<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: May 15, 1997
(Date of earliest event reported)
LUNN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-1298 11-1581582
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
1 Garvies Point Road
Glen Cove, New York 11542-2828
(Address of principal executive offices; zip code)
(516) 671-9000
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On May 15, 1997, Alcore, Inc. ("Alcore"), a wholly owned subsidiary of Lunn
Industries, Inc. (the "Company") purchased two adjacent parcels of land
containing approximately 7.29 acres, in the aggregate, in the Riverside Business
Park at 1324 and 1326 Brass Mill Road in Belcamp, Maryland together with all
improvements located thereon including a building containing approximately
50,000 square feet, which Alcore previously leased. The purchase price of both
parcels amounted to $2.03 million. The undeveloped land consisting of 3.06 acres
and the second parcel consisting of 4.23 acres were purchased for $275,000 and
$1.75 million, respectively, from BLC Properties, Inc., 1250 Brass Mill Road,
Belcamp, Maryland. The leasehold interest, for the building located on the
second parcel held by Alcore's former landlord, was also transferred to Alcore.
Alcore intends to renovate and expand the existing building by adding
approximately 15,000 square feet and to acquire certain necessary and useful
machinery and equipment to grow the business of Alcore.
Alcore obtained financing for the acquisition, renovation and expansion of this
property through municipal financing and tax credits. Alcore raised $2.6 million
through the issuance of tax exempt revenue bonds issued by the Maryland
Industrial Development Financing Authority. Additionally, $810,000 was borrowed
from the Maryland Industrial and Commercial Redevelopment Fund and $60,000 from
Harford County, Maryland. Alcore was issued tax credits by Harford County,
Maryland over a three year period totaling $30,000. The Company has guaranteed
the Letter of Credit issued pursuant to this municipal bond financing in favor
of First Union National Bank of North Carolina.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
10.1 Promissory note dated May 15, 1997 payable to the Maryland Industrial
Development Financing Authority for the sum of $2.6 million.
10.2 Loan Agreement dated as of May 1, 1997 between Maryland Industrial
Development Authority and Alcore, Inc.
10.3 Trust Indenture dated as of May 1, 1997 by and among Maryland
Industrial Development Financing Authority, First Union National
Bank of Virginia and Branch Banking and Trust Company.
10.4 Guaranty Agreement dated May 1, 1997 made by Lunn Industries, Inc. in
favor of First Union National Bank of North Carolina.
10.5 Letter of Credit and Reimbursement Agreement by and between Alcore,
Inc. And First Union National Bank of North Carolina dated May 1, 1997.
10.6 Security Agreement dated as of May 1, 1997 by and among Alcore, Inc.,
Lunn Industries, Inc., First Union Bank of North Carolina, The
Maryland Industrial Development Financing Authority and First Union
National Bank of Maryland.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LUNN INDUSTRIES, INC.
Date: May 30, 1997 By: s/ Alan Baldwin
------------------------
Alan Baldwin
Chairman of the Board
Chief Executive Officer
3
<PAGE>
Index of Exhibits
10.1 Promissory note dated May 15, 1997 payable to the Maryland Industrial
Development Financing Authority for the sum of $2.6 million.
10.2 Loan Agreement dated as of May 1, 1997 between Maryland Industrial
Development Authority and Alcore, Inc.
10.3 Trust Indenture dated as of May 1, 1997 by and among Maryland
Industrial Development Financing Authority, First Union National Bank
of Virginia and Branch Banking and Trust Company.
10.4 Guaranty Agreement dated May 1, 1997 made by Lunn Industries, Inc. in
favor of First Union National Bank of North Carolina.
10.5 Letter of Credit and Reimbursement Agreement by and between Alcore,
Inc. And First Union National Bank of North Carolina dated May 1,
1997.
10.6 Security Agreement dated as of May 1, 1997 by and among Alcore, Inc.,
Lunn Industries, Inc., First Union Bank of North Carolina, The Maryland
Industrial Development Financing Authority and First Union National
Bank of Maryland.
4
<PAGE>
Exhibit 10.1
AFTER THE ENDORSEMENT OF THIS NOTE AS HEREIN PROVIDED, THIS NOTE MAY NOT BE
ASSIGNED, PLEDGED, ENDORSED OR OTHERWISE TRANSFERRED EXCEPT TO A SUCCESSOR OF
THE TRUSTEE UNDER THE TRUST INDENTURE REFERRED TO IN THE LOAN AGREEMENT
REFERRED TO HEREIN.
PROMISSORY NOTE
$2,600,000.00 May 15, 1997
FOR VALUE RECEIVED, ALCORE, INC., a Delaware corporation (the
"Borrower"), by this promissory note promises to pay to the order of the
MARYLAND INDUSTRIAL DEVELOPMENT FINANCING AUTHORITY (the "Issuer") the
principal sum of TWO MILLION SIX HUNDRED THOUSAND and No/100 Dollars
($2,600,000.00) which principal amount shall be due and payable in sixty
consecutive quarterly installments on the first Business Day of each February,
May, August and November, commencing the first Business Day of February, 1998,
as more specifically set forth below:
<TABLE>
<CAPTION>
Payment Principal Payment Principal Payment Principal
Date Amount Date Amount Date Amount
- ------- --------- ------- --------- ------- ---------
<S> <C> <C> <C> <C> <C>
February, 1998 $50,000 February, 2003 $55,000 February, 2008 $35,000
May, 1998 50,000 May, 2003 55,000 May, 2008 35,000
August, 1998 50,000 August, 2003 55,000 August, 2008 35,000
November, 1998 50,000 November, 2003 55,000 November, 2008 35,000
February, 1999 50,000 February, 2004 55,000 February, 2009 35,000
May, 1999 50,000 May, 2004 55,000 May, 2009 35,000
August, 1999 50,000 August, 2004 55,000 August, 2009 35,000
November, 1999 50,000 November, 2004 55,000 November, 2009 35,000
February, 2000 50,000 February, 2005 35,000 February, 2010 35,000
May, 2000 50,000 May, 2005 35,000 May, 2010 35,000
August, 2000 50,000 August, 2005 35,000 August, 2010 35,000
November, 2000 50,000 November, 2005 35,000 November, 2010 35,000
February, 2001 55,000 February, 2006 35,000 February, 2011 35,000
May, 2001 55,000 May, 2006 35,000 May, 2012 35,000
August, 2001 55,000 August, 2006 35,000 August, 2012 35,000
November, 2001 55,000 November, 2006 35,000 November, 2012 35,000
February, 2002 55,000 February, 2007 35,000 February, 2012 35,000
May, 2002 55,000 May, 2007 35,000 May, 2012 35,000
August, 2002 55,000 August, 2007 35,000 August, 2012 35,000
November, 2002 55,000 November, 2007 35,000 November, 2012 35,000
</TABLE>
The Borrower further agrees to pay interest on the unpaid principal
amount from the date of authentication and delivery of the Bonds (as defined in
the Loan Agreement referred to below) until the principal amount and all
interest thereon is paid in full which shall be paid on the first Business Day
of each February, May, August and November (the "Interest Payment Dates"), at
the rate of interest equal to the Variable Rate (as defined in the Indenture
hereinafter mentioned) or the Fixed Rate (as defined in the Indenture).
<PAGE>
This Promissory Note is the "Note" referred to in the Loan Agreement
dated as of May 1, 1997 (the "Loan Agreement"), between the Borrower and the
Issuer and is entitled to the benefits thereof and subject to the conditions
thereof. Terms not otherwise defined herein shall have the definitions set
forth in the Loan Agreement.
Under the Loan Agreement, the Issuer has loaned to the Borrower the
proceeds received from the sale of the Issuer's $2,600,000 Maryland Industrial
Development Financing Authority Economic Development Revenue Bonds (Alcore,
Inc. Facility), 1997 Issue, dated as of May 1, 1997 (the "Bonds"). The Bonds
have been issued, concurrently with the execution and delivery of this Note,
pursuant to, and are secured by, the Trust Indenture among the Issuer, First
Union National Bank of Virginia, as Trustee (the "Trustee") and Branch Banking
and Trust Company, as Credit Facility Trustee (the "Credit Facility Trustee")
dated as of May 1, 1997 (the "Indenture"). The Bonds bear interest at the
Variable Rate prior to the Conversion Date (as defined in the Indenture) and at
the Fixed Rate on or subsequent to the Conversion Date. Such interest is
payable on the Interest Payment Dates. This Note shall bear interest at the
Variable Rate and the Fixed Rate during the same periods as such rates are
borne by the Bonds.
Each payment of principal of and interest on this Note will be
sufficient to enable the Issuer to pay when due the total amount of principal
of (whether at maturity, upon acceleration or otherwise), premium, if any, and
interest on the Bonds. To the extent that principal of, premium, if any, or
interest on the Bonds shall be paid, there shall be credited against unpaid
principal of or interest on this Note, as the case may be, an amount equal to
the principal of or interest on the Bonds so paid. The principal of, premium,
if any, and interest on this Note are payable in immediately available funds of
any coin or currency of the United States of America which on the respective
dates of payment thereof shall be legal tender for the payment of public and
private debts.
In addition, the Borrower agrees to pay when due in immediately
available funds all other amounts at the time the Issuer may be required to pay
the same pursuant to the Bonds or the Indenture.
The obligation of the Borrower to make the payments required hereunder
shall be absolute and unconditional without any defense, recoupment or right of
set-off by reason of any default by the Issuer under the Loan Agreement or for
any other reason.
Upon the occurrence of an Event of Default specified in the Loan
Agreement, the unpaid principal hereof and accrued interest and additional
interest hereon may become forthwith due and payable as provided in the Loan
Agreement, and in the event the Borrower shall fail to pay any amount required
to be paid under this Note when due, the Borrower shall pay interest on such
amount at a rate per annum equal to the Overdue Rate (as defined in the Loan
Agreement) or the maximum rate permitted by law, whichever is lower.
The Borrower may at its option, and may under certain circumstances be
required to, prepay all or any part of the unpaid principal of this Note upon
the terms provided in the Loan Agreement.
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, THE BORROWER AUTHORIZES THE CLERK
OR ANY ATTORNEY DESIGNATED BY THE BANK, THE ISSUER OR ANY CLERK OF ANY COURT OF
RECORD TO APPEAR FOR IT IN ANY COURT OF RECORD AND CONFESS JUDGMENT AGAINST IT
WITHOUT PRIOR HEARING, IN FAVOR OF THE BANK OR THE ISSUER FOR AND IN THE AMOUNT
EQUAL TO SUCH OF THE OBLIGATIONS OF THE BORROWER WHICH HAVE BEEN DUE AND
PAYABLE UNDER THE PROVISIONS OF THIS NOTE, PLUS
2
<PAGE>
INTEREST ACCRUED AND UNPAID THEREON, ALL OTHER AMOUNTS THEN DUE AND PAYABLE
HEREUNDER, COSTS OF SUIT AND AN ATTORNEY'S FEE IN AN AMOUNT EQUAL TO FIFTEEN
PERCENT (15%) OF SUCH OBLIGATIONS PLUS ALL ACCRUED AND UNPAID INTEREST THEREON,
PROVIDED, HOWEVER, (A) IF THE ACTUAL ATTORNEY'S FEES INCURRED BY THE BANK OR
THE ISSUER ARE LESS THAN 15% OF SUCH OBLIGATION (PLUS ALL ACCRUED AND UNPAID
INTEREST THEREON), THE BANK OR THE ISSUER WILL REFUND (TO THE EXTENT ACTUALLY
COLLECTED) TO THE BORROWER AN AMOUNT EQUAL TO THE DIFFERENCE BETWEEN 15% OF
SUCH OBLIGATION (PLUS ALL ACCRUED AND UNPAID INTEREST THEREON) AND THE AMOUNT
OF SUCH ACTUAL ATTORNEY'S FEES (AFTER ALL OF SUCH OBLIGATIONS HAVE BEEN PAID IN
FULL), OR (B) IF THE ACTUAL ATTORNEY'S FEES INCURRED BY THE BANK OR THE ISSUER
OR OTHER HOLDER HEREOF EXCEED 15% OF SUCH OBLIGATIONS (PLUS ALL ACCRUED AND
UNPAID INTEREST THEREON, WHETHER BY REASON OF JUDGMENT BEING CONTESTED OR
OTHERWISE, THE BORROWER WILL PAY TO THE BANK OR THE ISSUER ON DEMAND THE AMOUNT
OF ANY SUCH EXCESS. THE AUTHORITY AND POWER TO APPEAR FOR AND ENTER JUDGMENT
AGAINST THE BORROWER SHALL NOT BE EXHAUSTED BY ONE OR MORE EXERCISE THEREOF, OR
BY ANY IMPERFECT EXERCISE THEREOF, AND SHALL NOT BE EXTINGUISHED BY ANY
JUDGMENT ENTERED PURSUANT THERETO. SUCH AUTHORITY AND POWER MAY BE EXERCISED ON
ONE OR MORE OCCASIONS, FROM TIME TO TIME, IN THE SAME OR DIFFERENT
JURISDICTIONS. AS OFTEN AS THE BANK OR THE ISSUER SHALL DEEM NECESSARY OR
DESIRABLE, FOR ALL OF WHICH THIS NOTE SHALL BE A SUFFICIENT WARRANT.
The Borrower hereby promises to pay all costs of collection, including
reasonable attorneys' fees and disbursements, without regard to any statutory
presumption, in the case of a default under this Note or the Loan Agreement.
The Borrower hereby waives presentment, protest and notice of protest or
dishonor.
This Note shall be construed in accordance with the laws of the State
of Maryland.
IN WITNESS WHEREOF, the Borrower has caused this instrument to be
executed in its corporate name by its duly authorized officers and its
corporate seal to be affixed hereto all as of the date first above written.
ALCORE, INC.
ATTEST:
____________________ By: __________________________________
Secretary Edward A. Kiley, President
(CORPORATE SEAL)
3
<PAGE>
ENDORSEMENT
Pay to the order of First Union National Bank of Virginia, as Trustee
for the benefit of the Bondholders under the Trust Indenture dated as of May 1,
1997, between the Issuer, the Trustee and Branch Banking and Trust Company, as
Credit Facility Trustee, without recourse. This endorsement is given and made
without any warranty as to the authority and genuineness of the signature of
the maker of the foregoing Promissory Note.
This the ______ day of May, 1997.
MARYLAND INDUSTRIAL DEVELOPMENT
FINANCING AUTHORITY
By: _______________________________
Thomas H. Mullaney, Chairman
<PAGE>
Exhibit 10.2
===========================================================================
LOAN AGREEMENT
Dated as of May 1, 1997
Between
MARYLAND INDUSTRIAL DEVELOPMENT FINANCING AUTHORITY
("Issuer")
and
ALCORE, INC.
("Borrower")
$2,600,000
Maryland Industrial Development Financing Authority
Economic Development Revenue Bonds
(Alcore, Inc. Facility)
1997 Issue
=========================================================================
CERTAIN RIGHTS OF THE ISSUER UNDER THIS AGREEMENT HAVE BEEN ASSIGNED TO, AND
ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF, FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, AS TRUSTEE AND BRANCH BANKING AND TRUST COMPANY, AS CREDIT
FACILITY TRUSTEE UNDER A TRUST INDENTURE OF EVEN DATE HEREWITH BETWEEN THE
ISSUER, THE TRUSTEE AND THE CREDIT FACILITY TRUSTEE, AS AMENDED OR SUPPLEMENTED
FROM TIME TO TIME.
<PAGE>
LOAN AGREEMENT
This LOAN AGREEMENT, dated as of May 1, 1997, between the Maryland
Industrial Development Financing Authority, a body corporate and politic and a
public instrumentality of the State of Maryland (the "Issuer"), and Alcore,
Inc., a Delaware corporation (the "Borrower"),
W I T N E S S E T H:
In consideration of the respective representations and agreements
contained herein, the parties hereto, recognizing that under the Act (as
hereinafter defined) this Loan Agreement shall not in any way obligate the
State (as hereinafter defined) or any political subdivision thereof, the
Department (as hereinafter defined), the Issuer or any other public body, to
raise any money by taxation or use other public moneys for any purpose in
relation to the Facility (as hereinafter defined) and that neither the State
nor any political subdivision thereof, nor the Department, nor the Issuer, nor
any other public body, shall pay or promise to pay any debt or meet any
financial obligation to any person at any time in relation to the Facility,
except from moneys received or to be received under the provisions of this Loan
Agreement, the Note and from the Credit Facility Issuer under a Credit Facility
(each as hereinafter defined) or derived from the exercise of the rights of the
Issuer thereunder, agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1. Definitions. In addition to words and terms elsewhere
defined in this Loan Agreement or in the Indenture, the following words and
terms shall have the following meanings:
"Acquisition" or "acquisition" shall mean, when used in regard to the
Facility, and shall include, where applicable, and without limitation, the
acquisition, construction, rehabilitation, remodeling, extension, equipping and
permanent improvement of the Facility, and paying the necessary costs of
preparing, printing and selling the Bonds, and such other costs as may be
permitted by the Act and the Code.
"Act" shall mean the MIDFA Act and the Revenue Bond Act.
"Addition" shall mean the addition containing approximately 15,000
square feet to be made to the Building.
"Administrative Expenses" shall mean the amounts payable pursuant to
Section 7.2 hereof and Section 1006 of the Indenture by the Borrower to or for
the account of the Issuer, the Trustee, the Registrar, the Paying Agent and
others to provide for payment of the costs and expenses incurred by such
parties.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person. For the purposes of this definition, "control"
when used with respect to a Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
<PAGE>
"Alternate Credit Facility" shall mean an irrevocable direct-pay
letter of credit, insurance policy, surety bond or similar credit enhancement
or support facility issued for the benefit of the Credit Facility Trustee, the
terms of which Alternate Credit Facility shall in all respects material to the
Bondholders be the same (except for the term set forth in such Alternate Credit
Facility) as the Letter of Credit.
"Associate Director" shall mean the Associate Director of the Issuer
or such other person or officer to which the principal functions of the
Associate Director may be transferred.
"Bank" shall mean First Union National Bank of North Carolina, as the
issuer of the Letter of Credit.
"Bond" or "Bonds" shall mean any bond or bonds authenticated and
delivered under the Indenture.
"Bond Documents" shall mean collectively the Indenture, the Bonds,
this Loan Agreement, the Deed of Trust, the Note, the Placement Agreement, the
Tender Agency Agreement, the Remarketing Agreement, the Intercreditor
Agreement, and any and all other documents that the Issuer, the Borrower or any
other party or parties or their representatives have executed and delivered or
may hereafter execute and deliver, to evidence or secure the obligations of the
Issuer or the Borrower in connection with the Bonds and the Note or any part
thereof, together with any and all amendments and supplements thereto;
provided, however, that the term "Bond Documents," with the exception of the
Deed of Trust and the Intercreditor Agreement, does not include the Letter of
Credit Documents.
"Bondholder" or "Bondholders" or "owner of Bonds" or "owners of Bonds"
shall mean (a) in the event that the book-entry system of evidence of transfer
of ownership in the Bonds is employed pursuant to Section 206 of the Indenture,
Cede & Co., as nominee of DTC, or its nominee, and (b) in all other cases the
person or persons in whose name any of the Bond or Bonds are registered on the
books and records of the Bond Registrar pursuant to Section 204 of the
Indenture.
"Bond Fund" shall mean the trust fund so designated, which is
established pursuant to Section 502(a) of the Indenture.
"Borrower" shall mean Alcore, Inc., a Delaware corporation, and its
successors and assigns and any surviving, resulting or transferee corporation
or other entity.
"Borrower Representative" shall mean any one of the persons at the
time designated to act on behalf of the Borrower by the written certificate
furnished to the Issuer and the Trustee containing the specimen signatures of
such persons and signed on behalf of the Borrower by the President or any duly
authorized Vice President of the Borrower.
"Borrower's Tax Certificate" shall mean the Borrower's Tax Certificate
and Compliance Agreement dated the date of the initial issuance and delivery of
the Bonds, together with any amendments or supplements thereto.
"Building" shall mean the building containing approximately 50,000
square feet located at the Facility Site.
-2-
<PAGE>
"Business Day" shall mean a day upon which banks in the State and in
the Commonwealth of Virginia and the State of North Carolina are open for the
transaction of business of the nature required pursuant to this Loan Agreement
and the Indenture.
"Chairman" shall mean the Chairman of the Issuer or such other person
or officer to which the principal functions of the Chairman may be transferred.
"Co-Bond Counsel" or "Bond Counsel" shall mean Chewanney A. Brown,
Attorney At Law, and Miles & Stockbridge, a Professional Corporation, or a firm
of attorneys of nationally recognized standing in matters pertaining to the
tax-exempt nature of interest on bonds issued by states and their political
subdivisions, duly admitted to the practice of law before the highest court of
any state of the United States of America and approved by the Issuer.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the related regulations, rulings and procedures issued by the United States
Department of the Treasury or its successors.
"Completion Date" shall mean that date certified by the Borrower under
Section 4.3 hereof.
"Consistent Basis" shall mean, in reference to the application of
Generally Accepted Accounting Principles, that the accounting principles
observed in the period referred to are comparable in all material respects to
those applied in the preceding period, except as to any changes consented to by
the Trustee and the Credit Facility Issuer.
"Cost of Acquisition of the Facility" shall mean the costs and
allowances for the Acquisition of the Facility which are permitted under the
Act and which include, but are not limited to, all capital costs of the
Facility, including the following: (i) the Acquisition, construction,
renovation and installation of the Facility at the Facility Site; (ii)
preparation of the plans and specifications, if any, for the Facility
(including any preliminary study or plan of the Facility or any aspect
thereof), any labor, services, materials and supplies used or furnished in the
Acquisition of the Facility, the acquisition and installation necessary to
provide utility services or other services and all real and tangible personal
property deemed necessary by the Borrower in connection with the Facility;
(iii) the fees for architectural, engineering, supervisory and consulting
services in connection with the Acquisition of the Facility; (iv) to the extent
they shall not be paid by a contractor, the premiums of all insurance and
surety and performance bonds required to be maintained in connection with the
Acquisition of the Facility; (v) any fees and expenses in connection with the
acquisition, perfection and protection of title to the Facility Site and any
fees and expenses incurred in connection with the preparation, recording or
filing of such documents, instruments or financing statements as either the
Borrower, the Issuer or the Trustee may deem desirable to perfect or protect
the rights of the Issuer or the Trustee under the Bond Documents and the Letter
of Credit Documents; (vi) the legal, accounting and financial advisory fees and
expenses, filing fees, and printing and engraving costs incurred in connection
with the authorization, issuance, sale and purchase of the Bonds, and the
preparation of the Bond Documents, the Letter of Credit Documents, and all
other documents in connection with the authorization, issuance and sale of the
Bonds; (vii) interest prior to, during and for a period not exceeding one year
after completion of construction of the Facility; and (viii) any administrative
or other fees charged by the Issuer or reimbursement thereto of expenses, in
connection with the Facility to the Completion Date.
-3-
<PAGE>
"Counsel" shall mean an attorney or a firm of attorneys acceptable to
the Trustee, and may, but need not, be Co-Bond Counsel or counsel to the
Issuer, the Credit Facility Issuer or the Borrower.
"Credit Facility" shall mean the Letter of Credit or any Alternate
Credit Facility delivered to the Credit Facility Trustee, pursuant to Article
VI of the Indenture.
"Credit Facility Issuer" shall mean the Bank with respect to the
Letter of Credit and the institution issuing any Alternate Credit Facility.
"Credit Facility Trustee" shall mean Branch Banking and Trust Company
and its successors in the trust described in Section 1002 of the Indenture. In
the event that the Bonds are converted to a Fixed Rate and there will no longer
be a Credit Facility in effect, then thereafter, all references to the Credit
Facility Trustee shall mean Trustee.
"Deed of Trust" shall mean the Deed of Trust and Security Agreement
dated as of May 1, 1997 from the Borrower to certain individual trustees named
therein.
"Department" means the Department of Business and Economic Development
of the State.
"Determination of Taxability" shall be defined as and shall be deemed
to have occurred on the first to occur of the following: (i) on that date when
the Borrower files any statement, supplemental statement or other tax schedule,
return or document (whether pursuant to Treasury Regulations ss.
1.103-10(b)(2)(vi), as the same may be amended or supplemented, or otherwise)
which discloses that an Event of Taxability shall have in fact occurred; (ii)
on that date when any Bondholder or former Bondholder notifies the Borrower or
the Trustee that it has received a written opinion of bond counsel to the
effect that an Event of Taxability shall have occurred unless, within 180 days
after receipt by the Borrower of such notification from the Trustee, any
Bondholder or any former Bondholder, the Borrower shall obtain and deliver to
the Trustee and each Bondholder and former Bondholder a favorable ruling or
determination letter issued to or on behalf of the Borrower by the Commissioner
or any District Director of Internal Revenue (or any other government official
exercising the same or a substantially similar function from time to time) to
the effect that, after taking into consideration such facts as form the basis
for the opinion that an Event of Taxability has occurred, an Event of
Taxability shall not have occurred; (iii) on that date when the Borrower shall
be advised in writing by the Commissioner or any District Director of Internal
Revenue (or any other government official or agent exercising the same or a
substantially similar function from time to time) that, based upon filings of
the Borrower, or upon any review or audit of the Borrower, or upon any other
grounds whatsoever, an Event of Taxability shall have occurred; (iv) on that
date when the Borrower shall receive notice in writing from any Bondholder or
former Bondholder, or from the Trustee, that the Internal Revenue Service (or
any other government agency exercising the same or a substantially similar
function from time to time) has assessed as includable in the gross income of
any Bondholder or former Bondholder the interest on such Bondholder's or former
Bondholder's Bond due to the occurrence of an Event of Taxability; provided,
however, no Determination of Taxability shall occur under subparagraph (iii) or
(iv) hereof unless the Borrower has been afforded the opportunity, at its
expense, to contest any such assessment or unfavorable ruling and, further, no
Determination of Taxability shall occur until such contest, if made, has been
finally determined.
"DTC" shall mean the Depository Trust Company, a limited purpose
company organized under the laws of the State of New York, and its successors
and assigns.
-4-
<PAGE>
"Eminent Domain" shall mean the taking of title to, or the temporary
use of, the Facility or any part thereof pursuant to eminent domain or
condemnation proceedings, or any voluntary conveyance of any part of the
Facility during the pendency of, or as a result of a threat of, such
proceedings.
"Equipment" shall mean all of the fixtures (including all leasehold
improvements), machinery, equipment and other items of tangible personal
property now owned or hereafter acquired by the Borrower and located or to be
located on or affixed to the Facility Site, together with all substitutions
therefor and all repairs, renewals and replacements thereof.
"Event of Bankruptcy" shall mean a petition by or against the Borrower
or the Issuer under any bankruptcy act or under any similar act which may be
enacted which shall have been filed (other than a bankruptcy proceeding
instituted by the Borrower, any Affiliate or the Issuer against third parties)
unless such petition shall have been dismissed and such dismissal shall be
final and not subject to appeal.
"Event of Default" or "Default" shall have the meaning set forth in
Section 9.1 hereof.
"Event of Taxability" shall mean a change in law or fact or the
interpretation thereof, or the occurrence or existence of any fact, event or
circumstance (including, without limitation, the issuance of obligations or the
incurring of capital expenditures in excess of those permitted by Sections
144(a)(4)(A) of the Code, or the taking of any action by the Borrower, or the
failure to take any action, by the Borrower, or the making by the Borrower of
any misrepresentation herein or in any certificate required to be given in
connection with the issuance, sale or delivery of the Bonds) which has the
effect of causing the interest paid or payable on any Bond to become includable
in the gross income of any Bondholder or former Bondholder other than a
Bondholder or former Bondholder who is or was a "substantial user" or "related
person" as such terms are used in Section 147(a) of the Code.
"Executive Director" shall mean the Executive Director of the Issuer
or such other person or officer to which the principal functions of the
Executive Director may be transferred.
"Facility" shall mean (a) the Facility Site, (b) the Addition, (c)
certain necessary or useful equipment and machinery, and (d) such other
interests in land or improvements as may be necessary and suitable for the
foregoing, including roads and rights of access, utilities and other necessary
site preparation facilities.
"Facility Site" shall mean those two parcels of land containing in the
aggregate approximately 7.26 acres located in the Riverside Industrial Park,
Belcamp, Harford County, Maryland and known as Lot 17 with a street address of
1324 Brass Mill Road and Lot 18 with a street address of 1326 Brass Mill Road
(as more particularly described in Exhibit B attached hereto) and any and all
improvements thereon including, without limitation, the Building.
"Guarantor" shall mean Lunn Industries, Inc., a Delaware corporation,
and its successors and assigns and any surviving, resulting or transferee
corporation or other entity.
"Guaranty" shall mean the Guaranty Agreement dated as of May 1, 1997
by the Guarantor in favor of the Bank and the Hedge Counterparty.
"Generally Accepted Accounting Principles" shall mean those principles
of accounting set forth in pronouncements of the Financial Accounting Standards
Board and its predecessors or pronouncements of the American Institute of
Certified Public Accountants or those principles of
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accounting which have other substantial authoritative support and are
applicable in the circumstances as of the date of application, as such
principles are from time to time supplemented and amended.
"Government Obligations" shall mean (i) direct obligations of the
United States of America, (ii) obligations unconditionally guaranteed by the
United States of America, and (iii) securities or receipts evidencing ownership
interests in obligations or specified portions (such as principal or interest)
of obligations described in clause (i) or (ii) above the full and timely
payment of which securities, receipts or obligations is unconditionally
guaranteed by the United States of America.
"Hazardous Materials" shall mean have the meaning set forth in the
Deed of Trust.
"Hazardous Materials Contamination" shall have the meaning set forth
in the Deed of Trust.
"Hedge Agreement" shall mean the agreement between the Borrower and
the Hedge Counterparty executed in connection with the interest rate swap or
similar hedge arrangement between the Bank and the Hedge Counterparty.
"Hedge Counterparty" shall mean First Union National Bank of North
Carolina, its successors and assigns.
"Indenture" shall mean the Trust Indenture of even date herewith by
and between the Issuer, the Trustee and the Credit Facility Trustee, together
with any amendments or supplements thereto permitted thereby.
"Intercreditor Agreement" shall mean the Intercreditor Agreement dated
as of May 1, 1997 by and among the Issuer, the Trustee, the Borrower, the
Guarantor, the Bank, First Union National Bank of Maryland, and the Hedge
Counterparty, as the same may be amended from time to time.
"Issuer" shall mean the Maryland Industrial Development Financing
Authority, a body corporate and politic and a public instrumentality of the
State.
"Issuer Representative" shall mean the Chairman, Vice Chairman,
Executive Director or the Associate Director or such other persons at the time
designated to act on behalf of the Issuer by written certificate furnished to
the Borrower and the Trustee containing the specimen signatures of such persons
and signed on behalf of the Issuer by its Chairman or Vice Chairman.
"Letter of Credit" shall mean the irrevocable direct pay letter of
credit dated May 15, 1997 in the amount of $2,704,000 issued by the Bank,
including any extensions thereof.
"Letter of Credit Documents" shall mean the Letter of Credit, the Deed
of Trust, the Reimbursement Agreement, the Intercreditor Agreement, the Deed of
Trust, the Guaranty Agreement, the Security Agreement, and the Pledge Agreement
and any and all other documents that the Borrower, the Guarantor or any other
party or parties or their representatives have executed and delivered or may
hereafter execute and deliver to evidence or secure the obligations of the
Borrower in connection with the Letter of Credit or any part thereof, together
with any amendments or supplements thereto.
"Loan Agreement" shall mean this Loan Agreement and any amendments and
supplements hereto.
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"Net Proceeds" when used with respect to any insurance proceeds or
award resulting from, or other amount received in connection with, Eminent
Domain shall mean the gross proceeds from such proceeds, award or other amount,
less all expenses (including attorneys' fees) incurred in the realization
thereof.
"Note" shall mean the promissory note given by the Borrower pursuant
to Section 5.1 of this Loan Agreement, substantially in the form of Exhibit A
attached hereto.
"Official Intent" shall mean the Declaration of Official Intent to
Reimburse executed by the Executive Director of the Issuer on October 16, 1996.
"Overdue Rate" shall mean the Prime Rate plus two percent.
"Payment of the Bonds" shall mean payment of (i) the principal of,
premium (if any) and interest on and purchase price of the Bonds in accordance
with their terms whether through payment at maturity, upon acceleration,
prepayment or purchase, (ii) all amounts due as Administrative Expenses or
otherwise, and (iii) any and all other liabilities and obligations arising
under the Indenture and this Loan Agreement; in any case, in such a manner that
all such amounts due and owing with respect to the Bonds shall have been paid.
"Permitted Encumbrances" shall mean, as of any particular time,
"Permitted Liens," as defined in the Reimbursement Agreement.
"Person" shall mean an individual, partnership, corporation, trust,
unincorporated organization, association, joint venture, joint-stock company, a
government or agency or political subdivision.
"Placement Agreement" shall mean the letter agreement dated the date
of the initial issuance and delivery of the Bonds among the Borrower, the
Issuer and First Union National Bank of North Carolina, as Placement Agent,
providing for the introducing of the Bonds by the Placement Agent to
prospective purchasers.
"Plans and Specifications" shall mean the plans and specifications
used in the Acquisition of the Facility, as the same may be revised from time
to time by the Borrower in accordance with Section 3.3 hereof.
"Plant" shall mean all buildings, structures, improvements, fixtures,
furniture, machinery, equipment or other property (excluding inventory) of the
Borrower, now or hereafter located at or affixed to the Facility Site,
including without limitation the Facility.
"Pledge Agreement" shall mean the Pledge Agreement of even date
herewith between the Borrower and the Bank, and any amendments or supplements
thereto.
"Prime Rate" shall mean the rate of interest per annum announced by
First Union National Bank of North Carolina at its principal office in
Charlotte, North Carolina from time to time to be its prime rate.
"Private Placement Memorandum" shall mean the Private Placement
Memorandum dated May 15, 1997, relating to the Bonds.
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"Reimbursement Agreement" shall mean the Letter of Credit and
Reimbursement Agreement dated as of May 1, 1997 between the Borrower and the
Bank, as the same may be amended from time to time and filed with the Trustee,
and any agreement of the Borrower with a Credit Facility Issuer setting forth
the obligations of the Borrower to such Credit Facility Issuer arising out of
any payments under a Credit Facility and which provides that it shall be deemed
to be a Reimbursement Agreement for the purposes of the Indenture.
"Remarketing Agent" shall mean First Union National Bank of North
Carolina (acting through its Capital Markets Group) and its successor as
provided in Section 1201 of the Indenture.
"Remarketing Agreement" shall mean the Remarketing Agreement dated as
of May 1, 1997 between the Borrower and the Remarketing Agent, as amended,
restated, modified or supplemented from time to time.
"Reserved Rights of the Issuer" shall have the meaning set forth in
the Indenture.
"Security Agreement" shall mean the Security Agreement dated as of May
1, 1997 from the Borrower and the Guarantor in favor of the Bank, the Issuer
and the Hedge Counterparty.
"State" shall mean the State of Maryland.
"Tender Agency Agreement" shall mean the Tender Agency Agreement dated
as of May 1, 1997 among the Borrower, the Trustee and the Tender Agent.
"Tender Agent" means First Union National Bank of Virginia and its
successors as provided in Section 1202 of the Indenture.
"Trustee" shall mean the banking institution at the time serving as
Trustee under the Indenture.
"Vice Chairman" shall mean the Vice Chairman of the Issuer or such
other person or officer to which the principal functions of the Vice Chairman
may be transferred.
Section 1.2. Rules of Construction.
(a) Words of the masculine gender shall be deemed and construed to
include correlative words of the feminine and neuter genders, and words of the
neuter gender shall be deemed and construed to include correlative words of the
masculine and feminine genders.
(b) The table of contents, captions and headings in this Loan
Agreement are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Loan Agreement.
(c) All references herein to particular articles or sections are
references to articles or sections of this Loan Agreement unless some other
reference is established.
(d) All accounting terms not specifically defined herein shall be
construed in accordance with Generally Accepted Accounting Principles applied
on a Consistent Basis.
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(e) All references herein to the Borrower shall be deemed to refer to
each of the Persons if more than one, as described by such term and any
agreement, obligation, duty or liability of the Borrower shall be a joint and
several agreement, obligation, duty or liability of each of the Persons so
described by such term.
(f) Any terms not defined herein but defined in any of the other Bond
Documents shall have the same meaning herein.
(g) All references herein to the Code or any particular provision or
section thereof shall be deemed to refer to any successor, or successor
provision or section, thereof, as the case may be.
ARTICLE II
REPRESENTATIONS
Section 2.1. Representations by the Issuer. The Issuer represents and
warrants as follows:
(a) The Issuer is a body politic and corporate and a public
instrumentality of the State. Under the provisions of the Act, the Issuer has
the power to enter into this Loan Agreement and the other Bond Documents
entered into by it and the transactions contemplated hereunder and thereunder
and to carry out its obligations hereunder and thereunder. By proper action,
the Issuer has duly authorized the execution and delivery of this Loan
Agreement and each of the other Bond Documents executed and delivered by it.
The Issuer is not in default under any of the provisions of the laws of the
State which would affect its existence or its powers referred to in this
subsection (a).
(b) To finance the cost of the acquisition of the Facility,
the Issuer has agreed at the request of the Borrower to issue and sell the
Bonds and to lend the proceeds thereof to the Borrower under and pursuant to
this Loan Agreement.
(c) As provided in the Indenture, the Revenues are pledged to
secure the payment of the principal of and interest and premium (if any) on the
Bonds and for any other payment referred to in this Loan Agreement.
(d) This Loan Agreement and the Indenture have been duly and
properly authorized, executed, sealed and delivered by the Issuer, constitute
valid and legally binding obligations of the Issuer, and are fully enforceable
against the Issuer in accordance with their respective terms; provided,
however, that the enforceability and binding nature of this Loan Agreement and
the Indenture are subject to bankruptcy, insolvency, reorganization and other
state and federal laws affecting the enforcement of creditors' rights
generally, and, to the extent that certain remedies under such instruments
require, or may require enforcement by a court of equity, such principles of
equity as the court having jurisdiction may impose.
(e) There are no proceedings pending or, to the knowledge of
the Issuer, threatened before any court or administrative agency which may
affect the authority of the Issuer to enter into this Loan Agreement or the
Indenture.
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(f) The execution, delivery and performance by the Issuer of
this Loan Agreement and the Indenture, or any other document required or
contemplated hereby to be delivered by the Issuer, do not and shall not
constitute a violation or breach of or a default under any existing mortgage,
indenture, contract, instrument or agreement binding on the Issuer or affecting
its property, or any provision of law or order of any court binding upon the
Issuer.
Section 2.2. Representations, Warranties and Covenants by the
Borrower.
The Borrower represents, warrants and covenants as follows:
(a) The Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, and is qualified to
do business in the State, has legal authority to enter into and to perform the
agreements and covenants on its part contained in the Bond Documents and the
Letter of Credit Documents to which it is a party, has approved Appendix A of
the Private Placement Memorandum and has duly authorized the execution,
delivery and performance of the Bond Documents and the Letter of Credit
Documents to which it is a party.
(b) The borrowing under the Note, the execution and delivery of this
Loan Agreement and the other Bond Documents and the Letter of Credit Documents
to which it is a party and the approval of Appendix A of the Private Placement
Memorandum, the consummation of the transactions contemplated hereby and
thereby, and the fulfillment of or compliance with the terms and conditions
hereof and thereof do not and will not violate, conflict with or constitute a
breach of or default under or require any consent (except for such consents and
approvals as have heretofore been obtained) pursuant to the Certificate of
Incorporation or Bylaws of the Borrower, any law or regulation of the United
States or the State or, to the best knowledge of the Borrower, of any other
jurisdiction presently applicable to the Borrower, any order of any court,
regulatory body or arbitral tribunal or any agreement or instrument to which
the Borrower is a party or by which it or any of its property is bound.
(c) The Borrower will cause the proceeds of the Bonds to be applied to
the Facility.
(d) The Borrower intends that the proceeds of the Loan be used solely
to pay Facility Costs. The Borrower intends that the interest payable on the
Bonds shall be excludable from the gross income of the holders thereof for
purposes of federal income taxation and shall be exempt from state, county and
municipal taxation in the State.
(e) The Borrower presently expects to operate the Facility as a
manufacturing facility for honeycomb aluminum products until Payment of the
Bonds.
(f) The Facility is a "facility" within the meaning of the Act.
(g) The Facility is located wholly within Harford County, Maryland.
(h) Assuming due authorization, execution and delivery by the other
parties thereto, when executed and delivered, the Bond Documents and the Letter
of Credit Documents to which the Borrower is a party will be the valid and
binding obligations or agreements of the Borrower enforceable in accordance
with their respective terms, subject to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws effecting the rights of
creditors generally and by general principles of equity, whether applied in a
proceeding at law or in equity.
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(i) There is no action, suit or proceeding at law or in equity or by
or before any governmental instrumentality or agency or arbitral body now
pending, or to the knowledge of the Borrower, threatened against or affecting
the Borrower or any properties or rights of the Borrower which, if adversely
determined, would materially impair the right of the Borrower to carry on its
business substantially as now conducted or would materially adversely affect
the Facility Site or the financial condition, business or operations of the
Borrower or the transactions contemplated by, or the validity of, any of the
Bond Documents or the Letter of Credit Documents.
(j) The Borrower has filed all federal, state and local tax returns
which are required to be filed by it and has paid or caused to be paid all
taxes as shown on said returns or on any assessment received by it, to the
extent that such taxes have become due, and no controversy in respect of
additional income taxes, state or federal, of the Borrower is pending or, to
the knowledge of the Borrower, threatened which has not heretofore been
disclosed in writing to the Trustee and the Issuer and which, if adversely
determined, would materially and adversely affect the financial condition or
operations of the Borrower.
(k) Neither the Bond Documents nor the Letter of Credit Document to
which the Borrower is a party nor the Borrower's Tax Certificate contains any
misrepresentation or untrue statement of fact or omits to state a material fact
necessary in order to make any such representation or statement contained
therein in light of the circumstances under which made, not misleading.
(l) The Borrower possesses all necessary patents, licenses,
trademarks, trademark rights, trade names, trade name rights and copyrights to
conduct its business as now conducted, without known conflict with any patent,
license, trademark, trade name or copyrights of any other Person.
(m) The Facility Site is properly zoned, and its intended use and the
operation of the Facility comply with the uses permitted by applicable zoning
regulations.
(n) No approval, consent or authorization of, or registration,
declaration or filing with, any governmental or public body or authority is
required in connection with the valid execution, delivery and performance by
the Borrower of the Bond Documents or the Letter of Credit Documents to which
it is a party which has not heretofore been obtained, other than approvals and
permits relating to the construction and improvements at the Facility which are
customarily obtained during or after construction.
(o) The Borrower will not take or omit to take any action which would
impair the exemption of interest on the Bonds from federal income taxation.
(p) All of the representations, warranties and covenants of the
Borrower contained in the Borrower's Tax Certificate are hereby reaffirmed and
incorporated herein by reference.
(q) The Borrower has a place of business in only one county in the
State, such county being Harford County. In addition to the places of business
described in the next preceding sentence, since January 1, 1976, the Borrower
has had a place of business in the following counties in the State: Howard
County.
(r) In addition to Alcore, Inc., since January 1, 1976, the Borrower
has used or operated under the following corporate and/or trade names: None.
Since January 1, 1976, the Borrower has
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not changed its name from Alcore, Inc., or changed its identity or corporate
structure so as to make the use of the name Alcore, Inc. in a filed financing
statement materially misleading.
(s) Except for simultaneous liens being granted in favor of the
Trustee and the Bank, there exist no liens or security interests on or with
respect to the Facility (other than Permitted Encumbrances).
(t) The Borrower will comply with all applicable federal, State and
local laws, rules and regulations, subject to the Borrower's right to contest
any of the foregoing in good faith and by appropriate proceedings diligently
prosecuted.
All of the above representations, warranties and covenants shall
survive the execution of this Loan Agreement and the issuance of the Note.
ARTICLE III
ACQUISITION OF THE FACILITY
Section 3.1. Acquisition of the Facility. The Borrower shall complete
the Acquisition of the Facility with all reasonable dispatch, delays incident
to strikes, riots, acts of God or the public enemy or any delay beyond its
reasonable control only excepted, in accordance with the Plans and
Specifications; provided, however, that if completion of such Acquisition is
delayed for any reason, there shall be no diminution in or postponement of the
payments to be made by the Borrower pursuant to the Note or Section 5.1 hereof.
Section 3.2. Borrower to Obtain Approvals Required for the Facility
and the Plant. The Borrower shall obtain or cause to be obtained all necessary
permits and approvals for the Acquisition of the Facility and the operation and
maintenance of the Plant and the Equipment and shall comply with all lawful
requirements of any governmental body regarding the use or condition of the
Equipment, the Facility Site and the Plant. The Borrower may, however, contest
any such requirement by an appropriate proceeding diligently prosecuted in good
faith.
Section 3.3. Plans and Specifications. The Borrower shall maintain a
set of Plans and Specifications at the Facility Site which shall be available
to the Issuer and the Trustee for inspection and examination during the
Borrower's regular business hours. The Borrower may supplement, amend and add
to the Plans and Specifications, and the Borrower shall be authorized to omit
or make substitutions for components of the Facility, provided that no such
change shall be made which shall be contrary to subsections (c), (d), (e), (f),
(g), (h) and (i) of Section 2.2 hereof or the provisions of Article IX hereof,
and provided further that if any such change would render materially incorrect
or incomplete the description of the initial components of the Facility or the
description of the Facility Site as set forth in Exhibit B to this Loan
Agreement, the Borrower and the Issuer shall amend such Exhibit B to reflect
such change, upon receipt by the Issuer and the Trustee of an opinion of
Co-Bond Counsel that such change will not result in an Event of Taxability.
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ARTICLE IV
ISSUANCE OF THE BONDS; FACILITY FUND
Section 4.1. Agreement to Issue the Bonds, Insurance of Other
Obligations. To provide funds for the acquisition of the Facility, the Issuer
agrees that it will sell, issue and deliver the Bonds in the aggregate
principal amount of $2,600,000 in the manner set forth in the Indenture and
cause the proceeds of the Bonds to be applied as provided in the Indenture.
THE BONDS AND THE PREMIUM (IF ANY) AND INTEREST THEREON, AND THE PURCHASE
PRICE THEREOF, ARE LIMITED OBLIGATIONS OF THE ISSUER, THE PRINCIPAL OF,
PREMIUM, IF ANY, AND INTEREST ON, AND THE PURCHASE PRICE OF WHICH ARE PAYABLE
SOLELY FROM THE REVENUES TO BE RECEIVED IN CONNECTION WITH THE FINANCING OF THE
FACILITY AND FROM ANY OTHER MONEYS MADE AVAILABLE TO THE ISSUER FOR SUCH
PURPOSE. NEITHER THE BONDS NOR ANY PREMIUM OR INTEREST THEREON, NOR THE
PURCHASE PRICE THEREOF, SHALL EVER CONSTITUTE AN INDEBTEDNESS OR A CHARGE
AGAINST THE GENERAL CREDIT OR TAXING POWERS OF THE STATE OF MARYLAND, THE
DEPARTMENT, THE ISSUER, HARFORD COUNTY, MARYLAND (THE "COUNTY") OR ANY OTHER
PUBLIC BODY WITHIN THE MEANING OF ANY CONSTITUTIONAL OR CHARTER PROVISION OR
STATUTORY LIMITATION AND NONE OF THE ABOVE SHALL EVER CONSTITUTE OR GIVE RISE
TO ANY PECUNIARY LIABILITY OF THE STATE OF MARYLAND, THE DEPARTMENT, THE
ISSUER, THE COUNTY OR ANY OTHER PUBLIC BODY. THE BONDS DO NOT CONSTITUTE AN
INDEBTEDNESS TO WHICH THE FAITH OR CREDIT OF THE STATE OF MARYLAND, THE
DEPARTMENT, THE ISSUER, THE COUNTY OR ANY OTHER PUBLIC BODY IS PLEDGED.
The Issuer expressly reserves the right (but shall be under no
obligation to do so) to enter into, to the extent permitted by law, an
agreement other than this Loan Agreement with respect to the issuance by the
Issuer under an indenture or indentures other than the Indenture to provide
additional funds to complete the Facility, or to refund all or any principal
amount of the Bonds, or any combination of the foregoing.
Section 4.2. Disbursement from the Facility Fund. All payments from
the Facility Fund to pay the Cost of Acquisition of the Facility or to
reimburse the Borrower for any Cost of Acquisition of the Facility paid or
incurred by the Borrower before or after the execution and delivery of this
Loan Agreement and the issuance and delivery of the Bonds shall be made by the
Trustee pursuant to the Indenture upon receipt by the Trustee of a requisition
and certificate substantially in the form of Exhibit A attached to the
Indenture.
Section 4.3. Closeout of the Facility Fund. The Completion Date for
the Facility shall be promptly established and evidenced to the Trustee and
shall be the date on which the Borrower Representative delivers to the Trustee,
the Credit Facility Issuer and the Issuer a certificate stating that, except
for the amounts retained by the Trustee at the Borrower's direction for any
Cost of Acquisition of the Facility not then due and payable, the Acquisition
of the Facility has been completed substantially in accordance with the Plans
and Specifications, and all costs and expenses incurred in connection therewith
have been paid. Notwithstanding the foregoing, such certificate may state that
it is given without prejudice to any rights against third parties that exist at
the date of such certificate or that may subsequently come into being. Such
certificate shall be accompanied by a permanent use and occupancy certificate
authorizing occupancy of the Facility and final lien waivers of the general
contractor and all subcontractors.
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Section 4.4. Disposition of the Balance in the Facility Fund. Pursuant
to the Indenture, as soon as practicable after, and in any event within sixty
(60) days from, the Trustee's receipt of the certificate mentioned in Section
4.3 hereof, all amounts remaining in the Facility Fund, including any
unliquidated investments made with money theretofore deposited in the Facility
Fund except for amounts to be retained in the Facility Fund for any Cost of
Acquisition of the Facility not then due and payable as provided in Section 4.3
hereof, shall be transferred by the Trustee to the Loan Repayment Account of
the Bond Fund and shall be applied to the prepayment of the principal
installments of the Bonds in accordance with the terms of the Indenture.
Section 4.5. Borrower Required to Pay in Event Facility Fund
Insufficient. In the event the moneys in the Facility Fund should not be
sufficient to pay the total cost of the Facility, the Borrower agrees to
complete the Facility and to pay that portion of such cost in excess of the
moneys available therefor in the Facility Fund. THE ISSUER MAKES NO WARRANTY,
EITHER EXPRESS OR IMPLIED, THAT THE MONEYS PAID INTO THE FACILITY FUND AND
AVAILABLE FOR PAYMENT OF THE COST OF THE ACQUISITION OF THE FACILITY WILL BE
SUFFICIENT TO PAY THE TOTAL COST OF THE FACILITY. The Borrower agrees that if,
after exhaustion of the moneys in the Facility Fund, the Borrower should pay
any portion of the total Cost of the Acquisition of the Facility pursuant to
the provisions of this Section, it shall not be entitled to any reimbursement
therefor from the Issuer, the Trustee, the Credit Facility Trustee or any
Bondholder and it shall not be entitled to any abatement or diminution of the
payments required to be made by the Borrower pursuant to the Note or Section
5.1 hereof.
Section 4.6. No Third Party Beneficiary. It is specifically agreed
between the parties executing this Loan Agreement that it is not intended by
any of the provisions of any part of this Loan Agreement to establish in favor
of the public or any member thereof, other than as may be expressly provided
herein or as contemplated in the Indenture, the rights of a third party
beneficiary hereunder, or to authorize anyone not a party to this Loan
Agreement to maintain a suit for personal injuries or property damage pursuant
to the terms or provisions of this Loan Agreement. The duties, obligations, and
responsibilities of the parties to this Loan Agreement with respect to third
parties shall remain as imposed by law.
ARTICLE V
LOAN BY THE ISSUER TO THE BORROWER; REPAYMENT; PAYMENT OF REBATE
AMOUNT AND PURCHASE PRICE
Section 5.1. Loan by the Issuer; Repayment. Upon the terms and
conditions of this Loan Agreement, the Issuer shall lend to the Borrower the
proceeds of the sale of the Bonds. The loan shall be evidenced by and repayable
as set forth in the Note. The loan shall be made by depositing said proceeds in
the Facility Fund in accordance with the terms of the Indenture.
As consideration for the issuance of the Bonds and the making of the
loan to the Borrower by the Issuer, the Borrower will execute and deliver this
Loan Agreement and the Note, in the form attached as Exhibit A hereto, and the
Issuer will endorse the Note without recourse to the order of, and pledge the
Note and assign this Loan Agreement (except for the Reserved Rights of the
Issuer) and the Note to, the Trustee, as the assignee of the Issuer under the
Indenture, contemporaneously with the issuance of the Bonds. The Borrower shall
repay the loan in accordance with the provisions of the Note and of this Loan
Agreement.
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Section 5.2. No Set-Off. The obligation of the Borrower to make the
payments required by the Note shall be absolute and unconditional. The Borrower
will pay without abatement, diminution or deduction (whether for taxes or
otherwise) all such amounts regardless of any cause or circumstance whatsoever
including, without limitation, any defense, set-off, recoupment or counterclaim
that the Borrower may have or assert against the Issuer, the Trustee, the
Credit Facility Trustee, any Bondholder or any other Person.
Section 5.3. Prepayments. The Borrower may prepay all or any part of
the amounts the Note obligates it to pay as provided in Section 701 and 702 of
the Indenture with respect to redemption of the Bonds. Except as provided in
this Section 5.3 and in Sections 4.4, 10.1, 10.2 and 10.3, the Borrower shall
not be entitled to prepay the Note or cause the Bonds to be prepaid. The
Borrower shall prepay all of the amounts it is required to prepay as provided
in Sections 10.2 and 10.3 hereof.
Section 5.4. Credits Against the Note. To the extent that principal of
or interest on the Bonds shall be paid, including those payments made pursuant
to a draw under a Credit Facility, there shall be credited against the unpaid
principal of or interest on the Note, as the case may be, an amount equal to
the principal of or interest on the Bonds so paid. If the principal of and
interest on and other amounts payable under the Bonds shall have been paid
sufficiently that Payment of the Bonds shall have occurred, then the Note, ipso
facto, shall be deemed to have been paid in full, the Borrower's obligations
thereon shall be discharged (with the exception of the obligation of the
Borrower to make certain payments which may subsequently arise as a result of a
Determination of Taxability which shall survive (notwithstanding Payment of the
Bonds), and the Note shall be canceled and surrendered to the Borrower.
Section 5.5. Letter of Credit and Reimbursement Agreement. As a
further condition to the Issuer's making the loan hereunder, the Borrower
shall:
(a) cause the Letter of Credit to be issued and delivered to the
Credit Facility Trustee as security for the Bonds. Until the earlier to occur
of the Conversion Date or payment of the Note and the Bonds in full, the
Borrower shall cause a Credit Facility meeting the requirements of Section 603
of the Indenture to be maintained with the Credit Facility Trustee; and
(b) enter into the Reimbursement Agreement in form and substance
satisfactory to the Bank and execute and deliver the other Letter of Credit
Documents required by the Bank.
Section 5.6. Rebate Amount. The Borrower shall pay at any time and
from time to time the Rebate Amount, if any, to the United States of America as
provided in the Indenture and the Borrower's Tax Certificate. The Borrower
shall pay to the Trustee at any time and from time to time for deposit into the
Rebate Fund moneys equal to the Rebate Amount. If the moneys on deposit in the
Rebate Fund are not sufficient to pay the Rebate Amount, the Borrower,
immediately upon notice from the Trustee, shall pay to the Trustee, for deposit
in the Rebate Fund, an amount of money sufficient to cause the amount of moneys
on deposit in the Rebate Fund to equal the Rebate Amount.
Section 5.7. Payments to Trustee for Purchase of Bonds. The Borrower
shall pay to the Trustee amounts equal to the amounts to be paid to Owners of
Bonds pursuant to Section 203 and Section 701(e) of the Indenture, on the dates
the purchase price of Bonds tendered or deemed tendered for purchase to the
Trustee is to be paid pursuant to the Indenture and the Bonds. The obligation
of the Borrower to make the payments required to be made under this Section 5.7
shall
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be reduced by the amount of any moneys available for such payment from proceeds
of the remarketing and sale of Bonds or money received from a drawing under the
Credit Facility to pay the purchase price of such Bonds.
ARTICLE VI
GENERAL COVENANTS
Throughout the term of the loan described herein and until all of the
Issuer's obligations and the Borrower's obligations under the Bond Documents
and the Letter of Credit Documents shall have been paid and performed in full,
the Borrower will undertake the following:
Section 6.1. Maintenance and Modification of the Plant by Borrower.
The Borrower agrees that, until Payment of the Bonds shall be made, it will at
its own expense, (i) keep the Plant and the Facility Site or cause the Plant
and the Facility Site to be kept in as reasonably safe a condition as its
operations shall permit, (ii) make or cause to be made from time to time all
necessary repairs thereto and renewals and replacements thereof and otherwise
keep the Plant in good repair and in good operating condition, and (iii) not
permit or suffer others to commit a nuisance on or about the Plant or the
Facility Site. The Borrower shall pay or cause to be paid all costs and
expenses of operation and maintenance of the Plant.
The Borrower may, at its own expense, make from time to time any
additions, modifications or improvements to the Plant that it may deem
desirable for its business purposes and that do not materially impair the
effective use, or decrease the value, of the Facility.
Section 6.2. Taxes and Utility Charges.
(a) The Borrower shall pay as the same respectively become due, all
taxes, assessments, levies, claims and charges of any kind whatsoever that may
at any time be lawfully assessed or levied against or with respect to the
Facility (including, without limiting the generality of the foregoing, any tax
upon or with respect to the income or profits of the Borrower from the Plant
and that, if not paid, would become a charge on the payments to be made under
this Loan Agreement or the Note prior to or on a parity with the charge thereof
created by the Indenture and including ad valorem, sales and excise taxes,
assessments and charges upon the Borrower's interest in the Plant), all utility
and other charges incurred in the operation, maintenance, use, occupancy and
upkeep of the Facility and all assessments and charges lawfully made by any
governmental body for public improvements that may be secured by lien on any
portion of the Facility.
(b) The Borrower may, at its expense, contest in good faith any such
levy, tax, assessment, claim or other charge, but the Borrower may permit the
items so contested to remain undischarged and unsatisfied during the period of
such contest and any appeal therefrom only if the Borrower shall notify the
Issuer, the Trustee and the Credit Facility Trustee that in the opinion of
Counsel, by non-payment of any such items, the rights of the Trustee and the
Credit Facility Trustee with respect to this Loan Agreement and the Note
created by the assignment under the Indenture, as to the rights assigned under
this Loan Agreement, or any part of the payments to be made under this Loan
Agreement or the Note, will not be materially endangered nor will the Facility
or any part thereof be subject to loss or forfeiture. If the Borrower is unable
to deliver such an opinion of Counsel, the Borrower shall promptly pay or bond
and cause to be satisfied or discharged all such
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unpaid items or furnish, at the expense of the Borrower, indemnity satisfactory
to the Trustee and the Credit Facility Trustee; but provided further, that any
tax assessment, charge, levy or claim shall be paid forthwith upon the
commencement of proceedings to foreclose any lien securing the same. The
Issuer, the Trustee and the Credit Facility Trustee, at the expense of the
Borrower, will cooperate fully in any such permitted contest. If the Borrower
shall fail to pay any of the foregoing items, the Issuer or the Trustee may
(but shall be under no obligation to) pay the same and any amounts so advanced
therefor by the Issuer or the Trustee shall become an additional obligation of
the Borrower to the one making the advancement, which amounts, together with
interest thereon at the Overdue Rate, or the maximum contract rate permitted by
law, whichever is lower, from the date of payment, the Borrower agrees to pay
on demand therefor.
(c) The Borrower shall furnish the Issuer, the Credit Facility Issuer,
the Trustee and the Credit Facility Trustee, upon request, with proof of
payment of any taxes, governmental charges, utility charges, insurance premiums
or other charges required to be paid by the Borrower under this Loan Agreement.
Section 6.3. Insurance. Until Payment of the Bonds shall be made, the
Borrower will keep the Plant and the Facility Site continuously insured against
such risks as are customarily insured against by businesses of like size and
type engaged in the same or similar manufacturing operations (other than
business interruption insurance) including, without limiting the generality of
the foregoing:
(a) casualty insurance on the Plant in an amount not less than the
full insurable value of all property located at, and all improvements to, the
Facility Site, against loss or damage by fire and lightning and other hazards
ordinarily included under uniform broad form extended coverage policies,
limited only as may be provided in the uniform broad form of extended coverage
endorsement at the time in use in the State;
(b) general comprehensive liability insurance against claims for
bodily injury, death or property damage occurring on, in or about the Plant or
the Facility Site (such coverage to include provisions waiving subrogation
against the Issuer and the Trustee) in amounts not less than $1,000,000 with
respect to bodily injury to any one person, $1,000,000 with respect to bodily
injury to two or more persons in any one accident and $1,000,000, with respect
to property damage resulting from any one occurrence;
(c) liability insurance with respect to the Plant and the Facility
Site under the workers' compensation laws of the State; provided, however, that
the insurance so required may be provided by blanket policies now or hereafter
maintained by the Borrower; and
(d) if at any time any portion of the Facility Site is in an area that
has been identified by the Secretary of Housing and Urban Development as having
special flood and mud slide hazards, a policy of flood insurance covering
improvements located on such portion of the Facility Site with amounts and
coverage satisfactory to the Trustee.
Section 6.4. General Requirements Applicable to Insurance.
(a) Each insurance policy obtained in satisfaction of the requirements
of Section 6.3 hereof:
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(i) shall be by such insurer (or insurers) as shall be
financially responsible, qualified to do business in the State and of
recognized standing;
(ii) shall be in such form and have such provisions
(including, without limitation, the lenders long-form loss payable
clause, the waiver of subrogation clause, the deductible amount, if
any, and the standard mortgagee endorsement clause), as are generally
considered standard provisions for the type of insurance involved and
are acceptable in all respects to the Trustee;
(iii) shall prohibit cancellation or substantial
modification, termination or lapse in coverage by the insurer without
at least 30 days' prior written notice to the Issuer and the Trustee;
(iv) shall provide that losses thereunder shall be adjusted
with the insurer by the Borrower at its expense on behalf of the
insured parties and the decision of the Borrower as to any adjustment
shall be final and conclusive; and
(v) without limiting the generality of the foregoing, all
insurance policies carried on the Plant shall name the Borrower, the
Issuer and the Trustee as parties insured thereunder as the respective
interests of each may appear, and any loss thereunder shall be made
payable and shall be applied as provided in Section 6.8 hereof.
(b) Prior to expiration of any such policy, the Borrower shall furnish
the Issuer and the Trustee with evidence satisfactory to the Trustee that the
policy or certificate has been renewed or replaced in compliance with this Loan
Agreement or is no longer required by this Loan Agreement.
Section 6.5. Advances by the Issuer or the Trustee. In the event the
Borrower shall fail to maintain, or cause to be maintained, the full insurance
coverage required by this Loan Agreement or shall fail to keep or cause to be
kept the Plant in good repair and good operating condition, the Issuer or the
Trustee may (but shall be under no obligation to), after 10 days' written
notice to the Borrower, contract for the required policies of insurance and pay
the premiums on the same and make any required repairs, renewals and
replacements, and the Borrower agrees to reimburse the Issuer and the Trustee
to the extent of the amounts so advanced by them or any of them with interest
thereon at the Overdue Rate or the maximum rate permitted by law, whichever is
lower, from the date of advance to the date of reimbursement. Any amounts so
advanced by the Issuer or the Trustee shall become an additional obligation of
the Borrower, shall be payable on demand, and shall be deemed a part of the
obligation of the Borrower evidenced by the Note.
Section 6.6. Borrower to Make up Deficiency in Insurance Coverage. The
Borrower agrees that to the extent that it shall not carry insurance required
by Section 6.3 hereof, it shall pay promptly to the Trustee for application in
accordance with the provisions of Section 6.8 hereof, such amount as would have
been received as Net Proceeds by the Trustee under the provisions of Section
6.8 hereof had such insurance been carried to the extent required.
Section 6.7. Eminent Domain. Unless the Borrower shall have prepaid
the Note pursuant to the provisions of Article X hereof, in the event that
title to, or temporary use of, the Facility Site,
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the Plant or any part thereof shall be taken by Eminent Domain, the Borrower
shall be obligated to continue to make the payments required to be made
pursuant to the Note and the Net Proceeds received as a result of such Eminent
Domain shall be applied as provided in Section 6.8(b) hereof.
Section 6.8. Application of Net Proceeds of Insurance and Eminent
Domain.
(a) The Net Proceeds of the insurance carried pursuant to the
provisions of Sections 6.3(b) and 6.3(c) hereof shall be applied by the
Borrower toward extinguishment of the defect or claim or satisfaction of the
liability with respect to which such insurance proceeds may be paid.
(b) The Net Proceeds of the insurance carried with respect to the
Plant pursuant to the provisions of Sections 6.3(a) and 6.3(d) hereof
(excluding the Net Proceeds of any business interruption insurance, which shall
be paid to the Borrower, but including any Net Proceeds from title insurance),
and the Net Proceeds resulting from Eminent Domain shall be paid to the Trustee
and applied as follows:
(i) If the amount of the Net Proceeds does not exceed
$50,000, the Net Proceeds shall be paid to the Borrower and shall be
applied to the repair, replacement, renewal or improvement of the
Plant as necessary. Any residual amount of Net Proceeds not applied to
the repair, replacement, renewal or improvement of the Plant shall be
promptly paid to the Trustee for deposit in the Loan Repayments
Account of the Bond Fund.
(ii) If the amount of the Net Proceeds exceeds $50,000, the
Net Proceeds shall be paid to and held by the Trustee as a special
trust fund and invested in accordance with Section 602 of the
Indenture pending receipt of written instructions from the Borrower.
At the option of the Borrower, to be exercised within the period of 90
days from the receipt by the Trustee of such Net Proceeds, the
Borrower shall advise the Trustee that (A) the Borrower will use the
Net Proceeds for the repair, replacement, renewal or improvement of
the Plant (such funds to be disbursed by the Trustee to the Borrower
following substantially the same procedure for the disbursement of the
proceeds of the Bonds from the Facility Fund), or (B) the Net Proceeds
shall be applied to the prepayment of the Bonds as provided in Article
X hereof. If the Borrower does not advise the Trustee within said
period of 90 days that it elects to proceed under clause (A) to use
such Net Proceeds for the repair, replacement, renewal or improvement
of the Plant, such Net Proceeds shall be applied to the prepayment of
the Bonds pursuant to Article X hereof. Any prepayment pursuant to the
preceding sentence shall be effected on the next interest payment date
not less than 30 days after the earlier of notice of the Borrower's
election to prepay the Bonds or expiration of said period of 90 days
without an election by the Borrower. The Borrower shall deposit with
the Trustee an amount that together with moneys representing Net
Proceeds, shall be sufficient so that upon redemption no Bonds are in
denomination other than Authorized Denominations.
The Borrower agrees that if it shall elect to use the moneys paid to
the Trustee pursuant to subsection (b)(ii) of this Section 6.8 for the repair,
replacement, renewal or improvement of the Plant,
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it will restore the Plant, or cause the same to be done, to a condition
substantially equivalent to its condition prior to the occurrence of the event
to which the Net Proceeds were attributable. To the extent that the Net
Proceeds are not sufficient to restore or replace the Plant, the Borrower shall
use its own funds to restore or replace the Plant. Prior to the commencement of
such work, the Trustee, the Issuer or the Credit Facility Issuer may require
the Borrower to furnish a completion bond, escrow deposit, or other
satisfactory evidence of the Borrower's ability to pay or provide for the
payment of any estimated costs in excess of the amount of the Net Proceeds. Any
balance remaining after any such application of such Net Proceeds, shall be
promptly paid to the Trustee for deposit in the Loan Repayment Account of the
Bond Fund. The Borrower shall be entitled to the Net Proceeds of any insurance
or resulting from Eminent Domain relating to property of the Borrower not
included in the Plant or the Facility Site and not providing security for the
Note or this Loan Agreement.
Section 6.9. Parties to Give Notice. In case of any material damage to
or destruction of all or any part of the Plant, the Borrower shall give prompt
notice thereof to the Issuer and the Trustee. In case of a taking or proposed
taking of all or any part of the Plant, the Facility Site or any right therein
by Eminent Domain, the Borrower shall give prompt notice thereof to the Issuer
and the Trustee. Each such notice shall describe generally the nature and
extent of such damage, destruction, taking, loss, proceeding or negotiations.
Section 6.10. Hazardous Material. (1) The Borrower shall not place,
manufacture or store, or permit to be placed, manufactured or stored, on the
Property any Hazardous Materials, except in accordance with all applicable
laws.
(2) The Borrower agrees to (a) give notice to the Issuer immediately
upon the Borrower's acquiring knowledge of the presence of any Hazardous
Materials on the Property that are not being used or stored in accordance with
all applicable laws or of any Hazardous Materials Contamination, with a full
description thereof; (b) promptly comply with any laws requiring the removal,
treatment or disposal of such Hazardous Materials or Hazardous Materials
Contamination and provide the Issuer with satisfactory evidence of such
compliance; (c) provide the Issuer, within thirty (30) days after a demand by
the Issuer, with a bond, letter of credit or similar financial assurance
evidencing to the Issuer's satisfaction that the necessary funds are available
to pay the cost of removing, treating and disposing of such Hazardous Materials
or Hazardous Materials Contamination and discharging any Encumbrance which may
be established on the Property as a result thereof; and (d) indemnify and hold
harmless the Issuer and the Trustee from any and all claims which may now or in
the future (whether before or after the release of this Loan Agreement) be
asserted against the Issuer or the Trustee as a result of the presence of any
Hazardous Materials on the Property or any Hazardous Materials Contamination
except for those resulting from the gross negligence of the Trustee or their
Agents.
ARTICLE VII
SPECIAL COVENANTS
Section 7.1. Payment of Administrative Expenses of the Trustee, the
Paying Agent, the Remarketing Agent and the Credit Facility Trustee. The
Borrower agrees to pay to the Trustee, the Credit Facility Issuer, the
Remarketing Agent and the Credit Facility Trustee amounts equal to the
respective fees and charges of the Trustee, the Credit Facility Issuer, the
Remarketing Agent and the Credit Facility Trustee for the services rendered and
expenses reasonably incurred (including attorneys fees) under the Bond
Documents as and when the same become due; provided,
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however, that the fees and expenses of the Remarketing Agent shall be paid by
the Borrower as provided in the Remarketing Agreement. In addition, the
Borrower shall pay all reasonable costs and expenses of the Trustee, the Credit
Facility Trustee and the Credit Facility Issuer in connection with the
registration, exchange or registration of transfer of the Bonds pursuant to
Section 204 of the Indenture. The obligation of the Borrower under this Section
shall survive the termination of this Loan Agreement and the payment and
performance of all other of the Borrower's obligations.
Section 7.2. Payment of Issuer's Administrative Expenses. The Borrower
agrees to pay the Issuer (or, if the Issuer so elects, to pay directly to the
person entitled to payment) for the Administrative Expenses, if any, incurred
by the Issuer in the administration of this Loan Agreement, of the loan
described herein, and of the Bonds, including attorneys' fees. The obligation
of the Borrower under this Section shall survive the termination of this Loan
Agreement and the payment and performance of all other of the Borrower's
obligations.
Section 7.3. No Pecuniary Liability. The Act prescribes and the
parties intend that by reason of making this Loan Agreement, by reason of the
issuance of the Bonds, by reason of the performance of any act required of it
by this Loan Agreement, or by reason of the performance of any act requested of
it by the Borrower, no indebtedness or charge against the general credit or
taxing powers of the State, the Department or the Issuer within the meaning of
any constitutional or charter provision or statutory limitation shall occur,
nor shall any of the foregoing ever constitute or give rise to any pecuniary
liability of the State, the Department or the Issuer. Nevertheless, if the
Issuer incurs any such pecuniary liability, then in such event the Borrower
shall indemnify and hold the Issuer harmless by reason thereof.
Section 7.4. Indemnification of the Issuer, the Trustee, the Credit
Facility Issuer, the Remarketing Agent and the Credit Facility Trustee. The
Borrower shall protect, indemnify, and save harmless the Issuer, the Trustee,
the Credit Facility Issuer, the Remarketing Agent and the Credit Facility
Trustee and their respective officers, employees and agents against and from
any and all liabilities, suits, actions, claims, demands, losses, expenses and
costs of every kind and nature incurred by, or asserted or imposed against, the
Issuer, the Trustee, the Credit Facility Issuer, the Remarketing Agent and the
Credit Facility Trustee and their respective officers, members, agents or
employees, or any of them, by reason of any accident, injury (including death)
or damage to any person or property, however caused (other than the gross
negligence or willful misconduct of the Trustee, the Credit Facility Issuer,
the Remarketing Agent or the Credit Facility Trustee, which gross negligence or
willful misconduct shall affect the indemnification rights of only that person
which committed such gross negligence or willful misconduct), resulting from,
connected with or growing out of (a) any untrue statement or alleged untrue
statement of a material fact contained in the Private Placement Memorandum
distributed in connection with the Bonds, any other disclosure statement or
offering document used in connection with the remarketing of the Bonds or any
other information with respect to the Borrower provided by the Borrower or the
omission or alleged omission to state therein a material fact necessary to make
the statements and information therein not misleading in any material respect,
and (b) any act of commission or omission of the Borrower, or any officers,
employees, agents, assignees, contractors or subcontractors of the Borrower or
any use, non-use, possession, occupation, condition, operation, service,
design, construction, acquisition, maintenance or management of, or on, or in
connection with, the Facility, or any part thereof, during the term of the loan
and regardless of whether such liabilities, suits, actions, claims, demands,
damages, losses, expenses and costs be against or be suffered or sustained by
the Issuer, the Trustee, the Credit Facility Issuer, the Remarketing Agent or
the Credit Facility Trustee, or any of their respective officers, members,
agents or employees, or be against or be suffered or sustained by legal
entities, officers, members, agents, or other persons to whom the Issuer, the
Trustee, the Credit Facility
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Issuer, the Remarketing Agent and the Credit Facility Trustee, or any of their
respective officers, members, agents or employees may become liable therefor.
