of
Principal of and Interest on
Puerto Rico Industrial, Tourist, Educational, Medical and
Environmental Control Facilities Financing Authority,
Industrial Revenues Bonds, 1995 Series A
(Plaza Palma Real Project)
_______________________
PROSPECTUS
______________________
PaineWebber Incorporated of Puerto Rico Smith Barney Inc.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
All amounts are estimated except for the SEC filing fee.
SEC filing fee................ $15,183
Accounting fees and expenses.. 4,000
Legal fees and expenses....... 16,000
Printing...................... 15,000
Miscellaneous................. 1,817
-------
Total....................... $52,000
=======
Item 15. Indemnification of Directors and Officers.
The Registrant's By-Laws provide that each person who was or is made a
party to, or is involved in, any action, suit or proceeding by reason of the
fact that he or she was a director or officer of the Registrant (or was
serving at the request of the Registrant as a director, officer, employee or
agent for another entity) will be indemnified and held harmless by the
Registrant, to the full extent authorized by the Delaware General Corporation
Law.
Under Section 145 of the Delaware General Corporation Law, a
corporation may indemnify a director, officer, employee or agent of the
corporation against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him or her
if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his or her conduct was unlawful. In the case of an action
brought by or in the right of a corporation, the corporation may indemnify a
director, officer, employee or agent of the corporation against expenses
(including attorneys' fees) actually and reasonably incurred by him or her if
he or she acted in good faith and in a manner he or she reasonably believed
to be in the best interests of the corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless a court finds that, in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses as
the court shall deem proper.
II-1
<PAGE>
The Registrant's Certificate of Incorporation provides that to the
fullest extent permitted by Delaware General Corporation Law as the same
exists or may hereafter be amended, a director of the Registrant shall not be
liable to the Registrant or its stockholders for monetary damages for breach
of fiduciary duty as a director. The Delaware General Corporation Law
permits Delaware corporations to include in their certificates of
incorporation a provision eliminating or limiting director liability for
monetary damages arising from breaches of their fiduciary duty. The only
limitations imposed under the statute are that the provision may not
eliminate or limit a director's liability (i) for breaches of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or involving intentional misconduct or known
violations of law, (iii) for the payment of unlawful dividends or unlawful
stock purchases or redemptions, or (iv) for transactions in which the
director received an improper personal benefit.
The Registrant is insured against liabilities which it may incur by
reason of its indemnification of officers and directors in accordance with
its By-Laws. In addition, directors and officers are insured, at the
Registrant's expense, against certain liabilities which might arise out of
their employment and are not subject to indemnification under the By-Laws.
The foregoing summaries are necessarily subject to the complete text of
the statute, Certificate of Incorporation, By-Laws and agreements referred to
above and are qualified in their entirety by reference thereto.
<TABLE>
<CAPTION>
Item 16. List of Exhibits.
Exhibit
Reference Number Description
---------------- -----------
<S> <C>
1(a) Form of Bond Purchase Agreement
4(a) Form of Guaranty between Wal-Mart Stores, Inc. and
the Puerto Rico Industrial, Tourist, Educational,
Medical and Environmental Control Facilities
Financing Authority (the "Authority")
4(b) Form of Trust Agreement between the Authority and
Banco Popular de Puerto Rico, as trustee, relating
to the Industrial Revenue Bonds
4(c) Form of Loan Agreement between the Authority and
Palma Real Associates, S.E.
5(a)* Opinion of Conner & Winters, A Professional
Corporation, counsel for Wal-Mart Stores, Inc.
12(a)* Computation of Ratio of Earnings to Fixed Charges
23(a) Consent of Ernst & Young LLP
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Reference Number Description
---------------- -----------
<S> <C>
23(b)* Consent of Conner & Winters, A Professional
Corporation, appears in its opinion filed as
Exhibit 5(a)
24* Power of Attorney (included on the previously
filed signature page to this Registration
Statement)
</TABLE>
______________
*Previously filed.
Item 17. Undertakings.
1. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
2. Insofar as indemnification of liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
3. The Registrant hereby undertakes that:
(a) For purposes of determining liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as a
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this Registration Statement as of the time it was
declared effective.
II-3
<PAGE>
(b) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duty authorized in the City of Bentonville, State of
Arkansas, on February 20, 1995.
WAL-MART STORES, INC.
By /s/ S. Robson Walton
------------------------------------------
S. Robson Walton
Chairman of the Board of Directors
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ S. Robson Walton Chairman of the Board of
- --------------------------- Directors and Director February 20, 1995
S. Robson Walton
/s/ David D. Glass* President, Chief Executive February 20, 1995
- --------------------------- Officer and Director
David D. Glass
/s/ Donald G. Soderquist* Vice Chairman of the Board February 20, 1995
- --------------------------- of Directors, Chief Operating
Donald G. Soderquist Officer and Director
II-5
<PAGE>
Signature Title Date
--------- ----- ----
/s/ Paul R. Carter Executive Vice President, February 20, 1995
- --------------------------- Chief Financial Officer and
Paul R. Carter Director
/s/ James L. Walton* Senior Vice President and February 20, 1995
- --------------------------- Director
James L. Walton
/s/ James A. Walker, Jr.* Vice President and Controller February 20, 1995
- --------------------------- (Principal Accounting
James A. Walker, Jr. Officer)
/s/ David R. Banks* Director February 20, 1995
- ---------------------------
David R. Banks
. Director
- ---------------------------
John A. Cooper, Jr.
/s/ Robert H. Dedman* Director February 20, 1995
- ---------------------------
Robert H. Dedman
Director
- ---------------------------
Frederick J. Humphries
Director
- ---------------------------
F. Kenneth Iverson
. Director
- ---------------------------
R. Drayton McLane, Jr.
/s/ Elizabeth A. Sanders* Director February 20, 1995
- ---------------------------
Elizabeth A. Sanders
II-6
<PAGE>
Signature Title Date
--------- ----- ----
Director
- ---------------------------
Jack Shewmaker
Director
- ---------------------------
John T. Walton
*By:/s/ Paul R. Carter February 20, 1995
Paul R. Carter
Attorney in Fact
II-7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Reference Number Description
- ---------------- -----------
<S> <C>
1(a) Form of Bond Purchase Agreement
4(a) Form of Guaranty between Wal-Mart Stores, Inc. and
the Puerto Rico Industrial, Tourist, Educational,
Medical and Environmental Control Facilities
Financing Authority (the "Authority")
4(b) Form of Trust Agreement between the Authority and
Banco Popular de Puerto Rico, as trustee, relating
to the Industrial Revenue Bonds
4(c) Form of Loan Agreement between the Authority and
Palma Real Associates, S.E.
5(a)* Opinion of Conner & Winters, A Professional
Corporation, counsel for Wal-Mart Stores, Inc.
12(a)* Computation of Ratio of Earnings to Fixed Charges
23(a) Consent of Ernst & Young LLP
23(b)* Consent of Conner & Winters, A Professional
Corporation, appears in its opinion filed as
Exhibit 5(a)
24* Power of Attorney (included on the previously
filed signature page to this Registration
Statement)
_______________
</TABLE>
*Previously filed.
<PAGE>
EXHIBIT 1(a)
________________________________________________________________________________
BOND PURCHASE AGREEMENT
AMONG
PUERTO RICO INDUSTRIAL, TOURIST, EDUCATIONAL,
MEDICAL AND ENVIRONMENTAL CONTROL FACILITIES
FINANCING AUTHORITY,
(THE "AUTHORITY")
PALMA REAL ASSOCIATES, S.E.
(THE "BORROWER")
AND
PAINEWEBBER INCORPORATED OF PUERTO RICO
INDIVIDUALLY AND ON BEHALF OF SMITH BARNEY INC.
(COLLECTIVELY, THE "UNDERWRITER")
DATED FEBRUARY 23, 1995
________________________________________________________________________________
PUERTO RICO INDUSTRIAL, TOURIST, EDUCATIONAL, MEDICAL
AND ENVIRONMENTAL CONTROL FACILITIES
FINANCING AUTHORITY
$43,450,000 INDUSTRIAL REVENUE BONDS,
1995 SERIES A
(PLAZA PALMA REAL PROJECT)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. Introduction; Definitions; Rules of Interpretation .................... 1
2. Representations, Warranties and Agreements of the Authority ........... 2
3. Representations, Warranties and Agreements of the Borrower ............ 3
4. Covenants of the Authority and the Borrower ........................... 6
5. Payment and Delivery of the Bonds ..................................... 7
6. Closing of the Underwriter's Obligation ............................... 7
7. Indemnification and Contribution ...................................... 11
8. Representations and Warranties of the Underwriter ..................... 15
9. Fees and Expenses ...................................................... 16
10. Notices ................................................................ 16
11. Beneficiaries and Survival ............................................. 17
12. Counterpart Execution .................................................. 18
13. Construction ........................................................... 18
14. Bond Purchase Agreement Supersedes Prior Agreements .................... 18
</TABLE>
<PAGE>
The parties appearing in the cover page of this Bond Purchase Agreement
which is hereby made an integral part hereof, hereby agree with each other as
follows:
1. INTRODUCTION; DEFINITIONS; RULES OF INTERPRETATION.
--------------------------------------------------
Upon the terms, conditions, representations, warranties, and agreements set
forth herein, the Underwriter agrees to purchase from the Authority and the
Authority agrees to sell and deliver to the Underwriter all, but not less than
all, of $43,450,000 aggregate principal amount of the Authority's captioned
bonds (the "Bonds"), to be dated January 1, 1995, at an aggregate discount of
[$820,453] of the principal amount thereof. The Bonds shall mature, shall bear
interest, shall be payable, shall be secured and shall be otherwise as provided
in the Trust Agreement (the "Trust Agreement") by and between the Authority and
the Trustee (therein identified) to be dated the date of delivery of the Bonds
and purchase therefor (the "Date of Issuance") relative to the Bonds and the
resolution (the "Resolution") adopted by the Authority authorizing the issuance
and sale of the Bonds.
The capitalized words hereinbefore and hereinafter used shall have the
meanings assigned thereto under the Trust Agreement.
The Bonds shall be issued under and pursuant to the Trust Agreement. The
Authority will loan the proceeds of the Bonds to the Borrower under the Loan
Agreement. Concurrently with the issuance of the Bonds, the Authority will cause
to be delivered to the Trustee, the Guaranty, the Mortgage, the Mortgage Note,
the Pledge Agreement, the Title Insurance and the Collateral Assignment. This
Bond Purchase Agreement, the Trust Agreement, the Bonds and the Related
Documents are hereinafter collectively referred to as the "Contracts".
A Preliminary Official Statement (the "Preliminary Official Statement") and
an Official Statement (as amended or supplemented from time to time, the "Final
Official Statement") have been prepared in connection with the offering of the
Bonds. As used herein, the terms "Preliminary Official Statement" and "Final
Official Statement" shall include the appendices attached thereto, the materials
incorporated by reference therein and the exhibits to such materials, and are
herein collectively referred to as the "Official Statement".
This Bond Purchase Agreement shall be interpreted pursuant to the rules
established in the Trust Agreement.
-1-
<PAGE>
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE AUTHORITY.
-----------------------------------------------------------
The Authority represents, warrants and agrees as follows:
(a) The Authority is a body corporate and politic constituting a
public corporation and governmental instrumentality of the Commonwealth, duly
constituted and existing under the laws of the Commonwealth, particularly the
Act, with full legal right, power and authority to enter into this Bond Purchase
Agreement, to adopt the Resolution, to issue, sell and deliver the Bonds to the
Underwriter as provided herein, and to enter into and carry out and consummate
all other transactions contemplated by the Contracts to which it is a party.
(b) By official action of the Authority prior to or concurrently with
its execution of this Bond Purchase Agreement, the Authority has duly adopted
the Resolution, and has duly authorized and approved the execution and delivery
of, and the performance by the Authority of the obligations contained in, the
Contracts to which it is a party.
(c) The information with respect to the Authority and the Government
Development Bank for Puerto Rico in the Official Statement as of the date hereof
does not contain any untrue or misleading statement of a material fact or omit
to state a material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they are made, not misleading.
(d) The Authority has duly and validly authorized the execution and
delivery of the Contracts to which it is a party, and when executed and
delivered by the other parties thereto, will constitute the legal, valid and
binding agreements of the Authority, except as may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
generally from time to time in effect and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(e) There are no actions, suits, proceedings or investigations at law
or in equity before or by any court, arbitration board or tribunal, public board
or body, pending or, to the best knowledge of the Authority, threatened against
or affecting the Authority, or, to the best knowledge of the Authority, does
there exist any basis therefor, (i) to restrain or enjoin the issuance or
delivery of the Bonds, (ii) which in any way question or affect the validity of
any of the Contracts to which it is a party, any provisions thereof, or any
proceedings taken with respect thereto, (iii) which question the Authority's
creation, organization or existence or the titles to office of any of its
officers,,or its powers to finance the Project, or (iv) wherein an unfavorable
decision, ruling or finding would adversely affect the transactions contemplated
by, or the validity or
-2-
<PAGE>
enforceability of, the Contracts to which it is a party or any other agreement
or instrument to which the Authority is a party and which is used or
contemplated for use in consummation of the transactions contemplated by the
Contracts.
(f) To the best knowledge of the Authority: (i) no event has occurred
and no condition exists which, upon the issuance of the Bonds, or thereupon with
notice and/or passage of time, would constitute an event of default within the
meaning of the Trust Agreement or the Loan Agreement, or a breach of this Bond
Purchase Agreement; and (ii) the Authority is not in default in any material
respect under any term of any indenture, agreement, by-law or other instrument
to which it is a party or by which it may be bound.
(g) All consents, approvals, atuthorizations and orders of, or
filings, registrations or qualifications with, any governmental or regulatory
authorities (collectively, the "Governmental Approvals") which are required to
be obtained by the Authority for consummation of the transactions contemplated
by the Contracts to which the Authority is a party have been duly and validly
obtained or performed on or before this date and are in full force and no
default exists thereunder; provided, however, that no representation, warranty,
promise or agreement is made herein by the Authority with respect to compliance
by the Authority with the Securities Act or the securities or Blue Sky laws of
the Commonwealth or the states of the United States of America (the "States").
(h) Neither the issuance and sale of the Bonds nor the execution and
delivery of the Contracts to which the Authority is a party, the consummation of
the transactions herein and therein contemplated, nor compliance with the terms,
conditions or provisions of such instruments, will conflict with, or violate or
result in a breach of, or constitute a default under the by-laws of the
Authority or the rules of procedure of the Authority or any indenture, agreement
or other instrument by which the Authority or any of its properties may be bound
or any statute, rule, regulation, order, decree or ordinance of any court,
government or governmental body having jurisdiction over the Authority or any of
its property.
(i) As of this date, the Preliminary Official Statement was deemed
"final" by the Authority for purposes of paragraph (b)(1) of Rule 15c2-12 (the
"Rule") of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the Authority omitted therefrom only such information permitted to be
omitted therefrom by the Rule.
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE BORROWER.
----------------------------------------------------------
The Borrower represents, warrants and agrees as follows:
-3-
<PAGE>
(a) The information provided by the Borrower contained in the
Preliminary Official Statement as of the date thereof did not, and the
information contained in the Final Official Statement does not, contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Borrower
makes no representation or warranty as to statements or omissions made in
reliance upon, and in conformity with, information furnished to the Borrower by
the Underwriter, the Authority, the Government Development Bank for Puerto Rico
or the Guarantor expressly for use therein.
(b) There is no fact known to the Borrower which the Borrower has not
disclosed in writing to the Authority and to the Underwriter which materially
adversely affects the properties, business or financial condition of the
Borrower or the ability of the Borrower to perform its obligations under the
Contracts to which it is a party or any other agreement or instrument to which
the Borrower is a party and which is used or contemplated for use in
consummation of the transactions contemplated by any such agreement.
(c) The Borrower is a partnership organized and validly existing
under the laws of the Commonwealth which has made an election under Supplement P
of the Commonwealth Income Tax Act of 1954, as amended, is in good standing
there in, and is not in violation of any provisions of its partnership
agreement.
(d) The Borrower has all requisite power and authority to own and
operate its properties and to carry on its business as now conducted and as
presently proposed to be conducted, and to enter into, execute, deliver and
carry out and consummate the transactions contemplated by the Contracts to which
it is a party.
(e) The Borrower has duly and validly authorized the execution and
delivery of the Contracts to which it is a party and, when duly executed and
delivered by the parties thereto, will be legal, valid, and binding agreements
of the Borrower.
(f) As presently contemplated, the Project conforms in all material
respects to all statements with regard thereto contained in the Official
Statement.
(g) Except as reflected in or contemplated by the Official Statement,
since the respective dates as of which information is given therein there has
not been any material adverse change in the condition, financial or otherwise,
of the Borrower or in its result of operations or in its business or prospects.
(h) The Borrower does not have any contingent obligations not
disclosed in the Official Statement which are material to the businesses or
financial
-4-
<PAGE>
condition of the Borrower and which are required to be disclosed in the
Borrower's financial statements.
(i) The Borrower has obtained or will obtain and maintain in full
force and effect once obtained all Governmental Approvals.
(j) There does not exist any material breach or material default, and
no event has occurred which with notice, lapse of time, or both, would
constitute a material default under any indenture, mortgage, deed of trust or
other agreement or instrument to which the Borrower is now a party which would
have a material adverse effect on the condition, financial or otherwise, or the
Borrower.
(k) Neither the execution or delivery by the Borrower of the
Contracts to which it is a party, the consummation of the transactions therein
contemplated, nor compliance with the terms, conditions or provisions of such
instruments, will result in a breach or violation of, or be in contravention of,
any of the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or other agreement or instrument to which the Borrower
is a party or by which is bound, or any statute or the partnership agreement of
the Borrower, or any rule, regulation, judgment or order of any court or
governmental agency or body having jurisdiction over the Borrower or over its
properties.
(l) Except as described in the Official Statement, there are no
actions, suits or proceedings pending, or, to the knowledge of the Borrower,
threatened, against the Borrower or any of its property, at law or in equity or
before or by any Federal or state court, commission, regulatory body or
administrative agency or other governmental body, in which an adverse decision
would, in the judgment of the Borrower, be reasonably expected to have a
material adverse effect on the business or financial condition of the Borrower.
(m) The Borrower will not take or omit to take any action which
action or omission will in any way cause the proceeds from the sale of the Bonds
to be applied in a manner contrary to that provided in the Trust Agreement and
the Loan Agreement, as in force from time to time.
(n) There is no litigation or proceeding pending, or to the knowledge
of the Borrower threatened, against the Borrower or, to the knowledge of the
Borrower, any other person, affecting in any manner whatsoever the right of the
Borrower to execute the Contracts to which it is a party, or the ability of the
Borrower to make the payments required thereunder, or to otherwise comply with
the Borrower's obligations contained therein.
-5-
<PAGE>
(o) The Borrower covenants that throughout the term that the Loan
Agreement is in force, it shall comply with all laws, regulations and
governmental requirements that may apply to the Project or to the operation of
the Borrower.
(p) The Borrower covenants to furnish to the Underwriter or to each
Person designated by the Underwriter within seven (7) days after the date
hereof, at such address or addresses as the Underwriter shall specify, such
number of conformed copies of the Official Statement with all exhibits thereto
in such quantities as the Underwriter requests in order to comply with paragraph
(b)(4) of the Rule and the Rules of the Municipal Securities Rulemaking Board.
(q) The Borrower will not take or permit any action within its power
to be taken, nor will it omit to take any action within its power which would
result in the interest paid on the Bonds being considered from sources outside
of the Commonwealth for purposes of the Code.
(r) As of this date, the Preliminary Official Statement was deemed
"final" by the Borrower for purposes of paragraph (b)(1) of the Rule and the
Borrower omitted therefrom only such information permitted to be omitted
therefrom by the Rule.
4. COVENANTS OF THE AUTHORITY AND THE BORROWER.
-------------------------------------------
The Authority and the Borrower agree that:
(i) If at any time between the date of this Bond Purchase Agreement
and a date 90 days after the Date of Issuance any event occurs which might or
would cause the Official Statement, as then amended or supplemented, to contain
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein in the light of the
circumstances under which they were made, not misleading, the Borrower or the
Authority shall forthwith notify the Underwriter thereof and, if in the opinion
of the Underwriter such event required the preparation and publication of a
supplement or amendment to the Official Statement, the Authority and the
Borrower, at the Underwriter's request, shall prepare and furnish to the
Underwriter, in such quantity as the Underwriter may reasonably request, an
amendment or supplement to such statement in a form and in a manner approved by
the Underwriter. The Borrower will not, at any time prior to the expiration of
such period, amend or supplement the Official Statement unless the Underwriter
shall previously have been advised and furnished with a copy of such amendment
or supplement.
-6-
<PAGE>
(ii) The Authority and the Borrower will, when and as requested by
the Underwriter, reasonably cooperate with the Underwriter in qualifying the
Bonds for offering and sale and in determining their eligibility for investment
under the laws of the Commonwealth and will maintain such qualification in
effect so long as required for their distribution.
5. PAYMENT AND DELIVERY OF THE BONDS.
---------------------------------
The Authority will deliver the Bonds to the Underwriter at the offices of
the Bond Counsel, at approximately 10:00 a.m., Atlantic Standard Time, on the
Date of Issuance, in definitive form, duly executed and authenticated, against
payment therefor to the Trustee by the Underwriter of the initial principal
amount of the Bonds less the aggregate discount set forth in Section 1 hereof by
wire transfer. Upon such payment, the Trustee shall authorize delivery of the
Bonds to the Underwriter.
The Bonds shall be: (i) in the form and as otherwise described in the Trust
Agreement and (ii) delivered and issued as fully registered bonds without
coupons, in such names and in such denominations (which denominations may not be
other than those authorized in the Trust Agreement) as the Underwriter shall
specify not less than 24 hours prior to the Date of Issuance.
6. CLOSING OF THE UNDERWRITER'S OBLIGATION.
---------------------------------------
The obligation of the Underwriter to purchase and pay for the Bonds as
provided herein shall be subject, in its reasonable discretion, to compliance
with the following conditions precedent on or before the Date of Issuance, in a
manner reasonably satisfactory to the Underwriter and its counsel:
(a) All of the representations and warranties of the Authority and
the Borrower contained herein and all the information provided by them and
contained in the Official Statement shall be true and correct in all material
respects as of the Date of Issuance.
(b) Any and all statements of the officers and/or directors of the
Authority and the Borrower made in connection with the issuance and sale of the
Bonds pursuant to the provisions hereof or the execution of the Contracts and
other instruments of the Authority and the Borrower referred to herein shall be
true and correct in all material respects as of the Date of Issuance.
-7-
<PAGE>
(c) The Authority and the Borrower shall have performed all of their
obligations hereunder and heretofore to be performed.
(d) On the Date of Issuance the market price of the Bonds, or the
market price of general credit or revenue obligations issued by the Commonwealth
or any of its agencies, instrumentalities or political subdivisions, or the
market price of revenue obligations of the character of the Bonds, shall not
have been materially adversely affected (in the reasonable opinion of the
Underwriter) by reason of the fact that (i) legislation shall have been
introduced in or enacted by the Federal Congress or the Commonwealth
Legislature, or legislation pending in such Congress shall have been amended, or
legislation shall have been recommended to such Congress or otherwise endorsed
for passage (by press release, other form of notice or otherwise) by the Federal
President, or Treasury Department, or the Chairman or ranking minority member of
the Committee on Finance of the Federal Senate or the Committee on Ways and
Means of the Federal House of Representatives, or legislation shall have been
proposed for consideration by either such Committee by any member thereof or
presented as an option for consideration by either such Committee by the staff
of such Committee or by the staff of the Joint Committee on Taxation of such
Congress, or legislation shall have been favorably reported for passage to
either house of such Congress by a committee of such house to which such
legislation has been referred for consideration, or (ii) a decision shall have
been rendered by a court established under Article III of the Federal
Constitution, or the Federal Tax Court, or (iii) an order, ruling, regulation or
official statement shall have been made by the Federal or Commonwealth Treasury
Department in each such case with the purpose or effect, directly or indirectly,
of imposing Federal, State, Commonwealth or local taxation upon interest to be
received by the Holder of any Bond.
(e) On the Date of Issuance none of the following shall have occurred
(i) any outbreak of hostilities or other national or international calamity or
crisis, or (ii) there shall be in force a general suspension of trading, or
minimum or maximum prices for all trading shall have been fixed and in force, or
maximum ranges for prices for all securities shall have been required and in
force, on the New York Stock Exchange, whether by virtue of a determination by
that Exchange or by order of the Securities and Exchange Commission or any other
governmental authority having jurisdiction, or (iii) a general banking
moratorium shall have been declared by Federal, or Commonwealth authorities
having jurisdiction, or (iv) there shall exist any event which in the reasonable
opinion of the Underwriter either makes untrue or incorrect in any material
respect any statement or information contained in the Official Statement
delivered after the acceptance of this Bond Purchase Agreement.
(f) No order, decree or injunction of any court of competent
jurisdiction, or any judicial proceeding, or any order ruling, regulation or
administrative proceeding by any governmental body, instrumentality or board,
shall have been issued or commenced, nor shall any legislation have been
enacted, with the purpose or effect
-8-
<PAGE>
of prohibiting the issuance, offering or sale of the Bonds as contemplated
hereby or by the Official Statement or the performance by the Authority or the
Borrower of their respective obligations under the Contracts.
(g) There shall have been duly tendered to the Underwriter Bonds
representing, in the aggregate, the entire principal amount of the Bonds.
(h) That the Underwriter shall have received evidence satisfactory to
the Underwriter and its counsel to the effect that the Guaranty has been
registered for distribution under the Securities Act.
(i) The Bonds shall be rated "A" by the Rating Agency.
(j) The Underwriter shall have received, in form and substance
satisfactory to the Underwriter and its counsel, the following documents:
(i) certified, executed or simple copies of each of the
Contracts;
(ii) copies of the Resolution, certified as of the Date of
Issuance by the Secretary of the Authority as having been duly adopted
by the Authority and as being in full force and effect;
(iii) certified copies of the transcript of all proceedings of
the Authority relating to the authorization and issuance of the Bonds;
(iv) the following legal opinions or letters dated the Date of
Issuance;
(A) a letter of the Bond Counsel, to the effect that the
opinions in substantially the form included in the Official
Statement may be relied upon by the Underwriter to the same
extent as if such opinions were addressed to the Underwriter,
(B) a supplementary opinion of the Bond Counsel to the
effect that the statements contained in the Official Statement
appearing under the captions "THE AUTHORITY AND GOVERNING BOARD",
"THE GOVERNMENT DEVELOPMENT BANK FOR PUERTO RICO", "THE BONDS",
"TAX MATTERS", "THE TRUST AGREEMENT", "THE SECURITY AGREEMENTS"
and "THE LOAN AGREEMENT", are a fair, accurate and complete
summary of the subject matter described therein,
-9-
<PAGE>
(C) the opinion of Letvia Arza Goderich, Esq., counsel to
the Borrower, dated the Date of Issuance,
(D) the opinion of Delfina Betancourt, Esq., general
counsel to the Authority, dated the Date of Issuance,
(E) the opinion of Samuel Susi, Esq., special counsel to
the Borrower,
(F) the opinion of Fiddler Gonzalez & Rodriguez, counsel to
the Underwriter, with respect to the Official Statement and other
related matters as the Underwriter may reasonably require,
(G) the opinion of Conner & Winters, special counsel to the
Guarantor, with respect to the registration of the Guaranty,
(H) the opinion of Allison D. Garrett, Assistant General
Counsel to the Guarantor;
(v) a certificate of the Executive Director of the Authority, or
of other duly authorized official of the Authority, dated the Date of
Issuance, to the effect that (A) on and as of the Date of Issuance,
each of the representations and warranties of the Authority set forth
in Section 2 hereof is true, accurate and complete and all agreements
of the Trustee herein provided and contemplated to be performed on or
prior to the Date of Issuance have been so performed, (B) the Bonds
have been duly authorized, executed and delivered to the Trustee, (C)
the Contracts to which the Authority is a party, and any and all other
agreements and documents required to be executed and delivered by the
Authority in order to carry out, give effect to, and consummate the
transactions contemplated thereby have each been duly authorized,
executed and delivered by the Authority and, as of the Date of
Issuance, each is in full force and effect, and substantially all
right, title and interest inuring to the Authority under the Loan
Agreement and the Guaranty and all amounts payable thereunder have
been duly assigned to the Trustee under the Trust Agreement for the
benefit of the Bondholders, and (D) no litigation is pending or
threatened to restrain or enjoin the issuance or sale of the Bonds or
in any way contesting the validity of or affecting the Authority in
connection with the issuance of the Bonds, the authorization,
execution or performance of the Contracts to which it is a party, or
the existence of powers of the Authority or the right of the Authority
to lend money in connection with the Project;
-10-
<PAGE>
(vi) a certificate of the managing partner of the Borrower,
dated the Date of Issuance, (A) as to the accuracy, as of the date
thereof, of the representations and warranties set forth in Section 3
hereof, (B) as to no event having occurred which, pursuant to the
terms of this Bond Purchase Agreement, shall have been set forth in an
amendment or supplement to the Official Statement and (C) to the
effect that the Contracts to which the Borrower is a party have each
been duly authorized, executed and delivered by the Borrower and
constitute the legal, valid and binding obligations of the Borrower;
(vii) a certificate of one or more duly authorized officers of
the Trustee, dated as of the Date of Issuance, as to the due
authorization, execution and delivery of the Trust Agreement by the
Trustee and the due authentication and delivery of the Bonds by the
Trustee thereunder;
(viii) a certificate of a duly authorized officer of the
Guarantor, dated the Date of Issuance, (A) to the effect that the
information relating to the Guarantor in the Final Official Statement
is true and correct in all material aspects, and (B) to the effect
that the Guaranty has been duly authorized, executed and delivered by
the Guarantor and constitute the legal, valid and binding obligation
of the Guarantor;
(ix) a copy of the executed Guaranty;
(x) such additional certificates, opinions, instruments or other
documents as the Underwriter may reasonably require to evidence the
accuracy, as of the Date of Issuance, of the representations and
warranties herein contained, and the due performance and satisfaction
by the Authority and the Borrower at or prior to such time of all
agreements then to be performed and all conditions then to be
satisfied by any one or all of them in connection with the Contracts.
If the Authority or the Borrower shall be unable to satisfy the
conditions to the obligations of the Underwriter contained in this Bond Purchase
Agreement, this Bond Purchase Agreement shall terminate and the Underwriter, the
Authority and the Borrower shall have no further obligations or liabilities
hereunder except as otherwise provided in Sections 7 and 11.
7. INDEMNIFICATION AND CONTRIBUTION.
--------------------------------
-11-
<PAGE>
(a) The Borrower agrees to indemnify and hold harmless the Authority,
the Underwriter and each Person who controls the Underwriter within the meaning
of Section 15 of the Securities Act, or Section 20(a) of the Exchange Act, from
and against any and all losses, claims, damages or liabilities, joint or
several, under the Securities Act, the Exchange Act or any other statute or
common law, including, but not limited to reimburse the Authority, the
Underwriter and each such controlling Person for any legal or other expenses
(including, to the extent hereinafter provided, reasonable counsel fees)
incurred by them in connection with investigating any such losses, claims,
damages or liabilities or in connection with defending any actions ("Losses") to
which the Authority, the Underwriter or such controlling Person may become
subject, insofar as the Losses, arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Official Statement (or the Official Statement as amended or supplemented if such
losses, claims, damages, liabilities, expenses or actions arise out of or are
based upon the use of the Official Statement after the Borrower shall have
amended or supplemented the Official Statement) or the omission or alleged
omission to state therein a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading or (ii) any untrue statement or alleged untrue statement of
a material fact contained in any application or other document or communication
(in this Section 7 called "application") executed by or on behalf of the
Borrower, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that with respect to the Underwriter or any
Person who controls the Underwriter, the indemnity agreement contained in this
paragraph shall not apply to any Losses arising out of or based upon, any such
untrue statement or alleged untrue statement, or any such omission or alleged
omission, if such statement or omission (i) was made in reliance upon
information in respect of the Underwriter, furnished herein to the Borrower by
the Underwriter expressly for use in the Official Statement or in any
application, (ii) relates to the information set forth in subsection (b)(i)
below, or (iii) relates to the information set forth under the captions "THE
AUTHORITY AND GOVERNING BOARD","THE GOVERNMENT DEVELOPMENT BANK FOR PUERTO
RICO", "LEGAL INVESTMENT" and "TAX MATTERS" (except matters relating to the
Borrower) in the Official Statement, provided further, that with respect to the
Authority, the indemnity agreement contained in this paragraph shall not apply
to any Losses arising out or based upon, any such untrue statement or alleged
untrue statement, or any such omission or alleged omission, if such statement or
omission relates to the information set forth under the captions "THE AUTHORITY
AND GOVERNING BOARD", "THE GOVERNMENT DEVELOPMENT BANK FOR PUERTO RICO", "TAX
MATTERS" (except matters relating to the Borrower) and "LEGAL INVESTMENT", and
provided further that the indemnity agreement contained in this Section with
respect to the Preliminary Official Statement will not inure to the benefit of
the Underwriter (or to the benefit of any such person controlling the
Underwriter) from whom the Person asserting any Losses, purchased the
-12-
<PAGE>
Bonds which are the subject, thereof, unless with or prior to the written
confirmation of the sale a copy of the Final Official Statement was delivered to
such Person. The indemnity agreement of the Borrower contained in this Section
7 and the representations and warranties of the Borrower contained in Section 3
hereof shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Authority or Underwriter or any such
controlling Person, and shall survive the delivery of the Bonds. The Borrower
agrees promptly to notify the Authority and the Underwriter of the commencement
of any litigation or proceedings against the Borrower or any of its officers or
directors in connection with the issuance and sale of the Bonds. This indemnity
agreement shall be in addition to any liability which the Borrower may otherwise
have.
(b) The Underwriter agrees to indemnify and hold harmless the
Authority, and its officers and directors against any and all Losses, to which
they or any of them may become subject, insofar as such Losses arise out of the
are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained on the cover page of the Official Statement respecting
the offering prices for the Bonds and under the caption "Underwriters" and
"Supplemental Information" in the Summary and "UNDERWRITING", or Losses which
arise out of or are based upon the use of the Official Statement after the
Underwriter shall have amended or supplemented the Official Statement with
respect to the sections of the Official Statement set forth above, or the
omission or alleged omission to state therein a material fact necessary in order
to make the statements made therein, in the light of the circumstances under
which they were made, not misleading, or (ii) any untrue statement or alleged
untrue statement of a material fact contained in any application or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, if such
statement or omission was made in reliance upon information in respect of the
Underwriter furnished herein to the Authority by the Underwriter expressly for
use in the Official Statement or in any application. The indemnity of the
Underwriter contained in this paragraph shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of the
Authority, its officers and directors or any such controlling person, and shall
survive the delivery of the Bonds. The Authority agrees promptly to notify the
Underwriter of the commencement of any litigation or proceedings against it in
connection with the issuance and sale of the Bonds. This indemnity agreement
shall be in addition to any liablity which the Underwriter may otherwise have.
(c) The Authority, to the extent permitted by law, and the
Underwriter will indemnify and hold harmless the Borrower, and each Person who
controls the Borrower within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act, from and against any and all Losses to which
they or any of them may become subject, in so far as such Losses arise out or of
are based upon any untrue
-13-
<PAGE>
statement or alleged untrue statement of a material fact contained in the
Official Statement, from time to time amended or supplemented, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading, in light of the circumstances under which they were
made, but only in so far as any such statement or omission was made in reliance
upon and in conformity with such information, if any, as was furnished to the
Borrower by the Authority or the Underwriter specifically for use in the
Official Statement under the captions "THE AUTHORITY AND GOVERNING BOARD", "THE
GOVERNMENT DEVELOPMENT BANK FOR PUERTO RICO", "LEGAL INVESTMENT" and "TAX
MATTERS". This indemnity agreement will be in addition to any liability which
the Authority or the Underwriter may otherwise have.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of the
Losses, in such proportion as is appropriate to reflect the relative benefits
received by the indemnified party on the one hand and the indemnifying party on
the other in connection with the statements or omissions that resulted in such
Losses, as well as any other relevant equitable considerations. Relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the indemnifying
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The
parties hereto agree that it would not be just and equitable if contributions
pursuant hereto were to be determined by pro rata allocation or by any other
method of allocation which does not take into account the equitable
considerations referred to in the first sentence of this subsection. The
obligation to contribute in this subsection are several in proportion to each
party's respective obligations and not joint. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) Promptly after receipt by an indemnified party under this Section
7 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof may be made against the indemnifying party under this
Section 7, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 7. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to such
-14-
<PAGE>
indemnified party, unless such indemnified party reasonably objects to such
assumption on the ground that there may be legal defenses available to it which
are different from or in addition to those available to such indemnifying party.
If any indemnifying party assumes the defense of such action, the indemnifying
party shall not be liable for any fees and expenses of counsel for the
indemnified party incurred thereafter in connection with such action unless the
employment of such counsel has been authorized by the indemnifying party or
unless based in the opinion of counsel to the indemnified party there may be
legal defenses available to it which are different from or in addition to those
available to such indemnifying party. An indemnifying party shall not be liable
to indemnify any indemnified person for any settlement of such action effected
without the indemnifying party's consent.
8. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITER.
-------------------------------------------------
The Underwriter hereby represents and warrants as follows:
(a) it is duly (i) organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, and (ii) authorized to
perform the obligations to be performed by the Underwriter hereunder;
(b) it is not, and at the time of delivery of the Bonds will not be,
in breach of or in default under in any material respect any applicable law
(including without limitation, any administrative rule-making law) or
administrative regulation, and the execution and delivery by the Underwriter of
this Bond Purchase Agreement will not conflict with or constitute a breach of or
default under any law, administrative regulation, judgment, decree or any
agreement or other instrument to which the Underwriter is a party, which
conflict, breach or default might have a material adverse effect on the
performance by the Underwriter of its obligations hereunder;
(c) at the time of delivery of the Bonds, this Bond Purchase
Agreement will constitute the legal, valid and binding obligation of the
Underwriter, enforceable in accordance with its terms;
(d) it understands that the Bonds are not registered under the
Securities Act, and that during the period from the initial offering of the
Bonds until nine months after the last sale of the Bonds by it, it will only
sell or offer for sale or dispose of, any Bonds to individuals who have their
principal residence and to corporations or other entities that have their
principal office and principal place of business within the Commonwealth;
(e) during the period from the initial offering of the Bonds until
nine months after the last sale of the Bonds by it, it will obtain from each
Person to whom it
-15-
<PAGE>
has sold any Bonds, the representation letter required by Section 206 of the
Trust Agreement;
(f) it will offer, sell or dispose of, any Bonds only from its branch
office in the Commonwealth; and
(g) it will provide to everyone who buys a Bond a copy of the
Official Statement and the prospectus included as part of the registration
statement covering the registration of the issuance of the Guaranty under the
Securities Act.
9. FEES AND EXPENSES.
-----------------
All expenses in connection with the preparation, issuance, delivery,
recording and (if and where needed) filing of any of the Contracts, and any
notice with respect thereto, shall be paid out of the proceeds of the Bonds or
directly by the Borrower. For the purpose of the foregoing sentence, such
expenses shall include all expenses incurred by the Borrower or the Underwriter,
in connection with the preparation and printing of the Official Statement; the
cost of reproducing the Contracts; the cost of preparing and printing the Bonds;
the fees and expenses of the Trustee, counsel for the Trustee in connection with
the Trust Agreement and the issuance of the Bonds, Bond Counsel, Underwriter's
counsel and counsel for the Borrower; and all other costs and expenses incident
to the performance of the Borrower's or the Underwriter's obligations hereunder.
In the event any transaction hereby contemplated is not consummated, the
Borrower shall pay all of the above fees and expenses and the out-of-pocket
expenses of the Underwriter (including the fees and disbursements of its
counsel). The foregoing undertakings shall survive the delivery of the Bonds.
10. NOTICES.
-------
(a) Any notice, demand, direction, certificate, request, advise,
consent or other instrument or communication authorized or required by this Bond
Purchase Agreement to be given by or to be filed with or given to the parties
hereto shall be in writing and given by (i) first class mail, registered or
certified, return receipt requested, or (ii) private courier service, next day
delivery, or (iii) telefax or other similar form of rapid transmission,
confirmed as provided in clauses (i) or (ii) hereof, at substantially the same
time as such rapid transmission, or (iv) personally delivered to the receiving
party or, if not an individual, to an officer of the receiving party. All such
communications shall be mailed, sent or delivered addressed as follows:
If to the Authority:
-16-
<PAGE>
as provided in the Trust Agreement
If to the Borrower:
as provided in the Trust Agreement
If to the Underwriter:
PaineWebber Incorporated of Puerto Rico
American International Plaza
Penthouse Floor
250 Munoz Rivera Avenue
San Juan, Puerto Rico 00918
Attention: Executive Vice-President
---------
Telefax (809) 250-2055
Smith Barney, Inc.
270 Munoz Rivera Avenue
Fourth Floor
San Juan, Puerto Rico 00918
Attention: Managing Director
---------
Telefax (809) 764-0585
(b) A duplicate copy of each notice, demand, direction, certificate,
request, consent or other instrument or communication given hereunder to a party
hereto shall also be concurrently given to each of the others.
(c) The parties hereto may, by notice given hereunder, designate any
further or different addresses to which subsequent notices, demands, directions,
certificates, requests, consents or other instruments or communications shall be
sent.
(d) All written notices hereunder shall be deemed given on the day
when received, except when mailed, in which case they shall be deemed given on
the third day after deposit in the mails in the manner provided above.
11. BENEFICIARIES AND SURVIVAL.
--------------------------
This Bond Purchase Agreement is made solely for the benefit of the
Authority, the Borrower and the Underwriter and their respective personal
representatives,
-17-
<PAGE>
successors and assigns, and no other person shall acquire or have any right
hereunder or by virtue hereof. All of the representations, warranties and
agreements of the Authority, the Borrower and the Underwriter and their
respective personal representatives, successors and assigns, shall remain
operative and in full force and effect regardless of (a) any investigations made
by or on behalf of the Underwriter, (b) delivery of and payment for the Bonds
hereunder, and (c) any termination of this Bond Purchase Agreement.
12. COUNTERPART EXECUTION.
---------------------
This Bond Purchase Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which,
when so executed and delivered, shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
13. CONSTRUCTION.
------------
This Bond Purchase Agreement shall be governed by the laws of the
Commonwealth.
14. BOND PURCHASE AGREEMENT SUPERSEDES PRIOR AGREEMENTS.
---------------------------------------------------
This Bond Purchase Agreement supersedes any other prior agreements or
understandings, written or oral, between the parties hereto.
-18-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Bond
Purchase Agreement to be duly executed by its officers thereunto duly authorized
on the date set forth above.
PUERTO RICO INDUSTRIAL, TOURIST,
EDUCATIONAL,MEDICAL AND ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY
By: ________________________________
Francisco Sierra Mendez
Assistant Executive Director
PALMA REAL ASSOCIATES, S.E.
By: ________________________________
Mark Davis Bragin
Managing Partner
PAINEWEBBER INCORPORATED OF PUERTO RICO
individually and on behalf of Smith Barney Inc.