The Issuer shall not be liable for any damage or injury occurring during the
term of the loan described herein to the persons or property of the Borrower or
any of its officers, agents, including operating personnel, contractors and
employees, or any other person or entity who or which may be upon the Facility.
The Borrower may, and if so requested by the Issuer, the Trustee, the Credit
Facility Issuer, the Remarketing Agent and the Credit Facility Trustee, shall,
undertake to defend, at its sole cost and expense, any and all suits, actions
and proceedings brought against the Issuer, the Trustee, the Credit Facility
Issuer, the Remarketing Agent and the Credit Facility Trustee, or any of their
respective officers, members, agents or employees in connection with any of the
matters indemnified against in this Section. The Issuer, the Trustee, the
Credit Facility Issuer, the Remarketing Agent and the Credit Facility Trustee
shall give the Borrower timely notice of and shall forward to the Borrower
every demand, notice, summons or other process received with respect to any
claim or legal proceedings within the purview hereof, but the failure of the
Issuer, the Trustee, the Credit Facility Issuer, the Remarketing Agent or the
Credit Facility Trustee to give such notice shall not affect its right to
indemnification hereunder, unless the failure to give notice shall have
deprived the Borrower of a reasonable opportunity to contest any such matter.
The Borrower agrees to indemnify the Trustee, the Credit Facility
Issuer, the Credit Facility Trustee and their respective officers, employees
and agents for, and to hold them harmless against, any loss, liability or
expense incurred without gross negligence, willful misconduct or bad faith on
their part, arising out of or in connection with the acceptance or
administration of the trust or trusts and duties hereunder and under the Bond
Documents, including the costs and expenses of defending themselves against any
claim or liability in connection with the exercise or performance of any of
their powers or duties hereunder.
If the indemnification provided for herein is held by a court to be
unavailable or is insufficient to hold any indemnified party harmless in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof), then the Borrower shall contribute to the amount paid or payable by
the indemnified party as a result of the losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to reflect
the relative fault of the Borrower on the one hand and the indemnified party on
the other hand, as well as any other relevant equitable considerations.
The obligations of the Borrower under this Section shall survive the
termination of this Loan Agreement and the payment and performance of all other
of the Borrower's obligations.
All acts, including any failure to act, relating to the Facility by
any agent, representative or designee of the Trustee are performed solely for
the benefit of the Trustee and the Owners to assure repayment of the loan and
are not for the benefit of the Borrower or the benefit of any other person.
Section 7.5. Right to Perform; Advances by Issuer or Trustee. If the
Borrower fails to make, or cause to be made, any payment or to perform any
other of the Borrower's obligations, the Issuer or the Trustee, without notice
or demand upon the Borrower, without waiving any default or releasing the
Borrower from any of the Borrower's obligations, and without being under any
obligation to do so, may make such payment or perform any of the Borrower's
obligations. All amounts so paid by the Issuer or the Trustee and all costs,
fees and expenses incurred by the Issuer or the Trustee in connection with such
payment or performance shall be immediately due and payable by the
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Borrower as additional payments, together with interest thereon or the Overdue
Rate from the date the same are paid or incurred, until the same are paid in
full by the Borrower.
Section 7.6. Agreement to Pay Attorneys' Fees and Expenses. In the
event the Borrower defaults under any of the provisions of the Bond Documents
and the Issuer or the Trustee employs attorneys or incur other expenses for the
collection of amounts due hereunder or the enforcement of performance or
observance of any obligation or agreement on the part of the Borrower contained
in the Bond Documents, the Borrower will, on demand therefor, pay to the Issuer
or the Trustee the reasonable fees of such attorneys and such other reasonable
expenses so incurred by the Issuer or the Trustee.
Section 7.7. No Warranty of Suitability or Merchantability by Issuer.
The Borrower recognizes that since the Plans and Specifications for
constructing the Facility are furnished by it, and since any items of equipment
are selected by it and are to be installed in accordance with its directions,
the Issuer makes no warranty, either express or implied, and offers no
assurances that the Facility will be suitable for the Borrower's purposes or
needs or that the proceeds derived from the Loan will be sufficient to pay in
full all costs of the acquisition of the Facility. Without limiting the
generality of the foregoing provisions of this Section, the Borrower hereby
acknowledges that THE ISSUER DOES NOT IN ANY WAY WARRANT THE MERCHANTABILITY OF
ANY EQUIPMENT, AND THAT THERE ARE NO IMPLIED WARRANTIES OR WARRANTIES OF
FITNESS MADE BY THE ISSUER. By acceptance of each item of equipment, the
Borrower is deemed to have acknowledged to the Issuer that such item of
equipment is in acceptable condition, occurrence, and operating order.
Section 7.8. Issuer's Rights to Approve Certain Actions and Receive
Notices and Information. Notwithstanding the Granting Clauses of the Indenture,
the Issuer reserves to itself and shall retain the right to grant any and all
approvals which the Issuer is specifically entitled to grant under the terms of
the Bond Documents, and the Letter of Credit Documents and the right to receive
from time to time reports, notices and other information from the Borrower or
any other person pursuant to the Bond Documents or the Letter of Credit
Documents.
Section 7.9. Officials of Issuer Not Liable. No covenant or agreement
contained in the Bonds or in the other Bond Documents shall be deemed to be the
covenant or agreement of any official, officer, agent, or employee of the
Issuer in his or her individual capacity, and neither any employee of the
Issuer, the Department or the State nor any official executing the Bonds shall
be liable personally on the Bonds or be subject to any personal liability or
accountability by reason of the issuance thereof.
Section 7.10 Access to the Facility and Inspection. The Credit
Facility Issuer, the Trustee, the Credit Facility Trustee, and the Issuer shall
have the right at all reasonable times and as often as reasonably requested
(and or any time whatsoever to enforce any remedies after the occurrence of an
Event of Default) to enter upon the Facility Site and to examine and inspect
the Plant and the Equipment. The Trustee, the Credit Facility Trustee, the
Credit Facility Issuer, the Issuer and their duly authorized agents shall also
have such right of access to the Facility as may be reasonably necessary to
cause to be completed the construction, acquisition and installation of the
Facility, and thereafter for its proper maintenance, in the event of failure by
the Borrower to perform its obligations relating to maintenance under this Loan
Agreement. The Borrower hereby covenants to execute, acknowledge and deliver
all such further documents, and do all such other acts and things as may be
necessary to grant to the Issuer, the Credit Facility Trustee, and the Trustee
such right of entry. The Issuer, the Credit Facility Trustee, the Trustee and
the Credit Facility Issuer shall also be
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permitted, at all reasonable times, to examine the books and records of the
Borrower with respect to the Facility and the obligations of the Borrower
hereunder, but none of them shall be entitled to access to trade secrets or
other proprietary information (other than financial information) of the
Borrower or its clients or customers. No prior notice shall be required upon
the occurrence and continuance of an Event of Default.
Section 7.11. Further Assurances and Corrective Instruments. Subject
to the provisions of the Indenture, the Issuer and the Borrower agree that they
will, from time to time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, such supplements and amendments hereto
and such further instruments as may reasonably be required for carrying out the
intention or facilitating the performance of this Loan Agreement; provided,
however, that no such instruments or actions shall pledge the credit or taxing
power of the State, the Department, the Issuer or any other public body or
require the State, the Department the Issuer or any other public body to incur
any pecuniary obligations. All such supplements, amendments and further
instruments shall require the approval of the Credit Facility Issuer.
Section 7.12. Recording and Filing; Other Instruments.
(a) The Borrower covenants that it will, at its expense, cause Counsel
in the State to take all steps are as reasonably necessary to render an
opinion, and to render an opinion to the Issuer and the Trustee not earlier
than 60 nor later than 30 days prior to each anniversary date occurring at
five-year intervals after the issuance of the Bonds, to the effect that all
financing statements, continuation statements, notices and other instruments
required by applicable law have been recorded or filed or re-recorded or
re-filed in such manner and in such places required by law in order fully to
preserve and protect the rights of the Trustee and the Credit Facility Trustee
in the granting by the Issuer of certain rights of the Issuer, pursuant to the
Indenture, under this Loan Agreement and the Note.
(b) The Borrower and the Issuer shall execute and deliver all
instruments and shall furnish all information and evidence deemed necessary or
advisable by such Counsel to enable him to render the opinion referred to in
subsection (a) of this Section. The Borrower shall file and re-file and record
and re-record or cause to be filed and re-filed and recorded and re-recorded
all instruments required to be filed and re-filed and recorded or re-recorded
pursuant to the opinion of such Counsel and shall continue or cause to be
continued the liens of such instruments for so long as the Bonds shall be
outstanding, except as otherwise required by this Loan Agreement.
Section 7.13. Non-Arbitrage Covenants: Notice of Event of Taxability.
(a) Neither the Borrower nor the Issuer shall take any action, and the
Borrower covenants that it will not approve the Trustee's taking any action or
making any investment or use of the proceeds of the Bonds, which would cause
any of the Bonds to be an "arbitrage bond" within the meaning of Section 148 of
the Code.
(b) The Borrower's obligation to make any payments of rebate amounts
required by this Loan Agreement and the Indenture and to prepare and furnish to
the Issuer and the Trustee the statements and forms described herein and
therein shall survive Payment of the Bonds notwithstanding any provision of
this Loan Agreement to the contrary.
(c) The Borrower shall give immediate telephonic notice, promptly
confirmed in writing, to the Issuer and the Trustee of any Event of Taxability
whether the Borrower is on Notice of such
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Event of Taxability by its own filing of any statement, tax schedule, return or
document with the Internal Revenue Service which discloses that an Event of
Taxability shall have occurred, by its receipt of any oral or written advice
from the Internal Revenue Service that an Event of Taxability shall have
occurred, or otherwise.
Section 7.14. Additional Information. Until Payment of the Bonds shall
have occurred, the Borrower shall promptly, from time to time, deliver to the
Issuer and the Trustee such information regarding the operations, business
affairs and financial condition of the Borrower as the Issuer and the Trustee
may reasonably request, but in any event exclusive of proprietary or
confidential information of the Borrower and any client or customer of the
Borrower. The Trustee is hereby authorized to deliver a copy of any such
financial information delivered hereunder, or otherwise obtained by the
Trustee, to the Credit Facility Trustee, to any Bondholder or prospective
Bondholder, to any regulatory authority having jurisdiction over the Trustee
and to any other Person as may be required by law. The Issuer and the Trustee
are authorized to provide information concerning the outstanding principal
amount and payment history of, and other information pertaining to, the Bonds
or the Note to any agency or regulatory authority of the State requesting such
information. Notwithstanding the above, the Borrower acknowledges that the
Borrower is subject to the provisions of State Government Article, Sections
10-601, et. seq., of the Annotated Code of Maryland, know as the Maryland
Public Information Act.
Section 7.15. Maintain Corporate Existence. Unless the Issuer, the
Trustee and the Credit Facility Trustee consent in writing, the Borrower will
maintain its corporate existence in good standing as a Delaware corporation and
maintain its qualification to do business in good standing in the State;
provided, however, that nothing in this Section shall prohibit the merger of a
subsidiary into the Borrower or the merger or consolidation of a subsidiary
with or into another person if the corporation surviving such consolidation or
merger is a subsidiary and if, in each case, after giving effect thereto, no
event of default shall have occurred.
Section 7.16. Default Certificates. The Borrower shall deliver to the
Issuer, the Trustee and the Credit Facility Trustee, annually, within 60 days
after the close of each fiscal year, a certificate that no Event of Default
hereunder or under the Note, the Indenture, or the Reimbursement Agreement, or
an event which would constitute such an Event of Default but for the
requirement that notice be given or time elapse or both has occurred and is
continuing, or if such an event has occurred or is continuing, a certificate of
the Borrower specifying the nature and period of existence thereof and what
action the Borrower proposes to take with respect thereto.
Section 7.17. Notification to Trustee and Credit Facility Trustee. The
Borrower shall notify the Issuer, the Trustee and the Credit Facility Trustee
in writing promptly, but in any event within five Business Days, of the
occurrence of any of the following, with respect to the Borrower:
(i) any levy of an attachment, execution or other process
against its assets, which may materially adversely affect the
financial condition or operation of the Borrower;
(ii) any change in any existing agreement or contract which
may materially adversely affect its business or affairs, financial or
otherwise; and
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(iii) any change in the senior executive management of the
Borrower or upon taking the Borrower in private rather than public
ownership.
Section 7.18. Additional Reporting Requirements. The Borrower shall
deliver on or prior to December 1 of each year to the Issuer (if requested by
the Issuer) and the Trustee a certificate stating the principal amount of the
Bonds outstanding and the Registered Owners of such Bonds as of June 30 of such
year.
Section 7.19. Observe Laws. The Borrower shall observe all applicable
laws, regulations and other valid requirements of any regulatory authority with
respect to its operations at the Plant and the Facility Site.
Section 7.20. Covenants of the Issuer. The Issuer hereby covenants and
agrees as follows:
(a) Maintenance of Existence; Compliance with Laws. The
Issuer will not voluntarily take any action towards dissolution unless it has
assured the assumption of its obligations under this Loan Agreement and the
other Bond Documents by any other person succeeding to its powers; and it will
comply with all laws applicable to this Loan Agreement or any of the other
Documents.
(b) Priority of Pledge. Except for the assignment to the Bank
under this Agreement and the Assignment of Note, the Issuer will not sell,
lease or otherwise dispose of or encumber its interest in any part of the
security for the Bonds, and will cooperate in causing to be discharged any
encumbrances created by it with respect to any of the security for the Bonds.
(c) Books and Documents Open to Inspection. The Issuer shall,
to the extent required and permitted by law, within a reasonable time after
request as permitted by law, open any and all of its books and documents in its
possession relating to the financing of the Facility, if any, during the normal
business hours of the Issuer, to such accountants or other persons as the
Credit Facility Issuer or the Borrower or both may from time to time designate.
Section 7.21. Affirmative Covenants of the Borrower. Until the Bonds
have been fully paid, the Borrower will, unless the prior written consent to do
otherwise has been obtained from the Bank and the Issuer:
(a) Financial Statements. Furnish to the Bank and the Issuer:
(i) As soon as available and in any event within
120 days after the end of each fiscal year of Lunn Industries, Inc. and
relating to the Borrower, its subsidiaries, if any, and Lunn Industries, Inc.,
a consolidated and consolidating balance sheet of the Lunn Industries, Inc. and
the Borrower, and all consolidated subsidiaries as of the end of such fiscal
year and the related consolidated and consolidating statements of income and
cash flows for such fiscal year, setting forth in each case in comparative form
the figures for the previous fiscal year, all in reasonable detail satisfactory
to the Bank and the Issuer, and accompanied by an opinion thereon by Coopers &
Lybrand or other independent public accountants satisfactory to the Bank and
the Issuer, which opinion shall not be qualified as to the scope of the audit
and which shall state that such consolidated financial statements present
fairly the consolidated financial position of the Lunn Industries, Inc. and the
Borrower and their respective consolidated subsidiaries as of the date of such
financial statements and the results of their operations for the period covered
by such financial
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statements in conformity with generally accepted accounting principles applied
on a consistent basis (except for changes in the application of which such
accountants concur) and shall not contain any "going concern" or like
qualification or exception or qualification arising out of the scope of the
audit; and
(ii) such additional information, reports or
statements as the Credit Facility Issuer or the Issuer may from time to time
reasonably request.
(b) Taxes and Claims. Pay and discharge all Taxes prior to
the date on which penalties attach thereto, and all lawful claims which, if
unpaid, might become an encumbrance upon any of its properties, subject to the
right of the Borrower to contest the same in accordance with the provisions of
this Article VII hereof. If the Borrower fails to pay any of such Taxes at the
time or in the manner provided in this Section, the Bank may, at its option,
pay such Taxes and the Borrower shall pay to the Bank the amount of any sum so
paid, with interest thereon.
The fact that the Issuer is assisting in the financing of the
acquisition of the Facility shall not imply that the Borrower is or shall be
eligible for any decrease in or immunity from any applicable Taxes ordinarily
imposed by the State, the County or any other public body.
(c) Insurance. In addition to the insurance required by
Article VI hereof, maintain insurance with responsible insurance companies on
such of its properties, in such amounts and against such risks as is
customarily maintained by similar businesses operating in the same vicinity.
The Borrower shall file with the Bank and the Issuer, upon request, a detailed
list of the insurance then in effect, stating the names of the insurance
companies, the amounts and rates of insurance, dates of the expiration thereof
and the properties and risks covered thereby; and, within 30 days after Notice
from the Bank, obtain such additional insurance as the Bank may reasonably
request.
(d) Existence. Maintain in good standing its existence as a
Delaware corporation, qualified to do business in the State.
(e) Compliance With Laws. Comply with all applicable federal,
state and local laws, rules and regulations, including, without limitation, the
Employment Retirement Income Security Act of 1974, as amended.
(f) Equal Employment. Prohibit and not engage in
discrimination on the basis of (i) political or religious opinion or
affiliation, marital status, race, color, creed or national origin, (ii) sex or
age, except when sex or age constitutes a bona fide occupational qualification,
or (iii) the physical or mental disability of a qualified individual with a
disability. Upon the request of the Issuer or the Department, the Borrower will
submit to the Issuer or the Department, as appropriate, information relating to
its employment practices and operations, with regard to this subsection (f) on
a form to be prescribed by the Department.
(g) Drug and Alcohol Free Workplace. Make a good faith effort
to eliminate illegal drug use and alcohol and drug abuse from any workplace of
the Borrower in the State, including, without limitation, the Facility, during
the term of this Agreement by:
(1) prohibiting the unlawful manufacture, distribution,
dispensation, possession, or use of drugs in any workplace of the Borrower in
the State, including without limitation, the Facility;
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(2) prohibiting its employees from working while
under the influence of alcohol or illegal drugs or abusing alcohol or drugs;
(3) not hiring or assigning to work on an activity
funded in whole or part with State funds, anyone whom it knows, or in the
exercise of due diligence should know, currently abuses alcohol or drugs and is
not actively engaged in a bona fide rehabilitation program;
(4) promptly informing the appropriate law
enforcement agency of every drug- related crime that occurs in any workplace of
the Borrower in the State, including, without limitation, the Facility if it or
its employee has observed the violations or otherwise has reliable information
that a violation has occurred; and
(5) notifying employees that illegal drug use and
alcohol and drug abuse are banned in any workplace of the Borrower in the
State, including, without limitation, the Facility, imposing sanctions on
employees who abuse drugs and alcohol in any workplace of the Borrower in the
State, including, without limitation, the Facility, and instituting steps to
maintain any workplace of the Borrower in the State, including, without
limitation, the Facility free from illegal drug use and drug and alcohol abuse.
(h) Employment Count. Upon request, but not more frequently
than twice annually, supply the employment count at the Facility to the Issuer,
including the number of employees of tenants.
(i) Licenses and Permits. Obtain and maintain all licenses
and permits required for the Borrower's operations.
(j) Books and Records; Inspection. Keep adequate records and
books of account with respect to the Facility and its business in accordance
with generally accepted accounting principles and permit the Issuer and the
Bank to inspect the Facility and examine such records and books of account.
(k) Issuer's Fee. Starting not later than Bond closing, and
annually thereafter, the Issuer shall be paid an Issuer's Fee equal to 0.125%
of the outstanding principal balance of the Bonds before taking into account
that year's annual principal reduction. This Issuer's Fee shall have a priority
over principal of and interest on the Bonds in the Indenture, shall be
collected in monthly installments by the Trustee, and shall be remitted by the
Trustee without the necessity of any notice from the Issuer. Failure to pay the
Issuer's Fee shall be an Event of Default under Article IX hereof, and shall be
treated in a manner similar to non-payment of principal of or interest on the
Bonds.
Section 7.22. Negative Covenants of the Borrower. Until full payment
of the Bonds, the Borrower will not, without the prior written consent of the
Issuer, directly or indirectly:
(a) ERISA Compliance.
(i) amend any employee benefit pension plan (as that
term is defined in Section 3(2) of ERISA) which is maintained by the Borrower
or any corporation, trade or business that is under common control with the
Borrower as defined in Section 414(b), (c), (m) or (o) of the Code (hereafter
"commonly controlled entity") and intended to be a qualified plan under Section
401(a) of the Code in any manner designed to cause such plan to not be
qualified under Section 401(a) of the Code;
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(ii) permit any officers of the Borrower or any
commonly controlled entity to take any action that would cause such plan not to
be qualified under Section 401(a) of the Code;
(iii) engage in or permit any commonly controlled
entity to engage in any transaction prohibited by Section 4975 of the Code in
connection with such plan;
(iv) permit any such plan that is subject to Section
412 of the Code to have an accumulated funding deficiency (within the meaning
of Section 412 of the Code);
(v) take, or permit any commonly controlled entity
to take, any action in connection with such plan which results in the
imposition of a lien on any property of the Borrower or any commonly controlled
entity pursuant to Section 4068 of ERISA;
(vi) fail to notify the Bank and the Issuer that
notice has been received of the termination of an employee pension benefit plan
which is a multi-employer pension plan (as those terms are defined in Section
3(2) and Section 3(37) of ERISA) to which the Borrower or any commonly
controlled entity is required to contribute under circumstances where such
termination would result in a material liability to the Borrower or any
commonly controlled entity;
(vii) fail to notify the Bank and the Issuer that
notice has been received of the reorganization of an employee pension benefit
plan which is a multi-employer pension plan (as those terms are defined in
Section 3(2), Section 3(37) and Section 4241 of ERISA) to which the Borrower or
any commonly controlled entity is required to contribute under circumstances
where such reorganization would result in a material liability to the Borrower
or any commonly controlled entity; and
(viii) incur or permit a commonly controlled entity
to incur a material liability as a result of a complete withdrawal or partial
withdrawal (as those terms are defined in Section 4203 and Section 4205 of
ERISA).
Section 7.23. Consent Relating to Construction of the Facility. Until
all obligations of the Borrower hereunder to be performed and paid shall have
been performed and paid in full, and so long as the Credit Facility shall be
outstanding, the Borrower covenants and agrees that all required consents
hereunder shall include the written consent of the Credit Facility Issuer and
the Issuer.
Section 7.24. Notice To Trustee. The Borrower agrees to notify the
Trustee and the Issuer in writing promptly upon the occurrence of an Event of
Bankruptcy.
ARTICLE VIII
ASSIGNMENT, LEASING AND SELLING
Section 8.1. Assignment of Loan Agreement or Lease or Sale of Facility
by the Borrower. Except with the prior written consent of the Issuer, the
Credit Facility Issuer, the Credit Facility Trustee and the Trustee, the rights
of the Borrower under this Loan Agreement may not be assigned, and, other than
leases relating to a portion of the Facility in accordance with the terms of
this Loan Agreement, the Facility may not be leased or sold as a whole or in
part.
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Section 8.2. Restrictions on Transfer of Issuer's Rights. Except for
the assignment made pursuant to the Indenture of certain of its rights under
this Loan Agreement and its pledge of the Note, endorsed without recourse to
the order of the Trustee, to the Trustee as security pursuant to the Indenture,
the Issuer will not, during the term of this Loan Agreement, sell, assign,
transfer or convey any of its interests in this Loan Agreement or the Note. The
Borrower hereby assents to such assignment and pledge of the Issuer's rights
under the Loan Agreement and the pledge of the Note to the Trustee.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.1. Events of Default Defined. The term "Event of Default" shall
mean any one or more of the following events:
(a) The failure by the Borrower to pay when due any payment of
principal or interest on or other amount payable under the Note.
(b) The failure of the Borrower to perform any of its obligations
under Sections 7.4, 7.21(k) and 7.22 hereof.
(c) If by reason of an "Event of Default" (as that term is defined in
the Indenture) under the Indenture the Bonds automatically become, or are
declared, due and payable by acceleration of maturity in accordance with
Section 902 of the Indenture.
(d) Any representation or warranty of the Borrower contained in
Section 2.2 hereof, or in any document, instrument or certificate delivered
pursuant hereto or to the Indenture or in connection with the issuance and sale
of the Bonds, including but not limited to the Borrower's Tax Certificate,
shall be false, misleading or incomplete in any material respect on the date as
of which made.
(e) Failure by the Borrower to observe and perform any covenant,
condition or agreement on the part of the Borrower under the Note or this Loan
Agreement, other than as referred to in the preceding paragraphs of this
Section 9.1, for a period of 30 days after written notice, specifying such
failure and requesting that it be remedied, is given to the Borrower by the
Issuer or the Trustee; provided however, that such failure shall not constitute
an Event of Default hereunder so long as the Credit Facility Issuer has not
failed to pay any drawing (which drawing strictly complies with, and conforms
to, the terms and conditions of the Credit Facility) presented under the Credit
Facility, unless the Credit Facility Issuer declares the same to be an Event of
Default hereunder by notice given in writing and delivered to the Trustee and
the Borrower accompanied by a written request that the loan described herein
and all accrued and unpaid interest become immediately due and payable.
(f) The commencement against the Borrower of an involuntary case under
the federal bankruptcy laws, as now constituted or hereafter amended, or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or of any action or proceeding for the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of the
Borrower or for any substantial part of its property, or for the winding-up or
liquidation of its affairs and the continuance of any such case, action, or
proceeding unstayed and in effect for a period of 60 consecutive days; provided
however, that such commencement of action against the Borrower shall
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not constitute an Event of Default hereunder so long as the Credit Facility
Issuer has not failed to pay any drawing (which drawing strictly complies with,
and conforms to, the terms and conditions of the Credit Facility) presented
under the Credit Facility, unless the Credit Facility Issuer declares the same
to be an Event of Default hereunder by notice given in writing and delivered to
the Trustee and the Borrower accompanied by a written request that the loan
described herein and all accrued and unpaid interest become immediately due and
payable.
(g) The commencement by the Borrower of a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or the
consent by it to, or its acquiescence in the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Borrower or of any substantial
part of its property, or the making by it of or the consent by it to any
assignment for the benefit of creditors, or the taking of any action by the
Borrower in furtherance of any of the foregoing; provided however, that such
commencement of action against the Borrower shall not constitute an Event of
Default hereunder so long as the Credit Facility Issuer has not failed to pay
any drawing (which drawing strictly complies with, and conforms to, the terms
and conditions of the Credit Facility) presented under the Credit Facility,
unless the Credit Facility Issuer declares the same to be an Event of Default
hereunder by notice given in writing and delivered to the Trustee and the
Borrower accompanied by a written request that the loan described herein and
all accrued and unpaid interest become immediately due and payable.
Section 9.2. Remedies on Default. If Payment of the Bonds shall not
have been made, whenever any Event of Default referred to in Section 9.1 hereof
shall have happened and shall not have been waived:
(a) The Issuer, or the Trustee on behalf of the Issuer, may by written
notice to the Borrower, the Credit Facility Issuer, and the Remarketing Agent
declare all installments of principal repayable pursuant to the Note for the
remainder of the term thereof to be immediately due and payable, whereupon the
same, together with accrued interest thereon as provided for in the Note, shall
become immediately due and payable without presentment, demand, protest or any
other notice whatsoever, all of which are hereby expressly waived by the
Borrower; provided, however, all such amounts shall automatically be and become
immediately due and payable without notice upon the occurrence of any event
described in Section 9.1(f) or 9.1(g) hereof, which notice the Borrower hereby
expressly waives.
Notwithstanding anything to the contrary herein contained, upon the
occurrence of an Event of Default caused by the failure of the Borrower to
perform its obligations under Section 7.21 (k), the Trustee shall not declare
all installments of principal repayable pursuant to the Note for the remainder
of the term thereof to be immediately due and payable, unless the Issuer so
directs the Trustee in writing. If such written direction is received by the
Trustee, the Trustee shall by written notice to the Issuer, the Borrower, the
Remarketing Agent and the Credit Facility Issuer declare all installments of
principal repayable pursuant to the Note for the remainder of the term thereof,
together with all other moneys payable thereunder, to be immediately due and
payable without presentment, demand, protest, or any other notice whatsoever,
all of which are hereby expressly waived by the Borrower.
(b) The Issuer may take whatever other action at law or in equity may
appear necessary or desirable to collect the amounts payable pursuant to the
Note then due and thereafter to become due, or to enforce the performance and
observance of any obligation, agreement or covenant of the Borrower under this
Loan Agreement or under any of the other Bond Documents.
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In the enforcement of the remedies provided in this Section 9.2, the
Issuer may treat all reasonable expenses of enforcement, including, without
limitation, legal, accounting and advertising fees and expenses, as additional
amounts payable by the Borrower then due and owing and the Borrower agrees to
pay such additional amounts upon demand, the amount of such legal fees to be
without regard to any statutory presumption.
Section 9.3. Application of Amounts Realized in Enforcement of
Remedies. Any amounts collected pursuant to action taken under Section 9.2
hereof shall be paid to the Trustee and applied to the payment of, first, any
costs, expenses and fees incurred by the Issuer, the Trustee and the Credit
Facility Trustee as a result of taking such action; second, any interest which
shall have accrued on any overdue interest and any accrued interest on any
overdue principal of the Bonds at the rate set forth in the Bonds; third, any
overdue interest on the Bonds; fourth, any overdue principal of the Bonds;
fifth, the outstanding principal balance of the Bonds; and sixth, if Payment of
the Bonds shall have been made in full, all remaining moneys shall be applied
as set forth in Article IX of the Indenture.
Section 9.4. No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Issuer is intended to be exclusive of any other available
remedy or remedies, but each and every such remedy shall be cumulative and
shall be in addition to every other remedy given under this Loan 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 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 may be
deemed expedient.
Section 9.5. Agreement to Pay Attorneys' Fees and Expenses. In any
Event of Default, if the Issuer, the Trustee, the Credit Facility Trustee, the
Credit Facility Issuer or any Bondholder employs attorneys or incurs other
expenses for the collection of amounts payable hereunder or for the enforcement
of the performance or observance of any covenants or agreements on the part of
the Borrower contained herein or in the Indenture (in the case of the Issuer,
the Trustee, the Credit Facility Trustee, or the Credit Facility Issuer) or
contained in the Indenture (on the part of any Bondholder), the Borrower agrees
that it will on demand therefor pay to the Issuer, the Trustee, the Credit
Facility Trustee, the Credit Facility Issuer or such Bondholder the reasonable
fees of such attorneys and such other reasonable expenses so incurred by the
Issuer, the Trustee, the Credit Facility Trustee, the Credit Facility Issuer or
such Bondholder, the amount of such fees of attorneys to be without regard to
any statutory presumption.
Section 9.6. Correlative Waivers. If an event of default under Section
901 of the Indenture shall be cured or waived and any remedial action by the
Trustee or the Credit Facility Trustee rescinded, any correlative default under
this Loan Agreement shall be deemed to have been cured or waived.
Section 9.7 Conflicting Provisions. Upon the occurrence of a conflict
between provisions of this Loan Agreement and the Reimbursement Agreement, so
long as the Credit Facility is outstanding and there are no defaults under the
Reimbursement Agreement by the Credit Facility Issuer, provisions of the
Reimbursement Agreement shall control.
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ARTICLE X
PREPAYMENTS
Section 10.1. Optional Prepayments.
(a) The Borrower is hereby granted, and shall have, the option to
prepay the unpaid principal of the Note in whole or in part in accordance with
and as set forth in Sections 701 and 702 of the Indenture with respect to the
prepayment of the Bonds; provided, all prepayments shall be made in immediately
available funds and with accrued interest to the date of prepayment and that
any prepayment of the Note in part shall be applied to unpaid installments of
principal in inverse order of maturity. Any prepayment pursuant to this
subsection (a) shall be made by the Borrower taking, or causing the Issuer to
take, the actions required (i) for Payment of the Bonds, in the case of
prepayment of the Note in whole, or (ii) to effect prepayment of less than all
of the Bonds according to their terms in the case of a partial prepayment of
the Note.
(b) In the event of damage, destruction, or condemnation of the Plant
or any part thereof, the Borrower may, at its option, pursuant to Section 6.8
hereof and without penalty or premium, prepay the Note in whole or in part;
provided that any such prepayment shall be made in immediately available funds
with accrued interest to the date of whole or partial prepayment. Any
prepayment pursuant to this subsection (b) shall be made by the Borrower
taking, or causing the Issuer to take, the actions required for the full or
partial prepayment of the Bonds as provided for in subsection (a) hereof.
(c) To exercise the option granted in subsection (a) or (b) of this
Section 10.1, the Borrower shall give written notice to the Issuer and the
Trustee which shall specify therein (i) the date of the intended prepayment of
the Note, which shall not be less than 30 nor more than 60 days from the date
the notice is mailed and (ii) the principal amount of the Note to be prepaid.
When given, such notice shall be irrevocable by the Borrower.
Section 10.2. Mandatory Prepayments.
(a) In the event of a Determination of Taxability, the Borrower shall,
on a date selected by the Borrower not more than 180 days following the date of
written notice to the Trustee of a Determination of Taxability, prepay the
entire unpaid principal balance of the Note in full, plus accrued interest to
such date. Immediately upon the occurrence of a Determination of Taxability,
the Borrower shall notify the Issuer, the Trustee and the Credit Facility
Trustee of the date selected for payment pursuant to this Section 10.2.
(b) Prior to the Conversion Date, in the event any Credit Facility is
not renewed and an Alternate Credit Facility has not been provided in
accordance with Section 603 of the Indenture, the Borrower shall on or before
the Interest Payment Date occurring closest but not less than 15 days prior to
the expiration date of the then current Credit Facility, prepay the entire
unpaid principal balance of the Note in full. The Borrower shall promptly
notify the Issuer, the Trustee and the Credit Facility Trustee of the date
selected for such payment.
Section 10.3. Other Mandatory Prepayments. The amounts required to be
applied to the prepayment of the Note by Sections 4.4, 5.3 and 6.8 hereof shall
be applied by the Borrower to prepay, together with accrued interest, all or a
portion of the unpaid principal of the Note. Such prepayment shall be made by
the Borrower taking, or causing the Issuer to take, the actions required
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(i) for payment of the Bonds, whether by redemption prior to maturity or by
payment at maturity, or (ii) to effect the purchase, redemption or payment at
maturity of less than all of the installments of principal on the Bonds in
inverse order of their maturities.
ARTICLE XI
MISCELLANEOUS
Section 11.1. References to the Bonds Ineffective After Bonds Paid.
Upon payment of the Bonds, all references in this Loan Agreement to the Bonds
shall be ineffective and the Issuer and any holder of the Bonds shall not
thereafter have any rights hereunder, excepting reporting and payment of rebate
amounts and other payments under the Borrower's Tax Certificate.
Section 11.2. No Implied Waiver. In the event any agreement contained
in the Note or this Loan 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
thereunder or hereunder. Neither any failure nor any delay on the part of the
Trustee to exercise any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude any other or further exercise thereof, or the
exercise of any other right, power or privilege.
Section 11.3. Issuer Representative. Whenever under the provisions of
this Loan Agreement the approval of the Issuer is required or the Issuer 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 Issuer Representative; and
the Borrower, the Trustee and the Bondholders shall be authorized to rely on
any such approval or action.
Section 11.4. Borrower Representative. Whenever under the provisions
of this Loan Agreement the approval of the Borrower is required or the Borrower
is required to take some action at the request of the Issuer, such approval
shall be made or such action shall be taken by the Borrower Representative; and
the Issuer, the Trustee, the Credit Facility Trustee and the Bondholders shall
be authorized to act on any such approval or action.
Section 11.5. Notices. All notices, certificates or other
communications hereunder shall be sufficiently given and shall be deemed given
when delivered by hand delivery or mailed by first class, postage prepaid,
registered or certified mail, addressed as follows:
If to the Issuer: Maryland Industrial Development
Financing Authority
217 East Redwood Street, 22nd Floor
Baltimore, Maryland 21202
Attention: Executive Director
If to the Borrower: Alcore, Inc.
1324 Brass Mill Road
Belcamp, Maryland 21017
Attention: Edward A. Kiley,
President
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<PAGE>
If to the Trustee: First Union National Bank
of Virginia
Bond Administration
901 E. Cary Street, 2nd Floor
Richmond, Virginia 23219
Attention: Corporate Trust Department
If to the Credit
Facility Issuer: First Union National Bank of North Carolina
Two First Union Center
Charlotte, North Carolina 28288
Attention: International Operations
If to Credit Facility
Trustee: Branch Banking and Trust Company
223 West Nash Street
Wilson, North Carolina 27984
Attention: Corporate Trust Department
If to Placement/
Remarketing Agent: First Union National Bank of North Carolina
Capital Marketing Group
Two First Union Center, T-7
Charlotte, North Carolina 28288
The Issuer, the Borrower or the Trustee may, by notice given hereunder,
designate from time to time any further or different addresses to which
subsequent notices, certificates or other communications shall be sent.
Section 11.6. If Payment or Performance Date Is Other Than a Business
Day. If the specified or last date for the making of any payment, the
performance of any act or the exercising of any right, as provided in this Loan
Agreement, shall be a day other than a Business Day, such payment may be made
or act performed or right exercised on the next succeeding Business Day with
the same effect as if made, performed or exercised on the specified date;
provided that interest shall accrue during any such period during which payment
shall not occur.
Section 11.7. Binding Effect. This Loan Agreement shall inure to the
benefit of and shall be binding upon the Issuer, the Borrower and their
respective successors and assigns.
Section 11.8. Severability. In the event any provision of this Loan
Agreement or the Note shall be held invalid or unenforceable by any court of
competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provision hereof or thereof.
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<PAGE>
Section 11.9. Amendments, Changes and Modifications. Subsequent to the
issuance of the Bonds and prior to Payment of the Bonds, this Loan Agreement
and the other Bond Documents may not be effectively amended, changed, modified,
altered or terminated except in accordance with the Indenture.
Section 11.10. Execution in Counterparts. This Loan Agreement may be
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument, and no one counterpart
of which need be executed by all parties, except that, to the extent that this
Loan Agreement shall constitute personal property under the Uniform Commercial
Code of Maryland, no security interest in this Loan Agreement may be created or
perfected through the transfer or possession of any counterpart of this Loan
Agreement other than the original counterpart, which shall be the counterpart
containing the receipt therefor executed by the Trustee following the
signatures to this Loan Agreement.
Section 11.11. Applicable Law. This Loan Agreement shall be governed
by and construed in accordance with the laws of the State.
Section 11.12. No Charge Against Issuer Credit. No provision hereof
shall be construed to impose a charge against the general credit of the Issuer
or any personal or pecuniary liability upon any official, member, employee or
agent of the Issuer, the Department or the State.
Section 11.13. Issuer Not Liable. Notwithstanding any other provision
of this Loan Agreement (a) the Issuer shall not be liable to the Borrower, the
Trustee, any Bondholder or any other Person for any failure of the Issuer to
take action under this Loan Agreement unless the Issuer (i) is requested in
writing by an appropriate Person to take such action, (ii) is assured of
payment of or reimbursement for any expense in such action, and (iii) is
afforded, under the existing circumstances, a reasonable period to take such
action, and (b) except with respect to any action for specific performance or
any action in the nature of a prohibitory or mandatory injunction, neither the
Issuer nor any member of the Issuer nor any other official, member, employee or
agent of the Issuer, the Department or the State shall be liable to the
Borrower, the Trustee, any Bondholder or any other Person for any action taken
by the Issuer or by its officers, member, servants, agents or employees, or for
any failure to take action under this Loan Agreement or the other Bond
Documents to which the Issuer is a party. In acting under this Loan Agreement,
or in refraining from acting under this Loan Agreement, the Issuer may
conclusively rely on the advice of its counsel.
Section 11.14. Expenses. The Borrower agrees to pay all reasonable
fees and expenses incurred in connection with the preparation, execution,
delivery, modification, waiver, and amendment of this Loan Agreement, the other
Bond Documents and related documents, and the fees and expenses of Co-Bond
Counsel, Counsel for the Issuer and, in connection with any amendments, any
Counsel, if any, for any Bondholder who owns more than 25% of the aggregate
principal amount of the Bonds Outstanding. The Borrower also agrees to pay all
expenses incurred by the Trustee or the Issuer in collection of any
indebtedness incurred hereunder in the Event of Default by the Borrower,
provided that the amount of any legal fees so incurred shall be without regard
to any statutory presumption.
Section 11.15. Amounts Remaining with the Trustee. Any amounts
remaining in the Bond Fund or otherwise in trust with the Trustee under the
Indenture or this Loan Agreement shall, after Payment of the Bonds and all
Administrative Expenses in accordance with this Loan Agreement, be disbursed by
the Trustee in accordance with the provisions of the Indenture or otherwise as
may be required by law.
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<PAGE>
Section 11.16. Effective Date. This Loan Agreement has been dated as
of the date first written solely for the purpose of convenience of reference
and shall become effective upon its execution and delivery, on the date of
initial issuance of the Bonds, by the parties hereto. All representations and
warranties set forth herein shall be deemed to have been made on such date.
[SIGNATURES ON FOLLOWING PAGE]
-37-
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Borrower have caused this Loan
Agreement to be executed in their respective legal names by their duly
authorized representatives and their respective seals to be hereunto affixed,
and the signatures of duly authorized persons to be attested, all as of the
date first above written.
MARYLAND INDUSTRIAL DEVELOPMENT
FINANCING AUTHORITY
ATTEST:
____________________________ By: ______________________________________
A. P. Ramsey Crosby, Thomas H. Mullaney,
Executive Director Chairman
(SEAL)
ALCORE, INC.
ATTEST:
_____________________ By: ________________________________
________________ Edward A. Kiley, President
(CORPORATE SEAL)
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<PAGE>
RECEIPT
Receipt of the foregoing original counterpart of the Loan Agreement, dated as
of May 1, 1997, between the Maryland Industrial Development Financing Authority
and Alcore, Inc., is hereby acknowledged.
FIRST UNION NATIONAL BANK
OF VIRGINIA,
as Trustee
By:______________________________
Title:___________________________
<PAGE>
EXHIBIT A
AFTER THE ENDORSEMENT OF THIS NOTE AS HEREIN PROVIDED, THIS NOTE MAY NOT BE
ASSIGNED, PLEDGED, ENDORSED OR OTHERWISE TRANSFERRED EXCEPT TO A SUCCESSOR OF
THE TRUSTEE UNDER THE TRUST INDENTURE REFERRED TO IN THE LOAN AGREEMENT
REFERRED TO HEREIN.
PROMISSORY NOTE
$____________ May ______, 1997
FOR VALUE RECEIVED, ALCORE, INC., a Delaware corporation (the
"Borrower"), by this promissory note promises to pay to the order of the
MARYLAND INDUSTRIAL DEVELOPMENT FINANCING AUTHORITY (the "Issuer") the
principal sum of __________________________________ and No/100 Dollars
($_____________) which principal amount shall be due and payable in __________
consecutive quarterly installments on the first Business Day of each February,
May, August and November, commencing the first Business Day of November, 1998,
as more specifically set forth below:
[INSERT SCHEDULE FROM INDENTURE]
The Borrower further agrees to pay interest on the unpaid principal
amount from the date of authentication and delivery of the Bonds (as defined in
the Loan Agreement referred to below) until the principal amount and all
interest thereon is paid in full which shall be paid on the first Business Day
of each February, May, August and November (the "Interest Payment Dates"), at
the rate of interest equal to the Variable Rate (as defined in the Indenture
hereinafter mentioned) or the Fixed Rate (as defined in the Indenture).
This Promissory Note is the "Note" referred to in the Loan Agreement
dated as of May 1, 1997 (the "Loan Agreement"), between the Borrower and the
Issuer and is entitled to the benefits thereof and subject to the conditions
thereof. Terms not otherwise defined herein shall have the definitions set
forth in the Loan Agreement.
Under the Loan Agreement, the Issuer has loaned to the Borrower the
proceeds received from the sale of the Issuer's $2,600,000 Maryland Industrial
Development Financing Authority Economic Development Revenue Bonds (Alcore,
Inc. Facility), 1997 Issue, dated as of May 1, 1997 (the "Bonds"). The Bonds
have been issued, concurrently with the execution and delivery of this Note,
pursuant to, and are secured by, the Trust Indenture among the Issuer, First
Union National Bank of Virginia, as Trustee (the "Trustee") and Branch Banking
and Trust Company, as Credit Facility Trustee (the "Credit Facility Trustee")
dated as of May 1, 1997 (the "Indenture"). The Bonds bear interest at the
Variable Rate prior to the Conversion Date (as defined in the Indenture) and at
the Fixed Rate on or subsequent to the Conversion Date. Such interest is
payable on the Interest Payment Dates. This Note shall bear interest at the
Variable Rate and the Fixed Rate during the same periods as such rates are
borne by the Bonds.
<PAGE>
Each payment of principal of and interest on this Note will be
sufficient to enable the Issuer to pay when due the total amount of principal
of (whether at maturity, upon acceleration or otherwise), premium, if any, and
interest on the Bonds. To the extent that principal of, premium, if any, or
interest on the Bonds shall be paid, there shall be credited against unpaid
principal of or interest on this Note, as the case may be, an amount equal to
the principal of or interest on the Bonds so paid. The principal of, premium,
if any, and interest on this Note are payable in immediately available funds of
any coin or currency of the United States of America which on the respective
dates of payment thereof shall be legal tender for the payment of public and
private debts.
In addition, the Borrower agrees to pay when due in immediately
available funds all other amounts at the time the Issuer may be required to pay
the same pursuant to the Bonds or the Indenture.
The obligation of the Borrower to make the payments required hereunder
shall be absolute and unconditional without any defense, recoupment or right of
set-off by reason of any default by the Issuer under the Loan Agreement or for
any other reason.
Upon the occurrence of an Event of Default specified in the Loan
Agreement, the unpaid principal hereof and accrued interest and additional
interest hereon may become forthwith due and payable as provided in the Loan
Agreement, and in the event the Borrower shall fail to pay any amount required
to be paid under this Note when due, the Borrower shall pay interest on such
amount at a rate per annum equal to the Overdue Rate (as defined in the Loan
Agreement) or the maximum rate permitted by law, whichever is lower.
The Borrower may at its option, and may under certain circumstances be
required to, prepay all or any part of the unpaid principal of this Note upon
the terms provided in the Loan Agreement.
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, THE BORROWER AUTHORIZES THE CLERK
OR ANY ATTORNEY DESIGNATED BY THE BANK, THE ISSUER OR ANY CLERK OF ANY COURT OF
RECORD TO APPEAR FOR IT IN ANY COURT OF RECORD AND CONFESS JUDGMENT AGAINST IT
WITHOUT PRIOR HEARING, IN FAVOR OF THE BANK OR THE ISSUER FOR AND IN THE AMOUNT
EQUAL TO SUCH OF THE OBLIGATIONS OF THE BORROWER WHICH HAVE BEEN DUE AND
PAYABLE UNDER THE PROVISIONS OF THIS NOTE, PLUS INTEREST ACCRUED AND UNPAID
THEREON, ALL OTHER AMOUNTS THEN DUE AND PAYABLE HEREUNDER, COSTS OF SUIT AND AN
ATTORNEY'S FEE IN AN AMOUNT EQUAL TO FIFTEEN PERCENT (15%) OF SUCH OBLIGATIONS
PLUS ALL ACCRUED AND UNPAID INTEREST THEREON, PROVIDED, HOWEVER, (A) IF THE
ACTUAL ATTORNEY'S FEES INCURRED BY THE BANK OR THE ISSUER ARE LESS THAN 15% OF
SUCH OBLIGATION (PLUS ALL ACCRUED AND UNPAID INTEREST THEREON), THE BANK OR THE
ISSUER WILL REFUND (TO THE EXTENT ACTUALLY COLLECTED) TO THE BORROWER AN AMOUNT
EQUAL TO THE DIFFERENCE BETWEEN 15% OF SUCH OBLIGATION (PLUS ALL ACCRUED AND
UNPAID INTEREST THEREON) AND THE AMOUNT OF SUCH ACTUAL ATTORNEY'S FEES (AFTER
ALL OF SUCH OBLIGATIONS HAVE BEEN PAID IN FULL), OR (B) IF THE ACTUAL
ATTORNEY'S FEES INCURRED BY THE BANK OR THE ISSUER OR OTHER HOLDER HEREOF
EXCEED 15% OF SUCH OBLIGATIONS (PLUS ALL ACCRUED AND UNPAID INTEREST THEREON,
WHETHER BY REASON OF JUDGMENT BEING CONTESTED OR OTHERWISE, THE BORROWER WILL
PAY TO THE BANK OR THE ISSUER ON DEMAND THE AMOUNT OF ANY SUCH EXCESS. THE
AUTHORITY AND POWER TO APPEAR FOR AND ENTER JUDGMENT AGAINST THE BORROWER SHALL
NOT BE EXHAUSTED BY ONE OR MORE EXERCISE THEREOF, OR BY ANY IMPERFECT EXERCISE
THEREOF, AND SHALL NOT BE EXTINGUISHED BY ANY
-2-
<PAGE>
JUDGMENT ENTERED PURSUANT THERETO. SUCH AUTHORITY AND POWER MAY BE EXERCISED ON
ONE OR MORE OCCASIONS, FROM TIME TO TIME, IN THE SAME OR DIFFERENT
JURISDICTIONS. AS OFTEN AS THE BANK OR THE ISSUER SHALL DEEM NECESSARY OR
DESIRABLE, FOR ALL OF WHICH THIS NOTE SHALL BE A SUFFICIENT WARRANT.
The Borrower hereby promises to pay all costs of collection, including
reasonable attorneys' fees and disbursements, without regard to any statutory
presumption, in the case of a default under this Note or the Loan Agreement.
The Borrower hereby waives presentment, protest and notice of protest or
dishonor.
This Note shall be construed in accordance with the laws of the State
of Maryland.
IN WITNESS WHEREOF, the Borrower has caused this instrument to be
executed in its corporate name by its duly authorized officers and its
corporate seal to be affixed hereto all as of the date first above written.
ALCORE, INC.
ATTEST:
____________________ By: __________________________________
Secretary Edward A. Kiley, President
(CORPORATE SEAL)
-3-
<PAGE>
ENDORSEMENT
Pay to the order of First Union National Bank of Virginia, as Trustee
for the benefit of the Bondholders under the Trust Indenture dated as of May 1,
1997, between the Issuer, the Trustee and Branch Banking and Trust Company, as
Credit Facility Trustee, without recourse. This endorsement is given and made
without any warranty as to the authority and genuineness of the signature of
the maker of the foregoing Promissory Note.
This the ______ day of May, 1997.
MARYLAND INDUSTRIAL DEVELOPMENT
FINANCING AUTHORITY
By: _______________________________
Thomas H. Mullaney, Chairman
<PAGE>
EXHIBIT B
THE FACILITY SITE
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
PARTIES...........................................................................................................1
RECITALS..........................................................................................................1
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1. Definitions.....................................................................................1
Section 1.2. Rules of Construction...........................................................................9
ARTICLE II
REPRESENTATIONS
Section 2.1. Representations by the Issuer...................................................................9
Section 2.2. Representations, Warranties and Covenants by the Borrower......................................10
ARTICLE III
ACQUISITION OF THE FACILITY
Section 3.1. Acquisition of the Facility....................................................................13
Section 3.2. Borrower to Obtain Approvals Required for the Facility and the Plant...........................13
Section 3.3. Plans and Specifications.......................................................................13
ARTICLE IV
ISSUANCE OF THE BONDS; FACILITY FUND
Section 4.1. Agreement to Issue the Bonds...................................................................14
Section 4.2. Disbursement from the Facility Fund............................................................14
Section 4.3. Closeout of the Facility Fund..................................................................14
Section 4.4. Disposition of the Balance in the Facility Fund................................................14
Section 4.5. Borrower Required to Pay in Event Facility Fund Insufficient...................................14
Section 4.6. No Third Party Beneficiary.....................................................................15
ARTICLE V
LOAN BY THE ISSUER TO THE BORROWER; REPAYMENT
Section 5.1. Loan by the Issuer; Repayment..................................................................15
Section 5.2. No Set-Off.....................................................................................15
Section 5.3. Prepayments....................................................................................16
Section 5.4. Credits Against the Note.......................................................................16
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<PAGE>
Section 5.5. Letter of Credit and Reimbursement Agreement...................................................16
Section 5.6 Rebate Amount..................................................................................16
Section 5.7 Payment to Trustee for Purchase of Bonds.......................................................16
ARTICLE VI
GENERAL COVENANTS
Section 6.1. Maintenance and Modification of the Plant by Borrower..........................................17
Section 6.2. Taxes and Utility Charges......................................................................17
Section 6.3. Insurance......................................................................................18
Section 6.4. General Requirements Applicable to Insurance...................................................18
Section 6.5. Advances by the Issuer or the Trustee..........................................................19
Section 6.6. Borrower to Make up Deficiency in Insurance Coverage...........................................19
Section 6.7. Eminent Domain.................................................................................20
Section 6.8. Application of Net Proceeds of Insurance and Eminent Domain....................................21
Section 6.9. Parties to Give Notice.........................................................................21
Section 6.10. Hazardous Material.............................................................................21
ARTICLE VII
SPECIAL COVENANTS
Section 7.1. Payment of Administrative Expenses of Trustee,
the Paying Agent, the Remarketing Agent and the Credit Facility Trustee........................21
Section 7.2. Payment of Issuer's Administrative Expenses....................................................22
Section 7.3. No Pecuniary Liability.........................................................................22
Section 7.4. Indemnification of the Issuer, the Trustee, the Credit Facility
Issuer, the Remarketing Agent and the Credit Facility Trustee..................................24
Section 7.5. Right to Perform; Advances by Issuer or Trustee................................................24
Section 7.6. Agreement to Pay Attorney's Fees and Expenses..................................................24
Section 7.7. No Warranty of Suitability or Merchantability by Issuer........................................24
Section 7.8. Issuer's Rights to Approve Certain Actions and Receive Notice
and Information................................................................................24
Section 7.9. Officials of Issuer Not Liable.................................................................24
Section 7.10. Access to the Facility and Inspection..........................................................24
Section 7.11. Further Assurance and Corrective Instruments...................................................25
Section 7.12. Recording and Filing; Other Instruments........................................................25
Section 7.13. Non-Arbitrage Covenants; Notice of Events of Taxability........................................26
Section 7.14. Additional Information.........................................................................26
Section 7.15. Maintain Corporate Existence...................................................................26
Section 7.16. Default Certificates...........................................................................26
Section 7.17. Notification to Trustee and Credit Facility Trustee............................................27
Section 7.18. Additional Reporting Requirements..............................................................27
Section 7.19. Observe Laws...................................................................................27
Section 7.20. Covenants of the Issuer........................................................................27
Section 7.21. Affirmative Covenants of the Borrower..........................................................28
Section 7.22. Negative Covenants of the Borrower.............................................................30
Section 7.23. Consent Relating to Construction of the Facility...............................................31
Section 7.24. Notice to Trustee..............................................................................31
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<PAGE>
ARTICLE VIII
ASSIGNMENT, LEASING AND SELLING
Section 8.1. Assignment of Loan Agreement or Lease or Sale of Facility by the Borrower......................31
Section 8.2. Restrictions on Transfer of Issuer's Rights....................................................31
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.1. Events of Default Defined......................................................................31
Section 9.2. Remedies on Default............................................................................33
Section 9.3. Application of Amounts Realized in Enforcement of Remedies.....................................33
Section 9.4. No Remedy Exclusive............................................................................34
Section 9.5. Agreement to Pay Attorneys' Fees and Expenses..................................................34
Section 9.6. Correlative Waivers............................................................................34
Section 9.7. Conflicting Provision..........................................................................34
ARTICLE X
PREPAYMENTS
Section 10.1. Optional Prepayments...........................................................................35
Section 10.2. Mandatory Prepayments..........................................................................35
Section 10.3. Other Mandatory Prepayments....................................................................36
ARTICLE XI
MISCELLANEOUS
Section 11.1. References to the Bonds Ineffective After Bonds Paid...........................................36
Section 11.2. No Implied Waiver..............................................................................36
Section 11.3. Issuer Representative..........................................................................36
Section 11.4. Borrower Representative........................................................................36
Section 11.5. Notices........................................................................................36
Section 11.6. If Payment or Performance Date Is Other Than a Business Day....................................37
Section 11.7. Binding Effect.................................................................................37
Section 11.8. Severability...................................................................................37
Section 11.9. Amendments, Changes and Modifications..........................................................37
Section 11.10..............Execution in Counterparts.............................................................38
Section 11.11..............Applicable Law........................................................................38
Section 11.12..............No Charge Against Issuer Credit.......................................................38
Section 11.13..............Issuer Not Liable.....................................................................38
Section 11.14..............Expenses..............................................................................38
Section 11.15..............Amounts Remaining with the Trustee....................................................38
Section 11.16..............Effective Date........................................................................39
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<PAGE>
Execution by the Issuer..........................................................................................40
Execution by the Borrower........................................................................................40
Exhibit A - Promissory Note
Exhibit B - The Facility Site
</TABLE>
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<PAGE>
Exhibit 10.3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MARYLAND INDUSTRIAL DEVELOPMENT FINANCING AUTHORITY
"Issuer"
to
FIRST UNION NATIONAL BANK OF VIRGINIA
"Trustee"
and
BRANCH BANKING AND TRUST COMPANY
"Credit Facility Trustee"
---------------
TRUST INDENTURE
---------------
Dated as of May 1, 1997
Securing
$2,600,000
Maryland Industrial Development Financing Authority
Economic Development Revenue Bonds
(Alcore, Inc. Facility)
1997 Issue
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
Parties ................................................................... 1
Recitals .................................................................. 1
Granting Clauses .......................................................... 2
ARTICLE I
DEFINITIONS
Section 101. Definitions .................................................. 5
Section 102. Rules of Construction ........................................ 22
ARTICLE II
THE BONDS
Section 201. Amount, Terms, and Issuance of Bonds ......................... 23
Section 202. Designation, Denominations, Maturity,
Dates and Interest Rates of the Bonds ........................ 23
Section 203. Optional Tender Provisions of the Bonds ...................... 26
Section 204. Registered Bonds Required, Bond Registrar
and Bond Register ............................................ 27
Section 205. Transfer and Exchange ........................................ 28
Section 206. Book-Entry System ............................................ 29
Section 207. Execution .................................................... 31
Section 208. Authentication; Authenticating Agent ......................... 31
Section 209. Payment of Principal and Interest; Interest
Rights Preserved ............................................. 32
Section 210. Persons Deemed Owners ........................................ 33
Section 211. Mutilated, Destroyed, Lost, Stolen or
Undelivered Bonds ............................................ 33
Section 212. Temporary Bonds .............................................. 34
Section 213. Cancellation of Surrendered Bonds ............................ 34
Section 214. Conditions of Issuance ....................................... 34
Section 215. Obligations of Issuer Limited ................................ 36
ARTICLE III
PURCHASE AND REMARKETING OF TENDERED BONDS
Section 301. Remarketings of Tendered Bonds ............................... 37
Section 302. Purchase of Bonds Delivered to Tender Agent .................. 38
Section 303. Delivery of Purchased Bonds .................................. 39
Section 304. Delivery of Proceeds of Sale of Remarketed
Bonds ........................................................ 40
Section 305. No Remarketing After Certain Events .......................... 40
i
<PAGE>
ARTICLE IV
FACILITY FUND
Section 401. Creation of and Deposits to the Facility Fund ................ 41
Section 402. Payments from the Facility Fund .............................. 41
Section 403. Trustee May Rely on Requisitions ............................. 42
Section 404. Completion Date .............................................. 42
Section 405. Transfers to the Bond Fund ................................... 42
Section 406. Trustee's Records ............................................ 42
ARTICLE V
REVENUES AND APPLICATION THEREOF
Section 501. Revenues to Be Paid Over to Trustee .......................... 42
Section 502. The Bond Fund ................................................ 42
Section 503. Revenues to Be Held for All Registered Owners;
Certain Exceptions ........................................... 44
Section 504. Non-Presentment of Bonds ..................................... 44
Section 505. Creation of Rebate Fund; Duties of Trustee;
Amounts Held in Rebate Fund .................................. 45
ARTICLE VI
SECURITY FOR DEPOSITS;
INVESTMENT OF FUNDS; CREDIT FACILITY
Section 601. Security for Deposits ........................................ 47
Section 602. Investment of Moneys ......................................... 47
Section 603. The Credit Facility .......................................... 48
ARTICLE VII
REDEMPTION AND PURCHASE OF BONDS
Section 701. Redemption or Purchase Dates and Prices ...................... 50
Section 702. Borrower Direction of Optional Redemption .................... 53
Section 703. Selection of Bonds to be Called for Redemption ............... 53
Section 704. Notice of Redemption or Purchase ............................. 54
Section 705. Bonds Redeemed or Purchased in Part .......................... 55
ARTICLE VIII
PARTICULAR COVENANTS AND PROVISIONS
Section 801. Covenant to Pay Bonds: Bonds Limited
Obligations of the Issuer .................................... 55
Section 802. Covenants to Perform Obligations under this
Indenture .................................................... 56
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<PAGE>
Section 803. Covenant to Perform Obligations under the
Loan Agreement ............................................... 56
Section 804. Trustee or Credit Facility Trustee May Enforce
Issuer's Rights Under Loan Agreement ......................... 57
Section 805. Covenant Against Arbitrage ................................... 57
Section 806. Inspection of Bond Register .................................. 58
ARTICLE IX
DEFAULT AND REMEDIES
Section 901. Defaults ..................................................... 58
Section 902. Acceleration and Annulment Thereof ........................... 59
Section 903. Other Remedies ............................................... 61
Section 904. Legal Proceedings by Credit Facility Trustee ................. 61
Section 905. Discontinuance of Proceedings by Credit
Facility Trustee ............................................. 61
Section 906. Credit Facility Issuer or Registered Owners
May Direct Proceedings ....................................... 62
Section 907. Limitations on Actions by Registered Owners .................. 62
Section 908. Credit Facility Trustee May Enforce Rights
Without Possession of Bonds .................................. 62
Section 909. Remedies Not Exclusive ....................................... 63
Section 910. Delays and Omissions Not to Impair Rights .................... 63
Section 911. Application of Moneys in Event of Default .................... 63
Section 912. Credit Facility Trustee and Registered Owners
Entitled to All Remedies Under Act ........................... 63
Section 913. Credit Facility Trustee May File Claim in
Bankruptcy ................................................... 64
Section 914. Receiver ..................................................... 65
Section 915. Assignment to Credit Facility Issuer ......................... 65
Section 916. Intercreditor Agreement ...................................... 65
ARTICLE X
CONCERNING THE TRUSTEE AND THE CREDIT FACILITY TRUSTEE
Section 1001. Acceptance of Trusts by the Trustee ......................... 66
Section 1002. Acceptance of Trusts by the Credit Facility
Trustee ..................................................... 67
Section 1003. Trustee or Credit Facility Trustee to Give
Notice ...................................................... 68
Section 1004. Trustee and Credit Facility Trustee Entitled
to Indemnity ................................................ 69
Section 1005. Neither the Trustee nor the Credit Facility
Trustee Responsible for Insurance, Taxes,
Execution of Indenture, Acts of the Issuer
or Application of Moneys Applied in Accordance
with this Indenture ......................................... 70
Section 1006. Compensation ................................................ 71
Section 1007. Trustee to Preserve Records ................................. 71
Section 1008. Trustee and Credit Facility Trustee May be
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<PAGE>
Registered Owners ........................................... 72
Section 1009. Trustee and Credit Facility Trustee Not
Responsible for Recitals .................................... 72
Section 1010. No Responsibility for Recording or Filing ................... 72
Section 1011. Trustee and Credit Facility Trustee May
Rely on Certificates ........................................ 72
Section 1012. Qualification of the Trustee ................................ 72
Section 1013. Resignation and Removal of Trustee or Credit
Facility Trustee ............................................ 73
Section 1014. Successor Trustee or Credit Facility Trustee ................ 75
Section 1015. Co-Trustee .................................................. 76
Section 1016. Notice to Moody's or S&P .................................... 76
ARTICLE XI
EXECUTION OF INSTRUMENTS BY REGISTERED OWNERS
AND PROOF OF OWNERSHIP OF BONDS
Section 1101. Execution of Instruments by Registered Owners
and Proof of Ownership of Bonds ............................. 77
Section 1102. Preservation of Information ................................. 78
ARTICLE XII
THE REMARKETING AGENT; THE TENDER AGENT;
THE PLACEMENT AGENT
Section 1201. The Remarketing Agent ....................................... 78
Section 1202. The Tender Agent ............................................ 79
Section 1203. The Placement Agent ......................................... 79
Section 1204. Notices ..................................................... 79
ARTICLE XIII
AMENDMENTS AND SUPPLEMENTS
Section 1301. Amendments and Supplements Without
Registered Owners' Consent .................................. 80
Section 1302. Amendments With Registered Owners' and
Credit Facility Issuer's Consent ............................ 81
Section 1303. Supplemental Indentures Affecting Rights
of Credit Facility Issuer ................................... 81
Section 1304. Amendment of Loan Agreement ................................. 81
Section 1305. Amendment of Loan Agreement Requiring Consent
of Credit Facility Issuer ................................... 82
Section 1306. Amendment of Credit Facility ................................ 82
Section 1307. Trustee and Credit Facility Trustee Authorized
to Join in Amendments and Supplements;
Reliance on Counsel ......................................... 82
iv
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ARTICLE XIV
DEFEASANCE; OTHER PAYMENTS
Section 1401. Defeasance .................................................. 83
Section 1402. Deposit of Funds for Payment of Bonds ....................... 85
Section 1403. Effect of Purchase of Bonds ................................. 85
ARTICLE XV
MISCELLANEOUS PROVISIONS
Section 1501. Covenants of Issuer to Bind its Successors .................. 85
Section 1502. Notices ..................................................... 85
Section 1503. Trustee as Paying Agent and Bond Registrar .................. 86
Section 1504. Rights Under Indenture ...................................... 87
Section 1505. Form of Certificates and Opinions ........................... 87
Section 1506. Severability ................................................ 87
Section 1507. Covenants of Issuer Not Covenants of
Officials Individually ...................................... 87
Section 1508. State Law Governs ........................................... 88
Section 1509. Payments or Performance Due on Days Other
Than Business Days .......................................... 88
Section 1510. Execution in Counterparts ................................... 88
Section 1511. Effective Date .............................................. 88
EXHIBIT A. Requisition and Certificate
EXHIBIT B. Form of Notice of Conversion to Fixed Rate
EXHIBIT C. Form of Bond
Exhibit A. Form of Registered Owner's
Optional Retention Notice
Exhibit B. Form of Registered Owner's
Optional Tender Notice
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TRUST INDENTURE
THIS TRUST INDENTURE, dated as of May 1, 1997 (the "Indenture"),
between the MARYLAND INDUSTRIAL DEVELOPMENT FINANCING AUTHORITY, a body
corporate and politic and a public instrumentality of the State of Maryland (the
"Issuer"), FIRST UNION NATIONAL BANK OF VIRGINIA, a national banking association
having its principal office in Richmond, Virginia (in its capacity as trustee,
the "Trustee") and BRANCH BANKING AND TRUST COMPANY, a North Carolina state
banking corporation, having its principal office in Wilson, North Carolina (the
"Credit Facility Trustee");
WITNESSETH:
WHEREAS, the Issuer intends to (i) issue and sell its Economic
Development Revenue Bonds (Alcore, Inc. Facility), 1997 Issue in the aggregate
principal amount of $2,600,000 (the "Bond" or "Bonds"), (ii) loan the proceeds
of the Bonds to Alcore, Inc., a Delaware corporation, its successors and assigns
(the "Borrower"), pursuant to a Loan Agreement dated as of May 1, 1997 by and
between the Issuer and the Borrower (such Agreement as from time to time amended
or supplemented, the "Loan Agreement") to provide for the acquisition of a
manufacturing facility located in Harford County, Maryland (the "Facility"); and
(iii) secure the repayment of the Bonds by (A) the assignment contained herein
from the Issuer to the Trustee and the Credit Facility Trustee pursuant to which
the Issuer assigns to the Trustee and the Credit Facility Trustee for the
benefit of the Registered Owners (as hereinafter defined) certain of its rights
under the Loan Agreement, endorses without recourse to the order of, and pledges
and assigns to, the Trustee and the Credit Facility Trustee, for the benefit of
the Registered Owners, the Note, dated the date of initial issuance of the
Bonds, issued by the Borrower pursuant to the Loan Agreement (such Note as from
time to time amended or supplemented, the "Note"), and (B) the delivery to the
Credit Facility Trustee of an irrevocable direct-pay letter of credit dated the
date of issuance of the Bonds in the amount of $2,704,000 issued by First Union
National Bank of North Carolina (in such capacity, the "Bank"); and
WHEREAS, the Trustee and the Credit Facility Trustee have accepted the
trusts created by this Indenture and in evidence thereof have joined in the
execution hereof; and
WHEREAS, the Issuer has determined that the Bonds to be issued
hereunder shall be substantially in the form attached hereto as Exhibit C, with
such variations, omissions and insertions as are required or permitted by this
Indenture; and
WHEREAS, THE BONDS AND THE PREMIUM (IF ANY) AND INTEREST THEREON, AND
THE PURCHASE PRICE THEREOF, ARE LIMITED OBLIGATIONS OF THE ISSUER, THE PRINCIPAL
OF, PREMIUM (IF ANY) AND INTEREST ON, AND THE PURCHASE PRICE OF, WHICH ARE
PAYABLE SOLELY FROM THE REVENUES TO BE RECEIVED IN CONNECTION WITH THE FINANCING
OF THE FACILITY OR FROM ANY OTHER MONEYS MADE AVAILABLE TO THE ISSUER FOR SUCH
<PAGE>
PURPOSE. NEITHER THE BONDS NOR ANY PREMIUM OR INTEREST THEREON, NOR THE PURCHASE
PRICE THEREOF, SHALL EVER CONSTITUTE AN INDEBTEDNESS OR A CHARGE AGAINST THE
GENERAL CREDIT OR TAXING POWERS OF THE STATE OF MARYLAND, THE DEPARTMENT OF
BUSINESS AND ECONOMIC DEVELOPMENT OF THE STATE OF MARYLAND (THE "DEPARTMENT"),
THE ISSUER, HARFORD COUNTY, MARYLAND (THE "COUNTY") OR ANY OTHER PUBLIC BODY
WITHIN THE MEANING OF ANY CONSTITUTIONAL OR CHARTER PROVISION OR STATUTORY
LIMITATION AND NONE OF THE ABOVE SHALL EVER CONSTITUTE OR GIVE RISE TO ANY
PECUNIARY LIABILITY OF THE STATE OF MARYLAND, THE DEPARTMENT, THE ISSUER, THE
COUNTY OR ANY OTHER PUBLIC BODY. THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS TO
WHICH THE FAITH OR CREDIT OF THE STATE OF MARYLAND, THE DEPARTMENT, THE ISSUER,
THE COUNTY OR ANY OTHER PUBLIC BODY IS PLEDGED.
NOW, THEREFORE, 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 Registered Owners, and also for and in consideration of the sum
of One Dollar to the Issuer in hand paid by the Trustee at or before the
execution and delivery of this Indenture, the receipt of which is hereby
acknowledged, and for the purpose of fixing and declaring the terms and
conditions upon which the Bonds are to be issued, delivered, secured and
accepted by the Registered Owners and any and all other persons who shall from
time to time be or become owners thereof, and in order to secure the payment of
the Bonds at any time issued and outstanding hereunder 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 ISSUER DOES HEREBY PLEDGE AND ASSIGN, and grant a security interest
unto the Trustee and the Credit Facility Trustee, and their successors and
assigns for the benefit of the owners of the Bonds all right, title and interest
of the Issuer presently owned or hereafter acquired in and to the following
(collectively, the "Trust Estate"):
A. The Loan Agreement, including, but not limited to, all payments of
principal and interest due and to become due under the Note and the Loan
Agreement whether made at their respective due dates or as prepayments permitted
or required by the Loan Agreement, together with full power and authority, in
the name of the Issuer or otherwise, to demand, receive, enforce, collect or
receipt for any or all of the foregoing, to endorse or execute any checks or
other instruments or orders, to file any claims and to take any action which the
Trustee may deem necessary or advisable in connection therewith, and the Issuer
hereby irrevocably appoints the Trustee attorney-in-fact of the Issuer for such
purposes, which appointment is coupled with an interest and is irrevocable.
B. The Note, dated as of the date of issuance of the Bonds, of the
Borrower to the Issuer in the original principal amount of $2,600,000 evidencing
the Borrower's obligation to repay the loan
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made by the Issuer to the Borrower pursuant to the Loan Agreement, together with
interest thereon and other amounts with respect thereto, as provided for in the
Loan Agreement, the Issuer having on this date endorsed, pledged and assigned
the Note without recourse to the order of, and delivered the same to, the
Trustee as security for the obligations of the Issuer to the Trustee hereinafter
referred to.