By: ________________________________
Eugenio Belaval
Executive Vice-President
-19-
<PAGE>
EXHIBIT 4(a)
GUARANTY
--------
THIS GUARANTY is made and entered into as of February __, 1995, by WAL-MART
STORES, INC., a corporation duly organized and existing under the laws of the
State of Delaware (the "Guarantor"), in favor of PUERTO RICO INDUSTRIAL,
TOURIST, EDUCATIONAL, MEDICAL AND ENVIRONMENTAL CONTROL FACILITIES FINANCING
AUTHORITY (the "Authority").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, PALMA REAL ASSOCIATES, S.E. (the "Borrower"), a partnership formed
under the laws of the Commonwealth that has elected to be treated as a special
partnership in accordance with the provisions of the Puerto Rico Income Tax Act
of Nineteen Hundred Fifty-four (1954), as amended, and Act Number Three (3) of
September twenty-seven (27), nineteen hundred eighty-five (1985), and the
Authority entered into the Loan Agreement dated as of February 1, 1995 as it may
be from time to time amended, supplemented, extended, renewed or otherwise
modified (hereinafter called the "Loan Agreement") pursuant to which the
Authority has undertaken to issue bonds in the aggregate principal amount of
$43,450,000 (the "Bonds") the proceeds of which will be loaned to the Borrower
to finance the cost of the acquisition, construction, development, equipping,
installation and improvement of a shopping center located in Humacao, Puerto
Rico (the "Project") and to pay expenses incurred in connection with the
issuance of the Bonds;
WHEREAS, the Bonds are issued under and secured by, among other things,
that certain Trust Agreement, dated the date of issuance of the Bonds (the
"Trust Agreement"), by and between the Authority and BANCO POPULAR DE PUERTO
RICO (the "Trustee"). Any term used herein which is not defined in this
Guaranty and which is defined in the Trust Agreement shall have the same meaning
in this Guaranty as in the Trust Agreement;
WHEREAS, the Loan Agreement provides that the Borrower will make all
payments of principal, premium, if any, and interest due on the Bonds;
WHEREAS, Wal-Mart Puerto Rico, Inc., a wholly owned subsidiary of the
Guarantor, is one of the partners of the Borrower;
WHEREAS, the Authority, in order to secure the monetary obligations of the
Borrower under the Loan Agreement, has required that the Borrower cause the
Guarantor to execute and deliver this Guaranty;
WHEREAS, the Guarantor desires that the Authority issue and sell the Bonds
and apply the proceeds for the purposes described in the Loan Agreement and, in
order to provide an inducement to the Authority to issue and sell the Bonds and
an inducement to the purchasers of the Bonds and all who shall at any time
become
<PAGE>
holders thereof, the Guarantor is willing to execute and deliver this Guaranty;
WHEREAS, the Authority desires to assign this Guaranty to the Trustee for
the benefit of the bondholders and the Guarantor agrees to such assignment;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, hereby covenant
and agree with each other as follows:
ARTICLE I
---------
REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR
-----------------------------------------------
The Guarantor does hereby represent and warrant that it is a corporation
organized, existing and in good standing under the laws of the State of Delaware
with all requisite power and authority to enter into and perform all agreements
on its part herein contained and it has been authorized to enter into this
Guaranty by all proper corporate action.
ARTICLE II
----------
COVENANTS AND AGREEMENTS
------------------------
SECTION 2.1. The Guarantor hereby unconditionally guarantees to the
Authority, jointly and severally ("in solidum") with the Borrower, the full and
prompt payment of the then current Exposure Amount (up to a maximum equal to the
then current Enhancement Amount), all as applicable from time to time, and in
the Event of a Default under the Trust Agreement or the Loan Agreement, as the
case may be, entitling the Authority to make a claim under this Guaranty, the
Guarantor hereby agrees to make payment of the then current Enhancement Amount
to the Authority within ten (10) days following written demand to the Guarantor
by the Trustee, for the benefit of the then holders of the Bonds, which written
demand shall be on the form attached hereto as Exhibit "A" and made to form a
part hereof.
All payments by the Guarantor hereunder shall be made in lawful money of
the United States of America.
SECTION 2.2. (a) The obligations of the Guarantor under this Guaranty
shall be independent, absolute and unconditional without regard to the validity,
legality, or enforceability of the Bonds or of the obligations of the Borrower
under the Loan Agreement or of any other instrument delivered in connection with
the Bonds or the Loan Agreement or any other circumstance which might otherwise
constitute a legal or equitable discharge of a
2
<PAGE>
surety or guarantor and shall remain in full force and effect, subject to the
provisions of Articles III, IV, V and VII hereof, until the entire then current
Exposure Amount (up to a maximum equal to the then current Enhancement Amount),
shall have been paid or provided for and such obligations, subject to the
provisions of Articles III, IV, V, and VII hereof, shall not be affected,
modified or impaired by the happening from time to time of any event whatsoever,
including any law, regulation or decree which might in anyway affect any of the
terms and or provisions or rights of any holder of the Bonds with respect
thereto as against the Authority.
(b) The Guarantor hereby consents that from time to time and with notice
to, but without the consent or approval of, the Guarantor, the obligations,
indebtedness or liabilities of the Borrower under the Loan Agreement may be
waived, renewed, extended or accelerated in accordance with any agreement
between the Trustee, the bondholders and the Borrower without affecting the
liabilities of the Guarantor under this Guaranty; provided, however, that the
written consent of the Guarantor shall be required prior to any modification
which requires the Guarantor's consent pursuant to Section 1105 of the Trust
Agreement or that would increase the then current Exposure Amount and the then
current Enhancement Amount or any of the Guarantor's obligations under this
Guaranty.
(c) This Guaranty shall extend to any payment, or any part thereof, on the
Bonds that is rescinded and required to be returned by a bondholder upon the
insolvency, bankruptcy or reorganization of the Authority or the Borrower, or
otherwise, all as though such payment had not been made. However, in no event
will the liability of the Guarantor exceed the then current Enhancement Amount
in effect at the time a claim is presented by the Trustee with respect to such
payment.
SECTION 2.3. Subject in all cases to the provisions of Articles III, IV,
V and VII hereof, no set-off, counterclaim, reduction or diminution of any
obligation, or any defense of any kind or nature which the Guarantor has or may
come to have against the Authority, the Borrower, the Trustee or any of the
bondholders shall be available to the Guarantor, except as related to a payment
hereunder; provided that nothing contained herein shall prohibit the Guarantor
from asserting any claim against the Authority, the Borrower, the Trustee or any
of the bondholders in a separate proceeding, which proceeding shall in no way
delay the prompt performance by the Guarantor of its obligations under this
Guaranty.
SECTION 2.4. The following shall constitute events of default hereunder:
3
<PAGE>
(a) Failure by the Guarantor to make a payment when and as due hereunder;
(b) If the Guarantor shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or shall
consent to the entry of an order for relief in an involuntary case under any
such law, or shall consent to the appointment of or taking possession by a
receiver, custodian, liquidator, assignee, trustee or sequestrator (or other
similar official) of itself or of all of its property, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay its
debts as they become due, or if the Guarantor or its directors or majority
shareholders shall take any action in furtherance of any of the forgoing (except
in connection with a consolidation or a merger of the Guarantor with or into
another corporation or transfer of all or substantially all the assets of the
Corporation not prohibited by Section 10.1 hereof); or
(c) If a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Guarantor in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or appointing a receiver, custodian, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Guarantor or of its affairs, and
the continuance of such decree or order unstayed and in effect for a period of
one-hundred eighty (180) consecutive days.
SECTION 2.5. In the event of a default: (a) in the payment of principal
of the Bonds when and as the same shall become due, whether at the stated
maturity thereof, by acceleration, by redemption prior to maturity or otherwise;
(b) in the payment of any interest on the Bonds when and as the same shall
become due; or (c) in the payment of the redemption price upon the redemption of
any portion of the Bonds; or (d) under Section 2.4 hereof, and regardless of the
reason for any such default, the Authority, on behalf of the bondholders and all
who may become holders at any time and from time to time of the Bonds, may
proceed first and directly against the Guarantor under this Guaranty without
proceeding against or exhausting any other remedies which it may have and
without resorting to any other security held by the Authority. The Guarantor
agrees to pay all reasonable costs, expenses and fees, including all reasonable
attorneys' fees, which may be incurred by the Authority in enforcing this
Guaranty following any default on the part of the Guarantor under this Guaranty,
whether the same shall be enforced by suit or otherwise.
SECTION 2.6. Subject in all cases to the provisions of Articles III, IV,
V and VII hereof, the obligations of the Guarantor under this Guaranty shall be
satisfied in full and discharged when all monetary obligations of the Borrower
under the Loan Agreement, including, without limiting in any way the
4
<PAGE>
generality of the foregoing, the Borrower's obligation to pay the Bonds, have
been satisfied, except as provided herein with respect to expenses incurred in
connection with the enforcement of this Guaranty.
ARTICLE III
-----------
LIMITATION ON LIABILITY OF THE GUARANTOR
----------------------------------------
Notwithstanding anything contained herein to the contrary, in no event
shall the Guarantor's liability under this guaranty at any time exceed the then
current Enhancement Amount, as the same may be reduced from time to time
pursuant to Article IV hereof. On the Date of Issuance, the Enhancement Amount
shall equal $43,473,608.75.
ARTICLE IV
----------
RELEASE OR PARTIAL RELEASE OF GUARANTY
--------------------------------------
SECTION 4.1. Following the assignment of this Guaranty to the Trustee by
the Authority, the Trustee shall hold the Guaranty as security for the payment,
at any time and from time to time, of the then current Exposure Amount (up to a
maximum equal to the then current Enhancement Amount), subject to reduction or
elimination of this Guaranty, at any time, upon receipt by the Trustee of (i)
Enhancement Amount Reduction Determinations and (ii) Enhancement Amount
Reduction Certifications. Upon delivery of the foregoing letters to the
Trustee, the Enhancement Amount shall automatically and permanently be reduced
to the new Enhancement Amount thereafter applicable.
The Borrower may cause there to be delivered to the Trustee, from time to
time, until the Enhancement Amount is reduced to zero, additional Enhancement
Amount Reduction Determinations and Enhance-ment Amount Reduction
Certifications.
SECTION 4.2. On each Principal Payment Date, if no event of default shall
then be declared and be continuing under this Guaranty or under any of the
Related Documents, the Enhancement Amount (unless a lower amount shall have been
determined as provided in Section 4.1) shall be recomputed to an amount equal to
the principal of the Bonds then outstanding, plus two hundred ten (210) days'
interest thereon at eight and one-tenth percent (8.1%) per annum, less the
Reserve Fund Amount. The Trustee shall notify the Guarantor of the then current
Enhancement Amount as so computed on each such Principal Payment Date.
SECTION 4.3. If the then current Enhancement Amount shall be reduced, the
Guaranty shall be amended (without the need of a formal written amendment to
this Guaranty) to reduce the liability of the Guarantor to the new Enhancement
Amount. If the then
5
<PAGE>
current Enhancement Amount shall be zero or less than zero, the Trustee shall
cancel and deliver this Guaranty to the Guarantor.
SECTION 4.4. In no event will the Enhancement Amount be increased or
reinstated once reduced or eliminated.
ARTICLE V
---------
SUBSTITUTION OF GUARANTY
------------------------
Subject to the requirements of Section 4.09 of the Loan Agreement, the
Borrower may provide for the delivery to the Trustee of a new Credit Enhancement
or Cash Collateral to substitute for this Guaranty. In the event such a
substitution takes place, the Trustee shall cancel and deliver this Guaranty to
the Guarantor.
ARTICLE VI
----------
RIGHTS OF THE GUARANTOR
-----------------------
In the event that the Trustee shall make a claim against the Guaranty, the
Guarantor, upon the total and complete payment of the Bonds, shall be entitled
to receive from the Trustee (i) any funds or securities held by the Trustee in
any fund or account existing under the Trust Agreement, and (ii) an assignment
of all of the Trustee's interest, if any, in the Related Documents until the
Guarantor shall have been reimbursed in full for all then unreimbursed sums paid
out by the Guarantor under this Guaranty.
ARTICLE VII
-----------
SURRENDER OF GUARANTY UPON PAYMENT OF THE BONDS
-----------------------------------------------
Upon payment of the Bonds, and in the event that this Guaranty shall then
be outstanding, the Trustee shall cancel and deliver this Guaranty to the
Guarantor.
ARTICLE VIII
------------
ASSIGNMENT OF GUARANTY
----------------------
The Authority does hereby assign and convey to the Trustee, for the benefit
of the bondholders and all who may become holders at any time and from time to
time of the Bonds, the Authority's right, title and interest in and to this
Guaranty and the Guarantor does hereby consent to such assignment.
6
<PAGE>
ARTICLE IX
----------
NOTICE AND SERVICE OF PROCESS,
------------------------------
PLEADINGS AND OTHER PAPERS
--------------------------
The Guarantor hereby irrevocably appoints, its wholly owned subsidiary,
WAL-MART PUERTO RICO, INC., a Puerto Rico corporation ("WMPR"), as its agent for
service of process in the Commonwealth. If WMPR shall cease to do business in
the Commonwealth, the Guarantor will irrevocably appoint one of its other
subsidiaries designated in writing to the Authority which shall be qualified to
do, and actively engaged in, business in the Commonwealth or the office of C.T.
Corporation System in the Commonwealth, as its agent for service of process in
the Commonwealth. If all such subsidiaries shall cease to be qualified or to do
business in the Commonwealth and the office of C. T. Corporation System in the
Commonwealth shall cease to act as such agent, the Guarantor hereby irrevocably
appoints the Secretary of State of the Commonwealth, as its agent for service of
process in the Commonwealth. The aforesaid agents shall serve as agents of the
Guarantor upon whom may be served all process, pleadings, notices or other
papers which may be served upon the Guarantor as a result of any of its
obligations under this Guaranty.
ARTICLE X
---------
MISCELLANEOUS
-------------
SECTION 10.1. The Guarantor covenants that while this Guaranty remains
outstanding, it will maintain its corporate existence, will not dissolve or
otherwise dispose of all or substantially all of its assets; except, however,
that the Guarantor may consolidate with or merge into another corporation, or
sell or otherwise transfer to another corporation all or substantially all of
its assets and thereafter dissolve, provided that the following conditions are
met:
(a) the successor formed by or resulting from such consolidation, transfer
or merger shall be a corporation organized under the laws of one of the States
of the United States of America or of the District of Columbia;
(b) the successor corporation, if other than the Guarantor, shall assume
in writing the full and faithful performance of the Guarantor's duties and
obligations under this Guaranty; and
(c) immediately after such consolidation, transfer or merger, neither the
Guarantor nor such successor corporation, if other than the Guarantor, shall be
in default in the performance or observance of any duties, obligations or
covenants under this Guaranty.
7
<PAGE>
SECTION 10.2. No remedy herein conferred upon or reserved to the Authority
is intended to be exclusive of any other available remedy, all such remedies
being cumulative and in addition to every other remedy given under this Guaranty
or now or hereafter existing at law or in equity. No delay or omission to
exercise any right or power accruing upon any default, omission or failure of
performance under the Guaranty shall impair any such 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 the event any
provision contained in this Guaranty should be breached by the Guarantor and
thereafter duly waived by the Authority, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
under this Guaranty. No waiver, amendment, release or modification of this
Guaranty shall be established by conduct, custom or course of dealing.
SECTION 10.3. The invalidity or unenforceability of any one or more
provisions in this Guaranty shall not affect the validity or enforceability of
the remaining portions of this Guaranty, or any part thereof.
SECTION 10.4. This Guaranty may be amended, to the extent and upon the
same conditions as are provided herein and in the Trust Agreement with regard to
the amendment of the Guaranty, by the parties hereto in writing.
SECTION 10.5. This Guaranty shall be governed by and construed in
accordance with the laws of the Commonwealth. The Guarantor hereby submits to
the jurisdiction of the local and federal courts in the Commonwealth for
purposes of any action arising from or growing out of this Guaranty.
8
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed
and delivered to the Authority in its name and behalf by its duly authorized
officer as of the date first above written.
WAL-MART STORES, INC.
By:________________________
Name:
Title:
ACCEPTED the ______ day of February, 1995.
PUERTO RICO INDUSTRIAL, TOURIST,
EDUCATIONAL, MEDICAL AND ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY
By:_____________________________
Gregory Kaufman
Executive Director
9
<PAGE>
EXHIBIT "A"
-----------
GUARANTY DRAW REQUEST
---------------------
DRAW AMOUNT: $__________________
ENHANCEMENT AMOUNT
ON THE DATE HEREOF: $__________________
BORROWER: PALMA REAL ASSOCIATES, S.E.
TRUSTEE: BANCO POPULAR DE PUERTO RICO
GUARANTOR: WAL-MART STORES, INC.
LENDER: PUERTO RICO INDUSTRIAL, TOURIST, EDUCATIONAL, MEDICAL AND
ENVIRONMENTAL CONTROL FACILITIES FINANCING AUTHORITY
PROJECT: PLAZA PALMA REAL, Humacao, Puerto Rico
1. I, _________________________, the ______________________ of the
Trustee, am duly authorized to make this Guaranty Draw Request on behalf of the
Trustee.
2. I am familiar with the terms and conditions of the Guaranty issued by
the Guarantor in favor of the Authority dated as of February __, 1995 and with
the terms of the Trust Agreement and Related Documents executed in connection
with the bonds issued by the Authority to finance the Project.
3. The Borrower is in default under the terms of the Loan Agreement
and/or the Related Documents, as follows:
________________________________________________________________________________
________________________________________________________________________________
4. The Guaranty, and the obligations of the Guarantor thereunder, are on
the date hereof outstanding and remain in full force and effect.
5. The amount drawn pursuant to this draw does not exceed the Enhancement
Amount applicable on the date hereof.
6. As a result of such default, Trustee, as assignee of the Authority
under the Guaranty, hereby makes a draw under the Guaranty for the Draw Amount
first above stated.
BANCO POPULAR DE PUERTO RICO
By: ________________________
Name:
Title:
10
<PAGE>
EXHIBIT 4(b)
TRUST AGREEMENT
In the City of San Juan, Commonwealth of Puerto Rico, this _______________
(____) day of February, Nineteen Hundred and Ninety-Five (1995).
BEFORE ME
JAVIER FERRER CANALS
Attorney-at-law and Notary Public in and for the Commonwealth of Puerto Rico,
with residence in San Juan, Puerto Rico and offices at One Six Seven (167) Ponce
de Leon Avenue, Hato Rey, Puerto Rico.
OF THE FIRST PART: PUERTO RICO INDUSTRIAL, TOURIST, EDUCATIONAL, MEDICAL AND
ENVIRONMENTAL CONTROL FACILITIES FINANCING AUTHORITY (hereinafter referred to as
the "Authority"), a public corporation and a governmental instrumentality of the
Commonwealth of Puerto Rico, Internal Revenue Service Employer Identification
Number 66-0426994, herein represented by its Executive Director, GREGORY
KAUFMAN, Social Security Number ###-##-####, who is of legal age, single, an
attorney and a resident of San Juan, Puerto Rico, whose authority to execute
this Deed, he agrees to show whenever and wherever properly required to do so.
OF THE SECOND PART: BANCO POPULAR DE PUERTO RICO, a bank organized and
existing under the laws of the Commonwealth of Puerto Rico, having its principal
corporate trust office in Hato Rey, Puerto Rico, which is authorized under laws
of the Commonwealth of Puerto Rico to exercise corporate trust powers (said bank
and any other bank or trust company becoming successor trustee under this
Agreement being hereinafter sometimes called the "Trustee"), Internal Revenue
Service Employer Identification Number 66-0175278, and represented
1
<PAGE>
herein by its Senior Vice President, Luis R. Cintron, Social Security Number
###-##-####, of legal age, married, a banker and a resident of Guaynabo, Puerto
Rico, who has been duly authorized to appear herein on behalf of the Trustee and
whose authority to execute this Deed, he agrees to show whenever and wherever
properly required to do so.
I, the Notary, do hereby certify that I am personally acquainted with the
appearing parties, and by their statements, I further certify as to their age,
civil status, occupation and residence. They assure me of having and in my
judgment they do have, the necessary legal capacity to execute this instrument,
and wherefore, in consequence thereof, they freely:
STATE
FIRST: That by Act Number One Hundred Twenty-One (121) of the Legislature of
Puerto Rico, approved June twenty-seven (27), of Nineteen Hundred Seventy-Seven
(1977), as amended (the "Act"), the Authority was created a body corporate and
politic constituting a public corporation and governmental instrumentality of
the Commonwealth of Puerto Rico (the "Commonwealth").
SECOND: That the Authority is authorized under the Act to borrow money and
issue bonds therefor for the purpose of providing funds to pay all or any part
of the cost of constructing improvements, additions, extensions or enlargements
of any industrial, tourist, educational, medical or environmental control
facilities, the principal of and the premium, if any, and the interest on which
bonds shall be payable solely from the funds provided by the obligor under the
financing agreement in respect of such facility.
2
<PAGE>
THIRD: PALMA REAL ASSOCIATES, S.E. (the "Borrower"), a partnership
organized and existing under the laws of the Commonwealth, has made a loan
application to the Authority to, among other things, to provide funds for (i)
the acquisition, construction, development, equipping, installation and
improvement of a certain shopping center, to be located in Humacao, Puerto Rico,
to be known as Plaza Palma Real (the "Shopping Center"), (ii) the deposit of the
Reserve Fund Amount in the Reserve Fund (both as hereinafter defined), and (iii)
the payment of other costs, expenses and fees incurred in connection with the
issuance of the Bonds.
FOURTH: The Authority has entered into a Loan Agreement, dated as of the Date
of Issuance (as hereinafter defined), with the Borrower (the "Loan Agreement"),
providing for the financing of the Project; the issuance of bonds of the
Authority to pay all or part of the Cost (as hereinafter defined) of the
Project, and the obligation of the Borrower to pay, or cause to be paid, to the
Authority amounts sufficient to pay the principal of and the redemption premium,
if any, and the interest on such Bonds.
FIFTH: The Authority is entering into this Agreement for the purpose of
issuing FORTY THREE MILLION FOUR HUNDRED AND FIFTY THOUSAND DOLLARS
($43,450,000) aggregate principal amount of its Industrial Revenue Bonds,
Nineteen Hundred Ninety-Five (1995) Series A (Plaza Palma Real Project) (the
"Bonds"), dated the Date of Issuance, and securing the payment thereof by
assigning certain of its interests in the Loan Agreement, including its rights
to a portion of the payments thereunder; and
SIXTH: In order to secure the Borrower's
3
<PAGE>
obligations under the Loan Agreement, the Guarantor (as hereinafter defined) has
entered into a certain Guaranty Agreement (as hereinafter defined) dated the
Date of Issuance by and between the Guarantor and the Authority pursuant to
which the Guarantor will guaranty the payment of the principal of and interest
on the Bonds in accordance with their terms up to the Enhancement Amount (as
hereinafter defined).
SEVENTH: In order to secure its obligations under the Loan Agreement, the
Borrower under the terms of a Pledge Agreement dated the Date of Issuance, by
and between the Borrower and the Authority (the "Pledge Agreement"), will pledge
the Mortgage Note (as hereinafter defined) which is secured by the Mortgage (as
hereinafter defined) on certain real properties of the Borrower where the
Shopping Center is to be located. To secure the payment of the Bonds, the
Authority proposes to assign its rights under the Pledge Agreement to the
Trustee for the benefit of the Bondholders.
EIGHTH: That in order to further secure its obligations under the Loan
Agreement, the Borrower, under the terms of a Collateral Assignment of Lessor's
Interest in Leases dated the Date of Issuance (the "Collateral Assignment") by
and between the Borrower and the Authority, will assign its rights in certain
Leases in connection with its ownership of the Shopping Center to the Authority.
To further secure the payment of the Bonds, the Authority proposes to assign its
rights under the Collateral Assignment to the Trustee for the benefit of the
Bondholders.
NINTH: The Authority has determined that the Bonds to be issued hereunder and
the certificate of
4
<PAGE>
authentication to be endorsed thereon by the Trustee shall be, respectively,
substantially in the form attached hereto as Exhibit A, with such variations,
omissions and insertions as are required or permitted by this Agreement.
TENTH: The execution and delivery of this Agreement, the Loan Agreement, the
Guaranty Agreement, the Pledge Agreement, the Collateral Assignment, and the
Mortgage, have been duly authorized by a resolution of the Authority; and
ELEVENTH: All acts, conditions and things required by the Puerto Rico Federal
Relations Act, by the Constitution and laws of the Commonwealth and the rules
and regulations of the Authority to happen, exist and be performed precedent to
and in the execution and delivery of this Agreement and the Loan Agreement have
happened, exist and have been performed as so required in order to make this
Agreement a legal, valid and binding trust agreement for the security of the
Bonds in accordance with its terms and in order to make the Loan Agreement a
legal, valid and binding loan agreement in accordance with its terms; and
TWELFTH: The Trustee has accepted the trusts created by this Agreement and in
evidence thereof has joined in the execution hereof; now, therefore,
WITNESSETH
That in consideration of the premises, of the acceptance by the Trustee of
the trusts hereby created, and of the purchase and acceptance of the Bonds by
the holders thereof, and for the purpose of fixing and declaring the terms and
conditions upon which the Bonds are to be issued, executed, authenticated,
delivered, secured and accepted by all persons who shall from time to time be or
become
5
<PAGE>
holders thereof, and in order to secure the payments of the principal of all the
Bonds at any time issued and Outstanding and the premium, if any, and the
interest thereon according to their tenor, purport and effect, and in order to
secure the performance and observance of all the covenants, agreements and
conditions therein and herein contained, the Authority has executed and does
hereby assign to the Trustee the Authority's rights, title and interest in and
to the Loan Agreement, the Pledge Agreement, the Mortgage Note, the Mortgage,
and the Collateral Assignment (except for its rights under Sections 4.05, 4.06,
5.08 and 7.04 of the Loan Agreement to payment of certain costs and expenses and
to indemnification, and to individual and corporate rights to exemption from
liability under Sections 5.06, 10.14 and 10.15 of the Loan Agreement), as
security for the payment of the Bonds and the premium, if any, and the interest
thereon, and as security for the satisfaction of any other obligation assumed by
the Authority in connection with such Bonds, and it is so mutually agreed and
covenanted by and between the parties hereto, for the equal and proportionate
benefit and security of all and singular the present and future holders of the
Bonds issued under this Agreement without preference, priority or distinction as
to lien or otherwise, except as otherwise hereinafter provided, of any one Bond
over any other Bond, by reason of priority in the issue, sale or negotiation
thereof or otherwise;
TO HAVE AND TO HOLD the trust estate forever subject, however, to the rights
of the Borrower under the Loan Agreement, the Mortgage, the Mortgage Note, the
Collateral Assignment and the Pledge
6
<PAGE>
Agreement to the exceptions, reservations and matters therein and herein recited
but in TRUST, nevertheless, for the equal and proportionate benefit and security
of the owners from time to time of the Bonds authenticated and delivered
hereunder and issued by the Authority and Outstanding, without preference,
priority or distinction as to lien or otherwise, except as otherwise hereinafter
provided, of any one Bond over any other Bond, by reason of priority in the
issue, sale or negotiation thereof or otherwise.
PROVIDED, HOWEVER, that if, after the rights, title and interest of the
Trustee in and to the estate pledged and assigned to it under this Agreement
shall have ceased, terminated and become void in accordance with Article XIII
hereof, the principal of and interest on all of the Bonds shall have been paid
to the Bondholders, or shall have been paid to the Borrower pursuant to Section
505 hereof, then this Agreement and all covenants, agreements and other
obligations of the Authority, hereunder shall cease, terminate and become void,
and thereupon the Trustee shall cancel and discharge this Agreement and execute
and deliver to the Authority and the Borrower such instruments in writing as
shall be required to evidence the discharge hereof; otherwise this Agreement is
to be and remain in full force and effect.
THIS DEED OF TRUST FURTHER WITNESSETH
And it is expressly declared, that all Bonds issued and secured hereunder are
to be issued, authenticated and delivered and the payments under the Loan
Agreement and other revenues and funds hereby pledged are to be dealt with and
disposed of under, upon and subject to the terms, conditions,
7
<PAGE>
stipulations, covenants, agreements, trusts, uses and purposes as hereinafter
expressed, and the Authority has agreed and covenanted, and does hereby agree
and covenant, with the Trustee and with the owners, from time to time, of the
Bonds, or any portion thereof, as follows, that is to say:
AGREEMENT
ARTICLE I
Definitions
Section 101. Definitions. In addition to words and terms elsewhere defined
-----------
in this Agreement, the following words and terms shall have the following
meanings, unless the context requires otherwise:
"Act" shall mean Act No. 121 of the Legislature of the Commonwealth, approved
June 27, 1977, as amended, and all future acts supplemental thereto or
amendatory thereof.
"Act of Bankruptcy" when used with respect to any Person shall mean the
filing of a petition of bankruptcy by or against such Person or any other
commencement of a bankruptcy or similar proceeding under any applicable
bankruptcy, insolvency, reorganization or similar law as now or hereafter in
effect.
"Administrative Fee" shall mean the single fee payable to the Authority in
the amount of one percent (1%) of the principal amount of the Bonds.
"Affiliate" shall mean, with respect to the Borrower, any Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with, the Borrower and includes its subsidiaries. For the purposes of this
definition, a Person shall be deemed to control another Person if such Person
possesses, directly or indirectly, the power to direct or cause the
8
<PAGE>
direction of management and policies of such other Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" means this Trust Agreement, dated the Date of Issuance, together
with all agreements supplemental hereto as herein permitted.
"Appraisal" shall mean, at any time, and from time to time, the appraisal (or
update of a prior appraisal) of the Shopping Center carried out by the
Appraiser, made within one (1) year of the date on which it is to be used
pursuant to the provisions hereof, reflecting such Appraiser's valuation of the
market value of the Shopping Center in accordance with the general practice for
the appraisal of properties of the same nature, including customary
qualifications, and taking into consideration any outstanding or contemplated
financing.
"Appraised Value" shall mean, at any time, and from time to time, the then
current appraised value of the Shopping Center as reflected in the most recent
Appraisal.
"Appraiser" shall mean, as applicable, Robert F. McCloskey & Associates,
Vallejo & Vallejo, or any other appraiser acceptable to the Authority and the
Rating Agency (in the case of the Rating Agency only until the then current
Enhancement Amount is less than or equal to twenty five percent (25%) of the
then current Exposure Amount), who shall be a member of the Appraisal Institute
(MAI), duly licensed in the Commonwealth.
"Authority" shall mean Puerto Rico Industrial, Tourist, Educational, Medical
and Environmental Control Facilities Financing Authority, a body corporate and
politic constituting a public corporation and governmental instrumentality of
the
9
<PAGE>
Commonwealth and any successor thereto.
"Authority Representative" shall mean each of the persons at the time
designated to act on behalf of the Authority in a written certificate furnished
to the Borrower and the Trustee containing the specimen signature of each such
person and signed on behalf of the Authority by an authorized officer thereof.
"Borrower Representative" shall mean each of the persons at the
time designated to act on behalf of the Borrower by written certificate
furnished to the Authority and the Trustee containing the specimen signature of
such persons and signed on behalf of the Borrower by an authorized
representative of the Borrower.
"Board" shall mean the board of directors of the Authority as constituted
from time to time and defined by the Act, or if said Board shall be abolished,
then the board, body or officer succeeding to the principal functions thereof or
to whom the powers of the Authority shall be given by law.
"Bond Fund" shall mean the fund created by Section 501 of this Agreement.
"Bondholder" or "holder" shall mean the registered owner of any Bond issued
under the provisions of Section 208 of this Agreement.
"Bonds" shall mean the bonds authorized to be issued under Section 208 of
this Agreement.
"Borrower" shall mean Palma Real Associates, S.E., a partnership organized
under the laws of the Commonwealth, and its successors and permitted assigns and
any surviving, resulting or transferee corporation or other Person.
"Business Day" shall mean any day of the year other than a Saturday, Sunday,
or other day on which
10
<PAGE>
banks in San Juan, Puerto Rico are authorized or required by law or executive
order to close.
"Collateral" shall mean the funds which shall be on deposit at any time
or from time to time in the Collateral Fund, in an amount at least equal to the
then current Enhancement Amount.
"Casualty and Condemnation Award Fund" shall mean the fund created by Section
512 of this Agreement.
"Code" shall mean the United States Internal Revenue Code of 1986, and the
rules and regulations thereunder, as the same may be amended or supplemented
from time to time.
"Collateral Assignment" shall mean the Collateral Assignment of Lessor's
Interest in Leases dated the Date of Issuance between the Borrower and the
Authority providing for the assignment as collateral of all Leases.
"Collateral Documents" shall mean all or any portion of the following, as
the context indicates: (i) the Mortgage; (ii) the Mortgage Note; (iii) the
Collateral Assignment; and (iv) the Pledge Agreement.
"Collateral Fund" shall mean the fund created by Section 515 of this
Agreement.
"Commonwealth" shall mean the Commonwealth of Puerto Rico.
"Completion Date" shall have the meaning ascribed such term in Section 3.06
of the Loan Agreement.
"Cost" as applied to the Project, without intending thereby to limit or
restrict any proper definition of such word under the Act, shall have the
meaning set forth in Section 403 of this Agreement.
"Credit Enhancement" shall mean the Guaranty Agreement or the Letter of
Credit, as applicable, so
11
<PAGE>
long as credit enhancement shall be required pursuant to the provisions of
Section 4.01(e) and Section 4.01(f) of the Loan Agreement.
"Date of Issuance" shall mean February __, nineteen hundred ninety five
(1995).
"Debt Service Factor" shall equal 9.34
"Defaulted Interest" shall mean the meaning specified in Section 203 hereof.
"Depositor" shall mean the Borrower, the Guarantor, the Letter of Credit Bank
or any other Person who deposits the Cash Collateral in the Collateral Fund.
"Depository" shall mean any Bank authorized to receive funds of the
Commonwealth.
"Determination Date" shall mean the sixtieth (60th) day immediately preceding
each Principal Payment Date, commencing with the Principal Payment Date
occurring on January first (1st), nineteen hundred ninety six (1996).
"Enhancement Amount" shall mean the amount which shall be available from time
to time for the Payment of the Bonds under the Credit Enhancement or in Cash
Collateral, which amount shall on the Date of Issuance equal $43,473,608.75,
representing the principal of and two hundred ten (210) days interest on the
Bonds at 8.1%, less the Reserve Fund Amount, which amount shall be reduced on
each Principal Payment Date to the principal amount of the Bonds then
outstanding and two hundred ten (210) days simple interest thereon at 8.1%, less
the Reserve Fund Amount, as such amount may be further reduced from time to
time, initially upon Enhancement Amount Reduction Determination(s) and
thereafter upon permitted Enhancement Amount Reduction Certifications or other
Enhancement Amount Reduction
12
<PAGE>
Determinations.
"Enhancement Amount Reduction Certification" shall mean, for such period as
the then current Enhancement Amount shall be less than or equal to twenty five
percent (25%) of the then current Exposure Amount, the reduction(s) in the
Enhancement Amount, if any, resulting from a certification by the Independent
Accountant, given in writing to the Trustee, providing: (i) the then current
Lower Net Operating Income; (ii) the then current Unenhanced Amount; (iii) the
difference between the then current Exposure Amount and the then current
Unenhanced Amount; and (iv) to the extent the amount in (iii) shall be positive,
a certification that such amount plus two hundred ten (210) days' interest
thereon at ___% is the new Enhancement Amount. The foregoing certification may
contain customary qualifications for opinion letters by accountants.
"Enhancement Amount Reduction Determination" shall mean the determination
made at any time by the Rating Agency given in writing to the Trustee providing:
(i) that the Enhancement Amount may be reduced or eliminated; (ii) for the new
Enhancement Amount, if any; (iii) that the Bonds will continue to be rated not
lower than "A" after the reduction in the Enhancement Amount contemplated under
(i) above; and (iv) to the extent that the Enhancement Amount shall be reduced
to an amount less than or equal to twenty-five percent (25%) of the then current
Exposure Amount, for the establishment of the Maximum Loan to Value Ratio and
the Minimum Debt Service Coverage Ratio.
"Event of Default" shall mean those events set forth in Section 7.01 of the
Loan Agreement.
13
<PAGE>
"Event of Taxability" shall have the meaning ascribed to such term in Section
5.10 of the Loan Agreement.
"Executive Director" shall mean the Executive Director, the Assistant
Executive Director or the Acting Executive Director of the Authority, or if
there is no Executive Director, Assistant Executive Director or Acting Executive
Director, then any person designated by the Board or authorized by the by-laws
of the Authority to perform the functions of the Executive Director.
"Exposure Amount" shall mean, at any time, the difference, if any, between
the principal amount of and accrued but unpaid interest on the Bonds at such
time Outstanding and the aggregate amount of funds deposited under the Trust
Agreement which are available for the payment of principal and interest on the
Bonds (including capitalized interest in the Project Fund, and any amounts
therein after the Completion Date, Mandatory Project Termination Date or after
notice by the Borrower that the Project will not be completed) without taking
into account moneys, if any, in the Collateral Fund.
"Government Obligations" shall mean: (i) direct obligations of, or
obligations the principal of and the interest on which are unconditionally
guaranteed by, the United States of America; and (ii) any certificates or other
evidences of an ownership interest in obligations or in specified portions
thereof (which may consist of specified portions of the principal thereof or the
interest thereon) of the character described in clause (i); provided that such
certificates or other evidences of an ownership interest referred to in clause
(ii) are rated within the highest rating category issued by a nationally
14
<PAGE>
recognized statistical rating agency.
"Guarantor" shall mean the Initial Guarantor and any Successor Guarantor, and
any successor or assign thereof.
"Guaranty Agreement" shall mean the Initial Guaranty Agreement and any
Successor Guaranty Agreement, as the case may be.
"Highest Lawful Rate" shall mean the maximum rate of interest permitted from
day to day by applicable law.
"Independent Accountant" shall mean Kevane, Peterson, Soto and Pasarell or
any firm of certified public accountants of recognized standing in the
Commonwealth, which may also be the firm which audits the books of the Borrower,
which is independent with respect to the Borrower within the meaning of the Code
of Professional Ethics of the American Institute of Certified Public
Accountants.
"Industrial Facilities" shall have the meaning given to such term by Section
3 of the Act.
"Initial Guarantor" shall mean Wal-Mart Stores, Inc., a corporation organized
under the laws of the State of Delaware, and any successors or assigns.
"Initial Guaranty Agreement" shall mean that certain Guaranty, dated the Date
of Issuance, between the Authority and the Guarantor providing for the
Guarantor's guaranty of the Bonds up to the Enhancement Amount.
"Initial Letter of Credit" shall mean the irrevocable, transferable, stand-by
Initial Letter of Credit issued by the Initial Letter of Credit Bank in a form
reasonably acceptable to the Trustee, for a minimum term of one (1) year and a
maximum term of two (2) years, in an amount sufficient to cover the then current
Enhancement Amount.
15
<PAGE>
"Initial Letter of Credit Bank" shall mean a banking association, bank or
trust company or branch or agency thereof that meets the Rating Requirement and
issues the Initial Letter of Credit.
"Interest Payment Dates" shall mean the first (1st) of each month commencing
March first (1st), nineteen ninety five (1995).
"Investment Agreement" means an agreement providing for the investment of
funds held under this Agreement, whether in the form of an interest bearing time
account, repurchase agreement or any similar arrangement, entered into between
the Trustee and a financial institution, located in the Commonwealth.
"Investment Obligations" shall mean Government Obligations and any of the
following investments or securities which are rated within the highest credit
rating (without regard to any gradations within such categories by numerical
qualifier or otherwise) issued by a Rating Agency, or such lower rating which is
acceptable to the Rating Agency in its sole discretion, which acceptability
shall be so confirmed in writing by the Rating Agency to the Trustee), issued by
any nationally recognized statistical rating service and which have maturities
of not more than one (1) year: (i) bonds, debentures or notes issued by any of
the following: Banks for Cooperatives, Federal Intermediate Credit Banks,
Federal Home Loan Banks, Export-Import Bank of the United States, Government
National Mortgage Association, Federal Land Banks, or the Federal National
Mortgage Association (including participation certificates issued by such
Association), (ii) obligations of the Commonwealth or any of its
instrumentalities or political
16
<PAGE>
subdivisions, (iii) all other obligations issued or unconditionally guaranteed
as to principal and interest by an agency or Person controlled or supervised by
and acting as an instrumentality of the United States of America pursuant to
authority granted by the Congress of the United States of America, (iv) time
deposits, certificates of deposit or similar arrangements with the Trustee or
any bank organized under the laws of the United States of America, any state
thereof or the Commonwealth having reported capital and surplus of not less than
FIFTY MILLION DOLLARS ($50,000,000) and reported deposits of not less than TWO
HUNDRED FIFTY MILLION DOLLARS ($250,000,000) and which has been designated by
the Secretary of the Treasury of the Commonwealth as a Depository for public
funds, fully secured in the manner provided in Section 601 hereof, (v) bankers'
acceptances (other than by the Borrower and its subsidiaries or affiliates)
drawn on and accepted by any commercial bank (including the Trustee) organized
under the laws of the United States of America or any state thereof or the
Commonwealth which is a member of the Federal Deposit Insurance Corporation
having reported capital and surplus of not less than FIFTY MILLION DOLLARS
($50,000,000) and reported deposits of not less than TWO HUNDRED FIFTY MILLION
DOLLARS ($250,000,000), (vi) repurchase agreements (including repurchase
agreements with the Trustee) with primary dealers or subsidiaries thereof with
respect to Government Obligations or any of the investments or securities
referred to in subsections (i), (ii), (iii), (iv) and (v) above, (vii)
commercial paper of any corporation, other than the Borrower and its
subsidiaries or affiliates and
17
<PAGE>
(viii) bonds, debentures, notes and other obligations of any corporation, other
than the Borrower and its subsidiaries or affiliates and (ix) an Investment
Agreement.
"ITA" shall mean the Puerto Rico Income Tax Act of 1954, as amended.
"Leases" shall mean all leases between the Borrower, as lessor, and the
respective lessees, for lease of commercial space in the Shopping Center, as set
forth in Exhibit A to the Collateral Assignment, and any leases which the
Borrower may enter into in the future pertaining to the Shopping Center .
"Letter of Credit" shall mean the Initial Letter of Credit or any Successor
Letter of Credit, as the case may be.
"Letter of Credit Bank" shall mean the Initial Letter of Credit Bank during
the term of the Initial Letter of Credit and thereafter shall mean the issuer of
any Successor Letter of Credit during the term of such Successor Letter of
Credit.
"Loan Agreement" shall mean the Loan Agreement, dated the Date of Issuance,
by and between the Authority and the Borrower, together with any amendments or
supplements thereto as herein permitted.
"Lower Net Operating Income" shall mean in connection with an Enhancement
Amount Reduction Certification, the lowest Net Operating Income for either of
the two (2) twelve (12) month periods comprised within any twenty-four (24)
month period preceding the date of such request, determined within one hundred
eighty (180) days of the date presented for use hereunder, all such amounts as
audited by the Independent Accountant.
"Mandatory Project Termination Date" shall have
18
<PAGE>
the meaning ascribed such term in Section 3.06 of the Loan Agreement.
"Maximum Loan to Value Ratio" shall mean the loan to value ratio established
by the Rating Agency on or after the time the then current Enhancement Amount is
reduced to an amount less than or equal to twenty-five percent (25%) of the then
current Exposure Amount pursuant to an Enhancement Amount Reduction
Determination, or any such higher ratio as the Rating Agency may, in its sole
discretion, deem appropriate, at any time thereafter, and confirmed in writing
to the Trustee.
"Minimum Debt Service Coverage Ratio" shall mean the debt service coverage
ratio established by the Rating Agency on or after the time the then current
Enhancement Amount is reduced to an amount less than or equal to twenty-five
percent (25%) of the then current Exposure Amount pursuant to an Enhancement
Amount Reduction Determination, or such lower ratio as the Rating Agency may, in
its sole discretion, deem appropriate, at any time thereafter, and confirmed in
writing to the Trustee.
"Mortgage" shall mean the mortgage on the Mortgaged Property as more fully
described therein, from the Borrower, as mortgagor, to the Authority as
mortgagee, constituted by Deed Number __ executed before Notary Public Javier
Ferrer Canals on the Date of Issuance.
"Mortgage Note" shall mean the mortgage note secured by the Mortgage to be
given by the Borrower in pledge to the Authority.
"Mortgaged Property" shall mean all the mortgaged properties as defined or
described in the Mortgage.
"Net Condemnation Proceeds" shall have the meaning ascribed such term in
Section 9.02(d) of the
19
<PAGE>
Loan Agreement.