C. All money or securities at any time on deposit in, in transit to or
credited to any account or fund created hereunder, including without limitation
the Facility Fund and the Bond Fund but excluding the Rebate Fund (each as
hereinafter defined);
D. The Revenues (as hereinafter defined);
E. The Deed of Trust (as hereinafter defined);
and it is so mutually agreed and covenanted by and between the parties hereto
for the equal and proportionate benefit and security of the Registered Owners
(as hereinafter defined) without preference, priority or distinction as to lien
or otherwise, except as hereinafter provided, of any one Bond over any other
Bond, by reason of priority in the issue, sale or negotiation thereof or
otherwise, for the benefit of the Registered Owners and as security for the
fulfillment of the obligations of the Issuer hereunder;
SAVING, EXCEPTING AND RESERVING, HOWEVER, unto the Issuer all of the
Reserved Rights of the Issuer (as hereinafter defined);
TO HAVE AND TO HOLD the same forever, subject, however, to the
exceptions, reservations and matters therein and herein recited but IN TRUST,
nevertheless, for the benefit and security of the owners from time to time of
the Bonds delivered hereunder and issued by the Issuer and outstanding;
PROVIDED, HOWEVER, that if, after the right, title and interest of the
Trustee in and to the Trust Estate pledged and assigned to it under this
Indenture shall have ceased, terminated and become void in accordance with
Article XIV hereof, the principal of and interest on the Bonds and any other
obligations arising hereunder shall have been paid to the Registered Owners or
shall have been paid by the Borrower pursuant to Article XIV hereof, then, this
Indenture and all covenants, agreements and other obligations of the Issuer
hereunder shall cease, terminate and be void, and thereupon the Trustee shall
cancel and discharge this Indenture and execute and deliver to the Issuer and
the Borrower such instruments in writing as shall be required to evidence the
discharge hereof; otherwise, this Indenture shall be and remain in full force
and effect; and
PROVIDED, FURTHER, that neither the Trustee nor the Credit Facility
Trustee undertakes or assumes any obligations of the Issuer as set forth in this
Indenture.
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THIS INDENTURE FURTHER WITNESSETH, and it is expressly declared, that
the Bonds issued and secured hereunder are to be issued and delivered and the
Trust Estate and other revenues and funds herein pledged and assigned are to be
dealt with and disposed of under, upon and subject to the terms, conditions,
stipulations, covenants, agreements, trusts, uses and purposes as hereinafter
expressed, and the Issuer has agreed and covenants, and does hereby agree and
covenant, with the Trustee, the Credit Facility Trustee and with the Registered
Owners of said Bonds, as follows, that is to say:
ARTICLE I
DEFINITIONS
Section 1011. Definitions. All words and terms defined in Article I of
the Loan Agreement shall have the same meanings in this Indenture, unless
otherwise specifically defined herein. In addition, the following words and
terms as used in this Indenture shall have the following meanings unless some
other meaning is plainly intended:
"Acquisition" or "acquisition" shall mean, when used in regard to the
Facility, and shall include, where applicable, and without limitation, the
acquisition, construction, rehabilitation, remodeling, extension, equipping and
permanent improvement of the Facility, and paying the necessary costs of
preparing, printing and selling the Bonds, and such other costs as may be
permitted by the Act and the Code.
"Act" shall mean the MIDFA Act and the Revenue Bond Act.
"Addition" shall mean the addition containing approximately 15,000
square feet to be made to the Building.
"Administrative Expenses" shall mean the amounts payable pursuant to
Article VII of the Loan Agreement and Section 1006 of this Indenture by the
Borrower to or for the account of the Issuer, the Trustee, the Registrar, the
Paying Agent and others to provide for payment of the costs and expenses
incurred by such parties.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person. For the purpose of this definition, "control"
when used with respect to a Person shall mean the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
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"Alternate Credit Facility" shall mean an irrevocable direct-pay letter
of credit, insurance policy, surety bond or similar credit enhancement or
support facility issued for the benefit of the Credit Facility Trustee, the
terms of which Alternate Credit Facility shall in all respects material to the
Registered Owners be the same (except for the term set forth in such Alternate
Credit Facility) as the Letter of Credit as set forth in Section 603 hereof.
"Associate Director" shall mean the Associate Director of the Issuer or
such other person or officer to which the principal functions of the Associate
Director may be transferred.
"Authenticating Agent" shall mean the Trustee and any agent so
designated in and appointed pursuant to Section 208 hereof.
"Authorized Denomination" shall mean $100,000 or any integral multiple
of $5,000 in excess thereof.
"Available Moneys" shall mean (a) with respect to any payment date
occurring during any period that the Bonds are entitled to the benefit of a
Credit Facility, (i) moneys which have been paid to the Trustee by the Borrower
(including moneys transferred from the Facility Fund pursuant to Section 401
hereof) and which have been on deposit with the Trustee for at least 367 days
during and prior to which no Event of Bankruptcy shall have occurred, and the
proceeds from the investment of such moneys once such moneys have been held by
the Trustee for at least 367 days, (ii) moneys on deposit with the Trustee
representing proceeds from the remarketing by the Remarketing Agent of Bonds to
persons other than the Issuer, the Borrower or any Affiliate as described in
Article III hereof, which, in each case, were at all times since their deposit
with the Trustee held in a separate and segregated account or accounts or
sub-account or sub-accounts in which no moneys were at any time held, (iii)
moneys drawn under a Credit Facility which in each case were at all times since
their deposit with the Trustee held in a separate and segregated account or
accounts or sub-account or sub-accounts in which no moneys (other than those
drawn under a Credit Facility) were at any time held and (iv) proceeds of the
Bonds and all investment earnings thereon transferred from the Facility Fund to
the Loan Repayments Account of the Bond Fund pursuant to Section 4.4 of the Loan
Agreement and (b) with respect to any payment date not occurring during a period
that the Bonds are entitled to the benefit of a Credit Facility, any moneys
furnished to the Trustee and the proceeds from the investment thereof. The
Trustee may presume that no Event of Bankruptcy has occurred unless notified in
writing to the contrary by the Borrower, the Bank or the owners of not less than
25% in aggregate principal amount of Bonds Outstanding.
"Bank" shall mean First Union National Bank of North Carolina, as the
issuer of the Letter of Credit.
5
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"Bank Account" shall mean the account of that name established in the
Bond Purchase Fund pursuant to Section 302 hereof.
"Beneficial Owner" shall have the meaning set forth in
Section 206 hereof.
"Bond" or "Bonds" shall mean any bond or bonds authenticated and
delivered under this Indenture.
"Bond Documents" shall mean, collectively, this Indenture, the Bonds,
the Loan Agreement, the Deed of Trust, the Note, the Intercreditor Agreement,
the Placement Agreement, the Tender Agency Agreement, the Remarketing Agreement
and any and all other documents that the Issuer, the Borrower or any other party
or parties or their representatives have executed and delivered or may hereafter
execute and deliver, to evidence or secure the obligations of the Issuer or the
Borrower in connection with the Bonds and the Note or any part thereof, together
with any and all amendments and supplements thereto; provided, however, that the
term "Bond Documents," with the exception of the Deed of Trust and the
Intercreditor Agreement, does not include the Letter of Credit Documents.
"Bond Fund" shall mean the trust fund so designated which is
established pursuant to Section 502(a) hereof.
"Bond Purchase Fund" shall mean the trust fund so designated which is
established pursuant to Section 302 hereof.
"Bond Registrar" shall mean the Bond Registrar as designated in Section
204 hereof.
"Borrower" shall mean Alcore, Inc., a Delaware corporation, and its
successors and assigns and any surviving, resulting or transferee corporation or
other entity.
"Borrower Representative" shall mean any one of the persons at the time
designated to act on behalf of the Borrower by the written certificate furnished
to the Issuer and the Trustee containing the specimen signatures of such persons
and signed on behalf of the Borrower by the President or any duly authorized
Vice President of the Borrower.
"Borrower's Tax Certificate" shall mean the Borrower's Tax Certificate
and Compliance Agreement dated the date of the initial issuance and delivery of
the Bonds, together with any amendments or supplements thereto.
"Building" shall mean the building containing approximately 50,000
square feet located on the Facility Site.
"Business Day" shall mean a day upon which banks in the Commonwealth of
Virginia and the State of North Carolina are open
6
<PAGE>
for the transaction of business of the nature required pursuant to the Loan
Agreement and the Indenture.
"Calculation Period" shall mean the period from and including the day
following the Determination Date of each week (even if not a Business Day) to
and including the earlier of the Conversion Date or the following Determination
Date; provided that if during the Variable Rate Period the Determination Date is
a Regular Record Date, such Calculation Period will extend until the Business
Day following such Determination Date.
"Cede & Co." shall mean Cede & Co., the nominee of DTC or any successor
nominee of DTC with respect to the Bonds.
"Chairman" shall mean the Chairman of the Authority or such other
person or officer to which the principal functions of the Chairman may be
transferred.
"Co-Bond Counsel" or "Bond Counsel" shall mean Miles & Stockbridge, a
Professional Corporation, and Chewanney A. Brown, Attorney At Law, or a firm of
attorneys of nationally recognized standing in matters pertaining to the
tax-exempt nature of interest on bonds issued by states and their political
subdivisions, duly admitted to the practice of law before the highest court of
any state of the United States of America and approved by the Issuer.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the related regulations, rulings and procedures issued by the United States
Department of the Treasury or its successors.
"Completion Date" shall mean that date certified by the Borrower under
Section 4.3 of the Loan Agreement.
"Conversion Date" shall mean that Business Day elected by the Borrower
in accordance with Section 202(e) hereof as the effective date of conversion of
the interest rate on the Bonds from the Variable Rate to the Fixed Rate, which
date shall be an Interest Payment Date.
"Cost of Acquisition of the Facility" shall mean the costs and
allowances for the Acquisition of the Facility which are permitted under the Act
and which include, but are not limited to, all capital costs of the Facility,
including the following: (i) the Acquisition, construction, renovation and
installation of the Facility at the Facility Site; (ii) preparation of the plans
and specifications, if any, for the Facility (including any preliminary study or
plan of the Facility or any aspect thereof), any labor, services, materials and
supplies used or furnished in the Acquisition of the Facility, the acquisition
and installation necessary to provide utility services or other services and all
real and tangible personal property deemed necessary by the Borrower in
connection with the Facility; (iii) the fees for architectural, engineering,
supervisory and consulting services in
7
<PAGE>
connection with the Acquisition of the Facility; (iv) to the extent they shall
not be paid by a contractor, the premiums of all insurance and surety and
performance bonds required to be maintained in connection with the Acquisition
of the Facility; (v) any fees and expenses in connection with the acquisition,
perfection and protection of title to the Facility Site and any fees and
expenses incurred in connection with the preparation, recording or filing of
such documents, instruments or financing statements as either the Borrower, the
Issuer or the Trustee may deem desirable to perfect or protect the rights of the
Issuer or the Trustee under the Bond Documents and the Letter of Credit
Documents; (vi) the legal, accounting and financial advisory fees and expenses,
filing fees, and printing and engraving costs incurred in connection with the
authorization, issuance, sale and purchase of the Bonds, and the preparation of
the Bond Documents, the Letter of Credit Documents and all other documents in
connection with the authorization, issuance and sale of the Bonds; (vii)
interest prior to, during and for a period not exceeding one year after
completion of construction of the Facility; and (viii) any administrative or
other fees charged by the Issuer or reimbursement thereto of expenses, in
connection with the Facility to the Completion Date.
"Counsel" shall mean an attorney or firm of attorneys acceptable to the
Trustee, and may, but need not, be Co-Bond Counsel or counsel to the Issuer, the
Credit Facility Issuer or the Borrower.
"County" shall mean Harford County, Maryland.
"Credit Facility" shall mean the Letter of Credit or any Alternate
Credit Facility delivered to the Credit Facility Trustee pursuant to Article VI
hereof.
"Credit Facility Issuer" shall mean the Bank with respect to the Letter
of Credit and the institution issuing any Alternate Credit Facility.
"Credit Facility Trustee" shall mean Branch Banking and Trust Company
and its successors in the trust described in Section 1002 hereof. In the event
that the Bonds are converted to a Fixed Rate and there will no longer be a
Credit Facility in effect, then thereafter, all references to the Credit
Facility Trustee shall mean the Trustee.
"Deed of Trust" shall mean the Deed of Trust and Security Agreement
dated as of May 1, 1997 from the Borrower to certain individual trustees named
therein.
"Department" shall mean the Department of Business and Economic
Development of the State.
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"DTC" shall mean The Depository Trust Company, a limited purpose
company organized under the laws of the State of New York, and its successors
and assigns.
"DTC Participant" or "DTC Participants" shall mean securities brokers
and dealers, banks, trust companies and clearing corporations that have access
to the DTC system.
"Defaulted Interest" has the meaning provided in Section 209
hereof.
"Determination Date" shall mean the Wednesday of each week or if
Wednesday is not a Business Day then the next succeeding Business Day.
"Determination of Taxability" shall be defined as and shall be deemed
to have occurred on the first to occur of the following: (i) on that date when
the Borrower files any statement, supplemental statement or other tax schedule,
return or document (whether pursuant to Treasury Regulations
ss.1.103-10(b)(2)(vi) as the same may be amended or supplemented, or otherwise)
which discloses that an Event of Taxability shall have in fact occurred; (ii) on
that date when any Bondholder or former Bondholder notifies the Borrower or the
Trustee that it has received a written opinion of bond counsel to the effect
that an Event of Taxability shall have occurred unless, within 180 days after
receipt by the Borrower of such notification from the Trustee, any Bondholder or
any former Bondholder, the Borrower shall obtain and deliver to the Trustee and
each Bondholder and former Bondholder a favorable ruling or determination letter
issued to or on behalf of the Borrower by the Commissioner or any District
Director of Internal Revenue (or any other government official exercising the
same or a substantially similar function from time to time) to the effect that,
after taking into consideration such facts as form the basis for the opinion
that an Event of Taxability has occurred, an Event of Taxability shall not have
occurred; (iii) on that date when the Borrower shall be advised in writing by
the Commissioner or any District Director of Internal Revenue (or any other
government official or agent exercising the same or a substantially similar
function from time to time) that, based upon filings of the Borrower, or upon
any review or audit of the Borrower, or upon any other grounds whatsoever, an
Event of Taxability shall have occurred; (iv) on that date when the Borrower
shall receive notice in writing from any Bondholder or former Bondholder, or
from the Trustee, that the Internal Revenue Service (or any other government
agency exercising the same or a substantially similar function from time to
time) has assessed as includable in the gross income of any Bondholder or former
Bondholder the interest on such Bondholder's or former Bondholder's Bond due to
the occurrence of an Event of Taxability; provided, however, no Determination of
Taxability shall occur under subparagraph (3) or (4) hereof unless the Borrower
has been afforded the opportunity, at its expense, to contest any such
assessment or unfavorable ruling and, further, no Determination of
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Taxability shall occur until such contest, if made, has been finally determined.
"Eminent Domain" shall mean the taking of title to, or the temporary
use of, the Facility or any part thereof pursuant to eminent domain or
condemnation proceedings, or any voluntary conveyance of any part of the
Facility during the pendency of, or as a result of a threat of, such
proceedings.
"Event of Bankruptcy" shall mean a petition by or against the Borrower
or the Issuer under any bankruptcy act or under any similar act which may be
enacted which shall have been filed (other than bankruptcy proceedings
instituted by the Borrower, any Affiliate or the Issuer against third parties)
unless such petition shall have been dismissed and such dismissal shall be final
and not subject to appeal.
"Event of Default" shall mean any of the events specified in Section
901 hereof to be an Event of Default.
"Event of Taxability" shall mean a change in law or fact or the
interpretation thereof, or the occurrence or existence of any fact, event or
circumstance (including, without limitation, the issuance of obligations or the
incurring of capital expenditures in excess of those permitted by Sections
144(a)(4)(A) of the Code, or the taking of any action by the Borrower, or the
failure to take any action, by the Borrower, or the making by the Borrower of
any misrepresentation herein or in any certificate required to be given in
connection with the issuance, sale or delivery of the Bonds) which has the
effect of causing the interest paid or payable on any Bond to become includable
in the gross income of any Bondholder or former Bondholder other than a
Bondholder or former Bondholder who is or was a "substantial user" or "related
person" as such terms are used in Section 147(a) of the Code.
"Executive Director" shall mean the Executive Director of the Authority
or such other person or officer to which the principal functions of the
Executive Director may be transferred.
"Facility" shall mean (a) the Facility Site, (b) the Addition, (c)
certain necessary or useful equipment and machinery, and (d) such other
interests in land or improvements as may be necessary and suitable for the
foregoing, including roads and rights of access, utilities and other necessary
site preparation facilities.
"Facility Fund" shall mean the trust fund so designated which is
established pursuant to Section 401 hereof.
"Facility Site" shall mean those two parcels of land containing in the
aggregate approximately 7.26 acres located in the Riverside Industrial Park,
Belcamp, Harford County, Maryland and known as Lot 17 with a street address of
1324 Brass Mill Road and Lot 18 with a street address of 1326 Brass Mill Road
(as more
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particularly described in Exhibit B attached to the Loan Agreement) and
any and all improvements thereon including, without limitation, the Building.
"Fixed Rate" shall mean the rate of interest per annum determined by
the Placement Agent on the seventh day (or on the immediately following Business
Day if such seventh day is not a Business Day) prior to the Conversion Date to
be that rate which, in the sole judgment of the Placement Agent based on
prevailing market conditions, is the minimum fixed annual rate of interest
necessary to enable the Placement Agent to arrange for the sale of all of the
Bonds in the secondary market at a price equal to the principal amount thereof,
for which the Placement Agent would be so required to arrange for the sale on
the Conversion Date pursuant to Section 202(e) hereof.
"Fixed Rate Period" shall mean the period during which the Fixed Rate
is in effect.
"Government Obligations" shall mean (i) direct obligations of the
United States of America, (ii) obligations unconditionally guaranteed by the
United States of America, and (iii) securities or receipts evidencing ownership
interests in obligations or specified portions (such as principal or interest)
of obligations described in clause (i) or (ii) above the full and timely payment
of which securities, receipts or obligations is unconditionally guaranteed by
the United States of America.
"Guarantor" shall mean Lunn Industries, Inc., a Delaware corporation,
and its successors and assigns and any surviving, resulting or transferee
corporation or other entity.
"Guaranty" shall mean the Guaranty Agreement dated as of May 1, 1997 by
the Guarantor in favor of the Bank and the Hedge Counterparty.
"Hedge Agreement" shall mean the agreement between the Borrower and the
Hedge Counterparty executed in connection with the interest rate swap or similar
hedge arrangement between the Bank and the Hedge Counterparty.
"Hedge Counterparty" shall mean First Union National Bank of Maryland,
its successors and assigns.
"Indenture" shall mean this Trust Indenture, together with any and all
amendments and supplements thereto permitted thereby.
"Initial Interest Rate" shall mean the variable rate of interest
determined by the Remarketing Agent on the date of issuance of the Bonds.
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"Initial Rate Period" shall mean the period from and including the date
of initial authentication and delivery of the Bonds to and including May 21,
1997.
"Intercreditor Agreement" shall mean the Intercreditor Agreement dated
as of May 1, 1997 by and among the Issuer, the Trustee, the Borrower, the
Guarantor the Bank, First Union National Bank of Maryland and the Hedge
Counterparty, as the same may be amended from time to time.
"Interest Payment Date" shall mean the first Business Day of each
February, May, August and November, commencing August 1, 1997, through the
Maturity Date of the Bonds and any date specified as a Conversion Date in
accordance with Section 202(e) hereof.
"Investment Obligations" shall mean:
(a) Government Obligations maturing within one year from the date of
acquisition thereof;
(b) obligations of any state or political subdivision of the United
States or any agency or instrumentality thereof if (i) such obligations are
secured by cash, Government Obligations or a combination thereof (A) which have
been deposited into a segregated escrow account for and irrevocably pledged to
the payment, when due, of the principal or redemption price of and interest on
such obligations and (B) which are sufficient, without reinvestment, to provide
for the payment, when due, of the principal or redemption price of and interest
on such obligations; or (ii) such obligations are insured as to timely payment
of principal or redemption price and interest by an insurance company or
commercial bank with capital, surplus and undivided profits in excess of
$10,000,000 and are rated by Moody's or by S&P in the highest rating category
assigned by such rating service to obligations of the same type;
(c) bonds, debentures, notes or other evidences of indebtedness issued
by any of the following agencies or such other like governmental or government
sponsored agencies which may be hereafter created: Bank for Cooperatives;
Federal Intermediate Credit Banks; Federal Financing Bank; Federal Home Loan
Bank System; Export-Import Bank of the United States; Farmers Home
Administration; Small Business Administration; Inter-American Development Bank;
International Bank for Reconstruction and Development; Federal Land Banks;
Government National Mortgage Association; or Tennessee Valley Authority;
(d) direct and general obligations of any state of the United States,
to the payment of the principal of and interest on which the full faith and
credit of such state is pledged, if at the time of their purchase such
obligations are rated in any of the two highest rating categories by S&P and
Moody's';
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(e) negotiable and non-negotiable certificates of deposit which are
issued by banks, trust companies or savings and loan associations maturing
within one year from the date of acquisition thereof, provided that the
aggregate principal amount of all such certificates issued to or for the benefit
of the Borrower or any Affiliate of the Borrower by any such institution shall
not at any time exceed 10% of the combined capital and surplus of such
institution;
(f) repurchase agreements for Government Obligations which (i) are
entered into with banks, trust companies or dealers in government bonds which
report to, trade with and are recognized as primary dealers by a Federal Reserve
Bank, and (ii) such Government Obligations shall have a fair market value on the
date of the repurchase agreement equal to at least 100% of the amount of the
related repurchase obligations, and (iii) such Government Obligations are
transferred to the Trustee or a third party agent of the Trustee by physical
delivery or by an entry made on the records of the issuer of such Government
Obligations;
(g) obligations of any state or political subdivision thereof or any
agency or instrumentality of such a state or political subdivision, the payment
of principal or redemption price of and interest on which is secured by an
unconditional, irrevocable letter of credit issued by a bank, trust company,
savings and loan association or other financial institution, provided that at
the time of its purchase both such obligation and the long term unsecured,
uncollateralized debt of such financial institutions are rated in either of the
two highest rating categories by S&P and Moody's;
(h) shares of an open-end, diversified investment company which is
registered under the Investment Company Act of 1940, as amended, and which (i)
invests its assets exclusively in Government Obligations having a final maturity
date of less than one year from their date of purchase or invests its assets in
repurchase agreements described in (f) above; (ii) seeks to maintain a constant
net asset value per share; and (iii) has aggregate net assets of not less than
$10,000,000 on the date of purchase of such shares; provided that, at the time
of purchase, such shares are rated in either of the two highest rating
categories by S&P and Moody's;
(i) commercial paper rated by Moody's within its NCO/Moody's ratings of
prime 1, or by S&P within its ratings of A-1, or by Fitch Investors Service
within its ratings of F-1;
(j) obligations described in Section 103(a) of the Code, the interest
on which is excludable from the gross income of the owner thereof for federal
income tax purposes under Section 103(a) of the Code, including any stock in a
"regulated investment company" within the meaning of Section 851(a) of the Code,
which corporation during any quarter of its taxable year during which the
Trustee has
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invested therein any moneys in the Facility Fund or the Bond Fund (i) meets the
requirements of Section 852(a) of the Code for the taxable year; (ii) has
authorized and outstanding only one class of stock; and (iii) to the extent
practicable invests all its assets in obligations described in Section 103(a) of
the Code and states in its prospectus made available to the Trustee at the time
of such investment its intention that at least 98 percent (A) of its gross
income will be derived from interest on or gains from the sale or other
disposition of obligations described in Section 103(a) of the Code, or (B) of
the weighted average value of its assets is represented by investments in
obligations described in Section 103(a) of the Code; provided, however, that if
the Trustee receives notice that, during any quarter during which the Trustee
invested moneys in the Facility Fund or Bond Fund therein, such regulated
investment company failed to meet any of the foregoing requirements, such stock
shall no longer be deemed to meet the requirements of clause (iii) of this
paragraph j);
(k) if the Trustee has received an opinion of Co-Bond Counsel that such
investment will not adversely affect the exclusion of interest on the Bonds from
gross income for federal income tax purposes under Section 103(a) of the Code,
obligations of the United States Treasury--State and Local Government Series
("SLGS"), provided the yield on the SLGS does not exceed that specified in such
opinion of Co-Bond Counsel; and
(l) any other investment authorized by the applicable law of the State
and approved in writing by the Credit Facility Issuer.
"Issuer" shall mean the Maryland Industrial Development Financing
Authority, a body politic and corporate and a public instrumentality of the
State.
"Issuer Representative" shall mean the Chairman, Vice Chairman,
Executive Director or the Associate Director or such other persons at the time
designated to act on behalf of the Issuer by written certificate furnished to
the Borrower and the Trustee containing the specimen signature of such persons
and signed on behalf of the Issuer by its Chairman or Vice Chairman.
"Issuer's Fee" shall mean the annual fee payable by the Borrower to the
Issuer described in Section 7.21(k) of the Loan Agreement.
"Letter of Credit" shall mean the irrevocable direct pay letter of
credit, dated May 15, 1997, in the amount of $2,704,000 issued by the Bank,
including any extensions thereof.
"Letter of Credit Documents" shall mean the Letter of Credit, the
Reimbursement Agreement, the Intercreditor Agreement, the Deed of Trust, the
Guaranty, the Security Agreement, the Pledge Agreement and any and all other
documents that the Borrower, the Guarantor or any other party or parties or
their representatives,
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have executed and delivered or may hereafter execute and deliver, to evidence or
secure the obligations of the Borrower in connection with the Letter of Credit
or any part thereof, together with any amendments or supplements thereto.
"Loan Agreement" shall mean the Loan Agreement dated as of May 1, 1997
by and between the Issuer and the Borrower, together with any and all amendments
and supplements thereto.
"Loan Repayments Account" shall mean the account of that name
established in the Bond Fund pursuant to Section 502 hereof.
"Majority Registered Owners" shall mean the owners of a majority of the
aggregate principal amount of the Bonds Outstanding.
"Maturity Date" shall mean November 1, 2012, unless the maturity of the
Bonds shall be accelerated by the Trustee pursuant to Section 902 of this
Indenture, in which case the Maturity Date of the Bonds shall be the date set
forth in the notice of acceleration from the Trustee to the Issuer, the
Borrower, the Credit Facility Trustee and the Credit Facility Issuer pursuant to
Section 902 of this Indenture.
"MIDFA Act" shall mean the Maryland Industrial Development Financing
Authority Act, constituting Subtitle 9 of Title 5 of Article 83A of the
Annotated Code of Maryland, as amended.
"Moody's" shall mean Moody's Investors Service, Inc., a Delaware
corporation, its successors and assigns, and, if such corporation shall be
dissolved or liquidated or shall no longer perform the functions of a securities
rating agency, "Moody's" shall be deemed to refer to any other nationally
recognized securities rating agency designated by the Remarketing Agent, with
the consent of the Borrower and the Credit Facility Issuer.
"Net Proceeds" when used with respect to any insurance proceeds or
award resulting from, or other amount received in connection with, Eminent
Domain shall mean the gross proceeds from such proceeds, award or other amount,
less all expenses (including attorneys' fees) incurred in the realization
thereof.
"Note" shall mean the promissory note given by the Borrower pursuant to
Section 5.1 of the Loan Agreement, substantially in the form of Exhibit A
attached thereto.
"Official Intent" shall mean the Declaration of Official Intent to
Reimburse executed by the Executive Director of the Issuer on October 16, 1996.
"Optional Retention Notice" shall mean a notice from the owner of a
Bond to the Trustee in the form attached to the Bond as Exhibit A.
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"Optional Tender Notice" shall mean a notice from the owner of a Bond
to the Tender Agent in the form attached to the Bond as Exhibit B.
"Outstanding," in connection with Bonds shall mean, as of the time in
question, all Bonds authenticated and delivered under this Indenture, except:
(i) Bonds theretofore canceled or required to be canceled
under Section 213 hereof;
(ii) Bonds which are deemed to have been paid in accordance
with Article XIV hereof;
(iii) Bonds in substitution for which other Bonds have been
authenticated and delivered pursuant to Article II hereof; and
(iv) Undelivered Bonds.
In determining whether the owners of a requisite aggregate principal amount of
Bonds Outstanding have concurred in any request, demand, authorization,
direction, notice, consent or waiver under the provisions hereof, Bonds which
are held by or on behalf of the Borrower (unless all of the Outstanding Bonds
are then owned by the Borrower) or an Affiliate of the Borrower shall be
disregarded for the purpose of any such determination; provided that the Trustee
can assume that no Bonds are owned by an Affiliate of the Borrower unless the
Trustee has received written notice from the Borrower as to the identity of such
Affiliate. For the purpose of this paragraph, an "Affiliate" of any specified
entity shall mean any other entity directly or indirectly controlling or
controlled by or under direct or indirect common control with such specified
entity and "control" when used with respect to any specified entity, shall mean
the power to direct the management and policies of such entity, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Person" shall mean an individual, partnership, corporation, trust,
unincorporated organization, association, joint venture, joint-stock company, a
government agency or political subdivision.
"Placement Agent" shall mean the First Union National Bank of North
Carolina (acting through its Capital Markets Group) and its successors or any
other person designated by the Borrower meeting the requirements of Section 1203
hereof.
"Placement Agreement" shall mean the letter agreement dated the date of
the initial issuance and delivery of the Bonds among the Borrower, the Issuer
and the Placement Agent, providing for the
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introducing of the Bonds by the Placement Agent to prospective purchasers.
"Plant" shall mean all buildings, structures, improvements, fixtures,
furniture, machinery, equipment or other property (excluding inventory) of the
Borrower, now or hereafter located at or affixed to the Facility Site, including
without limitation the Facility.
"Pledge Agreement" shall mean that certain Pledge Agreement, dated as
of May 1, 1997, between the Bank and the Borrower.
"Principal Office" of the Trustee or Bond Registrar shall mean the
office at which, at the time in question, is designated as its corporate trust
office from which its business hereunder is principally conducted.
"Private Placement Memorandum" shall mean the Private Placement
Memorandum dated May 15, 1997, relating to the Bonds.
"Rebate Amount" shall mean the amount (if any) that is to be paid to
the United States of America pursuant to the Borrower's Tax Certificate.
"Rebate Fund" shall mean the trust fund so designated which is
established pursuant to Section 505 hereof.
"Registered Owner" or "Registered Owners" or "Owner" or "Bondholder" or
"Bondholders" shall mean (a) in the event that the book-entry system of evidence
of transfers of ownership in the Bonds is employed pursuant to Section 206, Cede
& Co., as nominee for DTC, or its nominee, and (b) in all other cases, the
person or persons in whose names any Bond or Bonds are registered on the books
and records of the Bond Registrar pursuant to Section 204 of this Indenture.
"Regular Record Date" shall mean (a) in respect of any Interest Payment
Date during the Variable Rate Period, the close of business on the Business Day
immediately preceding each such Interest Payment Date, and (b) in respect of any
Interest Payment Date during the Fixed Rate Period, the 15th day (whether or not
a Business Day) of the calendar month immediately preceding each such Interest
Payment Date.
"Reimbursement Agreement" shall mean the Letter of Credit and
Reimbursement Agreement dated as of May 1, 1997 between the Borrower and the
Bank, as the same may be amended from time to time and filed with the Trustee,
and any agreement of the Borrower with a Credit Facility Issuer setting forth
the obligations of the Borrower to such Credit Facility Issuer arising out of
any payments under a Credit Facility and which provides that it shall be deemed
to be a Reimbursement Agreement for the purpose of this Indenture.
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"Remarketing Account" shall mean the account of that name established
in the Bond Purchase Fund pursuant to Section 302 hereof.
"Remarketing Agent" shall mean First Union National Bank of North
Carolina (acting through its Capital Markets Group) and its successors as
provided in Section 1201 hereof.
"Remarketing Agreement" shall mean the Remarketing Agreement dated as
of May 1, 1997 between the Borrower and the Remarketing Agent, as amended,
restated, modified or supplemented from time to time.
"Requisite Registered Owners" shall mean the Registered Owners of more
than two-thirds of the aggregate outstanding principal amount of the Bonds.
"Reserved Rights of the Issuer" shall mean (a) all rights of the Issuer
as set forth in Sections 6.5, 7.2 through 7.10, inclusive, 7.13(c), 7.14,
7.21(h), 7.21(k), 9.3 and 9.5 of the Loan Agreement; (b) all rights of the
Issuer to indemnification, inspection and payment of costs, expenses and
advances under the Deed of Trust; (c) the right of the Issuer (in its corporate
capacity as Issuer and not as Beneficiary under the Deed of Trust) to receive
notices, reports or other information, make determinations and grant approvals
under the Loan Agreement and the Deed of Trust; (d) all rights of the Issuer to
enforce (other than the declaration of a default under any of the Bond
Documents) the representations, warranties, covenants and agreements of the
Borrower pertaining in any manner or way, directly or indirectly, to the
tax-exempt status of interest on the Bonds set forth in any of the Bond
Documents or in the Borrower's Tax Certificate or in any other certificate or
agreement executed by the Borrower; (e) all rights of the Issuer in connection
with any amendment to or modification of the Bond Documents; and (f) all
enforcement remedies with respect to the foregoing.
"Responsible Officer" when used with respect to the Trustee shall mean
any trust officer or assistant trust officer and also shall mean, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Revenue Bond Act" shall mean the Maryland Economic Development Revenue
Bond Act, constituting Subtitle 1 of Title 14 of Article 41 of the Annotated
Code of Maryland, as amended.
"Revenues" shall mean (a) all amounts payable to the Trustee with
respect to the principal or redemption price of, or interest on, the Bonds (i)
by the Borrower under the Note, (ii) by the Credit Facility Issuer under a
Credit Facility, and (iii) by transfer from the Facility Fund pursuant to
Section 401 hereof, and
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(b) investment income with respect to any moneys held by the Trustee in the Bond
Fund.
"Security Agreement" shall mean the Security Agreement dated as of May
1, 1997 by the Borrower and the Guarantor in favor of the Bank, the Issuer and
the Hedge Counterparty.
"S&P" shall mean Standard & Poor's, a Division of The McGraw-Hill
Companies, Inc., its successors and assigns, and, if such corporation shall be
dissolved or liquidated or shall no longer perform the functions of a securities
rating agency, "S&P" shall be deemed to refer to any other nationally recognized
securities rating agency designated by the Remarketing Agent, with the consent
of the Borrower and the Credit Facility Issuer.
"Special Record Date" shall mean for purpose of payment of Defaulted
Interest on the Bonds, the date fixed by the Trustee pursuant to Section 209
hereof.
"State" shall mean the State of Maryland.
"Subsidiary" shall mean any corporation, association or other business
entity of which more than 50% of the issued and outstanding stock or equivalent
thereof having ordinary voting power is, at the time at which any determination
is being made, owned or controlled by the Borrower or by one or more
Subsidiaries or other affiliates of the Borrower.
"Tax-Exempt Bonds" shall mean bonds or other evidences of indebtedness,
the interest on which is excluded from gross income for federal income tax
purposes (although such interest may be an item of tax preference for
individuals or corporations subject to the alternative minimum income tax).
"Tax-Exempt Money Market Fund" shall mean any entity that (i) is
treated as a "grantor trust" under Subchapter J, Part 1, Subpart E of the Code
in which the certificate holders or unit holders are treated as the owners of
all assets owned by such trust and (ii) invests solely in Tax-Exempt Bonds;
provided, however, such terms shall include a "regulated investment company"
within the meaning of Section 851 of the Code meeting the requirements of such
entity specified by paragraph (j) of the definition "Investment Obligations."
"Tender Agency Agreement" shall mean the Tender Agency Agreement dated
as of May 1, 1997 among the Borrower, the Trustee and the Tender Agent.
"Tender Agent" shall mean First Union National Bank of Virginia and its
successors as provided in Section 1202 hereof.
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"Tendered Bonds" shall mean those Bonds delivered or deemed delivered
by the Registered Owners for purchase pursuant to an Optional Tender Notice or
on the Conversion Date.
"Trustee" shall mean First Union National Bank of Virginia and its
successors in the trust hereunder.
"Undelivered Bonds" shall mean (i) any Bond for which an Optional
Tender Notice has been given pursuant to Section 203 hereof and which has not
been delivered to the Tender Agent on the date specified for purchase, and (ii)
any Bond which has not been delivered to the Trustee for redemption or purchase
when called for redemption or purchase on any optional or mandatory redemption
or purchase date or the Conversion Date if, with respect to Bonds to be
delivered on the Conversion Date, the owner thereof has not provided the Trustee
with the Optional Retention Notice; provided that in either case the Trustee has
on hand and available on such date funds sufficient to purchase or redeem said
Bond.
"Variable Rate" shall mean a variable interest rate per annum
established from time to time after the Initial Rate Period as the rate of
interest per annum determined by the Remarketing Agent (and certified in writing
to the Trustee) on each Determination Date as the minimum rate of interest per
annum necessary, in the judgment of the Remarketing Agent taking into account
market conditions prevailing on the Determination Date, to enable the
Remarketing Agent to arrange for the sale of all of the Bonds on the Thursday
following the Determination Date in the secondary market at a price equal to the
principal amount thereof (plus accrued interest to the date of settlement). In
the event the Remarketing Agent fails to certify such rate for any Calculation
Period, or, if for any reason the Variable Rate is held to be invalid or
unenforceable by a court of competent jurisdiction for any period, the Variable
Rate for each Calculation Period thereafter (if none is certified by the
Remarketing Agent) shall be 90% of the yield for United States Treasury bills
maturing approximately 30 days after the Determination Date for such Calculation
Period as published by The Wall Street Journal on such Determination Date (or
the next preceding Business Day on which The Wall Street Journal is published if
not published on the Determination Date). Notwithstanding anything else
contained herein, the Variable Rate shall not in any event exceed the lesser of
(i) 12% per annum or (ii) the maximum rate permitted by law.
"Variable Rate Period" shall mean that period during which the Bonds
bear interest at a Variable Rate.
"Variable Rate Purchase Date" shall mean while the Bonds bear interest
at the Variable Rate, any Business Day (prior to or upon the effective date of
the Fixed Interest Rate) on which the Bonds may be tendered for purchase at the
option of the Registered Owner or Beneficial Owner thereof, in accordance with
Section 203 hereof,
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which date shall be a date at least seven days after the date of delivery of the
Optional Tender Notice.
"Vice Chairman" shall mean the Vice Chairman of the Authority or such
other person or officer to which the principal functions of the Vice Chairman
may be transferred.
Section 1012. Rules of Construction.
(a) 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, the words "Bond", "Registered Owners", and "person"
shall include the plural as well as the singular number; the word "person" shall
include any individual, corporation, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
(b) Words importing the redemption or calling for redemption of the
Bonds shall not be deemed to refer to or connote payment of Bonds at their
stated maturity.
(c) The Table of Contents, captions and headings in this Indenture are
for convenience only and in no way limit the scope or intent of any provision or
section of this Indenture.
(d) All references herein to particular articles or sections are
references to articles or sections of this Indenture unless some other reference
is indicated.
(e) All references herein to the Code or any particular provision or
section thereof shall be deemed to refer to any successor, or successor
provisions or section, thereof, as the case may be.
(f) All references herein to time shall be Charlotte, North Carolina
time.
ARTICLE II
THE BONDS
Section 1021. Amount, Terms, and Issuance of Bonds. The Bonds shall be
limited to $2,600,000 in aggregate principal amount and shall contain
substantially the terms recited in the form of Bond attached hereto as Exhibit C
and as set forth in this Indenture. No Bonds may be issued under this Indenture
except in accordance with this Article II. No additional bonds shall be issued
under this Indenture.
The Issuer may cause a copy of the text of the opinion of Co-Bond
Counsel delivered in connection with the issuance of the Bonds to be printed on
any of the Bonds. The Bonds may bear such
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endorsement or legend satisfactory to the Trustee as may be required to conform
to usage or law with respect thereto, including the imposition of CUSIP or other
identifying numbers.
Upon satisfaction of the conditions set forth in Section 214 hereof,
the Issuer shall issue the Bonds, and the Trustee shall, at the Issuer's
request, authenticate the Bonds and deliver them as specified in the request.
Section 1022. Designation, Denominations, Maturity, Dates and Interest
Rates of the Bonds.
(a) Designation, Denominations, Maturity, Dates. The Bonds shall be
designated "Maryland Industrial Development Financing Authority Economic
Development Revenue Bonds (Alcore, Inc. Facility), 1997 Issue." The Bonds shall
be issuable as fully registered Bonds in Authorized Denominations. No amount of
Bonds may be tendered, retained or redeemed under the terms of this Indenture
which would result in the ownership of Bonds in denominations other than
Authorized Denominations. All Bonds shall bear the date of their authentication,
shall bear interest from the most recent date to which interest has been paid or
duly provided for or, if authenticated on an Interest Payment Date, from that
date, or if no interest has been paid or duly provided for, from the original
date of authentication, and shall mature, subject to prior redemption as
provided in Article VII hereof, on November 1, 2012.
(b) Interest Rates. The Bonds shall bear interest at the applicable
rate provided below. On each Interest Payment Date, interest accrued through the
day immediately preceding such Interest Payment Date shall be payable. While the
Bonds bear interest at a Variable Rate, interest on the Bonds shall be computed
on the basis of a year of 365 or 366 days, as applicable, for the number of days
actually elapsed, and from and including the Conversion Date, and thereafter,
interest on the Bonds shall be computed on the basis of a 360-day year of twelve
equal months of 30 days each.
(c) Initial Interest Rate. For the Initial Rate Period, the Bonds shall
bear interest at the Initial Interest Rate.
(d) Variable Rate. Following the Initial Rate Period and until the
Conversion Date, the Bonds shall bear interest at the Variable Rate. During the
Variable Rate Period, the Remarketing Agent shall determine the Variable Rate
for the Bonds on each Determination Date. The first Determination Date shall be
May 21, 1997. The Remarketing Agent shall give telephonic notice on the
Determination Date to the Trustee (promptly certified in writing) and the
Borrower of the Variable Rate to be in effect for the next succeeding
Calculation Period.
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(e) Fixed Rate; Conversion to Fixed Rate.
(1) At the election of the Borrower, the Bonds shall bear interest at
the Fixed Rate from and after any Interest Payment Date following compliance by
the Borrower with the provisions of this Section 202(e). The Fixed Rate shall be
established after delivery by the Borrower to the Issuer, the Trustee, the
Credit Facility Trustee, the Credit Facility Issuer, the Tender Agent and the
Remarketing Agent of: (i) a notice to the effect that the interest rate on the
Bonds shall become fixed on the Conversion Date specified in such notice, which
notice shall designate the Placement Agent and state whether or not a Credit
Facility will be in effect after the Conversion Date and, if so, the name of the
Credit Facility Issuer, (ii) an opinion of Co-Bond Counsel addressed to the
Trustee and the Issuer that the establishment of a Fixed Rate is authorized and
permitted under this Indenture and will not cause interest on the Bonds to be
includable in the gross income of the Registered Owners for federal income tax
purposes and (iii) an agreement between the Placement Agent and the Borrower
concerning the placement of the Bonds at the Fixed Rate. Such notice and opinion
must be delivered not less than 30 nor more than 60 days prior to the Conversion
Date.
(2) At least 25 days prior to the proposed Conversion Date, the Trustee
shall mail, in the name of the Issuer, a notice to the owners of the Bonds,
which notice shall be in the form attached hereto as Exhibit B.
(3) Any Registered Owner that (i) does not provide the Trustee with the
Optional Retention Notice at least 15 days prior to the Conversion Date and (ii)
fails to deliver its Bonds not subject to an Optional Retention Notice at or
prior to 10:00 a.m. on the Conversion Date, shall be deemed to have tendered its
Bonds to the Tender Agent on the Conversion Date. Said Registered Owner shall
not be entitled to any payment (including any interest to accrue subsequent to
the Conversion Date) other than the purchase price for such Bonds which shall be
equal to the unpaid principal amount of such Bonds, and any such Bonds shall no
longer be entitled to the benefits of this Indenture, except for the purpose of
payment of the purchase price therefor and interest payable on the Conversion
Date. Payment of the purchase price of any such Bonds shall be made only upon
the presentment and surrender of such Bonds to the Tender Agent. Upon request,
the Trustee shall provide the Tender Agent with the address set forth on the
Bond Register (as hereinafter defined) for such Registered Owner. The Trustee
shall notify the Bond Registrar of all Bonds with respect to which the Trustee
has not received Optional Retention Notices, which Bonds shall be deemed to be
tendered for purchase on the Conversion Date. In the case of any Bond deemed
tendered, the Issuer shall cause to be executed, and the Trustee shall
authenticate and deliver to the new Registered Owner as provided in Section 301
hereof, a new Bond of like date and tenor in lieu of and in substitution for
such Bond deemed to be tendered.
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(4) The rate of interest borne by the Bonds from and including the
Conversion Date until the maturity or prior redemption of the Bonds shall be the
Fixed Rate determined by the Placement Agent on the seventh day (or the
immediately following Business Day if such seventh day is not a Business Day)
prior to the Conversion Date.
(5) If, for any reason, the Fixed Rate is held to be invalid or
unenforceable by a court of competent jurisdiction, the Fixed Rate will be 8%
per annum. Notwithstanding anything to the contrary contained herein or in the
Indenture, the Fixed Rate shall in no event be a rate of interest in excess of
the maximum rate permitted by law.
(6) The Fixed Rate shall be computed on the basis of a 360- day year of
twelve equal months of 30 days each and interest on the Bonds shall be payable
on each Interest Payment Date after the Conversion Date until the principal of,
and premium, if any, and interest on the Bonds shall have been paid in full.
(7) Upon the determination of the Fixed Rate, the Placement Agent shall
promptly notify the Trustee of the same in writing.
(8) On or before the Conversion Date, all Bonds shall be presented to
the Trustee for stamping or otherwise noting thereon of the legend:
"The interest rate on this Bond has been fixed at _____% per
annum in accordance with the provisions of this Bond and
Section 202(e) of the Indenture.
(9) Following the conversion of the interest rate on the Bonds to a
Fixed Rate on the Conversion Date, the Credit Facility Trustee shall assign all
of its right, title and interest in, and duties and obligations under, this
Indenture and the other Bond Documents to the Trustee, and the Trustee shall
accept such assignment. Thereafter all references in this Indenture and the
other Bond Documents to the Credit Facility Trustee shall mean the Trustee.
However, if there is a mandatory purchase of any Bonds on the Conversion Date in
accordance with Section 701(e) hereof, the Credit Facility Trustee shall submit
any drawing under the Credit Facility required in connection therewith prior to
making the assignment to the Trustee as described in this subsection.
(f) Interest Rate Determination Binding. The determination of the
interest rates on the Bonds in accordance with the terms of this Indenture shall
be conclusive and binding upon the Registered Owners, the Issuer, the Borrower,
the Trustee, the Credit Facility Trustee, the Remarketing Agent, the Placement
Agent, the Tender Agent and the Credit Facility Issuer.
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Section 1023. Optional Tender Provisions of the Bonds.
(a) While the Bonds bear interest at the Variable Rate, any Bond or
portion thereof in an Authorized Denomination (other than a Bond registered in
the name of the Borrower) shall be purchased on the demand of the Registered
Owner thereof, at a purchase price equal to 100% of the principal amount thereof
plus accrued interest, if any, to the purchase date, if the Registered Owner of
such Bond delivers to the Tender Agent at its address filed with the Trustee an
Optional Tender Notice. Such purchase shall be made only on a Business Day at
least seven (7) days after receipt of the Optional Tender Notice by the Trustee
and at least 10 days prior to the Conversion Date.
(b) Any Optional Tender Notice delivered pursuant to the preceding
paragraph shall automatically constitute: (i) an irrevocable offer to sell such
Bond on the Variable Rate Purchase Date at a price equal to 100% of the
principal amount of such Bond plus accrued interest to the Variable Rate
Purchase Date; and (ii) an irrevocable authorization and instruction to the Bond
Registrar to effect transfer of such Bond to the purchaser thereof on the
Variable Rate Purchase Date. No purchase of Bonds pursuant to the provisions of
this Section 203 shall be deemed a redemption thereof.
(c) Unless the Bonds are being held pursuant to a book-entry system as
provided in Section 206 hereof, any Registered Owner who delivers an Optional
Tender Notice pursuant to this Section 203 shall deliver such Bond to the Tender
Agent, at its address filed with the Trustee, not less than five days prior to
the Variable Rate Purchase Date specified in the aforesaid Optional Tender
Notice. All Bonds delivered to the Tender Agent pursuant to this Section 203
must be duly endorsed for transfer in blank in form satisfactory to the Trustee.
(d) If a Registered Owner who gives the Optional Tender Notice shall
fail to deliver the Bond or Bonds identified in the Optional Tender Notice to
the Tender Agent at or prior to 10:00 a.m. on the Variable Rate Purchase Date,
such Undelivered Bond shall be deemed to have been tendered for purchase, shall
be purchased and shall cease to accrue interest on such Variable Rate Purchase
Date and the Registered Owner thereof shall thereafter be entitled only to
payment of the purchase price therefor and to no other benefits of this
Indenture, and the Issuer, to the extent permitted by law, shall execute and the
Trustee or the Authenticating Agent shall authenticate and deliver a substitute
Bond or Bonds in lieu of the Undelivered Bond and the Bond Registrar shall
register such Bond in the name of the purchaser or purchasers thereof pursuant
to Section 205 hereof. The Tender
Agent shall notify the Trustee and the Bond Registrar of any Undelivered Bonds.
The Trustee shall (i) notify the Remarketing Agent of such Undelivered Bonds and
(ii) place a stop transfer against such Undelivered Bonds until the Undelivered
Bonds are
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properly delivered to the Tender Agent. Upon notice of such delivery,
the Bond Registrar shall make any necessary adjustment to the Bond Register.
(e) Notwithstanding anything to the contrary contained herein, the
rights of the Registered Owners to tender Bonds pursuant to this Section 203
shall cease immediately and without further notice from and including the date
payment of the Bonds is accelerated following an Event of Default pursuant to
Article IX hereof.
Section 1024. Registered Bonds Required, Bond Registrar and Bond
Register. All Bonds shall be issued in fully registered form. The Bonds shall be
registered upon original issuance and upon subsequent transfer or exchange as
provided in this Indenture.
The Issuer shall designate one or more persons to act as "Bond
Registrar" for the Bonds provided that the Bond Registrar appointed for the
Bonds shall be either the Trustee or a person which would meet the requirements
for qualification as a successor trustee imposed by Section 1011 hereof. The
Issuer hereby appoints First Union National Bank of Virginia as its Bond
Registrar in respect of the Bonds. Any person other than the Trustee undertaking
to act as Bond Registrar shall first execute a written agreement, in form
satisfactory to the Trustee, to perform the duties of a Bond Registrar under
this Indenture, which agreement shall be filed with the Trustee and the Tender
Agent.
The Bond Registrar shall act as registrar and transfer agent for the
Bonds. There shall be kept at an office of the Bond Registrar a register (herein
sometimes referred to as the "Bond Register") in which, subject to such
reasonable regulations as the Issuer, the Trustee or the Bond Registrar may
prescribe, there shall be provisions for the registration of the Bonds and for
the registration of transfers of the Bonds. The Issuer shall cause the Bond
Registrar to designate, by a written notification to the Trustee, a specific
office location (which may be changed from time to time, upon similar
notification) at which the Bond Register is kept. In the absence of a specific
designation by the Bond Registrar, the principal corporate trust office of the
Trustee in Richmond, Virginia shall be deemed such office in respect of the
Bonds for which the Trustee is acting as Bond Registrar.
Section 1025. Transfer and Exchange. Subject to the provisions of
Section 206 below, the following provisions shall be applicable to all transfers
and exchanges of Bonds. Upon surrender for transfer of any Bond at the office of
the Bond Registrar, the Issuer shall execute and the Trustee or its
Authenticating Agent shall authenticate and deliver in the name of the
transferee or transferees, one or more new fully registered Bonds of authorized
denomination in the aggregate principal amount which the Registered Owner is
entitled to receive; provided that if monies for the purchase of such Bond have
been provided pursuant to a draw under
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the Credit Facility, such Bond shall not be transferable to anyone other than
the Borrower or its assignee or pledgee. Except for transfers in connection with
the purchase of Bonds pursuant to Section 203 and 701(e) and the remarketing
thereof pursuant to Article III, which shall be effected at the office of the
Tender Agent, Bonds shall be surrendered for transfer at the principal corporate
trust office of the Trustee in Richmond, Virginia. Also, the Issuer shall
execute and the Trustee or its Authenticating Agent shall authenticate and
deliver Bonds in lieu of Undelivered Bonds.
Bonds may be exchanged for other Bonds of any other authorized
denomination, of a like aggregate principal amount, upon surrender of the Bonds
to be exchanged at the principal corporate trust office of the Bond Registrar or
Trustee; provided, however, that in connection with the purchase of Bonds
tendered for purchase pursuant to Sections 203 and 701(e) hereof and the
remarketing thereof pursuant to Article III, Bonds may be exchanged at the
principal office of the Tender Agent or any office of any agent designated by
the Trustee. Whenever any Bonds are so surrendered for exchange, the Issuer
shall execute, and the Trustee or its Authenticating Agent shall authenticate
and deliver, the Bonds which the Registered Owner making the exchange is
entitled to receive.
All Bonds presented for transfer, exchange, redemption or payment (if
so required by the Issuer, the Bond Registrar or the Trustee), shall be
accompanied by a written instrument or instruments of transfer or authorization
for exchange, in form satisfactory to the Bond Registrar, which may include a
signature guarantee, duly executed by the Registered Owner or by his attorney
duly authorized in writing.
No service charge shall be made to a Registered Owner for any exchange
or transfer of Bonds, but the Issuer or the Bond Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto.
Except in connection with the purchase of Bonds pursuant to Sections
203 and 701(e) hereof and the remarketing thereof pursuant to Article III,
neither the Issuer nor any Bond Registrar on behalf of the Issuer shall be
required to issue, transfer or exchange any Bond selected for redemption in
whole or in part or to issue, transfer or exchange any of the Bonds during the
period of ten days preceding the date a notice of redemption is sent.
New Bonds delivered upon transfer or exchange shall be valid limited
obligations of the Issuer, evidencing the same debt as the Bonds surrendered,
shall be secured by this Indenture and shall be entitled to all of the security
and benefits hereof to the same extent as the Bonds surrendered.
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Section 1026. Book-Entry System. The Bonds shall initially be held
under a book-entry system with DTC. References in this Section 206 to a Bond or
the Bonds shall be construed to mean the Bond or the Bonds that are held under
the book-entry system. One Bond of each maturity shall be issued to DTC and
immobilized in its custody. A book-entry system shall be employed, evidencing
ownership of the Bonds in Authorized Denominations, with transfers of beneficial
ownership effected on the records of DTC and the DTC Participants pursuant to
rules and procedures established by DTC.
Each DTC Participant shall be credited in the records of DTC with the
amount of such DTC Participant's interest in the Bonds. Beneficial ownership
interests in the Bonds may be purchased by or through DTC Participants. The
holders of these beneficial ownership interests are hereinafter referred to as
the "Beneficial Owners." The Beneficial Owners shall not receive Bonds
representing their beneficial ownership interests. The ownership interests of
each Beneficial Owner shall be recorded through the records of the DTC
Participant from which such Beneficial Owner purchased its Bonds. Transfers of
Ownership interests in the Bonds shall be accomplished by book entries made by
DTC and, in turn, by DTC Participants acting on behalf of Beneficial Owners. SO
LONG AS CEDE & CO., AS NOMINEE FOR DTC, IS THE REGISTERED OWNER OF THE BONDS,
THE TRUSTEE SHALL TREAT CEDE & CO. AS THE ONLY HOLDER OF THE BONDS FOR ALL
PURPOSES UNDER THIS INDENTURE, INCLUDING RECEIPT OF ALL PRINCIPAL OF, PREMIUM,
IF ANY, AND INTEREST ON THE BONDS, RECEIPT OF NOTICES, VOTING AND REQUESTING OR
DIRECTING THE TRUSTEE TO TAKE OR NOT TO TAKE, OR CONSENTING TO, CERTAIN ACTIONS
UNDER THIS INDENTURE.
Payments of principal, interest, premium, if any, and purchase price
with respect to the Bonds, so long as DTC is the only owner of the Bonds, shall
be paid by the Trustee directly to DTC or its nominee. DTC shall remit such
payments to DTC Participants, and such payments thereafter shall be paid by DTC
Participants to the Beneficial Owners. The Issuer, the Borrower, the Credit
Facility Trustee, the Tender Agent and the Trustee shall not be responsible or
liable for payment by DTC or DTC Participants, for sending transaction
statements or for maintaining, supervising or reviewing records maintained by
DTC or DTC Participants.
Notwithstanding anything to the contrary contained in this Indenture,
for so long as Cede & Co. is the sole Registered Owner of the Bonds, all tenders
and deliveries of Bonds under the provisions of this Indenture shall be made
pursuant to DTC's procedures in effect from time to time and none of the Issuer,
the Trustee, the Tender Agent or the Remarketing Agent shall have any
responsibility for or liability with respect to the implementation of such
procedures.
In the event that (1) DTC determines not to continue to act as
securities depository for the Bonds or (2) the Remarketing Agent determines that
the continuation of the book-entry system of
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evidence and transfer of ownership of the Bonds would adversely affect the
interests of the Beneficial Owners of the Bonds, the Issuer shall discontinue
the book-entry system with DTC with respect to the Bonds. If the Remarketing
Agent fails to identify another qualified securities depository to replace DTC,
the Trustee shall authenticate and deliver replacement Bonds in the form of
fully registered Bonds pursuant to the written instructions of DTC.
THE ISSUER, THE BORROWER, THE REMARKETING AGENT, THE CREDIT FACILITY
TRUSTEE, THE TENDER AGENT AND THE TRUSTEE SHALL NOT HAVE ANY RESPONSIBILITY OR
OBLIGATIONS TO ANY DTC PARTICIPANT OR ANY BENEFICIAL OWNER WITH RESPECT TO (i)
THE BONDS; (ii) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC
PARTICIPANT; (iii) THE PAYMENT BY DTC OR ANY DTC PARTICIPANT OF ANY AMOUNT DUE
TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OF, PREMIUM, IF ANY, AND
INTEREST ON THE BONDS; (iv) THE DELIVERY OR TIMELINESS OF DELIVERY BY DTC OR ANY
DTC PARTICIPANT OF ANY NOTICE DUE TO ANY BENEFICIAL OWNER THAT IS REQUIRED OR
PERMITTED UNDER THE TERMS OF THIS INDENTURE TO BE GIVEN TO BENEFICIAL OWNERS;
(v) THE SELECTION OF BENEFICIAL OWNERS TO RECEIVE PAYMENTS IN THE EVENT OF ANY
PARTIAL REDEMPTION OF THE BONDS; OR (vi) ANY CONSENT GIVEN OR OTHER ACTION TAKEN
BY DTC OR ITS NOMINEE, AS OWNER.
In the event that a book-entry system of evidence and transfer of
ownership of the Bonds is discontinued pursuant to the provisions of this
Section, the Bonds shall be delivered solely as fully registered Bonds without
coupons in the Authorized Denominations, shall be lettered "R" and numbered
separately from 1 upward, and shall be payable, executed, authenticated,
registered, exchanged and canceled pursuant to the provisions hereof.
The Borrower shall not be limited to utilizing a book-entry system
maintained by DTC but may enter into a custody agreement with any bank or trust
company serving as custodian (which may be the Trustee serving in the capacity
of custodian) to provide for a book-entry or similar method for the registration
and registration of transfer of all or a portion of the Bonds.
SO LONG AS A BOOK-ENTRY SYSTEM OF EVIDENCE OF TRANSFER OF OWNERSHIP OF
ALL THE BONDS IS MAINTAINED IN ACCORDANCE HEREWITH, THE PROVISIONS OF THIS
INDENTURE RELATING TO THE DELIVERY OF PHYSICAL BOND CERTIFICATES WITH RESPECT TO
THE BONDS SHALL BE DEEMED INAPPLICABLE OR BE OTHERWISE SO CONSTRUED AS TO GIVE
FULL EFFECT TO SUCH BOOK-ENTRY SYSTEM.
Section 1027. Execution. The Bonds shall be executed by the manual or
facsimile signature of the Chairman or Vice Chairman of the Issuer, and the seal
of the Issuer shall be affixed, imprinted, lithographed or reproduced thereon
and shall be attested by the manual or facsimile signature of the Executive
Director of the Issuer.
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Bonds executed as above provided may be issued and shall, upon request
of the Issuer, be authenticated by the Trustee or the Authenticating Agent,
notwithstanding that any officer signing such Bonds or whose facsimile signature
appears thereon shall have ceased to hold office at the time of issuance or
authentication or shall not have held office at the date of the Bond.
Section 1028. Authentication; Authenticating Agent. No Bond shall be
valid for any purpose until the Trustee's Certificate of Authentication thereon
shall have been duly executed as provided in this Indenture, and such
authentication shall be conclusive proof that such Bond has been duly
authenticated and delivered under this Indenture and that the Registered Owner
thereof is entitled to the benefit of the trust hereby created, subject to the
provisions of Section 202(e)(4), Section 203(d) and Article XIV hereof.
If the Bond Registrar is other than the Trustee, the Trustee may
appoint the Bond Registrar as an Authenticating Agent with the power to act on
the Trustee's behalf and subject to its direction in the authentication and
delivery of Bonds in connection with transfers and exchanges under Section 205
hereof, and the authentication and delivery of Bonds by an Authenticating Agent
pursuant to this Section shall, for all purposes of this Indenture, be deemed to
be the authentication and delivery "by the Trustee." The Trustee shall, however,
itself authenticate all Bonds upon their initial issuance. The Authenticating
Agent may authenticate Bonds in substitution for Undelivered Bonds as provided
in Section 303(c) hereof. The Authenticating Agent shall be entitled to
reasonable compensation from the Borrower for its services.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate trust business
of any Authenticating Agent, shall be the successor of the Authenticating Agent
hereunder, if such successor corporation is otherwise eligible as a Bond
Registrar under Section 204, without the execution or filing of any further
document on the part of the parties hereto or the Authenticating Agent or such
successor corporation.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee, the Issuer, the Remarketing Agent and the
Borrower. The Trustee may at any time terminate the agency of any Authenticating
Agent by giving written notice of termination to such Authenticating Agent, the
Issuer and the Borrower. Upon receiving such a notice of resignation or upon
such a termination, or in case at any time any Authenticating Agent shall cease
to be eligible under this Section, the Trustee shall promptly appoint a
successor Authenticating Agent, shall give written notice of such appointment to
the Issuer and the Borrower, and shall mail notice of such appointment to all
Registered Owners
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of Bonds as the names and addresses of such Registered Owners appear on the Bond
Register.
Section 1029. Payment of Principal and Interest; Interest Rights
Preserved. The principal and redemption price of any Bond shall be payable, upon
surrender of such Bond, at the principal corporate trust office of the Trustee.
Interest on each Interest Payment Date shall be payable by check, mailed on the
Interest Payment Date to the address of the person entitled thereto on the
Regular Record Date or, if applicable, the Special Record Date, as such address
shall appear in the Bond Register. Interest shall also be payable by wire
transfer to any Registered Owner of Bonds in the principal amount of $500,000 or
more at the written request of the Registered Owner received by the Trustee at
least five days prior to the Regular Record Date or Special Record Date. If the
Interest Payment Date is not a Business Day, interest shall be mailed or sent by
wire transfer on the next succeeding Business Day as if made on the Interest
Payment Date.
Interest on any Bond which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the person in whose
name that Bond is registered at the close of business on the Regular Record Date
for such interest.
Any interest on any Bond which is payable, but is not punctually paid
or provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Registered Owner of such
Bonds on the relevant Regular Record Date solely by virtue of such Registered
Owner having been such Registered Owner on the Regular Record Date, and such
Defaulted Interest shall be paid, pursuant to Section 911 hereof, to the person
in whose name the Bond is registered at the close of business on a Special
Record Date to be fixed by the Trustee, such date to be not more than 15 nor
less than 10 days prior to the date of proposed payment. The Trustee 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 Registered
Owner, at its address as it appears in the Bond Register, not less than 10 days
prior to such Special Record Date.
Subject to the foregoing provisions of this Section 209, each Bond
delivered under this Indenture upon transfer of or exchange for or in lieu of
any other Bond shall carry the rights to interest accrued and unpaid, and to
accrue, on such other Bond.
Section 210. Persons Deemed Owners. The Issuer, the Trustee, the Credit
Facility Trustee, the Bond Registrar and the Authenticating Agent shall deem and
treat the person in whose name any Bond is registered as the absolute owner
thereof (whether or not such Bond shall be overdue and notwithstanding any
notation of ownership or other writing thereon made by anyone other than the
Issuer, the Trustee, the Bond Registrar or the Authenticating
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Agent) for the purpose of receiving payment of or on account of the principal of
(and premium, if any, on), and (subject to Section 209) interest on such Bond,
and for all other purposes, and neither the Issuer, the Trustee, the Credit
Facility Trustee, the Bond Registrar, nor the Authenticating Agent shall be
affected by any notice to the contrary. All such payments so made to any such
Registered Owner, or upon his order, shall be valid and, to the extent of the
sum or sums so paid, effectual to satisfy and discharge the liability for moneys
payable upon any such Bond.
Section 211. Mutilated, Destroyed, Lost, Stolen or Undelivered Bonds.
If any Bond shall become mutilated, the Issuer shall execute, and the Trustee or
its Authenticating Agent shall thereupon authenticate and deliver, a new Bond of
like tenor and denomination in exchange and substitution for the Bond so
mutilated, but only upon surrender to the Trustee of such mutilated Bond for
cancellation, and the Issuer and the Trustee may require reasonable indemnity
therefor. If any Bond shall be reported lost, stolen or destroyed, evidence as
to the loss, theft or destruction thereof shall be submitted to the Issuer and
the Trustee; and if such evidence shall be satisfactory to both and indemnity
satisfactory to both shall be given, the Issuer shall execute, and thereupon the
Trustee or its Authenticating Agent shall authenticate and deliver, a new Bond
of like tenor and denomination. The cost of providing any substitute Bond under
the provisions of this Section shall be borne by the Registered Owners for whose
benefit such substitute Bond is provided. If any such mutilated, lost, stolen or
destroyed Bond shall have matured or be about to mature, the Issuer may, with
the consent of the Trustee, pay to the Registered Owner the principal amount of
such Bond upon the maturity thereof and the compliance with the aforesaid
conditions by such Registered Owner, without the issuance of a substitute Bond
therefor.
Every substitute Bond issued pursuant to this Section 211 shall
constitute an additional contractual obligation of the Issuer, whether or not
the Bond alleged to have been destroyed, lost or stolen shall be at any time
enforceable by anyone, and shall be entitled to all of the benefits of this
Indenture equally and proportionately with any and all other Bonds duly issued
hereunder.
All Bonds shall be held and owned upon the express condition that the
foregoing provisions are, to the extent permitted by law, exclusive with respect
to the replacement or payment of mutilated, destroyed, lost, stolen or
undelivered Bonds and shall preclude any and all other rights or remedies.
Section 212. Temporary Bonds. Pending preparation of definitive Bonds,
or by agreement with the purchasers of all Bonds, the Issuer may issue, and,
upon request, the Trustee shall authenticate, in lieu of definitive Bonds one or
more temporary printed or typewritten Bonds of substantially the tenor recited
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above in any Authorized Denomination. Upon request of the Issuer, the Trustee
shall authenticate definitive Bonds in exchange for and upon surrender of an
equal principal amount of temporary Bonds. Until so exchanged, temporary Bonds
shall have the same rights, remedies and security hereunder as definitive Bonds.
Section 213. Cancellation of Surrendered Bonds. Bonds surrendered for
payment, redemption, transfer or exchange and Bonds surrendered to the Trustee
by the Issuer or by the Borrower for cancellation shall be canceled by the
Trustee and a certificate evidencing such cancellation shall be furnished by the
Trustee to the Issuer (upon request) and the Borrower. Bonds purchased pursuant
to Sections 203 and 701(e) shall not be surrendered Bonds and, unless otherwise
specifically provided in this Indenture, shall be Outstanding Bonds.
Section 214. Conditions of Issuance. Prior to or simultaneously with
the authentication and delivery of the Bonds by the Trustee, the Trustee and the
Credit Facility Trustee shall have received written notice from the Bank that
the conditions for the issuance of the Letter of Credit as set forth in Article
VII of the Reimbursement Agreement have been satisfied and there shall be filed
with the Trustee and the Credit Facility Trustee, as applicable, the following:
(a) A certified copy of the resolution of the Issuer authorizing the
issuance of the Bonds.
(b) A written order by the Issuer directing the authentication and
delivery of the Bonds to or upon the order of certain purchaser(s) upon payment
of the purchase price therein set forth.
(c) The original executed Letter of Credit.
(d) The original executed Note (endorsed without recourse by the Issuer
to the Trustee), the Reimbursement Agreement, the Tender Agency Agreement, the
Remarketing Agreement, the Loan Agreement and executed counterparts of this
Indenture.
(e) An opinion of Counsel for the Issuer, which may be Co-Bond Counsel,
to the effect that (i) the execution and delivery of this Indenture and the Loan
Agreement have been duly authorized by the Issuer, that this Indenture and the
Loan Agreement have been duly executed by the Issuer and that, assuming
enforceability thereof against the other parties thereto, this Indenture and the
Loan Agreement are the valid and binding agreements of the Issuer enforceable in
accordance with their respective terms, subject to the qualification that
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and limitations imposed by general principles of equity upon specific
enforcement, injunctive relief or other equitable remedies and (ii) the issuance
of the Bonds has been duly and validly authorized
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by the Issuer and that the Bonds are valid and binding limited obligations of
the Issuer in accordance with their terms and that interest on the Bonds is not
includable in the gross income of the Registered Owners for federal income tax
purposes under applicable law.
(f) An opinion of Counsel to the Borrower and the Guarantor to the
effect that the execution and delivery of the Loan Agreement, the Note, the
Reimbursement Agreement, the Deed of Trust, the Security Agreement, the
Guaranty, the Intercreditor Agreement, the Subordination Agreement dated as of
May 1, 1997 by and among, inter alia, the County, the Issuer, the Borrower and
the Guarantor, the Pledge Agreement, the Hedge Agreement, the Remarketing
Agreement and the Tender Agency Agreement have been duly authorized by the
Borrower and the Guarantor, as applicable, that such documents have been duly
executed and delivered by the Borrower and the Guarantor, as applicable, and
that such documents, assuming due authorization, execution and delivery thereof
by the other parties thereto, if any, are valid, binding and enforceable against
the Borrower and the Guarantor, as applicable, in accordance with their terms,
subject to the qualification that enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and limitations imposed by general
principles of equity upon specific enforcement, injunctive relief or other
equitable remedies.
(g) A title insurance commitment satisfactory to the Trustee and the
Credit Facility Issuer.
(h) Evidence satisfactory to the Trustee and the Credit Facility Issuer
that the insurance policies required by Section 6.3 of the Loan Agreement have
been obtained and are in effect.
When the documents mentioned in clauses (a) through (g) of this Section
shall have been filed with the Trustee and the Credit Facility Trustee, as
applicable, and when the Bonds shall have been executed as required by this
Indenture, the Trustee shall authenticate the Bonds and deliver them to or upon
the order of the purchaser(s) but only upon payment to the Trustee for the
account for the Issuer of the purchase price of the Bonds. The Trustee shall be
entitled to rely conclusively upon such resolution or resolutions, or documents
approved thereby, as to the name of the purchasers and the amount of such
purchase price.
Simultaneously with the delivery of the Bonds, the Trustee shall apply the
proceeds of the Bonds in accordance with Article IV of this Indenture.
Section 215. Obligations of Issuer Limited. The Bonds, together with
premium (if any) and interest thereon, and the purchase price thereof, do not
constitute an indebtedness to which the full faith and credit of the Issuer are
pledged but are limited
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obligations of the Issuer payable from the Trust Estate, which is hereby
assigned for the equal and ratable payment of the Bonds and the premium (if any)
and interest thereon and shall be used for no other purpose than to pay the
principal of, premium (if any) and interest on, and purchase price of, the
Bonds, except as may be otherwise expressly authorized in this Indenture.
NEITHER THE BONDS NOR ANY PREMIUM OR INTEREST THEREON, NOR THE PURCHASE
PRICE THEREOF, SHALL EVER (1) CONSTITUTE AN INDEBTEDNESS OR A CHARGE AGAINST THE
GENERAL CREDIT OR TAXING POWERS OF THE STATE, THE DEPARTMENT, THE ISSUER, THE
COUNTY OR ANY OTHER PUBLIC BODY OF THE STATE OR (2) GIVE RISE TO ANY PECUNIARY
LIABILITY OF THE STATE, THE DEPARTMENT, THE ISSUER, THE COUNTY OR ANY OTHER
PUBLIC BODY OF THE STATE.
In accordance with Section 5-910(c) of the MIDFA Act, neither the
members of the Issuer nor any person executing the Bonds or any agreement
entered into by the Issuer under the MIDFA Act, nor any employee of the Issuer,
the Department, the County or the State shall be liable personally on the Bonds
or agreement or be subject to any personal liability or accountability by reason
of the issuance, execution or delivery thereof. Each Bond, on its face, shall
plainly state that it has been issued under the provisions of the Revenue Bond
Act and the MIDFA Act and that it does not constitute an indebtedness to which
the faith and credit of the State, the Department, the County, the Issuer or any
other public body of the State is pledged.
It is recognized that, notwithstanding any other provision of this
Indenture, no Owner shall look to the Issuer for damages suffered by such Owner
as a result of the failure of the Issuer to perform any covenant, undertaking or
obligation under any of the documents executed and delivered in connection with
the Bonds, or as a result of the incorrectness of any representation made by the
Issuer therein. Although this Indenture recognizes that the Issuer shall not
incur any pecuniary liability whatsoever in connection with the Bonds, nothing
contained in this Indenture shall be construed to preclude in any way any action
or proceeding (other than that element of any action or proceeding involving a
claim for monetary damages against the Issuer) in any court or before any
governmental body, agency or instrumentality or otherwise against the Issuer or
any of its officers or employees (but only in their official capacities) to
enforce the provisions of any of the documents executed and delivered in
connection with the Bonds.
Although the Issuer has reserved unto itself the Reserved Rights of the
Issuer and may have the right to seek remedies in the event of a default by the
Borrower, the Issuer, by this Indenture, assigns the rights of take action to
the Trustee in order to implement the purposes and intent of the Act, namely, to
facilitate the financing of the Facility by the Borrower without incurring any
pecuniary obligation or liability by the Issuer.
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ARTICLE III
PURCHASE AND REMARKETING OF TENDERED BONDS
Section 1031. Remarketings of Tendered Bonds.
(a) Not later than the close of business on the date the Tender Agent
receives an Optional Tender Notice, the Tender Agent shall notify the
Remarketing Agent and the Borrower by telephone, telex or telecopier, confirmed
in writing if requested, specifying the Variable Rate Purchase Date and the
aggregate principal amount of Bonds to be purchased on the Variable Rate
Purchase Date pursuant to such Optional Tender Notices.
(b) Not later than the close of business on the 10th day prior to the
Conversion Date, the Trustee shall notify the Placement Agent and the Borrower
by telephone, telex or telecopier, confirmed in writing if requested, specifying
the aggregate principal amount of Bonds deemed tendered for mandatory purchase
on the Conversion Date.
(c) Except as provided in paragraph (d) below and Section 305, upon
receipt by the Remarketing Agent of notice from the Tender Agent pursuant to
Section 301(a) hereof and by the Placement Agent of notice from the Trustee
pursuant to Section 301(b) hereof, the Remarketing Agent or the Placement Agent,
as the case may be, shall use its best efforts to arrange for the sale, at par
plus accrued interest, if any, of such Bonds for settlement on the Variable Rate
Purchase Date or Conversion Date, respectively. At or before 4:00 p.m. on the
Business Day preceding the Variable Rate Purchase Date or Conversion Date, the
Remarketing Agent or the Placement Agent, respectively, shall give notice by
telephone, telecopier or telex, promptly confirmed in writing if requested, to
the Trustee and the Tender Agent specifying the principal amount of such Bonds,
if any, sold by it and to the Tender Agent and Bond Registrar the names,
addresses and social security numbers or other tax identification numbers of the
purchasers thereof.
(d) Notwithstanding the provisions of paragraph (c) above, any Bond
purchased pursuant to the terms of this Indenture from the date notice of
redemption or conversion is given shall not be remarketed except to a buyer who
agrees at the time of such purchase to tender such Bond for redemption or
purchase on the redemption or purchase date.
(e) During the Variable Rate Period, the Remarketing Agent shall
continue to use its best efforts to arrange for the sale, at the best price
available, but not less than the principal amount thereof plus accrued interest,
of any Bonds purchased with moneys advanced under the Credit Facility pursuant
to Section 302(a)(2) hereof; provided that Bonds purchased with moneys advanced
under the Credit Facility shall not be resold unless the Credit Facility
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has been reinstated by the amount drawn thereunder to pay the purchase price for
such Bonds or will be concurrently reinstated by such amount from the proceeds
of such sale upon delivery to the Credit Facility Issuer of the proceeds of such
sale and any reinstatement certificate required by such Credit Facility Issuer.
Section 1032. Purchase of Bonds Delivered to Tender Agent.
(a) There is hereby established with the Tender Agent a Bond Purchase
Fund out of which the purchase price for Bonds tendered for purchase on a
Variable Rate Purchase Date, the Conversion Date or on such other date on which
Bonds are remarketed shall be paid. There are hereby established in the Bond
Purchase Fund two separate and segregated accounts, to be designated the
"Remarketing Account" and the "Bank Account." Funds received from purchasers of
Tendered Bonds (other than the Borrower, any Affiliate, the Credit Facility
Issuer or the Issuer) shall be deposited by the Remarketing Agent or the
Placement Agent, as the case may be, in the Remarketing Account. At or prior to
10:00 a.m. on each Variable Rate Purchase Date or the Conversion Date, the
Remarketing Agent or the Placement Agent, as the case may be, shall deliver to
the Tender Agent for deposit in the Remarketing Account of the Bond Purchase
Fund immediately available funds, payable to the order of the Tender Agent, in
an amount equal to the purchase price of the Bonds to be delivered to the Tender
Agent that have been remarketed by the Remarketing Agent or placed by the
Placement Agent as specified in the notice delivered pursuant to Section 301(c)
hereof and shall verify that such Bonds were not remarketed to the Borrower, any
Affiliate, the Credit Facility Issuer or the Issuer. Funds, if any, drawn by the
Credit Facility Trustee under the Credit Facility pursuant to Section 302(b)
below in an amount equal to the aggregate purchase price of Bonds tendered for
purchase less the amount available in the Remarketing Account shall, at the
direction of the Credit Facility Trustee, be delivered by the Credit Facility
Issuer to the Tender Agent for deposit in the Bank Account of the Bond Purchase
Fund. On each Variable Rate Purchase Date and on the Conversion Date, the Tender
Agent shall effect the purchase, but only from the funds listed below, from the
Registered Owners of such Bonds as are tendered or deemed tendered at a purchase
price equal to the principal amount thereof, plus accrued interest, if any, to
the date of purchase and such payment shall be made in immediately available
funds. Funds for the payment of such purchase price shall be derived from the
following sources in the order or priority indicated:
(1) proceeds of the remarketing of such Bonds pursuant to
Section 301(c) hereof which constitute Available Moneys;
(2) moneys furnished by the Trustee or the Credit Facility
Trustee to the Tender Agent representing proceeds of a drawing by the
Credit Facility Trustee under the Credit Facility; and
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(3) any other moneys available for such purposes.
(b) The Tender Agent shall advise the Trustee and the Credit Facility
Trustee by telex or telecopier and shall advise the Credit Facility Issuer by
telephone, in each case no later than 10:30 a.m., on each Variable Rate Purchase
Date or the Conversion Date, as the case may be, of the amount (having taken
into account immediately available funds in the Remarketing Account, if any, as
of 10:00 a.m. on such date) of any drawing under the Credit Facility necessary
to make full and timely payments hereunder. The Credit Facility Trustee shall
promptly (and in no event later than 11:00 a.m.) take all action necessary to
draw on the Credit Facility for the specified amount. All amounts received by
the Credit Facility Trustee from a drawing under the Credit Facility shall be
transferred to the Tender Agent and held by the Tender Agent in the Bank Account
pending application of such moneys as provided in this Article III. The Credit
Facility Trustee shall provide to the Tender Agent the funds referred to in
clause (2) of Section 302(a) prior to the time the Tender Agent is required to
apply such funds to effect the purchase of Bonds and shall notify the Tender
Agent promptly after receipt of notice from the Credit Facility Issuer
reinstating the Credit Facility. The Remarketing Agent shall deliver funds from
the sale of Bonds held by the Credit Facility Issuer as pledgee of the Borrower
pursuant to Section 301(e) to the Tender Agent for deposit in the Remarketing
Account, which funds shall be promptly paid by the Tender Agent on behalf of the
Borrower to the Credit Facility Issuer as reimbursement under the Reimbursement
Agreement. The Tender Agent shall notify the Trustee and the Credit Facility
Trustee of any such reimbursement and the Credit Facility Trustee shall promptly
deliver to the Credit Facility Issuer any reinstatement certificate required by
the Credit Facility.
Section 1033. Delivery of Purchased Bonds.
(a) Bonds purchased shall be delivered as follows:
(1) Bonds placed by the Remarketing Agent or the Placement
Agent pursuant to Section 301 hereof shall be delivered by the Tender
Agent to the Remarketing Agent or the Placement Agent, as the case may
be, on behalf of the purchasers thereof.
(2) Bonds purchased with moneys described in Section 302(a)(2)
shall be delivered to the Credit Facility Issuer as pledgee of the
Borrower pursuant to the terms of the Reimbursement Agreement and the
Pledge Agreement or to the Credit Facility Issuer's designee.
(b) Except as otherwise set forth herein, Bonds delivered as provided
in this Section 303 shall be registered by the Bond Registrar in the manner
directed by the recipient thereof.
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(c) In the event that any Bond to be delivered to the Tender Agent is
not delivered by the Registered Owner thereof on or prior to the Variable Rate
Purchase Date or the Conversion Date, as the case may be, and there has been
irrevocably deposited with the Tender Agent an amount sufficient to pay the
purchase price thereof, which amount may be held by the Tender Agent in a
non-interest bearing account, the Issuer shall execute and the Trustee or its
Authenticating Agent shall authenticate and deliver a substitute Bond in lieu of
the Undelivered Bond and the Bond Registrar shall register such Bond in the name
of the purchaser thereof, and the Owner of such Undelivered Bond shall have no
further rights under this Indenture, other than the right to receive the
purchase price of such Undelivered Bond.
(d) Notwithstanding the foregoing, Bonds purchased with funds
identified in Section 302(a)(2) hereof shall be held by the Credit Facility
Issuer or the Tender Agent and shall not be delivered to subsequent purchasers
thereof or any other person until the Credit Facility Issuer has notified the
Trustee, the Credit Facility Trustee and the Tender Agent that the Credit
Facility has been reinstated to the extent of the purchase price of such Bonds.
Section 1034. Delivery of Proceeds of Sale of Remarketed Bonds. The
proceeds of the placement by the Remarketing Agent of any Bonds delivered to the
Tender Agent or by the Placement Agent of Bonds tendered or deemed tendered on
the Conversion Date shall be paid first, to the tendering Registered Owners of
such Bonds; second, to the Credit Facility Issuer, to the extent of any amounts
drawn under the Credit Facility in connection with the payment of the purchase
price for such Bonds and not reimbursed to the Credit Facility Issuer as of the
time of sale of such Bonds; and third, to the Borrower.
Section 1035. No Remarketing After Certain Events. Anything in this
Indenture to the contrary notwithstanding, there shall be no remarketing of
Bonds pursuant to this Article III after the principal of the Bonds shall have
been accelerated pursuant to Section 902 hereof.
ARTICLE IV
FACILITY FUND
Section 1041. Creation of and Deposits to the Facility Fund.
(a) A special fund is hereby created and designated "Maryland
Industrial Development Financing Authority Economic Development Revenue Bonds
(Alcore, Inc. Facility), 1997 Issue Facility Fund" (the "Facility Fund") to the
credit of which such deposits shall be made as are required by the provisions of
this Indenture. Any moneys received by the Issuer or by the Trustee as trustee
under this Indenture from any source for payment of the Cost of Acquisition of
the Facility, including all proceeds of the sale of
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the Bonds and insurance and condemnation proceeds as provided in the Loan
Agreement, shall be deposited to the credit of the Facility Fund.
(b) The moneys in the Facility Fund shall be held by the Trustee in
trust and, subject to the provisions of Section 405 and 902 of this Indenture,
shall be applied to the payment of the Cost of Acquisition of the Facility and,
pending such application, shall be and are hereby made subject to a lien and
charge in favor of the Registered Owners of the Bonds issued and outstanding
under this Indenture and for the further security of such owners until paid out
or transferred as herein provided.
Section 1042. Payments from the Facility Fund.
(a) Payment of the Cost of Acquisition of the Facility shall be made
from the Facility Fund. All payments from the Facility Fund shall be subject to
the provisions and restrictions set forth in this Article. Such payments shall
be made by the Trustee within 5 Business Days of receipt of a requisition and
certificate, signed by the Borrower Representative (substantially in the form of
the Requisition and Certificate attached hereto as Exhibit A and hereby
incorporated herein) stating to whom the payment described is to be made and the
purpose, in reasonable detail, for which the obligation to make such payment was
incurred and including, if such requisition and certificate comprises an item
for payment for labor or to contractors, builders or materialmen, a paragraph in
the form of the last paragraph of the attached form of requisition and
certificate, appropriately completed. Upon request of the Trustee, the Borrower
shall furnish to the Trustee copies of invoices relating to and substantiating
any request for payment from the Facility Fund. Notwithstanding the foregoing,
so long as the Letter of Credit is in force, all such requisitions and
certificates must be approved by the Bank (such approvals being evidenced by the
signature of an authorized representative of the Bank thereon) and the Trustee
may rely on such approval as conclusive evidence of the satisfaction of all the
requirements of this Section 402 with respect to requisitions from the Facility
Fund.
(b) The Trustee is authorized and directed to apply the moneys in the
Facility Fund in accordance herewith but only upon receipt of the requisitions
required by this Section 402, duly executed by the person and in the manner
provided for herein.
Section 1043. Trustee May Rely on Requisitions. All requisitions in the
form provided by Section 402 hereof and all other statements, orders,
certifications and approvals received by the Trustee, as required by this
Article as conditions of payment from the Facility Fund, may be conclusively
relied upon by the Trustee, and shall be retained by the Trustee, subject at all
reasonable times to examination by the Borrower (so long as the
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Loan Agreement shall remain in force and effect), the Issuer, any Registered
Owner and the agents and representatives thereof.
Section 1044. Completion Date. The establishment of the Completion Date
and the disposition of moneys then held for the credit of the Facility Fund
shall be in accordance with Sections 4.3 and 4.4 of the Loan Agreement,
respectively.
Section 1045. Transfers to the Bond Fund. In the event that the
Borrower should elect or be required to prepay the Note in its entirety pursuant
to Section 4.4, Section 10.1, Section 10.2 or Section 10.3 of the Loan Agreement
or that the Trustee shall declare the Bonds to be due and payable pursuant to
Section 902 hereof, the Trustee shall, without further authorization, forthwith
transfer any balance remaining in the Facility Fund to the Bond Fund.
Section 1046. Trustee's Records. The Trustee shall maintain adequate
records for a period of at least three (3) years after the Completion Date
pertaining to all disbursements from the Facility Fund. After the Completion
Date, the Trustee shall deliver to the Issuer and the Borrower an aggregate
statement of activity.
ARTICLE V
REVENUES AND APPLICATION THEREOF
Section 1051. Revenues to Be Paid Over to Trustee. The Issuer has
caused the Revenues to be paid directly to the Trustee. If, notwithstanding
these arrangements, the Issuer receives any payments on account of the Note or a
Credit Facility with respect to the principal or redemption price of or interest
on the Bonds, the Issuer shall immediately pay over the same to the Trustee to
be held as Revenues.
Section 1052. The Bond Fund.
(a) There is hereby established with the Trustee a special fund to be
designated "Maryland Industrial Development Financing Authority Economic
Development Revenue Bonds (Alcore, Inc. Facility), 1997 Issue Bond Fund" (the
"Bond Fund"), the moneys in which, in accordance with Section 502(c), the
Trustee shall apply to pay (i) the principal or redemption price of Bonds as
they mature or become due, upon surrender thereof, and (ii) the interest on the
Bonds as it becomes payable. There are hereby established with the Trustee
within the Bond Fund two separate and segregated accounts, to be designated the
"Loan Repayments Account" and the "Credit Facility Account."
(b) There shall be deposited into the accounts of the Bond Fund from
time to time the following:
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(i) into the Loan Repayments Account, (1) all payments of
principal of, redemption price (including premium) of or interest on
the Note, and (2) all other moneys received by the Trustee under and
pursuant to the provisions of this Indenture or any of the provisions
of the Note or the Loan Agreement, when accompanied by written
directions from the person depositing such moneys that such moneys are
to be paid into such account of the Bond Fund. All amounts deposited in
the Loan Repayments Account shall be segregated and held, with the
earnings thereon, separate and apart from other funds in the Bond Fund
until such amounts become Available Moneys. At such time as funds
deposited in the Loan Repayments Account become Available Moneys, they
may be commingled with other Available Moneys in the Loan Repayments
Account; and
(ii) into the Credit Facility Account, all moneys drawn by the
Credit Facility Trustee under the Credit Facility to pay the principal
or redemption price (excluding any premium) of the Bonds and interest
on the Bonds.
(c) Except as provided in Section 911 hereof, moneys in the Bond Fund
shall be used solely for the payment of the principal or redemption price of the
Bonds and interest on the Bonds from the following sources but only in the
following order of priority:
(i) moneys held in the Loan Repayments Account to the extent
such amounts qualify as Available Moneys;
(ii) moneys drawn under the Credit Facility and held in the
Credit Facility Account, provided that in no event shall moneys held in
the Credit Facility Account be used to pay any amounts due on Bonds
which are held by or for the account of the Borrower, including without
limitation, Bonds pledged to the Credit Facility Issuer, or to pay any
portion of the redemption premiums required pursuant to Section
701(a)(ii); and
(iii) any other moneys furnished to the Trustee for deposit in
the Bond Fund.
(d) Not later than 10:00 a.m. on the Business Day preceding the date on
which principal or redemption price of or interest on the Bonds is due and
payable (the "Payment Date"), the Trustee shall have notified the Borrower, the
Credit Facility Trustee, and the Credit Facility Issuer of the amounts of
principal and interest due on the Bonds on the Payment Date. Not later than
11:00 a.m. on each Payment Date, the Credit Facility Trustee shall present a
draft or drafts under the Credit Facility in the amounts due and payable on the
Bonds to the extent there are not Available Moneys on deposit in the Loan
Repayments Account. Such funds shall be wired by the Credit Facility Issuer to
the Credit Facility Trustee and immediately transferred by the Credit Facility
Trustee to the Trustee to be deposited in the Credit Facility Account and
payments
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due under the Bonds shall be made by the Trustee in accordance with Section 209
and Section 502(c) hereof. Following such payment to the Registered Owners, the
Trustee shall, on behalf of the Borrower, promptly pay moneys on deposit in the
Loan Repayments Account in an amount equal to the amount of such drawing or
drawings to the Credit Facility Issuer as reimbursement to the Credit Facility
Issuer under the terms of the Reimbursement Agreement. So long as a Credit
Facility is in effect and has not been wrongfully dishonored, and no amounts are
owed by the Borrower to the Credit Facility Issuer under the Reimbursement
Agreement, any amounts remaining in the Loan Repayments Account on the Business
Day next following an Interest Payment Date shall be paid to the Borrower upon
request with the consent of the Credit Facility Issuer.
(e) Notwithstanding anything to the contrary herein contained, amounts
deposited in the Bond Fund will be spent within a thirteen-month period
beginning on the date of deposit; and amounts received from investments of
moneys held in the Bond Fund will be spent within a one-year period beginning on
the date of receipt. On each anniversary of the date of initial issuance of the
Bonds, if any moneys are on deposit in the Bond Fund, an amount of such moneys
which is estimated by the Borrower to be not greater than one-twelfth of the
annual debt service on the Bonds shall be retained therein, and the balance of
such moneys shall be paid to the Borrower.
Section 1053. Revenues to Be Held for All Registered Owners; Certain
Exceptions. Revenues shall, until applied as provided in this Indenture, be held
by the Trustee in trust for the benefit of the Registered Owners of all
Outstanding Bonds, except that any portion of the Revenues representing the
principal or redemption price of any Bonds, and interest on any Bonds previously
matured or called for redemption in accordance with Article VII of this
Indenture, shall be held for the benefit of the Registered Owners of such Bonds
only.
Section 1054. Non-Presentment of Bonds. If any Bond or evidence of
beneficial ownership of such Bond shall not be presented for payment when the
principal thereof becomes due (whether at maturity, by acceleration, upon call
for redemption, upon purchase or otherwise), all liability of the Issuer to the
Registered Owner thereof for the payment of such Bond, shall forthwith cease,
determine and be completely discharged if funds sufficient to pay such Bond and
interest due thereon, if any, shall be held by the Trustee. Thereupon it shall
be the duty of the Trustee to segregate and hold such funds, uninvested and
without liability for interest thereon, for the benefit of the holder of such
Bond, who shall thereafter be restricted exclusively to such funds for any claim
of whatever nature on his part under this Indenture or on, or with respect to,
such Bond.
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Any moneys which the Trustee segregates and holds in trust for the
payment of the principal of, premium (if any) or interest on or the purchase
price of, any Bond and which remain unclaimed for one year after such principal,
premium (if any), interest or purchase price has become due and payable, upon
the Borrower's written request to the Trustee, but only to the extent permitted
by law, shall be paid to the Borrower, with notice to the Credit Facility Issuer
of such payment; provided, however, that:
(a) before the Trustee makes any such payments to the
Borrower, the Trustee, at the expense of the Borrower, shall cause notice to be
given once by first-class mail, postage prepaid, to the Owner of such Bond, at
the last address for such Owner listed in the Bond Register, to the effect that
such moneys remain unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such notice, any unclaimed
balance of such moneys then remaining will be paid to the Borrower, and
(b) no such payment shall be made to the Borrower if the
Trustee has notice, within the meaning of Section 1003(c) hereof, that an Event
of Default shall have occurred and be continuing or the Trustee has written
notice from the Credit Facility Issuer that an Event of Default shall have
occurred and be continuing under any of the documents executed and delivered in
connection with the Credit Facility.
After the payment of such unclaimed moneys to the Borrower, the Owner
of such Bond shall thereafter look only to the Borrower for the payment thereof,
and all liability of the Issuer, the Trustee, the Paying Agent, the Remarketing
Agent and the Credit Facility Issuer with respect to such moneys shall thereupon
cease.
Section 1055. Creation of Rebate Fund; Duties of Trustee; Amounts Held
in Rebate Fund.
(a) There is hereby created and established with the Trustee a trust
fund to be held in trust to be designated "Maryland Industrial Development
Financing Authority Rebate Fund -- Alcore, Inc. Facility, 1997 Issue" (the
"Rebate Fund"). Moneys held in the Rebate Fund are not held for the benefit of
the Owners.
(b) The Trustee shall make information regarding the Bonds and the
investments hereunder available to the Borrower upon request and shall make
deposits to and disbursements from the Rebate Fund in accordance with the
directions received from the Borrower Representative.
(c) Upon written direction of the Borrower, the Trustee shall deposit
into the Rebate Fund amounts paid by the Borrower pursuant to the Loan Agreement
and the Borrower's Tax Certificate.
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(d) The determination of the Rebate Amount shall be made in accordance
with the Borrower's Tax Certificate and the Rebate Amount shall be paid at such
times and in such installments as provided therein. As further provided in the
Loan Agreement and the Borrower's Tax Certificate, the Borrower shall be
responsible for paying the Rebate Amount.
(e) Neither the Issuer nor the Trustee shall be obligated to pay any
portion of the Rebate Amount (except from funds on deposit in the Rebate Fund).
In addition, neither the Issuer nor the Trustee shall have any responsibility
with respect to the calculation of the Rebate Amount.
(f) Any moneys held as part of the Rebate Fund and not immediately
required to be paid to the United States pursuant to the Borrower's Tax
Certificate shall be invested or reinvested by the Trustee, at the written
direction of the Borrower, in Government Obligations or in any money market or
short-term investment fund investing in or consisting solely of and secured by
Government Obligations, having maturities consonant with the need for moneys as
estimated by the Borrower.
(g) As provided in the Borrower's Tax Certificate, the Borrower is
required to (i) perform a rebate calculation with respect to the Rebate Amount
every five years and either (ii) (a) pay to the Trustee for deposit into the
Rebate Fund an amount of money as determined by such calculation within 30 days
of such calculation or (b) provide the Trustee with written notice (signed by
the Borrower and the Independent Accountant (as defined in the Borrower's Tax
Certificate)) that no deposit is required. If the Trustee does not receive
either of the items required in (ii)(a) or (ii)(b) above within 30 days of such
calculation date, the Trustee shall notify the Issuer, the Credit Facility
Issuer and the Remarketing Agent. Rebate calculations shall be performed by the
Borrower on the last day of the fifth Bond Year (as defined in the Borrower's
Tax Certificate) and on each fifth anniversary thereafter as provided in the
Borrower's Tax Certificate.
ARTICLE VI
SECURITY FOR DEPOSITS;
INVESTMENT OF FUNDS; CREDIT FACILITY
Section 1061. Security for Deposits. All moneys deposited with the
Trustee under the provisions of this Indenture or the Loan Agreement shall be
held in trust and applied only in accordance with the provisions of this
Indenture and the Loan Agreement and shall not be subject to lien (other than
the lien created hereby) or attachment by any creditor of the Trustee, the
Issuer, the Credit Facility Trustee or the Borrower.
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Section 1062. Investment of Moneys. At the request and the direction of
the Borrower Representative (confirmed in writing), moneys held for the credit
of the Facility Fund and the Bond Fund (including any amount therein) shall be
invested and reinvested by the Trustee in Investment Obligations which shall
mature not later than the respective dates when the moneys held for the credit
of said Funds will be required for the purposes intended, provided that moneys
held in the Credit Facility Account and the Loan Repayments Account of the Bond
Fund shall be invested and reinvested by the Trustee only in Government
Obligations which shall mature not later than the date on which such moneys will
be required to be paid; provided further that such investment shall only be made
at the direction of the Borrower Representative. The Trustee shall be entitled
to rely on instructions from the Borrower Representative. In making investments
hereunder, or in selling or disposing of investments as required hereby, the
Trustee shall have no duty or responsibility to verify compliance with the
requirements of Section 7.15 of the Loan Agreement or with any provisions of the
Code required to be complied with to maintain the tax-exempt status of interest
on the Bonds. The Trustee shall be fully protected in relying solely upon the
directions of the Borrower in making investments of funds held hereunder.
Any moneys constituting (i) the proceeds of the Bonds transferred from
the Facility Fund to the Bond Fund pursuant to Section 4.4 of the Loan Agreement
or (ii) Net Proceeds shall be invested only in obligations issued by the United
States Treasury or in any other kinds of investments approved in writing by
Co-Bond Counsel.
Obligations so purchased as an investment of moneys in any such Fund or
account shall be deemed at all times to be a part of such Fund or account, and
the interest accruing thereon and any profit realized from such investment shall
be credited to such Fund or account, and any loss resulting from such investment
shall be charged to such Fund or account. The Trustee shall sell at market price
or present for redemption any obligation so purchased whenever it shall be
necessary so to do in order to provide cash to meet any payment or transfer from
any such Fund and account. Neither the Trustee nor the Issuer shall be liable or
responsible for any loss resulting from any such investment or the sale of any
such investment made pursuant to the terms of this Section.
For the purpose of the Trustee's determination of the amount on deposit
to the credit of any such Fund or account, obligations in which moneys in such
Fund and account have been invested shall be valued at the lower of cost or
market.
The Trustee may make any and all investments permitted by this Section
through its own bond or investment department, unless otherwise directed in
writing by the Borrower Representative.
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Section 1063. The Credit Facility.
(a) Initial Letter of Credit. The Letter of Credit shall be a direct
pay letter of credit and shall provide for direct payments to or upon the order
of the Credit Facility Trustee as hereinafter set forth and shall be the
irrevocable obligation of the Bank to pay to or upon the order of the Credit
Facility Trustee, upon request and in accordance with the terms thereof, an
amount of up to $2,704,000 of which (a) $2,600,000 shall support the payment of
principal on the Bonds when due and that portion of the purchase price
corresponding to principal of Tendered Bonds not remarketed on any Variable Rate
Purchase Date or sold on the Conversion Date, and (b) $104,000 shall support the
payment of up to 120 days' interest at an assumed rate of 12% per annum on the
Bonds when due and that portion of the purchase price corresponding to interest
on Tendered Bonds not remarketed on any Variable Rate Purchase Date or sold on
the Conversion Date.
The Letter of Credit shall terminate automatically on the earliest of
(i) the date on which a drawing under the Letter of Credit has been honored upon
the maturity or, acceleration of the Bonds or redemption of all the Bonds, (ii)
the date that the Bank receives a certificate stating that the Bonds have been
converted to a Fixed Rate, which notice shall also be given to the Credit
Facility Trustee, (iii) the date on which the Bank receives notice from the
Trustee that an Alternate Credit Facility is substituted for the Letter of
Credit and is in effect, (iv) the date on which the Bank receives notice from
the Trustee that there are no longer any Bonds Outstanding, and (v) the
expiration date stated in the Letter of Credit as it may be extended pursuant to
the terms thereof.
The Bank's obligation under the Letter of Credit may be reduced to the
extent of any drawing thereunder, subject to reinstatement as provided therein.
The Letter of Credit shall provide that, with respect to a drawing by the Credit
Facility Trustee solely to pay interest on the Bonds on any Interest Payment
Date, if the Credit Facility Trustee shall not have received from the Bank
within ten days from the date of such drawing a notice by telecopier, by telex
or in writing that the Bank has not been reimbursed, the Credit Facility
Trustee's right to draw under the Letter of Credit with respect to the payment
of interest shall be reinstated on or before the 11th calendar day following
such drawing in an amount equal to such drawing. With respect to any other
drawing by the Credit Facility Trustee, the amount available under the Letter of
Credit for payment of the principal, purchase price or redemption price of the
Bonds and interest on the Bonds shall be reinstated in an amount equal to any
such drawing but only to the extent that the Bank is reimbursed in accordance
with the terms of the Reimbursement Agreement for the amounts so drawn.
The Letter of Credit shall provide that if, in accordance with the
terms of the Indenture, the Bonds shall become or be declared
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immediately due and payable pursuant to any provision of the Indenture, the
Credit Facility Trustee shall be entitled to draw on the Letter of Credit to the
extent that the amounts are available thereunder to pay the aggregate principal
amount of the Bonds then Outstanding plus an amount of interest not to exceed
120 days.
(b) Expiration. Unless all of the conditions of Section 603(c) have
been met at least 45 days before the Interest Payment Date closest to but not
less than 15 days prior to the expiration date of a Credit Facility, the Trustee
shall call the Bonds for redemption in accordance with Section 701(d)(ii).
Neither the Trustee nor the Credit Facility Trustee shall extend the time for
the satisfaction of any such conditions, or accept any Alternate Credit Facility
after such 45th day, nor shall the Trustee suspend or cancel any proceedings for
the redemption of Bonds after such 45th day if the conditions for the acceptance
of an Alternate Credit Facility have not been satisfied by such 45th day. If at
any time there shall cease to be any Bonds Outstanding hereunder, the Credit
Facility Trustee shall promptly surrender the then current Credit Facility to
the Credit Facility Issuer for cancellation. The Credit Facility Trustee shall
comply with the procedures set forth in the Credit Facility relating to the
termination thereof.
(c) Alternate Credit Facilities. While the Bonds bear interest at the
Variable Rate, the Borrower may, at its option, provide for the delivery to the
Credit Facility Trustee of an Alternate Credit Facility. The Borrower shall
furnish to the Trustee, the Issuer and the Credit Facility Trustee (i) an
opinion of Counsel stating that the delivery of such Alternate Credit Facility
to the Credit Facility Trustee is authorized under this Indenture and complies
with the terms hereof and that such Alternate Credit Facility is enforceable
against the Credit Facility Issuer thereof in accordance with its terms, (ii) an
opinion of Co-Bond Counsel stating that the delivery of such Alternate Credit
Facility will not adversely affect the tax-exempt status of interest on the
Bonds, and (iii) if the Bonds are rated by Moody's and/or S&P, written evidence
from Moody's, if the Bonds are rated by Moody's, and from S&P, if the Bonds are
rated by S&P, in each case to the effect that such rating agency has reviewed
the proposed Alternate Credit Facility and that the substitution of the proposed
Alternate Credit Facility for the then current Credit Facility will not, by
itself, result in (A) a permanent withdrawal of its rating of the Bonds or (B) a
reduction of the then current rating of the Bonds, or if the Bonds are not rated
by Moody's and/or S&P, written evidence that the commercial paper of the bank or
institution issuing the proposed Alternate Credit Facility is rated P-1 or
higher by Moody's or A-1 or higher by S&P. The Credit Facility Trustee shall
then accept such Alternate Credit Facility and surrender the previously held
Credit Facility to the previous Credit Facility Issuer for cancellation promptly
on or before the 15th day after the Alternate Credit Facility becomes effective,
but not later than the 15th day following the last Interest Payment
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Date covered by the Credit Facility to be canceled. Notwithstanding anything to
the contrary contained herein, the Trustee shall not accept an Alternate Credit
Facility unless it shall have received from the Credit Facility Issuer of the
Credit Facility being replaced a certificate stating that any and all
requirements of the Letter of Credit Documents executed and delivered in
connection with the Credit Facility to be replaced have been satisfied.
(d) Notices of Substitution or Replacement of Credit Facility.
(i) The Trustee shall, at least 20 days prior to the proposed
replacement of a Credit Facility with an Alternate Credit Facility, give notice
thereof by mail to Registered Owners of the Bonds.
(ii) The Trustee shall promptly give notice of any replacement of the
Credit Facility to the Issuer, the Credit Facility Trustee, the Tender Agent and
the Remarketing Agent.
ARTICLE VII
REDEMPTION AND PURCHASE OF BONDS
Section 1071. Redemption or Purchase Dates and Prices. The Bonds shall
be subject to redemption, and, in certain instances, to purchase, prior to
maturity in the amounts, at the times and in the manner provided in this Article
VII. Payments of the redemption price or the purchase price of any Bond shall be
made only upon the surrender to the Trustee or its agent, as directed, of any
Bond so redeemed or purchased.
(a) Optional Redemption.
(i) Optional Redemption During Variable Rate Period. While the
Bonds bear interest at the Variable Rate, the Bonds shall be subject to
redemption, upon the written direction of the Borrower on behalf of the Issuer,
on any Interest Payment Date and on the Conversion Date in whole or in part, at
a redemption price equal to 100% of the principal amount thereof plus accrued
interest to the redemption date, without premium.
(ii) Optional Redemption With Premium During Fixed Rate
Period. While the Bonds bear interest at the Fixed Rate, the Bonds shall be
subject to redemption, upon the written direction of the Borrower on behalf of
the Issuer, in whole or in part, on any Interest Payment Date occurring on or
after the dates set forth below, at the redemption prices (expressed as
percentages of the
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principal amount to be redeemed) set forth below plus accrued interest to the
redemption date as follows:
Commencement of
Redemption Period Redemption Price
----------------- ----------------
Four years from 103%, declining by 1/2% on each
the Conversion Date succeeding anniversary of the
first day of the redemption
period until reaching 100% and
thereafter at 100%.
(b) Extraordinary Optional Redemption Due to Casualty or Eminent
Domain. The Bonds may be redeemed upon the written direction of the Borrower on
behalf of the Issuer, at any time in whole or in part at a redemption price
equal to 100% of the principal amount of the Bonds plus accrued interest to the
redemption date, without premium, under any of the following conditions, the
existence of which shall be certified to the Trustee by the Borrower
Representative:
(i) The Facility shall have been damaged or destroyed and
the Borrower elects not to rebuild the Facility or fails to so elect within 90
days of receipt by the Trustee of such Net Proceeds, or
(ii) Title to, or the temporary use of, all of the Facility
or any substantial portion thereof shall have been taken by Eminent Domain or
otherwise and the Borrower elects not to replace the property so taken or fails
so to elect within 90 days of receipt by the Trustee of such Net Proceeds.
Such redemption shall occur on any Business Day not more than 45 days
following the expiration of such 30-day period referred to in this Section
701(b).
(c) Mandatory Sinking Fund Redemption. The Bonds shall be redeemed in
part on the first Business Day of each February, May, August and November,
commencing on the first Business Day of
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February, 1998, at a redemption price equal to 100% of the principal amount of
the Bonds to be redeemed plus interest accrued to the redemption date, in
accordance with the following schedule:
<TABLE>
<CAPTION>
Redemption Redemption Redemption Redemption Redemption Redemption
Date* Amount Date* Amount Date* Amount
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
February, 1998 $50,000 February, 2003 $55,000 February, 2008 $35,000
May, 1998 50,000 May, 2003 55,000 May, 2008 35,000
August, 1998 50,000 August, 2003 55,000 August, 2008 35,000
November, 1998 50,000 November, 2003 55,000 November, 2008 35,000
February, 1999 50,000 February, 2004 55,000 February, 2009 35,000
May, 1999 50,000 May, 2004 55,000 May, 2009 35,000
August, 1999 50,000 August, 2004 55,000 August, 2009 35,000
November, 1999 50,000 November, 2004 55,000 November, 2009 35,000
February, 2000 50,000 February, 2005 35,000 February, 2010 35,000
May, 2000 50,000 May, 2005 35,000 May, 2010 35,000
August, 2000 50,000 August, 2005 35,000 August, 2010 35,000
November, 2000 50,000 November, 2005 35,000 November, 2010 35,000
February, 2001 55,000 February, 2006 35,000 February, 2011 35,000
May, 2001 55,000 May, 2006 35,000 May, 2011 35,000
August, 2001 55,000 August, 2006 35,000 August, 2011 35,000
November, 2001 55,000 November, 2006 35,000 November, 2011 35,000
February, 2002 55,000 February, 2007 35,000 February, 2012 35,000
May, 2002 55,000 May, 2007 35,000 May, 2012 35,000
August, 2002 55,000 August, 2007 35,000 August, 2012 35,000
November, 2002 55,000 November, 2007 35,000 November, 2012 35,000
</TABLE>
- ------------------------------------------------
*The Redemption Date shall be the first Business Day of each of the months
listed.
The principal amount of any Bonds redeemed otherwise than pursuant to
this subsection (c) shall be first applied to reduce the amount of the principal
installment payable on the date of final maturity of the Bonds until the amount
of such principal installment equals zero, and then to the amount of the
principal installment payable on the immediately preceding principal installment
date, and so on in reverse chronological order.
(d) Extraordinary Mandatory Redemption.
(i) Determination of Taxability. The Bonds shall be subject to
mandatory redemption in whole on any date at a redemption price equal to 100% of
the principal amount thereof, without premium, plus accrued interest thereon to
the redemption date, within 180 days following the receipt by the Trustee of
written notice of a Determination of Taxability.
(ii) Failure to Provide Alternate Credit Facility. The Bonds
shall be subject to mandatory redemption in whole during the Variable Rate
Period at a redemption price equal to 100% of the principal amount thereof,
without premium, plus accrued interest, if any, thereon to the date of
redemption, on the Interest Payment Date occurring closest to but not less than
15 days prior to the date of expiration of the then current Credit Facility,
unless an Alternate Credit Facility has been provided in accordance with Article
VI hereof.
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(iii) Mandatory Redemption After Completion Date. The Bonds
shall be subject to mandatory redemption in whole or in part with funds
transferred to the Loan Repayments Account of the Bond Fund from the Facility
Fund pursuant to Section 4.4 of the Loan Agreement at a redemption price equal
to 100% of the principal amount thereof, without premium, plus accrued interest
thereon to the redemption date. In the event the amount transferred from the
Facility Fund is less than $100,000 or a lesser amount which would result in any
Registered Owner holding Bonds in denominations other than Authorized
Denominations, the Trustee may, at the request of the Borrower and upon receipt
of an opinion of Co-Bond Counsel, hold such amount in the Bond Fund and apply it
to the next succeeding payment of principal or interest due on the Bonds, so
long as such payment of principal or interest would not result in less than 95%
of the net proceeds of the Bonds being used for the acquisition, construction,
reconstruction or improvement of land or property of a character subject to the
allowance for depreciation under the Code. Otherwise, the Borrower shall deposit
with the Trustee an amount that, together with the amount transferred from the
Facility Fund, shall be sufficient to redeem Bonds in Authorized Denominations.
(e) Mandatory Purchase on Conversion Date. The Bonds shall be subject
to mandatory purchase in whole at a purchase price equal to 100% of the
principal amount thereof, without premium, plus accrued interest, if any,
thereon to the date of purchase, on the Conversion Date; provided that there
shall not be so purchased (i) Bonds or portions thereof in Authorized
Denominations with respect to which the Trustee shall have received Optional
Retention Notices from the Registered Owners thereof, and (ii) Bonds issued in
exchange for or upon registration of transfer of Bonds or portions thereof in
Authorized Denominations referred to in clause (i) of this subsection (e).
Section 1072. Borrower Direction of Optional Redemption. The Borrower,
on behalf of the Issuer, shall direct the Trustee in writing to call Bonds for
optional redemption at the same time the Borrower notifies the Trustee in
writing that the Borrower has made or intends to make a corresponding prepayment
under the Note. Such direction from the Borrower on behalf of the Issuer to the
Trustee shall be given at least 45 days prior to the redemption date or such
shorter period as shall be acceptable to the Trustee. So long as a Credit
Facility is then held by the Credit Facility Trustee, the Trustee shall only
call Bonds for optional redemption if it has Available Moneys in the Loan
Repayments Account of the Bond Fund or has been notified by the Credit Facility
Issuer that it will receive moneys pursuant to the Credit Facility, in the
aggregate, sufficient to pay the redemption price of the Bonds to be called for
redemption, plus accrued interest thereon.
Section 1073. Selection of Bonds to be Called for Redemption. Except as
otherwise provided herein or in the Bonds, if less than all the Bonds are to be
redeemed, the particular Bonds to be called
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for redemption shall be selected by the Trustee in the following order of
priority: first, Bonds pledged to the Bank pursuant to the Pledge Agreement,
second, Bonds owned by the Borrower and third, Bonds selected by lot from among
the Registered Owners of less than $1,000,000 in aggregate principal amount;
provided that if there are no such Registered Owners, or if after selection from
among such Registered Owners such selection has resulted in redemption of less
than a sufficient amount of Bonds or in Bonds outstanding in unauthorized
denominations, then the remaining amount of Bonds to be redeemed shall be
selected from among the Registered Owners of $1,000,000 or more in aggregate
principal amount of Bonds. In no event shall the Trustee select Bonds for
redemption if such redemption will result in any Registered Owner owning Bonds
in principal amounts other than in Authorized Denominations; provided, however,
that Authorized Denominations shall not be required for Bonds Outstanding that
result from principal installments made pursuant to Section 701(c) hereof within
a year of (i) the maturity of the Bonds or (ii) the earlier payment in full
thereof.
Section 1074. Notice of Redemption or Purchase.
(a) When required to redeem or purchase Bonds under any provision of
this Article VII, or when directed to redeem Bonds by the Borrower on behalf of
the Issuer, the Trustee shall cause notice of the redemption or purchase to be
given not more than 60 days and not less than 30 days prior to the redemption or
purchase date by mailing a copy of all notices of redemption or purchase by
first class mail, postage prepaid, to all Registered Owners of Bonds to be
redeemed or purchased at their addresses shown on the Bond Register. Failure to
mail any such notice or any defect in the mailing thereof in respect of any Bond
shall not affect the validity of the redemption or purchase of any other Bond.
Notices of redemptions or purchases shall also be mailed to the Remarketing
Agent, the Credit Facility Trustee and the Credit Facility Issuer, if any. Any
such notice shall be given in the name of the Issuer, shall identify the Bonds
to be redeemed or purchased (and, in the case of partial redemption of Bonds,
the respective principal amounts thereof to be redeemed), shall specify the
redemption date, and shall state that on the redemption date the redemption
price of the Bonds called for redemption will be payable at the principal
corporate trust office of the Trustee, or in the case of mandatory redemption
pursuant to Section 701(d)(ii) or mandatory purchase pursuant to Section 701(e),
the redemption or purchase price shall be payable at the office of the Tender
Agent, and that from that date interest will cease to accrue. The Trustee may
use "CUSIP" numbers in notices of redemption or purchase as a convenience to
Registered Owners, provided that any such notice shall state that no
representation is made as to the correctness of such numbers either as printed
on the Bonds or as contained in any notice of redemption or purchase and that
reliance may be placed only on the identification numbers containing the prefix
established under the Indenture.
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(b) With respect to any notice of redemption of Bonds in accordance
with Section 701(d)(ii), such notice shall also specify the date of the
expiration of the term of the Credit Facility.
(c) After the Conversion Date, if at the time of mailing of notice of
any optional redemption, there shall not have been deposited with the Trustee
moneys sufficient to redeem all the Bonds called for redemption, such notice may
state that it is conditional on the deposit of Available Moneys with the Trustee
not later than the redemption date, and such notice shall be of no effect unless
such moneys are so deposited.
(d) Upon redemption of less than all of the Bonds, the Trustee shall
furnish to the Credit Facility Trustee and the Credit Facility Issuer a notice
in the form specified by the Credit Facility Issuer to reduce the coverage
provided by the Credit Facility and upon redemption of all of the Bonds, the
Credit Facility Trustee will surrender the Credit Facility to the Credit
Facility Issuer for cancellation.
(e) Purchases under Section 701(e) hereof shall be in accordance with
Section 202(e).
Section 1075. Bonds Redeemed or Purchased in Part. Any Bond which is to
be redeemed or purchased only in part shall be surrendered at a place stated in
the notice provided for in Section 704 (with due endorsement by, or a written
instrument of transfer in form satisfactory to the Trustee duly executed by, the
Registered Owner thereof or his attorney duly authorized in writing) and the
Issuer shall execute and the Trustee or its Authenticating Agent shall
authenticate and deliver to the Registered Owner of such Bond without service
charge, a new Bond or Bonds, of any Authorized Denomination as requested by such
Registered Owner in aggregate principal amount equal to and in exchange for the
unredeemed and unpurchased portion of the principal of the Bond so surrendered.
ARTICLE VIII
PARTICULAR COVENANTS AND PROVISIONS
Section 1081. Covenant to Pay Bonds: Bonds Limited Obligations of the
Issuer. The Issuer covenants that it will promptly pay the principal of, premium
and interest on and other amounts payable under the Bonds at the places, on the
dates and in the manner provided herein and in the Bonds according to the true
intent and meaning thereof; provided, however, that such principal
and interest and other amounts are payable solely from the payments made by the
Borrower on the Note and other Revenues.
The Issuer shall not in any event be liable for the payment of the
principal of, premium or interest on, or the purchase price of,
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<PAGE>
the Bonds, or for the performance of any pledge, mortgage, obligation or
agreement of any kind whatsoever which may be undertaken by the Issuer, and
neither the Bonds nor any of the agreements or obligations of the Issuer shall
be construed to constitute an indebtedness of the Issuer within the meaning of
any constitutional or statutory provision or limitation whatsoever. The Bonds
and the interest thereon shall not be deemed to constitute or to create in any
manner a debt, liability or obligation of the State, the Department, the County
or of any political subdivision or any agency thereof or a pledge of the faith
and credit of the State or any such political subdivision or any such agency,
but shall be limited obligations of the Issuer payable solely from the revenues
and other funds pledged therefor and shall not be payable from any other assets
or funds of the Issuer, and neither the faith and credit nor the taxing power of
the State, the Department, the County or any political subdivision or any agency
of the State is pledged to the payment of the principal of or interest on the
Bonds.
Section 1082. Covenants to Perform Obligations under this Indenture.
The Issuer covenants that it will faithfully perform at all times any and all
covenants, undertakings, stipulations and provisions contained in this
Indenture, in the Bonds executed and delivered hereunder and in all proceedings
of the Issuer pertaining thereto and will faithfully observe and perform at all
times any and all covenants, undertakings, stipulations and provisions of the
Loan Agreement on its part to be observed or performed. The Issuer covenants
that it is duly authorized under the laws of the State, including particularly
and without limitation the Act, to issue the Bonds authorized hereby and to
enter into this Indenture, to endorse the Note to the Trustee, to pledge the
payments on the Note and other Revenues in the manner and to the extent herein
set forth; and that all action on its part for the issuance of the Bonds issued
hereunder and the execution and delivery of this Indenture has been duly and
effectively taken; and that the Bonds in the hands of the Registered Owners
thereof are and will be the valid and binding limited obligations of the Issuer
according to the tenor and import thereof.
Section 1083. Covenant to Perform Obligations under the Loan Agreement.
Subject to the provisions of Section 804 of this Article, the Issuer covenants
and agrees that it will not suffer, permit or take any action or do anything or
fail to take any action or fail to do anything which may result in the
termination or cancellation of the Loan Agreement so long as any Bond is
Outstanding; that it will punctually fulfill its obligations and will require
the Borrower to perform punctually its duties and obligations under the Loan
Agreement; that it will not execute or agree to any change, amendment or
modification of or supplement to the Loan Agreement except by a supplement or an
amendment duly executed by the Issuer and the Borrower with the approval of the
Trustee and upon the further terms and conditions set forth in Article XIII of
this Indenture; that it will not agree to any
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abatement, reduction, abrogation, waiver, diminution or other modification in
any manner or to any extent whatsoever of the obligation of the Borrower to pay
the Note and to meet its other obligations as provided in the Loan Agreement.
Section 1084. Trustee or Credit Facility Trustee May Enforce Issuer's
Rights Under Loan Agreement. The Loan Agreement, a duly executed counterpart of
which has been filed with the Trustee and the Credit Facility Trustee, sets
forth the covenants and obligations of the Issuer and the Borrower, including a
provision in Section 11.9 thereof that subsequent to the issuance of the Bonds
and prior to Payment of the Bonds (as defined in the Loan Agreement), the Loan
Agreement and the Note may not be effectively amended, changed, modified,
altered or terminated except as provided in Article XIII of this Indenture, and
reference is hereby made to the Loan Agreement for a detailed statement of said
covenants and obligations of the Borrower under the Loan Agreement, and the
Issuer agrees that the Trustee or the Credit Facility Trustee, subject to the
provisions of the Loan Agreement and this Indenture reserving certain rights to
the Issuer and respecting actions by the Trustee or the Credit Facility Trustee
in its name or in the name of the Issuer, may enforce all rights of the Issuer
and all obligations of the Borrower under and pursuant to the Loan Agreement for
and on behalf of the Registered Owners whether or not the Issuer is in default
hereunder.
Section 1085. Covenant Against Arbitrage. The Issuer covenants and
agrees that it will not knowingly make or authorize any use, and directs the
Trustee not to make or permit any use, of the proceeds of the Bonds which would
cause any Bond to be an "arbitrage bond" within the meaning of Section 148 of
the Code and the applicable regulations promulgated from time to time
thereunder, and further covenants that it will observe and not violate the
requirements of Section 148 of the Code and any such applicable regulations to
the extent necessary so that the interest on the Bonds will not cease to be
exempt from Federal income tax by reason of such use of proceeds; provided that
neither the Issuer nor the Trustee shall be liable for any investment of moneys
under this Indenture made at the direction of the Borrower Representative.
If Co-Bond Counsel advises the Borrower that it is necessary to
restrict or limit the yield on the investment of any moneys, securities or other
obligations paid to or held by the Trustee hereunder in order to prevent any of
the Bonds from being considered an "arbitrage bond" within the meaning of
Section 148 of the Code, the Borrower will direct the Trustee in writing to take
such action with respect to the purchase or sale of specified investments as is
deemed necessary by Co-Bond Counsel to restrict or limit the yield on such
investment so as to comply with Section 148 of the Code.
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Section 1086. Inspection of Bond Register. At reasonable times and upon
reasonable regulations established by the Bond Registrar, the Borrower or any
Registered Owner may inspect the Bond Register, at its own expense.
ARTICLE IX
DEFAULT AND REMEDIES
Section 1091. Defaults. Each of the following events is hereby declared
an "Event of Default":
(a) Payment of interest on any of the Bonds shall not be made when the
same shall become due; or
(b) Payment of the principal or redemption price of any of the Bonds
shall not be made when the same shall become due, whether at maturity or upon
call for redemption or otherwise; or
(c) An "Event of Default" under the Loan Agreement (other than an Event
of Default arising from the Borrower's failure to perform its obligations set
forth in Section 7.21(k) of the Loan Agreement); provided, however, that such
occurrence shall not constitute an Event of Default hereunder if (i) there is
then a Credit Facility in effect and (ii) the Credit Facility Issuer has not
failed to honor any drawing (which drawing strictly complies with, and conforms
to, the terms and conditions of the Credit Facility) presented under the Credit
Facility, unless the Credit Facility Issuer declares the same to be an Event of
Default hereunder by notice given in writing and delivered to the Trustee and
the Borrower accompanied by a written request that the Bonds and all accrued and
unpaid interest thereon be declared immediately due and payable; or
(d) The Trustee and the Credit Facility Trustee receive written notice
from the Credit Facility Issuer that an "Event of Default" under the
Reimbursement Agreement has occurred and has not been waived or cured
accompanied by a written request that the Bonds and all accrued and unpaid
interest thereon be declared immediately due and payable; or
(e) The Credit Facility Trustee receives, on or before the close of
business on the tenth day following a drawing under a Credit Facility to pay
interest on the Bonds, notice by telecopier, by telex or in writing from the
Credit Facility Issuer that the Credit Facility has not been reinstated for the
amount so drawn; or
(f) Payment of the purchase price of any Bond tendered pursuant to
Section 203 or Section 701(e) is not made when payment is due; or
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(g) The Issuer shall default in the due and punctual performance of any
of the covenants, conditions, agreements and provisions contained in the Bonds
or in this Indenture on the part of the Issuer to be performed other than as
referred to in the preceding paragraphs of this Section; provided, however, that
no default specified in clause (g) of this Section 901 shall constitute such an
Event of Default until written notice specifying such default and requiring the
same to be remedied shall have been given to the Borrower, the Credit Facility
Trustee and the Issuer by the Trustee, which may give notice in the Trustee's
discretion and shall give such notice at the written direction of the Registered
Owners of not less than 25% in aggregate principal amount of Bonds then
Outstanding, and the Borrower and the Issuer shall have had 30 days after
receipt of such notice to correct said default and shall not have corrected said
default within the applicable period; or
(h) an "Event of Default" (as that term is defined in the Loan
Agreement) occurs under Section 7.21(k) of the Loan Agreement; provided,
however, that such occurrence shall not constitute an Event of Default, unless
the Issuer declares the same to be an Event of Default hereunder by notice given
in writing and delivered to the Trustee, the Credit Facility Trustee and the
Borrower accompanied by a written request that the Bonds and all accrued and
unpaid interest thereon become immediately due and payable.
Section 1092. Acceleration and Annulment Thereof. Subject to the
requirement that the Credit Facility Issuer's consent to any acceleration must
be obtained in the case of an Event of Default described in subsections (c), (d)
or (g) of Section 901 hereof, upon the occurrence of an Event of Default, the
Credit Facility Trustee may, and upon (i) the written request of the Registered
Owners of not less than 25% in aggregate principal amount of Bonds then
Outstanding, (ii) the written request of the Credit Facility Issuer, if any, or
(iii) the occurrence of an Event of Default described in subsection (a), (b),
(e), (f) or (h) (but with regard to (h) only if the Issuer declares in writing
the same to be an Event of Default and requests that the entire unpaid principal
amount of and interest on the Bonds to be immediately due and payable) of
Section 901 hereof, the Credit Facility Trustee shall, by notice to the Issuer
and the Trustee, declare the entire unpaid principal of and interest on the
Bonds due and payable; and upon such declaration, the said principal, together
with interest accrued thereon, shall become payable immediately at the place of
payment provided therein, anything in this Indenture or in the Bonds to the
contrary notwithstanding. Upon the occurrence of any acceleration hereunder, the
Trustee shall notify the Credit Facility Trustee of the amount of the
accelerated principal and interest due and payable and the Credit Facility
Trustee shall immediately direct the Trustee to exercise such rights as it may
have as the registered owner of the Note to declare all payments thereunder to
be due and payable immediately, and to the extent it
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has not already done so, the Credit Facility Trustee shall immediately draw upon
the Credit Facility, if any, to the extent permitted by the terms thereof.
Interest on the Bonds shall cease to accrue upon receipt by the Credit Facility
Trustee of funds drawn under the Credit Facility.
Immediately after any acceleration because of the occurrence of an
Event of Default under Sections 901(a), (b), (e), (f) or (h), the Credit
Facility Trustee shall notify in writing the Issuer, the Trustee, the Borrower
and the Credit Facility Issuer of the occurrence of such acceleration. Within
five days of the occurrence of any acceleration hereunder, the Trustee shall
notify by first class mail, postage prepaid, the Registered Owners of all Bonds
then Outstanding of the occurrence of such acceleration.
If, after the principal of the Bonds has become due and payable, (i)
all arrears of interest upon the Bonds are paid by the Issuer (solely out of the
Trust Estate), (ii) the Issuer also performs all other things in respect to
which it may have been in default hereunder and pays the reasonable charges of
the Trustee, the Credit Facility Trustee and the Registered Owners, including
reasonable attorneys' fees, and (iii) in case of an Event of Default described
in Section 901(e) hereof, the Trustee and the Credit Facility Trustee have
received written notice that the Credit Facility has been reinstated in
accordance with its terms to an amount equal to the principal amount of the
Bonds then Outstanding plus 120 days' interest accrued thereon at an assumed
rate of 12% per annum, then, and in every such case, the Credit Facility Issuer
or the Majority Registered Owners, by written notice to the Issuer, the Credit
Facility Trustee and the Trustee, may annul such acceleration and its
consequences, and such annulment shall be binding upon the Trustee, the Credit
Facility Trustee and upon all Registered Owners of Bonds issued hereunder;
provided, however, that the Trustee and the Credit Facility Trustee shall not
annul any acceleration without the consent of the Credit Facility Issuer unless
such acceleration has resulted from the failure of the Credit Facility Issuer to
honor a proper draw for payment under the Credit Facility.
Notwithstanding the foregoing, the Trustee and the Credit Facility
Trustee shall not annul any acceleration which has resulted from an Event of
Default which has resulted in a drawing under the Credit Facility unless the
Trustee and the Credit Facility Trustee have received written notice that the
Credit Facility has been reinstated in accordance with its terms to an amount
equal to the principal amount of the Bonds then Outstanding plus 120 days'
interest accrued thereon at an assumed rate of 12% per annum. The Trustee shall
forward a copy of any notice from Registered Owners received by it pursuant to
this paragraph to the Borrower. Immediately upon such annulment, the Credit
Facility Trustee shall cancel, by notice to the Borrower, any demand for payment
of the Note made by the Credit Facility Trustee pursuant to this Section 902.
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Section 1093. Other Remedies. If any Event of Default occurs and is
continuing, the Credit Facility Trustee, before or after the principal of the
Bonds becomes immediately due and payable, may direct the Trustee to enforce
each and every right granted to it as the holder of the Note and under the Loan
Agreement and any supplements or amendments thereto. In exercising such rights
and the rights given the Credit Facility Trustee under this Article IX, the
Credit Facility Trustee shall take such action as, in the judgment of the Credit
Facility Trustee applying the standards described in Section 1002 hereof, would
best serve the interests of the Registered Owners. It is the intention of the
parties hereto that the Credit Facility Trustee shall not be required 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 its rights or
powers.
Section 1094. Legal Proceedings by Credit Facility Trustee. If any
Event of Default has occurred and is continuing, the Credit Facility Trustee in
its discretion may, and upon the written request of the Credit Facility Issuer
or the Registered Owners of not less than 25% in aggregate principal amount of
all Bonds then Outstanding and receipt of indemnity to its satisfaction shall,
in its own name:
(i) By mandamus, or other suit, action or proceeding at law or in
equity, enforce all rights of the Registered Owners hereunder;
(ii) Bring suit upon the Bonds, the Credit Facility (but only to the
extent the Credit Facility Issuer shall have wrongfully dishonored drawings made
in strict conformity with the terms thereof) and the Note; and
(iii) By action or suit in equity enjoin any acts or things which may
be unlawful or in violation of the rights of the Registered Owners.
If an Event of Default under Section 901(c) occurs and is continuing,
the Credit Facility Trustee in its discretion may, and upon the written request
of the owners of not less than 25% in aggregate principal amount of all Bonds
then Outstanding and receipt of indemnity to its satisfaction shall, enforce
each and every right granted to it or to the Issuer under the Loan Agreement or
as a holder of the Note.
Section 1095. Discontinuance of Proceedings by Credit Facility Trustee.
If any proceeding commenced by the Credit Facility Trustee on account of any
default is discontinued or is determined adversely to the Credit Facility
Trustee, then the Borrower, the Credit Facility Trustee, the Credit Facility
Issuer, the Issuer, the Trustee and the Registered Owners shall be restored to
their former positions and rights hereunder as though no proceedings had been
commenced.
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Section 1096. Credit Facility Issuer or Registered Owners May Direct
Proceedings. Anything to the contrary in this Indenture notwithstanding, either
the Credit Facility Issuer, if a Credit Facility is in effect, or the Majority
Registered Owners shall have the right, after furnishing indemnity satisfactory
to the Trustee and the Credit Facility Trustee, to direct the method and place
of conducting all remedial proceedings by the Trustee and the Credit Facility
Trustee hereunder, provided that such direction shall not be in conflict with
any rule of law or with this Indenture or unduly prejudice the rights of
minority Registered Owners.
Section 1097. Limitations on Actions by Registered Owners. No
Registered Owner shall have any right to bring suit on the Credit Facility. No
Registered Owner shall have any right to pursue any other remedy hereunder
unless:
(a) the Trustee and the Credit Facility Trustee shall have been given
written notice of an Event of Default;
(b) the Registered Owners of not less than 25% in aggregate principal
amount of all Bonds then Outstanding shall have requested the Trustee or the
Credit Facility Trustee, in writing, to exercise the powers hereinabove granted
or to pursue such remedy in its or their name or names;
(c) the Trustee and the Credit Facility Trustee shall have been offered
indemnity satisfactory to it against costs, expenses and liabilities, except
that no offer of indemnification shall be required for a declaration of
acceleration under Section 902 or for a drawing under the Credit Facility; and
(d) the Trustee or the Credit Facility Trustee shall have failed to
comply with such request within a reasonable time.
Notwithstanding the foregoing provisions of this Section 907 or any
other provision of this Indenture, the obligation of the Issuer shall be
absolute and unconditional to pay hereunder, but solely from the Revenues and
other funds pledged under this Indenture, the principal or redemption price of,
and interest on, the Bonds to the respective Registered Owners thereof on the
respective due dates thereof, and nothing herein shall affect or impair the
right of action, which is absolute and unconditional, of such Registered Owners
to enforce such payment.
Section 1098. Credit Facility Trustee May Enforce Rights Without
Possession of Bonds. All rights under this Indenture and the Bonds may be
enforced by the Credit Facility Trustee without the possession of any Bonds or
the production thereof at the trial or other proceedings relative thereto, and
any proceeding instituted by the Credit Facility Trustee shall be brought in its
name for the ratable benefit of the Registered Owners of the Bonds.
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Section 1099. Remedies Not Exclusive. No remedy herein conferred is
intended to be exclusive of any other remedy or remedies, and each remedy is in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute.
Section 910. Delays and Omissions Not to Impair Rights. No delays or
omission in respect of exercising any right or power accruing upon any default
shall impair such right or power or be a waiver of such default, and every
remedy given by this Article IX may be exercised from time to time and as often
as may be deemed expedient.
Section 911. Application of Moneys in Event of Default. Any moneys
received by the Trustee or the Credit Facility Trustee under this Article IX
shall be applied in the following order; provided that any moneys received by
the Credit Facility Trustee from a drawing under the Credit Facility shall be
applied to the extent permitted by the terms thereof only as provided in clause
(iii) below with respect to the principal of, and interest accrued on, Bonds
other than Bonds held by or for the Borrower:
(i) To the payment of the reasonable costs of the Trustee and the
Credit Facility Trustee, including counsel fees, any disbursements of the
Trustee and the Credit Facility Trustee with interest thereon at the Trustee's
prime rate per annum and its reasonable compensation; and
(ii) To the payment of reasonable costs and expenses of the Issuer,
including counsel fees, incurred in connection with the Event of Default; and
(iii) To the payment of principal or redemption price (as the case may
be) and interest on the Bonds, and in case such moneys shall be insufficient to
pay the same in full, then to the payment of principal or redemption price and
interest ratably, without preference or priority of one over another or of any
installment of interest over any other installment of interest.
The surplus, if any, shall be paid to the Borrower or the person
lawfully entitled to receive the same as a court of competent jurisdiction may
direct; provided that, if the Credit Facility Trustee has received payments
under the Credit Facility following the Event of Default, the surplus shall be
paid to the Credit Facility Issuer to the extent of such payments.
Section 912. Credit Facility Trustee and Registered Owners Entitled to
All Remedies Under Act. It is the purpose of this Article IX to provide such
remedies to the Credit Facility Trustee and the Registered Owners as may be
lawfully granted under the provisions of the Act, but should any remedy herein
granted be held unlawful, the Credit Facility Trustee and the Registered Owners
shall nevertheless be entitled to every remedy provided by the Act.
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It is further intended that, insofar as lawfully possible, the provisions of
this Article shall apply to and be binding upon any trustee or receiver
appointed under applicable law.
Section 913. Credit Facility 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 Issuer, the Borrower or any other obligor upon the
Loan Agreement or the Bonds or to property of the Issuer, the Borrower, or such
other obligor or the creditors of any of them, the Credit Facility 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 Credit Facility Trustee shall have made any demand on the Borrower
for the payment on the Note of an amount equal to overdue principal or interest
or additional interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise:
(a) to file and prove a claim for the whole amount of
principal 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 Credit Facility Trustee (including any
claim for the reasonable compensation, expenses, disbursements and
advances of the Credit Facility Trustee, its agents and counsel) and of
the Registered Owners allowed in such judicial proceeding; and
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator or sequestrator (or other
similar official) in any such judicial proceeding is hereby authorized by the
Registered Owners to make such payments to the Credit Facility Trustee, and in
the event that the Credit Facility Trustee shall consent to the making of such
payments directly to the Registered Owners, to pay to the Credit Facility
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Credit Facility Trustee, its agents and
counsel, and any other amounts due the Credit Facility Trustee under Section 911
hereof.
Nothing herein contained shall be deemed to authorize the Credit
Facility Trustee to authorize or consent to or accept, or adopt on behalf of the
Registered Owners, any plan of reorganization, arrangement, adjustment or
composition affecting the Bonds or the rights of any Registered Owner thereof,
or to authorize the Credit Facility Trustee to vote in respect of the claim of
the Registered Owners in any such proceeding.
All moneys received by the Credit Facility Trustee pursuant to any
right given or action taken under this Indenture shall, after
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payment of the costs and expenses of the proceedings resulting in the collection
of such moneys and the fees and expenses of the Credit Facility Trustee, be
deposited in the Bond Fund and applied to the payment of the principal of,
redemption premium, if any, and interest then due and unpaid on the Bonds in
accordance with the provisions of this Indenture.
Section 914. 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 Credit Facility Trustee and of the Registered Owners
under this Indenture, the Credit Facility Trustee shall be entitled, as a matter
of right, to the appointment of a receiver or receivers of the amounts payable
on the Note or otherwise under the Loan Agreement and assigned to the Credit
Facility Trustee under this Indenture pending such proceedings, with such powers
as the court making such appointment shall confer, whether or not any such
amounts payable shall be deemed sufficient ultimately to satisfy the Bonds.
Section 915. Assignment to Credit Facility Issuer. It is expressly
understood and agreed by the Trustee that the Issuer does hereby pledge and
assign to the Credit Facility Issuer all of the Trust Estate herein assigned to
the Trustee as security for the payment of the Bonds, which assignment to the
Credit Facility Issuer is subordinate to the simultaneous assignment thereof to
the Trustee pursuant to this Indenture. Accordingly, anything in this Indenture
to the contrary notwithstanding, in the event, in connection with the payment of
the Bonds in full in accordance with Article XIV hereof, the Trustee draws under
the Credit Facility for the purpose of paying all or any portion thereof, then,
in such event, the Trustee shall, promptly following the Credit Facility
Issuer's honor of the draft so drawn by the Trustee, transfer and assign to the
Credit Facility Issuer all collateral pledged and assigned by the Issuer to the
Trustee pursuant to this Indenture, including, without limitation, all rights of
the Trustee under the Bond Documents, and, in addition, shall remit to the
Credit Facility Issuer all amounts in any of the funds created by this Indenture
which remain after the payment in full of the Bonds (except amounts held for the
payment of (a) the principal of and premium (if any) and interest on, or the
purchase price of, any Bonds, (b) any rebate to the United States of America and
(c) any accrued and unpaid Administrative Expenses and other amounts held by the
Trustee).
Section 916. Intercreditor Agreement. Certain of the rights, duties,
obligations and remedies of the Issuer, the Credit Facility Issuer, the Trustee,
the Borrower, First Union National Bank of Maryland, the Guarantor and the Hedge
Counterparty under this Indenture and the other Bond Documents and the Letter of
Credit Documents are subject to the terms, conditions and limitations set forth
in the Intercreditor Agreement.
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ARTICLE X
CONCERNING THE TRUSTEE AND THE CREDIT FACILITY TRUSTEE
Section 1101. Acceptance of Trusts by the Trustee. The Trustee hereby
represents and warrants to the Issuer (for the benefit of the Borrower and the
Registered Owners as well as the Issuer) that it is a national banking
association and that it is duly authorized under the laws of the United States
of America and the State to accept and execute trusts of the character herein
set out.
The Trustee accepts and agrees to execute the trusts imposed upon it by
this Indenture, but only upon the terms and conditions set forth in this Article
and subject to the provisions of this Indenture including the following express
terms and conditions, to all of which the parties hereto and the Registered
Owners agree, except:
(1) prior to the occurrence and continuance of an Event of Default, the
Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) 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 directions of the Borrower Representative and
upon certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; 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 requirements of this Indenture but need
not verify the accuracy of the contents thereof.
In case an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own grossly negligent action, its own grossly
negligent failure to act, or its own willful misconduct, except that:
(1) this subsection shall not be construed to limit the effect of the
preceding provisions of this Section 1001;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a responsible officer or officers of the
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Trustee unless it shall be proved that the Trustee was grossly negligent in
ascertaining the pertinent facts; and
(3) 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
Majority Registered Owners 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 this Indenture.
Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee, including without limitation
Sections 1003 and 1004 hereof, shall be subject to the provisions of this
Section 1001.
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 Indenture.
Section 1102. Acceptance of Trusts by the Credit Facility Trustee. The
Credit Facility Trustee hereby represents and warrants to the Issuer (for the
benefit of the Borrower and the Registered Owners as well as the Issuer) that it
is a state banking corporation and that it is duly authorized under such laws
and the laws of the State to accept and execute trusts of the character herein
set out.
The Credit Facility Trustee accepts and agrees to execute the trusts
imposed upon it by this Indenture, but only upon the terms and conditions set
forth in this Article and subject to the provisions of this Indenture including
the following express terms and conditions, to all of which the parties hereto
and the Registered Owners agree, except:
(1) prior to the occurrence and continuance of an Event of Default, the
Credit Facility Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Credit Facility
Trustee; and
(2) in the absence of bad faith on its part, the Credit Facility
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon directions of the Borrower
Representative and upon certificates or opinions furnished to the Credit
Facility Trustee and conforming to the requirements of this Indenture; but in
the case of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Credit Facility Trustee, the Credit
Facility Trustee shall be under a duty to examine the same to determine whether
or not they conform to requirements of this Indenture but need not verify the
accuracy of the contents thereof.
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In case an Event of Default has occurred and is continuing, the Credit
Facility Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise, as
a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
No provision of this Indenture shall be construed to relieve the Credit
Facility Trustee from liability for its own grossly negligent action, its own
grossly negligent failure to act, or its own willful misconduct, except that:
(1) this subsection shall not be construed to limit the effect of the
preceding provisions of this Section 1002;
(2) the Credit Facility Trustee shall not be liable for any error of
judgment made in good faith by a responsible officer or officers of the Credit
Facility Trustee unless it shall be proved that the Credit Facility Trustee was
grossly negligent in ascertaining the pertinent facts; and
(3) the Credit Facility 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 Majority Registered Owners relating to the time, method and
place of conducting any proceeding for any remedy available to the Credit
Facility Trustee, or exercising any trust or power conferred upon the Credit
Facility Trustee under this Indenture.
Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Credit Facility Trustee, including
without limitation Sections 1004 and 1005 hereof, shall be subject to the
provisions of this Section 1002.
The Credit Facility 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
Indenture.
Section 1103. Trustee or Credit Facility Trustee to Give Notice.
(a) If any Event of Default occurs and is continuing hereunder and if
the Trustee or the Credit Facility Trustee has received written notice thereof
or is deemed to have notice pursuant to Section 1003(c), the Trustee or the
Credit Facility Trustee shall give to all Registered Owners, the Issuer, the
Remarketing Agent and to the Credit Facility Issuer written notice of such
default or Event of Default within 30 days after receipt of such information.
For the purpose of this Section 1003 only, the term "default" shall mean any
event which is, or after notice or lapse of time or both would become, an Event
of Default under Section 901 hereof.
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(b) Promptly upon receipt of notice of the occurrence of an Event of
Taxability or a Determination of Taxability, the Trustee shall give immediate
telephonic notice, promptly confirmed in writing, to the Borrower, the Issuer,
the Registered Owners and former Registered Owners (provided that the Trustee
shall not be obligated to maintain records of such former Registered Owners or
to retain records relating to such former Registered Owners for more than six
years), the Remarketing Agent and the Credit Facility Issuer.
(c) Neither the Trustee nor the Credit Facility Trustee shall be
required to take notice or be deemed to have notice of any Event of Default
hereunder or under the Loan Agreement except for a default or Event of Default
referred to in Section 901(a) or (b), unless the Trustee or the Credit Facility
Trustee shall have received written notice of such Event of Default by the
Issuer, the Borrower, the Credit Facility Issuer or by the Registered Owners of
25% in aggregate principal amount of the Bonds then Outstanding.
Section 1104. Trustee and Credit Facility Trustee Entitled to
Indemnity.