"Net Insurance Proceeds" shall have the meaning ascribed such term in Section
9.02 of the Loan Agreement.
"Net Operating Income" shall mean, for any twelve (12) month period, after
commencement of operations at the Shopping Center, the gross revenues of the
Shopping Center (including interest on the monies in the Reserve Fund) for such
period less the operating expenses of the Shopping Center (including the
Trustee's fees, management fees, leasing commissions and the cost of tenant
improvements (such leasing commissions and tenant improvement costs being
amortized in accordance with generally accepted accounting principles
consistently applied), reserves and any other expenses incurred in the operation
of the Shopping Center) for such period (before debt service on the Bonds and
any other Indebtedness for such period, and excluding depreciation,
amortization and other similar non-cash items for such period), all such
amounts as audited by an Independent Accountant.
"Official Statement" shall mean the Official Statement dated February __,
1995, relating to the offer and sale of the Bonds.
"Outstanding" when used with reference to the Bonds, shall mean, as of a
particular date, all Bonds therefore issued and authenticated under this
Agreement except:
(a) Bonds paid or delivered to the Trustee for cancellation;
(b) Bonds deemed to have been paid in accordance with Article XIII of this
Agreement;
(c) Bonds in exchange for or in lieu of which other bonds have been
authenticated and delivered
20
<PAGE>
pursuant to this Agreement.
"Payment Date" shall mean each of the Interest Payment Dates, each of the
Principal Payment Dates, and each of the dates the principal of any Bond, and
premium, if any, becomes due and payable whether at maturity, redemption,
acceleration or otherwise.
"Payment of the Bonds" shall mean payment of the principal of, interest and
premium, if any, on all the Bonds in accordance with their terms, whether
through payment at maturity or redemption or provision for such payment in such
a manner that the Bonds shall be deemed to have been paid under Section 1301 of
this Agreement.
"Permitted Letter of Credit Deposit" shall mean the deposit of the entire
amount available under the Letter of Credit into the Collateral Fund through a
final drawing made by the Trustee prior to the expiration thereof as required by
Section 4.09(d) of the Loan Agreement.
"Person" shall mean any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Plans and Specifications" shall mean the final construction plans and
specifications for the Shopping Center, as the same may be revised from time to
time, prior to the completion of the Shopping Center in accordance with this
Agreement.
"Pledge Agreement" shall mean that certain Pledge Agreement relating to the
Mortgage Note, dated the Date of Issuance, between the Authority, as pledgee,
and the Borrower, as pledgor.
"Principal Payment Dates" shall mean January first (1st) and July first (1st)
of each year,
21
<PAGE>
commencing January first (1st), Nineteen Hundred Ninety Six (1996).
"Project" shall mean: (i) the acquisition, construction, development,
equipping, installation and improvement of the Shopping Center; (ii) the deposit
of the Reserve Fund Amount in the Reserve Fund; and (iii) the payment of other
costs, expenses and fees incurred in connection with the issuance of the Bonds.
"Project Fund" shall mean the fund created by Section 401 of this Agreement.
"Rating Agency" shall mean Duff & Phelps Credit Rating Co. and its successors
in interest and any resulting, surviving or transferee entity or any other
nationally recognized securities rating service.
"Rating Requirement" shall mean in connection with the issuance of a Letter
of Credit or a Successor Guaranty Agreement, as applicable, the requirement that
the issuer of such instrument be an entity whose long term debt obligations are
rated in one of the three (3) highest rating categories (without regard to any
gradations within any such category by numerical qualifier or otherwise) by the
Rating Agency, at the time of delivery of such Letter of Credit or Successor
Guaranty Agreement.
"Regular Record Date" shall mean the fifteenth (15th) of each month
immediately preceding a Payment Date.
"Related Document" shall mean, individually or collectively as the case may
be, any or all of the Bonds, the Trust Agreement, the Mortgage, the Mortgage
Note, the Collateral Assignment, the Pledge Agreement and the Bond Purchase
Agreement.
"Reserve Fund" shall mean the Industrial Revenue
22
<PAGE>
Bonds, Nineteen Hundred Ninety-Five (1995) Series A (Plaza Palma Real Project)
Reserve Fund, a special fund created and designated by the provisions of Section
509 of this Agreement.
"Reserve Fund Amount" shall have the meaning set forth in Section 4.01(b)(ii)
of the Loan Agreement.
"Secretary" shall mean the Secretary or any Assistant Secretary of the
Authority, or if there is no secretary or assistant secretary, then any person
designated by the Board or authorized by the by-laws of the Authority to perform
the functions of the Secretary.
"Shopping Center" shall mean the commercial shopping center, parking areas
and tangible properties to be owned and operated by the Borrower, to be known as
"Plaza Palma Real" on the Mortgaged Property located in Humacao, Puerto Rico and
includes any substitutions therefor or additions thereto or deletions therefrom.
"Special Record Date" shall mean a date fixed by the Trustee for the payment
of Defaulted Interest pursuant to Section 203 hereof.
"Successor Guarantor" shall mean an entity that meets the Rating Requirement
and issues the Successor Guaranty Agreement.
"Successor Guaranty Agreement" shall mean the irrevocable, transferable,
continuous guarantee, reasonably acceptable in form and substance to the Trustee
substantially similar to the Initial Guaranty Agreement, in an amount sufficient
to cover the then current Enhancement Amount.
"Successor Letter of Credit" shall mean the irrevocable, transferable, stand
by letter of credit, reasonably acceptable in form to the Trustee, substantially
similar to the Initial Letter
23
<PAGE>
of Credit, for a minimum term of one (1) year and a maximum term of two (2)
years in an amount sufficient to cover the then current Enhancement Amount.
"Successor Letter of Credit Bank" shall mean the issuer of the Successor
Letter of Credit that meets the Rating Requirement.
"Title Insurance" shall have the meaning ascribed such term in Section
3.07(n) of the Loan Agreement.
"Total Casualty" shall have the meaning ascribed such term in Section 9.02(a)
of the Loan Agreement.
"Total Taking" shall have the meaning ascribed such term in Section
9.02(d)(i) of the Loan Agreement.
"Trustee" shall mean the bank or trust company at the time serving as Trustee
under this Agreement.
"Trustee Fees" shall mean fees payable to the Trustee pursuant to this
Agreement.
"Underwriter" shall mean PaineWebber Incorporated of Puerto Rico.
"Unenhanced Amount" shall mean the lower of: (i) the product of the Appraised
Value and the Maximum Loan to Value Ratio; and (ii) the amount derived by
dividing (x) the quotient resulting from dividing the Lower Net Operating Income
by the Debt Service Factor, by (y) the Minimum Debt Service Coverage Ratio.
Section 102. Miscellaneous. Words of the masculine gender shall be deemed
-------------
and construed to include correlative words of the feminine and neuter genders.
Unless the context shall otherwise indicate, "Bond", "Bondholder", "owner", and
"person" shall include the plural as well as the singular number.
ARTICLE TWO (2)
24
<PAGE>
Form, Execution, Authentication, Delivery
and Exchange of Bonds
Section 201. Limitation on Issuance of Bonds. No Bonds may be issued under
-------------------------------
the provisions of this Agreement except in accordance with the provisions of
this Article.
Section 202. Form of Bonds. The definitive Bonds, are issuable as fully
-------------
registered Bonds without coupons. The Bonds shall be issuable in denominations
of FIVE THOUSAND DOLLARS ($5,000) and any multiple thereof. The definitive
Bonds and the certificates of authentication to be endorsed by the Trustee shall
be substantially in the form attached hereto as Exhibit A with such appropriate
variations, omissions and insertions as are permitted or required by this
Agreement. All Bonds may have endorsed thereon such legends or text as may be
necessary or appropriate to conform to any applicable rules and regulations of
any governmental authority or of any securities exchange on which the Bonds may
be listed or traded or any usage or requirement of law with respect thereto or
as may be authorized by the Authority and approved by the Trustee.
Section 203. Details of Bonds. The Bonds shall be dated, shall bear
----------------
interest until their payment and shall be stated to mature (subject to the right
of prior redemption), all as hereinafter provided.
Each Bond shall bear interest from the Interest Payment Date next preceding
the date on which it is authenticated, unless authenticated on an Interest
Payment Date, in which case it shall bear interest from such Interest Payment
Date, or, unless authenticated prior to the first Interest Payment Date, in
which case it shall bear interest from the Date of Issuance; provided, however,
that if at the
25
<PAGE>
time of authentication of any Bond interest is in default, such Bond shall bear
interest from the date to which interest shall have been paid.
Interest on the Bonds shall be computed on the basis of a three hundred sixty
(360) day year of twelve (12) thirty (30) day months. The Bonds shall be signed
by, or bear the facsimile signature of, the Executive Director and shall be
signed by, or bear the facsimile signature of, the Secretary, and a facsimile of
the corporate seal of the Authority shall be imprinted on the Bonds.
In case any officer whose signature or a facsimile of whose signature shall
appear on any Bond shall cease to be such officer before the delivery of such
Bonds, such signature or such facsimile shall nevertheless be valid and
sufficient for all purposes the same as if he had remained in office until such
delivery. Any Bond may bear the facsimile signature of or may be signed by such
persons as at the actual time of the execution of such Bond shall be the proper
officers to sign such Bond although at the date of such Bond such persons may
not have been such officers.
The principal of and the premium, if any, and the interest on the Bonds shall
be payable in any coin or currency of the United States of America which on the
respective dates of payment thereof is legal tender for the payment of public
and private debts. The principal of all Bonds and any premium, if any, thereon
shall be payable only to the registered owner or his legal representative at the
corporate trust office of the Trustee, and payment of the interest on each Bond
which is payable and is punctually paid or duly provided for shall be made by
the Trustee on each Interest Payment Date to the
26
<PAGE>
Person in whose name such Bond is registered at the close of business on the
Regular Record Date, by check mailed to such registered owner at its address as
it appears on such registration books kept by the Trustee or at the request of a
holder who initially purchases or subsequently acquires at least One Million
Dollars ($1,000,000) aggregate principal amount of Bonds, by wire transfer to
the bank account of such holder, provided he files his bank account number with
the Trustee for such purposes at least five (5) Business Days prior to the first
Interest Payment Date for which such wire transfer is to be made. In the event
that any payment cannot be made by operation of the preceding sentence
(including checks mailed and returned undelivered) the funds therefor shall be
held in accordance with Section 505 and will be paid to the Bondholder only upon
presentation of such Bond to the Trustee, the Authority or the Borrower,
whichever is then holding the funds therefor. Except as provided in Section 209
or Section 210 of this Agreement, payment of the principal and premium, if any,
of the Bonds shall be made upon the presentation and surrender of such Bonds as
the same shall become due and payable.
Any interest on any Bond which is payable but is not punctually paid or duly
provided for within five (5) days after the same shall become due and payable on
any Interest Payment Date for such Bond (herein called "Defaulted Interest"),
shall forthwith cease to be payable to the holder on the relevant Regular Record
Date by virtue of his having been such holder; and such Defaulted Interest may
be paid by the Authority, at its election in each case, as provided in clauses
One (1) or Two (2) below:
One: The Authority may elect to make payment of
27
<PAGE>
any Defaulted Interest to the Persons in whose names the Bonds are registered at
the close of business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Authority shall
notify the Trustee in writing of the amount of Defaulted Interest proposed to be
paid on each such Bond and the date of the proposed payment, and at the same
time the Authority shall deposit with the Trustee an amount of money equal to
the aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit prior to
the date of the proposed payment, such money when deposited to be held in trust
for the benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a Special Record Date for the
payment of such Defaulted Interest which shall be not more than fifteen (15)
days and not less than ten (10) days prior to the date of the proposed payment
and not less than ten (10) days after the receipt by the Trustee of the notice
of the proposed payment. The Trustee shall promptly notify the Authority and
the Borrower of such Special Record Date and, in the name and at the expense of
the Authority, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class postage
prepaid, to each holder of such Bonds at his address as it appears in the
registration books not less than ten (10) days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been mailed as aforesaid, such Defaulted Interest
shall
28
<PAGE>
be paid to the Persons in whose names such Bonds are registered at the close of
business on such Special Record Date and shall no longer be payable pursuant to
the following clause Two.
Two: The Authority may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Bonds affected may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Authority to the
Trustee of the proposed payment pursuant to this clause, such payment shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Bond delivered
under this Agreement upon registration of transfer of or in exchange for or in
lieu of any other Bond shall carry the rights to unpaid principal and interest
accrued and unpaid, and to accrue, which were carried by such other Bond.
Section 204. Authentication of Bonds. Only such of the Bonds as shall have
-----------------------
endorsed thereon a certificate of authentication substantially in the form set
forth in Exhibit A, duly executed by the Trustee, shall be entitled to any
benefit or security under this Agreement. No Bond shall be valid or become
obligatory for any purpose unless and until such certificate of authentication
shall have been duly executed by the Trustee, and such certificate of the
Trustee upon any such Bond shall be conclusive evidence that such Bond has been
duly authenticated and delivered under this Agreement. The Trustee's
certificate of authentication on any Bond shall be deemed to have been duly
executed if signed by an authorized officer of the Trustee, but
29
<PAGE>
it shall not be necessary that the same officer sign the certificate of
authentication on all of the Bonds that may be issued hereunder at any one
time.
Section 205. Exchange of Bonds. Bonds, upon surrender thereof at the
-----------------
corporate trust office of the Trustee, together with an assignment duly executed
by the owner or his attorney or legal representative in such form as shall be
satisfactory to the Trustee, may, at the option of the owner thereof, be
exchanged for an equal aggregate principal amount of Bonds, of the same
maturity, of any denomination or denominations authorized by this Agreement and
bearing interest at the same rate.
Section 206. Registration of Transfer of Bonds. The Trustee shall keep
---------------------------------
books for the registration of transfers of Bonds as provided in this Agreement.
The transfer of any Bond may be registered only upon the books kept for the
registration of transfers of Bonds upon surrender thereof to the Trustee
together with an assignment, duly executed by the registered owner or his
attorney or legal representative in such form as shall be satisfactory to the
Trustee. Upon any such registration of transfer the Authority shall execute and
the Trustee shall authenticate and deliver in exchange for such Bond a new Bond
or Bonds registered in the name of the transferee, of the same maturity, of any
denomination or denominations authorized by this Agreement and bearing interest
at the same rate.
In all cases in which Bonds shall be exchanged or the transfer of Bonds shall
be registered hereunder, the Authority shall execute and the Trustee shall
authenticate and deliver at the earliest practicable time Bonds in accordance
with the provisions of this Agreement. All Bonds surrendered in any such
30
<PAGE>
exchange or registration of transfer shall forthwith be cancelled by the Trustee
and shall not be entitled to any of the benefits hereunder. The Authority or the
Trustee may charge a reasonable fee or service charge for every such exchange or
registration of transfer of Bonds sufficient to reimburse it for any tax or
other governmental charge required to be paid with respect to such exchange or
registration of transfer. Neither the Authority nor the Trustee shall be
required to make any such exchange or registration during the fifteen (15) days
immediately preceding the date of first giving of notice of any redemption of
Bonds or after such Bond or any portion thereof has been selected for
redemption.
The Bonds have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), or any state or Commonwealth securities law and
may not be sold, transferred, pledged, hypothecated or otherwise disposed of, in
whole or in part, unless the Bonds are registered under the Securities Act or
the sale, transfer, pledge, hypothecation or other disposition is made pursuant
to an exemption from registration thereunder or any applicable state or
Commonwealth securities law.
During the period commencing on the Date of Issuance and terminating nine (9)
months after the date of the last sale of the Bonds by the Underwriter, the
Bonds can only be transferred to residents of the Commonwealth that comply with
the conditions set forth in the next sentence pursuant to the provisions of the
Securities Act, unless the Trustee, the Underwriter and the Borrower shall
receive an opinion of counsel acceptable to each of them to the effect that
subsequent resales and
31
<PAGE>
transfers of the Bonds can be made in transactions that are otherwise exempt
from the registration requirements of the Securities Act without having to
comply with the restrictions on transferability set forth in this Section. The
Trustee, during such period, may not register any Bond in the name of any Person
with respect to which there is not on file with the Trustee a letter of
representation (the "Letter of Representation"), in the case of a corporation or
other form of business organization or an individual that is acquiring Bonds for
its own account, substantially in the form set forth in Exhibit B. A Letter of
Representation will not be required by the Trustee to the extent that it
receives an opinion of counsel acceptable to the Borrower, the Underwriter and
the Trustee to the effect that such transfer will not require the registration
of the Bonds under the Securities Act or result in a violation of the applicable
provisions thereof, or any applicable State or Commonwealth securities laws.
Section 207. Ownership of Bonds; Transfer of Title. As to any Bond, the
-------------------------------------
Person in whose name the same shall be registered shall be deemed and regarded
as the absolute owner thereof for all purposes, and payment of or on account of
the principal of any such Bond, premium, if any, and the interest on any such
Bond shall be made only to or upon the order of the registered owner thereof or
his legal representative. All such payments shall be valid and effectual to
satisfy and discharge the liability upon such Bond including the premium, if
any, and interest thereon to the extent of the sum or sums so paid.
Any owner of any Bond is hereby granted power to
32
<PAGE>
transfer absolute title thereto by assignment thereof to a bona fide purchaser
for value (present or antecedent) without notice of prior defenses or equities
or claims of ownership enforceable against his assignor or any Person in the
chain of title and before the maturity of such Bond. Every prior owner of any
Bond shall be deemed to have waived and renounced all of his equities or rights
therein in favor of every such bona fide purchaser, and every such bona fide
purchaser shall acquire absolute title thereto and to all rights represented
thereby.
Section 208. Authorization of Bonds.
----------------------
(A) There shall be issued under and secured by this Agreement Bonds of the
Authority in the aggregate principal amount of FORTY THREE MILLION FOUR HUNDRED
AND FIFTY THOUSAND DOLLARS ($43,450,000) for the purpose of providing funds for
paying, with other available funds, the Cost of the Project. The Bonds shall be
designated "Industrial Revenue Bonds 1995 Series A (Plaza Palma Real Project)",
shall be dated as of the first (1st) day of January, Nineteen Hundred Ninety-
Five (1995), shall be numbered from RA-1 upwards, shall bear interest at such
rate or rates (not exceeding the Highest Lawful Rate) as may be provided by
resolution of the Board adopted prior to the issuance of such Bonds as set forth
below, and shall be stated to mature, subject to the right of prior redemption
as hereinafter set forth, except as otherwise herein provided, on the first
(1st) day of July in the following years and in the following amounts,
respectively: principal amount of THREE MILLION FIVE HUNDRED TEN THOUSAND
DOLLARS ($3,510,000) ("2000 Term Bonds"); principal amount of THREE MILLION
EIGHT HUNDRED EIGHTY-FIVE THOUSAND DOLLARS ($3,885,000) ("2004 Term Bonds");
principal amount of SIX MILLION EIGHT HUNDRED EIGHTY-EIGHT THOUSAND Dollars
($6,880,000) ("2009
33
<PAGE>
Term Bonds"); principal amount of TEN MILLION TWO HUNDRED AND FIVE THOUSAND
Dollars ($10,205,000) ("2014 Term Bonds"); and principal amount of EIGHTEEN
MILLION NINE HUNDRED SEVENTY THOUSAND Dollars ($18,970,000) ("2020 Term Bonds")
(the 2000 Term Bonds, the 2004 Term Bonds, the 2009 Term Bonds, the 2014 Term
Bonds and the 2020 Term Bonds shall be collectively referred to as the "Term
Bonds").------
The interest rate or rates, maturity dates and amounts shall be as provided
in one or more resolutions of the Board authorizing the issuance thereof, which
interest rate or rates and the maturity dates and amounts may be supplemented or
changed by a certificate of the Executive Director or Assistant Executive
Director of the Board executed on the Date of Issuance if provided for in said
resolution or resolutions.
(B) The Bonds shall be executed substantially in the form and manner set
forth in Exhibit A and shall be deposited with the Trustee for authentication,
but before the Trustee shall authenticate and deliver the Bonds upon their
initial issuance there shall be filed with the Trustee the following:
(a) a copy, certified by the Secretary, of a resolution or resolutions of
the Board awarding such Bonds, specifying the interest rate or rates for the
Bonds, directing the authentication and delivery of the Bonds to or upon the
order of the purchasers mentioned therein upon payment of the purchase price
therein set forth and the accrued interest, if any, on the Bonds;
(b) the Loan Agreement duly executed;
(c) the Pledge Agreement duly executed;
(d) the Guaranty Agreement duly executed;
(e) the Mortgage Note duly executed;
34
<PAGE>
(f) the Mortgage duly executed;
(g) the Collateral Assignment duly executed;
(h) an opinion of counsel to the Borrower to the effect that the
execution and delivery of the Loan Agreement, Pledge Agreement, the Collateral
Assignment, the Mortgage and the Mortgage Note have been duly authorized by the
Borrower, and that the Loan Agreement, the Pledge Agreement, the Collateral
Assignment, the Mortgage and the Mortgage Note are in the form so authorized and
have been duly executed by the Borrower and that, assuming proper authorization
and execution of the Loan Agreement, the Pledge Agreement, the Collateral
Assignment, the Mortgage and the Mortgage Note by the Authority, the Loan
Agreement, Pledge Agreement, the Collateral Assignment, the Mortgage and the
Mortgage Note are valid, binding and enforceable upon the Borrower in accordance
with its terms, except to the extent that the enforceability of the Loan
Agreement, Pledge Agreement, the Collateral Assignment, the Mortgage, and the
Mortgage Note may be limited by bankruptcy, insolvency or other laws affecting
creditors' rights generally and subject to general principles of equity
(regardless of whether said enforceability is considered in a proceeding in
equity or at law);
(i) an opinion of counsel, who may be counsel for the Authority, to the
effect that (i) the Authority has the legal right and power to enter into this
Agreement and the Related Documents to which it is a party and has duly
authorized and validly executed and delivered this Agreement and the Related
Documents to which it is a party and this Agreement and the Related Documents to
which it is a party are all legally valid and binding upon the Authority and
enforceable in accordance with
35
<PAGE>
their respective terms, except to the extent that the enforceability of this
Agreement and the Related Documents to which it is a party may be limited by
bankruptcy, insolvency or other laws affecting creditors' rights generally and
subject to general principles of equity (regardless of whether said
enforceability is considered in a proceeding in equity or at law), (ii) this
Agreement creates a legally valid and effective pledge of the moneys, securities
and funds held or set aside under this Agreement as security for the Bonds,
subject to the application thereof to the purposes and on the conditions
permitted by this Agreement, and that no filing or recording of any document is
necessary in order to make such pledge effective or to continue it in effect (or
specifying the place or places, if any, where such filing or recording is
necessary and furnishing any officially authenticated certificates, or other
documents, by which such filing or recording is evidenced), (iii) the issuance
of the Bonds will not violate any provision of law or of the by-laws of the
Authority or result in the breach of, or constitute a default under, any
agreement, indenture or other instrument to which the Authority is a party or by
which it may be bound, (iv) no authorization, consent or approval or withholding
of objection of any governmental body or regulatory authority is requisite to
the legal issue of the Bonds (unless such opinion shall show that no
authorization, consent or approval or withholding of objection is requisite to
the legal issue of the Bonds, it shall specify and furnish any officially
authenticated certificates, or other documents, by which such authorization,
consent or approval or withholding of objection is evidenced), (v) the
36
<PAGE>
Bonds are legally valid and binding direct obligations of the Authority
enforceable in accordance with their terms and the terms of this Agreement and
have been duly and validly authorized and issued in accordance with applicable
law and this Agreement, and (vi) the conditions precedent to the delivery of the
Bonds have been fulfilled, and covering such other matters as the Trustee may
reasonably request;
(j) an opinion of Bond counsel to the effect that under the provisions of
the Acts of Congress and the laws of the Commonwealth, the Bonds and the
interest thereon are exempt from Commonwealth taxation; and
(k) an opinion of counsel to the Guarantor to the effect that (a) the
execution and delivery of the Guaranty Agreement has been duly authorized by the
Guarantor, and that the Guaranty Agreement is in the form so authorized and that
assuming proper authorization and execution of the Guaranty Agreement by the
Authority the Guaranty Agreement is valid, binding and enforceable upon the
Guarantor in accordance with its terms, except to the extent that enforceability
of the Guaranty Agreement may be limited by bankruptcy, insolvency or other laws
affecting creditors' rights generally and subject to general principles of
equity (regardless of whether said enforceability is considered in a proceeding
in equity or at law) and (b) that a registration statement with respect to the
Guaranty Agreement has been filed with the United States Securities Exchange
Commission and become effective and with the Office of the Commissioner of
Financial Institutions of the Commonwealth.
(l) such other opinions and certificates as the
37
<PAGE>
Trustee may reasonably request.
(C) When the documents mentioned in (B) above shall have been filed with
the Trustee and when the Bonds shall have been executed and authenticated as
required by this Agreement, the Trustee shall deliver the Bonds at one time to
or upon the order of the Underwriter mentioned in the resolution(s) mentioned in
clause (A) of this Section, but only upon payment to the Trustee of the purchase
price of the Bonds and the accrued interest, if any.
(D) The Trustee shall deposit the proceeds of the Bonds as follows: (1) the
Reserve Fund Amount to the credit of the Reserve Fund, (ii) an amount equal to
the accrued interest on the Bonds, if any, shall be deposited to the credit of
the Bond Fund; and (iii) the remainder to the credit of the Project Fund.
Section 209. Temporary Bonds. Until definitive Bonds are ready for
---------------
delivery, there may be executed, and upon request of the Authority, the Trustee
shall authenticate and deliver, in lieu of definitive Bonds and subject to the
same limitations and conditions, temporary printed, typewritten, engraved or
lithographed Bonds, in the form of fully registered Bonds without coupons in
such denominations, or in the form of a single fully registered Bond without
coupons in a denomination equal to the aggregate principal amount of such
definitive Bonds, with payment record attached for the notation of payments of
interest, without presentation and surrender of such registered Bond, as the
Authority by resolution may provide, substantially of the tenor hereinabove set
forth and with such appropriate omissions, insertions and variations as may be
required.
38
<PAGE>
If temporary Bonds shall be issued, the Authority shall cause the definitive
Bonds to be prepared and to be executed and delivered to the Trustee, and the
Trustee, upon presentation to it at its corporate trust office, of any temporary
Bond, if any, shall cancel the same and authenticate and deliver in exchange
therefor at the place designated by the holder, without charge to the holder
thereof, a definitive Bond or Bonds of an equal aggregate principal amount as
the temporary Bonds surrendered. Until so exchanged, the temporary Bonds shall
in all respects be entitled to the same benefit and security of this Agreement
as the corresponding definitive Bonds to be issued and authenticated hereunder.
No charge of any kind shall be made against the holder upon an exchange of a
temporary Bond for a definitive Bond.
Section 210. Mutilated, Destroyed or Lost Bonds. A mutilated Bond may be
----------------------------------
surrendered and thereupon the Authority shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Bond of like tenor and
principal amount to the surrendered Bond.
If there be delivered to the Authority, the Borrower, and the Trustee;
(i) proof of the ownership of such Bond,
(ii) evidence to their satisfaction of the destruction or loss of such
Bond, and
(iii) such security or indemnity as may be required by them to save each of
them harmless, then, in the absence of notice to the Authority or the Trustee
that such Bond has been acquired by a bona fide purchaser, the Authority shall
execute and upon its request the Trustee shall authenticate and deliver in lieu
of any such destroyed or lost Bond,
39
<PAGE>
a new Bond of like tenor and principal amount.
In case any such mutilated, destroyed or lost Bond has become or is about to
become due and payable, the Authority, at its discretion, instead of issuing a
new Bond, may pay principal, premium, if any, plus accrued interest on such Bond
on the stated maturity date.
Upon the issuance of any new Bond under this Section, the Authority may
require the payment from the Bondholder of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
ARTICLE III
Redemption of Bonds
Section 301. Redemption of Bonds. The Bonds issued under the provisions of
-------------------
this Agreement shall not be subject to redemption prior to their stated maturity
except as provided in this Article III.
(a) In the event the Borrower shall have become obligated to prepay the
entire amount payable under Section 4.01 of the Loan Agreement in accordance
with Subsection (a) of Section 8.02 of the Loan Agreement, the Bonds shall be
called for redemption in whole, at a redemption price equal to one hundred
percent (100%) of the principal amount thereof, without premium, plus accrued
and unpaid interest to the redemption date which date shall be the next Interest
Payment Date occurring not less than forty-five (45) days after the (i) Borrower
shall have received notice from the Authority as provided in Section 8.02(a)(i)
of the Loan Agreement, or (ii) the Authority and the Trustee shall have received
notice from the Borrower, as provided in Section
40
<PAGE>
8.02(a)(ii) of the Loan Agreement.
(b) In the event the Borrower shall have become obligated to prepay the
entire amount payable under Section 4.01 of the Loan Agreement in accordance
with Section 8.02(b) of the Loan Agreement, the Bonds shall be called for
redemption, in whole, not later than forty-five (45) days after the Trustee
shall have received, with respect to Section 8.02(b) of the Loan Agreement, a
certificate or opinion pursuant to Section 5.10 of the Loan Agreement that an
Event of Taxability (as defined in Section 5.10 of the Loan Agreement) has
occurred making such occurrence the second time that an Event of Taxability has
occurred for a taxable year of the Borrower, at a redemption price equal to one
hundred percent (100%) of the principal amount thereof plus accrued and unpaid
interest to the date fixed for redemption, without premium.
(c) The Bonds are subject to redemption, in part, to the extent of any
balance remaining in the Project Fund on and after the dates set forth in
Section 8.03(a) of the Loan Agreement at a redemption price equal to one hundred
percent (100%) of the principal amount thereof without premium plus accrued and
unpaid interest to the date fixed for redemption and which redemption date shall
be on a date occurring not less than forty-five (45) days after the date set
forth in Section 8.03(a) of the Loan Agreement.
(d) In the event the Borrower shall elect to prepay any amount payable
under Section 4.01 of the Loan Agreement in accordance with Section 8.03(b) of
the Loan Agreement, or an event set forth in Section 8.02(c) of the Loan
Agreement shall occur, the Bonds shall be called for redemption, in whole or in
part,
41
<PAGE>
as appropriate, at a redemption price equal to one hundred percent (100%) of the
principal amount thereof without premium, plus accrued and unpaid interest to
the redemption date which redemption date shall be on a date occurring not less
than forty-five (45) days after: (i) receipt by the Trustee of the notice
delivered pursuant to Section 8.03(b) of the Loan Agreement or (ii) receipt of
notice to the Authority of a Total Taking by eminent domain or Total Casualty
pursuant to Article IX of the Loan Agreement and deposits of casualty or
condemnation proceeds.
(e) (i) In the event that the Authority and the Trustee shall receive
written notice pursuant to Section 8.01(a)(i) of the Loan Agreement that on or
after January first (1st), Two Thousand Five (2005), the Borrower shall have
elected to prepay all or a part of the amounts payable under Section 4.01 of the
Loan Agreement pursuant to Section 8.01(a)(i) of the Loan Agreement, the Bonds
shall be redeemable at the option of the Borrower, in whole or in part, at the
respective percentages of the principal amount thereof set forth in the Loan
Agreement, plus accrued and unpaid interest to the redemption date.
(ii) In the event that the Authority and the Trustee shall receive written
notice pursuant to Section 8.01(a) (ii) of the Loan Agreement that on or before
January first (1st), Two Thousand Five (2005), the Borrower shall have elected
to prepay all or a part of the amounts payable under Section 4.01 of the Loan
Agreement pursuant to Section 8.01(a)(ii) of the Loan Agreement, the Bonds shall
be redeemable at the option of the Borrower, as a whole or in part, at the
respective percentages of the principal amount thereof set forth in the Loan
42
<PAGE>
Agreement, plus accrued and unpaid interest to the redemption date.
(iii) In the event that the Authority and the Trustee shall receive written
notice pursuant to Section 8.01(a)(iii) of the Loan Agreement that the Borrower
shall have elected to prepay all or a part of the amounts payable under Section
4.01 of the Loan Agreement pursuant to Section 8.01(a)(iii) of the Loan
Agreement, the Bonds shall be redeemable at the option of the Borrower, in whole
or in part, at the respective percentages of the principal amount thereof set
forth in the Loan Agreement, plus accrued and unpaid interest to the redemption
date.
(f) Subject to the provisions of Section 301(g) of this Agreement, the Term
Bonds shall be called for redemption in part, in minimum denominations of Five
Thousand Dollars ($5,000), at a redemption price equal to the principal amount
thereof, without premium, plus accrued interest to the date fixed for
redemption, in accordance with Section 8.01(b) of the Loan Agreement.
(g) Except with respect to a redemption under the provisions of Section
8.01(b) of the Loan Agreement, if fewer than all of the Bonds shall be called
for redemption under the provisions of Section 8.01(a) or Section 8.03(a) and
(b) of the Loan Agreement, the Bonds shall be called for redemption in inverse
order of maturity. In all cases of redemption, if fewer than all of the Bonds
of any one maturity shall be called for redemption, the Bonds or portions of
Bonds to be redeemed shall be selected by the Trustee by such method as the
Trustee deems fair and appropriate. The portion of any Bond to be redeemed shall
be in the principal amount equal to FIVE THOUSAND DOLLARS ($5,000) or
43
<PAGE>
any integral multiple thereof, and in selecting Bonds for redemption, the
Trustee shall treat each Bond as representing that number of Bonds which is
obtained by dividing the principal amount of such Bond by FIVE THOUSAND DOLLARS
($5,000).
(h) On each Determination Date the Trustee shall: (x) determine whether the
total principal amount of the Term Bonds of the same stated maturity as the
Bonds to be redeemed on the related Principal Payment Date which have been
cancelled (including those purchased by Borrower and delivered to the Trustee
for cancellation), called for redemption under the provisions of this Article
III, or deemed to have been paid pursuant to Article XIII, prior to such
Determination Date is greater than the total aggregate amount of Term Bonds
required to be redeemed on and prior to said Principal Payment Date, then the
amounts of Bonds so required to be redeemed on such Principal Payment Date shall
be reduced by the amount of such excess, if any; and (y) furnish the Borrower
with a certificate specifying the aggregate principal amount, if any, of Bonds
that are subject to redemption pursuant to this Section 301(h) on the related
Principal Payment Date. The amount so certified shall continue to be applicable
until such related Principal Payment Date and no adjustment shall be made
thereto by reason of Bonds cancelled or called for redemption during the period
commencing on the date of such certificate and ending on such related Principal
Payment Date.
Section 302. Redemption Notice. Subject to Section 803 hereof, at least
-----------------
thirty (30) days but not more than sixty (60) days before the redemption date of
any Bonds, the Trustee shall cause a notice of any such redemption, signed by
the Trustee to be
44
<PAGE>
mailed, postage prepaid, to all Bondholders whose Bonds are to be redeemed. Each
such notice shall set forth, (1) the date fixed for redemption; (2) the
redemption price to be paid; (3) if fewer than all of the Bonds then Outstanding
shall be called for redemption, the distinctive numbers and letters, if any, of
such Bonds to be redeemed and, in the case of Bonds to be redeemed in part only,
the portion of the principal amount thereof to be redeemed; (4) that on the date
fixed for redemption such redemption price will become due and payable upon each
Bond or portion thereof called for redemption, and that interest thereon shall
cease to accrue on and after said redemption date; (5) the place where such
Bonds or portions thereof called for redemption are to be surrendered for
payment of such redemption price; (6) specifying the subsection of Section 301
hereof pursuant to which the Bonds are being redeemed; and (7) such other
information as may be required to comply with the requirements of Securities
Exchange Act of 1934 Release No. 34-23856 (the "Release") issued on December
three (3) Nineteen Hundred Eighty-Six (1986). In case any Bond is to be
redeemed in part only, the notice of redemption which relates to such Bond shall
state also that on or after the redemption date, upon surrender of such Bond, a
new Bond or Bonds in principal amount equal to the unredeemed principal portion
of such Bond will be issued. Failure to comply with the requirements of the
Release or any defect thereon shall not affect the validity of the proceedings
for the redemption of the Bonds. Failure to mail such notice to any holder or
any defect in any notice so mailed shall not affect the validity of the
proceedings for the redemption of
45
<PAGE>
the Bonds of any other holders.
Section 303. Effect of Calling for Redemption. On the date so designated
--------------------------------
for redemption, notice having been given in the manner and under the conditions
hereinabove provided, the Bonds or portions of Bonds so called for redemption
shall become and be due and payable at the redemption price provided for
redemption of such Bonds or portions of Bonds on such date, and, if sufficient
moneys for payment of the redemption price, the accrued and unpaid interest and
premium, if any, are held in separate accounts by the Trustee in trust for the
holders of the Bonds or portions of Bonds to be redeemed, as provided in this
Agreement, interest on the Bonds or portions of such Bonds so called for
redemption shall cease to accrue, such Bonds or portions of Bonds shall cease to
be entitled to any benefit or security under this Agreement, and the owners of
such Bonds or portions of Bonds shall have no rights in respect thereof except
to receive payment of the redemption price thereof, premium, if any, and the
accrued interest and, to the extent provided in Section 304 hereof, to receive
Bonds for any unredeemed portions of the Bonds.
Section 304. Redemption of Portions of the Bonds. In case part but not all
-----------------------------------
of an Outstanding Bond shall be selected for redemption, the registered owner
thereof or legal representative shall present and surrender such Bond to the
Trustee for payment of the principal amount thereof so called for redemption,
and the Authority shall execute and the Trustee shall authenticate and deliver
to or upon the order of such registered owner or his legal representative,
without charge therefor, for the unredeemed portion of the
46
<PAGE>
principal amount of the Bond so surrendered, a new Bond or Bonds of any
denomination or denominations authorized by this Agreement, of the same maturity
and bearing interest at the same rate as the Bond so surrendered.
Section 305. Cancellation of Bonds Redeemed. Bonds so redeemed and
------------------------------
surrendered shall be cancelled upon the surrender thereof to the Trustee.
ARTICLE IV
Project Fund
Section 401. Creation of Project Fund. A special fund is hereby created and
------------------------
designated the "Industrial Revenue Bonds, Nineteen Hundred Ninety-Five (1995)
Series A (Plaza Palma Real Project) Project Fund" (the "Project Fund"), to the
credit of which such deposits shall be made as are required by the provisions of
Section 208(D) of this Agreement, and to the extent applicable, by the
provisions of Article IX of the Loan Agreement. Any moneys received by the
Trustee from any other source for use to pay the Cost of the Project shall also
be deposited to the credit of the Project Fund.
Subject to the provisions of Sections 404, 406 and 602 of this Agreement, the
moneys in the Project Fund shall be held by the Trustee in trust and shall be
subject to a lien and charge in favor of the holders of the Bonds issued and
Outstanding under this Agreement, and for the further security of such holders,
until paid out or transferred as herein provided.
Section 402. Payments from Project Fund. Payment of the Cost of the Project
--------------------------
shall be made from the Project Fund. All payments from the Project Fund shall
be subject to the provisions and restrictions set forth in this Article.
47
<PAGE>
Section 403. Items of Cost. For the purposes of this Agreement, the Cost of
-------------
the Project shall embrace all costs permitted by the Act in connection with:
(A) The acquisition, development, construction and installation of the
Shopping Center including without limitation:
(i) Payment to the Borrower, and the Authority, as the case may be, of
such amounts, if any, as shall be necessary to reimburse the Borrower, and the
Authority in full for all advances and payments made by any of them or either of
them or for their accounts, with respect to the Shopping Center at any time
after March twenty-seven (27), Nineteen Hundred Ninety-One (1991), for
expenditures in connection with the acquisition, installation or construction of
the Project, the preparation of the plans and specifications, (including any
preliminary study or planning of the Project and any reports, appraisals or
analyses concerning the Project, the acquisition, construction, and equipping of
the Project, interest on the Bonds during construction and acquisition of the
Project, (which shall mean a period beginning with the date of delivery of the
Bonds and ending on the Completion Date (as defined in the Loan Agreement)) and
all real or personal property deemed necessary in connection with the Project,
or any one or more of said expenditures (including architectural, engineering,
consulting, and supervisory services).
(ii) Payment, as they become due, of the fees, commissions and expenses of
the Trustee properly incurred under this Agreement prior to and on the
Completion Date.
(iii) Payment of any other costs and expenses
48
<PAGE>
relating to the acquisition, development, construction, and installation of the
Project (including testing) or the authorization, issuance and sale of the
Bonds.
(iv) Payment for labor, services, materials and supplies used or furnished
in site improvement and in the acquisition, development, construction,
equipping, installation and improvement of the Shopping Center, payment for the
cost of the acquisition, construction and installation of utility services or
other facilities, and all real and personal property deemed necessary in
connection with the Shopping Center and payment for the miscellaneous expenses
incidental to any of the foregoing items.
(E) Payment of the Administrative Fee, the initial or acceptance fee of the
Trustee, legal, accounting and financial advisory fees and expenses,
underwriting fees and expenses (whether paid in the form of a fee or in the form
of a discount on the Bonds), filing and recording fees and taxes, and rating
agencies' fees and printing and engraving costs incurred in connection with the
authorization, sale and issuance of the Bonds, the execution of this Agreement,
the Loan Agreement, and all other documents in connection therewith, and payment
of all fees, costs and expenses for the preparation of the Loan Agreement, this
Agreement, the Collateral Assignment, the Mortgage, the Mortgage Note, Pledge
Agreement, the Guaranty Agreement, and the Bonds, and any other fees and
expenses necessary or incident to the issuance and sale of the Bonds, the
financing of the Project, and the documents contemplated thereby and by the Loan
Agreement.
Section 404. Requisites for Payments from
----------------------------
49
<PAGE>
Project Fund. Payments of the Cost of the Project from the Project Fund shall
- ------------
be made by the Trustee upon the order of the Borrower in accordance with the
provisions of this Section, but no such payment shall be made unless and until
the Trustee shall receive a requisition prepared and signed by an Authorized
Borrower Representative stating:
(i) the item number of each such payment;
(ii) the name of the Person (including the Borrower) to whom each such
payment is due;
(iii) the respective amounts to be paid; and
(iv) that obligations in the stated amounts have been incurred and are
presently due and payable, or reimbursable to or on behalf of the Borrower, and
that each item thereof is a proper charge against the Project Fund, is
substantially in accordance with the estimates of the Cost of the Project set
forth in the application, as amended, filed with the Authority, and has not been
paid from the Project Fund.
Upon receipt of any such order and accompanying requisition, the Trustee
shall pay such obligation from the Project Fund. If prior to payment of any
item in an order the Borrower should for any reason desire not to pay such item,
the Borrower shall give notice of such decision to the Trustee. In making any
disbursement, the Trustee shall pay each such obligation directly to the
Borrower or to any payee designated by an Authorized Borrower Representative, as
set forth in the order of the Borrower directing such disbursement.
Section 405. Reliance on Requisitions. All requisitions and orders received
------------------------
by the Trustee, as required in this Article as conditions of payment from the
Project Fund, may be relied upon by the
50
<PAGE>
Trustee, and shall be retained by the Trustee, subject at all reasonable times
to examination by the Borrower, the Authority, any Bondholder and the agents and
representatives thereof.
Section 406. Balance in Project Fund.
-----------------------
(a) In the event that the Borrower (i) exercises the option under Section
8.01(a) of the Loan Agreement, or (ii) is required pursuant to Sections 8.01(b),
8.02(a), (b) and (c) or 8.03(a) and (b) of the Loan Agreement to prepay in whole
or in part the amounts payable under Section 4.01 of the Loan Agreement, the
Trustee shall, upon the direction of the Borrower, deposit in the Bond Fund, on
the date the prepayment is made, any balance remaining in the Project Fund
except for any amounts held pursuant to Section 404 hereof which shall be held
pursuant to the terms thereof.