(a) The Borrower shall indemnify the Trustee and the Credit Facility
Trustee and their officers, directors and employees (herein, the "Indemnitees")
against any loss, liability or expense incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, except as set forth in subsection (b). An Indemnitee shall notify the
Borrower promptly of any claim for which it may seek indemnity. Except where the
Borrower is the claimant, the Borrower shall defend the claim, and the
Indemnitee shall cooperate in the defense. An Indemnitee may have separate
counsel, and the Borrower shall pay the reasonable fees and expenses of such
counsel. An Indemnitee shall not be required to give any bond or surety in
respect to the execution of its rights and obligations hereunder.
(b) The Borrower shall not be obligated to reimburse any expense or to
indemnify against any loss or liability incurred by an Indemnitee through gross
negligence or bad faith.
(c) To secure the Borrower's payment obligations in this Section, the
Trustee and the Credit Facility Trustee shall have a lien prior to the lien
created by this Indenture for the benefit of the Owners of the Bonds on all
money or property held or collected by the Trustee or the Credit Facility
Trustee other than money derived from a draw on the Credit Facility. Such
obligations shall survive the satisfaction and discharge of this Indenture.
(d) When the Trustee or the Credit Facility Trustee incurs expenses or
renders services after an Event of Default, the expenses and compensation for
the services are intended to constitute expenses of administration under any
applicable bankruptcy law.
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(e) The Trustee or the Credit Facility Trustee, as the case may be,
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 or Credit Facility
Trustee, as the case may be, without indemnity, and in such case the Issuer
shall reimburse the Trustee or the Credit Facility Trustee, as the case may be,
from funds available therefor under the Loan Agreement for all costs and
expenses, outlays and counsel fees and other reasonable disbursements properly
incurred in connection therewith; provided, however, that the Trustee or the
Credit Facility Trustee, as the case may be, shall (i) make all payments
hereunder of principal and redemption price of and interest on the Bonds and of
the purchase price of Bonds tendered at the option of the Registered Owners
thereof or purchased by the Borrower in lieu of redemption, (ii) accelerate the
Bonds when required to do so hereunder other than at the direction of the
Registered Owners, and (iii) draw on, or instruct the Credit Facility Trustee to
draw on the Credit Facility when required to do so hereunder, each without the
necessity of the Registered Owners providing security or indemnity to the
Trustee or the Credit Facility Trustee, as the case may be. If the Issuer shall
fail to make reimbursement, the Trustee may reimburse itself and the Credit
Facility Trustee from any moneys in its possession under the provisions of this
Indenture (other than monies derived from a draw on the Credit Facility) and
shall be entitled with respect thereto to a preference over the Bonds.
(f) Subject to the standards described in Sections 1001 and 1002
hereof, prior to taking action under this Indenture except for a declaration of
acceleration under Section 902 or a drawing under the Credit Facility or the
payment of principal and interest on the Bonds, the Trustee or the Credit
Facility Trustee, as the case may be, may require that satisfactory indemnity be
furnished to it for reimbursement of all expenses to which it may be put and to
protect it against all liability by reasons of any action so taken, except
liability resulting from its gross negligence or willful misconduct. None of the
provisos contained in this Indenture is intended to require the Trustee or the
Credit Facility Trustee, as the case may be, to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties or
other exercise of its rights or powers hereunder.
Section 1105. Neither the Trustee nor the Credit Facility Trustee
Responsible for Insurance, Taxes, Execution of Indenture, Acts of the Issuer or
Application of Moneys Applied in Accordance with this Indenture. Neither the
Trustee nor the Credit Facility Trustee shall 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.
Neither the Trustee nor the Credit Facility Trustee shall have
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responsibility in respect of the validity, sufficiency, due execution or
acknowledgment of this Indenture by the Issuer or the validity or sufficiency of
the security provided thereunder or in respect of the validity of the Bonds or
the due execution or issuance thereof. Neither the Trustee nor the Credit
Facility Trustee shall be under any obligation to see that any duties herein
imposed 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 neither the Trustee nor the Credit Facility Trustee shall be
under any liability for failure to see that any such duties or covenants are so
done or performed.
Neither the Trustee nor the Credit Facility Trustee shall be liable or
responsible because of the failure of the Issuer or of any of its employees or
agents to make any collections or deposits or to perform any act herein required
of the Issuer or because of the loss of any moneys arising through the
insolvency or the act or default or omission of any other depositary in which
such moneys shall have been deposited under the provisions of this Indenture.
Neither the Trustee nor the Credit Facility Trustee shall 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 application,
payment, withdrawal or transfer shall be made in accordance with the provisions
of this Indenture.
The immunities and exemptions from liability of the Trustee and the
Credit Facility Trustee hereunder shall extend to their respective directors,
officers, employees and agents.
Section 1106. Compensation. Subject to the provisions of any contract
relating to the compensation of the Trustee, the Borrower shall pay to the
Trustee as Administrative Expenses its reasonable fees and charges in accordance
with Section 7.5 of the Loan Agreement, and the Trustee shall pay the Credit
Facility Trustee. In computing the Trustee's compensation, the parties shall not
be limited by any law on the compensation of an express trust. If the Borrower
shall fail to make any payment required by this Section 1006, the Trustee may,
but shall be under no obligation to, make such payment from any moneys in its
possession under the provisions of this Indenture and shall be entitled to a
preference therefor over the Bonds hereunder; provided that no payments under
this Section 1006 shall be made with moneys drawn under the Credit Facility.
Section 1107. Trustee to Preserve Records. All records and files
pertaining to the Facility in the custody of the Trustee shall be open at all
reasonable times to the inspection of the Issuer, the Credit Facility Trustee,
the Bank and the Borrower and their agents and representatives.
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Section 1108. Trustee and Credit Facility Trustee May be Registered
Owners. The institutions acting as Trustee and Credit Facility Trustee under
this Indenture, and their respective directors, officers, employees or agents,
may in good faith buy, sell, own, hold and deal in the Bonds issued under and
secured by this Indenture, and may join in the capacity of a Registered Owner in
any action which any Registered Owner may be entitled to take with like effect
as if such institution were not the Trustee or the Credit Facility Trustee, as
the case may be, under this Indenture.
Section 1109. Trustee and Credit Facility Trustee Not Responsible for
Recitals. The recitals, statements and representations contained herein and in
the Bonds shall be taken and construed as made by and on the part of the Issuer
and not by the Trustee or the Credit Facility Trustee, and the Trustee and the
Credit Facility Trustee shall not be under any responsibility for the
correctness of the same.
Section 1010. No Responsibility for Recording or Filing. Neither the
Trustee nor the Credit Facility Trustee shall be under any obligation to see to
the recording or filing of this Indenture, the Loan Agreement, any financing
statements or any other instrument or otherwise to the giving to any person of
notice of the provisions hereof or thereof.
Section 1011. Trustee and Credit Facility Trustee May Rely on
Certificates. Subject to the provisions of Sections 1001 and 1002 hereof, the
Trustee and the Credit Facility Trustee shall be protected and shall incur no
liability in acting or proceeding, or in not acting or not proceeding, in good
faith and in accordance with the terms of this Indenture, upon any resolution,
order, notice, request, consent, waiver, certificate, statement, affidavit,
requisition, bond or other paper or document which it shall in good faith
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 the Loan Agreement or this Indenture, 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 neither the Trustee nor the Credit Facility
Trustee shall be under any duty to make any investigation or inquiry as to any
statements contained or matters referred to in any such instrument.
Section 1012. Qualification of the Trustee and Credit Facility Trustee.
(a) There shall at all times be a Trustee and, so long as a Credit Facility
supports the Bonds and the Trustee and the Credit Facility Issuer are the same
Person, a Credit Facility Trustee, hereunder, which shall be an association or a
corporation organized and doing business under the laws of the United States of
America or of any state, authorized under such laws and the applicable laws of
the State to exercise corporate trust powers and act as Bond Registrar
hereunder, having a combined capital and surplus of at least $100,000,000, and
subject to supervision or
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examination by Federal or state authority. If such association or corporation is
not a commercial bank or trust company, it shall also have a rating by Moody's
(if the Bonds are then rated by Moody's) of BAA 3/P3 or higher, or by S&P (if
the Bonds are then rated by S&P) of BBB/A3 or higher or shall otherwise be
approved in writing by Moody's or S&P, as the case may be. If such association
or 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 1012, the combined capital and surplus of such
association or corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
(b) If at any time the Trustee or the Credit Facility Trustee shall
cease to be eligible in accordance with the provisions of this Section 1012, it
shall resign immediately in the manner and with the effect specified in Section
1013 hereof.
(c) In addition, under no circumstances shall the Credit Facility
Trustee and the Credit Facility Issuer be the same person or be Affiliates of
one another.
Section 1013. Resignation and Removal of Trustee or Credit Facility
Trustee.
(a) No resignation or removal of the Trustee or the Credit Facility
Trustee and no appointment of a successor Trustee or successor Credit Facility
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee or the successor Credit Facility Trustee
under Section 1014 hereof.
(b) The Trustee or the Credit Facility Trustee may resign at any time
by giving written notice thereof to the Issuer and the Borrower. If an
instrument of acceptance by a successor Trustee or successor Credit Facility
Trustee shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the retiring Trustee or Credit Facility
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee or successor Credit Facility Trustee.
(c) The Trustee or the Credit Facility Trustee may be removed at any
time by an instrument or instruments in writing to the Trustee or the Credit
Facility Trustee, with copies to the Issuer and the Borrower, signed by the
Majority Registered Owners or by their attorneys, legal representatives or
agents and delivered to the Trustee, the Credit Facility Trustee, the Issuer and
the Borrower (such instruments to be effective only when received by the Trustee
or the Credit Facility Trustee, as the case may be).
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(d) If at any time:
(1) the Trustee or the Credit Facility Trustee shall cease to
be eligible under Section 1012 hereof, and shall fail to resign after
written request therefor by the Borrower or by the Majority Registered
Owners, or
(2) the Trustee or the Credit Facility Trustee shall become
incapable of acting or shall be adjudged a bankrupt or insolvent or a
receiver of the Trustee or Credit Facility Trustee or of its respective
property shall be appointed or any public officer shall take charge or
control of the Trustee or the Credit Facility Trustee or of its
respective property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (i) the Issuer or the Borrower may remove the
Trustee or the Credit Facility Trustee, as the case may be, or (ii) any
Registered Owner may petition any court of competent jurisdiction for
the removal of the Trustee or the Credit Facility Trustee, as the case
may be and the appointment of a successor.
(e) If the Trustee or the Credit Facility Trustee shall resign, be
removed or become incapable of acting, or if a vacancy shall occur in the office
of Trustee or Credit Facility Trustee for any cause, the Issuer with the
approval of the Borrower, shall promptly appoint a successor. If, within 60 days
after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee or successor Credit Facility Trustee shall be
appointed by act of the Majority Registered Owners delivered to the Borrower and
the retiring Trustee, as the case may be, the successor Trustee or successor
Credit Facility Trustee so appointed shall forthwith upon its acceptance of such
appointment become the successor Trustee or successor Credit Facility Trustee,
as the case may be, and supersede the successor Trustee or Credit Facility
Trustee appointed by the Issuer and approved by the Borrower. If no successor
Trustee or successor Credit Facility Trustee shall have been so appointed by the
Issuer and approved by the Borrower or the Majority Registered Owners and
accepted appointment in the manner hereinafter provided, any Registered Owner,
if he has been a bona fide Registered Owner of a Bond for at least six months,
may petition any court of competent jurisdiction for the appointment of a
successor Trustee or successor Credit Facility Trustee.
(f) The successor Trustee or successor Credit Facility Trustee, as the
case may be, shall, promptly upon appointment, give notice of each resignation
and each removal of the Trustee or Credit Facility Trustee and each appointment
of a successor Trustee or successor Credit Facility Trustee by mailing written
notice of such event by first-class mail, postage prepaid, to each Registered
Owner. Each notice shall include the name and address of the
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principal corporate trust office of the successor Trustee or successor Credit
Facility Trustee, as the case may be.
(g) In the event that a Credit Facility Trustee is no longer required
pursuant to Section 1012(a) hereof, the Trustee may request the resignation of
the Credit Facility Trustee by delivering written notice to the Issuer, the
Borrower and the Credit Facility Trustee. Such notice shall specifically ask for
the resignation of the Credit Facility Trustee and shall contain an acceptance
by the Trustee of all the rights, immunities, powers, trust, duties and
obligations of the Credit Facility Trustee hereunder. Immediately upon receipt
of such notice, the Credit Facility Trustee shall resign in accordance with the
provisions of Section 1013(b). Upon the resignation of the Credit Facility
Trustee pursuant to this Section 1013(g) and the satisfaction of the terms and
conditions set forth in Section 1014 below, all references to the Credit
Facility Trustee in this Indenture and in the other Bond Documents shall be
deemed to mean the Trustee. The provisions of Section 1014 shall apply in such
case as if the Trustee were a successor Credit Facility Trustee.
Section 1014. Successor Trustee or Credit Facility Trustee. Every
successor Trustee or successor Credit Facility Trustee appointed hereunder shall
execute, acknowledge and deliver to its predecessor, and also to the Issuer and
the Borrower, an instrument in writing accepting such appointment hereunder, and
thereupon such successor Trustee or Credit Facility Trustee, without any further
act, shall become fully vested with all the rights, immunities, powers and
trusts, and subject to all the duties and obligations, of its predecessors; but
such predecessor shall, nevertheless, on the written request of its successor or
of the Issuer and upon payment of the expenses, charges and other disbursements
of such predecessor which are payable pursuant to the provisions of Section 1006
hereof, execute and deliver an instrument transferring to such successor Trustee
or successor Credit Facility Trustee, as the case may be, all the rights,
immunities, powers and trusts of such predecessor hereunder; and every
predecessor Trustee or Credit Facility 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 1004 and 1007 hereof. Should any
instrument in writing from the Issuer be required by any successor Trustee or
successor Credit Facility Trustee for more fully and certainly vesting in such
Trustee or Credit Facility Trustee the rights, immunities, powers and trusts
hereby vested or intended to be vested in the predecessor Trustee or Credit
Facility Trustee, any such instrument in writing shall and will, on request, be
executed, acknowledged and delivered by the Issuer.
Notwithstanding any of the foregoing provisions of this Article, any
bank or trust company having power to perform the duties and execute the trusts
of this Indenture and otherwise qualified to act as Trustee or Credit Facility
Trustee hereunder with or into which the bank or trust company acting as Trustee
or
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Credit Facility Trustee, as the case may be, may be merged or consolidated, or
to which the assets and business of such bank or trust company may be sold,
shall be deemed the successor of the Trustee or the Credit Facility Trustee, as
the case may be.
Section 1015. Co-Trustee. It is the purpose of this Indenture that
there shall be no violation of any law of any jurisdiction denying or
restricting the right of certain banking corporations or associations to
transact business as trustee as contemplated herein in such jurisdiction. It is
recognized that in case of litigation under this Indenture upon the occurrence
of an Event of Default, it may be necessary that the Trustee appoint an
additional individual or institution as a separate Trustee or Co-Trustee, which
shall be satisfactory to the Borrower. The following provisions of this Section
1015 are adapted to these ends.
In the event of the incapacity or lack of authority of the Trustee, by
reason of any present or future law of any jurisdiction, to exercise any of the
rights, powers and trusts herein granted to the Trustee or to hold title to the
Trust Estate or to take any other action which may be necessary or desirable in
connection therewith, each and every remedy, power, right, claim, demand, cause
of action, immunity, estate, title, interest and lien expressed or intended by
this Indenture to be exercised by or vested in or conveyed to the Trustee with
respect thereto shall be exercisable by and vest in such separate Trustee or
Co-Trustee but only to the extent necessary to enable the separate Trustee or
Co-Trustee to exercise such rights, powers and trusts, and every covenant and
obligation necessary to the exercise thereof shall run to and be enforceable by
such separate Trustee or Co-Trustee.
Should any deed, conveyance or instrument in writing from the Issuer be
required by the separate Trustee or Co-Trustee so appointed by the Trustee in
order to more fully and certainly vest in and confirm to him or it such
properties, rights, powers, trusts, duties and obligations, any and all such
deeds, conveyances and instruments shall, on request, be executed, acknowledged
and delivered by the Issuer. In case any separate Trustee or Co-Trustee or a
successor to either, shall die, become incapable of acting, resign or be
removed, all the estates, properties, rights, powers, trusts, duties and
obligations of such separate Trustee or Co-Trustee, so far as permitted by law,
shall vest in and be exercised by the Trustee until the appointment of a new
Trustee or successor to such separate Trustee or Co-Trustee.
For all purposes of this Indenture, the Credit Facility Trustee shall
be deemed a Co-Trustee within the meaning of this Section 1015.
Section 1016. Notice to Moody's or S&P. At any time during which the
Bonds are rated by Moody's and/or S&P, the Trustee shall notify Moody's and/or
S&P, as applicable, promptly of (i) any
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change in the Trustee, (ii) the expiration, termination or substitution of the
Credit Facility during the Variable Rate Period unless an Alternate Credit
Facility is provided to the Trustee in accordance with the terms of this
Indenture, (iii) a change in the interest rate borne by the Bonds from the
Variable Rate to the Fixed Rate, (iv) the payment of all of the Bonds or (v) any
change to this Indenture, the Loan Agreement, the Reimbursement Agreement, the
Credit Facility or the Remarketing Agreement.
ARTICLE XI
EXECUTION OF INSTRUMENTS BY REGISTERED OWNERS
AND PROOF OF OWNERSHIP OF BONDS
Section 1111. Execution of Instruments by Registered Owners and Proof
of Ownership of Bonds. Any request, direction, consent or other instrument in
writing required or permitted by this Indenture to be signed or executed by a
Registered Owner may be signed or executed by the Registered Owner or its
attorneys or legal representatives. Proof of the execution of any such
instrument and of the ownership of the Bonds shall be sufficient for any purpose
of this Indenture and shall be conclusive in favor of the Trustee and the Credit
Facility Trustee with regard to any action taken by it under such instrument if
made in the following manner:
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,
and where such execution is by an officer of a corporation or
association or a member of a partnership on behalf of such corporation,
association or partnership, such verification or affidavit shall also
constitute sufficient proof of his authority.
Nothing contained in this Section 1101 shall be construed as limiting
the Trustee and the Credit Facility Trustee to such proof, it being intended
that the Trustee and the Credit Facility Trustee may accept any other evidence
of the matters herein stated which may be sufficient. Any request or consent of
a Registered Owner shall bind every future Registered Owner of the Bonds to
which such request or consent pertains or any Bonds issued in lieu thereof in
respect of anything done by the Trustee and the Credit Facility Trustee pursuant
to such request or consent.
Notwithstanding any of the foregoing provisions of this Section 1101,
the Trustee and the Credit Facility Trustee shall not be required to recognize
any person as an owner of Bonds or to take any action at his request unless the
Bonds shall be deposited with it.
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Section 1112. Preservation of Information. The Trustee shall preserve
in the Bond Register, in as current a form as is reasonably practicable the name
and address of each Registered Owner received by the Trustee in its capacity as
Bond Registrar.
ARTICLE XII
THE REMARKETING AGENT; THE TENDER AGENT;
THE PLACEMENT AGENT
Section 1121. The Remarketing Agent.
(a) The Issuer hereby appoints First Union National Bank of North
Carolina, with its corporate office in Charlotte, North Carolina, acting through
its Capital Markets Group, as Remarketing Agent under this Indenture. The
Remarketing Agent and any successor Remarketing Agent, by written instrument
delivered to the Issuer, the Trustee and the Borrower, shall accept the duties
and obligations imposed on it under this Indenture and the Remarketing
Agreement.
(b) In addition to the other obligations imposed on the Remarketing
Agent hereunder, the Remarketing Agent shall agree to keep such books and
records in connection with its activities as Remarketing Agent hereunder as
shall be consistent with prudent industry practice and make such books and
records available for inspection by the Issuer, the Trustee, the Credit Facility
Issuer and the Borrower at all reasonable times.
(c) The Remarketing Agent shall at all times be a member of the
National Association of Securities Dealers, Inc. and registered as a Municipal
Securities Dealer under the Securities Exchange Act of 1934, as amended, or a
national banking association or a bank or a trust company, in each case
authorized by law to perform its obligations hereunder.
(d) If at any time the Remarketing Agent is unable or unwilling to act
as Remarketing Agent, the Remarketing Agent, upon 60 days' prior written notice
to the Issuer, the Trustee, the Tender Agent and the Borrower, may resign. The
Remarketing Agent may be removed at any time by the Borrower with the consent of
the Credit Facility Issuer, by written notice signed by the Borrower delivered
to the Trustee, the Remarketing Agent and the Tender Agent. Upon resignation or
removal of the Remarketing Agent, the Borrower, with the consent of the Issuer,
shall appoint a substitute Remarketing Agent meeting the qualifications of
Section 1201(c); provided, however, that the resignation or removal of the
Remarketing Agent shall not be effective until the Borrower, with the consent of
the Issuer, shall have appointed a successor Remarketing Agent.
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(e) In the event that the Borrower shall fail to appoint a successor
Remarketing Agent upon the resignation or removal of the Remarketing Agent or
upon its dissolution, insolvency or bankruptcy, the Trustee may, but is not
required to, appoint a Remarketing Agent or itself act as Remarketing Agent
until the appointment of a successor Remarketing Agent in accordance with this
Section 1201.
Section 1122. The Tender Agent.
(a) The Issuer hereby appoints First Union National Bank of Virginia as
Tender Agent under this Indenture, which agent has a corporate trust office in
Richmond, Virginia. The Tender Agent and any successor Tender Agent, by written
instrument delivered to the Issuer, the Trustee and the Borrower, shall accept
the duties and obligations imposed on it under this Indenture.
(b) If at any time the Tender Agent is unable or unwilling to act as
Tender Agent, the Tender Agent, upon 60 days' prior written notice to the
Issuer, the Trustee, the Remarketing Agent and the Borrower, may resign;
provided, however, that in no case shall such resignation become effective until
the appointment of a successor Tender Agent. The Tender Agent may be removed at
any time by the Borrower with the consent of the Credit Facility Issuer and the
Trustee, by written notice signed by the Borrower delivered to the Trustee, the
Remarketing Agent, the Credit Facility Issuer and the Tender Agent. Upon
resignation or removal of the Tender Agent, the Borrower with the consent of the
Issuer, the Credit Facility Issuer and the Trustee shall appoint a substitute
Tender Agent; provided, however, that in no case shall such removal become
effective until the appointment of a successor Tender Agent.
(c) In the event the Borrower shall fail to appoint a successor Tender
Agent upon the resignation or removal of the Tender Agent or upon its
dissolution, insolvency or bankruptcy, the Trustee may at its discretion, but is
not required to, act as Tender Agent until the appointment of a successor Tender
Agent in accordance with this Section 1202.
Section 1123. The Placement Agent. The Placement Agent shall be a
member of the National Association of Securities Dealers, Inc. and registered as
a Municipal Securities Dealer under the Securities Exchange Act of 1934, as
amended, or a national banking association or a bank or trust company, in each
case authorized by law to perform its obligations described in Section 202(e)
hereof. The Placement Agent shall agree to establish the Preliminary Fixed Rate
and to use its best efforts to arrange for the sale of Tendered Bonds on the
Conversion Date, all as more particularly described in Section 202(e).
Section 1124. Notices. The Trustee shall, within 30 days of the
resignation or removal of the Remarketing Agent or the Tender Agent or the
appointment of a
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successor Placement Agent or a successor Remarketing Agent or Tender Agent, give
notice thereof by first-class mail, postage prepaid, to the Registered Owners of
the Bonds.
ARTICLE XIII
AMENDMENTS AND SUPPLEMENTS
Section 1131. Amendments and Supplements Without Registered Owners'
Consent. This Indenture may be amended or supplemented by the Issuer and the
Trustee at any time and from time to time, without the consent of the Registered
Owners, but with the consent of the Borrower and Credit Facility Issuer, if a
Credit Facility is in effect, by a supplemental indenture executed by the
Issuer, the Trustee and the Credit Facility Trustee and filed with the Trustee,
for one or more of the following purposes:
(a) to add additional covenants of the Issuer or to surrender any right
or power herein conferred upon the Issuer;
(b) for any purpose not inconsistent with the terms of this Indenture
or to cure any ambiguity or to correct or supplement any provision contained
herein or in any supplemental indenture which may be defective or inconsistent
with any other provision contained herein or in any supplemental indenture, or
to make such other provisions in regard to matters or questions arising under
this Indenture which shall not adversely affect the interests of the Registered
Owners of the Bonds;
(c) to permit the Bonds to be converted to certificated securities;
(d) to permit the appointment of a co-trustee under this Indenture;
(e) to modify, eliminate or add to the provisions of this Indenture to
such extent as shall be necessary to effect the qualification of this Indenture
under the Trust Indenture Act of 1939, or under any similar federal statute
hereafter enacted, and to add to this Indenture such other provisions as may be
expressly permitted by the Trust Indenture Act of 1939;
(f) except as otherwise provided in Section 1302 hereof, to modify,
eliminate or add to the provisions of this Indenture to such extent as shall be
necessary to obtain a rating of the Bonds from Moody's or S&P; and
(g) to amend the administrative provisions hereof to accommodate the
provisions of an Alternate Credit Facility.
Prior to making any amendment, the Borrower shall provide the Trustee, the
Issuer, the Credit Facility Trustee and the Credit
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Facility Issuer with (i) a copy of the proposed amendment and (ii) an opinion of
Co-Bond Counsel to the effect that such amendment or supplement will not
adversely affect the tax-exempt status of interest on the Bonds.
Section 1132. Amendments With Registered Owners' and Credit Facility
Issuer's Consent. This Indenture may be amended by the Issuer and the Trustee
from time to time, except with respect to (1) the principal, redemption price,
purchase price, or interest payable upon any Bonds, (2) the Interest Payment
Dates, the dates of maturity or the redemption or purchase provisions of any
Bonds, and (3) this Article XIII, by a supplemental indenture consented to by
the Credit Facility Issuer (if a Credit Facility is in effect) and by the
Borrower and approved by the Registered Owners of at least a majority in
aggregate principal amount of the Bonds then Outstanding which would be affected
by the action proposed to be taken. This Indenture may be amended with respect
to the matters enumerated in clauses (1) through (3) of the preceding sentence
only with the unanimous consent of all Registered Owners, the Credit Facility
Issuer (if a Credit Facility is in effect) and the Borrower.
Section 1133. Supplemental Indentures Affecting Rights of Credit
Facility Issuer. Anything herein to the contrary notwithstanding, a supplemental
indenture under this Article XIII which in the judgment of the Credit Facility
Issuer (if a Credit Facility is in effect) adversely affects the rights of the
Credit Facility Issuer hereunder shall not become effective unless or until the
Credit Facility Issuer shall have consented to the execution and delivery
thereof.
Section 1134. Amendment of Loan Agreement. The Issuer and the Borrower,
and, during the Variable Rate Period, the Credit Facility Issuer, may amend the
Loan Agreement with the prior written consent of the Trustee and during the
Variable Rate Period, the Credit Facility Trustee. Prior to making any
amendment, the Borrower shall provide the Trustee, the Issuer, the Credit
Facility Trustee and the Credit Facility Issuer with (a) a copy of the proposed
amendment and (b) an opinion of Co-Bond Counsel to the effect that such
amendment or supplement will not adversely effect the tax exempt status of
interest on the Bonds and, unless the Trustee shall have otherwise given its
consent to such amendment or supplement, to the further effect that such
amendment or supplement will not otherwise adversely affect the interests of the
Registered Owners. Notwithstanding the foregoing, the Issuer and the Borrower,
with the consent of the Trustee and, during the Variable Rate Period, the Credit
Facility Trustee and the Credit Facility Issuer, may amend the Loan Agreement to
such extent as shall be necessary to obtain a rating of the Bonds from Moody's
or S&P without providing the opinion of Co-Bond Counsel specified in clause (b)
above. If the Issuer and the Borrower propose to amend the Loan Agreement in
such a manner as would adversely affect the interests of the Registered Owners,
the Trustee shall notify
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Registered Owners of the proposed amendment and may consent thereto with the
consent of at least a majority in aggregate principal amount of the Bonds then
Outstanding which would be affected by the action proposed to be taken;
provided, that the Trustee shall not, without the unanimous consent of the
Registered Owners of all Bonds then Outstanding, consent to any amendment which
would (1) decrease the amounts payable on the Note, (2) change the due date of
principal of or interest on the Note or change any of the prepayment provisions
of the Note, or (3) change Section 5.5 of the Loan Agreement.
Section 1135. Amendment of Loan Agreement Requiring Consent of Credit
Facility Issuer. Anything herein to the contrary notwithstanding, any amendment,
change or modification of the Loan Agreement which in the judgment of the Credit
Facility Issuer affects the rights of the Credit Facility Issuer shall not
become effective unless or until the Credit Facility Issuer shall have consented
to the execution and delivery of such amendment, change and modification.
Section 1136. Amendment of Credit Facility. The initial Credit Facility
may be amended to such extent as shall be necessary to obtain a rating of the
Bonds from Moody's or S&P provided that (a) the Borrower consents to such
amendment or supplement and (b) such amendment or supplement will not adversely
affect the interests of the Registered Owners. The Trustee shall notify the
Registered Owners and the Issuer of any proposed amendment of the Credit
Facility which would adversely affect the interests of the Registered Owners and
may consent thereto with the consent of the Issuer, which consent shall not be
unreasonably withheld, and at least a majority in aggregate principal amount of
the Bonds then Outstanding which would be affected by the action proposed to be
taken; provided, that the Trustee shall not, without the unanimous consent of
the Registered Owners of all Bonds then Outstanding, consent to any amendment
which would decrease the amount payable under the Credit Facility or reduce the
term of the Credit Facility. Prior to making any amendment, the Borrower shall
provide the Trustee, the Issuer, the Credit Facility Trustee and the Credit
Facility Issuer with (i) a copy of the proposed amendment and (ii) an opinion of
Co-Bond Counsel to the effect that such amendment or supplement will not
adversely affect the tax-exempt status of interest on the Bonds.
Section 1137. Trustee and Credit Facility Trustee Authorized to Join in
Amendments and Supplements; Reliance on Counsel. The Trustee and the Credit
Facility Trustee are authorized to join with the Issuer in the execution and
delivery of any supplemental indenture or amendment permitted by this Article
XIII and in so doing shall be fully protected by an opinion of Counsel that such
supplemental indenture or amendment is so permitted and has been duly authorized
by the Issuer and that all things necessary to make it a valid and binding
agreement have been done; provided that certain amendments may, by agreement
between the Trustee and the
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Credit Facility Issuer, require the prior consent of the Credit Facility Issuer.
ARTICLE XIV
DEFEASANCE; OTHER PAYMENTS
Section 1141. Defeasance.
(a) When the principal or redemption price (as the case may be) of, and
interest on all Bonds issued hereunder have been paid, or provision has been
made for payment of the same, together with the compensation of the Trustee and
the Credit Facility Trustee and all other sums payable hereunder by the Issuer,
the right, title and interest of the Trustee and the Credit Facility Trustee in
and to the Trust Estate shall thereupon cease, and the Trustee and the Credit
Facility Trustee, on written demand of the Issuer, shall release this Indenture
and shall execute such documents to evidence such release as may be reasonably
required by the Issuer and shall turn over to the Borrower or to such person,
body or authority as may be entitled to receive the same all balances then held
by it hereunder; provided, that if any payments have been received by the
Trustee from draws by the Credit Facility Trustee on the Credit Facility in
connection with such release, such balances shall be paid to the Credit Facility
Issuer to the extent of such payments. If payment or provision therefor is made
with respect to less than all of the Bonds, the particular Bonds (or portion
thereof) for which provision for payment shall have been considered made shall
be selected by lot by the Trustee and thereupon the Trustee shall take similar
action for the release of this Indenture with respect to such Bonds.
(b) Provision for the payment of Bonds shall be deemed to have been
made when the Trustee holds in the Bond Fund, in trust and irrevocably sets
aside exclusively for such payment, (i) moneys sufficient to make such payment
provided that if a Credit Facility is then held by the Credit Facility Trustee,
such moneys shall constitute Available Moneys or (ii) noncallable Government
Obligations maturing as to principal and interest in such amounts and at such
times as will provide sufficient moneys without reinvestment to make such
payment; provided that (i) such provision for payment may only be made after the
Conversion Date and (ii) the Trustee and the Issuer shall have received an
opinion of Co-Bond Counsel to the effect that such deposit will not adversely
affect the tax-exempt status of the interest on any of the Bonds (e.g. by
causing any of the Bonds to be classified as "arbitrage bonds" within the
meaning of Section 148 of the Code), and provided further, that if a Credit
Facility is then held by the Credit Facility Trustee, such Government
Obligations shall have been on deposit with the Trustee in a separate and
segregated account for a period of 366 days during and prior to which no Event
of
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Bankruptcy has occurred or which Government Obligations were purchased with
Available Moneys.
No Bonds in respect of which a deposit under clause (b) above has been
made shall be deemed paid within the meaning of this Article unless the Trustee
is satisfied that the amounts deposited are sufficient to make all payments that
might become due on the Bonds. Notwithstanding the foregoing, no delivery to the
Trustee under this subsection (b) shall be deemed a payment of any Bonds which
are to be redeemed prior to their stated maturity until such Bonds shall have
been irrevocably called or designated for redemption on a date thereafter on
which such Bonds may be redeemed in accordance with the provisions of this
Indenture or the Issuer shall have given the Trustee, in form satisfactory to
the Trustee, irrevocable instructions to give notice of redemption. Neither the
obligations nor moneys deposited with the Trustee pursuant to this Section shall
be withdrawn or used for any purpose other than, and shall be segregated and
held in trust for, the payment of the principal of, redemption price of, and
interest on the Bonds with respect to which such deposit has been made. In the
event that such moneys or obligations are to be applied to the payment of
principal or redemption price of any Bonds more than 60 days following the
deposit thereof with the Trustee, the Trustee shall mail a notice stating that
such moneys or obligations have been deposited and identifying the Bonds for the
payment of which such moneys or obligations are being held to all Registered
Owners of such Bonds at their addresses shown on the Bond Register.
(c) Anything in Article XIII to the contrary notwithstanding, if moneys
or Government Obligations have been deposited or set aside with the Trustee
pursuant to this Article for the payment of the principal or redemption price,
of the Bonds and the interest thereon and the principal or redemption price, of
such Bonds and the interest thereon shall not have in fact been actually paid in
full, no amendment to the provisions of this Article shall be made without the
consent of the Registered Owner of each of the Bonds affected thereby.
Notwithstanding the foregoing, those provisions relating to the
maturity of Bonds, interest payments and dates thereof, and the dates, premiums
and notice requirements for optional and mandatory redemption and the Trustee's
remedies with respect thereto, and provisions relating to exchange, transfer and
registration of Bonds, replacement of mutilated, destroyed, lost or stolen
Bonds, the safekeeping and cancellation of Bonds, nonpresentment of Bonds,
the holding of moneys in trust and repayments to the Borrower or the Credit
Facility Issuer from the Bond Fund and the duties of the Trustee in connection
with all of the foregoing and the fees, expenses and indemnities of the Trustee
and the Credit Facility Trustee, shall remain in effect and shall be binding
upon the Trustee, the Credit Facility Trustee, the Issuer, the Borrower and the
Registered Owners, notwithstanding the release and discharge of the lien of this
Indenture.
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Section 1142. Deposit of Funds for Payment of Bonds. If the principal
or redemption price of any Bonds becoming due, either at maturity or by call for
redemption or otherwise, together with all interest accruing thereon to the due
date, has been paid or provisions therefor made in accordance with Section 1401
hereof, all interest on such Bonds shall cease to accrue on the due date and all
liability of the Issuer with respect to such Bonds shall likewise cease, except
as hereinafter provided. Thereafter the Registered Owners of such Bonds shall be
restricted exclusively to the funds so deposited for any claim of whatsoever
nature with respect to such Bonds, and the Trustee shall hold such funds in
trust for such Registered Owners.
Section 1143. Effect of Purchase of Bonds. No purchase of Bonds
pursuant to Section 303 shall be deemed to be a payment or redemption of such
Bonds or any portion thereof and such purchase will not operate to extinguish or
discharge the indebtedness evidenced by such Bonds.
ARTICLE XV
MISCELLANEOUS PROVISIONS
Section 1151. Covenants of Issuer to Bind its Successors. In the event
of the dissolution of the Issuer, all of the covenants, stipulations,
obligations and agreements contained in this Indenture by or on behalf of or for
the benefit of the Issuer shall bind or inure to the benefit of the successor or
successors of the Issuer 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, and the word "Issuer" as used in this
Indenture shall include such successor or successors.
Section 1152. Notices. Any notice, demand, direction, request or other
instrument authorized or required by this Indenture to be given to or filed with
the Issuer, the Trustee, the Credit Facility Trustee, the Borrower or the Credit
Facility Issuer shall be in writing and shall be deemed given or filed for all
purposes of this Indenture when delivered by hand delivery or mailed by
first-class, postage prepaid, registered or certified mail, addressed as
follows:
If to the Issuer: Maryland Industrial Development
Financing Authority
217 East Redwood Street
22nd Floor
Baltimore, Maryland 21202
Attention: Executive Director
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If to the Trustee: First Union National Bank
of Virginia
901 E. Cary Street
Richmond, Virginia 23219
Attention: Corporate Trust
Department
If to the Credit Branch Banking and Trust Company
Facility Trustee: 223 West Nash Street
Wilson, North Carolina 27984
Attention: Corporate Trust
Department
If to the Borrower: Alcore, Inc.
1324 Brass Mill Road
Belcamp, Maryland 21017
Attention: President
If to the Credit First Union National Bank
Facility Issuer: of North Carolina
Two First Union Center, T-7
Charlotte, North Carolina 28288-0742
Attention: International Operations
If to the First Union National Bank of
Remarketing Agent: North Carolina
Capital Marketing Group
Two First Union Center, T-7
Charlotte, North Carolina 28288
and if sent by telegraph, telegram report of delivery requested, addressed as
above, at the time and date appearing on the report of delivery. A duplicate
copy of each notice or other communication given hereunder by either the Issuer
or the Trustee to the other shall also be given to the Borrower.
All documents received by the Trustee or the Credit Facility Trustee
under the provisions of this Indenture, or photographic copies thereof, shall be
retained in its possession until this Indenture shall be released in accordance
with the provisions hereof, subject at all reasonable times to the inspection of
the Issuer and the Registered Owners and the agents and representatives thereof.
The Issuer, the Trustee, the Credit Facility Trustee, the Credit
Facility Issuer and the Borrower may, by notice given hereunder, designate any
further or different addresses to which subsequent notices, certificates or
other communications shall be sent.
Section 1153. Trustee as Paying Agent and Bond Registrar. The Trustee
is hereby designated and agrees to act as Paying Agent
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and Bond Registrar for and in respect of the Bonds and any amounts received
under the Credit Facility or the Loan Agreement.
Section 1154. Rights Under Indenture. Except as herein otherwise
expressly provided, nothing in this Indenture expressed or implied is intended
or shall be construed to confer upon any person, firm or corporation other than
the parties hereto, the Borrower and the Registered Owners of the Bonds issued
under and secured by this Indenture, any right, remedy or claim, legal or
equitable, under or by reason of this Indenture or any provision hereof, this
Indenture and all its provisions being intended to be and being for the sole and
exclusive benefit of the parties hereto, the Borrower and the Registered Owners
from time to time of the Bonds issued hereunder.
Section 1155. Form of Certificates and Opinions. Except as otherwise
provided in this Indenture, any request, notice, certificate or other instrument
from the Issuer or the Borrower to the Trustee shall be deemed to have been
signed by the proper party or parties if signed by the Issuer Representative or
the Borrower Representative, respectively, and the Trustee may accept and rely
upon a certificate signed by the Issuer Representative as to any action taken by
the Issuer and by the Borrower Representative as to any action taken by the
Borrower.
Section 1156. Severability. In case any one or more of the provisions
of this Indenture or of the 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 Indenture or of the Bonds, but this Indenture 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 of the Issuer contained in the Bonds or in this Indenture 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 Issuer to the full extent permitted by law.
Section 1157. Covenants of Issuer Not Covenants of Officials
Individually. All covenants, stipulations, obligations and agreements of the
Issuer contained in this Indenture shall be deemed to be covenants,
stipulations, obligations and agreements of the Issuer to the full extent
permitted by the Constitution and laws of the State. 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, officer,
agent or employee of the Issuer in his individual capacity, and neither the
members of the Issuer nor any other officer of the Issuer executing the Bonds
shall be liable personally on the Bonds nor shall any employee, member or
officer of the Issuer, the Department or the State be subject to any personal
liability or accountability by reason of the issuance thereof. No member,
officer, agent or employee of the Issuer, the
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Department or the State shall incur any personal liability in acting or
proceeding or in not acting or not proceeding in accordance with the terms of
this Indenture.
Section 1158. State Law Governs. This Indenture shall be governed by
and construed in accordance with the laws of the State.
Section 1159. Payments or Performance Due on Days Other Than Business
Days. In any case where the date of maturity of interest on or principal of the
Bonds or the date fixed for redemption of the Bonds or the specified last date
for the performance of any act or the exercising of any right shall be a day
other than a Business Day, then 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 made, performed or exercised on the specified date, provided that
interest shall accrue for the period of any such extension.
Section 1510. Execution in Counterparts. This Indenture may be executed
in multiple counterparts, each of which shall be regarded for all purposes as an
original, and such counterparts shall constitute but one and the same
instrument, and no one counterpart of which need be executed by all parties.
Section 1511. Effective Date. This Indenture has been dated as of the
date first above written solely for the purpose of convenience of reference and
shall become effective upon its execution and delivery, on the date of initial
issuance of the Bonds, by the parties hereto. All representations and warranties
set forth herein shall be deemed to have been made on such date.
Section 1512. Report by Trustee to Issuer of Outstanding Principal
Amount. Within 30 days of June 30 of each year, the Trustee shall notify the
Issuer in writing of the aggregate principal amount of Bonds Outstanding as of
such June 30.
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IN WITNESS WHEREOF, the Maryland Industrial Development Financing
Authority has caused this Indenture to be executed in its name and on its behalf
by its Chairman of and the official seal of the Issuer to be impressed hereon
and attested by its Executive Director; the Trustee has caused this Indenture to
be executed in its name and on its behalf by an authorized officer, and the
Credit Facility Trustee has caused this Indenture to be executed in its name or
its behalf by an authorized officer, all as of the date and year first above
written.
MARYLAND INDUSTRIAL DEVELOPMENT
FINANCING AUTHORITY
(SEAL) By: /s/ Thomas H. Mullaney
--------------------------------
Thomas H. Mullaney,
Chairman
ATTEST:
/s/ A. P. Ramsey Crosby
- -----------------------
A. P. Ramsey Crosby,
Executive Director
FIRST UNION NATIONAL BANK
OF VIRGINIA, as
Trustee
(SEAL) By: /s/ Dante M. Monakil
--------------------------------
Dante M. Monakil,
Vice President
ATTEST:
- -----------------------
Name:
Title:
BRANCH BANKING AND TRUST COMPANY,
as Credit Facility Trustee
(SEAL) By: /s/ Margaret H. Smith
--------------------------------
Margaret H. Smith,
Vice President
ATTEST:
/s/ Linda S. Davis
- -----------------------
Linda S. Davis,
Assistant Vice President
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EXHIBIT A
$______________ No. _____________
REQUISITION AND CERTIFICATE
_________________, 19_____
First Union National Bank of
Virginia, as Trustee
901 E. Cary Street
Richmond, Virginia 23219
Attention: Corporate Trust Department
Re: $2,600,000 Maryland Industrial Development Financing Authority
Economic Development Revenue Bonds (Alcore, Inc. Facility),
1997 Issue
Ladies and Gentlemen:
On behalf of Alcore, Inc. (the "Borrower"), I hereby requisition, from
the funds representing the proceeds of the sale of the $2,600,000 Economic
Development Revenue Bonds (Alcore, Inc. Facility) 1997 Issue issued by the
Maryland Industrial Development Financing Authority (the "Issuer") and dated as
of May 1, 1997 (the "Bonds"), which funds are held by you in the Maryland
Industrial Development Financing Authority Economic Development Revenue Bonds
(Alcore, Inc. Facility) 1997 Issue Facility Fund in accordance with the Trust
Indenture (the "Indenture") dated as of May 1, 1997, from the Issuer to you and
Branch Banking and Trust Company as Credit Facility Trustee, the sum of
$_______________ from the Facility Fund to be used to pay to the payees the
amounts designated on the schedule attached hereto.
I hereby certify that (a) the obligation to make such payment was
incurred by the Borrower in connection with the Acquisition (as defined in the
Loan Agreement dated as of May 1, 1997 between the Issuer and the Borrower,
hereinafter referred to as the "Loan Agreement") of the Facility (referred to in
the Loan Agreement), is a proper charge against the Cost of Acquisition of the
Facility (as defined in the Loan Agreement), and has not been the basis for any
prior requisition which has been paid; (b) neither the Borrower nor, to the best
of the Borrower's knowledge, the Issuer has received written notice of any lien,
right to lien or attachment upon, or claim affecting the right of such payee to
receive payment of, any of the money payable under this requisition to any of
the persons, firms or corporations named herein, or if any notice of any such
lien, attachment or claim has been received, such lien, attachment or claim has
been released or discharged or will be released or discharged upon payment of
this requisition; (c) this
A-1
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requisition contains no items representing payment on account of any retained
percentages which the Borrower is entitled to retain at this date; (d) the
payment of this requisition will not result in less than ninety-five percent
(95%) of the proceeds of the Bonds (determined by adding to the purchase price
paid for the Bonds any investment earnings on said proceeds) to be expended
under this requisition and under all prior requisitions having been used for the
acquisition, construction, reconstruction or improvement of land or property of
a character subject to the allowance for depreciation within the meaning of
Section 144(a)(1)(A) of the Internal Revenue Code of 1986, as amended; (e) the
payment of this requisition will not result in issuance costs equal to more than
two percent (2%) of the aggregate face amount of the Bonds being financed from
the proceeds of the Bonds (including any investment earnings on said proceeds);
(f) this requisition contains no items representing payment of any amounts paid
or incurred more than 60 days prior to the Official Intent (as defined in the
Indenture); (g) no Event of Default (as defined in the Loan Agreement) or event
of default which after notice or lapse of time or both would constitute an Event
of Default has occurred and not been waived; and (h) the amount requisitioned
hereby is being expended in a manner consistent in all material respects with
the representations and warranties of the Borrower set forth in the Loan
Agreement.
[THE FOLLOWING IS TO BE INCLUDED IN ALL REQUISITIONS FOR DIRECT COSTS
OF CONSTRUCTION EXCEPT THE FINAL DISBURSEMENT THEREFOR: This requisition for
direct costs of construction as set forth in the construction contract for the
Facility, when added to the total of prior requisitions for such direct costs of
construction, does not in amount exceed 90% of the cost of work performed and
material in place.]
[The following paragraph is to be completed when any requisition and
certificate includes any item for payment for labor, for indicated items of
equipment or to contractors, builders or materialmen.]
I hereby certify that insofar as the amount covered by the above
requisition includes payments to be made for labor or to contractors, builders
or materialmen, including payment for equip ment, materials or supplies, in
connection with the Acquisition of the Facility: (i) all obligations to make
such payments have been properly incurred, (ii) any such labor was actually
performed and any such equipment, materials or supplies were actually furnished
or installed on or about the Facility and are a proper charge against the Cost
of Acquisition of the Facility, and (iii) such equipment, materials or supplies
either are not subject to any lien
A-2
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or security interest or, if the same are so subject, such lien or security
interest will be released or discharged upon payment of this requisition.
ALCORE, INC.
By:
---------------------------------
Borrower Representative
APPROVED:
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, as Credit
Facility
Issuer
By:
---------------------------------
Title:
---------------------------
A-3
<PAGE>
SCHEDULE TO REQUISITION AND CERTIFICATE NO. _______________
Payee Item Amount
- ----- ---- ------
A-4
<PAGE>
EXHIBIT B
FORM OF NOTICE OF CONVERSION TO FIXED RATE
Date: ________________
To: [Registered Owners of Bonds]
RE: $2,600,000 Maryland Industrial Development Financing Authority
Economic Development Revenue Bonds (Alcore, Inc. Facility),
1997 Issue
Ladies and Gentlemen:
(1) The interest rate on the above-captioned Bonds is being converted to the
Fixed Rate (as defined in, and to be determined in, the Indenture) effective on
______________ ___, 19__ (the "Conversion Date" as defined in the Indenture).
(2) After ________________ ___, 19___ (the tenth day preceding the
Conversion Date), Registered Owners of Bonds shall not be entitled to deliver
Bonds to First Union National Bank of Virginia, as Tender Agent, for purchase
pursuant to Section 203 of the Indenture.
(3) Payment of the Bonds [will] [will not] be supported by a Credit
Facility (as defined in the Indenture) after the Conversion Date [, which Credit
Facility will be issued by __________________ effective on the Conversion Date
and expiring on ________________ ___, _____ unless otherwise terminated by the
terms thereof].
(4) Registered Owners who desire to retain their Bonds must deliver an
Optional Retention Notice (as defined in the Indenture) in the form of Exhibit A
attached to the Bonds to the Trustee by ______________ ___, 19___ (the 15th of
the month prior to the Conversion Date, or the next succeeding Business Day if
such date is not a Business Day) or be deemed to have tendered their Bonds for
purchase and must deliver the Bonds to the Tender Agent on or before the
Conversion Date to be stamped with the legend contained in Section 202(e)(7) of
the Indenture.
(5) Any Registered Owners not delivering an Optional Retention Notice
to the Trustee prior to the date specified in paragraph (6) above shall be
deemed to have tendered their Bonds for purchase. In order to receive payment of
the purchase price of any Bond which is deemed to have been tendered, the
Registered Owner of such Bond must deliver such Bond to the principal office of
First Union National Bank of Virginia, as Tender Agent, at Richmond, Virginia
before 10:00 a.m. on the Conversion Date.
First Union National Bank
of Virginia, as Trustee
By:
--------------------------------
Title:
--------------------------
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EXHIBIT C
[Form of Bond]
- --------------------------------------------------------------------------------
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to issuer or its agent
for registration of transfer, exchange, or payment and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entry as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
- --------------------------------------------------------------------------------
CUSIP 574221
THIS BOND IS ISSUED UNDER THE PROVISIONS OF THE MARYLAND ECONOMIC DEVELOPMENT
REVENUE BOND ACT AND THE MARYLAND INDUSTRIAL DEVELOPMENT FINANCING AUTHORITY ACT
AND DOES NOT CONSTITUTE AN INDEBTEDNESS TO WHICH THE FAITH AND CREDIT OF THE
STATE OF MARYLAND, THE MARYLAND DEPARTMENT OF BUSINESS AND ECONOMIC DEVELOPMENT,
THE ISSUER, HARFORD COUNTY, MARYLAND OR ANY OTHER PUBLIC INSTRUMENTALITY OR
PUBLIC BODY IS PLEDGED.
THIS BOND MAY BE TENDERED FOR PURCHASE AS DESCRIBED HEREIN. DELIVERY OF AN
OPTIONAL TENDER NOTICE WITH RESPECT TO THIS BOND CONSTITUTES AN IRREVOCABLE
OFFER TO SELL THIS BOND ON THE DATE SPECIFIED THEREIN AND IS BINDING ON
SUBSEQUENT REGISTERED OWNERS OF THIS BOND. IN THE EVENT THE REGISTERED OWNER
FAILS TO DELIVER THIS BOND TO THE TENDER AGENT ON THE SPECIFIED PURCHASE DATE,
THE OWNER HEREOF SHALL THEREAFTER BE ENTITLED ONLY TO PAYMENT OF THE PURCHASE
PRICE AND NOT TO THE BENEFITS OF THE INDENTURE. THIS BOND ALSO IS SUBJECT TO
MANDATORY TENDER AND PURCHASE AS DESCRIBED HEREIN.
MARYLAND INDUSTRIAL DEVELOPMENT FINANCING AUTHORITY
ECONOMIC DEVELOPMENT REVENUE BONDS
(ALCORE, INC. FACILITY)
1997 ISSUE
No. R-________
Registered Owner: _______________________
Principal Amount: _______________________
Maturity Date: November 1, 2012
Initial Interest Rate: A variable rate of interest determined by the
Remarketing Agent on the date of issuance.
Interest Payment Dates: The first Business Day of each February,
May, August and November commencing August 1, 1997,
through the Maturity Date.
Original Delivery Date: May 15, 1997
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<PAGE>
The Maryland Industrial Development Financing Authority (hereinafter
called the "Issuer"), a body corporate and politic and a public instrumentality
of the State of Maryland, for value received, hereby promises to pay (but only
from the sources and in the manner hereinafter mentioned) to the Registered
Owner, or registered assigns, the Principal Amount on the Maturity Date and to
pay (but only from the sources and in the manner hereinafter mentioned) interest
thereon from the Interest Payment Date immediately preceding the Date of
Authentication indicated hereon, unless it is authenticated on an Interest
Payment Date, in which event it shall bear interest from such date, or if it is
authenticated prior to May 15, 1997, in which event it shall bear interest from
the Date of Authentication, payable on each Interest Payment Date, until payment
of said principal sum has been made or provided for, at the rate or rates per
annum provided for below. Principal and interest and premium, if any, shall be
paid in any coin or currency of the United States of America which, at the time
of payment, is legal tender for the payment of public and private debts.
Interest shall be paid on each Interest Payment Date by check mailed to the
person in whose name this Bond is registered at the close of business on the
Regular Record Date (as hereinafter defined) immediately preceding such Interest
Payment Date (provided that, if such day is not a Business Day, such payment
shall be made on the immediately succeeding Business Day as if made on the
Interest Payment Date); provided, however, that interest shall also be payable
by wire transfer to the account at a member bank of the Federal Reserve System
of any registered owner of Bonds in the aggregate principal amount of $500,000
or more at the written request (identifying such account by number) of the
registered owner received by the Trustee (as hereinafter defined) at least five
(5) days before the Regular Record Date or Special Record Date (as defined in
the Indenture). While the Bonds bear interest at the Variable Rate (as
hereinafter defined), the Regular Record Date will be the close of business on
the Business Day immediately preceding each Interest Payment Date. While the
Bonds bear interest at the Fixed Rate (as hereinafter defined), the Regular
Record Date will be the 15th day of the calendar month preceding each Interest
Payment Date. Any such interest not so punctually paid or duly provided for
shall forthwith cease to be payable to the registered owner on such Regular
Record Date, and may be paid to the person in whose name this Bond is registered
at the close of business on a Special Record Date (as defined in the Indenture)
for the payment of such defaulted interest to be fixed by the Trustee, or may be
paid at any time in any other lawful manner, all as more fully provided in the
Indenture. Principal and redemption price shall be paid upon surrender of this
Bond at the principal corporate trust office of First Union National Bank of
Virginia, as Trustee (said banking institution and any successor trustee or
co-trustee under the Indenture being herein called the "Trustee"), in the City
of Richmond, Virginia. Payment of the purchase price of Bonds purchased as
described herein shall be paid, upon surrender of such Bonds, at the office of
First Union National Bank of
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Virginia (in such capacity, the "Tender Agent") in the City of Richmond,
Virginia.
This Bond is issued under and pursuant to the Maryland Industrial
Development Financing Authority Act, as amended, and the Maryland Economic
Development Revenue Bond Act, as amended (hereinafter collectively called the
"Act"), and under and pursuant to a resolution duly adopted by the Issuer on
February 27, 1997. THE BONDS AND THE PREMIUM (IF ANY) AND INTEREST THEREON, AND
THE PURCHASE PRICE THEREOF, ARE LIMITED OBLIGATIONS OF THE ISSUER, THE PRINCIPAL
OF, PREMIUM (IF ANY) AND INTEREST ON, AND THE PURCHASE PRICE OF, WHICH ARE
PAYABLE SOLELY FROM THE REVENUES TO BE RECEIVED IN CONNECTION WITH THE FINANCING
OF THE FACILITY AND FROM ANY OTHER MONEYS MADE AVAILABLE TO THE ISSUER FOR SUCH
PURPOSE. NEITHER THE BONDS NOR ANY PREMIUM OR INTEREST THEREON, NOR THE PURCHASE
PRICE THEREOF, SHALL EVER CONSTITUTE AN INDEBTEDNESS OR A CHARGE AGAINST THE
GENERAL CREDIT OR TAXING POWERS OF THE STATE OF MARYLAND, THE DEPARTMENT OF
BUSINESS AND ECONOMIC DEVELOPMENT OF THE STATE OF MARYLAND (THE "DEPARTMENT"),
THE ISSUER, HARFORD COUNTY, MARYLAND (THE "COUNTY") OR ANY OTHER PUBLIC BODY
WITHIN THE MEANING OF ANY CONSTITUTIONAL OR CHARTER PROVISION OR STATUTORY
LIMITATION AND NONE OF THE ABOVE SHALL EVER CONSTITUTE OR GIVE RISE TO ANY
PECUNIARY LIABILITY OF THE STATE OF MARYLAND, THE DEPARTMENT, THE ISSUER, THE
COUNTY OR ANY OTHER PUBLIC BODY. THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS TO
WHICH THE FAITH OR CREDIT OF THE STATE OF MARYLAND, THE DEPARTMENT, THE ISSUER,
THE COUNTY OR ANY OTHER PUBLIC BODY IS PLEDGED.
This Bond is one of the Bonds of a duly authorized issue of economic
development revenue bonds of the Issuer in the aggregate original principal
amount of $2,600,000 and is known as "Maryland Industrial Development Financing
Authority Economic Development Revenue Bonds (Alcore, Inc. Facility), 1997 Issue
(the "Bonds").
The Bonds have been issued in order to provide funds for the
acquisition of a manufacturing facility by Alcore, Inc. (the "Borrower") in
Harford County, Maryland (the "Facility").
This Bond is issued under and pursuant to a Trust Indenture dated as of
May 1, 1997 (said Trust Indenture, together with all such supplements and
amendments thereto as therein permitted, being herein called the "Indenture"),
by and among the Issuer, the Trustee and Branch Banking and Trust Company as
Credit Facility Trustee (said banking institution and any successor trustee or
co-trustee under the Indenture being herein called the "Credit Facility
Trustee"). An executed counterpart of the Indenture is on file at the principal
corporate trust office of the Trustee. Reference is hereby made to the Indenture
for the provisions, among others, with respect to the custody and application of
the proceeds of the Bonds, the collection and disposition of revenues, a
description of the funds charged with and pledged to the payment of the
principal of and interest on and any other amounts payable under the Bonds, the
nature and extent of the security, the terms
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<PAGE>
and conditions under which the Bonds are or may be issued, the rights, duties
and obligations of the Issuer and of the Trustee and the rights of the
registered owners of the Bonds, and, by the acceptance of this Bond, the
registered owner hereof assents to all of the provisions of the Indenture.
The Issuer has entered into a Loan Agreement dated as of May 1, 1997
(herein called the "Loan Agreement"), with the Borrower, under which the Issuer
has agreed to lend to the Borrower the proceeds of the Bonds, and in
consideration and as evidence of the loan the Borrower has agreed to issue its
promissory note (the "Note") in the principal amount, payable in installments,
bearing interest at rates and payable at times corresponding to the principal
amount of, installments of principal of, interest rates on and due dates of the
Bonds. The Loan Agreement also provides for the payment by the Borrower of
certain fees and expenses of the Issuer and the Trustee, and the Loan Agreement
further obligates the Borrower (i) to pay the cost of maintaining the Facility
in good repair in all material respects and keeping the same insured and (ii) to
maintain a Credit Facility (as hereinafter defined) during the period of time
the Bonds bear interest at the Variable Rate (the "Variable Rate Period").
Credit Facility. The Borrower has entered into a Letter of Credit and
Reimbursement Agreement dated as of May 1, 1997 (the "Reimbursement Agreement")
with First Union National Bank of North Carolina (in such capacity, the "Bank").
Pursuant to the Reimbursement Agreement, the Borrower has caused a Letter of
Credit issued by the Bank (the "Letter of Credit"), to be delivered to the
Credit Facility Trustee, as provided in the Indenture. The Credit Facility
Trustee shall be entitled under the Letter of Credit to draw up to an amount of
$2,704,000 of which (a) $2,600,000 shall support the payment of principal or
that portion of the purchase price corresponding to principal of the Bonds and
(b) $104,000 shall support the payment of up to 120 days' interest or that
portion of the purchase price corresponding to interest on the Bonds at an
assumed rate of 12% per annum. Subject to the provisions of the Indenture, the
Borrower is required during the Variable Rate Period to maintain with the Credit
Facility Trustee the Letter of Credit or an alternate credit facility with terms
and provisions substantially the same as those of the Letter of Credit (an
"Alternate Credit Facility"). During the Variable Rate Period, unless the Letter
of Credit or the then current Alternate Credit Facility is replaced prior to its
expiration in accordance with the terms of the Indenture, this Bond will become
subject to mandatory redemption as provided in the Indenture upon expiration of
the Credit Facility.
Source of Funds. The principal of, premium, if any, and interest on the
Bonds are payable solely from payments on the Note, the Loan Agreement and from
any other moneys held by the Trustee under the Indenture for such purpose,
including, with respect to principal and interest only, moneys drawn by the
Credit Facility
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<PAGE>
Trustee under the Letter of Credit or such other credit facility or facilities,
if any, as may then be held by the Credit Facility Trustee under the Indenture
for the benefit of the Registered Owners (the Letter of Credit or any Alternate
Credit Facility is hereafter referred to as the "Credit Facility" and the Bank
as the issuer of the Letter of Credit and any institution issuing an Alternate
Credit Facility are herein called the "Credit Facility Issuer"). Except as
otherwise specified in the Indenture, this Bond is entitled to the benefits of
the Indenture equally and ratably both as to principal (and redemption and
purchase price) and interest with all other Bonds issued under the Indenture.
Interest Rates
Initial Interest Rate. This Bond shall bear interest from the Date of
Authentication through May 21, 1997 at the Initial Interest Rate.
Variable Rate. After May 21, 1997 and prior to the Conversion Date
(hereinafter defined), the Bonds shall bear interest at a rate per annum equal
to a variable rate established as hereinafter provided (the "Variable Rate").
The Variable Rate shall be equal to the rate of interest certified in writing to
the Trustee by First Union National Bank of North Carolina (acting through its
Capital Markets Group) (herein, with its successors in such capacity, the
"Remarketing Agent") on each Wednesday (or the next succeeding Business Day (as
defined in the Indenture) if such Wednesday is not a Business Day) (the
"Determination Date") as the minimum rate of interest per annum necessary, in
the judgment of the Remarketing Agent taking into account market conditions
prevailing on the Determination Date, to enable the Remarketing Agent to arrange
for the sale of all of the Bonds on the Thursday following the Determination
Date in the secondary market at a price equal to the principal amount thereof
(plus accrued interest to the date of settlement) and shall be effective on the
first day of the next Calculation Period (as hereinafter defined). The first
Determination Date shall be May 21, 1997. In the event the Remarketing Agent
fails to certify such rate for any Calculation Period, or if for any reason the
Variable Rate is held to be invalid or unenforceable by a court of competent
jurisdiction for any period, the Variable Rate for each Calculation Period
thereafter (if none is certified by the Remarketing Agent) shall be 90% of the
yield for United States Treasury bills maturing approximately 30 days after the
Determination Date as published by The Wall Street Journal on such Determination
Date (or the immediately preceding Business Day on which The Wall Street Journal
is published if not published on the Determination Date). For purposes hereof,
"Calculation Period" shall mean the period from and including the day following
the Determination Date of each week (even if not a Business Day) to and
including the earlier of the Conversion Date or the following Determination
Date; provided that if during the Variable Rate Period the Determination Date is
a Regular Record Date, such Calculation Period will extend until the
C-5
<PAGE>
Business Day following such Determination Date. Notwithstanding anything to the
contrary contained herein or in the Indenture, the Variable Rate shall not in
any event exceed the lesser of (i) 12% per annum, or (ii) the maximum rate
permitted by law. Interest prior to the Conversion Date shall be computed on the
basis of a 365 or 366 day year, as applicable, for the number of days actually
elapsed, and shall be payable on each Interest Payment Date.
Fixed Rate. (a) The interest rate on this Bond shall be converted to
the Fixed Rate upon an election by the Borrower pursuant to the Indenture to
convert the rate of interest on all Bonds then outstanding from the Variable
Rate to a Fixed Rate on any Interest Payment Date by giving written notice,
accompanied by the items described in Section 202(e) of the Indenture, to the
Issuer, the Trustee, the Credit Facility Trustee, the Credit Facility Issuer,
the Tender Agent and the Remarketing Agent which notice shall specify the
Placement Agent which has agreed to use its best efforts to arrange for the sale
of any Bonds to be tendered or deemed tendered for purchase on the Conversion
Date (the "Placement Agent").
(b) At least 25 days prior to the proposed Conversion Date, a notice
shall be mailed by the Trustee to each registered owner stating, among other
things, (i) that the interest rate on the Bonds will be converted to the Fixed
Rate effective on the Conversion Date, (ii) the Conversion Date, (iii) that
after the tenth day preceding the Conversion Date, the owner shall not be
entitled to tender this Bond for purchase as described below under "Optional
Tender During Variable Rate Period," (iv) if applicable, that payment of this
Bond will not be supported by a Credit Facility after the Conversion Date and
(vi) that unless the registered owner delivers to the Trustee an Optional
Retention Notice in the form attached hereto as Exhibit A by the fifteenth day
of the month prior to the Conversion Date (or the immediately succeeding
Business Day if such date is not a Business Day), this Bond shall be deemed
tendered for purchase on the Conversion Date.
(c) The rate of interest borne by the Bonds from and including the
Conversion Date until the maturity or prior redemption of the Bonds shall be the
Fixed Rate determined by the Placement Agent on the seventh day (or the
immediately following Business Day if such day is not a Business Day) prior to
the Conversion Date to be the rate which, in the sole judgment of the Placement
Agent based on prevailing market conditions, is the minimum fixed annual rate of
interest necessary to enable the Placement Agent to arrange for the sale of all
of the Bonds in the secondary market at a price equal to the principal amount
thereof.
(d) If, for any reason, the Fixed Rate is held to be invalid or
unenforceable by a court of competent jurisdiction, the Fixed Rate will be 8%
per annum. Notwithstanding anything to the contrary contained herein or in the
Indenture, the Fixed Rate shall
C-6
<PAGE>
in no event be a rate of interest in excess of the maximum rate permitted by
law.
(e) The Fixed Rate shall be computed on the basis of a 360- day year of
twelve (12) equal months of 30 days each and shall be payable on each Interest
Payment Date after the Conversion Date until the principal of, and premium, if
any, and interest on the Bonds shall have been paid in full.
Interest Rate Determination Binding. The determination of the interest
rates on the Bonds in accordance with the terms of the Indenture shall be
conclusive and binding upon the Registered Owners, the Issuer, the Borrower, the
Trustee, the Credit Facility Trustee, the Remarketing Agent, the Placement
Agent, the Tender Agent and the Credit Facility Issuer.
REDEMPTION AND PURCHASE OF BONDS
Optional Redemption. (a) While the Bonds bear interest at the Variable
Rate, the Bonds shall be subject to redemption, upon the written direction of
the Borrower on behalf of the Issuer, on any Interest Payment Date, in whole or
in part, at a redemption price equal to 100% of the principal amount thereof
plus accrued interest to the redemption date, without premium.
(b) While the Bonds bear interest at the Fixed Rate, the Bonds shall be
subject to redemption, upon the written direction of the Borrower on behalf of
the Issuer, in whole or in part, on any Interest Payment Date occurring on or
after the dates set forth below at the redemption prices (expressed as
percentages of the principal amount thereof to be redeemed) set forth below plus
accrued interest to the redemption date as follows:
Commencement of
Redemption Period Redemption Price
----------------- ----------------
Four years from the 103%, declining by 1/2% on each
Conversion Date succeeding anniversary of the
first day of the redemption
period until reaching 100% and
thereafter at 100%
(c) The Bonds shall be subject to redemption, upon the written
direction of the Borrower on behalf of the Issuer, at any time in whole or in
part at a redemption price equal to 100% of the principal amount thereof plus
accrued interest to the redemption date without premium in the event of damage,
destruction or condemnation of the Facility, all as more fully described in
Section 701(b) of the Indenture.
Mandatory Sinking Fund Redemption. The Bonds shall be redeemed in part
on the first Business Day of each February, May, August and November, commencing
on the first Business Day of
C-7
<PAGE>
February, 1998, at a redemption price equal to 100% of the principal amount of
the Bonds to be redeemed plus interest accrued thereon to the redemption date in
accordance with the schedule set forth below:
<TABLE>
<CAPTION>
Redemption Redemption Redemption Redemption Redemption Redemption
Date* Amount Date* Amount Date* Amount
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
February, 1998 $50,000 February, 2003 $55,000 February, 2008 $35,000
May, 1998 50,000 May, 2003 55,000 May, 2008 35,000
August, 1998 50,000 August, 2003 55,000 August, 2008 35,000
November, 1998 50,000 November, 2003 55,000 November, 2008 35,000
February, 1999 50,000 February, 2004 55,000 February, 2009 35,000
May, 1999 50,000 May, 2004 55,000 May, 2009 35,000
August, 1999 50,000 August, 2004 55,000 August, 2009 35,000
November, 1999 50,000 November, 2004 55,000 November, 2009 35,000
February, 2000 50,000 February, 2005 35,000 February, 2010 35,000
May, 2000 50,000 May, 2005 35,000 May, 2010 35,000
August, 2000 50,000 August, 2005 35,000 August, 2010 35,000
November, 2000 50,000 November, 2005 35,000 November, 2010 35,000
February, 2001 55,000 February, 2006 35,000 February, 2011 35,000
May, 2001 55,000 May, 2006 35,000 May, 2011 35,000
August, 2001 55,000 August, 2006 35,000 August, 2011 35,000
November, 2001 55,000 November, 2006 35,000 November, 2011 35,000
February, 2002 55,000 February, 2007 35,000 February, 2012 35,000
May, 2002 55,000 May, 2007 35,000 May, 2012 35,000
August, 2002 55,000 August, 2007 35,000 August, 2012 35,000
November, 2002 55,000 November, 2007 35,000 November, 2012 35,000
</TABLE>
- ------------------------------------------------
*The Redemption Date shall be the first Business Day of each of the months
listed.
Extraordinary Mandatory Redemption. (a) The Bonds shall be subject to
mandatory redemption in whole on any date at a redemption price equal to 100% of
the principal amount thereof, without premium, plus accrued interest to the
redemption date, within 180 days following the receipt by the Trustee of written
notice of a Determination of Taxability (as defined in the Loan Agreement).
(b) During the Variable Rate Period, the Bonds shall be subject to
mandatory redemption in whole on the Interest Payment Date occurring closest to
but not less than 15 days prior to the date of expiration of the then current
Credit Facility, unless an Alternate Credit Facility has been provided in
accordance with the Indenture, at a redemption price equal to 100% of the
principal amount thereof plus accrued interest to the redemption date, without
premium.
(c) The Bonds shall be subject to mandatory redemption in whole or in
part with funds transferred to the Loan Repayments Account and the Bond Fund
(each as defined in the Indenture) from the Facility Fund (as defined in the
Indenture) pursuant to Section 4.4 of the Loan Agreement at a redemption price
equal to 100% of the principal amount thereof, without premium, plus accrued
interest thereon to the redemption date. In the event the amount transferred
from the Facility Fund is less than $100,000 or a
C-8
<PAGE>
lesser amount which would result in any Registered Owner holding Bonds in
denominations other than Authorized Denominations, the Trustee may, at the
request of the Borrower and upon receipt of an opinion of Co-Bond Counsel, hold
such amounts in the Bond Fund and apply it to the next succeeding payment of
principal or interest due on the Bonds, so long as such payment of principal or
interest would not result in less than 95% of the net proceeds of the Bonds
being used for the acquisition, construction, reconstruction or improvement of
land or property of a character subject to the allowance for depreciation under
the Code (as defined in the Indenture). Otherwise, the Borrower shall deposit
with the Trustee an amount that, together with the amount transferred from the
Facility Fund, shall be sufficient to redeem Bonds in Authorized Denominations.
Mandatory Purchase Upon Conversion to Fixed Rate. The Bonds shall be
subject to mandatory purchase in whole on the Conversion Date at a purchase
price equal to 100% of the principal amount thereof, without premium, plus
accrued interest thereon, if any, to the date of purchase, except there shall
not be so purchased (a) Bonds or portions thereof in Authorized Denominations
which the owners have irrevocably elected to retain at the Fixed Rate in
accordance with the Indenture by the delivery of an Optional Retention Notice,
and (b) Bonds issued in exchange for or upon the registration of transfer of
Bonds referred to in clause (a) above.
THE OWNER OF THIS BOND, BY ACCEPTANCE HEREOF, AGREES TO THE MANDATORY
PURCHASE OF THIS BOND AS PROVIDED IN THE INDENTURE, AND AGREES THAT THIS BOND
SHALL BE PURCHASED ON THE DATE SPECIFIED UPON DEPOSIT WITH THE TRUSTEE OF AN
AMOUNT SUFFICIENT TO PAY THE PURCHASE PRICE HEREOF. THE OWNER OF THIS BOND ALSO
UNDERSTANDS AND AGREES THAT, UNLESS THE OWNER HAS DELIVERED TO THE TRUSTEE AN
OPTIONAL RETENTION NOTICE, IN THE EVENT THE OWNER FAILS TO DELIVER THIS BOND,
PROPERLY ENDORSED FOR TRANSFER, TO THE TRUSTEE ON THE DATE SPECIFIED, INTEREST
SHALL CEASE TO ACCRUE HEREON AND THE OWNER HEREOF SHALL THEREAFTER BE ENTITLED
ONLY TO PAYMENT OF THE PURCHASE PRICE AND NOT TO THE BENEFITS OF THE INDENTURE.