(b) If the principal of all Outstanding Bonds shall have become due and
payable pursuant to an acceleration pursuant to Section 803 of this Agreement or
the giving of a redemption notice pursuant to Section 302 of this Agreement, the
Trustee shall deposit in the Bond Fund any balance remaining in the Project Fund
except for any amounts held pursuant to Section 404 hereof which shall be held
pursuant to the terms thereof.
ARTICLE V
Bond Fund
Section 501. Creation of Bond Fund. A special fund is hereby created and
---------------------
designated "Industrial Revenue Bonds, Nineteen Hundred Ninety-Five (1995) Series
A (Plaza Palma Real Project) Bond Fund" (the "Bond Fund"). Within the Bond Fund
there shall be created three accounts, an interest account, into which shall be
deposited all moneys to be used for
51
<PAGE>
payment of interest on the Bonds, a premium account, into which shall be
deposited all moneys to be used for payment of premium on the Bonds, and a
principal account, into which shall be deposited all moneys to be used for
payment of principal of the Bonds. The moneys in the Bond Fund shall be held by
the Trustee in trust and applied as hereinafter provided and, pending such
application, shall be subject to a lien and charge in favor of the holders of
the Bonds issued and Outstanding under this Agreement, and for the further
security of such holders, until paid out or transferred as herein provided.
Section 502. Payments into Bond Fund. There shall be deposited to the
-----------------------
credit to the appropriate account of the Bond Fund:
(i) accrued interest, if any, on the Bonds issued hereunder paid by the
purchasers thereof;
(ii) any amount in the Project Fund and the Reserve Fund to be transferred
to the Bond Fund in accordance with the provisions of Section 406, 511(C) and
602, respectively, of this Agreement; and
(iii) all other moneys received by the Trustee under and pursuant to any of
the provisions of the Loan Agreement, any Related Document or otherwise which
are permitted or required, or are accompanied by directions from the Borrower or
the Authority that such moneys are, to be paid into the Bond Fund.
If before eleven ante meridiem (11:00 a.m.), Atlantic Standard Time, on the
Business Day immediately preceding any Payment Date, sufficient moneys are not
available in the Bond Fund to pay, when due, principal (whether at maturity or
redemption or acceleration or otherwise), premium,
52
<PAGE>
if any, and interest due or to become due on the Bonds, the Trustee shall,
before eleven ante meridiem (11:00 A.M.), Puerto Rico time: (a) withdraw from
the Reserve Fund an amount sufficient, together with the amount then held to the
credit of the Bond Fund pursuant to clause (i), (ii) and (iii) of this Section,
to pay when due the principal of (whether at maturity or upon redemption or
acceleration or otherwise), premium, if any, and interest due or to become due
on the Bonds on such Payment Date and (b) if the amounts drawn under (a) should
prove insufficient for the payment due or to become due, make a single draw
under the Credit Enhancement, to the extent still required pursuant to the Loan
Agreement, or the Collateral Fund, if the Credit Enhancement shall have been
substituted through a deposit of the Cash Collateral in the Collateral Fund, in
an amount equal to the then current Enhancement Amount. The proceeds of such
draw shall be deposited to the credit of the Bond Fund.
The Trustee shall establish a separate account or subaccount within the Bond
Fund corresponding to the source of moneys specified in this Section 502 for
each deposit made into the Bond Fund so that the Trustee may at all times
ascertain the source and date of deposit of the funds in each such account or
subaccount.
The Trustee is authorized to receive at any time payments from or on behalf
of the Borrower pursuant to the Loan Agreement or otherwise for deposit in the
Bond Fund.
Section 503. Use of Moneys in Bond Fund. Moneys in the Bond Fund shall be
--------------------------
used solely for the payment
53
<PAGE>
of the principal (whether at maturity or upon acceleration or redemption or
otherwise) of premium, if any, and interest on the Bonds. The Trustee shall, on
each Interest Payment Date, withdraw from the Bond Fund moneys deposited to the
credit of the Bond Fund pursuant to Section 502 hereof, and remit by mail or by
wire transfer, if applicable, as provided under Section 203 of this Agreement to
each registered owner the amounts required for paying the interest on such Bonds
as such interest becomes due and payable. The Trustee shall, on each Principal
Payment Date, withdraw from the Bond Fund and set aside or deposit in trust
sufficient moneys for paying the principal of and redemption premium, if any, on
all Bonds as such principal and premium, if any, become due, whether at
maturity, upon acceleration or redemption or otherwise.
Section 504. Application and Pledge of Moneys in the Bond Fund. Subject to
-------------------------------------------------
the terms and conditions set forth in this Agreement, moneys held for the credit
of the Bond Fund shall be held in trust and disbursed by the Trustee for (a) the
payment of interest on the Bonds issued hereunder as such interest becomes due
and payable, (b) the payment of the principal of such Bonds at their respective
maturities, and (c) the payment of the redemption price of such Bonds on the
date fixed for redemption, and such moneys are hereby pledged to secure, and are
charged with, the payments mentioned in this Section.
Section 505. Moneys Withdrawn from Bond Fund. All moneys which the Trustee
-------------------------------
shall have withdrawn from the Bond Fund or shall have received from any other
source and set aside for the purpose of paying any of the Bonds, either at the
maturity thereof or
54
<PAGE>
upon call for redemption or otherwise shall be held in trust for the respective
holders of such Bonds, but any moneys which shall be so withdrawn or set aside
and which shall remain unclaimed by the holders of such Bonds for a period of
two (2) years after the date on which such Bonds shall have become due and
payable may, upon the request of the Borrower, be paid to the Borrower or to
such officer, board or body as may then be entitled by law to receive the same.
Thereafter, the holders of such Bonds shall look only to the Borrower or to such
officer, board or body, as the case may be, for payment and then only to the
extent of the amount so received by Borrower or such officer, board or body, as
the case may be, without any interest thereon, and the Authority and the Trustee
shall have no responsibility with respect to such moneys. Until distributed,
any moneys so withdrawn or set aside shall be invested as the Trustee and
Borrower may agree.
Section 506. Cancellation of Bonds Upon Payment. All Bonds paid or
----------------------------------
redeemed, either at or before maturity, and all Bonds delivered by the Borrower
to the Trustee for cancellation shall be cancelled upon the payment, redemption
or delivery of such Bonds. All Bonds cancelled under any of the provisions of
this Agreement shall be held by the Trustee until such time as they are
destroyed by the Trustee. The Trustee shall execute a certificate in triplicate
describing the Bonds so destroyed, and an executed certificate shall be filed
with each of the Authority and the Borrower and the other executed certificate
shall be retained by the Trustee. Upon the delivery to the Trustee by or on
behalf of the Borrower of any Bonds to be cancelled, the Trustee
55
<PAGE>
shall promptly give notice thereof to the Authority and the Borrower.
Section 507. Credit Enhancement or Cash Collateral Substitution.
--------------------------------------------------
(A) At any time and from time to time the Borrower may, pursuant to the
provisions of Section 4.09 of the Loan Agreement, cause the substitution of the
then current Credit Enhancement or Cash Collateral for another Credit
Enhancement or Cash Collateral, subject to the conditions set forth in the Loan
Agreement. If at any time there shall have been delivered to the Trustee a
substitute Credit Enhancement or Cash Collateral and the documents mentioned in
Section 4.09 of the Loan Agreement, then the Trustee shall accept such
substitute Credit Enhancement or Cash Collateral and surrender any previously
held Credit Enhancement or Cash Collateral to the Guarantor or Letter of Credit
Bank, as applicable, for cancellation in accordance with its terms, or shall
refund the Cash Collateral to the Depositor thereof.
(B) If at any time all the Bonds shall be deemed to have been paid within
the meaning and with the effect expressed in Section 1301 of this Agreement, the
Trustee shall surrender any Credit Enhancement or Cash Collateral to the issuer
or Depositor thereof for cancellation in accordance with its terms. The Trustee
shall comply with the procedures set forth in any Credit Enhancement relating to
the termination thereof.
Section 508. Bondholder Rights to Receive Payment. Notwithstanding any
------------------------------------
other provision of this Agreement, including the restrictions upon actions by
individual Bondholders in Section 809 of this Agreement, the right of any
Bondholder to
56
<PAGE>
receive payment of principal, premium, if any, and interest on the Bond, on or
after the respective due dates expressed in the Bonds, shall not be impaired or
affected without the consent of the Bondholder.-
Section 509. Creation of Reserve Fund. A special fund is hereby created and
------------------------
designated "Industrial Revenue Bonds, Nineteen Hundred Ninety Five (1995) Series
A (Plaza Palma Real Project) Reserve Fund". The moneys in the Reserve Fund
shall be held by the Trustee in trust and applied as hereinafter provided and,
pending such application, shall be subject to a lien and charge in favor of the
holders of the Bonds Outstanding and for the further security of such holders,
until paid out or transferred as herein provided.
Section 510. Payments into Reserve Fund. (A) There shall be deposited to
--------------------------
the credit of the Reserve Fund: (i) the amount required to be deposited pursuant
to Section 208(D) of this Agreement from the proceeds of the sale of Bonds and
(ii) all amounts paid by the Borrower pursuant to Section 4.01(b)(ii) of the
Loan Agreement.
(B) The Trustee is authorized to receive at any time payments from the
Borrower or the Guarantor pursuant to the Loan Agreement or the Guaranty
Agreement or otherwise for deposit in the Reserve Fund.
Section 511. Application of Moneys in Reserve Fund. (A) Moneys held for
-------------------------------------
the credit of the Reserve Fund shall be held in trust and applied by the Trustee
and are charged with the payments provided in Section 504 to the extent moneys
held to the credit of the Bond Fund are insufficient for the purposes
established in Section 504; provided that moneys to the credit of the Reserve
Fund shall not
57
<PAGE>
be applied to the payment of any redemption premium except in the case of a
redemption of the Bonds in whole.
(B) The Trustee shall, on each Payment Date, withdraw from the Reserve Fund
sufficient moneys to pay the amounts of principal of and interest on the Bonds
then due and payable to the Bondholders, as provided in this Agreement, to the
extent moneys held to the credit of the Bond Fund are insufficient therefor.
(C) Moneys held to the credit of the Reserve Fund in excess of the Reserve
Fund Amount following the Date of Issuance, shall be deposited to the credit of
the Bond Fund on each Interest Payment Date, provided, that, no Event of Default
under Section 802 shall have then been declared and be continuing.
(D) The Trustee shall determine the balance of moneys held to the credit of
the Reserve Fund, as soon as practicable after any draw of moneys from the
Reserve Fund is made pursuant to Sections 502 and 511(C) hereof without taking
into account unrealized gains or losses on Government Obligations in which all
or any part of the Reserve Fund shall be deposited. To the extent that the
moneys held to the credit of the Reserve Fund determined pursuant to the
provisions set forth above, shall be less than the Reserve Fund Amount, the
Trustee shall notify the Borrower of such deficiency pursuant to the terms of
Section 4.01(c)(iii) of the Loan Agreement.
Section 512. Creation of Casualty and Condemnation Award Fund. A special
------------------------------------------------
fund is hereby created and designated "Industrial Revenue Bonds, Nineteen
Hundred Ninety-Five (1995) Series A (Plaza
58
<PAGE>
Palma Real Project), Casualty and Condemnation Award Fund" (the "Casualty and
Condemnation Fund"). The moneys in the Casualty and Condemnation Award Fund
shall be held by the Trustee and applied as hereinafter provided, and pending
such application, shall be subject to a lien and charge in favor of the holders
of the Bonds Outstanding.
Section 513. Payments into Casualty and Condemnation Award Fund. There
--------------------------------------------------
shall be deposited to the credit of the Casualty and Condemnation Award Fund the
Net Insurance Proceeds received upon any casualty or the Net Condemnation
Proceeds received upon any taking of the Shopping Center after the Completion
Date pursuant to Article IX of the Loan Agreement.
Section 514. Application of Moneys in Casualty and Condemnation Award Fund.
-------------------------------------------------------------
Moneys held to the credit of the Casualty and Condemnation Award Fund shall be
applied by the Trustee for the purpose of redeeming Bonds or restoring the
Shopping Center in accordance with the requirements of Article IX of the Loan
Agreement, to the extent that the Borrower shall, under the provisions of such
Article IX elect to reconstruct, rehabilitate, or otherwise make improvements to
the Shopping Center, and it shall have otherwise satisfied the conditions set
forth in such Article IX. Upon the instructions of the Borrower, except in the
case of a Total Taking or Total Casualty, the Trustee shall make disbursements
from the Casualty and Condemnation Award Fund in the manner and in accordance
with the procedure set forth in the Project Fund.
Section 515. Creation of Collateral Fund. A special fund is hereby created
---------------------------
and designated "Industrial Revenue Bonds, Nineteen Hundred Ninety-
59
<PAGE>
Five (1995) Series A (Plaza Palma Real Project), Collateral Fund" (the
"Collateral Fund"). The moneys in the Collateral Fund shall be funded in
accordance with Section 516, and held by the Trustee and applied as hereinafter
provided, and pending such application, shall be subject to a lien and charge in
favor of the holders of the Bonds issued and outstanding under this Agreement.
Section 516. Payments into Collateral Fund. (A) There shall be deposited to
-----------------------------
the credit of the Collateral Fund: (i) Moneys in an amount of not less than the
then current Enhancement Amount, if at any time the Borrower shall elect to
substitute the Credit Enhancement or other Cash Collateral with Cash Collateral,
subject to the provisions of Section 4.09(c) of the Loan Agreement; and (ii) all
amounts paid pursuant to a Permitted Letter of Credit Deposit pursuant to
Section 4.09(d) of the Loan Agreement.
(B) The Trustee is authorized to receive at any time payments from the
Borrower or the Guarantor pursuant to the Loan Agreement or the Guaranty
Agreement or otherwise for deposit in the Collateral Fund.
Section 517. Application of Moneys in Collateral Fund. (A) Moneys held for
----------------------------------------
the credit of the Collateral Fund shall be held in trust and applied by the
Trustee and are charged with the payments provided in Section 504 to the extent
moneys held to the credit of the Bond Fund and the Reserve Fund are insufficient
for the purposes established in Section 504; provided that moneys to the credit
of the Collateral Fund shall not be applied to the payment of any redemption
premium, except in the case of a redemption of the Bonds in whole and then only
after
60
<PAGE>
all principal and interest due on the Bonds has been paid in full.
(B) The Trustee shall, on each Payment Date, withdraw from the Collateral
Fund sufficient moneys to pay the amounts of principal of and interest on the
Bonds then due and payable to the Bondholders, as provided in this Agreement, to
the extent moneys held to the credit of the Bond Fund and the Reserve Fund are
insufficient therefor.
(C) Moneys held to the credit of the Collateral Fund in excess of the then
current Enhancement Amount, shall be delivered by the Trustee on each Principal
Payment Date to the Depositor of such Cash Collateral.
ARTICLE VI
Depositories of Moneys, Security for
Deposits and Investment of Funds
Section 601. Security for Deposits. All moneys deposited with the Trustee
---------------------
under the provisions of this Agreement or the Loan Agreement shall be held in
trust for the exclusive benefit of the Bondholders in segregated accounts and
not commingled with the funds or accounts of any other Person and applied only
in accordance with the provisions of this Agreement and the Loan Agreement and
shall not be subject to lien or attachment by any creditor of the Authority, the
Trustee, the Borrower, the Guarantor, the Letter of Credit Bank or the Depositor
of Cash Collateral.
All moneys deposited with the Trustee under this Agreement and the Loan
Agreement in excess of the amount guaranteed by the Federal Deposit Insurance
Corporation or other federal agency shall be continuously secured for the
benefit of the Authority, the Borrower and the holders of the Bonds either (a)
by lodging with a bank or trust company
61
<PAGE>
approved by the Authority and by the Trustee as custodian, or, if then permitted
by law, by setting aside under control of the trust department of the bank
holding such deposit, as collateral security, Government Obligations or, with
the approval of the Trustee, other marketable securities eligible as security
for the deposit of trust funds under regulations of the Comptroller of the
Currency of the United States of America, or applicable Commonwealth or state
law or regulations, having a market value (exclusive of accrued interest) not
less than the amount of such deposit, or (b) if the furnishing of security as
provided in clause (a) of this Section is not permitted by applicable law, in
such other manner as may then be required or permitted by applicable
Commonwealth, state or federal laws and regulations regarding the security for,
or granting a preference in the case of, the deposit of trust funds, in
particular those relating to fiduciary funds on deposit pursuant to Twelve, Code
of Federal Regulations Section Nine Point Ten (b) (12 C.F.R. (S)9.10(b));
provided, however, that it shall not be necessary for the Trustee to give
security for any moneys which shall be represented by the investments purchased
under the provisions of this Article as an investment of such moneys.
Section 602. Investment of Moneys. Moneys held to the credit of the Project
--------------------
Fund, the Bond Fund (other than moneys held to pay any premiums on the Bonds),
and the Casualty and Condemnation Award Fund except as provided in Section 505
and Article XIII hereof, shall at the direction of an Authorized Borrower
Representative, be invested and reinvested by the Trustee in Investment
Obligations selected by the Borrower.
62
<PAGE>
Such obligations so purchased as an investment of moneys in the Project Fund,
the Bond Fund, the Reserve Fund, the Casualty and Condemnation Award Fund and
the Collateral Fund except as provided in Section 505 and Article XIII hereof,
shall be deemed at all times to be part of such funds and any interest accruing
on and any profit realized from the investment of moneys in such funds
regardless of the unliquidated value of such investment shall be credited to the
Bond Fund on each Interest Payment Date and any realized loss resulting from
such investment shall be charged to such funds. Neither the Trustee nor the
Authority shall be liable or responsible for any loss resulting from any such
investment.
The moneys held to the credit of the Collateral Fund and the Reserve Fund
shall be invested, as directed by an Authorized Borrower Representative, only in
Government Obligations. With respect to the Collateral Fund, such Government
Obligations shall not have maturities which exceed one (1) year. Interest or
profits thereon shall be held in the Collateral Fund and the Reserve Fund, as
applicable and applied as provided in Section 517(C) and Section 511(C) hereof,
respectively.
ARTICLE VII
Particular Covenants and Provisions
Section 701. Covenant to Pay Bonds; Bonds Limited Obligations of Authority.
-------------------------------------------------------------
The Authority covenants that it will cause to be paid promptly the principal
of and premium, if any, and interest on every Bond on the dates and in the
manner provided herein and in each Bond, according to the true intent and
meaning thereof; provided, however, that any amount in the Bond Fund available
63
<PAGE>
for any payment of the principal of or premium, if any, or interest on each Bond
shall be credited against any amount required to be caused by the Authority so
to be paid. Except as in this Agreement otherwise provided, such principal,
premium and interest are payable solely from the payments required to be made by
the Borrower under Section 4.01 of the Loan Agreement, and any other revenues
and funds derived under the Loan Agreement and this Agreement, the Related
Documents, the Credit Enhancement or from the Cash Collateral to the extent
provided in this Agreement or the Loan Agreement, which payments under the Loan
Agreement, revenues and funds to the extent provided in this Agreement and the
Loan Agreement are hereby pledged to the payment thereof in the manner and to
the extent hereinabove particularly specified.
The Bonds issued under the provisions of this Agreement and the premium, if
any, and the interest thereon shall not constitute an indebtedness of either the
Commonwealth or any of its political subdivisions, other than the Authority, and
neither the Commonwealth nor any of such political subdivisions, other than the
Authority, shall be liable thereon. The Bonds shall be payable solely from the
revenues and proceeds provided therefor and the Authority is not obligated to
pay the Bonds nor the premium, if any, or the interest thereon except from the
revenues and proceeds pledged therefor.
Section 702. Covenant to Perform Obligations under this Agreement and Loan
-------------------------------------------------------------
Agreement. The Authority covenants that it will faithfully perform at all times
- ---------
any and all covenants, undertakings, stipulations and provisions contained in
this Agreement and the Related Documents to which it is a
64
<PAGE>
party, in the Bonds and in all proceedings of the Authority pertaining thereto
and filed with the Trustee and will faithfully observe and perform at all times
any and all covenants, undertakings, stipulations and provisions of the Loan
Agreement and the Related Documents to which it is a party on its part to be
observed or performed. The Authority covenants that it is duly authorized under
the Constitution and laws of the Commonwealth, including particularly and
without limitation the Act, to issue the Bonds authorized hereby and to enter
into this Agreement and the Related Documents to which it is a party and to
pledge the payments and other funds derived from the Loan Agreement and the
Related Documents to which it is a party in the manner and to the extent herein
set forth; that all action on its part for the issuance of the Bonds and the
execution and delivery of this Agreement and the Related Documents to which it
is a party has been duly and effectively taken; and that such Bonds in the hands
of the owners thereof are and will be valid and enforceable obligations of the
Authority according to the tenor and import thereof.
Section 703. Covenant to Perform Further Acts. The Authority covenants that
--------------------------------
it will do, execute, acknowledge and deliver or cause to be done, executed,
acknowledged and delivered, such agreements supplemental hereto and such further
acts, instruments and transfers as the Trustee may reasonably require for the
better pledging unto the Trustee all and singular the payments and any other
revenues and other funds pledged hereby to the payment of the principal of and
premium, if any, and interest on the Bonds.
Section 704. Trustee May Enforce Authority's
-------------------------------
65
<PAGE>
Rights and Obligations Under Loan Agreement and Related Documents. The Loan
- -----------------------------------------------------------------
Agreement and other Related Documents, duly executed counterparts of which have
been filed with the Trustee, set forth the covenants and obligations of the
Authority and the Borrower, including a provision in Section 10.11 of the Loan
Agreement that provides that, subsequent to the issuance of the Bonds and prior
to the Payment of the Bonds, the Loan Agreement may not be effectively amended,
changed, modified, altered or terminated except in accordance with this
Agreement. Reference is hereby made to the Loan Agreement and the other Related
Documents for a detailed statement of said covenants and obligations of the
Borrower and the Authority under the Loan Agreement and the other Related
Documents, and the Authority agrees that the Trustee, subject to the provisions
of the Loan Agreement, the other Related Documents and this Agreement reserving
certain rights to the Authority and respecting actions by the Trustee in its
name or in the name of the Authority, may enforce all rights of the Authority
and all obligations of the Borrower and may perform all obligations of the
Authority under and pursuant to the Loan Agreement and the other Related
Documents for and on behalf of the Bondholders whether or not the Authority is
in default hereunder.
Section 705. Trustee's Notice to Guarantor, Letter of Credit Bank or
-------------------------------------------------------
Depositor of Cash Collateral. If on the fifteenth (15th) day of any month
- ----------------------------
immediately preceding any Payment Date there shall not otherwise be available to
the Trustee sufficient monies to the credit of the Bond Fund to pay the
principal of, premium, if any, and interest on the Bonds due on such Payment
Date, the Trustee
66
<PAGE>
shall on such day send a notice to the Guarantor, Letter of Credit Bank or
Depositor of the Cash Collateral, if any, with a copy to the Borrower, for their
information, stating the amount to become due with respect to the Bonds on such
Payment Date and the amount of the then existing deficiency, provided, that the
failure to provide such notice shall not impair the Trustee's right to draw upon
the applicable Credit Enhancement or the Cash Collateral.
ARTICLE VIII
Default and Remedies
Section 801. Extension of Interest. In case the time for the payment of the
---------------------
interest on any Bond shall be extended, whether or not such extension be by or
with the consent of the Authority, such interest shall not be entitled in case
of default hereunder to the benefit or security of this Agreement except subject
to the prior payment in full of the principal of all the Bonds then Outstanding
and interest the time for the payment of which shall not have been extended.
Section 802. Defaults. The following shall constitute Events of Default
--------
under this Agreement:
(a) An event of default under Section 7.01(c) of the Loan Agreement.
(b) An event of default under the Loan Agreement other than under Section
7.01(c) thereof.
Section 803. Acceleration. (a) Upon the happening and continuance of an
------------
Event of Default specified in Section 802(a) hereof, the Trustee shall by notice
in writing to the Authority, to the Bondholders and to the Borrower, declare the
principal of all of the Bonds then Outstanding (if not then due and payable) to
be
67
<PAGE>
due and payable immediately after the date of such notice, and upon such
declaration the same shall become and be due and payable and the Trustee shall
also realize on the Credit Enhancement or draw on the Cash Collateral, as
applicable, if any is then outstanding, up to the then Current Enhancement
Amount, if any, immediately after the date of such notice, anything contained in
the Bonds or in this Agreement to the contrary notwithstanding.
(b) Upon the happening and continuance of any Event of Default specified in
Section 802(b) hereof, then and in every such case the Trustee may, and upon the
written direction of the holders of not less than twenty-five percent (25%) in
aggregate principal amount of the Bonds Outstanding shall, by notice in writing
to the Authority and the Borrower, declare the principal of all of the Bonds
then Outstanding (if not then due and payable) to be due and payable and the
Trustee shall also realize on the Credit Enhancement or draw on the Cash
Collateral, as applicable, if any is then outstanding, up to the then Current
Enhancement Amount, if any, immediately after the date of such notice, and upon
such declaration the same shall become and be due and payable after the date of
such notice, anything contained in the Bonds or in this Agreement to the
contrary notwithstanding.
Section 804. Enforcement of Remedies. Upon the happening and continuance of
-----------------------
any Event of Default specified in Section 802 hereof, the Trustee (a) shall, in
the case of an event of default under Section 802(a) hereof, and (b) may, and
upon the written direction of the holders of not less than twenty-five percent
(25%) in aggregate principal amount of the Bonds then Outstanding hereunder
shall, in the case of a default
68
<PAGE>
under Section 802(b) hereof, proceed, subject to the provisions of Section 902
hereof, to protect and enforce its rights and the rights of the Bondholders
under applicable laws, under the Loan Agreement, under any of the Related
Documents or Credit Enhancement, if any, or under this Agreement by such suits,
actions or special proceedings in equity or at law, or by proceedings in the
office of any board or officer having jurisdiction, either for the specific
performance of any covenant or agreement contained herein or in aid or execution
of any power herein granted or for the enforcement of any proper legal or
equitable remedy, as the Trustee, being advised by counsel, shall deem most
effectual to protect and enforce such rights.
In the enforcement of any remedy under this Agreement, the Trustee in its
own name and as trustee of an express trust, shall be entitled to sue for,
enforce payment of and recover judgment for, any and all amounts then or after
any default becoming, and at any time remaining, due from the Authority or the
Borrower for principal, premium, if any, interest or otherwise under any of the
provisions of this Agreement or of the Bonds with interest to the extent
permitted by law on overdue payments of principal, premium, if any, and interest
at the rate or rates of interest specified in the Bonds, together with any and
all costs and expenses of collection and of all proceedings hereunder and under
the Bonds, without prejudice to any other right or remedy of the Trustee or of
the Bondholders, and to recover and enforce any judgment or decree against the
Authority or the Borrower but solely as provided herein and in the Bonds, for
any portion of such amounts remaining unpaid and
69
<PAGE>
interest, costs and expenses as above provided, and to collect (but solely from
moneys in the Bond Fund and any other moneys available for such purpose), in any
manner provided by law, the moneys adjudged or decreed to be payable.
Section 805. Trustee May File Claim in Bankruptcy. In case of the pendency
------------------------------------
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other similar judicial proceeding
relative to the Authority, the Borrower, the issuer of a Credit Enhancement or
the Depositor of Cash Collateral or to property of the Authority, the Borrower,
the issuer of a Credit Enhancement or the Depositor of Cash Collateral or the
creditors of either of them, the Trustee (irrespective of whether the principal
of the Bonds shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Borrower for the payments equal to overdue principal or
interest), the issuer of a Credit Enhancement or the Depositor of Cash
Collateral shall be entitled and empowered, by intervention in such proceeding
or otherwise:
(i) to file and prove a claim for the whole amount of principal, premium,
if any, and interest owing and unpaid in respect of the Bonds and to file such
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
of the Bondholders allowed in such judicial proceeding; and
(ii) to collect and receive any moneys or other
70
<PAGE>
property payable or deliverable on any such claims and to distribute the same;
and any receiver, custodian, assignee, trustee, liquidator, sequestrator (or
other similar official) in any such judicial proceeding is hereby authorized by
each Bondholder to make such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments directly to the
Bondholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 902 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Bondholder any plan
of reorganization, arrangement, adjustment or composition affecting the Bonds or
the rights of any holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Bondholder in any such proceeding.
Section 806. Pro Rata Application of Funds. Anything in this Agreement to
-----------------------------
the contrary notwithstanding, if at any time the moneys in the Bond Fund shall
not be sufficient to pay the principal of premium, if any, or interest on the
Bonds as the same shall become due and payable (either by their terms or by
acceleration under the provisions of Section 803 of this Article) such moneys,
together with any moneys then available or thereafter becoming available for
such purpose, whether through the exercise of the remedies provided for in this
Article or otherwise, shall be applied, following the satisfaction of any
payments due to the Trustee under the provisions of Sections
71
<PAGE>
902 and 906 of this Agreement, as follows:
(a) If the principal of all the Bonds shall not have become due and payable
or shall not have been declared due and payable, all such moneys shall be
applied
first: to the payment to the Persons entitled thereto of all installments
-----
of interest then due and payable in the order in which such installments became
due and payable, and, if the amount available shall not be sufficient to pay in
full any particular installment, then to the payment of such installment,
ratably, according to the amounts due on such installment, to the Persons
entitled thereto, without any discrimination or preference except as to any
difference in the respective rates of interest specified in the Bonds;
second: to the payment to the Persons entitled thereto of the unpaid
------
principal of, premium, if any, on any Bonds which shall have become due and
payable (other than Bonds deemed to have been paid in accordance with Article
XIII hereof) in the order of their due dates, with interest on the principal
amount of such Bonds at the respective rates specified therein from the
respective dates upon which such Bonds became due and payable, and, if the
amount available shall not be sufficient to pay in full the principal of the
Bonds and premium, if any, due and payable on any particular date, together with
such interest, then to the payment first of such interest, ratably, according to
the amount of such interest due on such date, and then to the payment of such
principal and premium, if any, ratably, according to the amount of such
principal and premium, if any, due on such date, to the Persons entitled
thereto, without any discrimination
72
<PAGE>
or preference except as to any difference in the respective rates of interest
specified in the Bonds; and
third: to the payment of the interest and the principal of the Bonds and to
-----
the redemption of Bonds, all in accordance with the provisions of this
Agreement.
Notwithstanding the foregoing, in all instances hereunder no redemption
premium shall be paid until all principal and interest due on the Bonds shall
first have been paid in full.
(b) If the principal of all the Bonds shall have become due and payable or
shall have been declared due and payable, all such moneys shall be applied to
the payment of the principal and interest and premium, if any, then due upon the
Bonds, without preference or priority of principal over interest or premium, or
of interest over principal or premium, or premium over principal or interest or
of any Bond over any other Bond, ratably, according to the amounts due
respectively for principal, interest and premium, if any, to the Persons
entitled thereto without any discrimination or privilege except as to any
difference in the respective rates of interest specified in the Bonds.
Whenever moneys are to be applied by the Trustee pursuant to the provisions
of this Section, such moneys shall be applied by the Trustee at such times, and
from time to time, as the Trustee in its sole discretion shall determine, having
due regard to the amount of such moneys available or becoming available for such
application or the likelihood of additional moneys in the future; the setting
aside of such moneys, in trust for the proper purpose shall constitute proper
application by the Trustee;
73
<PAGE>
and the Trustee shall incur no liability whatsoever to the Authority, to any
Bondholder or to any other Person for any delay in applying any such moneys so
long as the Trustee acts with reasonable diligence, having due regard to the
circumstances, and ultimately applies the same in accordance with such
provisions of this Agreement as may be applicable at the time of application by
the Trustee. Whenever the Trustee shall exercise such discretion in applying
such moneys, it shall fix the date (which shall be an Interest Payment Date
unless the Trustee shall deem another date more suitable) upon which such
application is to be made and upon such date interest on the amounts of
principal to be paid on such date shall cease to accrue. The Trustee shall give
such notice as it may deem appropriate of the fixing of any such date, and shall
not be required to make payment to the holder of any Bond until such Bond shall
be surrendered to the Trustee for appropriate endorsement, or for cancellation
if fully paid.
Section 807. Effect of Discontinuance of Proceedings. In case any
---------------------------------------
proceeding taken by the Authority or the Trustee on account of any default shall
have been discontinued or abandoned for any reason, then, and in every such
case, the Authority, the Trustee, the Borrower and the Bondholders shall be
restored to their former positions and rights hereunder, respectively, and all
rights, remedies, powers and duties of the Trustee, the Authority and the
Borrower shall continue as though no proceeding had been taken.
Section 808. Holders of Majority in Principal Amount of Bonds May Control
------------------------------------------------------------
Proceedings. Anything in this Agreement to the contrary notwithstanding
- -----------
74
<PAGE>
(but subject, however, to Sections 803 and 804 hereof), the holders of a
majority in principal amount of the Bonds then Outstanding shall have the right,
subject to the provisions of Sections 902 and 906 hereof, by an instrument or
concurrent instruments in writing executed and delivered to the Trustee, to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee hereunder or exercising any trust or power conferred
upon the Trustee, provided that (i) such direction shall not be otherwise than
in accordance with law and the provisions of this Agreement, and (ii) subject to
the provisions of Section 902 hereof, that the Trustee may take any other action
deemed proper by the Trustee which is not inconsistent with such direction.
Section 809. Restrictions Upon Actions by Individual Bondholder. Except
--------------------------------------------------
with respect to a claim for indemnity upon an Event of Taxability pursuant to
Section 5.11 of the Loan Agreement, no holder of any of the Bonds shall have any
right to institute any suit, action or proceeding in equity or at law on any
Bond or for the execution of any trust hereunder or for any other remedy
hereunder unless such holder previously shall have given to the Trustee written
notice of the Event of Default on account of which such suit, action or
proceeding is to be instituted, and unless also the holders of not less than
twenty-five percent (25%) in aggregate principal amount of the Bonds then
Outstanding shall have made written request of the Trustee after the right to
exercise such powers or right of action, as the case may be, shall have accrued,
and shall have afforded the Trustee a reasonable opportunity either to proceed
to exercise the powers hereinabove
75
<PAGE>
granted or to institute such action, suit or proceeding in its or their name,
and unless, also, there shall have been offered to the Trustee reasonable
security and indemnity against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee shall have refused or neglected to
comply with such request within a reasonable time; and such notification,
request and offer of indemnity are hereby declared in every such case, at the
option of the Trustee, to be conditions precedent to the execution of the powers
and trusts of this Agreement or to any other remedy hereunder. It is understood
and intended that, except as otherwise above provided, no one or more holders of
the Bonds hereby secured shall have any right in any manner whatever by his or
their action to affect, disturb or prejudice the security of this Agreement, or
to enforce any right hereunder except in the manner herein provided, that all
suits, actions and proceedings at law or in equity shall be instituted, had and
maintained in the manner herein provided and for the benefit of all holders of
such Outstanding Bonds, and that any individual right of action or other right
given to one or more of such holders by law is restricted by this Agreement to
the rights and remedies herein provided.
Section 810. Receiver. Upon the occurrence of an Event of Default and upon
--------
the filing of a suit or other commencement of judicial proceedings to enforce
the rights of the Trustee and of the Bondholders under this Agreement, the
Trustee shall be entitled, as a matter of right, to the appointment of a
receiver or receivers of the payments under the Loan Agreement pending such
proceedings, with such powers as the court making
76
<PAGE>
such appointment shall confer, whether or not any such amounts payable shall be
deemed sufficient ultimately to satisfy the Bonds Outstanding.
Section 811. Actions by Trustee. All rights of action and claims under this
------------------
Agreement or under any of the Bonds secured hereby, enforceable by the Trustee
may be prosecuted and enforced by it without the possession of any of the Bonds
or the production thereof in the trial or other proceeding relative thereto, and
any such suit, action or proceeding instituted by the Trustee shall be brought
in its name for the benefit of all of the holders of such Bonds, subject to the
provisions of this Agreement.
Section 812. No Remedy Exclusive. No remedy herein conferred upon or
-------------------
reserved to the Trustee, or to the holders of the Bonds is intended to be
exclusive of any other remedy or remedies herein provided, and each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or by law.
Section 813. No Delay or Omission Construed to be a Waiver. No delay or
---------------------------------------------
omission of the Trustee, or of any holder of the Bonds to exercise any right or
power accruing upon any default shall impair any such right or power or shall be
construed to be a waiver of any such default or any acquiescence therein; and
every power and remedy given by this Agreement to the Trustee, and to the
holders of the Bonds, respectively, may be exercised from time to time and as
often as may be deemed expedient.
Section 814. Waiver of Past Defaults. The holders of a majority in
-----------------------
aggregate principal amount of the Bonds then Outstanding may on behalf of the
holders of all the Bonds then Outstanding waive any past default under Section
802 hereof and its
77
<PAGE>
consequences, except a default in respect of a covenant or provision of the Loan
Agreement which under Section 1102 hereof cannot be modified or amended without
the consent of the holder of each Outstanding Bond affected.
Upon such waiver, such default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Agreement; but no such waiver shall extend to any subsequent or other default or
impair any right consequent thereon.
Section 815. Notice of Default. If an Event of Default occurs and is
-----------------
continuing and if it is known to the Trustee, the Trustee shall mail to each
Bondholder notice of such Event of Default within thirty (30) days after such
Event of Default shall have become known to the Trustee and the expiration of
any applicable grace or cure periods. Except in the case of default in the
payment of the principal of or any interest on the Bonds, the Trustee shall be
protected in withholding such notice if and so long as the board of directors or
a designated committee of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Bondholders. Subject to
the provisions of Section 905(c), the Trustee shall not, however, be subject to
any liability to any Bondholder by reason of its failure to mail any such
notice.
ARTICLE XI
Concerning the Trustee
Section 901. Acceptance of Trusts. The Trustee accepts and agrees to
--------------------
execute the trusts imposed upon it by this Agreement, but only upon the terms
and conditions set forth in this Article and subject to the provisions of this
Agreement, to all of which
78
<PAGE>
the parties hereto and the respective holders of the Bonds agree. The Trustee
also accepts, and agrees to do and perform, the duties and obligations imposed
upon it by and under the Loan Agreement, but only upon the terms and conditions
set forth in the Loan Agreement and this Agreement.
Section 902. Trustee Entitled to Indemnity. Except for its obligation to
-----------------------------
accelerate the Bonds, draw on the Cash Collateral and/or realize on the Credit
Enhancement, the Trustee shall be under no obligation to institute any suit, or
to take any remedial proceeding under this Agreement or under the Loan
Agreement, or to enter any appearance in or in any way defend against any suit,
in which it may be made a defendant, or to take any steps in the execution of
the trusts hereby created or in the enforcement of any rights and powers
hereunder or under the Loan Agreement until it shall be indemnified to its
satisfaction against any and all costs and expenses, outlays and counsel fees
and other reasonable disbursements, and against all liability other than
liability occasioned by its own bad faith, misconduct or negligence; the Trustee
may, nevertheless, begin suit, or appear in and defend suit, or do anything else
in its judgment proper to be done by it as such Trustee, without prior
indemnity, and in such case the Authority or the Borrower shall reimburse and
indemnify the Trustee from funds available therefor under the Loan Agreement for
all liabilities, costs and expenses, outlays and counsel fees and other
reasonable disbursements properly incurred in connection therewith. The Trustee
shall be paid interest on any funds advanced hereunder, at rates customarily
charged by the Trustee, which rates shall in no
79
<PAGE>
event be more than the prime rate charged by the Trustee to its best commercial
customers and furthermore, not in excess of the maximum legal interest rate. If
the Authority or the Borrower shall fail to make such reimbursement or
indemnification, the Trustee may reimburse or indemnify itself from any moneys
in its possession under the provisions of this Agreement and shall be entitled
to a preference over any of the Bonds Outstanding.
Section 903. Trustee Not Responsible for Insurance, Taxes or Execution of
------------------------------------------------------------
this Agreement. The Trustee shall not be under any obligation to effect or
- --------------
maintain insurance or to renew any policies of insurance or to inquire as to the
sufficiency of any policies of insurance carried by the Borrower, or to report,
or make or file claims or proof of loss for, any loss or damage insured against
or which may occur, or to keep itself informed or advised as to the payment of
any taxes or assessments, or to require any such payment to be made except that
the Trustee shall review the information, reports and certifications regarding
insurance to be delivered by the Borrower pursuant to the Pledge Agreement to
determine whether they comply, on their face, with the provisions of such
paragraph. The Trustee shall have no responsibility in respect of the validity,
sufficiency, due execution or acknowledgment of this Agreement by the Authority
or the Borrower or the validity or sufficiency of the security provided
hereunder or, except as to the authentication thereof, in respect of the
validity of the Bonds or the due execution or issuance thereof. The Trustee
shall not be under any obligation to see that any duties herein imposed
80
<PAGE>
upon any party other than itself, or any covenants herein contained on the part
of any party other than itself to be performed, shall be done or performed, and
the Trustee shall be under no obligation for failure to see that any such duties
or covenants are so done or performed, except for the failure of the Borrower to
provide the reports and certificates required to be delivered pursuant to this
Agreement and the Loan Agreement at specific times.
Section 904. Trustee Not Responsible for Act of the Authority or Application
---------------------------------------------------------------
of Moneys Applied in Accordance with this Agreement. The Trustee shall not be
- ---------------------------------------------------
liable or responsible because of the failure of the Authority or the Borrower or
any of their employees or agents to make any collections or deposits or to
perform any act herein required of the Authority or the Borrower or because of
the loss of any moneys arising through the insolvency or the act or default or
omission of any other Depository in which such moneys shall have been deposited
under the provisions of this Agreement. The Trustee shall not be responsible
for the application of any of the proceeds of the Bonds or any other moneys
deposited with it and paid out, withdrawn or transferred hereunder if such
applications, payment withdrawal or transfer shall be made in accordance with
the provisions of this Agreement. The immunities and exemptions from liability
of the Trustee hereunder shall extend to its directors, officers, employees and
agents.
Section 905. Certain Duties and Responsibilities of the Trustee. (a)
--------------------------------------------------
Except during the continuance of an Event of Default specified in Section 802 of
this Agreement,
(i) The Trustee undertakes to perform such
81
<PAGE>
duties and only such duties as are specifically set forth in this Agreement or
the Loan Agreement, and no implied covenants or obligations shall be read into
this Agreement or the Loan Agreement against the Trustee; and
(ii) In the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Agreement or the Loan Agreement; but in
the case of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be under
a duty to examine the same to determine whether or not they conform to the
requirements of this Agreement or the Loan Agreement.
(b) In case an Event of Default specified in Section 802 of this Agreement
has occurred and is continuing, the Trustee shall exercise such of the rights
and powers vested in it by this Agreement, and use the same degree of care and
skill in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(c) None of the provisions of this Agreement shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;-
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by an officer
82
<PAGE>
or officers of the corporate trust department of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
holders of not less than a majority in principal amount of the Bonds then
Outstanding relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under the provisions of this Agreement; and
(iv) no provision of this Agreement or the Loan Agreement shall require
the Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of this
Agreement or the Loan Agreement or the Related Documents relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
(e) Except as otherwise above provided in this Section:
(i) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, or other paper or
document
83
<PAGE>
believed by it to be genuine and to be signed or presented by the proper party
or parties;
(ii) whenever in the administration of this Agreement, prior to the
occurrence of an Event of Default specified in Section 802 hereof, the Trustee
shall deem it desirable that a matter be proved or established prior to taking
or suffering any action hereunder, such matters (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate of an Authorized Borrower
Representative and such certificate, in the absence of bad faith on the part of
the Trustee, shall be full warrant to the Trustee for any action taken or
suffered by it under the provisions of this Agreement upon the faith thereof;
(iii) the Trustee may consult with counsel, and the advice of such counsel
or any written opinion of counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(iv) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, or other
paper or document but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit, and, if
the Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Borrower,
personally or by agent or attorney; provided, however, that the aforesaid right
of examination
84
<PAGE>
shall be exercised only upon such reasonable and necessary terms and conditions
as the Borrower shall prescribe, which conditions shall be deemed to include,
but not be limited to, reasonable notice and those conditions necessary to
protect the Borrower's trade secrets and proprietary rights; and
(v) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through attorneys and the
Trustee shall not be responsible for any misconduct or negligence on the part of
any attorney appointed with due care by it hereunder or under the Loan
Agreement.
Section 906. Compensation. The Authority shall cause the Borrower to pay to
------------
the Trustee its reasonable fees and expenses in accordance with Section 4.05(a)
of the Loan Agreement. If the Borrower shall fail to make any payment required
by this Section 906, the Trustee may, but shall be under no obligation to, make
such payment from any moneys in its possession under the provisions of this
Agreement and shall be entitled to a preference therefor over any of the Bonds
Outstanding.
Section 907. Semi-Annual Statement of Funds on Deposit. It shall be the
-----------------------------------------
duty of the Trustee, on or before the first day of the month following the first
Principal Payment Date, and semi-annually thereafter, to file with the
Authority, the Borrower and the Rating Agency a statement setting forth in
respect of the preceding six (6) calendar months or portion thereof as
applicable:
(a) the amount withdrawn or transferred by it and the amount deposited with
it on account of each fund held by it under the provisions of this Agreement;
85
<PAGE>
(b) a brief description of all the obligations held by it as an investment
of moneys in each such fund;
(c) the amounts applied to the payment, purchase or redemption of Bonds and
a description of the Bonds so paid, purchased, or redeemed;
(d) the amount applied to the payment of interest on the Bonds; and
(e) any other information which the Authority, the Borrower or the Rating
Agency may reasonably request.
All records and files pertaining to the Project and the trusts hereunder in
the custody of the Trustee shall be open at all reasonable times to the
inspection of the Authority and the Borrower and their agents and
representatives.
Section 908. Notice of Default. Except in the case of a default under
-----------------
paragraph (a) of Section 802 or as otherwise provided in Section 903 of this
Agreement, the Trustee shall not be obliged to take action in respect of any
Event of Default hereunder or under the Loan Agreement, unless specifically
notified in writing of the action the Trustee is to take in respect of such
Event of Default by the holders of not less than twenty-five per centum (25%) in
aggregate principal amount of the Bonds hereby secured and then Outstanding.
Notwithstanding the foregoing, the Trustee shall, in the case of an Event of
Default under this Agreement and the expiration of any applicable grace or cure
period, provide notice to the Bondholders as required by Section 815 hereof.
Section 909. Trustee May be Bondholder. The bank, national banking
-------------------------
association, or trust company
86
<PAGE>
acting as Trustee under this Agreement, and its directors, officers, employees
or agents, may in good faith buy, sell, own, hold and deal in any of the Bonds,
and may join in the capacity of a Bondholder in any action which any Bondholder
may be entitled to take with like effect as if it were not the Trustee under
this Agreement, may engage, as principal or agent, or be interested in any
financial or other transaction with the Authority or the Borrower, may maintain
any and all other general banking and business relations with the Authority or
the Borrower with like effect and in the same manner as if the Trustee were not
a party to this Agreement, and may act as Depository, trustee or agent for any
committee or body of holders of the Bonds issued under and secured by this
Agreement or other obligations of the Authority with like effect and in the same
manner as if the Trustee were not a party to this Agreement; and no implied
covenant shall be read into this Agreement against the Trustee in respect of
such matters.
Section 910. Trustee Not Responsible for Recitals. The recitals, statements
------------------------------------
and representations contained herein and in the Bonds (excluding the Trustee's
certificates of authentication on the Bonds) shall be taken and construed as
made by and on the part of the Authority and not by the Trustee, and the Trustee
shall not be under any responsibility for the correctness of the same. The
Trustee makes no representations as to the validity or sufficiency of this
Agreement, the Loan Agreement or of the Bonds. The Trustee shall not be
accountable for the use or application, other than as herein provided, of any of
the proceeds of the Bonds.
87
<PAGE>
Section 911. Trustee Not Responsible for Recording. Subject to the duties
-------------------------------------
of which may arise under Section 905(b) of this Agreement, the Trustee shall not
be under any obligation to see to the recording or filing of this Agreement, the
Loan Agreement, the Related Documents or any other instrument or otherwise to
see to the giving to any Person of notice of the provisions hereof or thereof.
Section 912. Trustee May Rely on Certificates. Subject to the provisions of
--------------------------------
Section 905(b) hereof, the Trustee shall be protected and shall incur no
liability in acting or proceeding, or in not acting or not proceeding, in good
faith, reasonably and in accordance with the terms of this Agreement, upon any
resolution, order, notice, request, consent, waiver, certificate, statement,
affidavit, requisition, bond or other paper or document which it shall in good
faith reasonably believe to be genuine and to have been adopted or signed by the
proper board or person or to have been prepared and furnished pursuant to any of
the provisions of this Agreement, the Loan Agreement or any Related Document, or
upon the written opinion of any attorney, engineer, accountant or other expert
believed by it to be qualified in relation to the subject matter, and the
Trustee shall not be under any duty to make any investigation or inquiry as to
any statements contained or matters referred to in any such instrument.
Section 913. Qualification of the Trustee. There shall at all times be a
----------------------------
Trustee hereunder which shall be a corporation organized and doing business
under the laws of the United States of America, the Commonwealth or any state,
authorized
88
<PAGE>
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least Fifty Million Dollars ($50,000,000), subject to
supervision or examination by federal, Commonwealth or state authority, having
its principal trust office in the Commonwealth or in one of the states of the
United States of America and having a rating by the Rating Agency of no less
than "BBB" (or such lower rating which is acceptable to the Rating Agency in its
sole discretion, which acceptability shall be so confirmed in writing by the
Rating Agency to the Trustee). If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus and the reported deposits of such
corporation shall be deemed to be its combined capital and surplus and reported
deposits, respectively, as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect specified in Section 914 hereof.
Section 914. Resignation and Removal of Trustee.
----------------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 915 hereof.
(b) The Trustee may resign at any time by giving written notice thereof to
the Authority, the Borrower and the Rating Agency. If an instrument of
acceptance by a successor Trustee shall not have
89
<PAGE>
been delivered to the Trustee within thirty (30) days after the giving of such
notice of resignation, the retiring Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by demand of the holders of a
majority in principal amount of the Bonds then Outstanding, signed in person by
such holders or by their attorneys, legal representatives or agents and
delivered to the Trustee, the Authority and the Borrower (such demand to be
effective only when received by the Trustee, the Authority and the Borrower).
For the purpose of determining whether the Bondholders of the required principal
amount of Bonds have concurred in any such direction, Bonds owned by the
Borrower, or by any person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Borrower, shall be
disregarded, except that only Bonds which the Trustee knows are so owned shall
be so disregarded.
(d) If at any time:
(1) the Trustee shall cease to be eligible under Section 913 hereof and
shall fail to resign after written request therefor by the Borrower or by any
Bondholder who shall have been a bona fide Bondholder for at least six (6)
months; or
(2) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then, in any such case, (i) the Authority or the Borrower may
remove the
90
<PAGE>
Trustee, or (ii) subject to Section 804 hereof, any Bondholder who has been a
bona fide Bondholder for at least six (6) months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the
Authority, with the approval of the Borrower, shall promptly appoint a successor
Trustee. If, within one year after such resignation, removal or incapability,
or the occurrence of such vacancy, a successor Trustee shall be appointed by an
instrument or concurrent instruments in writing executed by the holders of a
majority in principal amount of the Bonds then Outstanding delivered to the
Authority, the Borrower and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the Borrower
and approved by the Authority. If no successor Trustee shall have been so
appointed by the Borrower and approved by the Authority, or appointed by the
Bondholders, and accepted appointment in the manner hereinafter provided, any
Bondholder who has been a bona fide holder of a Bond for at least six (6) months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee.
(f) The Authority shall give written notice by first-class mail, postage
prepaid, of each
91
<PAGE>
resignation and each removal of the Trustee and each appointment of a successor
Trustee to all Bondholders and the Rating Agency. Each notice shall include the
name and address of the corporate trust office of the successor Trustee.
Section 915. Successor Trustee. Every successor Trustee appointed hereunder
-----------------
shall execute, acknowledge and deliver to its predecessor, and also to the
Authority and the Borrower an instrument in writing accepting such appointment
hereunder, and thereupon such successor Trustee without any further act, shall
become fully vested with all the rights, immunities, powers and trusts, and be
subject to all the duties and obligations of its predecessor; but such
predecessor shall, nevertheless, on the written request of its successor or of
the Authority or the Borrower and upon payment of the expenses, charges and
other disbursements of such predecessor which are payable pursuant to the
provisions of Section 906 hereof, execute and deliver an instrument transferring
to such successor Trustee all the rights, immunities, powers and trusts of such
predecessor hereunder; and every predecessor Trustee shall deliver all property
and moneys held by it hereunder to its successor, subject, nevertheless, to its
preference, if any, provided for in Sections 902 and 906 hereof. Should any
instrument in writing from the Authority be required by any successor Trustee
for more fully and certainly vesting in such Trustee the rights, immunities,
powers and trusts hereby vested or intended to be vested in the predecessor
Trustee, any such instrument in writing shall and will, on request, be executed,
acknowledged and delivered by the Authority.
92
<PAGE>
Notwithstanding any of the foregoing provisions of this Article, any bank,
national association, or trust company having power to perform the duties and
execute the trusts of this Agreement and otherwise qualified to act as Trustee
hereunder with or into which the bank, national association, or trust company
acting as Trustee, may be converted, merged or consolidated, or to which the
corporate trust business assets as a whole or substantially as a whole of such
bank, national association, or trust company may be sold, shall be deemed the
successor of the Trustee.
Section 916. Money Held in Trust. Money held by the Trustee in trust under
-------------------
this Agreement shall not be commingled with the funds of any other Person and
shall be maintained in a segregated account. Subject to the provisions of
Section 602 hereof, the Trustee shall be under no liability for interest on any
money received by it under this Agreement, except as otherwise agreed by the
Authority and the Borrower.
Section 917. Notices to Rating Agency. So long as any Bond shall be rated,
------------------------
the Trustee shall furnish to the Rating Agency then rating the Bonds (i)
immediate notice of any Event of Default hereunder or under the Loan Agreement,
(ii) copies of all financial statements, reports and certificates delivered by
the Borrower or the Authority hereunder, (iii) copies of executed Leases and
certified rent rolls with respect to the Shopping Center received by the
Borrower, (iv) notice of any change, resignation or removal of the Trustee or a
successor trustee, (v) notice of any amendment or supplement to the Loan
Agreement, a Related Document or a Credit Enhancement, and (vi)
93
<PAGE>
any notice received by the Trustee from the Authority or the Borrower hereunder.
Section 918. Amendment of Credit Enhancement. Except as provided in Section
-------------------------------
4.09 of the Loan Agreement, the Trustee shall not consent to any amendment or
modification of any provision of the Credit Enhancement which would reduce the
amount of any payment required to be made thereunder to the Trustee, or would
postpone the time of any such payment, or would alter the conditions under which
any such payment is made, or any other amendment or modification which would
adversely affect the security of the holders of the Bonds.
In the event of a default by the Guarantor or the Letter of Credit Bank, as
applicable, under the Credit Enhancement, the Trustee is hereby authorized and
required to enforce all of its rights in and under such Credit Enhancement, by
such actions, at law or in equity, as it deems necessary in order to protect the
interest of the holders of the Bonds. No default by the Guarantor or the Letter
of Credit Bank, as applicable, under the terms of its Credit Enhancement shall
relieve or reduce any obligations of the Borrower under this Agreement.
Section 919. Trustee Authorized to Appear in Partial Releases of Mortgage,
-------------------------------------------------------------
Segregations, Easements and Non-Disturbance Agreements. The Trustee is hereby
- ------------------------------------------------------
authorized to appear on behalf of the Authority and at the request of the
Borrower in such public and private documents as shall be necessary or
convenient, all as provided in the Loan Agreement, to comply with the
obligations of the Authority under Sections 5.16 and 5.20 of the Loan Agreement
and under Section 26 of the Pledge Agreement.
94
<PAGE>
ARTICLE X
Execution of Instruments by Bondholders
and Proof of Ownership of Bonds
Section 1001. Execution of Instruments by Bondholders and Proof of Ownership
--------------------------------------------------------------
of Bonds.
- --------
(a) Any request, direction, consent or other instrument in writing required
or permitted by this Agreement to be signed or executed by Bondholders may be in
any number of concurrent instruments of similar tenor and may be signed or
executed by such Bondholders or their attorneys or legal representatives. Proof
of the execution of any such instrument and of the ownership of Bonds shall be
sufficient for any purpose of this Agreement and shall be conclusive in favor of
the Trustee with regard to any action taken by it under such instrument if made
in the following manner:
(1) The fact and date of the execution by any person of any such
instrument may be proved by the verification of any officer in any jurisdiction
who, by the laws thereof, has power to take affidavits within such jurisdiction,
to the effect that such instrument was subscribed and sworn to before him, or by
an affidavit of a witness to such execution. Where such execution is by a
Person other than an individual, such verification or affidavit shall also
constitute sufficient proof of the authority of the signer.
(2) The ownership of Bonds shall be proved by the registration books kept
under the provisions of Section 206 hereof.
Nothing contained in this Section shall be construed as limiting the Trustee
to such proof, it being intended that the Trustee may accept any other evidence
of the matters herein stated which may be sufficient in the reasonable judgment
of Trustee.
95
<PAGE>
Any request or consent of the holder of any Bond shall bind every future holder
of the same Bond or any Bond issued in place thereof in respect of anything done
by the Trustee in furtherance of such request or consent.
(b) If the Authority shall solicit from the holders any request, direction,
consent or other instrument in writing required or permitted by this Agreement
to be signed or executed by Bondholders, the Authority may, at its option, fix
in advance a record date for the determination of holders entitled to give such
request, direction, consent or other instrument, but the Authority shall have no
obligation to do so. If such a record date is fixed, such request, direction,
consent or other instrument may be given before or after such record date, but
only the holders of record at the close of business on such record date shall be
deemed to be holders for the purpose of determining whether holders of the
requisite proportion of Bonds have authorized or agreed or consented to such
request, direction, consent or other instrument, and for that purpose the Bonds
shall be computed as of such record date; provided that no such consent by the
holders on such record date shall be deemed effective unless it shall become
effective pursuant to the provisions of this Agreement not later than six (6)
months after the record date.
ARTICLE XI
Supplements and Amendments to this Agreement
Section 1101. Supplements and Amendments not Requiring Bondholder Consent.
-----------------------------------------------------------
The Authority and the Trustee may, without the consent or approval of, or notice
to, any of the Bondholders, at any time and from time to time, enter into such
supplements and
96
<PAGE>
amendments to this Agreement, in form satisfactory to the Trustee, as shall not
in the opinion of the Trustee be detrimental to the interests of the Bondholders
(which supplements and amendments shall thereafter form a part hereof):
(a) to cure any ambiguity or to make any other provisions with respect to
matters or questions arising under this Agreement; or
(b) to grant or confer upon the Trustee for the benefit of the Bondholders
any additional rights, remedies, powers, authority or security that may lawfully
be granted to or conferred upon the Bondholders or the Trustee; or
(c) to correct any description of, or to reflect changes in, any properties
comprising the Shopping Center; or
(d) to add to the covenants of the Authority for the benefit of the
Bondholders or to surrender any right or power herein conferred upon the
Authority; or
(e) to modify, amend or supplement this Agreement or any supplement or
amendment thereto in such manner as to permit the qualification hereof and
thereof under the Trust Indenture Act of 1939 or any similar federal statute
hereafter in effect or to permit the qualification of the Bonds for sale under
the securities laws of any of the states of the United States or the
Commonwealth and, if they so determine, to add to this Agreement or any
supplement or amendment thereto such other terms, conditions and provisions as
may be required by said Trust Indenture Act of 1939 or similar federal statute;
or
(f) to facilitate or permit a payment to be made under the Credit
Enhancement or a draw on the
97
<PAGE>
Cash Collateral in the manner contemplated therein or herein; or
(g) to make any other changes which, in the reasonable judgment of the
Trustee, will not restrict, limit or reduce the obligation to pay the principal
of or premium, if any, or interest on the Bonds or otherwise impair the security
of the Bondholders under this Agreement; or
(h) to add to the covenants of Borrower or surrender any right conferred
upon the Borrower.
Section 1102. Supplements and Amendments Requiring Consent of Holders of a
------------------------------------------------------------
Majority in Principal Amount of Bonds. With the consent of the holders of not
- -------------------------------------
less than a majority in aggregate principal amount of the Bonds at the time
Outstanding, the Authority and the Trustee, with the consent of the Borrower,
may, from time to time and at any time, enter into supplements and amendments to
this Agreement for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or any supplement
or amendment to this Agreement or of modifying in any manner the rights of the
holders of the Bonds; provided, however that nothing herein contained shall
permit, or be construed as permitting, without the consent of each Bondholder
affected, (a) an extension of the time for the payment of the principal of,
premium, if any, or the interest on any Bond, or (b) a reduction in the
principal amount of any Bond or the redemption premium, if any, or the rate of
interest thereon, or (c) the creation of any lien or security interest with
respect to the Loan Agreement, or the payments thereunder, other than the lien
created by this Agreement, the Collateral Assignment, the Mortgage,
98
<PAGE>
the Mortgage Note and the Pledge Agreement or (d) a preference or priority of
any Bond or Bonds over any other Bond or Bonds, or (e) any modification relating
in any way to the Credit Enhancement or the Cash Collateral, other than
modifications that do not affect the substantive rights of the Trustee to
realize on the Credit Enhancement or draw on the Cash Collateral; or (f) a
reduction in the aggregate principal of the Bonds required for consent to such
supplement or amendment or any waiver hereunder. Nothing herein contained,
however, shall be construed as making necessary the approval by Bondholders of
the execution of any supplemental agreement as authorized in Section 1101
hereof.
The Trustee is not obligated to execute any proposed supplement or amendment
if its rights, obligations and interests would be affected thereby. Nothing
herein will affect any preexisting rights to create liens set forth in this
Agreement. Any amendment or supplement to this Agreement will not become
effective without the consent of the Borrower.
It shall not be necessary for the consent of the Bondholders under this
Section to approve the particular form of any proposed supplement or amendment,
but it shall be sufficient if such consent shall approve the substance thereof.-
If at any time the Authority shall request the Trustee to enter into any
supplement or amendment to this Agreement for any of the purposes of this
Section, the Trustee shall, at the expense of the Authority, cause notice of the
proposed execution of such supplement or amendment to be mailed, postage
prepaid, to all Bondholders. Such notice shall briefly set forth the nature of
the proposed
99
<PAGE>
supplement or amendment and shall state that copies thereof are on file at the
corporate trust office of the Trustee for inspection by all Bondholders. The
Trustee shall not, however, be subject to any liability to any Bondholder by
reason of its failure to mail the notice required by this Section, and any such
failure or any defect in such notice shall not affect the validity of such
supplement or amendment when consented to as provided in this Section.
Whenever, at any time within one year after the date of the mailing of such
notice, the Authority shall deliver to the Trustee and the Borrower, an
instrument or instruments in writing purporting to be executed by the holders of
not less than a majority in aggregate principal amount of the Bonds then
Outstanding, which instrument or instruments shall refer to the proposed
supplement or amendment described in such notice and shall specifically consent
to and approve the execution thereof in substantially the form of the copy
thereof referred to in such notice, thereupon, but not otherwise, the Trustee
may execute such supplement or amendment in substantially such form, without
liability or responsibility to any holder of any Bond, whether or not such
holder shall have consented thereto.
If the holders of not less than a majority in aggregate principal amount of
the Bonds Outstanding at the time of the execution of such supplement or
amendment or any record date established in connection therewith pursuant to
Section 1001(b) hereof shall have consented to and approved the execution
thereof as herein provided, no holder of any Bond shall have any right to object
to the execution of such supplement or amendment, or to object to any of the
terms and provisions contained
100
<PAGE>
therein or the operation thereof or in any manner to question the propriety of
the execution thereof, or to enjoin or restrain the Trustee or the Authority
from executing the same or from taking any action pursuant to the provisions
thereof.
Section 1103. Supplements and Amendments Deemed Part of Agreement. The
---------------------------------------------------
Trustee is authorized to join with the Authority in the execution of any
supplement or amendment herein provided. Any supplement or amendment to this
Agreement executed in accordance with the provisions of this Article shall
thereafter form a part of this Agreement, and all of the terms and conditions
contained in any such supplement or amendment as to any provision authorized to
be contained therein shall be and shall be deemed to be part of the terms and
conditions of this Agreement for any and all purposes. Upon the execution of
any supplement or amendment to this Agreement pursuant to the provisions of this
Article, this Agreement shall be and be deemed to be modified and amended in
accordance therewith, and the respective rights, duties and obligations under
this Agreement of the Authority, the Trustee and all holders of bonds then
Outstanding shall thereafter be determined, exercised and enforced hereunder,
subject in all respects to such modifications and amendments. In case of the
execution and delivery of any supplement or amendment, express reference may be
made thereto in the text of any Bonds issued thereafter, if deemed necessary or
desirable by the Trustee.
Section 1104. Discretion of Trustee in Entering into Supplements and
------------------------------------------------------
Amendments. In each and every case provided for in this Article, the Trustee
- ----------
shall not be obligated to execute any proposed supplement
101
<PAGE>
or amendment, if the rights, obligations and interests of the Trustee would be
thereby affected, and the Trustee shall not be under any responsibility or
liability to the Authority, the Borrower or to any Bondholder or to anyone
whomsoever for its refusal in good faith to enter into any such supplement or
amendment if such supplement or amendment is deemed by it to be contrary to the
provisions of this Article.
The Trustee shall be entitled to receive, and shall be fully protected in
relying upon, an opinion of any counsel, as conclusive evidence that any such
proposed supplement or amendment does or does not comply with the provisions of
this Agreement, and that it is or is not proper for it, under the provisions of
this Article, to join in the execution of such supplement or amendment.
Section 1105. Consent of Borrower, Guarantor, Letter of Credit Bank and
---------------------------------------------------------
Depositor of Cash Collateral Required. Except in the case of any amendment or
- -------------------------------------
supplement permitted by Section 1101(a) anything herein to the contrary
notwithstanding, any such supplement or amended trust agreement shall not become
effective unless and until the Borrower shall have consented thereto in writing.
Anything herein to the contrary notwithstanding, any such supplement or
amendment pertaining to (i) the investment of the Cash Collateral, (ii) the
conditions under which the Cash Collateral may be applied to the Payment of the
Bonds, and (iii) the rights of the Depositor of Cash Collateral, the Guarantor
or the Letter of Credit Bank to the Related Documents and to funds and accounts
held by the Trustee hereunder, shall not become effective (if there shall at the
time be Cash Collateral held by the Trustee hereunder) unless and
102
<PAGE>
until the Depositor of Cash Collateral shall have consented thereto in writing,
and in the case of clause (iii) above only (if the Trustee at the time holds a
Guaranty Agreement or Letter of Credit hereunder) when the Guarantor or Letter
of Credit Bank, as applicable, shall have consented thereto in writing.
ARTICLE XII
Supplements and Amendments to Loan Agreement and Related Documents
Section 1201. Supplements and Amendments Not Requiring Consent. The
------------------------------------------------
Authority, the Borrower or the Depositor of Cash Collateral or issuer of a
Credit Enhancement, as the case may be, may enter into, and the Trustee may
consent to, from time to time and at any time, such amendments and supplements
to the Loan Agreement, the Credit Enhancement and the Related Documents in form
satisfactory to the Trustee, as shall not be inconsistent with the terms and
provisions thereof and, in the opinion of the Trustee shall not be detrimental
to the interests of the Bondholders (which supplements and amendments shall
thereafter form a part thereof),
(a) to make changes in the Plans and Specifications permitted by the Loan
Agreement; or
(b) to cure any ambiguity or formal defect or omission therein or, any
supplement thereto; or
(c) to identify more precisely the Project; or
(d) to grant to or confer upon the Authority or the Trustee for the benefit
of the Bondholders any additional rights, remedies, powers, benefits, authority
or security that may lawfully be granted to or conferred upon the Authority or
Bondholders or the Trustee; or
103
<PAGE>
(e) to make any other change, which, in the reasonable judgment of the
Trustee, will not restrict, limit, or reduce the obligation to pay the principal
of, premium, if any, or interest on the Bonds or of the Borrower to make the
payments under the Loan Agreement or otherwise impair the rights of the
Bondholders under this Agreement, the Credit Enhancement, if any, or the Related
Documents; or
(f) to add to the covenants of the Borrower for the benefit of the
Bondholders or to surrender any right or power therein conferred upon the
Borrower.
Section 1202. Supplements and Amendments Requiring Consent of Holders of a
------------------------------------------------------------
Majority in Principal Amount of Bonds. Except for supplements or amendments
- -------------------------------------
provided for in Section 1201, the Authority shall not enter into and the Trustee
shall not consent to any supplement or amendment to the Loan Agreement, the
Credit Enhancement, if any, or the Related Documents unless notice of the
proposed execution of such supplement or amendment shall have been given and the
holders of not less than a majority in aggregate principal amount of the Bonds
then Outstanding shall have consented to and approved the execution thereof, all
as provided for in Section 1102 hereof in the case of supplements and amendments
to this Agreement and with the same effect as provided in Section 1103; provided
that the Trustee shall be entitled to exercise its discretion in consenting or
not consenting to any such supplement or amendment in the same manner as
provided for in Section 1104 hereof in the case of supplements and amendments to
this Agreement.
Section 1203. Consent of Borrower, Guarantor, Letter of Credit Bank and
---------------------------------------------------------
Depositor of Cash Collateral Required. Except in the case of any
- -------------------------------------
104
<PAGE>
amendment or supplement permitted by Section 1201(b), anything herein to the
contrary notwithstanding, any such supplement or amendment to the Loan Agreement
and Related Documents shall not become effective unless and until the Borrower
shall have consented thereto in writing. Anything herein to the contrary
notwithstanding, any such supplement or amendment pertaining to (i) the
investment of the Cash Collateral, (ii) the conditions under which the Cash
Collateral may be applied to the Payment of the Bonds, and (iii) the rights of
the Depositor of Cash Collateral, the Guarantor or the Letter of Credit Bank to
the Related Documents and to funds and accounts held by the Trustee hereunder,
shall not become effective (if there shall at the time be Cash Collateral held
by the Trustee hereunder) unless and until the Depositor of Cash Collateral
shall have consented thereto in writing, and in the case of clause (iii) above
only (if the Trustee at the time holds a Guaranty Agreement or Letter of Credit
hereunder) when the Guarantor or Letter of Credit Bank, as applicable, shall
have consented thereto in writing.
ARTICLE XIII
Defeasances
Section 1301. Defeasance. If there is paid or caused to be paid from the
----------
Bond Fund in accordance with the provisions of Sections 503 and 504 to the
holders of all of the Bonds secured hereby the principal of, interest and
premium, if any, which is and shall thereafter become due and payable thereon,
together with all other sums payable hereunder by the Authority, then and in
that case the rights, title and interest of the Trustee hereunder shall cease,
terminate and become void, and such Bonds
105
<PAGE>
shall cease to be entitled to any lien, benefit or security under this
Agreement. In such event, subject to the rights of the Depositor of Cash
Collateral or issuer of a Credit Enhancement under the Pledge Agreement, and
Section 1302 of this Agreement, the Trustee shall transfer and assign to the
Borrower all property then held by the Trustee, shall execute such documents as
may be reasonably required by the Authority or the Borrower to evidence such
transfer and assignment and shall turn over to the Borrower any surplus in the
Bond Fund and any balance remaining in the Project Fund and Reserve Fund.
If the Authority shall pay or cause to be paid to the holders of less than
all of the Outstanding Bonds the principal of, premium, if any, and interest
which is and shall thereafter become due and payable upon such Bonds, such
Bonds, or portions thereof, shall cease to be entitled to any lien, benefit or
security under this Agreement.
Any Outstanding Bond shall be deemed to have been paid within the meaning and
with the effect expressed in this Section 1301 when the whole amount of the
principal of, premium, if any, and interest on such Bond shall have been paid or
when (a) in case said Bonds have been selected for redemption in accordance with
Section 301 hereof prior to their maturity, the Borrower shall have given to the
Trustee irrevocable instructions to give in accordance with the provisions of
Section 302 hereof notice of redemption of such Bonds, (b) there shall have been
deposited with the Trustee and specifically designated for the purpose of
defeasance, moneys in an amount which shall be sufficient, or Government
Obligations, which shall
106
<PAGE>
not contain provisions permitting the redemption thereof other than at the
option of the holder, the principal of and the interest on which when due, and
without any reinvestment thereof, will provide moneys which, together with the
moneys, if any, deposited with or held by the Trustee available therefor, shall
be sufficient to pay when due the principal of premium, if any, and interest due
and to become due on said Bonds or portions thereof on or prior to the
redemption date or maturity date thereof, as the case may be, and (c) in the
event said Bonds do not mature and are not to be redeemed within the next
succeeding sixty (60) days, the Borrower shall have given the Trustee
irrevocable instructions to give notice, as soon as practicable in the same
manner as a notice of redemption is given pursuant to Section 302 hereof, to the
holders of said Bonds, stating that the deposit of moneys or Government
Obligations required by clause (b) of this paragraph has been made with the
Trustee and that said Bonds are deemed to have been paid in accordance with this
Section and stating such maturity or redemption date upon which moneys are to be
available for the payment of the principal of, premium, if any, and interest on
said Bonds; (d) the Trustee shall have received an opinion of counsel, which
counsel shall be experienced in bankruptcy matters, satisfactory to the Trustee
and the Authority, to the effect that the payment to the holders of the Bonds of
the moneys described in clause (b) of this paragraph would not constitute a
transfer which may be voided under any provision of the United States Bankruptcy
Code in the event of an Act of Bankruptcy; and (e) the Trustee shall have
received an opinion of counsel experienced in tax
107
<PAGE>
matters under the Code satisfactory to the Trustee and the Authority, to the
effect that the deposit described in clause (b) of this paragraph would not
adversely affect the treatment of the interest received by the holders of the
Bonds as income from sources within the Commonwealth.
Neither the moneys nor the Government Obligations deposited with the Trustee
pursuant to this Section nor principal or interest payments on any such
obligations shall be withdrawn or used for any purpose other than, and shall be
held in trust for, the payment of the principal of premium, if any, and interest
on said Bonds. If payment of less than all of the Bonds is to be provided for
in the manner and with the effect expressed in this Section, the Trustee shall
select such Bonds, or portions thereof, in the manner specified in Section
301(g) hereof for selection for redemption of less than all of the Bonds in the
principal amounts designated to the Trustee by the Borrower.
Notwithstanding the defeasance of this Agreement pursuant to this Section
1301, the obligation of the Borrower to compensate and indemnify the Authority
under Sections 4.05, 4.06 and 5.06 of the Loan Agreement and to indemnify the
Authority, the Trustee, and the Bondholders under Section 5.08 of the Loan
Agreement shall survive.
Section 1302. Rights of Depositor of Cash Collateral, Guarantor and Letter
------------------------------------------------------------
of Credit Bank Upon Payment of the Bonds. In the event that the Trustee shall
- ----------------------------------------
exercise its right to draw on the Cash Collateral or Letter of Credit or shall
make a claim against the Guaranty Agreement, the Depositor of Cash Collateral,
the Letter of Credit Bank or the Guarantor, as the case may be, upon Payment of
the
108
<PAGE>
Bonds, shall be entitled to receive from the Trustee (i) any funds or securities
held by the Trustee in any fund or account existing hereunder, and (ii) an
assignment of all of the Trustee's interest, if any, in the Loan Agreement,
Mortgage, Mortgage Note, Pledge Agreement and Collateral Assignment, until the
Depositor of Cash Collateral, Letter of Credit Bank or Guarantor shall have been
reimbursed in full for all then unreimbursed sums drawn from the Collateral Fund
or under the Letter of Credit or paid out by the Guarantor under the Guaranty
Agreement, and thereafter the Borrower shall be entitled to receive all such
funds, securities and interests. Any payments by the Trustee to the Depositor
of Cash Collateral, Letter of Credit Bank or to the Guarantor pursuant to this
Section 1302 shall be made pursuant to instructions of the Depositor of Cash
Collateral, Letter of Credit Bank or the Guarantor, as the case may be.
Section 1303. Surrender of Credit Enhancement Upon Payment of the Bonds.
---------------------------------------------------------
Upon Payment of the Bonds, and in the event that there shall then be outstanding
a Credit Enhancement or Cash Collateral, the Trustee shall deliver the Credit
Enhancement to the Guarantor or Letter of Credit Bank, as applicable, and pay
over the Cash Collateral to the Depositor thereof, as the case may be.
ARTICLE XIV
Miscellaneous Provisions
Section 1401. Covenants of Authority Bind its Successors. In the event of
------------------------------------------
the dissolution of the Authority, all of the covenants, stipulations,
obligations and agreements contained in this Agreement by or on behalf of or for
the benefit of the Authority shall bind or inure to the benefit of
109
<PAGE>
the successor or successors of the Authority from time to time and any officer,
board, commission, authority, agency or instrumentality to whom or to which any
power or duty affecting such covenants, stipulations, obligations and agreements
shall be transferred by or in accordance with law.
Section 1402. Notices. Any notice, demand, direction, request or other
-------
instrument authorized or required by this Agreement to be given to or filed with
the Authority, the Trustee, or the Borrower shall be in writing and given by (i)
first class mail, registered or certified, return receipt requested, or (ii)
private courier service, next day delivery, or (iii) telefax or other similar
form of rapid transmission, confirmed as provided in clauses (i) and (ii)
hereof, at substantially the same time as such rapid transmission, or (iv)
personally delivered to the receiving party or, if not an individual, to an
officer of the receiving party. All such communications shall be mailed, sent
or delivered as follows: If to the Authority: Puerto Rico Industrial, Tourist,
Educational, Medical and Environmental Control Facilities Financing Authority,
c/o Government Development Bank for Puerto Rico, G.P.O. Box 42001, San Juan,
Puerto Rico 00940, (Telecopy number: (809) 726-1440) Attention: Gregory
Kaufman, Executive Director;
If to the Borrower: Palma Real Associates, S.E., 255 Ponce de Leon Avenue,
Suite 1501, Royal Bank Center, Hato Rey, Puerto Rico 00917 (Telecopy number:
(809) 753-8647) Attention: Managing Partner;
With copies to: Mark Davis, Esq., 7104 Melrose Castle Lane, Boca Raton, FL
33496 (Telecopy Number: (407) 482-4922); Ms. Mari Lee Holtzman, 100 South Dixie
Highway, Suite 200, West Palm Beach, FL 33431
110
<PAGE>
(Telecopy Number (407) 659-3185); Samuel Susi, Esq., 1900 Glades Road, Suite
280, Boca Raton, FL 33431 (Telecopy Number: (407) 394-0888); Wal-Mart Stores,
Inc., 702 SW 8th Street, Bentonville, Arkansas 72716 (Telecopy Number: (501)
273-4329) Attention: President;
If to the Trustee: Banco Popular de Puerto Rico, Banco Popular Center, 209
Munoz Rivera Avenue, San Juan, Puerto Rico 00918 (Telecopy Number: (809)754-
1267) Attention: Corporate Trust Department.
If to the Guarantor: Wal-Mart Stores, Inc., 702 SW 8th Street, Bentonville,
Arkansas 72716 (Telecopy Number: (501) 273-4329) Attention: President.
With a copy to: Wal-Mart Legal Team, Wal-Mart Stores, Inc., 702 SW 8th Street,
Bentonville, Arkansas 72716 (Telecopy Number: (501) 273-8650) Attention:
General Counsel.
If to the Rating Agency: Duff & Phelps Credit Rating Co., 55 East Monroe
Street, Chicago, Illinois 60603 (Telecopy Number: (312) 263-2852), Attention:
Structured Finance Commercial Real Estate Group Monitoring.
All documents received by the Trustee under the provisions of this Agreement,
or photographic copies thereof, shall be retained in its possession until this
Agreement shall be released in accordance with the provisions of this Agreement,
subject at all reasonable times to the inspection of the Authority and the
Bondholders and the agents and representatives thereof.
A duplicate copy of each notice, certificate, request or other communication
given hereunder to the Authority, the Borrower, or the Trustee shall also be
concurrently given to each of the others. The Authority, the Trustee and the
Borrower, may, by
111
<PAGE>
notice given hereunder, designate any further or different addresses to which
subsequent notices, certificates or other communications shall be sent.
All notices, demands, directions, certificates, requests, consents and
instruments or other communications delivered in connection with this Agreement,
shall be effective on receipt or first refusal thereof.
Section 1403. Substitute Mailing. In case, by reason of the suspension of
------------------
regular mail service as a result of strike, work stoppage or similar activity,
or if it shall be impractical to mail notice of any event to Bondholders when
such notice is required to be given pursuant to any provision of this Agreement,
any manner of giving notice as shall be satisfactory to the Trustee and the
Authority shall be deemed to be a sufficient giving of such notice.
Section 1404. Rights under Agreement. Except as herein otherwise expressly
----------------------
provided, nothing in this Agreement expressed or implied is intended or shall be
construed to confer upon any Person other than the parties hereto, the Borrower,
the issuer of the Credit Enhancement, the Depositor of Cash Collateral and the
holders of the Bonds, any right, remedy or claim, legal or equitable, under or
by reason of this Agreement or any provision hereof, this Agreement and all its
provisions being intended to be and being for the sole and exclusive benefit of
the parties hereto, the Borrower, the issuer of the Credit Enhancement, the
Depositor of Cash Collateral and the holders from time to time of the Bonds
issued hereunder.
Section 1405. Severability. In case any one or more of the provisions of
------------
this Agreement or of the
112
<PAGE>
Bonds issued hereunder shall for any reason be held to be illegal or invalid,
such illegality or invalidity shall not affect any other provision of this
Agreement or of the Bonds, but this Agreement and the Bonds shall be construed
and enforced as if such illegal or invalid provision had not been contained
therein. In case any covenant, stipulation, obligation or agreement contained
in the Bonds or in this Agreement shall for any reason be held to be in
violation of law, then such covenant, stipulation, obligation or agreement shall
be deemed to be the covenant, stipulation, obligation or agreement of the
Authority to the full extent permitted by law.
Section 1406. Covenants of Authority not Covenants of Officials
-------------------------------------------------
Individually. No covenant, stipulation, obligation or agreement contained
herein shall be deemed to be a covenant, stipulation, obligation or agreement of
any present or future member, agent or employee of the Authority in his
individual capacity, and neither the members of the Board nor any other officer
of the Board or the Authority 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. No member of the Board of the Authority and no officer,
agent or employee of the Board or the Authority shall incur any personal
liability in acting or proceeding or in not acting or not proceeding, in good
faith, reasonably and in accordance with the terms of this Agreement.
Section 1407. Puerto Rico Law Governs. This Agreement shall be governed by
-----------------------
and construed in accordance with the laws of the Commonwealth of Puerto Rico.
113
<PAGE>
Section 1408. Payments, Notices,Deposits Due on Saturdays, Sundays and
--------------------------------------------------------
Holidays. In case where the date of maturity of, interest on premium, if any,
- --------
or principal of the Bonds or the date fixed for redemption of any Bonds shall be
any day other than a Business Day, then payment of interest premium, if any, or
principal need not be made on such date but may be made on the next succeeding
Business Day with the same force and effect as if made on the date of maturity
or the date fixed for redemption, and no interest on such payment shall accrue
for the period after such date.
Section 1409. Headings, Not Part of Agreement. Any headings preceding the
-------------------------------
text of the several articles and sections hereof, and any table of contents or
marginal notes appended to copies hereof, shall be solely for convenience of
reference and shall not constitute a part of this Agreement, and they shall not
affect its meaning, construction or effect.
Section 1410. Agreement Supersedes Prior Agreements. This Agreement
-------------------------------------
supersedes any other prior agreement, written or oral, between the parties
hereto with respect to the Bonds.
ACCEPTANCE
The appearing parties accept this Deed as drafted and confirm that the same
has been drawn up in accordance with their instructions.
I, the Notary, hereby certify that this Deed was read by the persons
appearing herein; that I advised them of their right to have witnesses present
at the execution hereof, which right they waived, that I advised them of the
legal effects of this Deed; that they acknowledged that they understood the
contents of this Deed and its legal effect and that they are
114
<PAGE>
fluent in the English language and that thereupon they signed this Deed before
me and affixed their initials to each and every page hereof to which fact and to
all other matters hereinbefore stated, I the Notary, do hereby GIVE FAITH and
ATTEST.
115
<PAGE>
EXHIBIT 4(c)
LOAN AGREEMENT
This Agreement dated as of February 1, 1995 by and between Puerto Rico
Industrial, Tourist, Educational, Medical and Environmental Control Facilities
Financing Authority, a public corporation and governmental instrumentality of
the Commonwealth of Puerto Rico, (the "Authority") and Palma Real Associates,
S.E., a partnership organized under the laws of the Commonwealth of Puerto Rico
(the "Borrower").
WITNESSETH
WHEREAS, by Act No. 121 of the Legislature of Puerto Rico, approved
June 27, 1977, as amended, the Authority was created a body corporate and
politic constituting a public corporation and governmental instrumentality of
the Commonwealth of Puerto Rico; and
WHEREAS, the Authority is authorized under the Act to borrow money and
issue bonds therefor for the purpose of paying costs incurred in connection with
the acquisition, construction, development, equipping, installation and
improvement of industrial facilities and paying such obligations and liabilities
in connection therewith, for the purpose of constructing, installing and
improving, making additions or extensions thereto or rehabilitating, remodeling
or modernizing such facilities;
WHEREAS, the principal of and the premium, if any, and the interest on
the bonds shall be payable solely from the funds provided by the Borrower; and
WHEREAS, in order to secure the prompt and faithful performance of the
Borrower, Wal-Mart Stores, Inc. (the "Guarantor") has entered into a Guaranty
Agreement (as hereinafter defined) dated the Date of Issuance (as hereinafter
defined) with the Authority, pursuant to which the Guarantor will guaranty the
payment of the principal of and interest on the Bonds in accordance with their
terms up to the then current Enhancement Amount (as hereinafter defined); and
WHEREAS, the Authority has entered into a Trust Agreement (as
hereinafter defined), dated the Date of Issuance, with Banco Popular de Puerto
Rico, as Trustee, for the purpose of authorizing the issuance of $43,450,000
aggregate principal amount of its Industrial Revenue Bonds, 1995 Series A (Plaza
Palma Real Project) (the "Bonds"); and
WHEREAS, the Authority is entering into this Agreement with the
Borrower to provide funds for: (i) the financing of the acquisition,
construction, development, equipping, installation and improvement of the
Shopping Center (as hereinafter defined); (ii) the deposit of the Reserve Fund
Amount (as hereinafter defined) in
1
<PAGE>
the Reserve Fund (as hereinafter defined); and (iii) the payment of other costs,
expenses and fees incurred in connection with the issuance of the Bonds
(collectively, the "Project"); and
WHEREAS, the Authority is issuing the Bonds to lend the proceeds
thereof to the Borrower and to pay the Cost (as hereinafter defined) of the
Project and the Borrower is obligated to pay, or cause to be paid, to the
Authority amounts sufficient to pay the principal of, the premium, if any, and
the interest on such Bonds.
NOW, THEREFORE, in consideration of the respective premises and the
respective representations and agreements herein contained, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.01. DEFINITIONS. As used in this Agreement and unless
-----------
otherwise expressly indicated, or unless the context clearly requires otherwise:
(a) All the agreements or instruments herein defined shall mean such
agreements or instruments as the same may from time to time be supplemented or
amended or the terms thereof waived or modified to the extent permitted by, and
in accordance with, the terms thereof and of this Agreement.
(b) The following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Act" shall mean Act No. 121 of the Legislature of the Commonwealth,
approved June 27, 1977, as amended, and all future acts supplemental thereto or
amendatory thereof.
"Act of Bankruptcy" when used with respect to any Person shall mean
the filing of a petition of bankruptcy by or against such Person or any other
commencement of a bankruptcy or similar proceeding under any applicable
bankruptcy, insolvency, reorganization or similar law as now or hereafter in
effect.