Selection of Bonds to be Called for Redemption. Except as otherwise
provided in the Indenture or in the Bonds, if less than all the Bonds are to be
redeemed, the particular Bonds to be called for redemption shall be selected by
the Trustee in the following order of priority: first, Bonds pledged to the Bank
pursuant to the Pledge Agreement dated as of May 1, 1997 by and between the
Borrower and the Bank, second, Bonds owned by the Borrower and third, Bonds
selected by lot from among the Registered Owners of less than $1,000,000 in
aggregate principal amount; provided that if there are no such Registered
Owners, or if after selection from among such Registered Owners such selection
has resulted in redemption of less than a sufficient amount of Bonds or in Bonds
outstanding in unauthorized denominations, then the remaining amount of Bonds to
be redeemed shall be selected from among the Registered Owners of $1,000,000 or
more in aggregate principal
C-9
<PAGE>
amount of Bonds. In no event shall the Trustee select Bonds for redemption if
such redemption will result in any Registered Owner owning Bonds in principal
amounts other than in Authorized Denominations; provided, however, that
Authorized Denominations shall not be required for Bonds Outstanding that result
from principal installments made pursuant to Section 701(c) hereof within a year
of (i) the maturity of the Bonds or (ii) the earlier payment in full thereof.
Notice of Redemption or Purchase. When required to redeem or purchase
Bonds as described above, or when directed to redeem Bonds by the Borrower on
behalf of the Issuer, the Trustee shall cause notice of the redemption or
purchase to be given not more than 60 days and not less than 30 days prior to
the redemption or purchase date by mailing a copy of all notices of redemption
or purchase by first class mail, postage prepaid, to all Registered Owners of
Bonds to be redeemed or purchased at their addresses shown on the Bond Register.
Failure to mail any such notice or any defect in the mailing thereof in respect
of any Bond shall not affect the validity of the redemption or purchase of any
other Bond. Any such notice shall be given in the name of the Issuer, shall
identify the Bonds to be redeemed or purchased (and, in the case of partial
redemption of Bonds, the respective principal amounts thereof to be redeemed),
shall specify the redemption or purchase date, and shall state that on the
redemption date the redemption price of the Bonds called for redemption will be
payable at the principal corporate trust office of the Trustee, or in the case
of mandatory redemption described in clause (b) under "Extraordinary Mandatory
Redemption" above or mandatory purchase, the redemption or purchase price shall
be payable at the office of the Tender Agent, and that from that date interest
will cease to accrue.
After the Conversion Date, if at the time of mailing of notice of any
optional redemption, there shall not have been deposited with the Trustee moneys
sufficient to redeem all the Bonds called for redemption, such notice may state
that it is conditional on the deposit of Available Moneys with the Trustee not
later than the redemption date, and such notice shall be of no effect unless
such moneys are so deposited.
Provisions Applicable to Bond held under Book-Entry System. So long as
all of the Bonds are maintained under a book-entry system with a securities
depository in accordance with the Indenture, in the event that part, but not
all, of this Bond shall be called for redemption, the holder of this Bond may
elect not to surrender this Bond in exchange for a new Bond and in such event
shall make a notation indicating the principal amount of such redemption and the
date thereof on the Payment Grid attached hereto. For all purposes, the
principal amount of this Bond outstanding at any time shall be equal to the
Principal Amount shown on the face hereof reduced by the principal amount of any
partial redemption of this Bond following which the holder of this Bond has
elected not to surrender this Bond. The failure of any
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<PAGE>
holder hereof to note the principal amount of any partial redemption on the
Payment Grid attached hereto, or any inaccuracy therein, shall not affect the
payment obligation of the Issuer hereunder. THEREFORE, IT CANNOT BE DETERMINED
FROM THE FACE OF THIS BOND WHETHER A PART OF THE PRINCIPAL OF THIS BOND HAS BEEN
PAID.(1)
Optional Tender During Variable Rate Period. While the Bonds bear
interest at a Variable Rate, any Bond or portion thereof in an Authorized
Denomination shall be purchased on the demand of the registered owner (a
"Registered Owner" or "Owner") thereof on any Business Day at a purchase price
equal to 100% of the principal amount thereof, plus accrued interest, if any, to
the date of purchase upon delivery to the Tender Agent of an Optional Tender
Notice in the form attached hereto as Exhibit B (the "Optional Tender Notice")
specifying the date on which such Bond shall be purchased, which date shall be a
Business Day not prior to the seventh day after the date of delivery of the
Optional Tender Notice nor after the tenth day preceding the Conversion Date.
Unless the Bonds are held pursuant to a book-entry system as described below, to
receive payment of the purchase price, the owner will be required to deliver
such Bond to the Tender Agent, accompanied by an executed form of assignment and
any other instruments of transfer satisfactory to the Tender Agent, not less
than five days prior to the purchase date specified in such notice as provided
in the Indenture. No purchase of Bonds at the option of the Owner thereof or on
the Conversion Date shall be deemed to be a payment or redemption of the Bonds
or any portion thereof. Notwithstanding the foregoing, no Owner shall have a
right to tender its Bond(s) for purchase as described in this paragraph
following acceleration of the payment of the Bonds pursuant to the terms of the
Indenture. THE OWNER OF THIS BOND, BY ACCEPTANCE HEREOF, AGREES THAT DELIVERY OF
THE OPTIONAL TENDER NOTICE DESCRIBED ABOVE BY THE OWNER CONSTITUTES AN
IRREVOCABLE OFFER TO SELL THIS BOND ON THE DATE SPECIFIED, AND THAT THIS BOND
SHALL BE PURCHASED ON SUCH DATE UPON DEPOSIT WITH THE TENDER AGENT OF AN AMOUNT
SUFFICIENT TO PAY THE PURCHASE PRICE HEREOF. THE OWNER OF THIS BOND UNDERSTANDS
AND AGREES THAT IN THE EVENT THE OWNER FAILS TO DELIVER THIS BOND, PROPERLY
ENDORSED FOR TRANSFER, TO THE TENDER AGENT ON THE DATE SPECIFIED IN THE NOTICE,
THIS BOND SHALL BE HELD BY THE OWNER AS AGENT FOR THE BORROWER, INTEREST SHALL
CEASE TO ACCRUE HEREON AND THE OWNER HEREOF SHALL THEREAFTER BE ENTITLED ONLY TO
PAYMENT OF THE PURCHASE PRICE AND NOT TO THE BENEFIT OF THE INDENTURE AND THE
ISSUER SHALL, TO THE EXTENT PERMITTED BY LAW, EXECUTE AND THE TRUSTEE SHALL
AUTHENTICATE AND DELIVER A SUBSTITUTE BOND IN LIEU OF THE UNDELIVERED BOND.
Tender Agent. The Issuer has appointed First Union National
Bank of Virginia as Tender Agent. The Tender Agent may be changed
- --------
(1) This provision is to be deleted whenever the Bonds are not
maintained in book-entry form.
C-11
<PAGE>
at any time by the Borrower with the consent of the Credit Facility
Issuer and the Trustee.
Authorized Denominations. Subject to the provisions of the Indenture,
the Bonds are issuable as registered Bonds in the denomination of $100,000 or
any integral multiple of $5,000 in excess thereof (the "Authorized
Denominations"). Subject to the limitations provided in the Indenture and upon
payment of any tax or governmental charge, if any, Bonds may be exchanged for a
like aggregate principal amount of Bonds of other Authorized Denominations. No
amount of Bonds may be tendered, retained or redeemed under the terms of the
Indenture which would result in the ownership of Bonds in denominations other
than Authorized Denominations.
Transfer; Book-Entry. This Bond is transferable by the Registered Owner
hereof or his duly authorized attorney at the principal corporate trust office
of First Union National Bank of Virginia as Bond Registrar, in Richmond,
Virginia, in compliance with the terms and conditions set forth in the Indenture
and upon surrender of this Bond, accompanied by a duly executed instrument of
transfer in form satisfactory to the Bond Registrar, and upon payment of any tax
or other governmental charge incident to such transfer, PROVIDED, THAT IF MONEYS
FOR THE PURCHASE OF THIS BOND HAVE BEEN PROVIDED PURSUANT TO A DRAW UNDER THE
CREDIT FACILITY, THIS BOND IS NOT TRANSFERABLE TO ANYONE OTHER THAN THE BORROWER
OR ITS ASSIGNEE OR PLEDGEE. Upon any such transfer, a new Bond or Bonds
registered in the name of the transferee or transferees in Authorized
Denominations and in the same aggregate principal amount as the principal amount
of this Bond will be issued to the transferee. Except as set forth in this Bond
and as otherwise provided in the Indenture, the person in whose name this Bond
is registered shall be deemed the owner hereof for all purposes, and neither the
Issuer, the Bond Registrar nor the Trustee shall be affected by any notice to
the contrary.
The Bonds shall initially be held by means of a book-entry system
administered by The Depository Trust Company ("DTC") with no physical
distribution of Bonds made to the public. References in the remainder of this
paragraph and in the next five succeeding paragraphs to a Bond or the Bonds
shall be construed to mean the Bond or Bonds held under the book-entry system.
One Bond shall be issued to DTC and immobilized in its custody. The book-entry
system shall evidence ownership of the Bonds in Authorized Denominations, with
transfers of beneficial ownership effected on the records of DTC and the DTC
Participants pursuant to rules and procedures established by DTC.
Each DTC Participant shall be credited in the records of DTC with the
amount of such DTC Participant's interest in the Bonds. Beneficial ownership
interests in the Bonds may be purchased by or through DTC Participants. The
holders of these beneficial ownership interests are hereinafter referred to as
the "Beneficial
C-12
<PAGE>
Owners." OPThe Beneficial Owners shall not receive Bonds representing their
beneficial ownership interests. The ownership interests of each Beneficial Owner
shall be recorded through the records of the DTC Participant from which such
Beneficial Owner purchased its Bonds. Transfers of ownership interests in the
Bonds shall be accomplished by book entries made by DTC and, in turn, by DTC
Participants acting on behalf of Beneficial Owners. SO LONG AS CEDE & CO., AS
NOMINEE FOR DTC, IS THE REGISTERED OWNER OF THE BONDS, THE TRUSTEE SHALL TREAT
CEDE & CO. AS THE ONLY HOLDER OF THE BONDS FOR ALL PURPOSES UNDER THE INDENTURE,
INCLUDING RECEIPT OF ALL PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE
BONDS, RECEIPT OF NOTICES, VOTING AND REQUESTING OR DIRECTING THE TRUSTEE TO
TAKE OR NOT TO TAKE, OR CONSENTING TO, CERTAIN ACTIONS UNDER THE INDENTURE.
Payments of principal, premium, interest and purchase price with
respect to the Bonds, so long as DTC is the only owner of the Bonds, shall be
paid by the Trustee directly to DTC or its nominee. DTC shall remit such
payments to DTC Participants, and such payments thereafter shall be paid by DTC
Participants to the Beneficial Owners. The Issuer, the Borrower and the Trustee
shall not be responsible or liable for payment by DTC or DTC Participants, for
sending transaction statements or for maintaining, supervising or reviewing
records maintained by DTC or DTC Participants.
In the event that (a) DTC determines not to continue to act as
securities depository for the Bonds or (b) the Issuer or the Remarketing Agent
determines that the continuation of the book-entry system of evidence and
transfer of ownership of the Bonds would adversely affect the interests of the
Beneficial Owners of the Bonds, the Issuer shall discontinue the book-entry
system with DTC. If the Remarketing Agent fails to identify another qualified
securities depository to replace DTC, the Trustee shall authenticate and deliver
replacement Bonds pursuant to the written instructions of DTC.
THE ISSUER, THE REMARKETING AGENT, THE TENDER AGENT, THE CREDIT
FACILITY TRUSTEE, THE BORROWER AND THE TRUSTEE SHALL NOT HAVE ANY RESPONSIBILITY
OR OBLIGATIONS TO ANY DTC PARTICIPANT OR ANY BENEFICIAL OWNER WITH RESPECT TO
(a) THE BONDS; (b) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC
PARTICIPANT; (c) THE PAYMENT BY DTC OR ANY DTC PARTICIPANT OF ANY AMOUNT DUE TO
ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OF AND INTEREST ON THE BONDS;
(d) THE DELIVERY OR TIMELINESS OF DELIVERY BY DTC OR ANY DTC PARTICIPANT OF ANY
NOTICE DUE TO ANY BENEFICIAL OWNER THAT IS REQUIRED OR PERMITTED UNDER THE TERMS
OF THE INDENTURE TO BE GIVEN TO BENEFICIAL OWNERS; (e) THE SELECTION OF
BENEFICIAL OWNERS TO RECEIVE PAYMENTS IN THE EVENT OF ANY PARTIAL REDEMPTION OF
THE BONDS; OR (f) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC OR ITS NOMINEE,
AS REGISTERED OWNER.
C-13
<PAGE>
In the event that a book-entry system of evidence and transfer of
ownership of the Bonds is discontinued pursuant to the provisions of the
Indenture, the Bonds shall be delivered solely as fully registered Bonds without
coupons in the Authorized Denominations, shall be lettered "R" and numbered
separately from 1 upward, and shall be payable, executed, authenticated,
registered, exchanged and canceled pursuant to the provisions hereof and of the
Indenture.
The Registered Owner of this Bond shall have no right to enforce the
provisions of the Indenture or to institute action to enforce the covenants
therein, or to take any action with respect to any Event of Default under the
Indenture, or to institute, appear in or defend any suit or other proceeding
with respect thereto, except as provided in the Indenture.
In certain events, on the conditions, in the manner and with the effect
set forth in the Indenture, the principal of this Bond may become or may be
declared due and payable before the stated maturity hereof, together with the
interest accrued hereon.
Modifications or alterations of the Loan Agreement and the Indenture
and any supplement or amendment thereto may be made only to the extent and in
the circumstances permitted by the Indenture and may be made in certain cases
without the consent of the owners of the Bonds.
Anything herein or in the Indenture to the contrary notwithstanding,
the obligations of the Issuer hereunder shall be subject to the limitation that
payment of interest to the Registered Owner of this Bond shall not be required
to the extent that receipt of any such payment by the owner of this Bond would
be contrary to the provisions of law applicable to such Bond which limits the
maximum rate of interest which may be charged or collected by such Registered
Owner.
This Bond shall be governed by and construed in accordance with the
laws of the State of Maryland.
All acts, conditions and things required to happen, exist and be
performed precedent to and in the issuance of this Bond and the execution of the
Indenture have happened, exist and have been performed as so required.
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<PAGE>
IN WITNESS THEREOF, the Maryland Industrial Development Financing
Authority has caused this Bond to be executed with the manual or facsimile
signature of its Chairman and its official seal to be impressed or imprinted
hereon and attested by the manual or facsimile signature of its Executive
Director.
MARYLAND INDUSTRIAL DEVELOPMENT
FINANCING AUTHORITY
By:
-------------------------------
Chairman
[SEAL]
ATTEST:
- ------------------------
Executive Director
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds of the series designated therein and
issued under the provisions of the within-mentioned Indenture.
FIRST UNION NATIONAL BANK
OF VIRGINIA,
as Trustee
By:
--------------------------------
Authorized Officer
Date of Authentication: ____________
C-15
<PAGE>
(Form of Abbreviations)
The following abbreviations, when used in the description on the face
of the within Bond, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with the right of survivorship
and not as tenants in common
UTMA - Uniform Transfers to Minors Act
_________________ Custodian for _______________
(Cust) (Minor)
under Uniform Transfers to Minors Act of ______________________
(State)
Additional abbreviations may also be used
though not in the above list.
C-16
<PAGE>
PAYMENT GRID(2)
<TABLE>
<CAPTION>
Principal
Date of Principal Amount Holder
Payment Amount Paid Outstanding Signature
============================= ============================ ============================ =============================
<S> <C> <C> <C>
</TABLE>
- --------
(2) This payment grid is to be deleted whenever the Bonds are not
maintained in book-entry form.
C-17
<PAGE>
[Form of Assignment]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto the within Bond and all rights thereunder, and hereby irrevocably
constitutes and appoints ______________________, attorney to transfer the said
Bond on the bond register, with full power of substitution in the premises.
Dated:
---------------------------
Signature of Assignor
Social Security Number or
Tax Identification
Number of Transferee:
---------------------------
Signature Guaranteed:
- ------------------------------------
NOTICE: Signature must be guaranteed
by an institution which is a
participant in the Securities
Transfer Agent Medallion Stamp
Program ("STAMP") or similar program.
NOTICE: The assignor's signature to this
Assignment must correspond with the
name as it appears on the face of the
within Bond in every particular
without alteration or any change
whatever.
C-18
<PAGE>
EXHIBIT A
FORM OF REGISTERED OWNER'S OPTIONAL RETENTION NOTICE
Date: ________________
First Union National Bank of Virginia,
as Trustee (the "Trustee") under the
Trust Indenture dated as of May 1, 1997
(the "Indenture") among the Trustee,
Branch Banking and Trust Company as
Credit Facility Trustee, and the
Maryland Industrial Development
Financing Authority
Attention: Corporate Trust Department
Re: $2,600,000 Maryland Industrial Development Financing
Authority Economic Development Revenue Bonds (Alcore,
Inc. Facility), 1997 Issue numbered ________, CUSIP
___________, in the principal amount of $_________ (the
"Bonds").
1. The undersigned hereby certifies that it is the lawful registered
owner of the Bonds described above.
2. Pursuant to the provisions of the Indenture, the undersigned hereby
irrevocably elect(s) to hold the Bonds, which will bear interest at the Fixed
Rate (as defined in, and to be determined as described in, the Indenture),
effective on the Conversion Date (as defined in the Indenture) specified in the
Notice of Conversion to Fixed Rate received by the undersigned from the Trustee.
3. The undersigned hereby acknowledges that, even if it fails to
deliver such Bonds as agreed pursuant to paragraph 4 hereof, the Bonds will
nevertheless bear the Fixed Rate effective on the Conversion Date.
4. The undersigned hereby acknowledges that, after the Conversion Date,
the rating on the Bonds may be reduced or withdrawn.
5. The undersigned hereby undertakes to deliver the Bonds to First
Union National Bank of Virginia as Tender Agent, at its principal office at
Richmond, Virginia, Attention: Corporate Trust
C-19
<PAGE>
Department to be stamped with the legend set forth in Section 202(e) of the
Indenture not later than 10:00 a.m. on the Conversion Date.
Name of Registered Owner: ____________________
(Type or Print)
Signature: _________________________
Date: ______________________________
Signature Guaranteed:
- -----------------------------------
NOTICE: Signature must be guaranteed
by an institution which is a
participant in the Securities
Transfer Agent Medallion Stamp
Program ("STAMP") or similar
program.
C-20
<PAGE>
EXHIBIT B
FORM OF REGISTERED OWNER'S OPTIONAL TENDER NOTICE
Date ______________
First Union National Bank of Virginia, as Tender Agent for the Bonds issued
under the Trust Indenture dated as of May 1, 1997 (the "Indenture") among First
Union National Bank of Virginia as Trustee, Branch Banking and Trust Company as
Credit Facility Trustee, and the Maryland Industrial Development Financing
Authority
Attention: Corporate Trust Department
Re: $2,600,000 Maryland Industrial Development Financing Authority
Economic Development Revenue Bonds (Alcore, Inc. Facility),
1997 Issue numbered ____________, CUSIP in the principal
amount of $__________ (the "Bonds").
(1) The undersigned hereby certifies that it is the lawful registered
owner of the Bonds described above on the date hereof and that such Bonds are
free and clear of any liens or encumbrances.
(2) Pursuant to the provisions of the Indenture, the undersigned hereby
irrevocably request(s) the purchase of the Bonds described above.
(3) The date on which the Bonds shall be purchased shall be
_________________ ___, 19__. [Note: This date must be a Business Day (as defined
in the Indenture) at least seven (7) days after receipt of this notice by the
Tender Agent and at least ten (10) days prior to the Conversion Date (as such
terms are defined in the Indenture)].
(4) The person or persons to whom or to whose order the proceeds of the
purchase of the Bonds are to be paid is ________________, and the address or
addresses of such payee or payees is _________ ________________________________.
(5) The undersigned hereby irrevocably authorizes and instructs the
Trustee or the Bond Registrar (as defined in the Bonds) to effect the transfer
of such Bonds (or any Bond(s) exchanged therefor), upon payment of the purchase
price therefor, to the purchaser(s) thereof, whether or not it delivers such
Bonds as agreed pursuant to paragraph (7) hereof.
C-21
<PAGE>
(6) The undersigned hereby acknowledges that, even if it fails to
deliver such Bonds, the Bonds may nevertheless be purchased pursuant to the
Indenture, and that, in any event, on and after the proposed purchase date set
forth in paragraph 3 hereof, the Bonds will cease to be outstanding for all
purposes under the Indenture, to evidence the indebtedness of the Issuer with
respect thereto and to bear interest.
(7) The undersigned hereby undertakes to deliver the Bonds to you, as
Tender Agent, at 901 E. Cary Street, Richmond, Virginia, Attention: Corporate
Trust Department at least five days prior to the proposed purchase date set
forth in paragraph 3 above duly endorsed in blank for transfer.
Name of Registered Owner: _____________________
(Type or Print)
Signature: ____________________________________
Date: _________________________________________
Signature Guaranteed:
- -----------------------------------
NOTICE: Signature must be guaranteed
by an institution which is a
participant in the Securities
Transfer Agent Medallion Stamp
Program ("STAMP") or similar
program.
C-22
<PAGE>
Exhibit 10.4
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (the "Guaranty") is made as of this
1st day of May, 1997, and is made by LUNN INDUSTRIES, INC., a Delaware
corporation (the "Guarantor"), in favor of FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, a national banking association (the "Bank") and FIRST UNION NATIONAL
BANK OF NORTH CAROLINA, a national banking association, in its capacity as
counterparty to the Hedge Agreement (as hereinafter defined) (the "Hedge
Counterparty").
RECITALS
WHEREAS, pursuant to a Trust Indenture of even date herewith (as
amended, modified, supplemented or restated from time to time, the "Indenture")
among the Maryland Industrial Development Financing Authority (the "Issuer") and
First Union National Bank of Virginia, as Trustee, and Branch Banking and Trust
Company, as Credit Facility Trustee (collectively, in such capacities, the "Bond
Trustee"), the Issuer has issued and sold its Maryland Industrial Development
Financing Authority Economic Development Revenue Bonds (Alcore, Inc. Facility)
1997 Issue in the original aggregate principal amount of $2,600,000 (the
"Bonds"); and
WHEREAS, the proceeds of the sale of the Bonds will be loaned (such
loan of the proceeds of the Bonds being hereinafter referred to as the "Loan")
by the Issuer to the Alcore, Inc., a Delaware corporation and wholly-owned
subsidiary of the Guarantor (the "Borrower"), pursuant to a Loan Agreement of
even date herewith (as amended, modified, supplemented or restated from time to
time, the "Loan Agreement") between the Issuer and the Borrower, and used by the
Borrower to finance the acquisition of a certain facility to consist of and
include (a) the acquisition by the Borrower of two adjacent parcels of land
containing approximately 7.26 acres in the aggregate in the Riverside Business
Park at 1324 and 1326 Brass Mill Road in Belcamp, Harford County, Maryland,
together any and all improvements located thereon including, without limitation,
a building containing approximately 50,000 square feet (the "Building"), (b) the
renovation and expansion of such building to add approximately 15,000 square
feet (the "Addition"), (c) the acquisition and installation of certain necessary
and useful machinery and equipment (the "Equipment"), and (d) the acquisition of
such other interests in land or improvements as may be necessary or suitable for
the foregoing, including roads and rights of access, utilities and other
necessary site preparation facilities, all of which shall be used by the
Borrower in its business of making honeycomb aluminum products (such real
property, Building, Addition and Equipment being herewith collectively referred
to as the "Facility"); and
WHEREAS, in order to enhance the marketability of the Bonds, pursuant
to a Letter of Credit and Reimbursement Agreement of even date herewith (the
"Letter of Credit Agreement") by and between the Borrower and the Bank, the
Bank has agreed to issue to the Bond Trustee an irrevocable direct pay letter of
credit in the stated amount of $2,704,000 (such letter of credit and all
<PAGE>
amendments and supplements thereto, or any successor or substitute letter of
credit issued by the Bank with respect thereto being hereinafter called the
"Letter of Credit"); and
WHEREAS, the Borrower and the Hedge Counterparty have entered into an
ISDA Master Agreement dated April 17, 1997 but effective as of the date hereof
(the "Hedge Agreement") providing for an interest rate swap or other hedge
arrangement (the "Hedge") for the Loan (the Borrower's obligations under the
Hedge Agreement being herein called the "Hedge Obligations"; and
WHEREAS, as a condition precedent to the issuance of the Letter of
Credit, the Bank has required that the Borrower's Obligations (hereinafter
defined) be guaranteed by the Guarantor; and
WHEREAS, as a condition precedent to the Hedge, the Hedge Counterparty
has required that the Hedge Obligations be guaranteed by the Guarantor; and
WHEREAS, as a condition precedent to the issuance of the Letter of
Credit, and as a condition precedent to the Hedge, among other things, the Bank
and the Hedge Counterparty also have required that the payment and performance
of the Borrower's Obligations (hereinafter defined) be secured by a Security
Agreement of even date herewith by and among the Borrower and the Guarantor in
favor of the Bank, the Issuer, and the Hedge Counterparty (the "Security
Agreement") encumbering certain personal property assets (the "Collateral"),
together with a Deed of Trust of even date herewith (the "Deed of Trust")
encumbering the Facility.
NOW, THEREFORE, in consideration of these premises, the respective
representations, covenants and agreements hereinafter contained, and other good
and valuable consideration, the receipt and sufficiency of which are by all
parties hereby acknowledged, and to induce the Bank to issue the Letter of
Credit in order to enhance the marketability of the Bonds, and to thereby
achieve lower interest costs and other savings to the Borrower, and to encourage
the Hedge Party to provided the Hedge, the Guarantor agrees as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
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<PAGE>
SECTION 1.1. Definitions. The terms defined in the Preamble and
Recitals hereto shall have the respective meanings specified therein, and the
following terms shall have the following meanings:
"Borrower's Obligations" means any and all obligations, whether
absolute or contingent, now or hereafter due or becoming due or owing by the
Borrower (a) to the Bank under the Letter of Credit Documents, (b) to the Hedge
Counterparty under the Hedge Documents, and (c) the Enforcement Costs.
"Consistent Basis" shall have the meaning assigned to such term in the
Letter of Credit Agreement.
"Enforcement Costs" means any and all funds, costs, expenses and
charges of any nature whatsoever (including, without limitation, reasonable
attorneys' fees and expenses) reasonably advanced, paid or incurred by or on
behalf of the Bank under or in connection with the administration or enforcement
of this Guaranty or any of the Borrower's Obligations, including, without
limitation, (a) the compliance of the Borrower with any covenant, warranty,
representation or agreement of the Borrower made in or pursuant to this
Agreement or any of the Financing Documents, (b) the collection or enforcement
of any of the Borrower's Obligations, this Agreement and any of the Financing
Documents, and (c) the exercise, preservation, maintenance, protection,
operation, management, collection, sale or other disposition of, or realization
upon, all or any part of the Collateral, the Security Interests and the rights
and remedies of the Bank and the Hedge Counterparty hereunder, under the
Financing Documents, under applicable law and otherwise.
"Environmental Law" shall have the same meaning assigned to such term
in the Letter of Credit Agreement.
"ERISA" shall have the same meaning assigned to such term in the Letter
of Credit Agreement.
"Event of Default" means an event which, with the giving of notice or
the lapse of time, or both, could or would constitute an Event of Default under
the provisions of this Guaranty.
"Financing Documents" means, collectively, the Letter of Credit
Documents and the Hedge Documents.
- 3 -
<PAGE>
"Generally Accepted Accounting Principles" shall have the meaning
assigned to such term in the Letter of Credit Agreement.
"Hedge Obligations" shall have the meaning given such term in the
Recitals of this Agreement.
"Indebtedness for Money Borrowed" means all indebtedness in respect of
money borrowed, including (without limitation) the deferred purchase price of
any property or asset or indebtedness evidenced by a promissory note, bond,
guaranty or similar written obligation for the payment of money (including but
not limited to, conditional sales or similar title retention agreements).
"Letter of Credit Documents" means the Letter of Credit, the Letter of
Credit Agreement, the Deed of Trust, the Security Agreement, and any other
documents now or hereafter executed by the Borrower or any other party to
evidence, secure or in connection with the Letter of Credit, as the same may be
amended, modified or supplemented from time to time in accordance with their
respective terms.
"Letter of Credit Obligations" means the obligations of the Borrower
under the Letter of Credit Documents (a) to make all payments required by the
Letter of Credit Documents, when and as the same become due and payable,
including without limitation, all drafts drawn under the Letter of Credit, and
(b) to timely perform, observe and comply with all of the terms, covenants,
conditions, stipulations and agreements, express or implied, which the Borrower
is required by the Letter of Credit Documents to observe or perform.
"Lien" means any mortgage, deed of trust, pledge, security interest,
assignment, encumbrance, judgment, lien, claim or charge of any kind in, on, of
or in respect of, any asset or property or any rights to any asset or property,
including, without limitation, (a) any interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to any such asset or property, and (b) the filing of, or any agreement
to give, any financing statement relating to any such asset or property under
the Uniform Commercial Code of any jurisdiction.
"Long Term Debt" shall have the meaning assigned to such term in the
Letter of Credit Agreement.
- 5 -
<PAGE>
"Material Adverse Effect" means (a) any material adverse effect upon
the condition (financial or otherwise), results of operations, properties,
assets, business or prospects of the Borrower or of the Guarantor, or of the
Borrower and the Guarantor and their Consolidated Subsidiaries, taken as a
whole; (b) a material adverse effect on the ability of the Borrower to perform
the Borrower's Obligations; (c) a material adverse effect on the ability of the
Guarantor to perform the Guaranteed Obligations (as hereinafter defined), or (d)
a material adverse effect on the rights and remedies of the Bank or the Hedge
Counterparty under this Agreement.
"Permitted Liens" means Permitted Liens, as such term is defined in the
Letter of Credit Agreement with respect to the Facility, and as such term is
described in the Security Agreement with respect to the Collateral.
"Person" means and includes an individual, a corporation, a
partnership, a joint venture, a trust, an unincorporated association, a
government or political subdivision or agency thereof, or any other entity.
"Security Interests" means the security interests and other Liens in
the Collateral granted under the Security Agreement.
"Subsidiary" shall have the meaning assigned to such term in the Letter
of Credit Agreement.
"UCC" means the Uniform Commercial Code as in effect on the date hereof
in the State of Maryland.
SECTION 1.2. Rules of Construction. Unless otherwise defined herein and
unless the context otherwise requires, all terms used herein which are defined
by the UCC shall have the same meanings assigned to them by the UCC unless and
to the extent varied by this Agreement. The words "hereof", "herein",
"hereunder", "hereto", and other words of similar import refer to this Agreement
in its entirety. The terms "agree" and "agreements" contained herein are
intended to include and mean "covenant" and "covenants". References to Articles,
Sections, and other subdivisions of this Agreement are to the designated
Articles, Sections, and other subdivisions of this Guaranty as originally
executed. The headings of this Agreement are for convenience only and shall not
define or limit the provisions hereof. As used herein, the singular number shall
include the plural, the plural number shall include the singular, and the use of
the masculine, feminine or neuter gender shall include all genders, as the
context may require.
- 5 -
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES BY THE GUARANTOR
The Guarantor makes the following representations and warranties:
SECTION 2.1 Incorporation. The Guarantor is a corporation duly
organized, existing and in good standing under the laws of State of Delaware,
and has the power to own its properties and to carry on its business as now
being conducted, and, is duly qualified and in good standing as a foreign entity
to do business in every jurisdiction in which the character of the properties
they own or the business they transact makes such qualification necessary,
and/or in which the failure to be so qualified would have a natural adverse
effect on the business of the Guarantor.
SECTION 2.2 Power and Authority. Guarantor is duly authorized under all
applicable provisions of law to execute, deliver and perform this Guaranty, and
all corporate action on its part required for the lawful execution, delivery and
performance hereof has been duly taken; and this Guaranty, upon the due
execution and delivery hereof, will be the valid and binding obligation of
Guarantor enforceable in accordance with its terms subject to the effect of
applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws
affecting creditors' rights generally and to principles of equity, regardless of
whether applied in a proceeding in equity or law. Neither the execution of this
Guaranty, nor the fulfillment of or compliance with its provisions and terms,
(a) will conflict with, or will result in a breach of, a violation of, or a
default under, any terms, conditions, or provisions of the Articles of
Incorporation or Bylaws of the Guarantor, or any other organizational documents
of Guarantor or any Subsidiary, or (b) will be a breach of, a violation of, or a
default under any agreement or instrument to which Guarantor or any Subsidiary
is now a party, or, (c) to, the best of the Guarantor's knowledge, will be a
breach of, a violation of, or a default under any applicable law, regulation,
judgment, writ, order or decree to which Guarantor or any Subsidiary or any of
their respective properties are subject.
SECTION 2.3 Taxes. Guarantor has filed all tax returns required to be
filed by it and all taxes due with respect thereto have been paid, and no
controversy in respect of additional taxes, state, federal or foreign, of
Guarantor is pending, or, to the knowledge of Guarantor, threatened, except as
otherwise disclosed to the Bank in writing from time to time.
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<PAGE>
SECTION 2.4 No Default. Guarantor is not in default in the performance,
observance or fulfillment of any of its material obligations, covenants or
conditions contained in any agreement or instrument to which it is a party.
SECTION 2.5 Government Authority. Guarantor has received the written
approval of all federal, state, local and foreign governmental authorities, if
any, necessary to carry out the terms of this Guaranty, and no further
governmental consents or approvals are required in the making or performance of
this Guaranty by the Guarantor.
SECTION 2.6 No Untrue Statements. Neither this Guaranty nor any
reports, schedules, certificates, information, exhibits, agreements or
instruments heretofore or simultaneously with the execution of this Guaranty
delivered to the Bank or the Hedge Counterparty by Guarantor in connection with
the negotiation of this Guaranty or the issuance and sale of the Bonds contains
any material misrepresentation or untrue statement of any material fact or omits
to state any material fact necessary to make this Guaranty or any such reports,
schedules, certificates, information, exhibits, agreements or instruments in
light of the circumstances under which made or materially misleading.
SECTION 2.7 ERISA Requirements. Guarantor has not incurred any material
accumulated funding deficiency within the meaning of ERISA, or incurred any
material liability to the Pension Benefit Agreement Corporation established
under ERISA (or any successor thereto under ERISA) in connection with any
employee pension benefit plan established or maintained by it or by any Person
under common control with any of them (within the meaning of Section 414(c) of
the Internal Revenue Code of 1986, as amended, or of Section 400(b) of ERISA),
or in which employees of any of them are entitled to participate. No Reportable
Event (as defined in ERISA) in connection with any such plan has occurred or is
continuing, except as disclosed in writing to the Bank from time to time.
SECTION 2.8 Labor Relations. The Guarantor is not engaged in any unfair
labor practice that could have a Material Adverse Effect. There is (i) no
significant unfair labor practice complaint pending against the Guarantor, to
the best knowledge of the Guarantor, threatened against it, before the National
Labor Relations Board, and no significant grievance or significant arbitration
proceedings arising out of or under any collective bargaining agreement is so
pending against the Guarantor or, to the best knowledge of the Guarantor,
threatened against it, (ii) no significant strike, labor dispute, slowdown or
stoppage pending against the Guarantor or, to the best knowledge of the
Guarantor, threatened against the Guarantor, and (iii) to the best
- 7 -
<PAGE>
knowledge of the Guarantor, no union representation question existing with
respect to the employees of the Guarantor and, to the best knowledge of the
Guarantor, no union organizing activities are taking place.
SECTION 2.9 Purpose of Guaranty. The Guarantor has a direct financial
interest in the Borrower. This Guaranty is made in furtherance of the purposes
for which the Guarantor has been organized, and the assumption by the Guarantor
of its obligations hereunder will result in direct financial benefits to the
Guarantor.
ARTICLE III
GENERAL COVENANTS AND AGREEMENTS
SECTION 3.1 Guaranteed Obligations. The Guarantor, for itself, its
successors and assigns, hereby fully and unconditionally and irrevocably
guarantees to the Bank and to the Hedge Counterparty the full and prompt payment
and performance of the Borrower's Obligations, and the Guarantor further agrees
to indemnify and hold the Bank and the Hedge Counterparty harmless from any loss
(including reasonable attorneys' fees) resulting from any default by the
Guarantor under the terms of this Guaranty (these obligations of the Guarantor
being hereinafter referred to as the "Guaranteed Obligations").
SECTION 3.2. Separate Causes of Action; Currency. Each and every Event
of Default under the terms of any of the Financing Documents or this Guaranty
shall give rise to a separate cause of action, and separate actions may be
brought as each cause of action arises. All payments by the Guarantor shall be
paid in lawful money of the United States which at the time and place of payment
is legal tender for the payment of public or private debts in the United States.
SECTION 3.3. Guaranty Agreement is a Continuing Obligation. The
Guaranteed Obligations shall be continuing, absolute, irrevocable and
unconditional and shall remain in full force and effect until all of the
Guaranteed Obligations shall have been paid and performed in
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<PAGE>
full, irrespective of the genuineness, validity, regularity or enforceability of
the Bonds, or the bankruptcy, insolvency, merger, reorganization, termination,
discontinuation or dissolution of the Issuer, the Bank, the Hedge Counterparty,
or the Borrower, or any assignment for the benefit of creditors by the Issuer,
the Bank, the Hedge Counterparty, or the Borrower.
SECTION 3.4. Certain Events Which Will Not Impair Guaranty. Without in
any way limiting the generality of the absolute and unconditional obligations
imposed by Section 3.1 hereof, the obligations, covenants, agreements and duties
of the Guarantor under this Guaranty shall not be affected or impaired by reason
of the happening from time to time of any of the following events with respect
to the Financing Documents, or any assignment thereof, or with respect to this
Guaranty, or any assignment hereof, even if such events happen without the
giving of notice to, or the obtaining of the consent of, the Guarantor:
(a) any compromise, settlement, release, renewal, extension,
indulgence, modification, or termination of any or all of the Borrower's
Obligations under any of the Financing Documents, or of the Guarantor under this
Guaranty; or
(b) any failure to give notice to the Guarantor of the occurrence of an
Event of Default under the terms and provisions of any of the Financing
Documents; or
(c) any assignment or mortgaging or the purported assignment or
mortgaging of all or any part of the interest of the Borrower in the Facility or
the Collateral, or any condemnation or destruction of the Facility or the
Collateral, or any part thereof; or
(d) any waiver of the performance or observance by the Borrower or the
Guarantor, as the case may be, of any of the obligations, covenants, agreements,
duties, terms or conditions contained in any of the Financing Documents or this
Guaranty, or any assignment thereof; or
(e) any extension of time for the payment of any sums of money due from
the Borrower or the Guarantor under any of the Financing Documents or this
Guaranty; or
(f) any modification or amendment (whether material or otherwise) of
any obligation, covenant or agreement set forth in any of the Financing
Documents or this Guaranty; or
(g) any taking or any omission of the actions referred to in any of the
Financing Documents or this Guaranty, or
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<PAGE>
(h) any failure, omission, delay, or deficiency on the part of the Bank
or the Hedge Counterparty in enforcing, asserting or exercising any right, power
or remedy conferred on the Bank or the Hedge Counterparty in any of the
Financing Documents or this Guaranty; or
(i) any voluntary or involuntary liquidation, dissolution, merger, sale
or other disposition of all or substantially all the assets, the marshaling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition, readjustment of
debt, or other similar proceeding affecting the Borrower (including, without
limitation, the occurrence of an Act of Bankruptcy), the Bank, the Hedge
Counterparty, or the Guarantor, or any of their assets, or any allegation
contesting the validity or enforceability of any of the Financing Documents or
this Guaranty, or any stay of the enforcement by the Bank or the Hedge
Counterparty of any remedies against the Borrower or the Guarantor in connection
with any of the Financing Documents or this Guaranty; or
(j) any release or discharge of the Borrower, the Bank, or the Hedge
Counterparty from the performance or observance of any obligation, covenant,
agreement, duty, term or condition contained in any of the Financing Documents
or this Guaranty, or
(k) any merger, consolidation or sale of assets by the Borrower or the
Guarantor; or
(1) any default or failure of the Guarantor fully to perform any of its
obligations, covenants, agreements or duties set forth in this Guaranty; or
(m) any release of any collateral or security for the Borrower's
Obligations or the Guaranteed Obligations; or
(n) the invalidity or unenforceability of any of the Financing
Documents or this Guaranty; or
(o) any extensions of the expiration date of the Letter of Credit.
SECTION 3.5. Limitation of Liability of Borrower under any of the
Financing Documents Not to Affect Liability of Guarantor Hereunder. Without
limiting the foregoing, it is specifically understood that any modification,
limitation or discharge of the liability of the Borrower under any of the
Financing Documents arising out of or by virtue of any bankruptcy, arrangement,
reorganization or similar proceeding for relief of debtors under federal or
state law initiated by or against the Borrower shall not affect, modify, limit
or discharge the liability of the
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<PAGE>
Guarantor hereunder in any manner whatsoever, and this Guaranty shall remain and
continue in full force and effect; and it is the intent and purpose of this
Guaranty that the Guarantor shall and does hereby waive all rights and benefits
which might accrue to it by reason of any such proceeding, and the Guarantor
agrees that it shall be liable for the full amount of the obligations guaranteed
by it pursuant to this Guaranty, irrespective of and without regard to any
modification, limitation or discharge of the liability of the Borrower under any
of the Financing Documents that may result from any such proceedings.
SECTION 3.6. No Action by Bank to Impair Enforcement of Bank's Rights
Hereunder. No act of commission or omission of any kind or at any time upon the
part of the Bank, or any successor or assignee of any of the Bank, in respect of
any matter whatsoever, shall in any way affect or impair the rights of the Bank,
or any successor or assignee of any of the Bank, to enforce any right, power or
benefit of the Bank under this Guaranty, and no set-off, counterclaim,
reduction, or diminution of an obligation, or any defense of any kind or nature
which the Guarantor has or may have against the Bank, or any assignee or
successor of any of the Bank, shall be available to the Guarantor with respect
to the Guaranteed Obligations.
SECTION 3.7. Right to Proceed Directly Against Guarantor. Each of the
Bank and the Hedge Counterparty, or any successor or assign of the Bank or the
Hedge Counterparty, in their sole discretion, shall have the right to proceed
first and directly against the Guarantor, its successors and assigns under this
Guaranty without proceeding against or exhausting their remedies against the
Borrower under any of the Financing Documents, and without resorting to any
other security for the Borrower's Obligations or the Guaranteed Obligations.
SECTION 3.8. Security for the Guaranteed Obligations. The Guaranteed
Obligations are secured by the Security Agreement.
ARTICLE IV
SPECIAL COVENANTS
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<PAGE>
SECTION 4.1. Jurisdiction, Service of Process, and Waiver of Jury
Trial.
(a) The Guarantor hereby agrees and consents that any action or
proceeding arising out of or brought to enforce the provisions of this Guaranty
or any of the Guaranteed Obligations may be brought in any appropriate court in
the State of Maryland, and by the execution of this Guaranty the Guarantor
irrevocably consents to the jurisdiction of each such court.
(b) The Guarantor hereby designates and appoints, without power of
revocation, _______________________________, as agent for the Guarantor for
service of process within the State of Maryland upon whom may be served all
process, pleadings, notice or other papers required to be served upon the
Guarantor which pertain to of any of the Guaranteed Obligations.
(c) The Guarantor covenants that throughout the period during which any
of the Guaranteed Obligations remain outstanding, if a new agent for service of
process within the State is designated pursuant to the terms of subsection (b)
of this Section, the Guarantor will immediately serve notice upon the Bank and
the Hedge Counterparty of the name and address of such new agent and the date on
which his appointment is to become effective.
(d) The Guarantor hereby waives trial by jury in any action or
proceeding to which it and the Bank or the Hedge Counterparty may be parties,
arising out of, or in any way pertaining to, this Guaranty or the Guaranteed
Obligations. It is agreed and understood that this waiver constitutes a waiver
of trial by jury of all claims against all parties to such actions or
proceedings, including claims against parties who are not parties to this
Guaranty. This waiver is knowingly, willingly and voluntarily made by the
Guarantor, and the Guarantor hereby represents that no representations of fact
or opinion have been made by any individual to induce this waiver of trial by
jury, or to in any way modify or nullify its effect. The Guarantor has had the
opportunity to discuss this waiver with counsel prior to signing of this
Guaranty making of this waiver.
ARTICLE V
AFFIRMATIVE COVENANTS
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<PAGE>
Until all of the Guaranteed Obligations shall be performed, the
Guarantor covenants and agrees that, unless the Bank and the Hedge Counterparty
consent otherwise in writing:
SECTION 5.1 Repayment of Obligations. The Guarantor will promptly repay
and satisfy, when due, all of payment obligations of the Guarantor hereunder and
under the Financing Documents.
SECTION 5.2 Performance Under Guaranty and Financing Documents. The
Guarantor will, and will cause each of its Subsidiaries to, perform all
obligations required to be performed by each of them under the terms of this
Guaranty and the Financing Documents, and under any other agreements now or
hereafter existing or entered into between the Guarantor, its Subsidiaries.
SECTION 5.3 Financial and Business Information about the Guarantor. The
Guarantor shall cause to be delivered to the Bank:
(A) ANNUAL FINANCIAL STATEMENTS. AS SOON AS AVAILABLE AND IN
ANY EVENT WITHIN 120 DAYS AFTER THE END OF EACH FISCAL YEAR OF THE
GUARANTOR, A CONSOLIDATED AND CONSOLIDATING BALANCE SHEET OF THE
GUARANTOR AND ALL CONSOLIDATED SUBSIDIARIES AS OF THE END OF SUCH
FISCAL YEAR AND THE RELATED CONSOLIDATED AND CONSOLIDATING STATEMENTS
OF INCOME AND CASH FLOWS FOR SUCH FISCAL YEAR, SETTING FORTH IN EACH
CASE IN COMPARATIVE FORM THE FIGURES FOR THE PREVIOUS FISCAL YEAR, ALL
IN REASONABLE DETAIL AND ACCOMPANIED BY AN OPINION THEREON BY COOPERS &
LYBRAND OR OTHER INDEPENDENT PUBLIC ACCOUNTANTS SATISFACTORY TO THE
BANK, WHICH OPINION SHALL NOT BE QUALIFIED AS TO THE SCOPE OF THE AUDIT
AND WHICH SHALL STATE THAT SUCH CONSOLIDATED FINANCIAL STATEMENTS
PRESENT FAIRLY THE CONSOLIDATED FINANCIAL POSITION OF THE GUARANTOR AND
ITS CONSOLIDATED SUBSIDIARIES AS OF THE DATE OF SUCH FINANCIAL
STATEMENTS AND THE RESULTS OF THEIR OPERATIONS FOR THE PERIOD COVERED
BY SUCH FINANCIAL STATEMENTS IN CONFORMITY WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES APPLIED ON A CONSISTENT BASIS (EXCEPT FOR CHANGES
IN THE APPLICATION OF WHICH SUCH ACCOUNTANTS CONCUR) AND SHALL NOT
CONTAIN ANY "GOING CONCERN" OR LIKE QUALIFICATION OR EXCEPTION OR
QUALIFICATION ARISING OUT OF THE SCOPE OF THE AUDIT.
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(B) QUARTERLY FINANCIAL STATEMENTS. AS SOON AS AVAILABLE AND
IN ANY EVENT WITHIN 50 DAYS AFTER THE END OF EACH QUARTER OF EACH
FISCAL YEAR OF THE GUARANTOR, A CONSOLIDATED AND CONSOLIDATING BALANCE
SHEET OF THE GUARANTOR AND ALL CONSOLIDATED SUBSIDIARIES AS OF THE END
OF SUCH FISCAL QUARTER (WITH ALL SUPPORTING SCHEDULES), THE RELATED
CONSOLIDATED AND CONSOLIDATING STATEMENTS OF INCOME AND CASH FLOWS OF
THE GUARANTOR AND ALL CONSOLIDATED SUBSIDIARIES FOR SUCH QUARTER, AND A
PROFIT AND LOSS STATEMENT OF THE GUARANTOR AND ITS CONSOLIDATED
SUBSIDIARIES, SETTING FORTH IN EACH CASE IN COMPARATIVE FORM THE
FIGURES FOR THE CORRESPONDING QUARTER OF THE GUARANTOR'S PREVIOUS
FISCAL YEAR, ALL CERTIFIED (SUBJECT TO NORMAL YEAR-END AUDIT
ADJUSTMENTS) AS TO FAIRNESS OF PRESENTATION, GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES AND CONSISTENCY BY THE CHIEF FINANCIAL OFFICER OR
CHIEF ACCOUNTING OFFICER OF THE GUARANTOR.
(C) OFFICER'S CERTIFICATE. SIMULTANEOUSLY WITH THE DELIVERY OF
EACH SET OF FINANCIAL STATEMENTS REFERRED TO IN SUBSECTIONS (A) AND (B)
ABOVE, A CERTIFICATE OF THE CHIEF FINANCIAL OFFICER OR CHIEF ACCOUNTING
OFFICER OF THE GUARANTOR, (I) STATING WHETHER THERE EXISTS ON THE DATE
OF SUCH CERTIFICATE ANY EVENT OF DEFAULT AND, IF ANY EVENT OF DEFAULT
THEN EXISTS, SETTING FORTH THE DETAILS THEREOF AND THE ACTION WHICH THE
GUARANTOR IS TAKING OR PROPOSES TO TAKE WITH RESPECT THERETO, AND (II)
STATING WHETHER, SINCE THE DATE OF THE MOST RECENT PREVIOUS DELIVERY OF
FINANCIAL STATEMENTS PURSUANT TO SUBSECTIONS (A) AND (B) OF THIS
SECTION, THERE HAS BEEN ANY MATERIAL ADVERSE CHANGE IN THE CONDITION
(FINANCIAL OR OTHERWISE), RESULTS OF OPERATIONS, PROPERTIES, ASSETS,
BUSINESS OR PROSPECTS OF THE GUARANTOR AND/OR ITS ALL CONSOLIDATED
SUBSIDIARIES, CONSIDERED AS A WHOLE, AND, IF SO, THE NATURE OF SUCH
MATERIAL ADVERSE CHANGE.
(D) ACCOUNTANT'S CERTIFICATE. SIMULTANEOUSLY WITH THE DELIVERY
OF EACH SET OF FINANCIAL STATEMENTS REFERRED TO IN SUBSECTION (A)
ABOVE, A STATEMENT OF THE FIRM OF INDEPENDENT PUBLIC ACCOUNTANTS WHICH
REPORTED ON SUCH STATEMENTS AS TO WHETHER ANYTHING HAS COME TO THEIR
ATTENTION TO CAUSE THEM TO BELIEVE THAT ANY EVENT OF DEFAULT EXISTED ON
THE DATE OF SUCH STATEMENTS AND CONFIRMING THE STATEMENTS SET FORTH IN
THE OFFICER'S
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CERTIFICATE DELIVERED SIMULTANEOUSLY THEREWITH PURSUANT TO SUBSECTION
(C) ABOVE.
(E) EVENT OF DEFAULT. FORTHWITH UPON THE OCCURRENCE OF ANY
EVENT OF DEFAULT, A CERTIFICATE OF THE CHIEF FINANCIAL OFFICER OR CHIEF
ACCOUNTING OFFICER OF THE GUARANTOR SETTING FORTH THE DETAILS THEREOF
AND THE ACTION WHICH THE GUARANTOR IS TAKING OR PROPOSES TO TAKE WITH
RESPECT THERETO.
(F) LITIGATION. AS SOON AS REASONABLY PRACTICABLE AFTER
OBTAINING KNOWLEDGE OF THE COMMENCEMENT OF, OR OF A MATERIAL THREAT OF
THE COMMENCEMENT OF, AN ACTION, SUIT, PROCEEDING OR INVESTIGATION
AGAINST THE GUARANTOR OR ANY OF ITS SUBSIDIARIES WHICH COULD MATERIALLY
ADVERSELY AFFECT ITS CONDITION (FINANCIAL OR OTHERWISE), THE
COLLATERAL, RESULTS OF OPERATIONS, PROPERTIES, ASSETS, BUSINESS OR
PROSPECTS OF THE GUARANTOR AND ITS CONSOLIDATED SUBSIDIARIES,
CONSIDERED AS A WHOLE, OR COULD OTHERWISE HAVE A MATERIAL ADVERSE
EFFECT OR WHICH IN ANY MANNER QUESTIONS THE VALIDITY OF THIS AGREEMENT
OR ANY OF THE OTHER TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AN
EXPLANATION OF THE NATURE OF SUCH PENDING OR THREATENED ACTION, SUIT,
PROCEEDING OR INVESTIGATION AND SUCH ADDITIONAL INFORMATION AS MAY BE
REASONABLY REQUESTED BY THE BANK.
(G) AUDITORS' MANAGEMENT LETTERS. PROMPTLY UPON RECEIPT
THEREOF, COPIES OF EACH REPORT SUBMITTED TO THE GUARANTOR OR ANY OF ITS
CONSOLIDATED SUBSIDIARIES BY INDEPENDENT PUBLIC ACCOUNTANTS IN
CONNECTION WITH ANY ANNUAL, INTERIM OR SPECIAL AUDIT MADE BY THEM OF
THE BOOKS OF THE GUARANTOR OR ANY OF ITS CONSOLIDATED SUBSIDIARIES
INCLUDING, WITHOUT LIMITATION, EACH REPORT SUBMITTED TO THE GUARANTOR
OR ANY OF ITS CONSOLIDATED SUBSIDIARIES CONCERNING ITS ACCOUNTING
PRACTICES AND SYSTEMS AND ANY FINAL COMMENT LETTER SUBMITTED BY SUCH
ACCOUNTANTS TO MANAGEMENT IN CONNECTION WITH THE ANNUAL AUDIT OF THE
GUARANTOR AND ITS CONSOLIDATED SUBSIDIARIES.
(H) TAX RETURNS. WITHIN 30 DAYS AFTER FILING, COPIES OF (I)
ALL FEDERAL, STATE AND LOCAL INCOME TAX RETURNS FILED BY THE GUARANTOR
OR ANY SUBSIDIARY, (II) ALL QUARTERLY REPORTS BY THE GUARANTOR OR ANY
SUBSIDIARY ON FORM 941, AND (III) ALL ANNUAL FUTA TAX RETURNS OF THE
GUARANTOR OR ANY SUBSIDIARY.
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(i) Reports and Proxies. The Guarantor shall deliver to the
Bank: (i) prior to or simultaneously with its annual financial
statements, copies of all 10K's, (ii) prior to or simultaneously with
its quarterly financial statements, (A) copies of all 10-Q's, and (B) a
current backlog report, and (iii) promptly following the date of items,
copies of all other financial statements, reports, notices and proxy
statements which are sent to stockholders of the Guarantor or its
Consolidated Subsidiaries, and all regular and periodic reports
required to be filed by Guarantor or its Consolidated Subsidiaries with
any governmental agency or authority.
(J) ENVIRONMENTAL MATTERS. PROMPTLY, UPON RECEIPT OF ANY
COMPLAINT, ORDER, CITATION, NOTICE OR OTHER WRITTEN COMMUNICATION FROM
ANY PERSON WITH RESPECT TO, OR UPON THE GUARANTOR'S OBTAINING KNOWLEDGE
OF, (I) THE EXISTENCE OR ALLEGED EXISTENCE OF A VIOLATION OF ANY
APPLICABLE ENVIRONMENTAL LAW IN CONNECTION WITH ANY PROPERTY NOW OR
PREVIOUSLY OWNED, LEASED OR OPERATED BY THE GUARANTOR OR ANY OF ITS
SUBSIDIARIES, (II) ANY RELEASE ON SUCH PROPERTY OR ANY PART THEREOF IN
A QUANTITY THAT IS REPORTABLE UNDER ANY APPLICABLE ENVIRONMENTAL LAW
AND (III) ANY PENDING OR THREATENED PROCEEDING FOR THE TERMINATION,
SUSPENSION OR NON-RENEWAL OF ANY PERMIT REQUIRED UNDER ANY APPLICABLE
ENVIRONMENTAL LAW, IN EACH CASE IN WHICH THERE IS A REASONABLE
LIKELIHOOD OF AN ADVERSE DECISION OR DETERMINATION WHICH COULD RESULT
IN A MATERIAL ADVERSE EFFECT.
(K) OTHER INFORMATION. FROM TIME TO TIME SUCH ADDITIONAL
FINANCIAL OR OTHER INFORMATION REGARDING THE CONDITION (FINANCIAL OR
OTHERWISE), RESULTS OF OPERATIONS, PROPERTIES, ASSETS, BUSINESS OR
PROSPECTS OF THE GUARANTOR OR ANY OF ITS SUBSIDIARIES AS THE BANK MAY
REASONABLY REQUEST.
SECTION 5.4 Notice of Certain Events. The Guarantor shall promptly,
after any officer of the Guarantor learns or obtains knowledge of the occurrence
thereof, give written notice to the Bank of:
(a) any written notice of a violation received by the
Guarantor or any of its Subsidiaries from any governmental regulatory
body or law enforcement authority which, if such violation were
established, might have a Material Adverse Effect on the business of
the Guarantor or any of its Subsidiaries or the value of the
Collateral;
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(b) any labor controversy that has resulted in a strike or
other work action materially affecting the Guarantor or any of its
Subsidiaries;
(c) any attachment, judgment, lien, levy or order (other than
Permitted Liens) that may be placed on or assessed against or
threatened against the Guarantor, any of its Subsidiaries, the
Guarantor or the Collateral;
(d) any other matter that has resulted in a Material Adverse
Effect on the financial condition of the Guarantor and its Subsidiaries
as a whole, or on the financial condition of the Guarantor, alone;
(e) the removal of inventory by the Guarantor or any of its
Subsidiaries, other than by consumption or sale in the ordinary course
of business, from the places where such inventory is located on the
date hereof to other places, with information as to the new places
where such inventory shall be maintained;
(f) the acquisition or leasing of material items of new
equipment by the Guarantor or any of its Subsidiaries, or the removal
of material items of equipment by the Guarantor or any of its
Subsidiaries from the places where such items or equipment is located
on the date hereof to other places, with information as to the places
such new or removed equipment shall be maintained;
(g) the acquisition or leasing by the Guarantor or any of its
Subsidiaries of any material additional real property, or the transfer
or termination of tenancy of any material existing personal or real
property, and the Guarantor shall, if requested by the Bank, deliver
such other information relating to any such acquisition, leasing,
transfer or termination of tenancy as the Bank may reasonably request.
(h) any material changes, additions or deletions as to the
material contracts of the Guarantor or any of its Subsidiaries; and
(i) any breach or violation of or noncompliance with any
covenant or condition of this Agreement.
SECTION 5.5 Payment of Obligations. The Guarantor will pay and
discharge, and will cause each of its Subsidiaries to pay and
discharge, as the same shall become due and
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payable, (a) all their respective obligations and liabilities, including all
claims or demands of materialmen, mechanics, carriers, warehousemen, landlords
and other like persons which, in any such case, if unpaid, might by law give
rise to a lien upon any of their properties or assets, and (b) all lawful taxes,
assessments and charges or levies made upon their properties or assets, by any
governmental body, agency or official, except where any of the items in clause
(a) or (b) of this Section 5.5 may be diligently contested in good faith by
appropriate proceedings and the Guarantor or such Subsidiary shall have set
aside on its books, if required under generally accepted accounting principles,
appropriate reserves for the accrual of any such items.
SECTION 5.6 Maintenance of Property; Insurance.
(a) Maintenance of the Property, Collateral and Other
Property. The Guarantor will keep, and will cause each of its Subsidiaries to
keep, the Property, the Collateral, and any other property of the Guarantor or
each of its Subsidiaries useful and necessary in their respective businesses in
good working order and condition, subject to ordinary wear and tear.
(b) Insurance. The Guarantor will maintain, and will cause
each of its Subsidiaries to maintain, insurance with financially sound and
responsible companies in such amounts (and with such risk retentions) and
against such risks as is usually carried by owners of similar businesses and
properties in the same general areas in which the Guarantor and its Subsidiaries
operate. The Guarantor will deliver to the Bank upon request from time to time
full information as to the insurance carried.
SECTION 5.7 Conduct of Business and Maintenance of Existence. The
Guarantor will continue, and will cause each of its Subsidiaries to continue, to
engage in business of the same general type as now conducted by the Guarantor
and its Subsidiaries, and will preserve, renew and keep in full force and
effect, and will cause each of its Subsidiaries to preserve, renew and keep in
full force and effect, their respective corporate existence and their respective
rights, privileges and franchises necessary or desirable in the normal conduct
of business; provided that nothing in this Section shall prohibit the merger of
a Subsidiary into the Guarantor or the merger or consolidation of a Subsidiary
with or into another Person if the corporation surviving such consolidation or
merger is a Subsidiary and if, in each case, after giving effect thereto, no
Event of Default shall have occurred.
SECTION 5.8 Compliance with Laws. The Guarantor will comply, and will
cause each of its Subsidiaries to comply, with all applicable laws, ordinances,
rules, regulations, and requirements of governmental authorities (including,
without limitation, Environmental Laws, ERISA
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and the rules and regulations thereunder) except (a) where the necessity of
compliance therewith is contested in good faith by appropriate proceedings or
(b) where noncompliance could not reasonably be expected to have a Material
Adverse Effect.
SECTION 5.9 Accounting; Inspection of Property, Books and Records. The
Guarantor will keep, and will cause each of its Subsidiaries to keep, proper
books of record and account in which full, true and correct entries in
conformity with generally accepted accounting principles shall be made of all
dealings and transactions in relation to their respective businesses and
activities, will maintain, and will cause each of its Subsidiaries to maintain,
their respective fiscal reporting periods on the present basis and will permit,
and will cause each of its Subsidiaries to permit, representatives of the Bank
to visit and inspect any of their respective properties, to examine and make
copies from any of their respective books and records and to discuss their
respective affairs, finances and accounts with their officers, employees and
independent public accountants, all at such reasonable times and as often as may
reasonably be desired.
SECTION 5.10 Taxes and Liens. The Guarantor shall promptly pay, or
cause to be paid, all taxes, assessments or other governmental charges which may
lawfully be levied or assessed upon the income or profits of the Guarantor or
upon any property, real, personal or mixed, belonging to the Guarantor or upon
any part thereof, and also any lawful claims for labor, material and supplies
which, if unpaid, might become a lien or charge against any such property;
provided, however, the Guarantor shall not be required to pay or cause to be
paid any such tax, assessment, charge, levy or claim so long as the validity
thereof shall be actively contested in good faith by proper proceedings and, if
requested by the Bank, reserves with respect thereto acceptable to the
Guarantor's independent certified public accountants shall be established and
maintained; but provided further that any such tax, assessment, charge, levy or
claim shall be paid forthwith upon the commencement of proceedings to foreclose
any lien securing the same unless a surety bond satisfactory to the Bank is
obtained and delivered to the Bank.
SECTION 5.11 Comply with ERISA. The Guarantor and each of its
Subsidiaries shall at all times make prompt payment of contributions required to
meet the minimum funding standards set forth in ERISA with respect to any
employee benefit plan; promptly after the filing thereof, furnish to the Bank
copies of any annual report required to be filed under ERISA in connection with
each employee benefit plan; not withdraw from participation in, permit the
termination or partial termination of, or permit the occurrence of any other
event with respect to any employee benefit plan that could result in liability
to the Pension Benefit Guaranty Corporation; notify the Bank as soon as
practicable of any "reportable event" (as defined in Section 4043(b) of ERISA)
and of any additional act or condition arising in connection with any employee
benefit plan which the
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Guarantor or any of its Subsidiaries believe might constitute grounds for the
termination thereof by the Pension Benefit Guaranty Corporation (or any
successor under ERISA) or for the appointment by the appropriate United States
district court of a trustee to administer such plan; and furnish to the Bank
upon the Bank's request, such additional information about any employee benefit
plan as may be reasonably requested. Neither the Guarantor nor any of its
Subsidiaries will permit the occurrence of any "prohibited transaction" (as
defined in ERISA).
ARTICLE VI
NEGATIVE COVENANTS
Until all the Guaranteed Obligations to be performed and paid hereunder
shall have been performed and paid in full, unless the Bank shall otherwise
consent in writing, the Guarantor will not, and will not permit any Subsidiary
to, either directly or indirectly:
SECTION 6.1 Restriction on Liens. The Guarantor will not, and will not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon or with respect to any property or assets of any kind (real or
personal, tangible or intangible) of the Guarantor or any such Subsidiary
whether now owned or hereafter acquired, or sell any such property or assets
subject to an understanding or agreement, contingent or otherwise, to repurchase
such property or assets (including sales of accounts receivable or notes with
recourse to the Guarantor or any of its Subsidiaries) or assign any right to
receive income, or file or permit the filing of any financing statement under
the Uniform Commercial Code as in effect in any applicable jurisdiction or any
other similar notice of Lien under any similar recording or notice statute;
provided that the provisions of this Section shall not prevent the creation,
incurrence, assumption or existence of the Permitted Liens.
SECTION 6.2 Limitation on Guarantees. Neither the Guarantor nor any of
its Subsidiaries shall guarantee any debt of any Person or Persons.
SECTION 6.3 No Voluntary Prepayment of Subordinated Debt and Long Term
Debt. The Guarantor will not, and will not permit any of its Subsidiaries to,
directly or indirectly, redeem, retire, purchase, acquire, defease or otherwise
make any payment with respect to the principal of any Long Term Debt at a date
in advance of its legal obligations to do so.
SECTION 6.4 Change of Management. The Guarantor and each of its
Subsidiaries, without the Bank's prior consent, will not make any material
change of management.
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SECTION 6.5 Change in Fiscal Year. The Guarantor and each of its
Subsidiaries, shall not, without the Bank's prior consent, change its fiscal
year.
SECTION 6.6 Transactions with Other Persons. The Guarantor will not,
and will not permit any of its Subsidiaries to, enter into any agreement with
any Person whereby any of them shall agree to any restriction on the right of
the Guarantor or any of its Subsidiaries to amend or waive any of the provisions
of this Agreement or any other Letter of Credit Document.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.1. Events of Default Defined. Each of the following shall be
Events of Default under this Agreement, whereupon all obligations of the
Guarantor hereunder, whether then owing or contingently owing, will, at the
option of the Bank or its successors or assigns, immediately become due and
payable by the Guarantor without presentation, demand, protest or notice of any
kind, all of which are hereby expressly waived. The terms "Event of Default" or
"default" shall mean, whenever they are used in this Agreement, any one or more
of the following events:
(a) The Guarantor shall fail to pay or perform any of the
Guaranteed Obligations;
(b) The occurrence of an "event of default" or an "Event of
Default" (beyond any applicable cure period) under any of the Financing
Documents;
(c) The Borrower or the Guarantor defaults (beyond any
applicable cure period) in the payment of principal or interest on any
other Indebtedness for Money Borrowed (other than in indebtedness to
the Bank under any of the Financing Documents) beyond any period of
grace provided with respect thereto, or in the performance of any other
agreement, term or conditions contained in any agreement under which
any such obligation is created, if the effect of such default is to
cause, or permit the holder or holders of such obligation to cause such
obligation to become due prior to its stated maturity, and the
acceleration of such
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obligation would have a material and adverse effect on the business or
financial condition of the Borrower or the Guarantor; or
(d) Any representation, warranty, certification or statement
made by the Guarantor herein, or in any writing furnished by or on
behalf of the Borrower or the Guarantor in connection with any of the
transactions evidenced by, or which are the subject of, any of the
Financing Documents, shall have been false, misleading or incomplete in
any material respect on the date as of which made; or
(e) The commencement of the liquidation or dissolution of the
Guarantor, or suspension of the business of the Guarantor or filing by
the Guarantor of a voluntary petition in bankruptcy or a voluntary
petition or an answer seeking reorganization, arrangement, readjustment
of its debts or for any other relief under the Bankruptcy Reform Act of
1978, as amended (the "Bankruptcy Code"), or under any other insolvency
act or law, state or Federal, now or hereafter existing, or any other
action of the Guarantor indicating its consent to, approval of, or
acquiescence in any such petition or proceeding, or the application by
the Borrower or the Guarantor for (or the consent or acquiescence to)
the appointment of a receiver or a trustee for the Guarantor, or an
assignment for the benefit of creditors, or the inability of the
Guarantor to pay its debts as they mature, or the admission by the
Guarantor in writing of its inability to pay its debts as they mature;
or
(f) The filing of an involuntary petition or other involuntary
proceeding against the Guarantor seeking a reorganization, arrangement,
readjustment of the Guarantor's debts or for any other relief under the
Bankruptcy Code or under any other insolvency act or law, state or
federal, now or hereafter existing, or the involuntary appointment of a
receiver or trustee for the Guarantor or for all or a substantial part
of the Borrower's or the Guarantor's property, and the continuance of
any of such action for (90) days undismissed or undischarged; or the
issuance of an order for attachment, execution or similar process
against any substantial part of the property of the Guarantor and the
continuance of any such order for (90) days undismissed or
undischarged; or
(g) The entry of an order in any proceedings against the
Guarantor decreeing the dissolution or split-up of the Guarantor; or
(h) The entry of a final judgment against the Guarantor, which
with other outstanding final judgments against the Guarantor exceeds an
aggregate of $100,000, if within thirty (30) days after entry thereof
such judgment shall not have been discharged or bonded
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or execution thereof stayed pending appeal, or if within thirty (30)
days after the expiration of any such stay such judgment shall not have
been discharged or bonded; or
(i) The dissolution of termination of the existence of the
Borrower or the Guarantor.
SECTION 7.2 Remedies on Default. Upon the occurrence of an Event of
Default and at any time thereafter, payment and performance of all of the
Guaranteed Obligations shall be immediately due and owing, and the Bank and the
Hedge Counterparty may proceed hereunder, and, to the extent therein provided,
under any of the Financing Documents, to exercise all remedies available at law,
in equity, or otherwise, in such order as the Bank and the Hedge Counterparty
may elect in their sole discretion, to recover payment and performance of all of
the Guaranteed Obligations and the Bank and the Hedge Counterparty shall have no
obligation to proceed against any Person, to resort to any other security, or to
exhaust any other remedy or remedies which may be available to the Bank and the
Hedge Counterparty.
SECTION 7.3 No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Bank and the Hedge Counterparty is intended to be exclusive of
any other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to any other remedy given hereunder, under
any of the Financing Documents, or now or hereafter existing at law or in equity
or by statute.
SECTION 7.4 Anti-Marshaling Provisions. The right is hereby given by
the Guarantor to the Bank and the Hedge Counterparty to make releases (whether
in whole or in part) of all or any part of the Property or Collateral under the
Financing Documents agreeable to the Bank and/or the Hedge Counterparty without
notice to, or the consent, approval or agreement of other parties and interests,
including junior lienors, which releases shall not impair in any manner the
validity of or priority of the liens and security interest in the remaining
Property or Collateral conferred under such Financing Documents, nor release the
Borrower or the Guarantor from the liability for any of the obligations secured
thereby. Notwithstanding the existence of any other security interest in all or
any part of the Property or the Collateral, the Bank and the Hedge Counterparty
shall have the right to determine the order in which all or any part of the
Property or the Collateral (subject to the provisions of the Intercreditor
Agreement) shall be subjected to the remedies provided therein, or in the
Financing Documents. The Guarantor hereby waives any and all rights to require
the marshaling of assets in connection with the exercise of any of the remedies
permitted by applicable law or provided herein or therein.
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SECTION 7.5 Confession of Judgment. Upon the occurrence of an Event of
Default, the Guarantor authorizes the clerk or any attorney designated by the
Bank or the Hedge Counterparty or any clerk of any court of record to appear for
it in any court of record and confess judgment against it without prior hearing,
in favor of the Bank and the Hedge Counterparty for and in the amount equal to
such of the obligations of the Guarantor which have been due and payable under
Section 7.1 hereof, plus interest accrued and unpaid thereon, all other amounts
then due and payable hereunder, costs of suit and an attorney's fee in an amount
equal to fifteen percent (15%) of such obligations, provided, however, (a) if
the actual attorney's fees incurred by the Bank and the Hedge Counterparty are
less than 15% of such obligations, the Bank and the Hedge Counterparty will
refund (to the extent actually collected) to the Guarantor an amount equal to
the difference between 15% of such obligations and the amount of such actual
attorney's fees (after all of such obligations have been paid in full), or (b)
if the actual attorney's fees incurred by the Bank and the Hedge Counterparty or
other holder hereof exceed 15% of such obligations, whether by reason of
judgment being contested or otherwise, the Guarantor will pay to the Bank and
the Hedge Counterparty on demand the amount of any such excess. The authority
and power to appear for and enter judgment against the Guarantor shall not be
exhausted by one or more exercises thereof, or by any imperfect exercise
thereof, and shall not be extinguished by any judgment entered pursuant thereto.