"Additional Indebtedness Debt Service Coverage Ratio" shall mean the
quotient resulting from dividing, at the time of calculation, the Net Operating
Income of the Shopping Center for the preceding twelve (12) month period, or if
acceptable to the Rating Agency, projected over the next twelve (12) month
period, by the amount necessary to pay the principal of and the interest on the
Bonds and such additional Indebtedness at their highest scheduled amortization
over any twelve (12) month period, and reviewed by an Independent Accountant.
2
<PAGE>
"Additional Indebtedness Loan-to-Value-Ratio" shall mean the quotient,
resulting from dividing, at the time of calculation, the then current Exposure
Amount, plus the principal amount of any proposed additional Indebtedness, by
the Appraised Value of the Shopping Center which has been reviewed by an
Independent Accountant.
"Administrative Fee" shall mean the single fee payable to the
Authority in the amount of one percent (1%) of the principal amount of the
Bonds.
"Affiliate" shall mean, with respect to the Borrower, any Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with, the Borrower and includes its subsidiaries. For the
purposes of this definition, a Person shall be deemed to control another Person
if such Person possesses, directly or indirectly, the power to direct or cause
the direction of management and policies of such other Person, whether through
the ownership of voting securities, by contract or otherwise.
"Appraisal" shall mean, at any time, and from time to time, the
appraisal (or update of a prior appraisal) of the Shopping Center carried out by
the Appraiser, made within one (1) year of the date on which it is to be used
pursuant to the provisions hereof, reflecting such Appraiser's valuation of the
market value of the Shopping Center in accordance with the general practice for
the appraisal of properties of the same nature, including customary
qualifications, and taking into consideration any outstanding or contemplated
financing.
"Appraised Value" shall mean, at any time, and from time to time, the
then current appraised value of the Shopping Center as reflected in the most
recent Appraisal.
"Appraiser" shall mean, as applicable, Robert F. McCloskey &
Associates, Vallejo & Vallejo, or any other appraiser acceptable to the
Authority and the Rating Agency (in the case of the Rating Agency only until the
then current Enhancement Amount is less than or equal to twenty five percent
(25%) of the then current Exposure Amount), who shall be a member of the
Appraisal Institute (MAI), duly licensed in the Commonwealth.
"Authority" shall mean Puerto Rico Industrial, Tourist, Educational,
Medical and Environmental Control Facilities Financing Authority, a body
corporate and politic constituting a public corporation and governmental
instrumentality of the Commonwealth and any successor thereto.
"Authority Representative" shall mean each of the persons at the time
designated to act on behalf of the Authority in a written certificate furnished
to the Borrower and the Trustee containing
3
<PAGE>
the specimen signature of each such person and signed on behalf of the Authority
by an authorized officer thereof.
"Authorized Borrower Representative" shall mean each of the persons at
the time designated to act on behalf of the Borrower by written certificate
furnished to the Authority and the Trustee containing the specimen signature of
such persons and signed on behalf of the Borrower by an authorized
representative of the Borrower.
"Bond Fund" shall mean the fund created by Section 501 of the Trust
Agreement.
"Bondholder" or "holder" shall mean the registered owner of any Bond
issued under the provisions of Section 208 of the Trust Agreement.
"Bonds" shall mean the bonds authorized to be issued under Section 208
of the Trust Agreement.
"Borrower" shall mean Palma Real Associates, S.E., a partnership
organized under the laws of the Commonwealth, and its successors and permitted
assigns and any surviving, resulting or transferee corporation or other Person.
"Business Day" shall mean any day of the year other than a Saturday,
Sunday, or other day on which banks in San Juan, Puerto Rico are authorized or
required by law or executive order to close.
"Cash Collateral" shall mean the funds which shall be on deposit at
any time or from time to time in the Collateral Fund, in an amount at least
equal to the then current Enhancement Amount.
"Casualty" shall have the meaning ascribed such term in Section 9.02
hereof.
"Casualty and Condemnation Award Fund" shall mean the fund created by
Section 512 of the Trust Agreement.
"Code" shall mean the United States Internal Revenue Code of 1986, and
the rules and regulations thereunder, as the same may be amended or supplemented
from time to time.
"Collateral Assignment" shall mean the Collateral Assignment of
Lessor's Interest in Leases dated the Date of Issuance between the Borrower and
the Authority providing for the assignment as collateral of all Leases.
"Collateral Documents" shall mean all or any portion of the following,
as the context indicates: (i) the Mortgage; (ii) the Mortgage Note; (iii) the
Collateral Assignment; and (iv) the Pledge Agreement.
4
<PAGE>
"Collateral Fund" shall mean the fund created by Section 515 of the
Trust Agreement.
"Commonwealth" shall mean the Commonwealth of Puerto Rico.
"Completion Date" shall have the meaning ascribed such term in Section
3.06 hereof.
"Cost" as applied to the Project, without intending thereby to limit
or restrict any proper definition of such word under the Act, shall have the
meaning set forth in Section 403 of the Trust Agreement.
"Credit Enhancement" shall mean the Guaranty Agreement or the Letter
of Credit, as applicable, so long as credit enhancement shall be required
pursuant to the provisions of Section 4.01(e) and Section 4.01(f) hereof.
"Date of Issuance" shall mean February __, 1995.
"Debt Service Factor" shall equal 9.34.
"Depositor" shall mean the Borrower, the Guarantor, the Letter of
Credit Bank or any other Person who deposits the Cash Collateral in the
Collateral Fund.
"Depository" shall mean any Bank authorized to receive funds of the
Commonwealth.
"Enhancement Amount" shall mean the amount which shall be available
from time to time for the Payment of the Bonds under the Credit Enhancement or
in Cash Collateral, which amount shall on the Date of Issuance equal
$43,473,608.75, representing the principal of and two hundred ten (210) days
interest on the Bonds at 8.1%, less the Reserve Fund Amount, which amount shall
be reduced on each Principal Payment Date to the principal amount of the Bonds
then outstanding and two hundred ten (210) days simple interest thereon at 8.1%,
less the Reserve Fund Amount, as such amount may be further reduced from time to
time, initially upon Enhancement Amount Reduction Determination(s) and
thereafter upon permitted Enhancement Amount Reduction Certifications or other
Enhancement Amount Reduction Determinations.
"Enhancement Amount Reduction Certification" shall mean, for such
period as the then current Enhancement Amount shall be less than or equal to
twenty five percent (25%) of the then current Exposure Amount, the reduction(s)
in the Enhancement Amount, if any, resulting from a certification by the
Independent Accountant, given in writing to the Trustee, providing: (i) the then
current Lower Net Operating Income; (ii) the then current Unenhanced Amount;
(iii) the difference between the then current Exposure Amount and the then
current Unenhanced Amount; and (iv) to the
5
<PAGE>
extent the amount in (iii) shall be positive, a certification that such amount
plus two hundred ten (210) days' interest thereon at 8.1% is the new Enhancement
Amount. The foregoing certification may contain customary qualifications for
opinion letters by accountants.
"Enhancement Amount Reduction Determination" shall mean the
determination made at any time by the Rating Agency given in writing to the
Trustee providing: (i) that the Enhancement Amount may be reduced or eliminated;
(ii) for the new Enhancement Amount, if any; (iii) that the Bonds will continue
to be rated not lower than "A" after the reduction in the Enhancement Amount
contemplated under (i) above; and (iv) to the extent that the Enhancement Amount
shall be reduced to an amount less than or equal to twenty-five percent (25%) of
the then current Exposure Amount, for the establishment of the Maximum Loan to
Value Ratio and the Minimum Debt Service Coverage Ratio.
"Event of Default" shall mean those events set forth in Section 7.01
of this Agreement.
"Event of Taxability" shall have the meaning ascribed to such term in
Section 5.10 of this Agreement.
"Exposure Amount" shall mean, at any time, the difference, if any,
between the principal amount of and accrued but unpaid interest on the Bonds at
such time Outstanding and the aggregate amount of funds deposited under the
Trust Agreement which are available for the payment of principal and interest on
the Bonds (including capitalized interest in the Project Fund, and any amounts
therein after the Completion Date, Mandatory Project Termination Date or after
notice by the Borrower that the Project will not be completed) without taking
into account moneys, if any, in the Collateral Fund.
"Government Obligations" shall mean: (i) direct obligations of, or
obligations the principal of and the interest on which are unconditionally
guaranteed by, the United States of America; and (ii) any certificates or other
evidences of an ownership interest in obligations or in specified portions
thereof (which may consist of specified portions of the principal thereof or the
interest thereon) of the character described in clause (i); provided that such
certificates or other evidences of an ownership interest referred to in clause
(ii) are rated within the highest rating category issued by a nationally
recognized statistical rating agency.
"Guarantor" shall mean the Initial Guarantor and any Successor
Guarantor, and any successor or assign thereof.
"Guaranty Agreement" shall mean the Initial Guaranty Agreement and any
Successor Guaranty Agreement, as the case may be.
6
<PAGE>
"Indebtedness" shall mean: (i) any debt for borrowed money; (ii)
obligations evidenced by bonds, debentures, notes or other similar instruments;
(iii) obligations to pay the deferred purchase price of property; and (iv)
obligations under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, debt or obligations of others of
the kinds referred to in clauses (i) through (iii) above.
"Independent Accountant" shall mean Kevane, Peterson, Soto and
Pasarell or any firm of certified public accountants of recognized standing in
the Commonwealth, which may also be the firm which audits the books of the
Borrower, which is independent with respect to the Borrower within the meaning
of the Code of Professional Ethics of the American Institute of Certified Public
Accountants.
"Industrial Facilities" shall have the meaning given to such term by
Section 3 of the Act.
"Initial Guarantor" shall mean Wal-Mart Stores, Inc., a corporation
organized under the laws of the State of Delaware, and any successors or
assigns.
"Initial Guaranty Agreement" shall mean that certain Guaranty, dated
the Date of Issuance, between the Authority and the Guarantor providing for the
Guarantor's guaranty of the Bonds up to the Enhancement Amount.
"Initial Letter of Credit" shall mean the irrevocable, transferable,
stand-by Initial Letter of Credit issued by the Initial Letter of Credit Bank in
a form reasonably acceptable to the Trustee, for a minimum term of one (1) year
and a maximum term of two (2) years, in an amount sufficient to cover the then
current Enhancement Amount.
"Initial Letter of Credit Bank" shall mean a banking association, bank
or trust company or branch or agency thereof that meets the Rating Requirement
and issues the Initial Letter of Credit.
"Interest Payment Dates" shall mean the first (1st) of each month
commencing March first (1st), nineteen ninety five (1995).
"ITA" shall mean the Puerto Rico Income Tax Act of 1954, as amended.
"Leases" shall mean all leases between the Borrower, as lessor, and
the respective lessees, for lease of commercial space in the Shopping Center, as
set forth in Exhibit A to the Collateral Assignment, and any leases which the
Borrower may enter into in the future pertaining to the Shopping Center.
7
<PAGE>
"Letter of Credit" shall mean the Initial Letter of Credit or any
Successor Letter of Credit, as the case may be.
"Letter of Credit Bank" shall mean the Initial Letter of Credit Bank
during the term of the Initial Letter of Credit and thereafter shall mean the
issuer of any Successor Letter of Credit during the term of such Successor
Letter of Credit.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind including, without limitation, any
conditional sale or other title retention agreement, any lease in the nature
thereof, or the filing of, or any agreement to give, any financing statement
under the Uniform Commercial Code of any jurisdiction or any similar statement
under the laws of the Commonwealth (other than informational filings in respect
of equipment leased under any lease not intended as security, within the meaning
of the Uniform Commercial Code or the laws of the Commonwealth).
"Lower Net Operating Income" shall mean in connection with an
Enhancement Amount Reduction Certification, the lowest Net Operating Income for
either of the two (2) twelve (12) month periods comprised within any twenty-four
(24) month period preceding the date of such request, determined within one
hundred eighty (180) days of the date presented for use hereunder, all such
amounts as audited by the Independent Accountant.
"Managing Partner" shall mean, initially, Mark B. Davis, the current
managing partner of the Borrower, or any successor managing partner of the
Borrower, from time to time, as the case may be.
"Mandatory Project Termination Date" shall have the meaning ascribed
such term in Section 3.06 hereof.
"Maximum Loan to Value Ratio" shall mean the loan to value ratio
established by the Rating Agency on or after the time the then current
Enhancement Amount is reduced to an amount less than or equal to twenty-five
percent (25%) of the then current Exposure Amount pursuant to an Enhancement
Amount Reduction Determination, or any such higher ratio as the Rating Agency
may, in its sole discretion, deem appropriate, at any time thereafter, and
confirmed in writing to the Trustee.
"Minimum Debt Service Coverage Ratio" shall mean the debt service
coverage ratio established by the Rating Agency on or after the time the then
current Enhancement Amount is reduced to an amount less than or equal to twenty-
five percent (25%) of the then current Exposure Amount pursuant to an
Enhancement Amount Reduction Determination, or such lower ratio as the Rating
Agency may, in its sole discretion, deem appropriate, at any time thereafter,
and confirmed in writing to the Trustee.
8
<PAGE>
"Mortgage" shall mean the mortgage on the Mortgaged Property as more
fully described therein, from the Borrower, as mortgagor, to the Authority as
mortgagee, constituted by Deed Number __ executed before Notary Public, Javier
Ferrer Canals, on the Date of Issuance.
"Mortgage Note" shall mean the mortgage note secured by the Mortgage
to be given by the Borrower in pledge to the Authority.
"Mortgaged Property" shall mean all the mortgaged properties as
defined or described in the Mortgage.
"Net Condemnation Proceeds" shall have the meaning ascribed such term
in Section 9.02(d) hereof.
"Net Insurance Proceeds" shall have the meaning ascribed such term in
Section 9.02 hereof.
"Net Operating Income" shall mean, for any twelve (12) month period,
after commencement of operations at the Shopping Center, the gross revenues of
the Shopping Center (including interest on the monies in the Reserve Fund) for
such period less the operating expenses of the Shopping Center (including the
Trustee's fees, management fees, leasing commissions, and the cost of tenant
improvements (such leasing commissions and tenant improvement costs being
amortized in accordance with generally accepted accounting principles
consistently applied), reserves and any other expenses incurred in the operation
of the Shopping Center) for such period (before debt service on the Bonds and
any other Indebtedness for such period, and excluding depreciation, amortization
and other similar non-cash items for such period), all such amounts as audited
by an Independent Accountant.
"Official Statement" shall mean the Official Statement dated February
__, 1995, relating to the offer and sale of the Bonds.
"Partner Debt" shall mean Indebtedness of the Borrower in favor of one
or more of the partners of the Borrower, which shall, at all times, and in all
respects, be subject and subordinate to the Mortgage, shall not be subject to
foreclosure or acceleration so long as any of the Bonds shall remain
Outstanding, and for 366 days after the Bonds have been paid in full; and, the
Partners, as holders of such Indebtedness, shall assign all rights to vote as a
creditor of the Borrower, in a bankruptcy by or against the Borrower, to the
Trustee, for the benefit of the Bondholders.
"Payment Date" shall mean each of the Interest Payment Dates, each of
the Principal Payment Dates, and each of the dates the principal of any Bond,
and premium, if any, becomes due and payable whether at maturity, redemption,
acceleration or otherwise.
9
<PAGE>
"Payment of the Bonds" shall mean payment of the principal of,
interest and premium, if any, on all the Bonds in accordance with their terms,
whether through payment at maturity or redemption or provision for such payment
in such a manner that the Bonds shall be deemed to have been paid under Section
1301 of the Trust Agreement.
"Permitted Letter of Credit Deposit" shall mean the deposit of the
entire amount available under the Letter of Credit into the Collateral Fund
through a final drawing made by the Trustee prior to the expiration thereof as
required by Section 4.09(d) hereof.
"Permitted Lien" shall mean: (i) the statutory mortgage constituted
in favor of the Commonwealth and its corresponding municipalities for land taxes
not yet subject to fines, penalties, interests or costs for non-payment and
Liens for taxes the payment of which is being contested as permitted by Section
12 of the Pledge Agreement; (ii) defects, irregularities, minor survey
exceptions, minor encumbrances, easements or reservations of, or rights of
others for rights of way, highways and railroad crossings, sewers, electric
lines, telegraph and telephone lines or other similar purposes existing on the
date hereof or hereafter created and necessary for the operation of the Shopping
Center; and (iii) those non-mortgage Liens which are superior to the Mortgage
and described therein and Leases to which the Mortgage may be subordinated in
the future pursuant to Section 5.16 hereof.
"Plans and Specifications" shall mean the final construction plans and
specifications for the Shopping Center, as the same may be revised from time to
time, prior to the completion of the Shopping Center in accordance with this
Agreement.
"Pledge Agreement" shall mean that certain Pledge Agreement relating
to the Mortgage Note, dated the Date of Issuance between the Authority, as
pledgee, and the Borrower, as pledgor.
"Preliminary Official Statement" shall mean the Preliminary Official
Statement dated January 17, 1995 relating to the offer and sale of the Bonds.
"Principal Payment Dates" shall mean January 1 and July 1 of each
year, commencing January 1, 1996.
"Project" shall mean: (i) the acquisition, construction, development,
equipping, installation and improvement of the Shopping Center; (ii) the deposit
of the Reserve Fund Amount in the Reserve Fund; and (iii) the payment of other
costs, expenses and fees incurred in connection with the issuance of the Bonds.
"Project Fund" shall mean the fund created by Section 401 of the Trust
Agreement.
10
<PAGE>
"Qualified Bondholder" shall have the meaning ascribed such term in
Section 5.10(b) hereof.
"Rating Agency" shall mean Duff & Phelps Credit Rating Co. and its
successors in interest and any resulting, surviving or transferee entity or any
other nationally recognized securities rating service.
"Rating Requirement" shall mean in connection with the issuance of a
Letter of Credit or a Successor Guaranty Agreement, as applicable, the
requirement that the issuer of such instrument be an entity whose long term debt
obligations are rated in one of the three (3) highest rating categories (without
regard to any gradations within any such category by numerical qualifier or
otherwise) by the Rating Agency, at the time of delivery of such Letter of
Credit or Successor Guaranty Agreement.
"Related Document" shall mean, individually or collectively as the
case may be, any or all of the Bonds, the Trust Agreement, the Mortgage, the
Mortgage Note, the Collateral Assignment, the Pledge Agreement and the Bond
Purchase Agreement.
"Release Debt Service Coverage Ratio" shall mean the quotient
resulting from dividing, at the time of calculation, the Net Operating Income of
the Project for the then previous twelve (12) month period (or, if acceptable to
the Rating Agency, in its sole discretion, for the then forthcoming twelve (12)
month period), after taking into consideration the reduction in actual (or
projected) Net Operating Income available to service the Bonds and any
additional Indebtedness due to any requested release(s) from the Mortgage, by
the amount necessary to pay the principal of and interest on the Bonds and any
additional Indebtedness scheduled for payment over the same twelve (12) month
period for which the Net Operating Income was calculated, as reviewed by an
Independent Accountant.
"Release Loan-to-Value-Ratio" shall mean the quotient resulting from
dividing, at the time of calculation, the then current Exposure Amount by the
Appraised Value of the Project as determined by an Appraiser no later than one
(1) year prior to such time, after taking into consideration the reduction in
Appraised Value due to any requested release(s) from the Mortgage, as reviewed
by an Independent Accountant.
"Reserve Fund" shall mean the fund created by the provisions of
Section 509 of the Trust Agreement.
"Reserve Fund Amount" shall have the meaning set forth in Section
4.01(b)(ii) of this Agreement.
"Restoration" shall have the meaning ascribed such term in Section
9.02 of this Agreement.
11
<PAGE>
"Shopping Center" shall mean the commercial shopping center, parking
areas and tangible properties to be owned and operated by the Borrower, to be
known as "Plaza Palma Real" on the Mortgaged Property located in Humacao, Puerto
Rico and includes any substitutions therefor or additions thereto or deletions
therefrom.
"Successor Guarantor" shall mean an entity that meets the Rating
Requirement and issues the Successor Guaranty Agreement.
"Successor Guaranty Agreement" shall mean the irrevocable,
transferable, continuous guarantee, reasonably acceptable in form and substance
to the Trustee substantially similar to the Initial Guaranty Agreement, in an
amount sufficient to cover the then current Enhancement Amount.
"Successor Letter of Credit" shall mean the irrevocable, transferable,
stand by letter of credit, reasonably acceptable in form to the Trustee,
substantially similar to the Initial Letter of Credit, for a minimum term of one
(1) year and a maximum term of two (2) years in an amount sufficient to cover
the then current Enhancement Amount.
"Successor Letter of Credit Bank" shall mean the issuer of the
Successor Letter of Credit that meets the Rating Requirement.
"Taking" shall have the meaning ascribed such term in Section 9.02(c)
hereof.
"Title Insurance" shall have the meaning ascribed such term in Section
3.07(n) of this Agreement.
"Total Casualty" shall have the meaning ascribed such term in Section
9.02(a) hereof.
"Total Taking" shall have the meaning ascribed such term in Section
9.02(d)(i) hereof.
"Trust Agreement" shall mean the Trust Agreement dated the Date of
Issuance by and between the Authority and the Trustee, as the same may be
amended or supplemented in accordance with the terms hereof.
"Trustee" shall mean the bank or trust company at the time serving as
Trustee under the Trust Agreement.
"Trustee Fees" shall mean fees payable to the Trustee pursuant to the
Trust Agreement.
"Underwriter" shall mean PaineWebber Incorporated of Puerto Rico.
12
<PAGE>
"Unenhanced Amount" shall mean the lower of: (i) the product of the
Appraised Value and the Maximum Loan to Value Ratio; and (ii) the amount derived
by dividing (x) the quotient resulting from dividing the Lower Net Operating
Income by the Debt Service Factor, by (y) the Minimum Debt Service Coverage
Ratio.
Section 1.02. RULES OF CONSTRUCTION.
---------------------
(a) Words of the masculine gender shall be deemed and construed to
include correlative words of the feminine and neuter genders.
(b) Unless the context shall otherwise indicate, the words "Bond",
"owner", "holder" and "Person" shall include the plural as well as the singular
number, "Person" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof, and "holder" and
"Bondholder" when used herein with respect to Bonds shall mean the registered
owner of Bonds at the time issued and outstanding under the Trust Agreement.
(c) Words importing the redemption or calling for redemption of the
Bonds shall not be deemed to refer to or connote the Payment of the Bonds at
their stated maturity.
(d) The captions or headings in this Agreement are for convenience
only and in no way define, limit or describe the scope or intent of any
provisions or sections of this Agreement.
(e) All references herein to particular articles, sections or
exhibits, are references to articles, sections or exhibits of this Agreement
unless some other reference is established.
(f) Except as provided in Section 8.04 hereof, any inconsistencies
between the provisions of this Agreement and the provisions of the Trust
Agreement shall be resolved in favor of the provisions of the Trust Agreement.
(g) Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations hereunder shall be
made, and all financial statements required to be delivered hereunder shall be
prepared, in accordance with generally accepted accounting principles as in
effect from time to time, as promulgated by the American Institute of Certified
Public Accountants, applied on a basis consistent with the financial statements
of the Borrower delivered to the Authority (except for changes approved by the
Borrower's Independent Accountant).
13
<PAGE>
ARTICLE II
REPRESENTATIONS
Section 2.01. REPRESENTATIONS BY THE AUTHORITY.
--------------------------------
The Authority represents that:
(a) It is a duly constituted and existing body corporate and politic
constituting a public corporation and governmental instrumentality of the
Commonwealth, established under the Act.
(b) Under the provisions of the Act, the Authority is duly authorized
to enter into, execute and deliver this Agreement, and the Related Documents to
which it is a party, to undertake the transactions contemplated hereby and
thereby and to carry out its obligations hereunder and thereunder.
(c) By duly adopted resolution, the Authority has duly authorized
the execution and delivery of this Agreement, the Trust Agreement and the
Related Documents to which it is a party, and the issuance and sale of the
Bonds.
(d) Under existing law, all payments received by the Authority
pursuant to this Agreement are exempt from taxation by the Commonwealth.
(e) The Authority shall not submit the statement provided in Section
149(c)(2) of the Code with respect to the Bonds.
Section 2.02. REPRESENTATIONS BY THE BORROWER. The Borrower
-------------------------------
represents and warrants to the Authority as follows:
(a) Due Organization. It is a partnership duly organized and validly
----------------
existing under the laws of the Commonwealth and duly qualified to do business in
the Commonwealth, has made an election to be treated as a special partnership
under Supplement P of the ITA, has all necessary power and authority to own its
properties and to conduct its business as presently conducted or as proposed to
be conducted, and to enter into and perform this Agreement and the Related
Documents to which it is a party and possesses or will possess all material
licenses and approvals necessary for the conduct of its business, as so
described.
(b) No Violation. The execution, delivery and performance by the
------------
Borrower of this Agreement and the Related Documents to which it is a party,
have been duly authorized by all necessary partnership action, and do not and
will not violate any law or any regulation, order, writ, injunction or decree of
any court or governmental body, agency or other instrumentality applicable to
the Borrower, or result in a breach of any of the material terms, conditions or
provisions of, or constitute a default under, or
14
<PAGE>
result in the creation or imposition of any Lien upon any of the assets of the
Borrower (except as contemplated hereby and by the Related Documents) pursuant
to the terms of Borrower's partnership agreement as now in effect, or any
mortgage, indenture, license, approval, agreement, instrument or document to
which the Borrower is a party or by which it or any of its properties is bound.
(c) Consents. All authorizations, consents and approvals of,
--------
notices to, registrations or filings with or other actions in respect of or by,
any governmental body, agency or other instrumentality or court required in
connection with the execution, delivery and performance by the Borrower of this
Agreement and the Related Documents to which it is a party have been or will be
duly obtained or given and are or will be in full force and effect.
(d) Enforceability. Assuming the due authorization and execution of
--------------
the other parties thereto, this Agreement and each Related Document to which
the Borrower is a party is a legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, reorganization
or any similar laws affecting creditors' rights generally, and by equitable
principles affecting the availability of remedies in the nature of specific
performance.
(e) No Litigation. There is no action, suit, proceeding, inquiry or
-------------
investigation before or by any court, public board or body pending or, to the
knowledge of the Borrower, threatened against the Borrower wherein an
unfavorable decision, ruling or finding would have a material adverse effect on
the properties, business, condition (financial or other) or results of
operations of the Borrower or the transactions contemplated by this Agreement or
the Related Documents or which would adversely affect the validity or
enforceability of, or the authority or ability of the Borrower to perform its
obligations under this Agreement and the Related Documents to which it is a
party.
(f) No Defaults. The Borrower is not in default under its
-----------
partnership agreement as now in effect or any law or any regulation, order,
writ, injunction or decree of any court or governmental body, agency or other
instrumentality applicable to the Borrower, and no material default has occurred
and is continuing under any debt instrument or any indenture or other agreement
or instrument governing the outstanding debt of the Borrower, or any other
contract, agreement or instrument to which it is a party or by which the
Borrower or its property is bound, and no event has occurred which with the
giving of notice or the passage of time or both would constitute such a material
default.
15
<PAGE>
(g) Financial Statements.
--------------------
(1) The financial statements of the Borrower dated December 31,
1993, certified by Kevane, Peterson, Soto & Pasarell, Independent Accountant,
copies of which have been delivered to the Authority, fairly present the
financial position of the Borrower as of such date, in conformity with generally
accepted accounting principles consistently applied.
(2) The Borrower has no contingent obligations, liabilities
for taxes or other outstanding liabilities or obligations, fixed or contingent,
which are material, individually or in the aggregate, except as disclosed in the
financial statements described in clause (1) above. Since the date of such
financial statements there has been no material adverse change in the condition
(financial or other), business, operations or prospects of the Borrower.
(h) Disclosure. As of the date hereof, the representations and
----------
warranties herein contained and in the Related Documents do not contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements herein and therein, in light of the circumstances under
which they were made, not misleading.
(i) Title; Liens. The Borrower has and will continue to have after
------------
giving effect to the transactions contemplated hereby good, legal, recordable,
marketable, fee simple (pleno dominio), and insurable title to the Mortgaged
Property and, except for Permitted Liens and as contemplated or permitted hereby
or by the Related Documents or reflected in the Title Insurance, the Mortgaged
Property are subject to no Liens, except for Permitted Liens.
(j) Compliance. The Shopping Center and the use, occupancy,
----------
operation and condition thereof are or will be in compliance in all material
respects with all applicable governmental laws, rules and regulations; there are
no material violations or notices or other records of violation of any zoning,
health, safety, building, environmental, or other statute, ordinance or
restriction affecting all or any part of the Mortgaged Property or any use or
condition thereof; all certificates, permits, licenses and authorizations
required for the construction, use and occupancy of the Shopping Center have
been or will be obtained and are or will be in full force and effect; and there
is no governmental proceeding, investigation or inquiry, pending or, to
Borrower's knowledge, threatened, to condemn, purchase or otherwise acquire all
or any part of the Mortgaged Property.
(k) Other Representations and Warranties. The Borrower hereby makes
------------------------------------
to the Authority each of the representations and warranties made by the Borrower
and contained in the Related
16
<PAGE>
Documents to which it is a party as if such representations and warranties were
set forth in full herein.
(l) Industrial Facilities. The Borrower intends to cause the
---------------------
Shopping Center to be operated as Industrial Facilities.
(m) Gross Income. For the three (3) year period preceding the Date
------------
of Issuance, or such lesser period as the Borrower has been in existence, more
than twenty percent (20%) of the Borrower's gross income has been derived from
Commonwealth sources within the meaning of the Code and no part of its gross
income is related to the active conduct of a trade or business in the United
States or otherwise outside of the Commonwealth.
(n) Sole Purpose. The Borrower is not engaged in any business other
------------
than the operation of the Shopping Center and does not own or operate and does
not intend, so long as any Bonds are outstanding, to engage in, or otherwise own
or operate any other business or any properties or assets other than the
Shopping Center and those properties or assets directly relating to the
operation thereof.
ARTICLE III
ISSUANCE OF THE BONDS
Section 3.01. CONSTRUCTION OF THE PROJECT. The Authority agrees to
---------------------------
lend to the Borrower funds to be used to pay, solely from the proceeds of the
Bonds and other moneys made available by the Borrower, the Cost of the Project.
The Borrower will cause the Shopping Center to be constructed substantially in
accordance with the Plans and Specifications with all reasonable dispatch; but
if for any reason such construction shall be delayed or shall not be completed
there shall be no resulting diminution in or postponement of the payments
required under this Agreement to be paid by the Borrower.
Section 3.02. REVISION OF DESCRIPTION OF THE PROJECT. The Borrower
--------------------------------------
may cause the description of the Project to be revised from time to time;
provided, however, no change in the description of the Project shall be
inconsistent with the representations incorporated by reference in subsection
(l) of Section 2.02 hereof, and in the case of any change that would render
materially inaccurate the description of the Project, there shall be delivered
to the Trustee and the Authority (i) a new description which shall have been
certified by an Authorized Borrower Representative, and (ii) approvals, if any,
required by the Act.
Section 3.03. AGREEMENT TO ISSUE THE BONDS. The Authority agrees
----------------------------
that it will use its best efforts to issue, sell and deliver the Bonds to the
Underwriter. The proceeds from the sale of the Bonds (including accrued
interest) shall be delivered to the
17
<PAGE>
Trustee for deposit in accordance with Section 208 (D) of the Trust Agreement.
Section 3.04. DISBURSEMENTS FROM PROJECT FUND. The Authority and
-------------------------------
the Borrower hereby agree that the moneys in the Project Fund shall be applied
to the payment of the Cost of the Project as described in Section 3.01 above,
and otherwise as provided in accordance with Article IV of the Trust Agreement,
and substantially to the extent of the estimates of the Cost of the Project set
forth in the application filed with the Authority, as such application may be
amended from time to time, and such moneys shall be invested and reinvested in
accordance with the Trust Agreement.
Section 3.05. BORROWER REQUIRED TO PAY COST OF THE PROJECT. If the
--------------------------------------------
moneys in the Project Fund available for the payment of the Cost of the Project
should not be sufficient to pay or cause to be paid the Cost of the Project, the
Borrower agrees to complete the Project and pay all that portion of the Cost of
the Project as may be in excess of the moneys available therefor in the Project
Fund. The Authority does not make any warranty, either express or implied, that
the monies which will be paid into the Project Fund will be sufficient to pay
the Cost of the Project. The Borrower agrees that if, after exhaustion of the
moneys in the Project Fund, the Borrower should pay or cause to be paid any
portion of the Cost of the Project, it shall not be entitled to any
reimbursement therefor from the Authority or from the Trustee, and that it shall
not be entitled to any abatement, diminution or postponement of the payments to
be made pursuant to Article IV of this Agreement.
Section 3.06. ESTABLISHMENT OF COMPLETION DATE; VERIFICATION OF COST
------------------------------------------------------
OF THE PROJECT. The Completion Date for the construction of the Project (the
- --------------
"Completion Date") shall be evidenced to the Trustee by a certificate delivered
to the Trustee, not later than the last day of the thirty sixth (36th) month
succeeding the Date of Issuance (the "Mandatory Project Termination Date") and
signed by an Authorized Borrower Representative, setting forth the Cost of the
Project and stating that, except for amounts not then due and payable or the
liability for the payment of which is being contested or disputed by the
Borrower, the acquisition, construction, equipping, installation and improvement
of the Shopping Center has been completed and the Cost of the Project has been
paid. Notwithstanding the foregoing, such certificate shall state that it is
given without prejudice to any rights the Borrower may have against third
parties which exist at the date of such certificate or which may subsequently
come into being. In addition, the Borrower shall provide to the Authority and
the Trustee: (i) a certificate of an architect (the "Architect's Certificate")
duly licensed to practice in the Commonwealth to the effect that the
construction, equipping, installation and improvement of the Shopping Center has
been completed, such completion conforming substantially to the Plans and
18
<PAGE>
Specifications; and (ii) a Certificate of Use; and (iii) evidence that all
mechanics, materialmen and suppliers providing labor or services to the Project
have been paid in full; and (iv) the bring down of Title Insurance covering the
Shopping Center.
The Borrower shall furnish to the Authority, within one hundred and
twenty (120) days after the end of the Borrower's fiscal year during which the
Shopping Center is completed, a written statement prepared by an Independent
Accountant verifying the Cost of the Project.
Section 3.07. CONDITIONS PRECEDENT TO ISSUANCE OF THE BONDS. The
-----------------------------------------------
obligation of the Authority to issue the Bonds is subject to the condition
precedent that the Authority shall have received, on or before the Date of
Issuance the following, each dated such date (except as to dates on those
documents delivered pursuant to paragraphs (c), (e), (i), (j), (k), (l), (m),
(n), (o), (p), (q) and (s) of this Section 3.07), and each in form and
substance satisfactory to the Authority and its counsel:
(a) Certifications, in form and substance satisfactory to the
Authority, of the Managing Partner of the Borrower as to the resolutions
approving this Agreement and the Related Documents and the transactions
contemplated hereby and thereby and as to such other matters as the Authority
may reasonably request.
(b) a certificate of an Authorized Borrower Representative certifying
the names and true signatures of the representatives of the Borrower authorized
to execute on behalf of the Borrower this Agreement and the Related Documents to
which the Borrower is a party and the other documents to be delivered by the
Borrower in connection herewith and therewith.
(c) a certified copy of the Borrower's partnership agreement,
together with all amendments thereto.
(d) an opinion of Letvia M. Arza Goderich, Esq., counsel for the
Borrower, pertaining to the due authority of the Borrower to enter into this
Agreement and the Related Documents and as to such other matters as the
Authority and the Rating Agency shall reasonably request.
(e) a certificate of the Trustee, delivered pursuant to the Bond
Purchase Agreement dated the Date of Issuance among the Underwriter, the
Borrower and the Authority, relating to its authorization to so act and such
other matters as shall reasonably be requested.
(f) an opinion of Martinez Odell & Calabria, Bond Counsel, delivered
pursuant to the Bond Purchase Agreement.
19
<PAGE>
(g) an opinion of counsel, who may be counsel to the Underwriter, to
the effect that the Bonds are exempt from the registration requirements of the
Securities Act of 1933 and the Commonwealth's Uniform Securities Act.
(h) an executed copy of each of the following:
(i) the Trust Agreement;
(ii) the Mortgage;
(iii) the Mortgage Note;
(iv) the Collateral Assignment;
(v) the Pledge Agreement;
(vi) the Guaranty Agreement;
(vii) the Bond Purchase Agreement; and
(viii) each other Related Document (other than the Bonds).
(i) An executed copy of each document delivered pursuant to Section
208 of the Trust Agreement and each document delivered pursuant to the Bond
Purchase Agreement.
(j) Evidence, in form and substance satisfactory to the Authority and
its counsel, that the Borrower has good, legal, recordable, marketable, fee
simple, and insurable title in and to the Mortgaged Property, and that the
Mortgage is a first priority lien on the Mortgaged Property.
(k) Copies of a survey of the Mortgaged Property, in form and
substance satisfactory to the Authority and Bond Counsel, certified to the
Authority within ninety (90) days prior to the Date of Issuance by an
independent surveyor reasonably satisfactory to the Authority and licensed in
the Commonwealth.
(l) Copies of all applicable governmental permits, licenses and
approvals relating to the construction of the Shopping Center.
(m) A letter from the Rating Agency issuing a rating of no less than
"A" for the Bonds.
(n) A mortgage title insurance policy or binder therefor in an amount
equal to the aggregate principal amount of the Mortgage Note, issued by an
insurer qualified to do business in the Commonwealth and naming the Authority
and the Trustee as beneficiaries and insuring that the Mortgage constitutes a
first lien on the Mortgaged Property (the "Title Insurance"), subject
20
<PAGE>
only to Liens contemplated or permitted by this Agreement and the Related
Documents.
(o) evidence that the insurance requirements of Section 9 of the
Pledge Agreement have been complied with and that the Authority and the Trustee
have been added to the endorsements thereof as additional insureds and loss
payees and as otherwise may be required by Section 9(b)(iii) of the Pledge
Agreement.
(p) The Borrower shall have delivered an environmental report
pertaining to the environmental condition of the Mortgaged Property, in form and
substance reasonably acceptable to the Authority.
(q) The Borrower shall have delivered a negative tax debt certificate
from the Commonwealth Treasury Department.
(r) An opinion of Conners & Winters, counsel to the Guarantor,
pertaining to the due authority of the Guarantor to enter into the Guaranty
Agreement, the effectiveness of the Registration Statement pertaining to the
Initial Guaranty Agreement filed with the Securities Exchange Commission and the
Office of the Commissioner of Financial Institutions of the Commonwealth and as
to such other matters as the Authority shall reasonably request.
(s) Such other documents, instruments, opinions, and approvals as the
Authority shall have reasonably requested.
Section 3.08. ADDITIONAL CONDITIONS PRECEDENT TO ISSUANCE OF THE
--------------------------------------------------
BONDS. The obligation of the Authority to issue the Bonds shall be subject to
- -----
the further conditions precedent that on the Date of Issuance:
(a) The following statements shall be true and correct in all
material respects and shall be deemed to have been represented by the Borrower
as being true and correct on the Date of Issuance and the Authority shall have
received a certificate, signed on behalf of the Borrower by an Authorized
Borrower Representative, dated the Date of Issuance, stating that:
(i) The representations and warranties contained in Section
2.02 of this Agreement are true and correct in all material respects on and as
of the Date of Issuance, as though made on and as of the Date of Issuance, and
(ii) No event has occurred and is continuing, or would result
from the issuance of the Bonds, or the other transactions contemplated hereby,
which constitutes an Event of Default or would constitute an Event of Default
but for the giving of notice or the lapse of time hereunder.
21
<PAGE>
(b) There shall have been paid, or there shall have been provided for
the payment of, all mortgage recording fees or filing fees and there shall have
been given, or taken, any notice or any other similar action, as may be
necessary or, to the extent requested by the Authority or its counsel,
advisable, in order to establish, perfect, protect and preserve the right, title
and interest, remedies, powers, privileges, liens and security interests of the
Authority and the Trustee, created by this Agreement and the Related Documents,
subject only to Permitted Liens and such other Liens contemplated or permitted
by this Agreement or the Related Documents and the Authority shall have received
evidence satisfactory to it and its counsel of all of the foregoing.
ARTICLE IV
LOAN BY THE AUTHORITY TO THE BORROWER;
REPAYMENT; EXPENSES; INDEMNIFICATION
Section 4.01. LOAN BY THE AUTHORITY; REPAYMENT.
--------------------------------
(a) Upon the terms and conditions of this Agreement, the Authority
shall loan the Borrower the proceeds of the sale of the Bonds. The principal
amount of the loan shall be equal to the aggregate principal amount of the
Bonds.
(b) The Borrower agrees to repay the loan in accordance with the
provisions of this Agreement. The Borrower will:
(i) with respect to each Payment Date, pay such amounts which
together with all other moneys available therefor in the Bond Fund, will be
sufficient to pay on such date:
(A) all interest which will then become due and payable
on the Bonds, and
(B) the principal amount of Bonds and premium, if any,
which will then become due and payable; and
(ii) pay such amounts which will cause the moneys deposited with
the Trustee to the credit of the Reserve Fund which equal in the aggregate at
least $2,029,403.75 (the "Reserve Fund Amount") whenever required to pursuant to
the provisions hereof.
(c) So long as any Bond is Outstanding, the Borrower agrees to pay to
the Trustee for deposit:
(i) to the credit of the Bond Fund on the fifteenth day of each
month commencing on February 15, 1995, an amount equal to the amount of interest
on the Bonds to become due and payable on the next ensuing Interest Payment
Date;
22
<PAGE>
(ii) to the credit of the Bond Fund on the fifteenth day of each
month commencing July 15, 1995, one-sixth (1/6th) of the amount of principal of
the Bonds to become due and payable (whether at maturity or redemption pursuant
to Section 301(f) of the Trust Agreement) on the next ensuing Principal Payment
Date;
The payment due in clauses (c)(i) and (c)(ii) above, on the month
immediately preceding each Payment Date shall be for an aggregate amount that,
together with moneys then on deposit in the Bond Fund, shall be sufficient to
pay the interest and principal of the Bonds which is due and payable on such
Payment Date.
(iii) to the credit of the Reserve Fund the amounts it is
required to pay under subsection (b)(ii) of this Section for deposit in the
Reserve Fund no later than 11:00 A.M., Atlantic Standard Time, not later than
the tenth (10th) Business Day immediately succeeding the date that the Trustee
notifies the Borrower of a deficiency in the Reserve Fund Amount (a "Reserve
Fund Deficiency Notice") after having made a determination of the moneys then to
credit of the Reserve Fund in accordance with Section 511(D) of the Trust
Agreement.
(iv) to the extent that for whatever reason the amounts on
deposit in the Bond Fund pursuant to the payments made in accordance with
clauses (c)(i) and (c)(ii) above shall not, by the fifth (5th) Business Day
immediately preceding each Payment Date, equal an aggregate amount sufficient to
pay the interest on, principal and premium, if any, on the Bonds due and payable
on such Payment Date, then the Borrower shall deposit no later than 11:00 a.m.
Atlantic Standard Time, on the Business Day immediately preceding such Payment
Date an amount which together with amounts then on deposit in the Bond Fund will
be sufficient to make the payments then due.
(d) The Borrower shall pay the amounts it is required to pay under
this Section 4.01 directly to the Trustee for deposit in the Bond Fund. The
Trustee shall not use any of the amounts deposited in the Bond Fund pursuant to
this Section for any purpose other than the payment of principal of and interest
and premium, if any, on the Bonds, payable on the date with respect to which
such amounts were deposited and as otherwise provided in the Trust Agreement.
For purposes of this Section 4.01, a drawing by the Trustee under the
Credit Enhancement or Cash Collateral, if any is then outstanding, to the extent
made and applied to the payment of the principal amount of and interest on the
Bonds, will be deemed to satisfy the obligations of the Borrower under this
Section 4.01.