Such authority and power may be exercised on one or more occasions, from time to
time, in the same or different jurisdictions, as often as the Bank shall deem
necessary or desirable, for all of which this Guaranty shall be a sufficient
warrant.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Indemnification. The Guarantor hereby indemnifies and holds
the Bank and the Hedge Counterparty harmless from and against any and all
claims, damages, losses, liabilities, costs or expenses whatsoever which the
Bank and the Hedge Counterparty may incur (or which may be claimed against the
Bank and the Hedge Counterparty by any Person) by reason of or, in connection
with, the execution, delivery or performance of any of the Financing Documents,
or any transaction contemplated by any of any of the Financing Documents.
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SECTION 8.2 Successors and Assigns. This Guaranty shall be binding upon
the Guarantor, its successors and assignees, and all rights against the
Guarantor arising under this Guaranty shall be for the sole benefit of the Bank
and the Hedge Counterparty, and their successors and assigns, all of whom shall
be entitled to enforce performance and observance of this Guaranty to the same
extent as if they were parties hereto. The Bank and the Hedge Counterparty will
not sell or assign the obligations of the Borrower or the Guarantor hereunder to
any competitor of the Borrower or Guarantor, as reasonably determined by the
Bank.
SECTION 8.3 Notices. All notices, requests and demands to or upon the
respective parties hereto shall be deemed to have been given or made when hand
delivered or mailed first class, certified or registered mail, postage prepaid,
addressed as follows or to such other address as the parties hereto shall have
been notified pursuant to this Section 9.6:
Guarantor: Lunn, Industries, Inc.
1 Garvies Point Road
Glen Cove, New York 11542-2828
Attention: Alan W. Baldwin
Chief Executive Officer and Chairman
With a copy to: S. Nelson Weeks, Esquire
Ballard, Spahr, Andrews & Ingersoll
Suite 1900
300 East Lombard Street
Baltimore, Maryland 21202
Bank: First Union National Bank of North Carolina
Two First Union Center, T-7
Charlotte, North Carolina 28288
Attention: International Operations
With a copy to: Joyce J. Gorman, Esquire
Piper & Marbury
1200 19th Street, N.W.
Washington, D.C. 20036
Hedge Counterparty: First Union National Bank of Maryland
c/o First Union National Bank of North Carolina
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One First Union Center, DC-8
301 S. College Street
Charlotte, NC 28288-0601
Attention: John Nenichka
except in cases where it is expressly herein provided that such notice, request
or demand is not effective until received by the party to whom it is addressed,
in which event said notice, request or demand shall be effective only upon
receipt by the addressee.
SECTION 8.4 Amendment. The Guaranty may be amended, modified or
discharged only upon an agreement in writing of the Guarantor and the Bank and
the Hedge Counterparty.
SECTION 8.5 Effect of Delay and Waivers. No delay or omission to
exercise any right or power accruing upon any default, omission or failure of
performance hereunder 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 order to entitle the Bank to
exercise any remedy now or hereafter existing at law or in equity or by statute,
it shall not be necessary to give any notice, other than such notice as may be
herein expressly required. In the event any provision contained in this Guaranty
should be breached by any party and thereafter waived by the other party so
empowered to act, such waiver shall be limited to the particular breach
hereunder. No waiver, amendment, release or modification of this Guaranty shall
be established by conduct, custom or course of dealing, but solely by an
instrument in writing duly executed by the parties thereunto duly authorized by
this Guaranty.
SECTION 8.6 Counterparts. This Guaranty may be executed simultaneously
in several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
SECTION 8.7 Severability. The invalidity or unenforceability of any one
or more phrases, sentences, clauses or Sections contained in this Guaranty shall
not affect the validity or enforceability of the remaining portions of this
Guaranty, or any part thereof.
SECTION 8.8 Cost of Collection. The Guarantor shall be liable for the
payment of all fees and expenses, including attorneys' fees (computed without
regard to any statutory presumption), reasonably incurred in connection with the
enforcement of this Guaranty.
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SECTION 8.9 Set Off. Upon the occurrence of an Event of Default
hereunder, the Bank is hereby authorized, without notice to the Guarantor, to
set off, appropriate and apply and all monies, securities and other properties
of the Guarantor hereafter held or received by or in transit to the Bank from or
for the Guarantor, against the obligations of the Guarantor irrespective of
whether the Bank shall have made any demand hereunder or under any of the
Financing Documents.
SECTION 8.10 Governing Law. This Guaranty shall be governed by and
construed in accordance with the laws of the State of Maryland.
SECTION 8.11 References. The words "herein", "hereof", "hereunder" and
other words of similar import when used in this Guaranty refer to this Guaranty
as a whole, and not to any particular article, section or subsection.
SECTION 8.12 Taxes, Etc. Any taxes (excluding income taxes) payable or
ruled payable by federal or state authority in respect to this Guaranty or the
Financing Documents shall be paid by the Guarantor upon demand by the Bank,
together with interest and penalties, if any.
SECTION 8.13 CONSENT TO JURISDICTION, WAIVER OF JURY TRIAL. THE
GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE COURT WITHIN HARFORD
COUNTY, MARYLAND OR ANY FEDERAL COURT LOCATED WITHIN THE STATE OF MARYLAND, FOR
ANY PROCEEDING TO WHICH THE BANK AND/OR THE HEDGE COUNTERPARTY IS A PARTY AND
CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY REGISTERED OR CERTIFIED MAIL
DIRECTED TO THE GUARANTOR AT THE ADDRESS INDICATED IN SECTION 8.3 OR AT SUCH
OTHER ADDRESS AS THE GUARANTOR MAY HAVE DESIGNATED IN WRITING TO THE BANK AND
THE HEDGE COUNTERPARTY, AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON
THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE
UNITED STATES MAILS, PROPER POSTAGE PREPAID AND PROPERLY ADDRESSED. TO THE
EXTENT PERMITTED BY LAW, THE GUARANTOR VOLUNTARILY AND KNOWINGLY WAIVES TRIAL BY
JURY AND WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON LACK OF JURISDICTION OR
IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING
INSTITUTED HEREUNDER, OR ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY OR
ANY OF THE FINANCING DOCUMENTS, OR ANY PROCEEDING TO WHICH THE BANK AND/OR THE
HEDGE COUNTERPARTY IS A PARTY, INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF
OR IN CONNECTION WITH ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT
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(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE BANK AND/OR THE HEDGE COUNTERPARTY
OR THE GUARANTOR, AND THE GUARANTOR CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. IN THE EVENT THAT THE
GUARANTOR'S WAIVER OF JURY TRIAL HEREIN SHALL BE DETERMINED TO BE INVALID OR
UNENFORCEABLE AS A MATTER OF LAW, THE GUARANTOR AND THE BANK AND THE HEDGE
COUNTERPARTY AGREE THAT THE PROVISIONS OF ARTICLE __ HEREOF SHALL GOVERN AS TO
THE MATTERS SET FORTH THEREIN. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF
THE BANK AND/OR THE HEDGE COUNTERPARTY TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE BANK AND THE HEDGE
COUNTERPARTY TO BRING ANY ACTION AND PROCEEDING AGAINST THE GUARANTOR IN THE
COURTS OF ANY JURISDICTION THAT HAS JURISDICTION OVER THE GUARANTOR.
SECTION 8.14 Indirect Means. Any act which the Guarantor is prohibited
from doing shall not be done indirectly through a Subsidiary or by any other
indirect means.
SECTION 8.15 Entire Agreement. Subject to the provisions of Article IX
below, Guaranty and the other Financing Documents shall completely and fully
supersede all other prior agreements, both written and oral, between the Bank
and the Guarantor relating to the obligations of the Guarantor to the Bank in
regard thereto.
SECTION 8.16 Intercreditor Agreement. Notwithstanding anything herein
to the contrary, all rights and remedies of the Bank and the Hedge Counterparty
under the Letter of Credit Documents are subject to the provisions of the
Intercreditor Agreement. In the event of any conflict between the terms and
provisions of this Guaranty and the terms and provisions of the Intercreditor
Agreement, the terms and provisions of the Intercreditor Agreement shall
prevail.
ARTICLE IX
ARBITRATION
SECTION 9.1 Arbitration. Except as otherwise specifically set forth in
this Guaranty or agreed to in writing by the Guarantor and the Bank, and except
as expressly provided otherwise in Section 9.3 below, in the event that the
Guarantor's waiver of trial by jury contained in Section 8.13 of this Guaranty
is determined to be invalid or unenforceable as a matter of law, then
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any action, dispute, claim or controversy between the parties, whether sounding
in contract, tort, or otherwise, arising under this Guaranty or any proceeding
to which the Bank is a party, including any actions based upon, arising out of,
or in connection with any course of conduct, course of dealing, statement
(whether oral or written), or actions of the Bank or the Guarantor ("Dispute" or
"Disputes"), shall be resolved by arbitration, as set forth in the Letter of
Credit Agreement. Such Disputes shall be resolved by binding arbitration in
accordance with Title 9 of the United States Code, as amended, and the
Commercial Arbitration Rules of the American Arbitration Association ("AAA"), as
in effect from time to time (the "Rules"). In the event of any inconsistency
between the Rules and the provisions of this Annex, the provisions of this Annex
shall supersede the Rules. All statutes of limitations that would otherwise be
applicable shall apply to any arbitration proceeding hereunder. In any
arbitration proceeding subject to the provisions of this Annex, the arbitrator
is specifically empowered to decide (by documents only, or with a hearing, at
the arbitrator's sole discretion) pre-hearing motions that are substantially
similar to pre-hearing motions to dismiss and motions for summary adjudication.
Judgment upon the award rendered may be entered in any court having
jurisdiction. Whenever an arbitration is required, the parties shall select an
arbitrator in the manner provided in Section 9.4 below.
SECTION 9.2 Judicial Reference. If a Dispute is not submitted to
arbitration as provided in Section 1 above for any reason, but become the
subject of a judicial action, at any point in the proceeding, any party may
elect to have any specific questions of fact or law, or all questions of fact or
law, determined by a reference accordance with Rule 53 of the North Carolina
Rules of Civil Procedure (or the equivalent rule of another State, as
applicable). A party shall not waive the right to request such judicial
reference for any remaining questions of fact or law to be decided by virtue of
the party's initiating or participating in judicial or other proceedings or by
failure to request such a reference up to any point in a judicial proceeding.
Whenever such an election is made, the parties shall designate to the court a
single referee selected in the manner provided in Section 9.4 below. Judgment
upon the award rendered shall be entered in the court in which such proceeding
was commenced.
SECTION 9.3 Remedies. No provision of, nor the exercise of any rights
under, Sections 9.1 or 9.2 above shall limit or otherwise affect the right of
the Bank (a) to proceed and foreclose against the Property or any of the
Collateral by the exercise of a power of sale available under the Financing
Documents and applicable law, (b) to exercise any self help remedies available
under this Guaranty or the Financing Documents and applicable law, including,
without limitation, set off, or to exercise any other nonjudicial rights and
remedies available to it under any of the Financing Documents or this Guaranty
and applicable law, or (c) to obtain provisional or ancillary remedies,
including, without limitation, injunctive relief and the appointment of a
receiver, from a
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court having jurisdiction before, during or after the pendency of any
arbitration or referral. The Bank's pursuit of provisional or ancillary
remedies, or its exercise of self help and other nonjudicial remedies, shall not
constitute a waiver of its right to submit the Dispute to arbitration or
judicial reference.
SECTION 9.4 Selection of Arbitrator or Referee. Whenever an arbitration
is required under Section 9.1 above or a referral is required under Section 9.2
above, the arbitrator or referee shall be selected in accordance with this
Section 9.4. Except as otherwise provided, the arbitrator or referee shall be an
attorney or retired judge selected in accordance with the Rules of the AAA. Any
arbitrator or referee selected under this Section 11.4 shall be knowledgeable in
the subject matter of the Dispute. Qualified retired judges shall be selected
through panels maintained by AAA, or any North Carolina Superior Court (or a
court, of an equivalent or higher level, of another State) or private
organization providing such services. A single arbitrator who is an attorney but
is not a retired judge shall have the power to render a maximum award of
$100,000. Where any party makes timely written request prior to appointment of
the arbitrator, or whether the claim of any party exceeds $100,000, the
arbitrator shall be a retired judge formerly sitting on the bench in a North
Carolina Superior Court or any higher State court (or a court, of an equivalent
level, of another State), or a retired Federal court judge formerly sitting on
the bench of a United States Court of Appeals or any Federal District Court. A
single arbitrator who is a retired judge shall have the power to render a
maximum award of $1,000,000. Where any party seeks an award in excess of
$1,000,000, the Dispute shall be decided by a majority vote of three
arbitrators, at least one of whom shall meet the requirements for retired judges
set forth herein. For purposes of this Section 9.4, the computation of the
maximum award an arbitrator may make shall include any amounts awarded for
arbitration fees, attorneys fees and all other related costs provided by Section
9.5 below.
SECTION 9.5 Miscellaneous. Any arbitration questions arising under this
Article on dispute resolution shall by governed in accordance with Title 9 of
the United States Code, as amended. This Article of the Guaranty, constitutes
the entire agreement of the parties with respect to its subject matter and
supersedes all prior discussions, arrangements, negotiations and other
communications on dispute resolution. To the extent any provision of this
Article is prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Article. The provisions of this Article shall survive any termination or
expiration of this Guaranty until full payment and performance of the
Guarantor's Obligations thereunder, unless the parties otherwise expressly agree
in writing. The arbitrator shall have the power to award to the prevailing party
recovery of all costs, expenses and fees incurred by it (including reasonable
attorneys' fees, administrative fees, arbitrators' fees, and court costs), and
in particular, but without limitation of the
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<PAGE>
foregoing, shall have the power to aware to either party hereto, whether or not
such party shall be the prevailing party in an arbitration, recovery of all
costs, expenses and fees incurred by it (including reasonable attorneys' fees,
administrative fees, arbitrators' fees, and court costs), but only to the extent
payable or reimbursable by the other party under the applicable provisions of
this Guaranty.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed in its name under seal, all as of the date first above written.
ATTEST: GUARANTOR:
LUNN INDUSTRIES, INC.
By: By: /s/ Alan W. Baldwin (SEAL)
----------------------------- -----------------------------
Name: Name: Alan W. Baldwin
Title: Title: Chief Executive Officer
[CORPORATE SEAL]
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<PAGE>
Exhibit 10.5
LETTER OF CREDIT
AND
REIMBURSEMENT AGREEMENT
by and between
ALCORE, INC.
and
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
Dated as of May 1, 1997
- --------------------------------------------------------------------------------
$2,600,000
Maryland Industrial Development Financing Authority
Economic Development Revenue Bonds
(Alcore, Inc. Facility)
1997 Issue
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<PAGE>
TABLE OF CONTENTS
(This Table of Contents is not a part of the Agreement
but rather is for the convenience of reference only.)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I
DEFINITIONS......................................................................................... 2
1.1 Definitions.......................................................................... 2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE BORROWER....................................... 12
2.1 Incorporation........................................................................ 12
2.2 Power and Authority.................................................................. 12
2.3 Financial Condition.................................................................. 12
2.4 Title to Assets...................................................................... 13
2.5 Contingent Liabilities............................................................... 13
2.6 Litigation........................................................................... 13
2.7 Taxes................................................................................ 13
2.8 Contract or Restriction Affecting Borrower........................................... 13
2.9 Trademarks, Franchises and Licenses.................................................. 13
2.10 No Default........................................................................... 14
2.11 Governmental Authority............................................................... 14
2.12 No Untrue Statements................................................................. 14
2.13 ERISA Requirements................................................................... 14
2.14 Pollution and Environmental Control; Hazardous Substances............................ 14
2.15 Facility............................................................................. 15
2.16 Labor Relations...................................................................... 15
ARTICLE III REIMBURSEMENT AND OTHER PAYMENTS..................................................... 15
3.1 Letter of Credit..................................................................... 15
3.2 Reimbursement and Other Payments..................................................... 16
3.3 Tender Advances...................................................................... 17
3.4 Commission and Fees.................................................................. 17
3.5 Increased Costs Due to Change in Law................................................. 17
3.6 Computation.......................................................................... 18
3.7 Payment Procedure.................................................................... 18
3.8 Business Days........................................................................ 18
3.9 Reimbursement of Expenses............................................................ 18
3.10 Extension of Expiration Date......................................................... 18
3.11 Obligations Absolute................................................................. 18
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE IV SECURITY............................................................................. 19
4.1 Security............................................................................. 20
4.2 Additional Liens..................................................................... 20
4.3 Casualty and Liability Insurance Required............................................ 20
4.4 General Requirements Applicable to Insurance......................................... 21
4.5 Advance by Bank...................................................................... 22
4.6 Borrower to Make up Deficiency in Insurance Coverage................................. 22
4.7 Eminent Domain....................................................................... 22
4.8 Application of Net Proceeds of Insurance and Eminent Domain.......................... 22
4.9 Parties to Give Notice............................................................... 23
ARTICLE V AFFIRMATIVE COVENANTS................................................................ 23
5.1 Repayment of Obligations............................................................. 23
5.2 Performance Under Reimbursement Agreement and Security Instruments................... 23
5.3 Financial and Business Information about the Borrower................................ 24
5.4 Notice of Certain Events............................................................. 27
5.5 Corporate Existence.................................................................. 28
5.6 Maintenance of Properties; Insurance................................................. 28
5.7 Conduct of Business and Maintenance of Existence..................................... 28
5.8 Compliance with Laws................................................................. 28
5.9 Accounting; Inspection of Books and Records.......................................... 29
5.10 Information about the Facility....................................................... 29
5.11 Taxes and Liens...................................................................... 29
5.12 Comply with ERISA.................................................................... 29
ARTICLE VI NEGATIVE COVENANTS................................................................... 30
6.1 Restriction on Liens................................................................. 30
6.2 Limitation on Guarantees............................................................. 30
6.3 No Voluntary Prepayment of Debt...................................................... 30
6.4 Change of Management................................................................. 30
6.5 Change in Fiscal Year................................................................ 30
6.6 Transactions with Other Persons...................................................... 31
ARTICLE VII CONDITIONS TO ISSUANCE OF LETTER OF CREDIT........................................... 31
7.1 Conditions on Issuance............................................................... 31
7.2 Additional Conditions Precedent to Issuance of the Letter of Credit.................. 34
7.3 Conditions Precedent to Each Tender Advance.......................................... 34
ARTICLE VIII DEFAULT.............................................................................. 35
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
8.1 Events of Default.................................................................... 35
8.2 No Remedy Exclusive.................................................................. 38
8.3 Anti-marshalling Provisions.......................................................... 38
8.4 Confession of Judgment............................................................... 38
ARTICLE IX MISCELLANEOUS........................................................................ 38
9.1 Indemnification...................................................................... 38
9.2 Transfer of Letter of Credit......................................................... 39
9.3 Reduction of Letter of Credit........................................................ 39
9.4 Liability of the Bank................................................................ 39
9.5 Successors and Assigns............................................................... 40
9.6 Notices.............................................................................. 40
9.7 Amendment............................................................................ 41
9.8 Effect of Delay and Waivers.......................................................... 41
9.9 Counterparts......................................................................... 41
9.10 Severability......................................................................... 41
9.11 Cost of Collection................................................................... 41
9.12 Set Off.............................................................................. 42
9.13 Governing Law........................................................................ 42
9.14 References........................................................................... 42
9.15 Taxes, Etc........................................................................... 42
9.16 Consent to Jurisdiction, Waiver of Jury Trial........................................ 42
9.17 Indirect Means....................................................................... 43
9.18 Entire Agreement..................................................................... 43
9.19 Authority to Act on Behalf of the Bank............................................... 43
ARTICLE X ACQUISITION OF FACILITY.............................................................. 43
10.1 Covenants by Borrower with Respect to Acquisition of Facility........................ 43
10.2 Enforcement of Remedies Against Contractors and Subcontractors
and Their Sureties................................................................... 45
10.3 Application of Proceeds of the Bonds................................................. 45
10.4 Conditions Precedent to the Bank's Approval of Requisitions
for Disbursements from Facility Fund................................................. 48
10.5 Financing Sign on Property; Publicity................................................ 51
10.6 Establishment of Completion Date..................................................... 51
ARTICLE XI ARBITRATION.......................................................................... 52
11.1 Arbitration.......................................................................... 52
11.2 Judicial Reference................................................................... 52
11.3 Remedies............................................................................. 52
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
11.4 Selection of Arbitrator or Referee................................................... 53
11.5 Miscellaneous........................................................................ 53
Exhibit A - Irrevocable Letter of Credit......................................................... A-1
Exhibit B - Borrower's Counsel Opinion........................................................... B-1
Exhibit C - Bond Counsel Reliance Letter......................................................... C-1
</TABLE>
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<PAGE>
LETTER OF CREDIT AND
REIMBURSEMENT AGREEMENT
THIS LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT is dated as of May 1,
1997 (the "Agreement" or "Reimbursement Agreement") and made by and between
ALCORE, INC., a Delaware corporation (the "Borrower"), and FIRST UNION NATIONAL
BANK OF NORTH CAROLINA, a national banking association organized and existing
under the laws of the United States with its principal offices located in
Charlotte, North Carolina (the "Bank");
W I T N E S S E T H:
WHEREAS, arrangements have been made pursuant to a Trust Indenture of
even date herewith by and between the Maryland Industrial Development Financing
Authority (the "Issuer"), First Union National Bank of Virginia (in such
capacity, the "Trustee") and Branch Banking and Trust Company, as Credit
Facility Trustee (the "Credit Facility Trustee") (as amended, the "Indenture")
for the issuance and sale by the Issuer of its Maryland Industrial Development
Financing Authority Economic Development Revenue Bonds (Alcore, Inc. Facility)
1997 Issue in the original aggregate principal amount of $2,600,000 (the
"Bonds"); and
WHEREAS, the proceeds from the sale of the Bonds have been loaned to
the Borrower pursuant to a Loan Agreement of even date herewith, by and between
the Issuer and the Borrower (as amended or supplemented, the "Loan Agreement")
to finance (a) the acquisition by the Borrower of a certain facility to consist
of and include (a) the acquisition by the Borrower of two adjacent parcels of
land containing approximately 7.26 acres located in the aggregate in the
Riverside Business Park and known as Lot 17 with a street address of 1324, and
Lot 18 with a street address of 1326 Brass Mill Road in Belcamp, Harford County,
Maryland (the "Facility Site"), together with and all improvements located
thereon including, without limitation, a building containing approximately
50,000 square feet (the "Building"), (b) the renovation and expansion of such
building to add approximately 15,000 square feet (the "Addition," and
collectively with the existing building, the "Improvements"), (c) the
acquisition and installation of certain necessary and useful machinery and
equipment (the "Equipment"), and (d) the acquisition of such other interests in
land or improvements as may be necessary or suitable for the foregoing,
including roads and rights of access, utilities and other necessary site
preparation facilities, all of which shall be used by the Borrower in its
business of making honeycomb aluminum products (such Facility Site, Improvements
and Equipment being hereinafter collectively referred to as the "Facility"); and
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<PAGE>
WHEREAS, the Maryland Department of Business and Economic Development
(the "Department") has agreed to make a loan to Harford County, Maryland (the
"County") from the Maryland Industrial and Commercial Redevelopment Fund in the
principal amount of $810,000, the proceeds of which have been or will be
reloaned by the County to the Borrower to finance the acquisition of the
Facility (the "MICRF Loan") pursuant to the terms of a letter dated February 24,
1997 to the County from the State;
WHEREAS, the County also has agreed (a) to make a loan to the Borrower
in the principal amount of $60,000, the proceeds of which shall be used by the
Borrower to finance the acquisition of the Facility (the "County Loan"); and (b)
to provide to the Borrower a tax credit in the amount of $30,000 to be applied
over a five year period (the "Tax Credit");
WHEREAS, in order to enhance the marketability of the Bonds, the
Borrower has requested that the Bank issue an irrevocable direct-pay letter of
credit in the form attached as Exhibit A (such letter of credit or any successor
or substitute letter of credit issued by the Bank herein individually and
collectively called the "Letter of Credit") in an amount of up to $2,704,000, of
which $2,600,000 will support the principal of the Bonds, and $104,000 will
support up to 120 days' interest on the Bonds at an assumed rate of 12% per
annum; and, the Bank has agreed to issue the Letter of Credit pursuant to this
Reimbursement Agreement; and
WHEREAS, as a condition precedent to the issuance of the Letter of Credit,
the Bank has required the Borrower to enter into an interest rate hedge
arrangement (the "Hedge") with a counterparty acceptable to the Bank (the "Hedge
Counterparty") pursuant to the terms and conditions of a swap agreement or
similar interest rate hedging agreement (as amended from time to time, the
"Hedge Agreement").
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, including the covenants, terms and conditions
hereinafter appearing, and to induce the Bank to issue the Letter of Credit, the
Borrower does hereby covenant and agree with the Bank as follows:
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<PAGE>
ARTICLE I
DEFINITIONS
1.1 Definitions. All words and terms defined in Article I of the Loan
Agreement shall have the same meanings in this Agreement, unless otherwise
specifically defined herein. The terms defined in this Article I have, for all
purposes of this Agreement, the meanings specified hereinabove or in this
Article, unless defined elsewhere herein or the context clearly requires oth
erwise.
"Account Debtor" shall have the same meaning assigned to such term in
the Security Agreement.
"Acquisition" or "acquisition" has the meaning specified for such term
in Article 1.1 of the Loan Agreement.
"Act of Bankruptcy" means the occurrence and continuation of any of the
events and/or actions described in Sections 8.1 (i), 8.1 (j) or 8.1 (k) with
respect to the Borrower and/or the Guarantor.
"Addition" means the addition containing approximately 15,000 square
feet to be made to the Building.
"Affiliate" shall mean, with respect to any Person, any other person
(i) directly or indi rectly controlling (including, but not limited to, all
directors and officers and such person), con trolled by, or under direct or
indirect common control with, such person or (ii) that directly or indirectly
owns more than 5% of the voting securities of such Person. A person shall be
deemed to control a corporation if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such corporation, whether through the ownership or voting
securities, by contract or otherwise.
"Agreement" shall mean this Letter of Credit and Reimbursement
Agreement, as the same may from time to time be amended, modified or
supplemented in accordance with the terms hereof.
"Bankruptcy Code" means 11 U.S.C. ss. 101 et seq., as amended.
"Bank's Inspector" means Construction and Development Services, L.C.
"Bond Documents" means, collectively, the Loan Agreement, the Note,
the Indenture, the Bonds, the Remarketing Agreement, the Tender Agency
Agreement, the Placement
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<PAGE>
Agreement and the Placement Memorandum, as the same may be amended, modified or
supplemented from time to time in accordance with their respective terms.
"Borrower's Obligations" means, collectively, the Letter of Credit
Obligations, the Bond Obligations, the Revolving Credit Obligations and the
Hedge Obligations.
"Bond Obligations" means the Borrower's obligations to the Issuer
under the Bond Documents.
"Building" means the building containing approximately 50,000 square
feet located on the Facility Site.
"Business Day" shall mean any day not a Saturday, Sunday or legal
holiday, on which commercial banks in Charlotte, North Carolina are open for
business.
"Closing Date" means the date on which the Bonds and the Letter of
Credit are issued.
"Collateral" means all real and property of the Borrower and/or the
Guarantor with respect to which the Bank, the Issuer, the Trustee, FUNBMD and/or
the Hedge Counterparty have been granted a lien or security interest pursuant to
the Security Instruments.
"Commitment Letter" means that certain commitment letter from the Bank
to the Borrower dated January 15, 1997, and accepted and executed by the
Borrower on or before the date of issuance of the Bonds.
"Completion Certificate" means the executed certificate of completion
described in Section 10.3(f) hereof.
"Consistent Basis" means, in reference to the application of Generally
Accepted Accounting Principles, that the accounting principles observed in the
period referred to are comparable in all material respects to those applied in
the preceding period, except as to any changes consented to by the Bank.
"Consolidated Cash Flow Coverage Ratio" means the sum of net profit, taxes,
interest expenses, depreciation and amortization divided by the sum of all
current maturities of long term debt and capital lease obligations and interest
expense of the Borrower, the Guarantor and their Consolidated Subsidiaries.
"Consolidated Current Assets" means the aggregate amount of all assets of
the Borrower, the Guarantor and their Consolidated Subsidiaries which would, in
accordance with generally accepted accounting principles, be defined as current
assets.
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<PAGE>
"Consolidated Current Liabilities" means the aggregate amount of all
current liabilities of the Borrower, the Guarantor and their Consolidated
Subsidiaries, as determined in accor dance with generally accepted accounting
principles, but in any event shall include all liabili ties except those having
a maturity date which is more than one (1) year from the date as of which such
computation is being made.
"Consolidated Current Ratio" means the ratio of Consolidated Current
Assets divided by Consolidated Current Liabilities.
"Consolidated Debt" means at any date the Debt of the Borrower, the
Guarantor and their Consolidated Subsidiaries, determined on a consolidated
basis as of such date.
"Consolidated Subsidiary" means with respect to any Person at any date,
any Subsid iary of such Person or other entity, the accounts of which would be
consolidated with those of such Person in its consolidated financial statements
if such statements were prepared as of such date in accordance with generally
accepted accounting principles.
"Consolidated Capital Expenditures" means, for any period, the additions to
property, plant and equipment and other capital expenditures of the Borrower,
the Guarantor and their Consolidated Subsidiaries for such period (including,
without limitation, gross leases to be capitalized under generally accepted
accounting principles and leasehold improvements), as the same are or would be
set forth in a consolidated statement of cash flows of the Borrower, the
Guarantor and their Consolidated Subsidiaries for such period, but excluding (to
the extent that they would otherwise be included) any such expenditures made for
the replacement or restora tion of assets to the extent financed by condemnation
awards or proceeds of insurance received with respect to the loss or taking of
or damage to the asset or assets being replaced or restored.
"Consolidated Tangible Net Worth" means at any date total assets (less
Intangible Assets) minus total liabilities (including Subordinated Debt) of the
Borrower, the Guarantor and their Consolidated Subsidiaries. For purposes of
this definition, "Intangible Assets" means all in tangible assets of the
Borrower, the Guarantor and their Consolidated Subsidiaries including, without
limitation, goodwill, franchises, patents, licenses, trademarks, copyrights,
service marks, advances to Affiliates and related parties, trade names and brand
names.
"County" means Harford County, Maryland.
"County Security Agreement" means the Deed of Trust from the Borrower
to the County, as the same may be amended, modified or supplemented from time to
time in accordance with the terms thereof.
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"County Documents" means, collectively, the County Note, the County
Security Agreement and all other instruments and documents executed and
delivered to evidence, secure or in connection with, the County Loan, as amended
from time to time.
"County Note" means the Deed of Trust Note in the principal amount of
$60,000 made or to be made by the Borrower payable to the County evidencing the
Borrower's obligations to the County in connection with the County Loan, as
amended from time to time.
"County Loan" means the loan from the County to the Borrower in the
principal amount of the County Note, as described in the Recitals hereof.
"Debt" of any Person means, at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services (other than trade accounts payable arising in the ordinary course of
business), (iv) all obligations of such Person as lessee under capital leases,
(v) all obligations of such Person to purchase securities or other property
which arise out of or in connection with the sale of the same or substantially
similar securities or property, (vi) all non-contingent obligations, all
contingent obligations of such Person to reimburse any bank or other person in
respect of amounts paid under a letter of credit, bankers' acceptance or similar
instrument, (vii) all obligations of others secured by a lien on any asset of
such Person, whether or not such obligation is assumed by such Person and (viii)
all obligations of others guaranteed by such Person.
"Deed of Trust" or "Mortgage" means the Deed of Trust and Security
Agreement of even date herewith from the Borrower to certain trustees for the
benefit of the Bank, the Issuer, FUNBMD and the Hedge Counterparty to secure the
Borrower's Obligations, as amended, restated, modified or supplemented from time
to time.
"Eminent Domain" means the taking of title to, or the temporary use of,
the Collateral or any part thereof to eminent domain or condemnation
proceedings, or any voluntary conveyance of any part of the Collateral during
the pendency of, or as a result of a threat of, such proceedings.
"Event of Default" shall have the meaning specified in Article VIII
hereof.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment
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or to emissions, discharges or releases of pollutants, contaminants, petroleum
or petroleum products, chemicals or industrial, toxic or hazardous substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, petroleum or petroleum products, chemicals
or industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"Environmental Report" means that certain Phase I Environmental Site
Assessment, originally dated November, 1989, and updated as of February 28,
1997, prepared by Geo-Technology Associates, Inc.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, including any rules and regulations promulgated thereunder.
"ERISA Group" means the Borrower, the Guarantor, any Subsidiary of
either the Borrower and the Guarantor, and all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any Subsidiary, are treated
as a single employer under Section 414 of the Internal Revenue Code.
"Expiration Date" means May 15, 2000, the expiration date of the Letter
of Credit, as such date may be extended pursuant to the terms of Section 3.10
hereof.
"Facility" means (a) the Facility Site, (b) the Improvements, including
(without limitation) the Addition and the Building, (c) the Equipment, and (d)
such other interests in land or improvements as may be necessary and suitable
for the foregoing, including roads and rights of access, utilities and other
necessary site preparation facilities.
"Facility Site" means those two parcels of land containing in the
aggregate approximately 7.26 acres of land located in the Riverside Industrial
Park, Belcamp, Harford County, Maryland and known as Lot 17 with a street
address of 1324 Brass Mill Road, and Lot 18 with a street address of 1326 Brass
Mill Road (as more particularly described in the Deed of Trust) and any and all
Improvements.
"FUNBMD" means First Union National Bank of Maryland, a national
banking association, and its successors and assigns.
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"Generally Accepted Accounting Principles" means those principles of
accounting set forth in pronouncements of the Financial Accounting Standards
board and its predecessors or pronouncements of the American Institute of
Certified Public Accountants or those principles of accounting which have other
substantial authoritative support and are applicable in the circumstances as of
the date of application, as such principles are form time to time supplemented
or amended.
"Guaranty" means the Guaranty Agreement dated of even date herewith
executed and delivered by the Guarantor in favor of the Bank to guaranty payment
and performance of the Letter of Credit Obligations, as the same may be amended,
restated or supplemented as therein permitted.
"Guarantor" means Lunn Industries, Inc., a Delaware corporation, the
parent company of the Borrower, and any successor or assign permitted under the
Guaranty.
"Hedge" means the interest rate swap or similar hedge arrangement
between the Borrower and the Hedge Counterparty.
"Hedge Agreement" means the agreement between the Borrower and the
Hedge Counterparty executed in connection with the Hedge.
"Hedge Counterparty" means the First Union National Bank of Maryland in
its capacity as counterparty to the Hedge Agreement with whom the Borrower has
entered the Hedge.
"Hedge Documents" means, collectively, the Hedge Agreement and all
other documents executed and delivered to evidence, secure, or in connection
with, the Hedge.
"Hedge Obligations" means all of the Borrower's obligations to the
Hedge Counterparty under the Hedge Documents.
"Indebtedness for Money Borrowed" means all indebtedness in respect of
money borrowed, including (without limitation) the deferred purchase price of
any property or asset or indebtedness evidenced by a promissory note, bond,
guaranty or similar written obligation for the payment of money (including but
not limited to, conditional sales or similar title retention agreements).
"Indenture" means the Indenture described in the Recitals of this
Agreement.
"Landlord's Waiver" means, collectively, the landlord's waivers
executed and delivered by each owner of space rented by the Borrower or the
Guarantor, which are required by the Bank
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as a condition precedent to the issuance of the Letter of Credit, as described
in Section 7.1(v) hereof.
"Letter of Credit Documents" means, collectively, this Agreement, the
Letter of Credit, the Security Instruments, the Guaranty, and all other
instruments and documents executed and delivered to evidence or secure the
Letter of Credit Obligations.
"Letter of Credit Obligations" means the obligations of the Borrower to
the Bank hereunder and under the other Letter of Credit Documents in connection
with the Letter of Credit.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, the Borrower or any Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset.
"Long Term Debt" means liabilities with maturity dates greater than one (1)
year from the date as of which such computation in being made.
"Material Adverse Effect" means (a) any material adverse effect upon the
condition (financial or otherwise), results of operations, properties, assets,
business or prospects of the Borrower or of the Guarantor, or of the Borrower
and the Guarantor and their Consolidated Subsidiaries, taken as a whole; (b) a
material adverse effect on the ability of the Borrower to consummate the
transactions contemplated hereby; (c) a material adverse effect on the ability
of the Borrower to perform its obligations under this Agreement or (d) a
material adverse effect on the rights and remedies of the Bank under this
Agreement.
"MICRF Documents" means, collectively, the MICRF Note, the MICRF
Security Agreement, and all other instruments and documents executed and
delivered to evidence or secure the MICRF Loan.
"MICRF Loan" means the loan from the County to the Borrower in the
principal amount of the MICRF Note as described in the Recitals hereof.
"MICRF Note" means the Reloan Note from the Borrower to the County in
the principal amount of $810,000 evidencing the Borrower's obligations to the
County in connection with the MICRF Loan under the MICRF Documents.
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<PAGE>
"MICRF Security Agreement" means the Deed of Trust from the Borrower to
the County securing the principal amount of the MICRF Loan, as the same may be
amended, modified or supplemented from time to time in accordance with the terms
thereof.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
"Net Proceeds" means, when used with respect to any insurance proceeds
or award resulting from, or other amount received in connection with, Eminent
Domain, shall mean the gross proceeds, aware or other amount, less all expenses
(including attorneys' fees) incurred in the realization thereof.
"Note" means the promissory note of the Borrower of even date herewith
in the amount of $2,600,000, issued by the Borrower to the Issuer to evidence
the Bond Obligations under the Bond Documents, as amended, restated, modified or
supplemented from time to time.
"Officer's Certificate" means the Certificate of the President, or
Chief Financial Officer of the Borrower.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Liens" means liens in favor of the Bank and any of the
following liens securing any indebtedness of the Borrower, the Guarantor or any
Subsidiaries on their property, real or personal, whether now owned or hereafter
acquired:
(a) Liens created by the Letter of Credit Documents, the Bond
Documents, the Hedge Documents, or the Revolving Credit Documents;
(b) Other Liens in favor of the Bank, FUNBMD or the Issuer;
(c) Liens for taxes not yet due or Liens for taxes being contested
in good faith and by appropriate proceedings for which adequate reserves
(in the good faith judgment of the management of the Borrower) have been
established;
(d) Liens imposed by law securing the charges, claims, demands or
levies of carriers, warehousemen, mechanics and other like persons which
were incurred in the ordinary
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course of business which (A) do not in the aggregate materially detract
from the value of the property or assets subject to such Lien or materially
impair the use thereof in the operation of the business of the Borrower or
any Subsidiary or (B) are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture
or sale of the property or assets subject to such lien; and
(e) Liens (other than any Liens imposed by ERISA or pursuant to
any Environmental Law) not securing debt of the Borrower or derivatives
obligations of the Borrower incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety bonds (other than
appeal bonds), bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations incurred in the
ordinary course of business.
(f) Encumbrances described in the Commitment for Title Insurance
(No. 1970014) issued by Commonwealth Land Title Insurance Company with
respect to the Mortgage.
(g) Any Lien created by the MICRF Security Agreement or the
County Security Agreement covering any portion of the Facility so long
as it is subordinate to all Liens described in subparagraph (a) above.
"Person" means an individual, partnership, corporation, limited
liability company, trust, unincorporated organization, association, joint
venture or a government or agency or political subdivision or instrumentality
thereof.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (a) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group, or (b) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Plans" means the plans and specifications for the Facility previously
approved by the Bank.
"Pledge Agreement" means the Pledge Agreement even date herewith from
the Borrower to the Bank, as amended, restated or supplemented from time to
time.
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<PAGE>
"Projected Completion Date" means December 15, 1997.
"Property" means the Facility Site.
"Reimbursement Rate" means the fluctuating rate of interest which is at
all times equal to the Prime Rate per annum provided, however, that if an Event
of Default shall have occurred and be continuing, the Reimbursement Rate shall
be equal to a fluctuating rate of interest which is at all times equal to the
Prime Rate plus 2% per annum.
"Revolving Credit Agreement" means the Credit Agreement dated November
22, 1996 by and between FUNBMD, the Borrower and the Guarantor, as amended,
restated, modified or supplemented from time to time.
"Revolving Credit Documents" means, collectively, the Revolving Credit
Agreement, the Revolving Credit Security Agreement, the Revolving Credit Note
and all other instruments and documents executed and delivered to evidence,
secure or in connection with, the Revolving Credit Facility.
"Revolving Credit Facility" means the revolving line of credit facility
in the principal amount of $6,000,000 made available by FUNBMD to the Borrower
and the Guarantor pursuant to the provisions of the Revolving Credit Agreement.
"Revolving Credit Note" means the Note dated November 22, 1996 made by
the Borrower and the Guarantor payable to FUNBMD in the principal amount of
$6,000,000, as amended, restated or modified from time to time.
"Revolving Credit Obligations" means all obligations of the Borrower
and the Guarantor to the Bank under the Revolving Credit Documents.
"Revolving Credit Security Agreement" means the Security Agreement
dated November 22, 1996 by and between the FUNBMD, the Borrower and the
Guarantor to secure the Borrower's obligations and the Guarantor's obligations
under the Revolving Credit Documents.
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<PAGE>
"Security Agreement" means the Security Agreement of even date herewith by and
between the Borrower and the Bank, as amended, restated, modified or
supplemented from time to time.
"Security Instruments" means collectively, the Deed of Trust, the
Pledge Agreement, the Security Agreement, the Guaranty, the Landlord's Waiver
and any and all other agreements or instruments now or hereafter executed and
delivered by the Borrower or any other Person in connection with, or as security
for the payment or performance of, the Letter of Credit or this Agreement, as
such agreements may be amended, modified or supplemented from time to time in
accordance with their respective terms.
"State" means the State of Maryland.
"Subordination Agreement" means the Subordination Agreement to be
entered into by and among the Borrower, the Guarantor, the Department, the
County, the Bank, the Hedge Counterparty and FUNBMD, as amended, restated, or
supplemented from time to time.
"Subordinated Debt" means the MICRF Loan, the County Loan, and with respect
to any Person, means all other Debt which (a) bears interest at rates not
greater than such Person shall reasonably determine to be the prevailing market
rate, at the time such Subordinated Debt is issued, for interest on comparable
subordinated debt issued by comparable issuers, (b) is subordinated in right of
payment to such Person's indebtedness, obligations and liabilities to the Bank
under the Letter of Credit Documents pursuant to payment and subordination
provisions satisfactory in form and substance to the Bank, and (c) is issued
pursuant to loan documents having covenants and events of default that are
satisfactory in form and substance to the Bank but that in no event are less
favorable, including with respect to rights of acceleration, to the Borrower
than the terms hereof.
"Subsidiary" means, as to any Person, (i) any corporation more than 50%
of whose stock of any class or classes having by the terms thereof ordinary
voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a 50% equity interest at the time. Unless the context
indicates otherwise, all references herein to Subsidiaries are references to
Subsidiaries of the Borrower.
"Tax Credit" means the tax credit granted by the County to the Borrower
in the amount of $30,000 to be applied over a five-year period, as described in
the Recitals hereof.
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<PAGE>
"Tender Advance" has the meaning assigned to that term in Section 3.3
of this Agreement.
"Tender Draft" has the meaning assigned to that term in the Letter of
Credit.
"Termination Date" means the last day a drawing is available under the
Letter of Credit.
"Trustee" means any Person or group of Persons at the time serving as
trustee under the Indenture.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
The Borrower represents and warrants to the Bank and the Issuer (which
representations and warranties shall survive the delivery of the documents
mentioned herein and the issuance of the Letter of Credit) that:
2.1 Incorporation. Borrower is a corporation duly organized, existing
and in good standing under the laws of State of Delaware, is qualified to do
business and is in good standing in the State of Maryland, and has the power to
own its properties and to carry on its business as now being conducted, and, is
duly qualified and in good standing as a foreign entity to do business in every
jurisdiction in which the failure to be so qualified would have a natural
adverse effect on the business of the Borrower.
2.2 Power and Authority. Borrower is duly authorized under all
applicable provisions of law to execute, deliver and perform this Agreement, and
all corporate action on its part required for the lawful execution, delivery and
performance hereof has been duly taken; and this Agreement, upon the due
execution and delivery hereof, will be the valid and binding obligation of
Borrower enforceable in accordance with its terms subject to the effect of
applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws
affecting creditors' rights generally and to principles of equity, regardless of
whether applied in a proceeding in equity or law. Neither the execution of this
Agreement, nor the fulfillment of or compliance with its provisions and terms,
will (a) conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a violation of or default under the Articles of
Incorporation or Bylaws of the Borrower or any other organizational documents of
Borrower or any Subsidiary, or any agreement or instrument to which Borrower or
any Subsidiary is now a party or to the best knowledge of the Borrower any
applicable law, regulation, judgment, writ, order or decree to which Borrower or
any Subsidiary or any of their respective properties are subject, or (b) create
any lien, charge or encumbrance upon any of the property or assets of the
Borrower pursuant to the terms of any agreement or instrument to which the
Borrower is a party or by which it or any
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of its properties, are bound, except pursuant to the Security Instruments and
the MICRF Security Agreement.
2.3 Financial Condition. The financial statement of Borrower for the
fiscal year ending as of December 31, 1996, copies of which have been furnished
to the Bank, are correct and complete in all material respects and fairly
presents the financial condition of Borrower as at the dates of such financial
statements and the results of its operations for such periods. The Borrower does
not have any material direct or contingent liabilities as of the date of this
Agreement which are not provided for or reflected in or referred to in such
financial statements or in notes thereto. Such financial statements have been
prepared in accordance with Generally Accepted Accounting Principles applied on
a Consistent Basis maintained throughout the period involved. There has been no
material adverse change in the business, properties or condition, financial or
otherwise, of Borrower since the date of the December 31, 1996 year end
financial statement.
2.4 Title to Assets. Borrower has good and marketable title to its
properties and assets, including the properties and assets reflected in the
financial statements and notes thereto described in Section 2.3 hereof, except
for such assets as have been disposed of since the date of said financial
statements in the ordinary course of business or as are no longer useful in the
conduct of its businesses, and all such properties and assets are free and clear
of all liens, mortgages, pledges, encumbrances or charges of any kind except
liens reflected in such financial statements or otherwise now or hereafter
permitted hereunder or pursuant hereto.
2.5 Contingent Liabilities. Borrower has not guaranteed any obligations
of others and is not, to the best of its knowledge, contingently liable in any
manner for any repayment of any borrowings, direct or indirect, except as
otherwise permitted hereunder or as disclosed in the financial statements and
notes thereto described in Section 2.3 hereof or as otherwise disclosed to the
Bank from time to time.
2.6 Litigation. There are no pending or, to the best of its knowledge,
threatened actions, suits or proceedings before any court, arbitrator or
governmental or administrative body or agency which may materially adversely
affect the properties, business or condition, financial or otherwise, of
Borrower except as disclosed in the financial statements and notes thereto
described in Section 2.3 or as otherwise disclosed to the Bank in writing from
time to time.
2.7 Taxes. Borrower has filed all tax returns required to be filed by
it and all taxes due with respect thereto have been paid, and no controversy in
respect of additional taxes, state, federal or foreign, of Borrower is pending,
or, to the knowledge of Borrower, threatened, except as otherwise disclosed to
the Bank in writing from time to time.
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<PAGE>
2.8 Contract or Restriction Affecting Borrower. Borrower is not a party
to nor is it bound by any contract or agreement or subject to any charter or
other corporate restrictions, or subject to the renegotiation of any contract,
which does or may materially and adversely affect the business, properties or
condition, financial or otherwise, of Borrower, except for any contract,
agreement or restrictions disclosed or reflected in the financial statements and
notes thereto described in Section 2.3 hereof or as otherwise disclosed to the
Bank from time to time.
2.9 Trademark, Franchises and Licenses. Borrower owns, possesses, or
has the right to use all necessary patents, licenses, franchises, trademarks,
trademark rights, trade names, trade name rights and copyrights to conduct its
businesses as now conducted, without known conflict with any patent, license,
license, franchise, trademark, trade name, or copyright of any other Persons,
except as disclosed to the Bank in writing from time to time.
2.10 No Default. Borrower is not in default in the performance,
observance or fulfillment of any of its material obligations, covenants or
conditions contained in any agreement or instrument to which it is a party.
2.11 Government Authority. Borrower has received the written approval
of all federal, state, local and foreign governmental authorities, if any,
necessary to carry out the terms of this Agreement, and no further governmental
consents or approvals are required in the making or performance of this
Agreement by the Borrower.
2.12 No Untrue Statements. Neither this Agreement nor any reports,
schedules, certificates, information, exhibits, agreements or instruments
heretofore or simultaneously with the execution of this Agreement delivered to
the Issuer, the Bank or the Trustee by Borrower in connection with the
negotiation of this Agreement or the issuance and sale of the Bonds contains any
material misrepresentation or untrue statement of any material fact or omits to
state any material fact necessary to make this Agreement or any such reports,
schedules, certificates, information, exhibits, agreements or instruments in
light of the circumstances under which made or materially misleading.
2.13 ERISA Requirements. Borrower has not incurred any material
accumulated funding deficiency within the meaning of ERISA, or incurred any
material liability to the Pension Benefit Agreement Corporation established
under ERISA (or any successor thereto under ERISA) in connection with any
employee pension benefit plan established or maintained by it or by any Person
under common control with any of them (within the meaning of Section 414(c) of
the Internal Revenue Code of 1986, as amended, or of Section 400(b) of ERISA),
or in which employees of any of them are entitled to participate. No Reportable
Event (as defined in ERISA) in connection with any such plan has occurred or is
continuing, except as disclosed in writing to the Bank from time to time.
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<PAGE>
2.14 Pollution and Environmental Control, Hazardous Substances. The
Borrower has obtained all permits, licenses and other authorizations which are
required under, and is in material compliance with, all Federal, state, and
local laws and regulations relating to pollution, reclamation or protection of
the environment, including laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants or hazardous or toxic materials
or wastes into air, water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants or hazardous or toxic substances, materials
or wastes. Neither the Borrower, nor to the Borrower's best knowledge any
previous owner of the Facility, has disposed of any hazardous substances on any
portion of the Facility except as otherwise disclosed in the Environmental
Report. As used in this subparagraph, "hazardous substances" shall have the
meaning set forth in the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. ss. 9601, et seq., and the regulations adopted pursuant
to such act.
2.15 Facility. The construction and operation of the Facility, as
described in the Plans, complies in all respects with presently existing or
amended zoning and other land use restrictions affecting all or any portion of
the Property, including without limitation any restrictive covenants.
2.16 Labor Relations. The Borrower is not engaged in any unfair labor
practice that could have a material adverse effect on the Borrower. There is (i)
no significant unfair labor practice complaint pending against the Borrower, to
the best knowledge of the Borrower, threatened against it, before the National
Labor Relations Board, and no significant grievance or significant arbitration
proceedings arising out of or under any collective bargaining agreement is so
pending against the Borrower or, to the best knowledge of the Borrower,
threatened against it, (ii) no significant strike, labor dispute, slowdown or
stoppage pending against the Borrower or, to the best knowledge of the Borrower,
threatened against the Borrower and (iii) to the best knowledge of the Borrower,
no union representation question existing with respect to the employees of the
Borrower and, to the best knowledge of the borrower, no union organizing
activities are taking place.
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ARTICLE III
REIMBURSEMENT AND OTHER PAYMENTS
3.1 Letter of Credit. The Bank agrees, on the terms and conditions
hereinafter set forth, to issue and deliver the Letter of Credit in favor of the
Credit Facility Trustee in substantially the form of Exhibit A attached hereto
upon fulfillment of the applicable conditions set forth in Article VII hereof.
The Bank agrees that any and all payments under the Letter of Credit will be
made with the Bank's own funds.
3.2 Reimbursement and Other Payments. Except as otherwise provided in
Section 3.3 below, the Borrower shall pay to the Bank:
(a) on or before 3:00 P.M. on the date that any amount is drawn
under the Letter of Credit, a sum (together with interest on such
sum from the date such amount is drawn until the same is paid, at the
rate per annum provided in clause (b) of this Section 3.2) equal to
such amount so drawn under the Letter of Credit plus, to the extent
permitted by applicable law, any and all reasonable charges and
expenses which the Bank may pay or incur relative to the Letter of
Credit;
(b) on demand, interest on any and all amounts remaining unpaid
by the Borrower when due hereunder from the date such amounts become
due until payment thereof in full, at a fluctuating interest rate
per annum equal at all times to the lesser of the then applicable
Reimbursement Rate or the highest lawful rate permitted by applicable
law;
(c) on demand, any and all reasonable expenses incurred by the
Bank in enforcing any rights under this Agreement and the other
Security Instruments; and
(d) on demand all charges, commissions, costs and expenses set
forth in Sections 3.4, 3.5 and 3.9 hereof.
3.3 Tender Advances.
(a) If the Bank shall make any payment of that portion of the
purchase price corresponding to principal and interest of the Bonds
drawn under the Letter of Credit pursuant to a Tender Draft and the
conditions set forth in Section 7.3 shall have been fulfilled, such
payment shall constitute a tender advance made by the Bank to the
Borrower on the date and in the amount of such payment (a "Tender
Advance"); provided that if the conditions of said Section 7.3 have not
been fulfilled, the amount so drawn
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pursuant to the Tender Draft shall be payable in accordance with the
terms of Section 3.2(a) above. Notwithstanding any other provision
hereof, the Borrower shall repay the unpaid amount of each Tender
Advance, together with all unpaid interest thereon, on the earlier to
occur of: (i) such date as any Bonds purchased pursuant to a Tender
Draft are resold as provided in paragraph 3.3(d) hereof; (ii) on the
date one year following the date of such Tender Advance; or (iii) the
Termination Date. The Borrower may prepay the outstanding amount of any
Tender Advance in whole or in part, together with accrued interest to
the date of such prepayment on the amount prepaid. The Borrower shall
notify the Bank prior to 11:00 A.M. Charlotte, North Carolina time on
the date of such prepayment of the amount to be prepaid.
(b) The Borrower shall pay interest on the unpaid amount of
each Tender Advance from the date of such Tender Advance until such
amount is paid in full, payable monthly, in arrears, on the first day
of each month during the term of each Tender Advance and on the date
such amount is paid in full, at a fluctuating interest rate per annum
in effect from time to time equal to the Prime Rate, provided that the
unpaid amount of any Tender Advance which is not paid when due shall
bear interest at the lower of the then applicable Reimbursement Rate or
the highest rate permitted by applicable law, payable on demand and on
the date such amount is paid in full.
(c) Pursuant to the Pledge Agreement the Borrower has agreed
that, in accordance with the terms of the Indenture, Bonds purchased
with proceeds of any Tender Draft shall be delivered by the Tender
Agent to the Bank or its designee to be held by the Bank or its
designee in pledge as collateral securing the Borrower's payment
obligations to the Bank hereunder. Bonds so delivered to the Bank or
its designee shall be registered in the name of the Borrower, as
provided for in Section 3 of the Pledge Agreement.
(d) Prior to or simultaneously with the resale of Pledged
Bonds, the Borrower shall prepay the then outstanding Tender Advances
(in the order in which they were made) by paying to the Bank an amount
equal to the sum of (i) the amounts advanced by the Bank pursuant to
the corresponding Tender Drafts relating to such Bonds, plus (ii) the
aggregate amount of accrued and unpaid interest on such Tender
Advances. Such payment shall be applied by the Bank in reimbursement of
such drawings (and as prepayment of Tender Advances resulting from such
drawings in the manner described above), and, upon receipt by the Bank
of a certificate completed and signed by the Trustee in substantially
the form of Annex F to the Letter of Credit, the Borrower irrevocably
authorizes the Bank to rely on such certificate and to reinstate the
Letter of Credit in accordance therewith. Funds held by the Tender
Agent as a result of sales of the Pledged Bonds by the Remarketing
Agent shall be paid to the Bank by the Tender Agent to be
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<PAGE>
applied to the amounts owing by Borrower to the Bank pursuant to this
paragraph (d). Upon payment to the Bank of the amount of such Tender
Advance to be prepaid, together with accrued interest on such Tender
Advance to the date of such prepayment on the amount to be prepaid, the
principal amount outstanding of Tender Advances shall be reduced by the
amount of such prepayment and interest shall cease to accrue on the
amount prepaid.
3.4 Commission and Fees.
(a) The Borrower shall pay to the Bank a fee or commission at
the rate of 1.0% per annum on the amount to be drawn under the Letter
of Credit (computed on the date that such commission is payable) from
and including the date of issuance of the Letter of Credit until the
Termination Date, payable: (i) as to the first year of the initial
period for which the Letter of Credit is issued ending May 15, 1998, on
such date of issuance; and (ii) thereafter payable annually in advance
on May 15th of each year.
(b) The Borrower shall pay to the Bank, upon transfer of the
Letter of Credit in accordance with its terms, a fee of $1,000.
(c) The Borrower shall pay to the Bank, upon each drawing upon
the Letter of Credit in accordance with its terms, a fee of $100 per
drawing.
(d) The Borrower shall pay to the Bank upon any substitution
of the Letter of Credit with another Credit Facility (for a reason
other than termination of the Letter of Credit by the Bank in
accordance with Section 3.10 hereof), a substitution fee equal to
$1,000.
3.5 Increased Costs Due to Change in Law. In the event of any change
in any existing or future law, regulation, ruling or other interpretation having
influence over the Bank which shall either: (a) impose, modify or make
applicable any reserve, special deposit, capital requirement, assessment or
similar requirement against the Letter of Credit; or (b) impose on the Bank any
other condition regarding the Letter of Credit, and the result of any event
referred to in clause (a) or (b) above shall be to increase the cost (including
a reasonable allocation of resources) or decrease the yield to the Bank of
issuing or maintaining the Letter of Credit (which increase in cost shall be the
result of the Bank's reasonable allocation of the aggregate of such cost
increases or yield decreases resulting from such events), then, upon demand by
the Bank, the Borrower shall immediately pay to the Bank, from time to time as
specified by the Bank, additional amounts which shall be sufficient to
compensate the Bank for such increased cost or decreased yield. A statement of
charges submitted by the Bank shall be conclusive, absent manifest error, as to
the amount owed.
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<PAGE>
3.6 Computation. All payments of interest, commission and other
charges under this Agreement shall be computed on the per annum basis of a
year of 360 days and calculated for the actual number of days elapsed.
3.7 Payment Procedure. All payments made by the Borrower under this
Agreement shall be made to the Bank in lawful currency of the United States of
America and in immediately available funds at the Bank's office in Charlotte,
North Carolina before 12:00 Noon (Charlotte, North Carolina time) on the date
when due, except that the time for payments made pursuant to Section 3.2(a)
shall be on or before 3:00 p.m.
3.8 Business Days. If the date for any payment hereunder falls on a
day which is not a Business Day, then for all purposes of this Agreement the
same shall be deemed to have fallen on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
payments of interest or commission, as the case may be.
3.9 Reimbursement of Expenses. Borrower will pay all reasonable legal
fees (computed without regard to any statutory presumption) incurred by the Bank
in connection with the preparation, and delivery of this Agreement, the Letter
of Credit, the Security Instruments, any and all other execution agreements and
transactions contemplated hereby and thereby, by the Bond Documents (including
any amendments hereto or thereto or consents or waivers hereunder or thereunder)
and by the MICRF Documents, and will also pay all fees, charges or taxes for the
recording or filing of Security Instruments. The Borrower will also pay for all
reasonable out-of-pocket expenses of the Bank in connection with the
administration of the Letter of Credit, this Agreement and the Security
Instruments. The Borrower will, upon request, promptly reimburse the Bank for
all amounts expended, advanced or incurred by the Bank to collect or satisfy any
obligation of the Borrower under this Agreement or any Security Instrument, or
to enforce the rights of the Bank under this Agreement or any Security
Instrument, which amounts will include, without limitation, all court costs,
reasonable attorneys' fees, fees of auditors and accountants and investigation
expenses incurred by the Bank in connection with any such matters.
3.10 Extension of Expiration Date; Substitution of Another Credit
Facility. The Bank hereby agrees that the Letter of Credit shall automatically
be extended for successive one-year terms from the then applicable Expiration
Date unless (i) the Bank shall have notified the Borrower and the Trustee in
writing at least 120 days prior to the Expiration Date, as extended from time to
time pursuant to Section 3.10, that the Bank will not extend such applicable
Expiration Date or (ii) the Letter of Credit is otherwise terminated in
accordance with its terms. In the event that another Credit Facility is
substituted for the Letter of Credit for a reason other than termination by the
Bank in accordance with this Section 3.10, the Borrower shall pay a substitution
fee of $1,000, as provided in Section 3.4(d) hereof.
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<PAGE>
3.11 Obligations Absolute. The obligations of the Borrower under this
Agreement shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement, under all circumstances
whatsoever, including, without limitation, the following circumstances:
(a) any lack of validity or enforceability of the Letter of
Credit, the Bonds, any of the other Bond Documents, any of the
Security Instruments or any other agreement or instrument related
thereto;
(b) any amendment or waiver of or any consent to departure from
the terms of the Letter of Credit, the Bonds, any of the other Bond
Documents, any of the Security Instruments or any other agreement or
instrument related thereto;
(c) the existence of any claim, set off, defense or other right
which either the Borrower or the Issuer may have at any time against
the Credit Facility Trustee, any beneficiary or any transferee of the
Letter of Credit (or any Person for whom the Credit Facility Trustee,
any such beneficiary or any such transferee may be acting), the Bank
or any other Person, whether in connection with this Agreement, the
Security Instruments, the Letter of Credit, the Bond Documents, the
Facility or any unrelated transaction;
(d) any statement, draft or other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect, or any statement therein being untrue or
inaccurate in any respect whatsoever, provided the Company shall be
under no obligation to make any payment hereunder resulting from the
Bank's negligence in accepting any such forged or fraudulent draft or
document; or
(e) the surrender or impairment of any security for the
performance or observance of any of the terms of this Agreement.
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<PAGE>
ARTICLE IV
SECURITY
4.1 Security. As security for the full and timely payment and
performance by the Borrower of the Borrower's Obligations, the Borrower shall on
the date hereof deliver to the Bank the Security Instruments, conveying to the
Bank duly perfected liens upon and security interests in the Collateral related
thereto, subject only to Permitted Liens.
As additional security for the Borrower's Letter of Credit Obligations,
the Borrower hereby assigns and pledges to the Bank, its successors and assigns,
and grants to the Bank, its successors and assigns, a continuing security
interest in and lien on the following:
(a) The interest of the Borrower in the Facility Fund (as
defined in the Indenture), in the Bond Fund (as defined in the Indenture) and in
all subaccounts created and maintained under any of such funds.
(b) The interest of the Borrower in any and all funds,
securities, instruments, documents, and other property which are at any time
paid to, deposited with, under the control of, or in the possession of the Bank
or any of its agents, branches, affiliates, correspondents or others acting on
its behalf (this security interest and lien is intended to be in addition to any
right of set-off or banker's lien that the Bank may otherwise enjoy under
applicable law).
The Borrower agrees, that with respect to the security described
in this Section, the Bank, its successors and assigns, shall have all of the
rights and remedies of a secured party under the Maryland Uniform Commercial
Code; provided, however, that Borrower shall nevertheless be free to withdraw
from time to time or otherwise obtain access to any of the funds described in
subparagraph (a) above (other than the funds pledged under the Pledge
Agreement), except upon the occurrence of an Event of Default which has occurred
and is continuing.
[4.2 THIS SECTION INTENTIONALLY DELETED.]
4.3 Casualty and Liability Insurance Required. The Borrower will keep
the Collateral continuously insured against such risks as are customarily
insured against by businesses of like size and type engaged in the same or
similar operations including, without limiting the generality of any other
covenants contained herein or in the Bond Documents or Security Instruments:
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<PAGE>
(a) casualty insurance on the Collateral in an amount not less
than the full insurable value thereof, against loss or damage by theft,
fire and lightning and other hazards ordinarily included under uniform
broad form standard extended coverage policies, limited only as may be
provided in the standard form of extended coverage endorsement at the
time in use in the State of Maryland;
(b) general comprehensive liability insurance against claims
for bodily injury, death or property damage occurring on, in or about
the Collateral (such coverage to include provisions waiving subrogation
against the Bank) in amounts not less than $1,000,000 with respect to
bodily injury to any one person, $1,000,000 with respect to bodily
injury to two or more persons in any one accident and $1,000,000 with
respect to property damage resulting from any one occurrence;
(c) liability insurance with respect to the operation of its
facilities under the workers' compensation laws of the State of
Maryland;
(d) business interruption insurance with respect to a material
interruption in the operation of its facilities; and
(e) if at any time the Facility is in an area that has been
identified by the Secretary of Housing and Urban Development as having
special flood and mudslide hazards, the Borrower shall purchase and
maintain a flood insurance policy satisfactory to the Bank.
provided, however, that the insurance so required may be provided by blanket
policies now or hereafter maintained by the Borrower.
4.4 General Requirements Applicable to Insurance.
(a) Each insurance policy obtained in satisfaction of the
requirements of Section 4.3 hereof:
(i) shall be by such insurer (or insurers) as shall
be financially responsible, qualified to do in the
State, and of recognized standing;
(ii) shall be in such form and have such provisions
(including, without limitation, the loss payable
clause, the waiver of subrogation clause, if any,
the deductible amount, if any, and the standard
mortgagee endorsement clause), as are
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<PAGE>
generally considered standard provisions for the
type of insurance involved and are acceptable in
all respects to the Bank and the Issuer;
(iii) shall prohibit cancellation or substantial
modification, termination or lapse in coverage by the
insurer without at least 30 days prior written notice
to the Bank and the Issuer; and
(iv) without limiting the generality of the foregoing,
all insurance policies carried on the Collateral
shall name the Bank, FUNBMD, the Hedge Counterparty,
the Issuer and the Borrower as loss payees and a
parties insured thereunder, as the interests may
appear, and any loss thereunder shall be made payable
and shall be applied as provided in Section 4.8
hereof).
(b) Prior to expiration of any such policy, the Borrower shall
furnish the Bank and the Issuer with evidence satisfactory to the Bank
that the policy or certificate has been renewed or replaced or is no
longer required by this Agreement.
4.5 Advances by Bank. In the event the Borrower shall fail to
maintain, or cause to be maintained, (i) the full insurance coverage required
pursuant to Section 4.3 or (ii) the Collateral in good repair and good operation
condition, the Bank may (but shall be under no obligation to), after 10 days
written notice to the Borrower and the Issuer and the failure of the Borrower to
obtain the required insurance or to commence (and complete with due diligence)
the making of the required repairs, renewals and replacements, contract for the
required policies of insurance and pay the premiums on the same or make any
required repairs, renewals and replacements; and the Borrower agrees to
reimburse the Bank to the extent of the amounts so advanced with interest
thereon at a rate per annum equal to the then applicable Reimbursement Rate or
the maximum rate permitted by law, whichever is lower, from the date of advance
to the date of reimbursement. Any amounts so advanced by the Bank shall become
an additional obligation of the Borrower secured by the Security Instruments.
4.6 Borrower to Make up Deficiency in Insurance Coverage. The Borrower
agrees to the extent that the Borrower shall not carry insurance required by
Section 4.3 hereof, it shall pay promptly to the Bank, for application in
accordance with the provisions of Section 4.8(b)(ii) hereof, such amount as
would have been received as Net Proceeds (as hereinafter defined) by the Bank,
under the provisions of Section 4.8(b)(ii) hereof had such insurance been
carried to the extent required.
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<PAGE>
4.7 Eminent Domain. In the event that title to, or the temporary use
of, the Collateral or any part thereof shall be taken by Eminent Domain, the Net
Proceeds received as a result of such Eminent Domain shall be applied as
provided in Section 4.8(b) hereof.
4.8 Application of Net Proceeds of Insurance and Eminent Domain.
(a) The Net Proceeds of the insurance carried pursuant to the
provisions of Sections 4.3(c), 4.3(d) and, if practicable, 7.1(c)
hereof shall be applied by the Borrower toward extinguishment of the
defect or claim or satisfaction of the liability with respect to which
such insurance proceeds may be paid.
(b) The Net Proceeds of the insurance carried with respect to
the Collateral pursuant to the provisions of Sections 7.1(c) (if not
applied pursuant to clause (a) of this Section 4.8), 4.3(a) and 4.3(b)
hereof (excluding the Net Proceeds of any business interruption
insurance, which shall be paid to the Borrower), and the Net Proceeds
resulting from Eminent Domain shall be paid and applied as follows:
(i) if Bonds shall then be outstanding under the
Indenture and no drawing under the Letter of Credit
shall theretofore have been presented which has not
been reimbursed by the Borrower (other than a Tender
Advance), or if the obligations under the Note are
then outstanding and no Event of Default has occurred
hereunder or under the Note and is then continuing,
then in the manner and at the times provided therefor
in Section 6.8 of the Loan Agreement, provided,
however, that in the event the Borrower wishes to
rebuild or replace any portion of the Facility
pursuant to Section 6.8(b)(ii) of the Loan Agreement,
any such rebuilding or replacement is subject to the
approval of the Bank; and
(ii) in all other cases, to the payment or reduction,
as the case may be, of the obligations of the Borrower
and the Issuer hereunder, with such allocations to
principal, interest, commissions, charges and expenses
as the Bank may elect.
4.9 Parties to Give Notice. In case of any material damage to or
destruction of all or any part of the Collateral, the Borrower shall give prompt
notice thereof to the Bank. In case of a taking or proposed taking of all or any
part of the Collateral or any right therein by Eminent Domain, the Borrower
shall give prompt notice to the Bank and the Issuer. Each such notice shall
describe generally the nature and extent of such damage, destruction, taking,
loss, proceeding or negotiations.
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<PAGE>
ARTICLE V
AFFIRMATIVE COVENANTS
Until all the obligations of the Borrower hereunder to be performed and
paid shall have been performed and paid in full, and for so long as the Letter
of Credit shall be outstanding, the Borrower covenants and agrees that, unless
the Bank and the Issuer consent otherwise in writing:
5.1 Repayment of Obligations. The Borrower will promptly repay the
payment obligations of the Borrower hereunder and under the Security Instruments
when due, according to the terms of this Agreement and the Security Instruments.
5.2 Performance Under Reimbursement Agreement and Security Instruments.
The Borrower will, and will cause each of its Subsidiaries to, perform all
obligations required to be performed by each of them under the terms of this
Agreement, the Security Instruments, the Revolving Credit Documents and any
other agreements now or hereafter existing or entered into between the Borrower,
its Subsidiaries and the Bank, subject to any applicable notice and cure
provisions contained therein.
5.3 Financial and Business Information about the Borrower. The Borrower
shall cause to be delivered to the Bank:
(a) Quarterly Financial Statements. As soon as available and in
any event within 50 days after the end of each quarter of each fiscal year
of the Guarantor, a consolidated and consolidating balance sheet of the
Guarantor and all Consolidated Subsidiaries as of the end of such fiscal
quarter (with all supporting schedules), the related consolidated and
consolidating statements of income and cash flows of the Guarantor and all
Consolidated Subsidiaries for such quarter, and a profit and loss statement
of the Guarantor and its Consolidated Subsidiaries, setting forth in each
case in comparative form the figures for the corresponding quarter of the
Guarantor's previous fiscal year, all certified (subject to normal year-end
audit adjustments) as to fairness of presentation, generally accepted
accounting principles and consistency by the chief financial officer or
chief accounting officer of the Borrower.
(b) Annual Financial Statements. As soon as available and in any
event within 120 days after the end of each fiscal year of the Guarantor, a
consolidated and consolidating balance sheet of the Guarantor and all
Consolidated Subsidiaries as of the end of such fiscal year and the related
consolidated and consolidating statements of income and cash flows for such
fiscal year, setting forth in each case in comparative form the figures for
the previous fiscal year, all in reasonable detail and accompanied by an
opinion thereon by Coopers & Lybrand or other independent public
accountants satisfactory to the Bank, which opinion shall
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<PAGE>
not be qualified as to the scope of the audit and which shall state that
such consolidated financial statements present fairly the consolidated
financial position of the Guarantor and its Consolidated Subsidiaries as of
the date of such financial statements and the results of their operations
for the period covered by such financial statements in conformity with
Generally Accepted Accounting Principles applied on a Consistent Basis
(except for changes in the application of which such accountants concur)
and shall not contain any "going concern" or like qualification or
exception or qualification arising out of the scope of the audit.
(c) Officer's Certificate. Simultaneously with the delivery of
each set of financial statements referred to in subsections (a) and (b)
above, a certificate of the chief financial officer or chief accounting
officer of the Guarantor, (i) stating whether there exists on the date of
such certificate any Event of Default and, if any Event of Default then
exists, setting forth the details thereof and the action which the Borrower
is taking or proposes to take with respect thereto, and (ii) stating
whether, since the date of the most recent previous delivery of financial
statements pursuant to subsections (a) and (b) of this Section, there has
been any material adverse change in the condition (financial or otherwise),
results of operations, properties, assets, business or prospects of the
Borrower or the Guarantor, or of the Borrower, the Guarantor and all
Consolidated Subsidiaries, considered as a whole, and, if so, the nature of
such material adverse change.
(d) Accountant's Certificate. Simultaneously with the delivery of
each set of financial statements referred to in subsection (a) above, a
statement of the firm of independent public accountants which reported on
such statements as to whether anything has come to their attention to cause
them to believe that any Event of Default existed on the date of such
statements and whether the Borrower is in compliance with the Financial
Covenants and confirming the statements set forth in the officer's
certificate delivered simultaneously therewith pursuant to subsection (c)
above.
(e) Event of Default. Forthwith upon the occurrence of any Event
of Default, a certificate of the chief financial officer or chief
accounting officer of the Borrower setting forth the details thereof and
the action which the Borrower is taking or proposes to take with respect
thereto.