(e) To secure its obligation to make the payments required under this
Section 4.01, the Borrower agrees to cause the Initial Guaranty Agreement to be
issued and delivered to the Trustee on or
23
<PAGE>
prior to the date of the delivery of and payment for the Bonds. The Initial
Guaranty Agreement shall be in an amount equal to the Enhancement Amount. The
Initial Guaranty Agreement may be substituted by the Borrower at any time for a
Letter of Credit, Successor Guaranty Agreement or Cash Collateral in an amount
equal to the then current Enhancement Amount, subject in each instance to the
conditions set forth in Section 4.09(a), Section 4.09(b) and Section 4.09(c),
respectively hereof.
(f) The applicable Credit Enhancement or the Cash Collateral and the
Enhancement Amount at any time available thereunder for the Payment of the Bonds
may be reduced from time to time, initially upon an Enhancement Amount Reduction
Determination(s) and thereafter upon permitted Enhancement Amount Reduction
Certification(s) or other Enhancement Amount Reduction Determinations. Any such
reduction in the Enhancement Amount, resulting from either (i) Enhancement
Amount Reduction Determination(s), or (ii) Enhancement Amount Reduction
Certification(s) shall irrevocably reduce the Enhancement Amount available under
the pertinent Credit Enhancement or the Cash Collateral effective upon receipt
thereof in writing by the Trustee. The Borrower may cause there to be delivered
to the Trustee, from time to time, until the Enhancement Amount is reduced to
zero, additional Enhancement Amount Reduction Determinations and Enhancement
Amount Reduction Certifications.
If the Enhancement Amount shall be reduced on a Principal Payment Date
as provided above or pursuant to an Enhancement Amount Reduction Determination
or an Enhancement Amount Reduction Certification, as the case may be (i) any
Cash Collateral in excess of the new Enhancement Amount shall be immediately
returned to the Depositor of the Cash Collateral, or (ii) the Credit Enhancement
shall be immediately amended, without the need of a written modification
thereto, permanently to reduce the liability of the issuer of the Credit
Enhancement to the new Enhancement Amount.
If the Enhancement Amount shall be zero or less than zero, the Trustee
shall immediately deliver the Cash Collateral to the Depositor or immediately
deliver the Credit Enhancement to the Guarantor or Letter of Credit Bank, as the
case may be.
Upon Payment of the Bonds, in the event that there shall then be
outstanding a Credit Enhancement or Cash Collateral, the Trustee shall
immediately deliver the Cash Collateral to the Depositor thereof, or the Credit
Enhancement to the Guarantor or Letter of Credit Bank, as the case may be.
In no event will the Enhancement Amount in effect at any point in time
be increased or reinstated once reduced or eliminated.
The Trustee shall not use any of the amounts deposited in the Bond
Fund
24
<PAGE>
pursuant to this Section for any purpose other than the payment of the principal
amount of, premium, if any, and interest on the Bonds payable on the date with
respect to which such amounts were deposited.
To additionally secure its obligation to make the payments required
under this Section 4.01, the Borrower agrees to execute and deliver the
Collateral Documents on or prior to the Date of Issuance.
Section 4.02. OBLIGATIONS ABSOLUTE. The obligations of the Borrower
--------------------
under this Agreement shall be absolute, unconditional and irrevocable, and shall
be paid or performed strictly in accordance with the terms of this Agreement
under all circumstances, including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of any Related Document;
(ii) any amendment or waiver of, or any consent to a change of, all
or any of the Related Documents;
(iii) the existence of any claim, set-off, defense or other right
which the Borrower may have at any time against the Authority, the Trustee, or
any other Person, whether in connection with this Agreement, any Related
Document, the transactions contemplated herein or therein or any unrelated
transaction other than payment of principal or interest by or on behalf of the
Borrower; and
(iv) any certificate or any other document presented hereunder by or
on behalf of the Borrower shall prove to be forged, fraudulent, invalid or
insufficient in any respect, or any statement therein being untrue or inaccurate
in any respect.
Section 4.03. PREPAYMENTS. The Borrower may optionally prepay the
-----------
amounts payable under Section 4.01 only at the times and in the amounts as
provided in Sections 8.01(a) and 8.03(b) and Article IX hereof, and the Borrower
shall be obligated to prepay all or any such part of the amounts payable under
Section 4.01 as provided in Sections 8.01(b), 8.02, and 8.03(a) hereof.
Section 4.04. COVENANT TO MAINTAIN THE SHOPPING CENTER. The Borrower
----------------------------------------
will, at its sole cost and expense, cause the Shopping Center with the
appurtenances and every part and parcel thereof to be maintained, preserved and
kept in good repair, working order and condition (reasonable wear and tear
excepted) and will, from time to time, cause to be made all reasonably necessary
and proper repairs, replacements and renewals; provided, however, that the
Borrower will have no obligation to cause to be maintained, preserved, repaired,
replaced or renewed any element or unit of the Project the maintenance, repair,
replacement or renewal of which,
25
<PAGE>
in the opinion of the Borrower, becomes uneconomic to the Borrower because of
damage or destruction or obsolescence, or change in economic or business
conditions, or change in government standards and regulations, or the
termination by the Borrower of the operation of the Industrial Facilities to
which such element or unit of the Project is an adjunct. For purposes of this
Section 4.04, the "opinion of the Borrower," upon the Authority's request, shall
be expressed to the Authority and the Trustee by delivery of a certificate of an
Authorized Borrower Representative specifying the circumstances, situations or
conditions described in this Section 4.04, the existence of which permits the
Borrower not to cause to be maintained any element or unit of the Project.
The Borrower covenants that it will promptly notify the Trustee and
the Authority if the Shopping Center ceases to be maintained and operated as
Industrial Facilities.
Section 4.05. EXPENSES.
--------
The Borrower will pay:
(a) all reasonable fees and expenses of the Trustee and the costs and
expenses of indemnifying the Trustee for, and holding the Trustee harmless
against, any loss, liability or expense (including the costs and expenses of
defending against any claim of liability) incurred without negligence or willful
misconduct by the Trustee and arising out of or in connection with its acting as
Trustee under the Trust Agreement; and
(b) the Administrative Fee, costs of issuance of the Bonds and
Underwriter's fees as provided in Section 403 of the Trust Agreement, and all
reasonable expenses of the Authority incurred at the request or with the consent
of the Borrower, in connection with the financing of the Project.
Section 4.06. INDEMNIFICATION. The Borrower will at all times
---------------
indemnify and hold harmless the Authority against any and all losses, costs,
damages, expenses and liabilities (collectively referred to hereinafter as
"Losses") of whatever nature (including, but not limited to, reasonable
attorneys' fees, litigation and court costs, amounts paid in settlement, and
amounts paid to discharge judgments) directly or indirectly resulting from,
arising out of, or related to one or more Claims, as hereinafter defined. The
word "Claims" as used herein shall mean all claims, lawsuits, causes of action
and other legal actions and proceedings involving bodily or personal injury or
death and including but not limited to claims, lawsuits, causes of action and
other legal actions and proceedings brought against the Authority or to which
the Authority is a party, that directly or indirectly result from, arise out of,
or relate to: (i) the design, construction, transfer, sale, operation, use,
occupancy, maintenance or ownership of the Shopping Center or any part thereof;
(ii) the execution, delivery or
26
<PAGE>
performance of this Agreement, the Trust Agreement or any Related Documents or
other instruments in connection therewith; or (iii) any untrue statement or
alleged untrue statement of a material fact contained herein or in any document
relating to the Bonds, or any amendment or supplement thereto, including, but
not limited to the Official Statement used in connection with the offer and sale
of the Bonds or any Preliminary Official Statement relating to the Bonds, or the
omission or alleged omission to state herein or in such documents a material
fact required to be stated herein or in such documents or necessary to make the
statements herein or therein, in light of the circumstances under which they
were made, not misleading, provided, however, that the Borrower will not be
liable in any case, to the extent that any such Loss or Claim arises out of, or
is based upon, an untrue or alleged untrue statement or omission or alleged
omission made in any of such documents in reliance upon and in conformity with
written information furnished to the Borrower by the Authority or the
Underwriter specifically for use therein (it being understood that the
information in the Preliminary Official Statement and the Official Statement
under the captions "The Authority and Governing Board," "Government Development
Bank of Puerto Rico," "Tax Matters" (except matters relating to, and
representations, warranties and covenants made by the Borrower), "Legal
Investment", and under the caption "Underwriting," has been so furnished to the
Borrower by the Authority or the Underwriter specifically for use therein). The
obligations of the Borrower under this Section 4.06 shall apply to all Losses or
Claims, or both, that result from, arise out of, or are related to any event,
occurrence, condition or relationship prior to termination of this Agreement,
whether such Losses or Claims, or both, are asserted prior to termination of
this Agreement or thereafter. The Authority shall reimburse the Borrower for
payments made by the Borrower pursuant to this Section 4.06 to the extent of any
proceeds, net of all expenses of collection, actually received by the Authority
from any insurance covering such Claims with respect to the Losses sustained.
The Authority shall have the duty to claim any such insurance proceeds and the
Authority shall assign its rights to such proceeds, to the extent of such
required reimbursement, to the Borrower. In case any action shall be brought
against the Authority in respect of which indemnity may be sought against the
Borrower, the Authority shall promptly notify the Borrower in writing and the
Borrower shall have the right to assume the investigation and defense thereof,
including the employment of counsel and the payment of all expenses. The
Authority shall have the right to employ separate counsel in any such action and
participate in the investigation and defense thereof, but the fees and expenses
of such counsel shall be paid by the Authority, unless the employment of such
counsel has been approved in writing by the Borrower. The Borrower shall not be
liable for any settlement of any such action without its written consent but, if
any such action is settled with the written consent of the Borrower or if there
be a final unappealable judgment for the plaintiff in any such action, the
Borrower agrees to indemnify
27
<PAGE>
and hold harmless the Authority from and against any such Losses or Claims.
Nothing herein shall be construed as requiring the Authority to acquire or
maintain insurance of any form or nature with respect to the Shopping Center or
any portion thereof or with respect to any phrase, term, provision, condition or
obligation of this Agreement or any other matter in connection herewith.
The provisions of this Section 4.06 shall survive the expiration or
termination of this Agreement and the Related Documents.
Section 4.07. PAST DUE PAYMENTS. In the event the Borrower shall
-----------------
fail to pay any amounts required to be paid under Section 4.01, any such amounts
pertaining to principal of or interest on the Bonds shall continue to bear
interest to the extent permitted by law until their payment from the Payment
Date of the Bonds to which such defaulted amounts relate at the rate of interest
on such Bonds.
Section 4.08. RATING.
------
(a) The Borrower shall cause the Rating Agency on or prior to the
Date of Issuance to issue a rating for the Bonds of not less than "A."
(b) After the Date of Issuance and until the Payment of the Bonds,
the Borrower covenants that it will deliver to the Rating Agency, from time to
time, such documents and other relevant information as the Rating Agency may
require for its due diligence on the rating assigned to the Bonds.
Section 4.09. SUBSTITUTION OF CREDIT ENHANCEMENT OR CASH COLLATERAL.
-----------------------------------------------------
The Borrower shall have the option of substituting the Initial
Guaranty Agreement for a Successor Guaranty Agreement, a Letter of Credit or
Cash Collateral as hereinafter provided, and thereafter shall have the option of
substituting any such Credit Enhancement or Cash Collateral for another form of
Credit Enhancement or other Cash Collateral, as applicable, subject to the
provisions hereof.
(a) The Borrower shall have the option, at any time, so long as an
Event of Default shall not have been declared and is not continuing and the
Reserve Fund Amount shall be available, of substituting the then applicable
Credit Enhancement or the Cash Collateral with a Letter of Credit and the
Borrower will additionally deliver to the Trustee together therewith the
following documents:
(1) an executed copy of the reimbursement agreement delivered in
connection with the Letter of Credit;
28
<PAGE>
(2) an opinion of counsel to the Borrower, which counsel may be
the general counsel of the Borrower, to the effect that either (at the option of
the Borrower) (i) the acceptance by the Trustee of the Letter of Credit will not
require that the Bonds, the obligations of the Borrower under the Loan Agreement
or the Letter of Credit be registered under the Securities Act of 1933, as
amended, or the qualification of the Trust Agreement under the Trust Indenture
Act of 1939, as amended, or (ii) any registration statement required to be filed
under the Securities Act of 1933, as amended, with respect to the Bonds, the
Borrower's obligations under the Loan Agreement or the Letter of Credit is
effective under such Act, and the Trust Agreement has been duly qualified under
the Trust Indenture Act of 1939, as amended;
(3) an opinion of counsel of the issuer of the Letter of
Credit, which may be the general counsel of the issuer of the Letter of Credit,
to the effect that the Letter of Credit is a legal, valid and binding obligation
of the Letter of Credit Bank;
(4) evidence, satisfactory to the Trustee that the proposed
Letter of Credit Bank meets the Rating Requirement at the time of delivery of
such Letter of Credit;
(5) an opinion of Bond Counsel to the effect that: (i) all
documents and opinions required to be delivered to the Trustee under this
Section 4.09(a) have been delivered and such documents and opinions on their
face comply with the requirements of this Section 4.09(a) and of the Trust
Agreement and that the delivery of the Letter of Credit is authorized under and
complies with the terms of this Agreement, and (ii) that the acceptance of the
Letter of Credit shall not adversely affect the tax treatment of the Bonds; and
(6) such other documents and opinions as the Trustee may
reasonably request.
(b) The Borrower shall have the option, at any time, so long as an
Event of Default shall not have been declared and is not continuing and the
Reserve Fund Amount shall be available, of substituting the then applicable
Credit Enhancement or the Cash Collateral with a Successor Guaranty Agreement,
and will additionally deliver to the Trustee together therewith the following
documents:
(1) an opinion of counsel to the Borrower, which counsel may be
the general counsel of the Borrower, to the effect that either (at the option of
the Borrower) (i) the acceptance by the Trustee of the Successor Guaranty
Agreement will not require that the Bonds, the obligations of the Borrower under
the Loan Agreement or the Successor Guaranty Agreement to be registered under
the Securities Act of 1933, as amended, or the qualification of the Trust
Agreement under the Trust Indenture Act of 1939, as amended,
29
<PAGE>
or (ii) any registration statement required to be filed under the Securities Act
of 1933, as amended, with respect to the Bonds, the Borrower's obligations under
the Loan Agreement or the Successor Guaranty Agreement is effective under such
Act, and the Trust Agreement has been duly qualified under the Trust Indenture
Act of 1939, as amended;
(2) an opinion of counsel of the issuer of the Successor
Guaranty Agreement, which may be the general counsel of the issuer of the
Successor Guaranty Agreement, to the effect that the Successor Guaranty
Agreement is a legal, valid and binding obligation of the Successor Guarantor;
(3) evidence, satisfactory to the Trustee that the proposed
Successor Guarantor meets the Rating Requirement at the time of delivery of such
Successor Guaranty Agreement;
(4) an opinion of Bond Counsel to the effect that: (i) all
documents and opinions required to be delivered to the Trustee under this
Section 4.09(b) have been delivered and such documents and opinions on their
face comply with the requirements of this Section 4.09(b) and of the Trust
Agreement and that the delivery of the Successor Guaranty Agreement is
authorized under and complies with the terms of this Agreement; and (ii) that
the acceptance of the Successor Guaranty Agreement shall not adversely affect
the tax treatment of the Bonds; and
(5) such other documents and opinions as the Trustee may
reasonably request.
(c) The Borrower shall have the option at any time, so long as an
Event of Default shall not have been declared and is not continuing and the
Reserve Fund Amount shall be available, of substituting the then applicable
Credit Enhancement or the Cash Collateral for Cash Collateral for deposit to the
credit of the Collateral Fund and will additionally deliver to the Trustee
together therewith the following documents:
(1) A certificate of the Depositor of such Cash Collateral, to
the effect that: (i) such deposit is made in substitution of the applicable
Credit Enhancement or the prior deposit of Cash Collateral; (ii) that the
Depositor consents to the use of the Cash Collateral under the terms and
conditions set forth in this Agreement and the Trust Agreement; and (iii) that
the Depositor will not exercise any claim against the Cash Collateral until the
principal of and interest on the Bonds is paid in full.
(2) An opinion of counsel knowledgeable in United States
Bankruptcy Code matters, and reasonably acceptable to the Trustee, to the effect
that (i) the deposit by the Depositor of the Cash Collateral may not be avoided
as a preferential transfer or otherwise by such Depositor's creditors in the
event such person
30
<PAGE>
were subject to an Act of Bankruptcy and (ii) that such amounts if and when paid
to the holders of the Bonds would not result in a preferential transfer,
challengeable by other creditors of the Depositor or the Borrower.
(3) an opinion of Bond Counsel to the effect that: (i) all
documents and opinions required to be delivered to the Trustee under this
Section 4.09(c) have been delivered and such documents and opinions on their
face comply with the requirements of this Section 4.09(c) and of the Trust
Agreement and that the delivery of the Cash Collateral is authorized under and
complies with the terms of the Loan Agreement, and (ii) that the acceptance of
the Cash Collateral shall not adversely affect the tax treatment of the Bonds;
and
(4) such other documents and opinions as the Trustee may
reasonably request.
(d) Prior to the expiration of the Letter of Credit, if one is then
outstanding and has not been substituted as provided in Section 4.09(a) or
renewed as provided in Section 4.09(e), the Trustee shall make a Permitted
Letter of Credit Deposit.
(e) The renewal of a Letter of Credit then in effect by the Letter of
Credit Bank which issued such Letter of Credit under essentially the same terms
thereof (except for changes in expiration dates and to reflect the then current
Enhancement Amount) shall not require the delivery of the documents and opinions
set forth in Section 4.09(a).
ARTICLE V
FURTHER AGREEMENTS
Section 5.01. COVENANT TO MAINTAIN EXISTENCE. The Borrower
------------------------------
covenants that so long as any Bonds are outstanding, it will do all things
necessary to preserve its existence and will not amend, modify or otherwise
change its partnership agreement in a manner which adversely affects the
Borrower's existence as a single purpose entity; will not dispose of all or
substantially all its assets and will not consolidate with or merge into another
Person; provided, however, that the Borrower may consolidate with or merge into
another Person, or transfer to another Person all or substantially all its
assets and thereafter dissolve and assign this Agreement to such successor or
transferee Person, if such Person: (i) is organized under the laws of any state
of the United States of America or the Commonwealth; (ii) complies with the
representations made in Section 2.02(m) hereof; (iii) irrevocably and
unconditionally assumes in writing all the obligations of the Borrower herein;
and (iv) the Borrower complies with the conditions of Section 6.01 hereof.
31
<PAGE>
As used herein, a "single purpose entity" means a Person, other than
an individual, which is formed or organized solely for the purpose of holding,
directly, an ownership interest in one (1) property, does not engage in any
business unrelated to such property and the financing thereof, does not have any
assets other than those related to its interest in the property or the financing
thereof or any indebtedness other than as permitted by this Agreement or the
Related Documents, has its own separate books and its own accounts, in each case
which are separate and apart from the books and records and accounts of any
other Person and holds itself out as being a Person, separate and apart from any
other Person.
Section 5.02. AUTHORITY'S COVENANT TO COOPERATE. In the event it
---------------------------------
may be necessary, for the proper performance of this Agreement, on the part of
the Authority or the Borrower, that any application or applications for any
permit or license to do or to perform certain things, be made to any
governmental or other agency by the Borrower or the Authority, the Borrower and
the Authority each agree to cooperate in such matters; provided however, that
the Authority and the Borrower are bound to the agreement of this Section 5.02
only in the case of reasonable requests for assistance.
Section 5.03. NO WARRANTY BY AUTHORITY. The Authority makes no
------------------------
warranty, either express or implied: (a) as to the condition of the Shopping
Center or its suitability for the Borrower's purpose or needs; or (b) that the
proceeds of the Bonds will be sufficient to pay the Cost of the acquisition,
construction, equipping, installation and improvement of the Shopping Center or
to reimburse fully the Borrower for Costs incurred in connection therewith.
Section 5.04. RIGHT OF INSPECTION. The Borrower agrees that the
-------------------
Authority, the Trustee and their duly authorized agents shall have the right, at
all reasonable times during business hours, to enter upon and examine and
inspect the Shopping Center to determine whether it continues to constitute
Industrial Facilities. The Authority and Trustee shall also be permitted, at
all reasonable times during business hours, to examine the Plans and
Specifications and the other books and records of the Borrower with respect to
the Shopping Center, in connection with the transactions contemplated by this
Agreement and the Related Documents. The aforesaid rights of examination and
inspection shall be exercised only upon such reasonable and necessary terms and
conditions as the Borrower shall prescribe, which conditions shall be deemed to
include, but not be limited to, reasonable notice and those conditions necessary
to protect the Borrower's trade secrets and proprietary rights and the customary
functioning of the Shopping Center.
Section 5.05. SERVICE OF PROCESS. The Borrower consents to the
------------------
jurisdiction of the courts of the Commonwealth for causes of
32
<PAGE>
action arising under the terms of this Agreement and the Related Documents. The
Borrower agrees to appoint and maintain an agent in the Commonwealth to receive
service of process for this limited purpose.
Section 5.06. OFFICERS OF AUTHORITY NOT LIABLE. All covenants,
--------------------------------
stipulations, promises, agreements and obligations of the Authority contained
herein shall be deemed to be covenants, stipulations, promises, agreements and
obligations of the Authority and not of any member of the governing body of the
Authority or any officer, agent, servant or employee of the Authority in his
individual capacity, and no recourse shall be had for the payment of the
principal or interest on the Bonds or for any claim based thereon or hereunder
against any member of the governing body of the Authority or any officer, agent,
servant or employee of the Authority or any natural Person executing the Bonds.
Neither any member of the governing body of the Authority nor any natural Person
executing the Bonds shall be liable personally on the Bonds or be subject to any
personal liability or accountability by reason of the issuance of the Bonds.
Section 5.07. COMPLIANCE WITH APPLICABLE LAW. The Borrower covenants
------------------------------
that the Plans and Specifications for the Shopping Center are in all material
respects in compliance with all provisions of applicable laws, ordinances,
orders, rules, regulations and requirements of all federal, Commonwealth and
municipal governments, and appropriate departments, commissions, boards and
officers thereof, now in force.
Section 5.08 INDEMNIFICATION WITH RESPECT TO GOVERNMENT OBLIGATIONS.
-------------------------------------------------------
If the Borrower shall elect to cause Government Obligations to be deposited with
the Trustee pursuant to Section 1301 of the Trust Agreement, the Borrower shall
pay and shall indemnify and hold harmless the Trustee, the Authority and each
holder of the Bonds against any tax, fee or other charge imposed upon or
assessed against such Government Obligations or the principal thereof, or
premium, if any, and interest received thereon.
Section 5.09. CONSENT TO ASSIGNMENT. The Borrower approves all the
---------------------
terms of the Trust Agreement and consents to the assignments made by the
Authority to the Trustee therein.
Section 5.10. COVENANT AS TO SOURCE OF INCOME. (a) The Borrower
-------------------------------
covenants that it will conduct its business and invest its funds, including any
moneys held by the Trustee under the Trust Agreement, so that an Event of
Taxability shall not occur. In particular, the Borrower covenants that for each
one of its taxable years up to and including the end of the taxable year
preceding the date on which the principal amount of and interest on the Bonds
are paid in full (whether by maturity, acceleration, redemption or otherwise),
it shall do or cause to be done all things necessary or
33
<PAGE>
proper to ensure that interest paid on the Bonds will constitute income from
sources within the Commonwealth under the applicable provisions of the Code, as
in effect on the Date of Issuance.
(b) The Borrower further covenants to cause an Independent Accountant
to deliver to the Trustee not later than one hundred twenty (120) days after the
close of each of Borrower's taxable years, beginning with the taxable year
ending December 31, 1995: (i) a certificate addressed to the Borrower, stating
for the taxable year then ended the percent of the Borrower's gross income that
was derived from Commonwealth sources and attributable to the conduct of the
trade or business of the Borrower in the Commonwealth; and (ii) its opinion that
based upon limited procedures, not constituting an examination made in
accordance with generally accepted auditing standards, but including an
examination of the Borrower's gross revenue accounts, as to whether the Borrower
met or failed to meet the requirements of the Code, as in effect on the Date of
Issuance, so that the interest payable on the Bonds for the taxable year for
which such certificate is furnished would qualify as income from sources within
the Commonwealth for purposes of the Code as in effect on the Date of Issuance.
If such Independent Accountant determines that the Borrower has failed to meet
the requirements of the Code as in effect on the Date of Issuance such that
interest on the Bonds fails to qualify as income from sources within the
Commonwealth, such certificate shall also state whether, solely as a result of
any such failure, any portion of the interest on the Bonds received by a
Qualified Bondholder (as hereinafter defined) is subject to United States income
tax under the Code (an "Event of Taxability"). For these purposes, the term
Qualified Bondholder shall mean a Bondholder which in the year in which interest
was paid on the Bonds and with respect to which taxes would be payable thereon
was a: (i) bona fide resident of the Commonwealth during the entire year in
order to meet the requirements of Section 933 of the Code; or (ii) a "foreign"
(as that term is defined in the Code) corporation and as to which the receipt of
interest on the Bonds is not treated as effectively connected with, or
attributable to, the conduct of a trade or business in the United States by such
foreign corporation (a "Foreign Corporation"). Any determination by such
Independent Accountant that the Borrower has failed to meet such requirements of
the Code as set forth above shall be immediately notified by the Trustee to the
Bondholders informing such Bondholders that an Event of Taxability has occurred
hereunder.
Section 5.11. INDEMNITY UPON EVENT OF TAXABILITY. Upon the
----------------------------------
occurrence of an Event of Taxability, the Borrower will pay an indemnity to each
Qualified Bondholder who demonstrates to the Borrower that solely as a result of
such Event of Taxability it had paid or is required to pay United States income
taxes ("federal taxes") in respect of the interest paid on the Bonds. The
amount of the indemnity will equal such amount as, after deducting any federal
taxes payable by the Bondholder with respect to such
34
<PAGE>
indemnity, will equal to the federal taxes such Bondholder was required or may
be required to pay on such interest as a result of the occurrence of the Event
of Taxability plus any penalties and interest that have been or may be assessed
against such Bondholder with respect to such federal taxes that are not
attributable to any act or omission of such Bondholder. The obligation of the
Borrower to make these indemnity payments is separate and apart from any other
obligations of the Borrower under this Agreement, shall survive the Payment of
the Bonds and the termination of this Agreement and the Trust Agreement, is
undertaken herein by the Borrower as an inducement to prospective purchasers of
the Bonds to induce them to purchase the Bonds and is intended to benefit the
Bondholders and is enforceable by each qualifying Bondholder as an independent
and direct claim against the Borrower.
Any indemnity claim against the Borrower by a Bondholder (the
"claimant") under this Section is subject to the following conditions and
procedures:
(a) The claim must be filed with the Borrower in writing no later
than ninety (90) days after receipt by the claimant of notice from the Trustee
of the occurrence of the Event of Taxability giving rise to the claim.
(b) The claim must be accompanied by a certificate of an Independent
Accountant certifying (i) that the federal taxes for which reimbursement is
sought have been paid or are required to be paid, (ii) the amount of such taxes,
(iii) the amount of penalties and interest payable with respect to such taxes,
and (iv) the amount of any additional federal taxes, penalties and interest
payable with respect to the indemnity claimed.
(c) The Borrower will pay the claim to the claimant within ninety
(90) days after the claim is received by the Borrower.
(d) Notwithstanding the foregoing, the Borrower shall not be required
to provide the indemnity provided for in this Section if the interest on the
Bonds received by a Qualified Bondholder becomes subject to United States income
tax as a result of an amendment to the Code or any other change in law.
Section 5.12. NO ABATEMENT OF PAYMENTS. If any of the Mortgaged
------------------------
Property shall be damaged or either partially or totally destroyed, or if title
to, or the temporary use of the whole or any part of the Mortgaged Property
shall be taken or condemned by a competent authority for any public use or
purpose, there shall be no abatement or reduction in the amounts payable by the
Borrower hereunder, and the Borrower shall continue to be obligated to make such
payments.
Section 5.13. AFFIRMATIVE COVENANTS. So long as the Borrower shall
---------------------
have any obligation to pay any amount to the Authority
35
<PAGE>
hereunder, unless the Authority shall otherwise consent in writing, which
consent shall not be unreasonably withheld, the Borrower covenants as follows:
(a) Compliance with Laws, Licenses, etc. The Borrower will comply
-----------------------------------
with all applicable laws, rules and regulations and orders of any governmental
authority, the failure to comply with which would have a material adverse effect
on its business, financial condition, results of operations, or would materially
adversely affect Borrower's ability to perform its obligations under this
Agreement or any Related Document, except laws, rules, regulations or orders
being contested by it in good faith and by appropriate proceedings (i) which
provide for the stay of the applicability of such law, rule, regulation or order
during the pendency thereof; or (ii) the failure to comply during the period of
such contest does not materially impair the use of the Mortgaged Property and
Shopping Center.
(b) Compliance with Conditions, Covenants, etc. The Borrower will
------------------------------------------
comply with all conditions, covenants, restrictions, leases, easements,
reservations, rights and rights-of-way and all applicable requirements of any
insurers related to the Mortgaged Property, the failure to comply with which
would have a material adverse effect on its business, financial condition or
results of operation. The Borrower will comply in all material respects with all
terms and conditions of licenses and permits relating to the operation of the
Shopping Center.
(c) Performance of Agreements. The Borrower will take all actions
-------------------------
and do all things which it is required or authorized by law to take and to do in
order to perform and observe all covenants and agreements on its part to be
performed and observed under this Agreement and each Related Document.
(d) Further Assurances. (i) The Borrower will execute, acknowledge
------------------
where appropriate, and deliver, and cause to be executed, acknowledged where
appropriate, and delivered, from time to time promptly at the request of the
Authority, all documents necessary or advisable to carry out the intent and
purpose of this Agreement and the Related Documents, and (ii) will execute and
file or record, or cause others to execute and file or record, such documents,
and take such other actions as may be necessary or advisable to create, perfect,
protect and preserve the first mortgage lien acquired, or intended to be
acquired, by the Authority under the Mortgage and the Pledge Agreement;
provided, that with respect to this Section 5.15 (d)(ii) to the extent that
Title Insurance shall be in full force and effect, and no event shall have
occurred which shall impair or affect the ability of the named insured to
collect thereunder, the Borrower shall be deemed to be in compliance hereunder.
36
<PAGE>
(e) Books and Records; Inspection Rights. The Borrower will keep
------------------------------------
adequate records and books of account, separate and apart from those of any
Affiliate, in which complete entries will be made and will reflect all financial
transactions of the Borrower in accordance with generally accepted accounting
principles consistently applied. The Borrower will at any reasonable time and
from time to time upon reasonable notice, up to the Completion Date, permit the
Authority, or any agents or representatives thereof, at the expense of the
Authority, to examine and make copies of and abstracts from the records and
books of account of, and visit the properties of, the Borrower and to discuss
the affairs, finances and accounts of the Borrower with any of its officers and
directors; provided, however, that if the Borrower shall designate any
information as confidential information such information shall be held
confidential by the Authority and shall not be furnished or disclosed by the
Authority to any Person other than the Authority's affiliates, any Person
receiving an assignment of rights under this Agreement or the Related Documents
from the Authority, or the Authority's legal counsel, except as may be required
by an order of any court or administrative agency or by any statute, rule,
regulation, order, policy, directive or request of any governmental authority or
agency.
(f) Reporting Requirements. The Borrower will furnish to the
----------------------
Authority, (i) as soon as available and in any event within one hundred twenty
(120) days after the end of each fiscal year of the Borrower, an audited balance
sheet of the Borrower as to the end of such fiscal year and related audited
statements of earnings and retained earnings and changes in financial position,
including, an income statement for such fiscal year setting forth in comparative
form an audited balance sheet and audited statements of earnings and retained
earnings and changes in financial position as at the end of and for the previous
fiscal year, and accompanied by the report thereon, not qualified as to the
scope of the audit or as a result of non-conformity with generally accepted
accounting principles or auditing standards, of an Independent Accountant;
(ii) concurrently with the delivery of the financial statements
referred to in clause (i), a certificate of an Authorized Borrower
Representative stating that he has reviewed this Agreement and the Related
Documents and has made, or caused to be made under his supervision, a review in
reasonable detail of the transactions and condition of the Borrower during the
accounting period covered by such financial statements, that, based on such
review, the Borrower has observed or performed all of its material covenants and
other agreements, the failure to observe or perform which would have a material
adverse effect on its business, financial condition, results of operations or
would materially adversely affect Borrower's ability to perform its obligations
hereunder and has satisfied every material condition contained in this Agreement
and the Related Documents to be observed, performed or satisfied by it, and that
such review has not disclosed the
37
<PAGE>
existence, during or at the end of such accounting period, and that such
Authorized Borrower Representative does not have knowledge of the existence,
during or at the end of such accounting period or as of the date of the
certificate, of any material Event of Default or event which, with the giving of
notice or the lapse of time or both, would constitute an Event of Default or, if
such Representative has any knowledge of any such Event of Default or other such
event, specifying what action Borrower is taking or proposes to take with
respect thereto;
(iii) together with each delivery of financial statements pursuant to
clause (i) above, a written statement by an Independent Accountant giving the
report thereon (1) stating that their audit examination has included a review of
the terms of this Agreement and of the Related Documents, as they relate to
accounting matters and (2) stating whether, in the course of their audit
examination, they obtained knowledge (and whether, as of the date of such
written statement, they have knowledge) of the existence of any Event of Default
or any event which, with the giving of notice or the lapse of time or both,
would constitute an Event of Default, and, if so, specifying the nature and
period of existence thereof.
(g) Maintenance of Principal Office; Change of Address. The
--------------------------------------------------
Borrower will maintain an office for the transaction of its business and will
give the Authority and the Trustee at least thirty (30) days prior written
notice of any relocation of its chief executive office or principal place of
business.
(h) Notice of Material Litigation. The Borrower shall
-----------------------------
promptly notify the Authority of the existence and status of any litigation
which individually or in the aggregate could, in the event of an unfavorable
outcome, have a material adverse effect on the Borrower or the Project.
(i) Defaults. The Borrower will promptly notify the Authority
--------
of the occurrence of any event, which with the giving of notice or the lapse of
time, or both, would result in an Event of Default, and the action that the
Borrower proposes to take with respect thereto.
(j) Insurance. The Borrower will comply with the insurance
---------
requirements contained in the Pledge Agreement.
(k) Payment and Performance Bond; Builder's Risk Insurance.
------------------------------------------------------
Promptly upon Borrower's determination of the contractor to be engaged for
the construction of the Shopping Center and in any event prior to actual
commencement of construction, Borrower shall provide the Authority and the
Trustee with copies of a Payment and Performance Bond for 100% of the
construction costs thereof, as well as Builder's Risk Insurance in compliance
with the requirements set forth in the Pledge Agreement.
38
<PAGE>
(l) Future Leases. Upon the execution of any future leases by
-------------
the Borrower, as lessor, of the Shopping Center or any part thereof, the
Borrower shall execute or cause to be executed any and all instruments,
certificates, assignments or other documents necessary or desired by the
Authority and Trustee to perfect the assignment of such future leases to the
Authority under the terms and provisions of, or terms and conditions
substantially similar to, the Collateral Assignment.
(m) Payment of Debts. The Borrower will pay its debts from
----------------
its assets as the same shall become due and payable and will conduct its affairs
in a prudent manner so as to at all times maintain its solvency, except for
those debts being contested by Borrower in good faith and by appropriate
proceedings.
(n) Conduct of Business. The Borrower will conduct and operate
-------------------
its business as presently conducted and operated.
(o) Separateness. The Borrower will be, and at all times will
------------
hold itself out to the public as a legal entity separate and distinct from any
other entity, including any Affiliate thereof, and will maintain its assets in
such a manner that it is not costly or difficult to segregate, ascertain or
identify its individual funds and assets from those of any Affiliate or any
other Person, and in connection therewith shall provide for the independent
filing of its tax returns and related governmental filings. Any common employee
or overhead shared with Affiliates will be appropriately allocated and charged.
(p) Annual Rating Agency Fee. The Borrower will pay the
------------------------
Rating Agency its annual fee, and any other fees or charges in connection with
the Rating Agency's annual credit review of the Borrower, as the same shall
become due.
Section 5.14. LIENS AND ENCUMBRANCES; OTHER DEBT.
----------------------------------
Except as provided in Section 5.15 hereof, the Borrower (a) covenants
that it will not create or suffer to be created any Lien, encumbrance or charge
upon the Mortgaged Property, or the Leases, or any part thereof, except for
Permitted Liens and as otherwise contemplated or permitted under this Agreement
or the Related Documents, and (b) will not, incur additional Indebtedness,
except (i) to the issuer of the Credit Enhancement or the Depositor of Cash
Collateral, whether secured or unsecured; (ii) for Indebtedness incurred for the
capital needs of the Shopping Center, including but not limited to the expansion
and/or modernization of the Shopping Center up to an amount not to exceed five
percent (5%) of the original principal amount of the Bonds; or (iii) such other
Indebtedness as may be approved by the Rating Agency, which approval shall be
confirmed in writing by the Rating Agency to the Trustee, and (iv) Partner Debt,
which shall, when added to all such other Indebtedness of the Borrower, not
exceed eighty percent (80%)
39
<PAGE>
of the current Appraised Value of the Shopping Center. In each instance under
(iv) above, the Borrower shall maintain, after taking into consideration the
principal amount of and debt service for such additional Indebtedness, an
Additional Indebtedness Loan-to-Value Ratio of no more than the Maximum Loan to
Value Ratio and an Additional Indebtedness Debt Service Coverage Ratio of no
less than the Minimum Debt Service Coverage Ratio. Any additional Indebtedness
permitted pursuant to the provisions hereinabove (i) shall either fully self
amortize during the term of such Indebtedness or shall mature on a date
following the date when the Bonds are to be paid in full, and (ii) shall in all
respects be subject and subordinate to this Agreement and the Related Documents,
including, but not limited to, the Mortgage and Collateral Assignment.
The Borrower further covenants that it will satisfy or cause to be
discharged, or will make adequate provision to satisfy and discharge, within
sixty (60) days after the same shall accrue, all lawful claims and demands
(except such as may arise from or in connection with the Shopping Center or the
acquisition, construction, equipping, installation and improvement of the
Shopping Center and as may be payable from the proceeds of the Bonds) for labor,
materials, supplies or other items which, if not satisfied, might by law become
a Lien upon the Shopping Center, its revenues or any part thereof. If any such
Lien shall be filed or asserted against the Shopping Center, its revenues or any
part thereof, by reason of labor, materials, supplies or other items supplied or
claimed to have been supplied on or to the Shopping Center at the request or
with the permission of the Borrower or of anyone claiming to act for the
Borrower, then the Borrower shall, within thirty (30) days after it receives
notice of the filing or the assertion thereof, cause the same to be discharged
of record or effectively prevent the enforcement or foreclosure thereof against
the Shopping Center, by contest, payment, deposit, bond, order of court or
otherwise. Nothing in this Section shall require the Borrower to satisfy or
discharge any such Lien, so long as the validity thereof shall be contested in
good faith and by appropriate legal proceedings, and such contest does not
jeopardize the interest of the Authority, the Borrower or the Trustee in the
Shopping Center and its revenues.
Section 5.15. PAYMENT OF OTHER CHARGES.
------------------------
The Borrower covenants and agrees to pay directly to the appropriate
party, when due, all assessments, levies, taxes and insurance premiums of every
kind and nature relating to the whole or any part of the Shopping Center, or any
interest therein, and all costs, expenses, liabilities and charges of every kind
and nature, including wages, charges for gas, electricity, water, sewer and
other utilities, relating to the maintenance, operation, repair, replacement and
improvement of the Shopping Center or any part thereof, or any facilities,
machinery or equipment thereon, or
40
<PAGE>
to the operations or services conducted or provided thereon in connection
therewith which may arise or accrue; provided, however, that with respect to the
obligations imposed upon it under this Section, the Borrower may exercise the
right to contest them to the same extent and in the same manner as is provided
in Section 5.14.
Section 5.16. COVENANTS OF THE AUTHORITY WITH RESPECT TO THE LEASES.
-----------------------------------------------------
Upon the Borrower's written request, the Authority agrees to cause the (i)
subordination of its lien under the Mortgage, with respect to the Leases, and/or
(ii) the execution and delivery of non-disturbance and attornment agreements
with respect to the Leases, all pursuant to and in connection with the terms and
conditions set forth in Section 26 of the Pledge Agreement.
Section 5.17. BUSINESS. Borrower covenants and agrees that it will
--------
not engage in any business other than the operation and administration of the
Shopping Center directly or through any subsidiary or joint venture or other
means.
Section 5.18. NEGATIVE COVENANTS. So long as the Borrower shall have
------------------
any obligation to pay any amount to the Authority hereunder, unless the
Authority and the Rating Agency shall otherwise consent in writing, the Borrower
covenants that it will not:
(a) own any asset or engage in any business other than the
ownership and operation of (i) the Mortgaged Property, and (ii) incidental
personal property necessary for the operation of the Mortgaged Property;
(b) enter into any contract or agreement with any Affiliate of
the Borrower, except upon terms and conditions set forth in written valid,
binding and enforceable agreements that are intrinsically fair and substantially
similar to those that would be available on an arms-length basis with third
parties other than an Affiliate;
(c) incur any Indebtedness, secured or unsecured, direct or
contingent (including guaranteeing any obligation), other than Indebtedness
permitted under the terms of this Agreement or any Related Documents;
(d) make any loans or advances to any Person (including any
Affiliate) other than duly authorized and valid partnership distributions to the
partners of the Borrower in the ordinary course of business;
(e) seek the dissolution or winding up, in whole or in part, of
the Borrower, except in compliance with Section 6.01 hereof; or
41
<PAGE>
(f) guarantee or otherwise hold itself out to be responsible
for the debts or obligations of any other Person or Affiliate, or permit that
any Affiliate be responsible or otherwise guarantee its obligations.
Section 5.19. LIMITATION OF LIABILITY.
-----------------------
Notwithstanding anything to the contrary contained in this Agreement
and whether or not the Borrower qualifies or continues to qualify as a special
partnership, no recourse shall be had, whether by levy or execution or
otherwise, for the payment of the principal of or interest on, or other amounts
owed under this Agreement, or for any claim based on this Agreement or in
respect thereof, directly or indirectly against any partner of the Borrower or
any predecessor, successor or affiliate of any such partner or any of their
assets (other than from the interest of such partner in the Borrower), or
against any principal, partner, shareholder, officer, director, agent or
employee of any such partner (other than from the interest of any such Person in
the Borrower), nor shall any such Persons be personally liable for any such
amount or claims, or liable for any deficiency judgment based thereon or with
respect thereto. The sole remedies of the Authority with respect to the
hereinbefore mentioned amounts and claims shall be against the Borrower, whether
or not it qualifies or continues to qualify as a special partnership, and all
such liability of the aforesaid Persons, except as expressly provided in this
Section 5.19, is expressly waived and released as a condition of and as
consideration for the execution of this Agreement. Anything in this Section to
the contrary notwithstanding (i) nothing contained in this Agreement (including,
without limitation, the provisions of this Section 5.19) shall constitute a
waiver of any indebtedness of the Borrower evidenced hereby or any of the
Borrower's other obligations or shall be taken to prevent recourse to and the
enforcement against the Borrower of all the liabilities, obligations and
undertakings contained in this Agreement; (ii) this Section 5.19 shall not be
applicable to a breach by any Person of any unrelated obligation to the
Authority; and (iii) this Section 5.19 shall not be applicable to any party in
the event of (A) fraud by such party, (B) misappropriation of funds or other
property by such party, or (C) damage to the Shopping Center or any part thereof
intentionally inflicted in bad faith by such party. Notwithstanding the
provisions of clause (iii) of this Section 5.19 nothing herein shall limit or
otherwise impair the protection afforded to Borrower's partners under the
provisions of Act No. 3 of September 27, 1985, as amended, or otherwise under
applicable law. For the purposes of the foregoing, the term "shareholder" shall
be deemed to include the shareholders of any corporation which is a shareholder
of a corporation and the term "partner" shall be deemed to include the partners
of any partnership which is a partner of a partnership.
42
<PAGE>
Section 5.20. PARTIAL RELEASE OF MORTGAGE
---------------------------
(a) After the then current Enhancement Amount is reduced to an amount
which is less than or equal to twenty-five percent (25%) of the then current
Exposure Amount, or such higher percentage which the Rating Agency may deem
appropriate in its sole discretion at any time thereafter and confirmed in
writing by the Rating Agency to the Trustee, upon the Borrower's request, unless
an Event of Default shall exist hereunder or under the Related Documents, and
after taking into consideration the reduction in value of the security for the
Bonds and the reduction in income available to service the Bonds resulting from
the release, and provided that at the time of such release the Borrower
maintains a Release Loan-to-Value Ratio of no more than the Maximum Loan to
Value Ratio and a Release Debt Service Coverage Ratio of no less than the
Minimum Debt Service Coverage Ratio, the Authority shall consent to the
segregation of and to release from the Mortgage and other Related Documents any
and/or all of those parcels identified as Out-Parcels A, B, C and D in Exhibit A
and A-1 hereof and the Trustee shall appear upon request at any such
segregation. Fifty percent (50%) of the net proceeds from any sale of an out-
parcel or land-pad released from the lien of the Mortgage pursuant to the
provisions of this Section shall be: (a) applied to redeem Bonds, or (b)
deposited to the credit of the Reserve Fund, at the election of the Borrower.
(b) Upon the Borrower's request, the Authority and the Trustee agree
to allow the Borrower to obtain or grant any easements, rights of way, or the
like, deemed necessary or convenient by the Borrower and to segregate and
release from the Mortgage any parcels of land for conveyance to the Commonwealth
or any agency or subdivision thereof, if deemed by the Borrower to be necessary
or convenient.
(c) No release under Sections 5.20(a) and (b) shall cause any change
in the terms and conditions hereof or any reduction in the Mortgage Note except
that the area of the land forming part of the Mortgaged Property shall be
reduced by the area of the parcel(s) so released.
All costs and expenses related to such segregation(s) and release(s)
shall be for the account of the Borrower, provided, however, that the Borrower
shall not be required to make any partial release or other payment or to pay any
compensation (other than the reimbursement of the cost and expenses mentioned
above) to the Authority and the Trustee for any segregation or release permitted
by this Section 5.20.
43
<PAGE>
Section 5.21. NO INTEREST OF AUTHORITY IN PROJECT.
-----------------------------------
The Authority shall not have any rights to or interest in the Project,
which shall be the sole and exclusive property of the Borrower.
ARTICLE VI
ASSIGNMENT
Section 6.01. SALE OF PROJECT; ASSIGNMENT OF LOAN AGREEMENT BY
------------------------------------------------
BORROWER. With prior notice to the Authority and the Trustee, but without the
- --------
necessity of obtaining the consent of the Authority or the Trustee, the
Shopping Center may be sold, leased or otherwise transferred, as a whole or in
part, and any proceeds thereof retained by the Borrower and/or this Agreement
may be assigned, in whole or in part; subject, however, in either case, to the
following conditions:
(a) prior to any sale, lease or other transfer of the Shopping
Center, the Authority and the Trustee shall be provided with evidence
satisfactory to them by the Borrower (which may include an opinion from counsel
approved by the Trustee and the Authority) that notwithstanding such event,
interest payable on the Bonds will continue to: (i) constitute Commonwealth
source income under applicable provisions of the Code as in effect on the Date
of Issuance, (ii) qualify for the exclusion from gross income under Section 933
of the Code, and (iii) not be subject to income taxes under the Code as in
effect on the Date of Issuance, when received by a foreign corporation;
(b) no sale, lease, or other transfer of the Shopping Center or
assignment of this Agreement shall relieve the Borrower of the obligation to
make the payments required by Section 4.01 hereof except if the requirements of
Section 6.01(A) hereof are met, in which case the Borrower shall be relieved of
all future obligations under this Agreement and the Related Documents;
(c) prior to any sale, lease, or other transfer of the Shopping
Center contemplated under this Section 6.01, if the Bonds are then rated, the
Borrower shall obtain evidence in written form of the Rating Agency that a sale,
lease, or other transfer of the Shopping Center, or the assignment of this
Agreement shall not cause the downgrading of the Bonds by the Rating Agency.
Any assignment of this Agreement by the Borrower is subject to the
following additional conditions:
(A) the assignee shall, in a certificate delivered to the
Authority and the Trustee, which certificate shall be in a form reasonably
satisfactory to the Authority and the Trustee, expressly assume, and agree to
pay and to perform, all of the
44
<PAGE>
obligations of the Borrower under the Agreement which shall have been assigned
to it; and
(B) the assignee shall deliver to the Authority and the Trustee a
certificate executed by its chief financial officer stating that none of the
obligations, covenants and performances under the Agreement assumed by it will
conflict with, or constitute on the part of such assignee a breach of, or
default under, any indenture, mortgage, agreement or other instrument to which
such assignee is a party or by which it is bound, or any existing law, rule,
regulation, judgment, order or decree to which such assignee is subject.
Notwithstanding anything contained herein to the contrary, the
foregoing reference to leases shall not mean the Leases entered into by Borrower
for the Shopping Center in the ordinary course of business, which Leases shall
not be subject to the requirements of this Section and may be entered into by
Borrower free of any obligations under this Section 6.01.
Section 6.02. ASSIGNMENT BY AUTHORITY. By the provisions of the
-----------------------
Trust Agreement, the Authority will assign its rights and interests under this
Agreement and the Related Documents to which it is a party (except its rights to
receive notices, reports, and other statements given both to the Authority and
the Trustee, its rights under Sections 4.05, 4.06, 5.08 and 7.04 hereof to
payment of certain costs and expenses and to indemnification, and to individual
and corporate rights to exemption from liability under Sections 5.06, 10.14 and
10.15 hereof) and will assign any payments, receipts and revenues receivable by
it (except as aforesaid) under or pursuant to this Agreement and the Related
Documents to which it is a party and income earned by the investment of funds
held under the Trust Agreement, to the Trustee as security for the payment of
the principal of, premium, if any, and interest on the Bonds. Except as provided
in this Section 6.02, the Authority will not sell, assign, transfer, convey or
otherwise dispose of its interest in this Agreement or the Related Documents to
which it is a party, or the payments, receipts and revenues of the Authority
derived hereunder.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01. EVENTS OF DEFAULT. The following shall be "Events of
-----------------
Default" under this Agreement, and the term "Events of Default" shall mean,
whenever used with reference to this Agreement, any one or more of the following
occurrences:
(a) failure by the Borrower to pay the amounts required to be paid
with respect to the principal amount of the Bonds or premium,
45
<PAGE>
if any, or interest on, the Bonds when the same shall become due and payable at
maturity, upon redemption or otherwise;
(b) failure by the Borrower for any two consecutive months to make
the monthly deposits required to be made under Section 4.01(c)(ii) of this
Agreement;
(c) failure by the Borrower to replenish the Reserve Fund within the
periods set forth in Section 4.01(c)(iii);
(d) failure by the Borrower to pay when due any payment required to
be made under this Agreement, other than payments under subsection (a), (b) and
(c) above, which failure shall continue for a period of thirty (30) days after
written notice, specifying such failure and requesting that it be remedied, is
given to the Borrower by the Authority or the Trustee, unless the Authority or
the Trustee shall agree in writing to an extension of such time prior to its
expiration; or
(e) failure by the Borrower to observe or perform any material
covenant, condition or agreement on its part to be observed or performed
hereunder or under the Related Documents, other than as referred to in
subsections (a), (b), (c) and (d) of this Section, which failure shall continue
for a period of sixty (60) days after written notice, specifying such failure
and requesting that it be remedied, is given to the Borrower by the Authority or
the Trustee, unless the Authority or the Trustee shall agree in writing to an
extension of such time prior to its expiration; provided, however, that if such
failure cannot be corrected within such sixty (60) day period, it shall not
constitute an Event of Default if corrective action is instituted by the
Borrower within such period and diligently pursued until such failure is
corrected; or
(f) the Borrower, the Guarantor, or the Letter of Credit Bank, as
applicable (if a Guaranty or Letter of Credit is then in effect), shall commence
a voluntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case under any such law, or shall consent to the
appointment of or taking possession by a receiver, custodian, liquidator,
assignee, trustee or sequestrator (or other similar official) of itself or of
any substantial part of its property, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or the Borrower or partners owning a majority interest in the Borrower
shall take any action in furtherance of any of the foregoing (except in
connection with a consolidation or a merger of the Borrower with or into another
entity or transfer of all or substantially all the assets of the Borrower not
prohibited by Section 5.01 hereof); provided, however, that should an Event of
Default under this Section 7.01(f) be caused by the Guarantor or
46
<PAGE>
Letter of Credit Bank, as applicable, no Event of Default shall exist, unless
the Borrower fails to deliver to the Trustee a substitute Credit Enhancement, as
contemplated under Section 4.09 hereof, within one hundred and eighty (180) days
of the occurrence of such an event; or
(g) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Borrower, the Guarantor, or the Letter of
Credit Bank, as applicable (if a Guaranty or Letter of Credit is then in
effect), in an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
custodian, liquidator, assignee, trustee or sequestrator (or other similar
official) of the Borrower or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
such decree or order unstayed and in effect for a period of one hundred eighty
(180) consecutive days; provided, however, that should an Event of Default under
this Section 7.01(g) be caused by the Guarantor or Letter of Credit Bank, as
applicable, no Event of Default shall exist, unless the Borrower fails to
deliver to the Trustee a substitute Credit Enhancement, as contemplated under
Section 4.09 hereof, within one hundred and eighty (180) days of the occurrence
of such an event; or
(h) there shall have occurred an event of default under any lien
junior to the Mortgage which shall have resulted in foreclosure proceedings
involving the Mortgaged Property which proceeding shall have remained unstayed
for one hundred twenty (120) consecutive days; or
(i) the Guarantor or the Letter of Credit Bank, as applicable, shall
fail to honor a draft or pay a claim under the Guaranty Agreement or the Letter
of Credit, as applicable.
The foregoing provisions of subsections (d) and (e) of this Section
are subject to the following limitations: if by reason of Force Majeure, the
Borrower is unable in whole or in part to carry out any of its covenants or
agreements herein contained or in the Related Documents, failure of the Borrower
to carry out any such covenants or agreements, other than the obligations on the
part of the Borrower contained in Sections 4.01 and 5.01 hereof, shall not be
deemed an Event of Default during the continuance of such inability, including a
reasonable time for the removal of the effect thereof.
The term "Force Majeure" shall mean, without limitation, the
following:
(a) 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 or of the Commonwealth
47
<PAGE>
or any of their departments, agencies, political subdivisions or officials, or
any civil or military authority; war; insurrections; civil disturbances; riots;
epidemics; landslides; lightning; earthquakes; fires; hurricanes; storms;
droughts; floods; washouts; 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
(b) any cause, circumstance or event not reasonably within the
control of the Borrower.
The Borrower agrees, however, to use diligent efforts to overcome its
inability to carry out such covenants or agreements by reason of such Force
Majeure; provided, that the settlement of any disputes of any nature, including
without limitation strikes, lockouts and other industrial disturbances, shall be
entirely within the discretion of the Borrower, and the Borrower shall not be
required to make settlement of any such disputes by acceding to the demands of
the opposing party or parties when such course is, in the judgment of the
Borrower, unfavorable to the Borrower.
Section 7.02. ACCELERATION; REMEDIES. Whenever any Event of Default
----------------------
shall have happened and be continuing, any one or more of the following remedial
steps may be taken, provided that written notice of the default has been given
to the Borrower by the Authority, the Trustee, or by the holders of a majority
of the Bonds then outstanding and the default has not theretofore been cured,
and provided further that no remedial steps shall be taken by the Authority, the
effect of which would be to entitle the Authority to funds necessary for the
payment of the principal of and interest on Bonds which have not yet matured or
otherwise become due, unless such principal and interest shall have been
declared due and payable in accordance with the Trust Agreement and such
declaration shall not have been rescinded:
(a) The Authority may at its option declare all unpaid amounts,
payable under Section 4.01 hereof, to be immediately due and payable.
(b) The Authority may take any action at law or in equity to collect
the payments then due and thereafter to become due, or to enforce performance
and observance of any obligation, agreement or covenant of the Borrower under
this Agreement.
Any amounts collected pursuant to action taken under this Section
shall be applied in accordance with the Trust Agreement.
Section 7.03. REMEDIES NOT EXCLUSIVE. No remedy conferred upon or
----------------------
reserved to the Authority in connection with the loan to the Borrower, pursuant
to this Agreement, is intended to be exclusive of any other available remedy or
remedies, but each and
48
<PAGE>
every remedy shall be cumulative and shall be in addition to every other remedy
either given under this Agreement or now or hereafter existing at law or in
equity or by statute. No delay or omission to exercise any right or power
accruing upon any default shall impair any such 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 it may be deemed expedient. In order to
entitle the Authority to exercise any remedy reserved to it in this Article, it
shall not be necessary to give any notice, other than such notice as may be
herein expressly required.
Section 7.04. ATTORNEYS' FEES AND EXPENSES. If an Event of Default
----------------------------
shall occur and the Authority or the Trustee shall employ attorneys or incur
other expenses for the collection of payments due hereunder, or for the
enforcement of performance or observance of any obligation or agreement on the
part of the Borrower contained herein, the Borrower will, on demand therefor,
reimburse the reasonable fees of such attorneys and such other reasonable
expenses so incurred.
Section 7.05. WAIVERS. In view of the assignment of the Authority's
-------
rights under and interest in this Agreement to the Trustee by the provisions of
the Trust Agreement, the Authority shall have no power to waive any default
hereunder or extend the time for the correction of any default which would
become an Event of Default by the Borrower, without the consent of the Trustee
to such waiver.
ARTICLE VIII
PREPAYMENT OF THE LOAN
Section 8.01. PREPAYMENT OF THE LOAN.
----------------------
(a) Optional Prepayment of the Loan. In accordance with the
-------------------------------
redemption procedure set forth in Article III of the Trust Agreement, the
Borrower shall have the right to prepay this loan, in whole or in part:
(i) at any time on or after January 1, 2005, at declining
premiums in relation to the date fixed for such redemption based upon a
percentage of the principal amount of the Bonds, as hereinafter set forth,
together with accrued and unpaid interest to the date fixed for such redemption:
DATE FIXED FOR REDEMPTION % OF PRINCIPAL OF BONDS
------------------------- -----------------------
January 1, 2005-December 31, 2005 103%
January 1, 2006-December 31, 2006 102%
January 1, 2007-December 31, 2007 101%
January 1, 2008 and thereafter 100%
49
<PAGE>
(ii) At any time prior to December 31, 2004, in the event the
Borrower sells or transfers a fifty percent (50%) or greater interest in the
Project (whether through a partnership interest sale or transfer), at the
redemption price of 104% of the principal amount of the Bonds to be so redeemed,
together with accrued and unpaid interest to the date fixed for such redemption,
or
(iii) at any time, in part, if the monies are not deposited to the
credit of the Reserve Fund, as provided in Section 5.20(a) hereof, from fifty
percent (50%) of the net proceeds of any sale of an out-parcel or land pad, at
declining premiums in relation to the date fixed for redemption, based upon a
percentage of the principal amount of the Bonds, as hereinafter set forth,
together with accrued and unpaid interest to the date fixed for such redemption:
DATE FIXED FOR REDEMPTION % OF PRINCIPAL OF BONDS
------------------------- -----------------------
Prior to January 1, 2005 104%
January 1, 2005-December 31, 2005 103%
January 1, 2006-December 31, 2006 102%
January 1, 2007-December 31, 2007 101%
January 1, 2008 and thereafter 100%
To exercise any of the options granted herein, the Borrower shall give
to the Authority and the Trustee, at least forty-five (45) days prior to such
optional redemption date, written notice setting forth (i) the date to be fixed
for redemption; (ii) the amount to be prepaid; (iii) the principal amount of
Bonds to be redeemed; and (iv) the maturity or maturities of the Bonds to be
redeemed.
The Borrower agrees to make, or cause to be made, the payments
required under this Section 8.01(a) to the Trustee for deposit to the credit of
the Bond Fund, in the amount due in respect of principal, interest and premium,
if any, to be due on the Bonds on the redemption date, not less than forty-five
(45) days prior to the date fixed for redemption; so that sufficient funds will
be on deposit in the Bond Fund on the date fixed for redemption.
(b) Special Mandatory Prepayment Without Premium. The Borrower shall
--------------------------------------------
be obligated, and agrees, to prepay on each Principal Payment Date commencing
January 1, 1996, a portion of the loan equal to a portion of the principal
amount of the Bonds due on July 1, 2000, July 1, 2004, July 1, 2009, July 1,
2014 and July 1, 2020, in the respective amounts set forth below, together with
accrued interest thereon to the date of redemption, without premium:
50
<PAGE>
BONDS DUE:
---------
<TABLE>
<CAPTION>
July 1, 2000 July 1, 2004
Redemption Date Amount to be Redeemed Redemption Date Amount to be Redeemed
- ----------------- --------------------- --------------- ---------------------
<S> <C> <C> <C>
January 1, 1996 $295,000 January 1, 2001 $425,000
July 1, 1996 310,000 July 1, 2001 440,000
January 1, 1997 320,000 January 1, 2002 460,000
July 1, 1997 330,000 July 1, 2002 475,000
January 1, 1998 345,000 January 1, 2003 495,000
July 1, 1998 355,000 July 1, 2003 510,000
January 1, 1999 370,000 January 1, 2004 530,000
July 1, 1999 380,000 July 1, 2004 550,000
January 1, 2000 395,000
July 1, 2000 410,000
<CAPTION>
July 1, 2009 July 1, 2014
Redemption Date Amount to be Redeemed Redemption Date Amount to be Redeemed
- ----------------- --------------------- --------------- ---------------------
<S> <C> <C> <C>
January 1, 2005 $575,000 January 1, 2010 $ 850,000
July 1, 2005 595,000 July 1, 2010 880,000
January 1, 2006 620,000 January 1, 2011 920,000
July 1, 2006 645,000 July 1, 2011 955,000
January 1, 2007 670,000 January 1, 2012 995,000
July 1, 2007 695,000 July 1, 2012 1,035,000
January 1, 2008 725,000 January 1, 2013 1,075,000
July 1, 2008 755,000 July 1, 2013 1,120,000
January 1, 2009 785,000 January 1, 2014 1,165,000
July 1, 2009 815,000 July 1, 2014 1,210,000
<CAPTION>
July 1, 2020
Redemption Date Amount to be Redeemed
--------------- ---------------------
<S> <C>
January 1, 2015 $1,260,000
July 1, 2015 1,310,000
January 1, 2016 1,365,000
July 1, 2016 1,420,000
January 1, 2017 1,475,000
July 1, 2017 1,535,000
January 1, 2018 1,595,000
July 1, 2018 1,660,000
January 1, 2019 1,730,000
July 1, 2019 1,800,000
January 1, 2020 1,870,000
July 1, 2020 1,950,000
</TABLE>
The redemption price to be paid by the Borrower pursuant to this
Section 8.01(b) shall be 100% of the principal amount, plus accrued and unpaid
interest to the redemption date. The Trustee may select which Bonds shall be
redeemed in accordance with the terms of Section 301(g) of the Trust Agreement.
In any such case described in the preceding paragraph, the Borrower
shall be obligated to pay, on or prior to the redemption date set for the Bonds
pursuant to Section 301(f) of the Trust Agreement, a sum sufficient, together
with any other funds held by the Trustee and available for such purpose,
pursuant to Section 4.01 hereof: (i) to redeem, on the date specified pursuant
to the Trust Agreement, all outstanding Bonds at a redemption price equal to the
principal amount of the Bonds; (ii) to pay the interest which will accrue on the
Bonds to the date so fixed for their redemption; and (iii) to make all other
payments required hereunder accrued and to accrue through the date fixed for
such redemption.
Section 8.02. MANDATORY PREPAYMENT OF THE LOAN. The Borrower shall be
--------------------------------
obligated, and agrees, to prepay the outstanding principal balance due
hereunder, without premium together with accrued and unpaid interest to the
redemption date, upon the occurrence of the following events:
(a) The cessation of operation of the Shopping Center as Industrial
Facilities. A cessation of operation of the Shopping Center as Industrial
Facilities shall not be deemed to have occurred (i) until one hundred twenty
(120) days shall have elapsed, after written notice has been given to the
Borrower, with a copy to the Trustee, by the Authority that operations at the
Shopping Center as Industrial Facilities have ceased and the Borrower shall not
have demonstrated to the reasonable satisfaction of the Authority through a
written certificate that the Shopping Center, is being operated as Industrial
Facilities or that the Borrower is, in good faith, seeking to cause the
resumption of an economically feasible operation of the Shopping Center as
Industrial Facilities or (ii) until receipt by the Authority and the Trustee of
written notice from the Borrower stating that operations at the Shopping Center
have ceased to be operated as Industrial Facilities and that the Borrower has no
present intention of causing the resumption of economically feasible operation
of the Shopping Center as Industrial Facilities or of seeking, in good faith, to
cause the resumption of an economically feasible operation of the Shopping
Center as Industrial Facilities. The prepayment obligation described in this
paragraph shall be subject to the Force Majeure limitation described in Section
7.01 of
51
<PAGE>
this Agreement. The entire amount payable under Section 4.01 hereof upon the
cessation of operation of the Shopping Center as Industrial Facilities shall be
reduced by the principal amount of Bonds theretofore redeemed.
If operations at the Shopping Center as Industrial Facilities shall
have ceased for the period and after the notice provided for in this subsection
and (a) the Borrower shall not have delivered the written certificate therein
provided for or (b) the Borrower shall have delivered the notice provided for in
Section 8.02(a)(ii), then the Borrower shall be obligated to pay the entire
amount payable under Section 4.01 hereof.
(b) The Borrower shall be obligated, and agrees, to pay the entire
amount payable under Section 4.01 hereof as required by Section 301 of the Trust
Agreement upon the occurrence of an Event of Taxability as set forth in Section
5.10 hereof, in any two (2) taxable years of the Borrower.
(c) The Borrower shall prepay the entire amount payable under Section
4.01 hereof in the event of a Total Taking or Total Casualty of the Shopping
Center.
(d) Upon any such mandatory prepayment pursuant to this Section 8.02
the Borrower shall be obligated to pay, not less than forty-five (45) days prior
to the redemption date set for the Bonds pursuant to Section 301 of the Trust
Agreement, a sum sufficient, together with any other funds held by the Trustee
and available for such purpose, (A) to redeem, on the date specified pursuant to
the Trust Agreement, all outstanding Bonds, reduced by the principal amount of
Bonds theretofore redeemed, at a redemption price equal to the principal amount
of the Bonds, (B) to pay the interest which will have accrued and remained
unpaid on said Bonds to the date so fixed for their redemption, and (C) to make
all other payments, if any, required hereunder accrued and to accrue through the
date fixed for such redemption.
(e) The entire amount payable under Section 4.01 and this Article
VIII hereof shall be reduced by the principal amount of Bonds theretofore
redeemed.
Section 8.03. OTHER SPECIAL REDEMPTIONS: (a) The Bonds are subject
-------------------------
to redemption, in part, to the extent of funds remaining in the Project Fund on
the earlier of (i) the Completion Date; (ii) the Mandatory Project Termination
Date; or (iii) the date of the Trustee's receipt of a Borrower's certificate
that the Shopping Center will not be completed.
(b) The Bonds are subject to redemption, in accordance with the terms
and conditions of Article IX of this Agreement by the Borrower giving notice of
such redemption to the Trustee and the Authority, in whole or in part upon the
occurrence of a Casualty to, or a Taking, that is not a Total Taking of or Total
Casualty to the Shopping Center.
52
<PAGE>
In each such case, such redemption shall be made on a date occurring
not less than forty five (45) days after (i) the date set forth in Section
8.03(a) or (ii) the notice of such redemption under Section 8.03(b), and shall
be at a redemption price equal to 100% of the principal amount, without premium,
plus accrued and unpaid interest to the redemption date.
Upon any special prepayment pursuant to this Section 8.03, the
Borrower agrees to make, or cause to be made, the payments required hereunder to
the Trustee for deposit to the credit of the Bond Fund, in the amount due in
respect of principal, interest to be due on the Bonds on the redemption date,
not less than forty-five (45) days prior to the date fixed for redemption, so
that funds will be on deposit in the Bond Fund on the date fixed for redemption.
Section 8.04. RELATIVE POSITION OF LOAN AGREEMENT AND TRUST
---------------------------------------------
AGREEMENT. The rights and the obligations of the Borrower in this Article VIII
shall be and remain prior and superior to the Trust Agreement and may be
exercised or shall be fulfilled, as the case may be, whether or not the Borrower
is in default hereunder, provided that such default will not result in
nonfulfillment of any condition to the exercise of any such right or option.
ARTICLE IX
DAMAGE, DESTRUCTION AND CONDEMNATION:
USE OF NET PROCEEDS
Section 9.01. DAMAGE, DESTRUCTION AND CONDEMNATION. Unless the
------------------------------------
Borrower shall have exercised its option to prepay the amounts payable under
this Agreement pursuant to the provisions of Article VIII hereof, if prior to
full Payment of the Bonds (or provisions for payment thereof having been made in
accordance with the provisions of the Trust Agreement) (i) the Mortgaged
Property or any portion thereof is destroyed (totally or partially) or is
damaged by fire or other casualty, or (ii) title to any interest in, or the
temporary use of, the Mortgaged Property or any part thereof shall be taken
under the exercise of the power of eminent domain by any governmental body or by
any Person acting under governmental authority, Borrower shall be subject to the
provisions of this Article IX with respect to the application of proceeds to
which the Borrower would be entitled by reason of such casualty or taking.
Section 9.02. APPLICATION OF NET PROCEEDS. In the event of any
---------------------------
damage, loss or destruction of the Mortgaged Property or any part thereof (a
"Casualty"), the Borrower shall give notice thereof to the Authority, which
shall describe the nature and extent of such damage or destruction and shall set
forth the Borrower's best estimate at that time of the cost of repair,
restoration or rebuilding (the "Restoration") of the damaged Mortgaged Property
and the period of time required to complete such Restoration. Any amounts
received or payable as a result of a Casualty shall be paid and delivered
directly to the
53
<PAGE>
Authority by the concerned insurance companies. The insurance proceeds, net of
all the costs, fees and expenses incurred by the Authority and the Borrower in
the collection thereof (the "Net Insurance Proceeds"), received or payable on
account of a Casualty shall be applied as herein stated.
If the estimated cost of the Restoration does not exceed $500,000, and
if no default under this Agreement, the Pledge Agreement, the Mortgage, the
Mortgage Note or any other Related Document exists, and no event shall have
occurred which, with the giving of notice or passage of time, or both, would
constitute such default, the Net Insurance Proceeds shall be delivered by the
Authority to the Borrower who shall promptly and diligently apply the same
exclusively to the Restoration of the Mortgaged Property. In the event such
costs and expenses exceed the Net Insurance Proceeds, the Borrower will pay the
difference.
The Authority, Trustee, and Borrower will cause the Net Insurance
Proceeds resulting from any event described in Section 9.01(i) involving amounts
in excess of $500,000 to be deposited in the Casualty and Condemnation Award
Fund. All net proceeds so deposited shall be applied as follows:
(a) In the event (i)(A) of a Casualty of all or substantially all of
the Mortgaged Property which, in the judgment of the Borrower, renders the
Mortgaged Property remaining after such Casualty physically or economically not
suitable for the restoration, replacement or rebuilding of such property to
substantially its condition, character and value immediately prior to the
occurrence of such Casualty, and the Borrower by not performing the Restoration
shall not breach the terms of any of the Leases (any such Casualty hereinafter
referred to as a "Total Casualty") or (B) the Borrower does not elect to or
cannot apply the Net Insurance Proceeds as provided in Section 9.02(b), because
the Restoration is not economically feasible, and (ii) upon receipt of evidence
that Borrower will be able to provide sufficient funds to redeem all the Bonds
in full, then the Net Insurance Proceeds shall be applied to the redemption of
the Bonds in accordance with Section 8.03(b) hereof.
(b) In cases other than upon the occurrence of a Total Casualty, the
Borrower may elect to apply the Net Insurance Proceeds toward the cost of the
Restoration of the damaged Mortgaged Property by giving written notice of its
intention as promptly as possible after the occurrence of such Casualty. The
Authority shall make available to the Borrower the Net Insurance Proceeds in
accordance and subject to the following procedures and conditions:
If the estimated cost of the Restoration of the Mortgaged Property
exceeds $500,000 prior to the commencement of any work on the Restoration of the
damaged Mortgaged Property, the Borrower shall submit, deliver or otherwise
deposit with the Authority and the Trustee:
54
<PAGE>
(i) an estimate of the cost of the Restoration of the damaged
Mortgaged Property approved by an architect or engineer, licensed in the
Commonwealth;
(ii) the plans and specifications for the Restoration of the damaged
Mortgaged Property prepared by an architect or engineer licensed in the
Commonwealth;
(iii) the amount, if any, by which the estimated costs of the
Restoration of the damaged Mortgaged Property exceed the Net Insurance Proceeds.
The Net Insurance Proceeds together with the amounts deposited by the Borrower
pursuant to the preceding sentence shall be disbursed by the Trustee to the
Borrower, from time to time as the work progresses, for the reimbursement of
costs and expenses incurred by the Borrower in Restoration of the damaged
Mortgaged Property, pursuant to certifications issued by the supervising
architect or engineer, selected by the Borrower and approved by the Authority;
(iv) The Borrower shall deliver to the Authority evidence of a lump
sum construction contract with a contractor acceptable to the Authority for the
Restoration work; and
(v) The Borrower shall deliver to the Authority one hundred
percent (100%) payment and performance bond for the Restoration;
(vi) evidence of adequate insurance coverage during the
Restoration;
(vii) binding commitments from tenants occupying seventy-five
percent (75%) of the gross leasable area of the Mortgaged Property to honor
their lease commitments upon completion of the Restoration;
(viii) an assignment of any business interruption insurance proceeds
or a cash deposit sufficient to cover all principal and interest payments due on
the Bonds during the Restoration period;
(ix) evidence that the contemplated Restoration of the damaged
Mortgaged Property shall be of a character and nature such that the Mortgaged
Property shall return to the same or similar function than the one they had
immediately prior to the occurrence of the Casualty;
In addition to the foregoing the following conditions shall be
complied with:
(i) There shall exist no uncured Event of Default under this
Agreement, the Pledge Agreement, the Mortgage, the Mortgage Note, or any other
Related Document, and no event shall have occurred which, with the giving of
notice or the passage of time, or both, would constitute such an Event of
Default;
(ii) The Restoration of the damaged Mortgaged Property shall be
done and completed by the Borrower in an expeditious and diligent
55
<PAGE>
fashion, in compliance with all applicable laws, statutes, ordinances,
regulations, orders, rules and covenants;
(iii) All costs and expenses incurred by the Authority in connection
with making the Net Insurance Proceeds and the funds deposited by the Borrower
pursuant to the provisions hereof available to the Borrower for the Restoration
of the damaged Mortgaged Property, including, without limitation, counsel fees
and the Architect's fees, shall be paid by the Borrower.
(iv) In the event that the Borrower fails to comply with any of the
foregoing, the Net Insurance Proceeds on account of a Casualty shall be applied
by the Authority as provided in Section 9.02(a) above.
(v) In the event the costs and expenses of the Restoration exceed
the Net Insurance Proceeds, the Borrower will pay the difference.
(c) In the event of a taking of all or any part of the Mortgaged
Property by eminent domain or condemnation or transfer in lieu thereof, (a
"Taking") or the commencement of any proceedings or negotiations which might
result in such Taking, the Borrower will promptly give written notice thereof to
the Authority generally describing the nature and extent of such Taking or the
nature and extent of the Taking which might result therefrom. The Authority may
participate jointly with the Borrower in said proceedings or negotiations, and
the Borrower shall deliver to the Authority all instruments and necessary
documents to permit such participation. The Borrower shall file and prosecute
its claim or claims for any such award or payment in good faith and with due
diligence. The Borrower will pay all costs, fees, and expenses reasonably
incurred by the Authority in connection with any Taking and seeking and
obtaining any award or payment on account thereof, including, without
limitation, attorney's fees.
(d) All awards and payments on account of a Taking shall be
delivered to the Authority. The Borrower shall execute and deliver any and all
assignments, endorsements or other instruments necessary to assign and transfer
to the Authority all such awards and payments free and clear of all liens and
encumbrances. The awards and payments on account of a Taking, net of all the
costs, fees and expenses incurred by the Authority and the Borrower in the
collection thereof (the "Net Condemnation Proceeds"), shall be applied as stated
herein. The Authority, Trustee, and Borrower will cause the Net Condemnation
Proceeds resulting from any event described in Section 9.01(ii) involving
amounts in excess of $500,000 to be deposited in the Casualty and Condemnation
Award Fund. All Net Condemnation Proceeds so deposited shall be applied as
follows:
(i) In the case of a Taking of all or substantially all of the
Mortgaged Property which in the judgment of the Borrower renders the Mortgaged
Property remaining after such Taking physically or economically not feasible or
suitable for the Restoration of such property to substantially its condition,
character and value immediately
56
<PAGE>
prior to the occurrence of such Taking, and the Borrower by not performing such
Restoration shall not breach the terms of any of the Leases (any such Taking
hereinafter referred to as a "Total Taking"), the Net Condemnation Proceeds
shall be applied to the redemption of the Bonds in accordance to Section 8.02(c)
hereof.
(ii) In all cases other than upon the occurrence of a Total Taking,
the Borrower may elect to apply the Net Condemnation Proceeds toward the cost of
the Restoration of the Mortgaged Property in the same manner and subject to the
same conditions established for cases other than a Total Casualty in Section
9.02(b) above.
Section 9.03. COOPERATION OF AUTHORITY. The Authority shall
------------------------
cooperate fully with Borrower, at the expense of Borrower, in filing any proof
of loss with respect to any insurance policy covering the casualties described
in Section 9.01 hereof and in the prosecution or defense of any prospective or
pending condemnation proceeding with respect to the Shopping Center or any part
thereof, or any property of Borrower in connection with which the Mortgaged
Property is used and may, with the prior written consent of the Authority,
litigate in any proceeding resulting therefrom and in the name and on behalf of
the Authority. In no event will the Authority voluntarily settle, or consent to
the settlement of, any proceeding arising out of any insurance claim or any
prospective or pending condemnation proceeding with respect to the Mortgaged
Property or any part thereof without the written consent of an Authorized
Borrower Representative.
ARTICLE X
MISCELLANEOUS
Section 10.01. TERMINATION. This Agreement and all obligations of
-----------
the parties hereunder, other than the obligations of the Borrower under Sections
4.06 and 5.08 hereof, shall terminate upon (i) Payment of the Bonds hereunder,
and (ii) payment or satisfaction of all other obligations incurred by the
Authority or the Borrower under this Agreement, including (without limitation)
interest, premiums, and other charges, if any, thereon. Upon such termination,
any amounts remaining in the Bond Fund and any other fund established under the
Trust Agreement not needed for payment of the aforesaid items, shall belong to
and be paid to the Borrower by the Trustee in accordance with the provisions of
the Trust Agreement.
Section 10.02. REFERENCE TO BONDS INEFFECTIVE AFTER BONDS PAID.
------------------------------------------------
Upon Payment of the Bonds, including all fees and charges of the Trustee, all
references in this Agreement to the Bonds and the Trustee shall be ineffective
and the Trustee, the Authority and the holders of any of the Bonds shall not
thereafter have any rights hereunder, other than with respect to the obligations
of the Borrower under Sections 4.05 and 5.08 hereof.
57
<PAGE>
Section 10.03. NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER. In the
------------------------------------------
event any agreement contained in this Agreement should be breached by either
party and thereafter waived by the other party, such waiver shall be limited to
the particular breach so waived and shall not be deemed to waive any other
breach hereunder.
Section 10.04. AUTHORITY REPRESENTATIVE. Whenever under the
------------------------
provisions of this Agreement, the approval of the Authority is required or the
Authority is required to take some action at the request of the Borrower, such
approval shall be made or such action shall be taken by the Authority
Representative; and the Borrower and the Trustee shall be authorized to act on
any such approval or action.
Section 10.05. AUTHORIZED BORROWER REPRESENTATIVE. Whenever under
----------------------------------
the provisions of this Agreement the approval of the Borrower is required or the
Borrower is required to take some action at the request of the Authority, such
approval shall be made or such action shall be taken by an Authorized Borrower
Representative; and the Authority and the Trustee shall be authorized to act on
any such approval or action.
Section 10.06. CONFIDENTIAL INFORMATION. Notwithstanding anything to
------------------------
the contrary contained in this Agreement, the Borrower shall not be required to
disclose, or to permit the Authority, the Trustee or others to acquire access
to, any trade secrets of the Borrower or any Affiliate or any other processes,
techniques or information deemed by the Borrower to be proprietary or
confidential.
Section 10.07. NOTICES. All notices, certificates, requests or
-------
other communications between the Authority, the Borrower and the Trustee,
required to be given hereunder or under the Trust Agreement shall be addressed
as follows:
If to the Authority: Puerto Rico Industrial, Tourist,
Educational, Medical, and Environmental Control
Facilities Financing Authority
c/o Government Development Bank for
Puerto Rico
G.P.O. Box 42001
San Juan, Puerto Rico 00940
Telecopy No. (809)726-1440
Attention: Executive Director
If to the Borrower: Palma Real Associates, S.E.
255 Ponce de Leon Avenue, Suite 1501
Royal Bank Center
Hato Rey, Puerto Rico 00917
Attention: President
Telefax: (809) 753-8647
58
<PAGE>
With copy to: Samuel Susi, Esq.
1900 Glades Road
Suite 280
Boca Raton, FL 33431
Ms. Mari Lee Holtzman
100 South Dixie Highway
Suite 200
West Palm Beach, Florida 33431
Telefax: (407)659-3185
If to the Trustee: Banco Popular de Puerto Rico
Banco Popular Center
209 Luis Munoz Rivera Avenue
Hato Rey, Puerto Rico
Attn: Luis Cintron, Esq.
Corporate Trust Department
Telefax: (809) 754-1267
If to Rating Agency: Duff & Phelps Credit Rating Co.
55 East Monroe Street
Chicago, Illinois 80803
Attn: Structured Finance-Commercial Real
Estate Group Monitoring
Telefax: (312) 263-2650
All such notices and communications shall be effective (i) if given by
telex, TWX, or telecopier, when transmitted to the telex, TWX, or telecopier
number specified as aforesaid and in the case of telecopy or of telex evidence
of receipt or the appropriate answerback is received, (ii) if given by mail or
telegram, three days after the date it is deposited in the mails or delivered to
the telegraph company, respectively, addressed as aforesaid, and (iii) if given
by other means, when delivered at the address specified as aforesaid. A
duplicate copy of each notice, certificate, request or other communication given
hereunder to the Authority, the Borrower, or the Trustee shall also be given to
each of the others. The Borrower, the Authority, and the Trustee may, by notice
given hereunder, designate any further or different addresses to which
subsequent notices, certificates, requests or other communications shall be
sent. In any case when the date of any notice, deposit or payment under the
terms of this Agreement shall be fixed on a Saturday or Sunday or a day not a
Business Day, then such notice, deposit or payment need not be made on such date
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date fixed by the Agreement for such notice, deposit or
payment.
59
<PAGE>
Section 10.08. BENEFITS; BINDING EFFECT. This Agreement shall inure
------------------------
to the benefit of the Authority and the Borrower, and shall be binding upon the
Authority, the Borrower and their respective successors and assigns, subject,
however, to the provisions contained in Section 5.01 and Section 6.01.
Section 10.09. IF PAYMENT OR PERFORMANCE DATE NOT ON BUSINESS DAY.
---------------------------------------------------
If the date for making payment, or the last date for performance of any act or
the exercising of any right, as provided in this Agreement, shall not be a
Business Day, such payment may be made, or act performed, or right exercised on
the next succeeding Business Day with the same force and effect as if done on
the nominal date provided in this Agreement, and no interest shall accrue for
the period after such nominal date.
Section 10.10. SEVERABILITY. In the event any provision of this
------------
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
Section 10.11. AMENDMENTS, CHANGES, AND MODIFICATIONS. Subsequent to
--------------------------------------
the issuance of the Bonds and prior to Payment of the Bonds, this Agreement may
not be effectively amended, changed, modified, altered or terminated except in
accordance with the Trust Agreement.
Section 10.12. EXECUTION IN COUNTERPARTS. This Agreement may be
-------------------------
executed in any number of counterparts, each of which shall be an original and
all of which shall constitute but one and the same instrument.
Section 10.13. APPLICABLE LAW. This Agreement shall be governed by
--------------
and construed in accordance with the laws of the Commonwealth.
Section 10.14. NO CHARGE AGAINST CREDIT. No provision hereof shall
------------------------
be construed to impose a charge against the general credit of the Authority, or
shall impose any personal or pecuniary liability upon any director, official or
employee of the Authority.
Section 10.15. AUTHORITY NOT LIABLE. Notwithstanding any other
--------------------
provision of this Agreement, (i) the Authority shall not be liable to the
Borrower, the Trustee, any holder of any of the Bonds, or any other Person, for
any failure of the Authority to take action under this Agreement, unless the
Authority (x) is requested in writing by an appropriate Person to take such
action and (y) is assured of payment of, or reimbursement for, any expenses in
such action, and (ii) except with respect to any action for specific performance
or any action in the nature of a prohibitory or mandatory injunction, neither
the Authority nor any director of the Authority shall be liable to the Borrower,
the Trustee, any holder of any of the Bonds, or any other Person for any action
taken by it or by its officers, servants, agents or employees, or for any
failure to take action under this Agreement or the Trust
60
<PAGE>
Agreement. In acting under this Agreement, the Authority may conclusively rely
on the advice of its legal counsel.
Section 10.16. LOAN AGREEMENT SUPERSEDES PRIOR AGREEMENTS. This
------------------------------------------
Agreement, together with the Related Documents, supersedes any other prior
agreements or understandings, written or oral, between the parties with respect
to the Project.
Section 10.17. CONSENT NOT TO BE WITHHELD. The consents and
--------------------------
authorizations required under this Agreement of the Borrower, the Authority or
the Trustee shall not be unreasonably delayed, withheld or denied.
IN WITNESS WHEREOF, the Authority and the Borrower have caused this
Agreement to be executed in their respective legal names and the
signatures of duly authorized persons to be attested or witnessed, all as of the
date first above written.
PUERTO RICO INDUSTRIAL, TOURIST,
EDUCATIONAL, MEDICAL AND
ENVIRONMENTAL CONTROL
FACILITIES FINANCING AUTHORITY
By:____________________________ [SEAL]
Gregory Kaufman
Executive Director
ATTEST:
_______________________________
SECRETARY
PALMA REAL ASSOCIATES, S.E.
By:____________________________
Mark B. Davis
Managing Partner
61
<PAGE>
Exhibit 23(a)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Experts" and
"Selected Financial Information of Wal-Mart" in Amendment No. 1 to the
Registration Statement (Form S-3) and related Prospectus of Wal-Mart Stores,
Inc. for the registration of its Guaranty of Puerto Rico Industrial Revenue
Bonds and to the incorporation by reference therein of our report dated March
25, 1994 with respect to the consolidated financial statements and schedules of
Wal-Mart Stores, Inc. included and/or incorporated by reference in its Annual
Report (Form 10-K) for the year ended January 31, 1994 filed with the Securities
and Exchange Commission.
ERNST & YOUNG LLP
Tulsa, Oklahoma
February 17, 1995