(f) Litigation. As soon as reasonably practicable after obtaining
knowledge of the commencement of, or of a material threat of the
commencement of, an action, suit, proceeding or investigation against the
Borrower or any of its Subsidiaries which could materially adversely affect
its condition (financial or otherwise), the Collateral, results of
operations, properties, assets, business or prospects of the Borrower and
its Consolidated Subsidiaries, considered as a whole, or could otherwise
have a Material Adverse Effect or which in any manner questions the
validity of this Agreement or any of the other transactions
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<PAGE>
contemplated hereby or thereby, an explanation of the nature of such
pending or threatened action, suit, proceeding or investigation and such
additional information as may be reasonably requested by the Bank.
(g) Auditors' Management Letters. Promptly upon receipt thereof,
copies of each report submitted to the Borrower or any of its Consolidated
Subsidiaries by independent public accountants in connection with any
annual, interim or special audit made by them of the books of the Borrower
or any of its Consolidated Subsidiaries including, without limitation, each
report submitted to the Borrower or any of its Consolidated Subsidiaries
concerning its accounting practices and systems and any final comment
letter submitted by such accountants to management in connection with the
annual audit of the Borrower and its Consolidated Subsidiaries.
(h) Tax Returns. Within 30 days after filing, copies of (i) all
federal, state and local income tax returns filed by the Borrower or any
Subsidiary, (ii) all quarterly reports by the Borrower or any Subsidiary on
Form 941, and (iii) all annual FUTA tax returns of the Borrower or any
Subsidiary.
(i) ERISA Matters. If and when any member of the ERISA Group (i)
gives or is required to give notice to the PBGC of any "reportable event"
(as defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of ERISA,
or knows that the plan administrator of any Plan has given or is required
to give notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA
or notice that any Multiemployer Plan is in reorganization, is insolvent or
has been terminated, a copy of such notice; (iii) receives notice from the
PBGC under Title IV of ERISA of an intent to terminate, impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or
appoint a trustee to administer any Plan, a copy of such notice; (iv)
applies for a waiver of the minimum funding standard under Section 412 of
the Internal Revenue Code, a copy of such application; (v) gives notice of
intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment-or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could
reasonably be expected to result in the imposition of a lien or the posting
of a bond or other security, a certificate of the chief financial officer
or the chief accounting officer of the Borrower setting forth details as to
such occurrence and action, if any, which the Borrower or applicable member
of the ERISA Group is required or proposes to take.
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<PAGE>
(j) Environmental Matters. Promptly, upon receipt of any
complaint, order, citation, notice or other written communication from any
Person with respect to, or upon the Borrower's obtaining knowledge of, (i)
the existence or alleged existence of a violation of any applicable
Environmental Law in connection with any property now or previously owned,
leased or operated by the Borrower or any of its Subsidiaries, (ii) any
release on such property or any part thereof in a quantity that is
reportable under any applicable Environmental Law and (iii) any pending or
threatened proceeding for the termination, suspension or non-renewal of any
permit required under any applicable Environmental Law, in each case in
which there is a reasonable likelihood of an adverse decision or
determination which could result in a Material Adverse Effect.
(k) Other Information. From time to time such additional financial
or other information regarding the condition (financial or otherwise),
results of operations, properties, assets, business or prospects of the
Borrower or any of its Subsidiaries as the Bank may reasonably request.
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<PAGE>
5.4 Notice of Certain Events. The Borrower shall promptly, after
any officer of the Borrower learns or obtains knowledge of the occurrence
thereof, give written notice to the Bank of:
(a) any written notice of a violation received by the Borrower
or any of its Subsidiaries from any governmental regulatory body or law
enforcement authority which, if such violation were established, would
have a Material Adverse Effect on the business of the Borrower or any
of its Subsidiaries or the value of the Collateral;
(b) any labor controversy that has resulted in a strike or other
work action materially affecting the Borrower or any of its
Subsidiaries;
(c) any attachment, uninsured judgment, lien, levy or order in
an amount exceeding $50,000 (other than Permitted Liens) that may be
placed on or assessed against or threatened against the Borrower, any
of its Subsidiaries, the Guarantor or the Collateral;
(d) any other matter that has resulted in a Material Adverse
Effect on the financial condition of the Borrower and its Subsidiaries
as a whole or the Guarantor;
(e) the removal of inventory, other than by consumption or sale
in the ordinary course of business, from the places where inventory is
located on the date hereof to other places, with information as to the
new places where such inventory shall be maintained;
(f) the acquisition or leasing of material items of new
equipment, or the removal of material items of equipment from the
places where such items or equipment is located on the date hereof to
other places, with information as to the places such new or removed
equipment shall be maintained;
(g) the acquisition or leasing by the Borrower or any of its
Subsidiaries of any material additional real property, or the transfer
or termination of tenancy of any material existing personal or real
property, and the Borrower shall, if requested by the Bank, deliver
such other information relating to any such acquisition, leasing,
transfer or termination of tenancy as the Bank may reasonably request;
(h) any material changes, additions or deletions as to the
material contracts of the Borrower or its Subsidiaries, which changes,
additions or deletions result in a change to the contract amount in
excess of $500,000; and
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(i) any breach or violation of or noncompliance with any covenant
or condition of this Agreement.
5.5 Payment of Obligations. The Borrower will pay and discharge, and
will cause each of its Subsidiaries to pay and discharge, as the same shall
become due and payable, (a) all their respective obligations and liabilities,
including all claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like persons which, in any such case, if
unpaid, might by law give rise to a lien upon any of their properties or assets,
and (b) all lawful taxes, assessments and charges or levies made upon their
properties or assets, by any governmental body, agency or official, except where
any of the items in clause (a) or (b) of this Section 5.2 may be diligently
contested in good faith by appropriate proceedings and the Borrower or such
Subsidiary shall have set aside on its books, if required under generally
accepted accounting principles, appropriate reserves for the accrual of any such
items.
5.6 Maintenance of Property; Insurance.
(a) Maintenance of Properties. The Borrower will keep, and will
cause each of its Subsidiaries to keep, all property, including the
Collateral, useful and necessary in their respective businesses in good
working order and condition, subject to ordinary wear and tear.
(b) Insurance. The Borrower will maintain, and will cause each of
its Subsidiaries to maintain, insurance with financially sound and
responsible companies in such amounts (and with such risk retentions) and
against such risks as is usually carried by owners of similar businesses
and properties in the same general areas in which the Borrower and its
Subsidiaries operate. The Borrower will deliver to the Bank and the Issuer
upon request from time to time full information as to the insurance
carried.
5.7 Conduct of Business and Maintenance of Existence. The Borrower will
continue, and will cause each of its Subsidiaries to continue, to engage in
business of the same general type as now conducted by the Borrower and its
Subsidiaries, and will preserve, renew and keep in full force and effect, and
will cause each of its Subsidiaries to preserve, renew and keep in full force
and effect, their respective corporate existence and their respective rights,
privileges and franchises necessary or desirable in the normal conduct of
business; provided that nothing in this Section shall prohibit the merger of a
Subsidiary into the Borrower or the merger or consolidation of a Subsidiary with
or into another Person if the corporation surviving such consolidation or merger
is a Subsidiary and if, in each case, after giving effect thereto, no Event of
Default shall have occurred.
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5.8 Compliance with Laws. The Borrower will comply, and will cause each
of its Subsidiaries to comply, with all applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities (including, without
limitation, Environmental Laws, ERISA and the rules and regulations thereunder)
except (a) where the necessity of compliance therewith is contested in good
faith by appropriate proceedings or (b) where noncompliance could not reasonably
be expected to have a Material Adverse Effect.
5.9 Accounting; Inspection of Property, Books and Records. The Borrower
will keep, and will cause each of its Subsidiaries to keep, proper books of
record and account in which full, true and correct entries in conformity with
generally accepted accounting principles shall be made of all dealings and
transactions in relation to their respective businesses and activities, will
maintain, and will cause each of its Subsidiaries to maintain, their respective
fiscal reporting periods on the present basis and will permit, and will cause
each of its Subsidiaries to permit, representatives of the Bank and the Issuer
to visit and inspect any of their respective properties, to examine and make
copies from any of their respective books and records and to discuss their
respective affairs, finances and accounts with their officers, employees and
independent public accountants, all at such reasonable times and as often as may
reasonably be desired.
5.10 Information about the Facility. Upon request by the Bank (and in
any event no later than the first advance of Loan proceeds for construction
costs), the Borrower will furnish to the Bank in form satisfactory to the Bank,
(a) a copy of the construction contract with the general contractor who shall
construct the Facility; (b) architect's or engineer's certification that all
work has been done and materials installed in compliance with plans and
specifications; (c) a complete set of plans and specifications of the Facility,
which plans and specifications are to be in full compliance with all building
codes and local ordinances; and (d) proof as to payment of construction bills,
lien waivers, inspection reports, statements showing itemization of present and
prospective expenditures, a statement of items due and unpaid, and, if
applicable, a list of items necessary for completion of the Facility.
5.11 Taxes and Liens. The Borrower shall promptly pay, or cause to be
paid, all taxes, assessments or other governmental charges which may lawfully be
levied or assessed upon the income or profits of the Borrower or upon any
property, real, personal or mixed, belonging to the Borrower or upon any part
thereof, and also any lawful claims for labor, material and supplies which, if
unpaid, might become a lien or charge against any such property; provided,
however, the Borrower shall not be required to pay or cause to be paid any such
tax, assessment, charge, levy or claim so long as the validity thereof shall be
actively contested in good faith by proper proceedings and, if requested by the
Bank, reserves with respect thereto acceptable to the Borrower's independent
certified public accountants shall be established and maintained; but provided
further that any such tax, assessment, charge, levy or claim shall be paid
forthwith upon
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the commencement of proceedings to foreclose any lien securing the same unless a
surety bond satisfactory to the Bank is obtained and delivered to the Bank.
5.12 Comply with ERISA. The Borrower and its Consolidated
Subsidiaries shall at all times make prompt payment of contributions required to
meet the minimum funding standards set forth in ERISA with respect to any
employee benefit plan; promptly after the filing thereof, furnish to the Bank
copies of any annual report required to be filed under ERISA in connection with
each employee benefit plan; not withdraw from participation in, permit the
termination or partial termination of, or permit the occurrence of any other
event with respect to any employee benefit plan that could result in liability
to the Pension Benefit Guaranty Corporation; notify the Bank as soon as
practicable of any "reportable event" (as defined in Section 4043(b) of ERISA)
and of any additional act or condition arising in connection with any employee
benefit plan which the Borrower or any of its Subsidiaries believe might
constitute grounds for the termination thereof by the Pension Benefit Guaranty
Corporation or for the appointment by the appropriate United States district
court of a trustee to administer such plan; and furnish to the Bank upon the
Bank's request, such additional information about any employee benefit plan as
may be reasonably requested. Neither the Borrower nor any of its Subsidiaries
will permit the occurrence of any "prohibited transaction" (as defined in
ERISA).
ARTICLE VI
NEGATIVE COVENANTS
Until all the obligations to be performed and paid hereunder shall have
been performed and paid in full, and for so long as the Letter of Credit shall
be outstanding, unless the Bank and the Issuer shall otherwise consent in
writing, the Borrower will not, and will not permit any Subsidiary to, either
directly or indirectly:
6.1 Restriction on Liens. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or
with respect to any property or assets of any kind (real or personal, tangible
or intangible) of the Borrower or any such Subsidiary whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with recourse to the
Borrower or any of its Subsidiaries) or assign any right to receive income, or
file or permit the filing of any financing statement under the Uniform
Commercial Code as in effect in any applicable jurisdiction or any other similar
notice of Lien under any similar recording or notice statute; provided that the
provisions of this Section shall not prevent the creation, incurrence,
assumption or existence of the Permitted Liens.
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6.2 Limitation on Guarantees. Neither the Borrower nor any of its
Subsidiaries shall guarantee any debt of any Person or Persons.
6.3 No Voluntary Prepayment of Subordinated Debt and Long Term Debt.
The Borrower will not, and will not permit any of its Subsidiaries to, directly
or indirectly, redeem, retire, purchase, acquire, defease or otherwise make any
payment with respect to the principal of any Long Term Debt at a date in advance
of its legal obligations to do so.
6.4 Change of Management. The Borrower will not make any material
change of management.
6.5 Change in Fiscal Year. The Borrower shall not, without the Bank's
prior consent, change its fiscal year.
6.6 Transactions with Other Persons. The Borrower will not, and will
not permit any of its Subsidiaries to, enter into any agreement with any Person
whereby any of them shall agree to any restriction on the right of the Borrower
or any of its Subsidiaries to amend or waive any of the provisions of this
Agreement or any other Letter of Credit Document.
ARTICLE VII
CONDITIONS TO ISSUANCE OF LETTER OF CREDIT
7.1 Conditions on Issuance. On or prior to the date hereof, the
Borrower shall have furnished to the Bank and the Issuer, in form satisfactory
to the Bank and the Issuer, the following:
(a) two executed counterparts of this Agreement;
(b) executed counterparts of each of the Bond Documents (except
for the Note and the Bonds, as to which a specimen copy may be
delivered) and the Security Instruments;
(c) a mortgagee title insurance commitment dated the date of
this Agreement, together with evidence that all premiums for such
commitment have been paid and that a conforming policy will be issued,
which policy shall: (i) be in an amount not less than
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$3,000,000; (ii) ensure that the Deed of Trust creates a valid first
lien on the property covered by such Deed of Trust free and clear of
all defects and encumbrances (except those acceptable to the Bank);
(iii) name the Bank and the Issuer and the other beneficiaries
thereunder as insured parties thereunder; (iv) be the form of ALTA Loan
Policy-1992 (amended 10-17-92) or other form approved by the Bank and
the Issuer; and (v) contain such endorsements and effective coverage as
the Bank and the Issuer may reasonably request;
(d) a physical survey containing maps or plats of the perimeter
or boundaries of the Facility certified to the Bank, the Issuer and the
title insurance company, in a manner acceptable to each of them, dated
a date satisfactory to the Bank, the Issuer and the title insurance
company, by an independent professional licensed land surveyor
satisfactory to the Bank and the title insurance company, which survey
shall indicate the following: (i) the locations on such site of all the
buildings, structures and other improvements and the established
building setback lines insofar as the foregoing structures and other
improvements and the established building setback lines insofar as the
foregoing affect the perimeter or boundary of such property; (ii) the
lines of streets abutting the site and width thereof; (iii) all access
and other easements appurtenant to the site or necessary or desirable
to use the site; (iv) all roadways, paths, driveways, easements,
encroachments and overhanging projections and similar encumbrances
affecting the site, whether recorded, apparent from a physical
inspection of the site or otherwise known to the surveyor; (v) any
encroachment on any adjoining property by the building structures and
improvements on the site; and (vi) if the site is described as being on
a filed map, a legend relating the survey to said map, all informed
satisfactory to the Bank and the Issuer; together with certification
from an independent professional licensed land surveyor satisfactory to
the Bank and the Issuer as to the location of the Facility or any
property covered by the Deed of Trust in any "special flood hazard"
area within the meaning of the Federal Flood Disaster Protection Act of
1973, or such other form of survey acceptable to the Bank and the
Issuer;
(e) evidence of compliance with the insurance requirements
contained herein (upon which there shall be affixed appropriate
mortgage, loss payee and/or additional insured clauses);
(f) opinions dated the date hereof addressed to, and in form and
substance acceptable to, the Bank and the Issuer, from the Issuer's
counsel and Bond Counsel, as to such matters as the Bank and the Issuer
may reasonably require;
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(g) an opinion of counsel for the Borrower and the Guarantor
dated the date hereof addressed to the Bank and the Issuer, and
substantially in the form attached hereto as Exhibit B, or otherwise in
form and substance reasonably acceptable to, the Bank;
(h) a certified copy of the Borrower's corporate resolutions
and the Guarantor's corporate resolutions authorizing the execution and
delivery of the Letter of Credit Documents, the Bond Documents, the
Hedge Documents, the MICRF Documents and the County Documents;
(i) (1) a copy of the Certificate of Incorporation of the
Borrower and the Guarantor and (2) certificates dated no earlier than
30 days prior to the date of issuance of the Bonds of the Maryland
State Department of Assessments and Taxation as to the good standing of
the Borrower and of the Secretary of State for the State of Delaware as
to the good standing of the Borrower and the Guarantor;
(j) an opinion from Miles & Stockbridge and Chewanney A. Brown,
Esquire, Co-Bond Counsel, or a letter in substantially the form of
Exhibit C hereto consenting to the Bank's reliance on certain opinions
delivered by such counsel in form and substance satisfactory to the
Bank and its counsel;
(k) copies of all governmental approvals required in connection
with the issuance of the Bonds and the Facility, including resolutions
of the Issuer and the County authorizing the issuance of the Bond;
(l) evidence of payment to the Bank of the initial annual letter
of credit commission pursuant to Section 3.4 of this Agreement;
(m) evidence satisfactory to the Bank and the Issuer that any
documents (including, without limitation, financing statements)
required to be recorded or filed in order to create, in favor of the
Bank, a perfected lien on and security interest in all real and
personal property covered by the Deed of Trust and the Security
Agreement have been properly (or will be promptly) recorded or filed in
each office in each jurisdiction required in order to create, in favor
of the Bank, a perfected lien on and security interest in the
respective Collateral described therein; and the Bank and the Issuer
shall have received evidence of all such recordation and acknowledgment
copies of all such filings (or, in lieu thereof, the Bank and the
Issuer shall have received other evidence satisfactory to the Bank and
the Issuer that all such filings have been or will be made), and the
Bank and the Issuer shall have received evidence that all necessary
recordation and filing fees and all documentary taxes and other
expenses related to such filings or recordations have been or will be
paid in full;
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(n) an executed counterpart of the Commitment Letter;
(o) the Environmental Report and a reliance letter from the
company which prepared the Environmental Report authorizing the Bank
and the Issuer to rely upon the Environmental Report to the same extent
as if the Environmental Report had been addressed to the Bank and the
Issuer, and such additional reports and remediation (if applicable) as
the Bank may require;
(p) the appraisal described in the Commitment Letter, together
with all other documents and information relating to the Facility as
specifically set forth in the Commitment Letter (including, without
limitation, Schedule A attached thereto);
(q) an executed counterpart of the Guaranty;
(r) a copy of the resolution passed by the County indicating
its approval of the MICRF Loan, the County Loan and the Tax Credit,
which approval of the MICRF Loan and the Tax Credit shall be subject
only to the expiration of a 60-day referendum period.;
(s) evidence satisfactory to the Bank that (i) the County has
approved substantially final forms of all MICRF Documents, all County
Document and the Subordination Agreement, and (ii) the County Loan will
be fully funded by August 31, 1997;
(t) evidence satisfactory to the Bank that (i) the Maryland
Board of Public Works has approved the MICRF Loan and the MICRF Loan
Documents, and (ii) the MICRF Loan will be fully funded no later than
August 31, 1997;
(u) executed counterparts of all Hedge Documents;
(v) executed counterparts of each Landlord's Waiver; and
(w) such other documents, instruments and certifications as the
Bank or the Issuer may reasonably require.
7.2 Additional Conditions Precedent to Issuance of the Letter of
Credit.
(a) The obligation of the Bank to the Letter of Credit shall
be subject to the further conditions precedent that on the date of
issuance the following statements shall be true and the Bank and the
Issuer shall have received a certificate signed by an authorized
officer of the Borrower, dated the date of issuance, stating that:
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(i) The representations and warranties contained in
Article II of this Agreement, Section 2.2 of the Loan
Agreement, and in the Security Instruments are correct in
all material respects on and as of the date of issuance
of the Letter of Credit as though made on and as of such
date; and
(ii) No event has occurred or would result from the
issuance of the Letter of Credit, which constitutes an
Event of Default or would constitute an Event of Default
but for the requirement that notice be given or time
elapse or both; and
(b) there shall have been no introduction of or change in, or
in the interpretation of, any law or regulation that would make it
unlawful or unduly burdensome for the Bank to issue the Letter of
Credit, no outbreak or escalation of hostilities or other calamity or
crisis affecting the Bank, no suspension of or material limitation on
trading on the New York Stock Exchange or any other national securities
exchange, no declaration of a general banking moratorium by United
States or North Carolina banking authorities, and no establishment of
any new restrictions on transactions in securities or on banks
materially affecting the free market for securities or the extension of
credit by banks.
7.3 Condition Precedent to Each Tender Advance. Each payment made by
the Bank under the Letter of Credit pursuant to a Tender Draft shall constitute
a Tender Advance hereunder only if on the date of such payment the following
statements shall be true:
(i) The representations and warranties contained in
Article II of this Agreement, Section 2.2 of the Loan
Agreement, and in the Security Instruments are correct in
all material respects on and as of the date of such
Tender Advance as though made on and as of such date; and
(ii) No event has occurred or would result from such
Tender Advance, which constitutes an Event of Default or
would constitute an Event of Default but for the
requirement that notice be given or time elapse or both.
Unless the Borrower shall have previously advised the Bank in writing or the
Bank has actual knowledge that one or more of the above statements is no longer
true, the Borrower shall be deemed to have represented and warranted, on the
date of payment by the Bank under the Letter of Credit pursuant to a Tender
Draft, that on the date of such payment the above statements are true and
correct.
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ARTICLE VIII
DEFAULT
8.1 Event of Default. Each of the following shall constitute an Event
of Default under this Agreement, whereupon all obligations of the Borrower
hereunder, whether then owing or contingently owing, will, at the option of the
Bank or its successors or assigns, immediately become due and payable by the
Borrower without presentation, demand, protest or notice of any kind, all of
which are hereby expressly waived, and the Borrower will pay the reasonable
attorneys' fees incurred by the Bank, or its successors or assigns, in
connection with such Event of Default or recourse against any Collateral held by
the Bank, or its successors or assigns, as security for the obligations
hereunder:
(a) Failure of the Borrower to pay when due (i) any payment of
principal, interest, commission, charge or expense referred to in
Article III hereof and (ii) any payment of principal or interest
referred to in Section 3.3 hereof; or
(b) Without the prior written consent of the Bank, failure of
the Borrower, the Guarantor and their Consolidated Subsidiaries to
maintain the following financial conditions, determined in accordance
with Generally Accepted Accounting Principles:
(i) a Consolidated Current Ratio, measured quarterly,
of not less than 1.00 to 1.00;
(ii) a Consolidated Tangible Net Worth, measured
quarterly, of not less than $9,800,000;
(iii) a ratio of (A) Consolidated Debt (including
Subordinated Debt) to (B) Consolidated Tangible Net
Worth, of not more than 1.00 to 1.00, measured quarterly;
(iv) a Consolidated Cash Flow Coverage Ratio equal
to at least 1.25 to 1.00, measured quarterly;
(c) Unless previously approved by the Bank, the Borrower, the
Guarantor or any of their Consolidated Subsidiaries makes or acquires any
investment in any Person, exclusive of loans and advances to employees in
the ordinary course of business, which loans or advances, in the aggregate,
at any time in excess of $500,000 outstanding;
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(d) Unless previously approved by the Bank, the Borrower, the
Guarantor or any of their Consolidated Subsidiaries makes Consolidated
Capital Expenditures for any fiscal year in excess of $2,000,000 in the
aggregate, excluding Consolidated Capital Expenditures for the
Facility;
(e) Unless previously approved by the Bank in writing, the
Borrower, the Guarantor or any of their Consolidated Subsidiaries
shall, directly or indirectly, become liable for any Consolidated Debt,
contingent or direct, if, giving effect to such additional Debt on a
pro forma basis, causes the aggregate amount of the Debt of the
Borrower, the Guarantor and their Consolidated Subsidiaries (excluding
Debt outstanding with the Bank, FUNBMD or the County), to exceed
$500,000;
(f) The occurrence of an "event of default" or an "Event of
Default" (beyond any applicable cure period) under any of the (i)
Security Instruments, (ii) the Bond Documents, (iii) the Revolving
Credit Documents, (iv) the MICRF Documents; (v) the County Documents,
or (vi) the Hedge Documents;
(g) The Borrower defaults (beyond any applicable cure period)
in the payment of principal or interest on any other Indebtedness for
Money Borrowed (other than in indebtedness to the Bank arising
hereunder) beyond any period of grace provided with respect thereto, or
in the performance of any other agreement, term or conditions contained
in any agreement under which any such obligation is created, if the
effect of such default is to cause, or permit the holder or holders of
such obligation to cause such obligation to become due prior to its
stated maturity, and the acceleration of such obligation would have a
material and adverse effect on the business or financial condition of
the Borrower; or
(h) Any representation, warranty, certification or statement
made by the Borrower herein, or in any writing furnished by or on
behalf of the Borrower in connection with the loan by the Issuer under
the Loan Agreement or pursuant to this Agreement, or any of the
Security Instruments shall have been false, misleading or incomplete in
any material respect on the date as of which made; or
(i) The commencement of the liquidation or dissolution of the
Borrower, or suspension of the business of the Borrower or filing by
the Borrower of a voluntary petition in bankruptcy or a voluntary
petition or an answer seeking reorganization, arrangement, readjustment
of its debts or for any other relief under the Bankruptcy Reform Act of
1978, as amended (the "Bankruptcy Code"), or under any other insolvency
act or law, state or Federal, now or hereafter existing, or any other
action of Borrower indicating its consent to, approval of, or
acquiescence in any such petition or proceeding,
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or the application by the Borrower for (or the consent or acquiescence
to) the appointment of a receiver or a trustee of the Borrower or an
assignment for the benefit of creditors, the inability of the Borrower
or the admission by the Borrower in writing of its inability to pay its
debts as they mature; or
(j) The filing of an involuntary petition against the Borrower
in bankruptcy or seeking reorganization, arrangement, readjustment of
its debts or for any other relief under the Bankruptcy Code or under
any other insolvency act or law, state or federal, now or hereafter
existing, or the involuntary appointment of a receiver or trustee of
the Borrower or for all or a substantial part of its property, and the
continuance of any of such action for (90) days undismissed or
undischarged; or the issuance of an order for attachment, execution or
similar process against any substantial part of the property of the
Borrower and the continuance of any such order for (90) days
undismissed or undischarged; or
(k) The entry of an order in any proceedings against the
Borrower decreeing the dissolution or split-up of the Borrower; or
(l) The entry of a final judgment against the Borrower, which
with other outstanding final judgments against the Borrower exceeds an
aggregate of $100,000, if within thirty (30) days after entry thereof
such judgment shall not have been discharged or bonded or execution
thereof stayed pending appeal, or if within thirty (30) days after the
expiration of any such stay such judgment shall not have been
discharged or bonded; or
(m) There occurs an abandonment or change in ownership of the
Facility; or
(n) The dissolution or termination of the existence of the
Borrower or the Guarantor;
(o) The Borrower defaults in the performance or observance of
any provision of this Agreement (other than those described above in
this Section 8.1) and such default is not cured within 30 days after
notice thereof is sent to the Borrower;
(p) The MICRF Loan is not funded by August 31, 1997;
then upon the occurrence of an Event of Default and at any time thereafter, the
Bank may (i) pursuant to Section 902 of the Indenture, advise the Credit
Facility Trustee that an Event of Default has occurred and instruct the Credit
Facility Trustee to declare the principal of all Bonds then outstanding and
interest thereon to be immediately due and payable, and (ii) proceed hereunder,
and under any of the Security Instruments and, to the extent therein provided,
under the Bond Documents, in such order as it may elect and the Bank shall have
no obligation to
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proceed against any Person or exhaust any other remedy or remedies which it may
have and without resorting to any other security, whether held by or available
to the Bank.
8.2 No Remedy Exclusive. No remedy herein conferred upon or reserved to
the Bank is intended to be exclusive of any other available remedy or remedies,
but each and every such remedy shall be cumulative and shall be in addition to
any other remedy given hereunder, under the Security Instruments, or now or
hereafter existing at law or in equity or by statute.
8.3 Anti-Marshalling Provisions. The right is hereby given by the
Borrower to the Bank to make releases (whether in whole or in part) of all or
any part of the Collateral under the Security Instruments agreeable to the Bank
without notice to, or the consent, approval or agreement of other parties and
interests, including junior lienors, which releases shall not impair in any
manner the validity of or priority of the liens and security interest in the
remaining Collateral conferred under such documents, nor release the Borrower
from the liability for the obligations hereby secured. Notwithstanding the
existence of any other security interest in the Collateral held by the Bank, the
Bank shall have the right to determine the order in which any or all of the
Collateral shall be subjected to the remedies provided therein, or in the
Security Instruments. The Borrower hereby waives any and all rights to require
the marshalling of assets in connection with the exercise of any of the remedies
permitted by applicable law or provided herein or therein.
8.4 Confession of Judgment. Upon the occurrence of an Event of Default,
the Borrower authorizes the clerk or any attorney designated by the Bank or any
clerk of any court of record to appear for it in any court of record and confess
judgment against it without prior hearing, in favor of the Bank for and in the
amount equal to such of the obligations of the Borrower which have been due and
payable under Section 8.1 hereof plus interest accrued and unpaid thereon, all
other amounts then due and payable hereunder, costs of suit and an attorney's
fee in an amount equal to fifteen percent (15%) of such obligations plus all
accrued and unpaid interest thereon, provided, however, (a) if the actual
attorney's fees incurred by the Bank are less than 15% of such obligations (plus
all accrued and unpaid interest thereon), the Bank will refund (to the extent
actually collected) to the Borrower an amount equal to the difference between
15% of such obligations (plus all accrued and unpaid interest thereon) and the
amount of such actual attorney's fees (after all of such obligations have been
paid in full), or (b) if the actual attorney's fees incurred by the Bank or
other holder hereof exceed 15% of such obligations (plus all accrued and unpaid
interest thereon, whether by reason of judgment being contested or otherwise,
the Borrower will pay to the Bank on demand the amount of any such excess. The
authority and power to appear for and enter judgment against the Borrower shall
not be exhausted by one or more exercises thereof, or by any imperfect exercise
thereof, and shall not be extinguished by any judgment entered pursuant thereto.
Such authority and power may be exercised on one or more occasions, from time to
time, in the same or different jurisdictions, as often as the Bank shall deem
necessary or desirable, for all of which this Agreement shall be a sufficient
warrant.
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ARTICLE IX
MISCELLANEOUS
9.1 Indemnification. The Borrower hereby indemnifies and holds the Bank
harmless from and against any and all claims, damages, losses, liabilities,
costs or expenses whatsoever which the Bank may incur (or which may be claimed
against the Bank by any Person); (i) by reason of or in connection with the
execution and delivery or transfer of, or payment or failure to pay under, the
Letter of Credit, provided that the Borrower shall not be required to indemnify
the Bank for any claims, damages, losses, liabilities, costs or expenses to the
extent, but only to the extent, caused by (A) the willful misconduct or gross
negligence of the Bank in connection with paying drafts presented under the
Letter of Credit or (B) the Bank's willful or grossly negligent failure to pay
under the Letter of Credit (other than in connection with a court order) after
the presentation to it by the Credit Facility Trustee or a successor corporate
fiduciary under the Indenture of a site draft and certificate strictly complying
with the terms and conditions of the Letter of Credit; or (ii) by reason of or
in connection with the execution, delivery or performance of any of the Related
Documents or any transaction contemplated by any thereof. In addition, if the
Borrower has generated, stored, or disposed of any hazardous substances on the
Property, the Borrower agrees to indemnify the Bank against any liability, cost
and expense, including reasonable attorneys' fees, arising out of or resulting
from any such generation, storage, disposal or location. Anything herein to the
contrary notwithstanding, nothing in this Section 9.1 is intended or shall be
construed to limit the Borrower's reimbursement obligation contained in Article
III hereof. Without prejudice to the survival of any other obligation of the
Borrower, the indemnities and obligations of the Borrower contained in this
Section 9.1 shall survive the payment in full of amounts payable pursuant to
Article III and the Termination Date.
9.2 Transfer of Letter of Credit. The Letter of Credit may be
transferred and assigned in accordance with the terms of the Letter of Credit.
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9.3 Reduction of Letter of Credit.
(a) The Letter of Credit is subject to reduction pursuant to
its terms.
(b) If the amount available to be drawn under the Letter of
Credit shall be permanently reduced in accordance with the terms
thereof, then the Bank shall have the right to require the Credit
Facility Trustee to surrender the Letter of Credit to the Bank and to
issue on such date, in substitution for such outstanding Letter of
Credit, a substitute irrevocable letter of credit, substantially in the
form of the Letter of Credit but with such changes therein as shall be
appropriate to give effect to such reduction, dated such date, for the
amount to which the amount available to be drawn under the letter of
Credit shall have been reduced.
9.4 Liability of the Bank. The Borrower, to the extent permitted by
applicable law, assumes all risks of the acts or omissions of the Trustee, the
Credit Facility Trustee and any beneficiary or transferee of the Letter of
Credit with respect to its use of the Letter of Credit. Neither the Bank nor any
of its officers, directors, employees, agents or consultants shall be liable or
responsible for:
(a) the use which may be made of the Letter of Credit or for any
acts or omissions of the Credit Facility Trustee or any beneficiary
or transferee in connection therewith;
(b) the validity, sufficiency or genuineness of documents, or
of any endorsement(s) thereon, even if such documents should in fact
prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged;
(c) payment by the Bank against presentation of documents which
do not comply with the terms of the Letter of Credit, including
failure of any documents to bear any reference or adequate reference to
the Letter of Credit; or
(d) any other circumstances whatsoever in any way related to the
making or failure to make payment under the Letter of Credit;
except only that the Borrower shall have a claim against the Bank, and the Bank
shall be liable to the Borrower, to the extent but only to the extent, of any
direct, as opposed to consequential damages suffered by the Borrower which the
Borrower proves were caused by (i) willful misconduct or gross negligence of the
Bank in determining whether documents presented under the Letter of Credit
complied with the terms of the Letter of Credit or (ii) willful failure of the
Bank to pay under the Letter of Credit after the presentation to it by the
Credit Facility Trustee or
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a successor trustee under the Indenture of a sight draft and certificate
strictly complying with the terms and conditions of the Letter of Credit. In
furtherance and not in limitation of the foregoing, the Bank may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
9.5 Successors and Assigns. This Agreement shall be binding upon the
Borrower, its successors and assigned and all rights against the Borrower
arising under this Agreement shall be for the sole benefit of the Bank, it
successors and assigns, all of whom shall be entitled to enforce performance and
observance of this Agreement to the same extent as if they were parties hereto.
The Bank will not sell or assign the obligations of the Borrower hereunder to
any competitor of the Borrower, as reasonably determined by the Bank.
9.6 Notices. All notices, requests and demands to or upon the
respective parties hereto shall be deemed to have been given or made when hand
delivered or mailed first class, certified or registered mail, postage prepaid,
addressed as follows or to such other address as the parties hereto shall have
been notified pursuant to this Section 9.6:
Borrower: Alcore, Inc.
1324 Brass Mill Road
Belcamp, Maryland 21017
Attention: Edward A. Kiley,
President/General Manager
With a copy to: Nelson Weeks, Esquire
Ballard, Spahr, Andrews & Ingersoll
Suite 1900
300 East Lombard Street
Baltimore, Maryland 21202
Bank: First Union National Bank of North Carolina
Two First Union Center, T-7
Charlotte, North Carolina 28288
Attention: International Operations
With a copy to: Joyce J. Gorman, Esquire
Piper & Marbury
1200 19th Street, N.W.
Washington, D.C. 20036
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except in cases where it is expressly herein provided that such notice, request
or demand is not effective until received by the party to whom it is addressed,
in which event said notice, request or demand shall be effective only upon
receipt by the addressee.
9.7 Amendment. The Agreement may be amended, modified or discharged
only upon an agreement in writing of the Borrower and the Bank.
9.8 Effect of Delay and Waivers. No delay or omission to exercise any
right or power accruing upon any default, omission or failure of performance
hereunder 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 order to entitle the Bank to
exercise any remedy now or hereafter existing at law or in equity or by statute,
it shall not be necessary to give any notice, other than such notice as may be
herein expressly required. In the event any provision contained in this
Agreement should be breached by any party and thereafter waived by the other
party so empowered to act, such waiver shall be limited to the particular breach
hereunder. No waiver, amendment, release or modification of this Agreement shall
be established by conduct, custom or course of dealing, but solely by an
instrument in writing duly executed by the parties thereunto duly authorized by
this Agreement.
9.9 Counterparts. This Agreement may be executed simultaneously in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
9.10 Severability. The invalidity or unenforceability of any one or
more phrases, sentences, clauses or Sections contained in this Agreement shall
not affect the validity or enforceability of the remaining portions of this
Agreement, or any part thereof.
9.11 Cost of Collection. The Borrower shall be liable for the payment
of all fees and expenses, including attorneys' fees (computed without regard to
any statutory presumption), reasonably incurred in connection with the
enforcement of this Agreement.
9.12 Set Off. Upon the occurrence of an Event of Default hereunder,
the Bank is hereby authorized, without notice to the Borrower, to set off,
appropriate and apply and all monies, securities and other properties of the
Borrower hereafter held or received by or in transit to the Bank from or for the
Borrower, against the obligations of the Borrower irrespective of whether the
Bank shall have made any demand hereunder or under any Security Instrument.
9.13 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland.
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9.14 References. The words "herein", "hereof", "hereunder" and other
words of similar import when used in this Agreement refer to this Agreement as a
whole, and not to any particular article, section or subsection.
9.15 Taxes, Etc. Any taxes (excluding income taxes) payable or ruled
payable by federal or state authority in respect to the Letter of Credit, this
Agreement or the Security Instruments shall be paid by the Borrower upon demand
by the Bank, together with interest and penalties, if any.
9.16 CONSENT TO JURISDICTION, WAIVER OF JURY TRIAL. THE BORROWER
HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE COURT WITHIN HARFORD COUNTY,
MARYLAND OR ANY FEDERAL COURT LOCATED WITHIN THE STATE OF MARYLAND, FOR ANY
PROCEEDING TO WHICH THE BANK IS A PARTY AND CONSENTS THAT ALL SERVICE OF
PROCESS BE MADE BY REGISTERED OR CERTIFIED MAIL DIRECTED TO THE BORROWER AT THE
ADDRESS INDICATED IN SECTION 9.6 OR AT SUCH OTHER ADDRESS AS THE BORROWER MAY
HAVE DESIGNATED IN WRITING TO THE BANK, AND SERVICE SO MADE SHALL BE DEEMED TO
BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER
DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID AND PROPERLY
ADDRESSED. TO THE EXTENT PERMITTED BY LAW, THE BORROWER VOLUNTARILY AND
KNOWINGLY WAIVES TRIAL BY JURY AND WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED
ON LACK OF JURISDICTION OR IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT
OF ANY PROCEEDING INSTITUTED HEREUNDER, OR ARISING OUT OF OR IN CONNECTION WITH
THIS REIMBURSEMENT AGREEMENT, OR ANY PROCEEDING TO WHICH THE BANK IS A PARTY,
INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF OR IN CONNECTION WITH ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF THE BANK OR THE BORROWER, AND THE BORROWER CONSENTS TO THE GRANTING
OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. IN THE
EVENT THAT THE BORROWER'S WAIVER OF JURY TRIAL HEREIN SHALL BE DETERMINED TO BE
INVALID OR UNENFORCEABLE AS A MATTER OF LAW, THE BORROWER AND THE BANK AGREE
THAT THE PROVISIONS OF ARTICLE XI HEREOF SHALL GOVERN AS TO THE MATTERS SET
FORTH THEREIN. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE BANK TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF
THE BANK TO BRING ANY ACTION AND PROCEEDING AGAINST THE BORROWER OR THE
COLLATERAL IN THE COURTS OF ANY JURISDICTION THAT HAS JURISDICTION OVER THE
BORROWER OR THE COLLATERAL.
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9.17 Indirect Means. Any act which the Borrower is prohibited from
doing shall not be done indirectly through a Subsidiary or by any other
indirect means.
9.18 Entire Agreement. This Agreement and the other Letter of Credit
Documents shall completely and fully supersede all other prior agreements
(including, the Commitment Letter), both written and oral, between the Bank and
the Borrower relating to the Letter of Credit and the obligations of the
Borrower to the Bank in regard thereto.
9.19 Authority to Act on Behalf of the Bank. With respect to the
acquisition of the Facility and disbursement of funds therefor, the Bank hereby
authorizes FUNBMD to take any actions as may be necessary to carry out the
purposes of this Agreement, including, without limitation, the giving or
withholding of consents or approvals related to disbursements from the Facility
Fund, on behalf of the Bank.
ARTICLE X
ACQUISITION OF FACILITY
10.1 Covenants by Borrower With Respect to Acquisition of Facility.
Subject to the provisions of Section 10.3 below, on the Closing Date, the
Borrower shall acquire the Facility Site and the Building, and proceeds of the
Loan will be advanced in an amount sufficient to pay for costs of such
acquisition, plus costs of issuance of the Bonds to the extent permitted by Bond
Counsel. All disbursements of Loan proceeds after the Closing Date shall be made
in accordance with the provisions of this Section 10.1. With respect to the
acquisition of the Facility, the Borrower hereby covenants and agrees with the
Bank and the Issuer that:
(a) Time of Completion. It will cause the acquisition of the
Facility to be prosecuted with diligence and continuity in accordance with the
Plans and will complete, on or before the Projected Completion Date, (i) the
renovation of and construction of the Addition and any other Improvements in
accordance with the Plans, and (ii) the purchase and installation of the
Equipment in the Facility, all of which shall be completed free and clear of
liens, security interests or claims (except for Permitted Liens.)
(b) Building Permits. All necessary building and other
governmental permits have been obtained with respect to the Facility or will be
obtained prior to commencing the particular work for which they are required.
(c) Plans and Specifications; Changes in Construction Contracts.
The Plans are satisfactory to the Borrower, have been approved (or will be
prior to commencing the
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particular work for which approvals are required), to the extent required by
applicable law or any effective restrictive covenant, respectively, by all local
authorities and the beneficiary of any such covenant; the Plans to be approved
have also been approved by the Borrower, the Bank, and the Bank's Inspector; all
construction, if any, heretofore performed on the Improvements has been
performed within the perimeter of the Property in accordance with the Plans and
in accordance with any restrictive covenants applicable thereto; there are no
material structural defects in the Improvements; and no material violation of
any law exists with respect to the Property. The Borrower shall not permit any
changes in the Plans (after they have been delivered to the Bank) or any change
orders in the construction contracts for the Facility (after they have been
delivered to the Bank) which would increase the amount thereof without the prior
written consent of the Bank and any governmental authorities having jurisdiction
if such consent is required.
(d) Inspection. The Borrower will permit the Bank and its
representatives (including but not limited to the Bank's Inspector) to enter
upon any of the Property, to inspect the Facility and all materials at the
Facility Site, and will cooperate, and cause the contractors of the Borrower to
cooperate, with the Bank and the Bank's Inspector in connection with any such
inspections.
(e) Delivery of Certain Documents to Bank. The Borrower will
deliver to the Bank, on demand, copies of any contracts, bills of sale,
statements, receipted vouchers or agreements, under which the Borrower claims
title to any materials, fixtures or articles incorporated in any of the Facility
or subject to the lien of the Security Instruments.
(f) Correction of Defects. The Borrower, upon demand by the
Bank, will commence and proceed promptly and diligently to correct any
structural defect in the Facility or any departure from the Plans not approved
as herein provided. The Bank shall determine in its reasonable discretion
whether the Borrower is acting promptly and diligently. No approval by the Bank
of any disbursements by the Trustee from the Facility Fund will constitute a
waiver of the Bank's right to require compliance with this covenant with respect
to any such defects or departures from the Plans and Specifications.
(g) Identification of Contractors, Subcontractors and
Suppliers. At the Bank's request, the Borrower will deliver to the Bank the
names of all persons with whom it intends to contract for the acquisition of the
Facility or for the furnishing of labor or materials therefor, and a copy of
each contract, subcontract and agreement relating thereto, and obtain the
approval of the Bank prior to executing any contract or any subcontract with
respect to the acquisition of the Facility.
(h) Books and Records. During the acquisition of the Facility,
the Borrower will keep adequate records and books of account with respect to
the Facility and will permit the Bank,
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by its agents, accountants and attorneys, to visit and inspect the Facility and
examine such records and books of account and to discuss the affairs, finances
and accounts pertaining thereto with representatives and agents of the Borrower
at such reasonable times as may be requested by the Bank.
(i) Compliance with Restrictions, etc. The Borrower will
comply (in all material respects) with all applicable building restrictions,
zoning ordinances, building codes, environmental protection requirements and
other governmental requirements applicable to the Facility.
(j) Payment of Contractors. The Borrower will promptly pay or
cause to be paid all of the contractors, subcontractors and materialmen
performing work in connection with the Facility the amounts justly due to them,
and receive the disbursements from the Facility Fund, and apply such
disbursements solely for the purpose of paying the costs of the completion of
the Facility.
No person contracting with the Borrower with respect to the
acquisition of the Facility shall have the right to be reimbursed by the Bank or
the Trustee under any circumstances whatsoever. The participation of the Bank
and the Trustee in the transactions contemplated hereby shall not in any way be
construed as obligating the Bank or the Trustee to any person or entity for the
payment of any expense incurred with respect to the acquisition of the Facility.
(k) Location Surveys. As soon as the footings and foundations
(if any) of the Addition are in (if deemed necessary by the Bank), the Borrower
shall cause to be delivered to the Bank a location survey prepared by surveyor
approved by the Bank showing the location of the Addition in relation to the
boundary lines thereof and setback restrictions applicable thereto and stating
that such location is in compliance with all setback and other applicable
restrictions. As construction of the Addition progresses, and upon their
completion, the Borrower will supply such further location surveys as the Bank
may reasonably require from time to time to assure itself that the Addition does
not extend beyond such boundary lines and setback and other restrictions.
10.2 Enforcement of Remedies Against Contractors and Subcontractors and
Their Sureties. The Borrower covenants that it will take such action and
institute such proceedings as shall be necessary to cause and require all
contractors, subcontractors, and material suppliers to complete their contracts
related to the Facility diligently in accordance with the terms of such
contracts, including (without limitation) the correcting of any defective work.
10.3 Application of Proceeds of the Bonds.
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(a) General. Pursuant to Section 401 of the Indenture, the
proceeds of the Bonds will be deposited into the Facility Fund and will be
disbursed from the Facility Fund to the Borrower or for the account of the
Borrower to pay the costs of the acquisition of the Facility, or to reimburse
the Borrower for the payment of the costs of the acquisition of the acquisition
of the Facility, approved by the Bank, as the acquisition of the Facility
progresses. Disbursements shall be made only against requisitions in the form
attached to the Indenture as Exhibit A and made a part thereof, which
requisitions must be signed by an authorized officer of the Borrower and
approved by the Bank pursuant to the procedures set forth herein and in the
Indenture.
The Bank, subject to the terms and provisions hereof, will
approve disbursements of the proceeds of the Bonds from the Facility Fund as
follows:
(i) A portion of such proceeds may be advanced to pay
the costs of issuance of the Bonds.
(ii) A portion of such proceeds may be
advanced to pay for costs of the acquisition of the
Facility Site and the renovation and construction of the
Improvements, which amount shall not exceed 75% of the
"As Built" appraised value of the Facility Site and all
Improvements based upon the Plans (which "As Built"
appraised value equals $2,875,000).
(iii) A portion of such proceeds may be advanced to pay
for the costs of the acquisition of the new Equipment,
which amount shall not exceed 80% of the costs of such
new Equipment (which costs are estimated to be $335,000).
(iv) A portion of such proceeds may be advanced to pay
for other costs of the Facility approved by the Bank and
the Trustee.
The amount of the difference, if any, between the total amount of the
costs of the Facility and the aggregate amount of the disbursements from the
Facility Fund permitted by this paragraph shall be paid by the Borrower from
sources other than the proceeds of the Bonds.
(b) Amounts Remaining After Completion. Upon completion of
the Facility all moneys remaining in the Facility Fund shall be transferred to
the Bond Fund and applied in accordance with Section 4.4 of the Loan Agreement.
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(c) Disbursement Procedure. All requisitions for disbursements
of moneys on deposit in the Facility Fund (other than transfers from the
Facility Fund to the Bond Fund), as well as all requisitions for disbursements
of proceeds of the County Loan and the MICRF Loan, shall be subject to the prior
written approval of the Bank. Each requisition shall (i) contain a breakdown of
amounts requested from each such funding source, and (ii) include a request for
some amount to be disbursed from the Facility Fund. The Bank shall have a period
of ten (10) Business Days within which to approve any requisition and shall not
be required to approve requisitions more than once each month. All disbursements
from the Facility Fund (except for transfers from the Facility Fund to the Bond
Fund) will be made by the Trustee. The Bank shall forward all approved
requisitions for funding from the County Loan or the MICRF Loan to the
appropriate party for funding under the County Loan Documents or the MICRF Loan
Documents, as applicable. At the Bank's direction all amounts disbursed from any
source shall be advanced directly to the Borrower unless the Bank, in its sole
direction, requires that any disbursements be made directly to any contractor,
or to subcontractors, laborers, materialmen or persons furnishing labor,
services, materials or equipment used or to be used on or in connection with the
acquisition of the Facility, or to any combination thereof, or to pay any loan
fees, taxes, inspection fees, recording charges, legal fees and any other
outstanding amounts due relating to Facility and the full cost of its
completion. Any such disbursement or payment shall be deemed to have been made
to the Borrower or for its account. Upon receipt of any funds requested by
requisition, the Borrower immediately shall apply such funds to payments of the
costs of the acquisition of the Facility for which such funds are requested by
the requisition.
(d) Disbursements for Costs of the Facility Other than the
Direct Costs of Construction and Renovation. Requisitions for costs of the
acquisition of the Facility, other than the direct costs of construction and
renovation, must (i) include an itemization of the costs for which payment is
requested, (ii) have attached thereto invoices evidencing such costs, (iii)
indicate that the delivery and installation of any Equipment for which payment
is requested has been completed, and (iv) at the Bank's request, have attached
thereto any additional documents or information (including any financing
statements or amendments to financing statements and all filing fees necessary
for the filing thereof) reasonably required by the Bank in order to create or
perfect, or continue the perfection of, the Bank's security interest in any
Equipment or other property.
(e) Disbursements for the Direct Costs of Construction and
Renovation. Requisitions for direct costs of construction and renovation of the
Facility must (i) include the AIA approved progress payment form, which must be
signed by the Borrower and the Borrower's architect, engineer or construction
manager and (ii) be approved by the Bank's Inspector, not to be unreasonably
delayed, conditioned or withheld. Disbursements for direct costs of construction
and renovation of the Facility shall be subject to retention (the "Retainage")
in an amount equal to ten percent (10%) of the value of the work performed and
materials in place with respect to such
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work. The Retainage with respect to the Facility may be released upon compliance
with the conditions set forth in paragraph (f) of this Section 10.3.
(f) Final Disbursement for the Direct Costs of Construction and
Renovation. The final disbursement for direct costs of construction and
renovation, and the Retainage with respect to the Facility will be withheld
until the Bank has been furnished with and approved (i) a copy of a certificate
of completion signed by the Borrower and the Borrower's architect or the
Borrower's engineer or the Borrower's construction manager stating that the
construction and renovation of the Facility has been completed pursuant to and
in compliance with (A) the applicable Plans (the "Completion Certificate"), and
(B) all applicable zoning and building laws, ordinances, and regulations; (ii)
final waivers of liens from all materialmen, contractors and subcontractors;
(iii) a copy of the "as built" survey with respect to the Facility; (iv)
evidence of hazard insurance meeting the requirements of Section 6.3 of the Loan
Agreement covering the Facility; (v) a copy of the permanent use and occupancy
certificate authorizing use and occupancy of the Facility in such form as those
governmental agencies having jurisdiction customarily issue upon completion of
improvements and readiness thereof for use in Harford County, Maryland; and (vi)
an updated title insurance policy, if required by the Bank.
(g) Disbursements for Materials Not Incorporated in the Facility.
The Bank will not approve requisitions for disbursements from the Facility Fund
for materials which are not physically incorporated into the Facility, other
than for materials actually delivered to the site and stored in a place secured
and insured against theft, vandalism and other damage, all in a manner
satisfactory to the Bank.
(h) Deficiency. If at any time, either on the Closing Date or
thereafter, moneys on deposit in the Facility Fund, plus anticipated proceeds of
the MICRF Loan and the County Loan, are, in the opinion of the Bank, in its sole
discretion, insufficient to pay for all costs of the Facility, the Borrower
shall (i) complete, or cause to be completed, the Facility and pay or finance,
or cause to be paid or financed, that portion of the costs of the Facility as
may be in excess of the moneys available therefor in the Facility Fund, and (ii)
immediately, upon receipt of notice from the Bank, pay to the Bank, from funds
other than the proceeds of the Bonds, for deposit in the Facility Fund, a sum of
money which, when added to the moneys then on deposit in the Facility Fund, will
be sufficient to pay all costs of the Facility not yet paid. Immediately upon
receipt of proceeds of the MICRF Loan and the County Loan, the Borrower shall
apply such funds to payment of Facility costs prior to any further disbursements
of amounts on deposit in the Facility Fund, and shall provide the Bank with
evidence of such payment. Neither the Issuer nor the Bank make any warranty,
either express or implied, that the proceeds of the Bonds will be sufficient to
pay all of the costs of the Facility. If the Borrower finances any portion of
the costs of the Facility pursuant to the provisions of this Section from
sources other than the proceeds of the Bonds, it shall not be entitled to any
reimbursement therefor from the Issuer, from the Trustee, from the
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Bank, or from any Bondholder, nor shall it be entitled to any abatement or
diminution of any payments required by the Bond Documents or the Letter of
Credit Documents.
(i) No Liability to Third Parties. Neither the issuance of the
Bonds nor the loan of the proceeds thereof to the Borrower shall in any way be
construed as obligating the Issuer or the Bank or the Trustee to any person for
the payment of any expense incurred with respect to the Facility, and no person
contracting with the Borrower in connection with the construction of the
Facility shall be reimbursed by the Issuer or the Bank or the Trustee under any
circumstances whatsoever. Neither the Bank nor the Trustee nor the Issuer shall
in any event be responsible or liable to any person other than the Borrower for
the disbursement of or failure to disburse proceeds of any of the Bonds, or any
part thereof, and neither any contractor, subcontractor nor material or
equipment supplier shall have any right or claim against the Bank, the Trustee
or the Issuer under this Letter of Credit Agreement or in connection with the
administration hereof.
10.4 Conditions Precedent to the Bank's Approval of Requisitions for
Disbursements from Facility Fund. The Bank shall not be obligated to approve any
requisition for disbursement until it shall have received a requisition meeting
the requirements of Section 402 of the Indenture, and until all of the following
conditions precedent shall have been fully met and complied with in all
respects:
(a) No Event of Default. No Event of Default shall have
occurred and be continuing hereunder.
(b) Sufficient Time to Complete Facility. There shall be
sufficient time in the opinion of the Bank to complete the Facility not later
than the Projected Completion Date.
(c) Permits. The Borrower shall have delivered to the Bank
copies of all permits required for the work for which a requisition has been
submitted.
(d) Waivers of Liens; Receipts. The Borrower shall have furnished
to the Bank waivers of liens and receipts of payment as to each contractor and
each subcontractor for all work performed to the date of the last previous
requisition and waivers of liens as to each supplier for materials included in
the last previous requisition, within 30 days from the date of funding of the
last previous requisition, or prior to the next requisition, whichever shall
first occur.
(e) Delivery of Contracts. The Borrower shall have delivered to
the Bank copies of any contracts, public works agreements and other agreements
executed by the Borrower in connection with the construction or renovation of
the Facility, all of which must have been approved by the Bank.
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(f) Title Continuation Report. At the option of the Bank, the
title insurance company insuring the title to the Real Property shall have
issued a title continuation or endorsement showing that the fee simple title to
the Real Property is clear of liens (other than Permitted Liens) to the date of
such disbursement and that no financing statements affecting the Property, or
any part thereof, other than in favor of the Issuer, the Bank and the Trustee,
or in connection with Permitted Liens, have been filed.
(g) Compliance with Plans and Specifications. The Borrower
shall have delivered to the Bank three sets of Plans, signed and sealed by the
Borrower's architect and approved by the Bank. The Borrower shall have certified
to the Bank, and the Bank's Inspector shall have confirmed, that all
construction work which has been completed on the Facility with respect to which
the requisition is being submitted is in conformity with the applicable Plans.
Upon the request of the Bank, the Borrower will specify the nature of any
deviations from such Plans and Specifications.
(h) Proper Application of Prior Disbursements. The Bank
shall have received, upon the Bank's request, evidence satisfactory to it that
all prior disbursements have been properly applied to costs of the Facility.
(i) Location Surveys. With respect to any new construction,
the Bank shall have received a current location survey showing (i) that all new
construction is within the property lines and in compliance with all applicable
setbacks, location and area requirements, and (ii) that there is no change in
conditions which could adversely affect the security for any of the obligations
of the Borrower under this Agreement.
(j) Sufficient Funds to Complete Facility. The sum of the
funds being requisitioned, plus all prior disbursements by the Trustee, plus the
aggregate of all retentions and undisbursed funds, plus the proceeds of the
County Loan and the MICRF Loan, shall be sufficient, in the sole opinion of the
Bank, to complete the Facility in accordance with the applicable Plans. In the
event that the Borrower is required to deposit moneys in the Facility Fund in
order to pay the costs of completing the Facility pursuant to Section 10.3(h)
hereof, the Borrower shall have made such deposit.
(k) Quality and Quantity of Construction. The Bank shall have
received (i) evidence acceptable to the Bank in its sole discretion that
construction work performed and materials in place to the date of the
requisition are satisfactory both as to the quality and quantity, and that the
subsoil is suitable for the continued construction of the Facility, and (ii) a
certification from the Bank's Inspector that the work performed is in compliance
with all applicable governmental requirements.
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(l) Events Required Prior to Disbursements for Construction or
Renovation. Notwithstanding any other provisions of this Agreement, prior to any
disbursement of proceeds of the Bonds for costs of construction or renovation
(specifically excluding acquisition costs of the Property and soft costs related
to the acquisition of the Property), the Bank shall received (i) satisfactory
evidence that (A) the proceeds of the MICRF Loan and the County Loan have been
advanced to the Borrower, and (B) the County has agreed to subordinate the
County Loan; (ii) a counterpart original of the Subordination Agreement (in the
form approved by the Bank prior to closing) duly executed by all parties
thereto; (iii) a satisfactory opinion of counsel to the Borrower regarding the
validity and enforceability of the Subordination Agreement; and (iv) a
satisfactory payment and performance bond from the general contractor.
(m) Documents Required Prior to Disbursements for Equipment.
Notwithstanding any other provisions of this Agreement, prior to any
disbursement of the proceeds of the Bonds for costs of each item of Equipment,
the Bank must have received and approved satisfactory evidence that the proceeds
of the MICRF Loan have been advanced to the Borrower (as described in
subparagraph (l) above), and all of the following items:
(i) a specific description of such equipment,
including name of manufacturer, manufacturer's I.D.
number or serial number and any other information
reasonably requested by the Bank in order to
sufficiently describe the equipment being financed
so that the Bank's security interest in such
equipment is adequately and may be or will be
adequately perfected, upon delivery to Borrower of
such item of Equipment.
(ii) an amendment to this Agreement, if
necessary in the sole opinion of the Bank, pursuant
to which the Borrower specifically grants to the
Bank a security interest in such equipment (or
Borrower's interest therein in respect of equipment
on order but not yet received), and
(iii) a financing statement or amendment to
financing statement, if necessary in the sole
opinion of the Bank, together with all filing fees
therefor, to be filed among the appropriate
financing statement records in order to perfect such
security interest.
(n) Final Disbursement. If the disbursement is the final
disbursement for the costs of the Facility, in order to obtain the Bank's
approval of such disbursement (including the Retainage), in addition to the
satisfaction of all conditions set forth in this Section, the Borrower
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shall have provided (i) the Completion Certificate, appropriately completed, and
the accompanying documents described therein, and (ii) evidence satisfactory to
Lender that an affidavit of completion has been recorded in the appropriate
governmental office Harford County, Maryland.
(o) Construction and Engineer's Contracts. The Borrower shall
cause each of the Borrower's general contractor, all sub-contractors specified
by the Bank, and the Borrower's engineer to execute an agreement to complete
which will provide, among other things, that upon request by the Bank, they will
continue to provide the services called for by their contracts with the Borrower
following an Event of Default. The Borrower will cause to agree to give the Bank
and the Issuer notice of a default and an opportunity to cure under their
contracts with the Borrower and to acknowledge the existence of the Bank's
interests in the Facility.
10.5 Financing Sign on Property: Publicity. The Borrower authorizes the
Bank to place signs at the Property at any reasonable locations selected by the
Bank and the Issuer (during the construction of the Facility), and to prepare
and furnish news releases to the news media or any other publications selected
by the Bank and the Issuer advertising the fact that financial assistance for
the Facility has been obtained from the Bank and the Issuer, and the details of
such financial assistance (but in no event any confidential information
regarding Borrower or its business). Any sign placed on the Property by the
Borrower which identifies the Facility shall identify the Bank and the Issuer as
the parties providing financing for the Facility. Any such news releases must be
first approved by the Borrower, which will not unreasonably withhold its
approval.
10.6 Establishment of Completion Date. The Completion Date shall be
established by the delivery to the Trustee by the Borrower of the Completion
Certificate (appropriately completed) executed by the Borrower and approved in
writing by the Bank. The Completion Certificate delivered to the Bank shall have
attached thereto the items described in Section 10.3(f) hereof.
Notwithstanding the foregoing, the Completion Certificate shall state
that it is given without prejudice to any rights against third parties which may
exist at the date of such Completion Certificate or which may subsequently come
into being. It shall be the duty of the Borrower to cause the Completion
Certificate to be furnished as soon as the construction and renovation of the
Facility shall have been completed.
ARTICLE XI
ARBITRATION
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11.1 Arbitration. Except as otherwise specifically set forth in this
Agreement or agreed to in writing by the Borrower and the Bank and except as
expressly provided otherwise in Section 11.3 below, in the event that the
Borrower's waiver of trial by jury contained in Section 9.16 of this Agreement
is determined to be invalid or unenforceable as a matter of law, then any
action, dispute, claim or controversy between the parties, whether sounding in
contract, tort, or otherwise, arising under this Agreement or any proceeding to
which the Bank is a party, including any actions based upon, arising out of, or
in connection with any course of conduct, course of dealing, statement (whether
oral or written), or actions of the Bank or the Borrower ("Dispute" or
"Disputes"), shall be resolved by arbitration as set forth in this Annex. Such
Disputes shall be resolved by binding arbitration in accordance with Title 9 of
the United States Code, as amended, and the Commercial Arbitration Rules of the
American Arbitration Association ("AAA"), as in effect from time to time (the
"Rules"). In the event of any inconsistency between the Rules and the provisions
of this Annex, the provisions of this Annex shall supersede the Rules. All
statutes of limitations that would otherwise be applicable shall apply to any
arbitration proceeding hereunder. In any arbitration proceeding subject to the
provisions of this Annex, the arbitrator is specifically empowered to decide (by
documents only, or with a hearing, at the arbitrator's sole discretion)
pre-hearing motions that are substantially similar to pre-hearing motions to
dismiss and motions for summary adjudication. Judgment upon the award rendered
may be entered in any court having jurisdiction. Whenever an arbitration is
required, the parties shall select an arbitrator in the manner provided in
Section 11.4 below.
11.2 Judicial Reference. If a Dispute is not submitted to arbitration
as provided in Section 1 above for any reason, but become the subject of a
judicial action, at any point in the proceeding, any party may elect to have any
specific questions of fact or law, or all questions of fact or law, determined
by a reference accordance with Rule 53 of the North Carolina Rules of Civil
Procedure (or the equivalent rule of another State, as applicable). A party
shall not waive the right to request such judicial reference for any remaining
questions of fact or law to be decided by virtue of the party's initiating or
participating in judicial or other proceedings or by failure to request such a
reference up to any point in a judicial proceeding. Whenever such an election is
made, the parties shall designate to the court a single referee selected in the
manner provided in Section 11.4 below. Judgment upon the award rendered shall be
entered in the court in which such proceeding was commenced.
11.3 Remedies. No provision of, nor the exercise of any rights under,
Sections 11.1 or 11.2 above shall limit or otherwise affect the right of the
Bank (a) to proceed and foreclose against any of the Collateral by the exercise
of a power of sale available under the Security Instruments and applicable law,
(b) to exercise any self help remedies available under this Agreement or the
Security Instruments and applicable law, including, without limitation, set off,
or to exercise any other nonjudicial rights and remedies available to it under
any of the Security Instruments or this Agreement and applicable law, or (c) to
obtain provisional or ancillary
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remedies, including, without limitation, injunctive relief and the appointment
of a receiver, from a court having jurisdiction before, during or after the
pendency of any arbitration or referral. The Bank's pursuit of provisional or
ancillary remedies, or its exercise of self help and other nonjudicial remedies,
shall not constitute a waiver of its right to submit the Dispute to arbitration
or judicial reference.
11.4 Selection of Arbitrator or Referee. Whenever an arbitration is
required under Section 11.1 above or a referral is required under Section 11.2
above, the arbitrator or referee shall be selected in accordance with this
Section 11.4. Except as otherwise provided, the arbitrator or referee shall be
an attorney or retired judge selected in accordance with the Rules of the AAA.
Any arbitrator or referee selected under this Section 11.4 shall be
knowledgeable in the subject matter of the Dispute. Qualified retired judges
shall be selected through panels maintained by AAA, or any North Carolina
Superior Court (or a court, of an equivalent or higher level, of another State)
or private organization providing such services. A single arbitrator who is an
attorney but is not a retired judge shall have the power to render a maximum
award of $100,000. Where any party makes timely written request prior to
appointment of the arbitrator, or whether the claim of any party exceeds
$100,000, the arbitrator shall be a retired judge formerly sitting on the bench
in a North Carolina Superior Court or any higher State court (or a court, of an
equivalent level, of another State), or a retired Federal court judge formerly
sitting on the bench of a United States Court of Appeals or any Federal District
Court. A single arbitrator who is a retired judge shall have the power to render
a maximum award of $1,000,000. Where any party seeks an award in excess of
$1,000,000, the Dispute shall be decided by a majority vote of three
arbitrators, at least one of whom shall meet the requirements for retired judges
set forth herein. For purposes of this Section 11.4, the computation of the
maximum award an arbitrator may make shall include any amounts awarded for
arbitration fees, attorneys fees and all other related costs provided by Section
11.5 below.
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11.5 Miscellaneous. This Agreement shall be interpreted, and the
resolution of all Disputes and the rights and liabilities of the parties shall
be determined, in accordance with the internal laws (as opposed to conflicts of
law provisions) of the State of North Carolina; provided that any arbitration
questions arising under this Annex on dispute resolution shall by governed in
accordance with Title 9 of the United States Code, as amended. This Section of
the Agreement, constitutes the entire agreement of the parties with respect to
its subject matter and supersedes all prior discussions, arrangements,
negotiations and other communications on dispute resolution. To the extent any
provision of this Section is prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Section. The provisions of this Section shall survive any termination or
expiration of this Agreement until payment in full of the obligations
thereunder, unless the parties otherwise expressly agree in writing. The
arbitrator shall have the power to award to the prevailing party recovery of all
costs, expenses and fees incurred by it (including reasonable attorneys' fees,
administrative fees, arbitrators' fees, and court costs), and in particular, but
without limitation of the foregoing, shall have the power to aware to either
party hereto, whether or not such party shall be the prevailing party in an
arbitration, recovery of all costs, expenses and fees incurred by it (including
reasonable attorneys' fees, administrative fees, arbitrators' fees, and
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court costs), but only to the extent payable or reimbursable by the other party
under the applicable provisions of this Agreement.
IN WITNESS WHEREOF, the Borrower and the Bank have caused this
Agreement to be executed in their respective names and their respective seals to
be hereunto affixed and attested by their duly authorized representatives, all
as of the date first above written.
BORROWER:
ATTEST: ALCORE, INC.
By: By: (SEAL)
Name: Name: Edward A. Kiley
Title: Title: President/General Manager
(CORPORATE SEAL)
BANK:
WITNESS: FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By: (SEAL)
Name: John Wooten
Title: Assistant Vice President
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<PAGE>
EXHIBIT A
IRREVOCABLE LETTER OF CREDIT
Date:__________, 1997
LETTER OF CREDIT NO. ________
Branch Banking and Trust
Company, as Credit Facility Trustee
223 West Nash Street
Wilson, North Carolina 27893
Attention: Corporate Trust Department
Ladies and Gentlemen:
We hereby issue to you, Branch Banking and Trust Company, as Credit
Facility Trustee under the Trust Indenture dated as of May 1, 1997 between the
Maryland Industrial Development Financing Authority (the "Issuer"), First Union
National Bank of Virginia, as Trustee, and you (as amended or supplemented, the
"Indenture"), pursuant to which the Maryland Industrial Development Financing
Authority Economic Development Revenue Bonds (Alcore, Inc. Facility) 1997 Issue
in the original principal amount of $2,600,000 (the "Bonds") have been issued,
this Irrevocable Letter of Credit No. ______________ (the "Letter of Credit")
for the account of Alcore, Inc. (the "Borrower") in the amount of $2,704,000
(the "Initial Stated Amount") and, as from time to time reduced and reinstated
as hereinafter provided, the "Amount Available," of which (i) subject to the
provisions below reducing amounts available hereunder, $2,600,000 (as from time
to time reduced and reinstated as hereinafter provided, the "Principal Amount
Available") shall be available for the payment of principal or the portion of
the purchase price corresponding to principal of the Bonds and (ii) subject to
the provisions below reducing amounts available hereunder, $104,000 (as from
time to time reduced and reinstated as hereinafter provided, for the "Interest
Amount Available") shall be available for the payment of up to 120 days'
interest or the portion of the purchase price corresponding to interest on the
Bonds at an assumed rate of 12% per annum. Subject to such aggregate limits and
to the conditions set forth herein, funds may be drawn upon hereunder (i) with
respect to payment of the unpaid principal amount or the portion of purchase
price corresponding to the principal of the Bonds and (ii) with respect to
payment of up to 120 days' interest accrued and payable or the portion of
purchase price corresponding to interest accrued on the Bonds on or prior to
their stated maturity date. This Letter of Credit is effective immediately and
expires as of the close of business at our
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Presentation Office (as hereinafter defined) on _________, 2000 (as may be
extended from time to time as hereinafter described, the "Stated Termination
Date") or earlier as hereinafter provided. This Letter of Credit shall be
extended automatically for successive one-year terms from the then applicable
Stated Termination Date unless we give you, or any successor Credit Facility
Trustee, written notice of our election not to renew this Letter of Credit at
least one hundred twenty (120) days prior to the applicable Stated Termination
Date by U. S. certified mail, return receipt requested or unless this Letter of
Credit is otherwise terminated in accordance with its terms. All drawings under
this Letter of Credit will be paid with our own funds.
We hereby irrevocably authorize you to draw on us, in an aggregate
amount not to exceed the Amount Available and in accordance with the terms and
conditions and subject to the reductions in amount as hereinafter set forth, (1)
in a single drawing (subject to the provisions contained in the next following
paragraph) by your draft drawn on us at sight, presented for payment on a day on
which banks in the State of North Carolina are open for the transaction of
business of the nature required pursuant to the Loan Agreement and the Indenture
(each as defined in the Bonds) (a "Business Day") and referring therein to the
number of this Letter of Credit, and accompanied by your written and completed
certificate signed by you in the form of Annex A attached hereto (such draft
accompanied by such certificate being your "Interest Draft"), an amount not
exceeding the Interest Amount Available on the date of such drawing; (2) in one
or more drawings by one or more of your drafts drawn on us at sight, presented
for payment on a Business Day and referring therein to the number of this Letter
of Credit, and accompanied by your written completed certificate signed by you
in the form of Annex B attached hereto (any such draft accompanied by such
certificate being your "Tender Draft"), and aggregate amount not exceeding the
Amount Available on the date of such drawing; (3) in one or more drawings by one
or more of your drafts drawn on us at sight, presented for payment on a Business
Day and referring therein to the number of this Letter of Credit, and
accompanied by your written and completed certificate signed by you in the form
of Annex C attached hereto (any such draft accompanied by such certificate being
your "Partial Redemption Draft"), an aggregate amount not exceeding the Amount
Available on the date of such drawing; (4) in a single drawing by your draft
drawn on us at sight presented for payment on a Business Day and referring
therein to the number of this Letter of Credit, and accompanied by your written
and completed certificate signed by you in the form of Annex D hereto (any such
draft accompanied by such certificate being your "Conversion Draft"), an amount
not exceeding the Amount Available on the date of such drawing; and (5) in a
single drawing by your draft drawing on us at sight, presented for payment on a
Business Day and referring therein to the number of this Letter of Credit, and
accompanied by your written and completed certificate signed by you in the form
of Annex E attached hereto (such draft accompanied by such certificate being
your "Final Draft"), an amount not exceeding the Amount Available on the date of
such drawing.
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If you shall draw on us by an Interest Draft and you shall not have
received from us within ten (10) calendar days from the date of our payment in
respect of such drawing a notice to the effect that we have not been reimbursed
for such drawing and that the interest portion of the Letter of Credit will not
be reinstated, then (x) your right to draw on us in a single drawing by your
Interest Draft under clause (1) of the immediately preceding paragraph shall be
automatically reinstated and (y) effective as of the eleventh (11th) calendar
day from the date of our payment in respect of such drawing, you shall again be
authorized to draw on us by your Interest Draft in accordance with said clause
(1). The provisions of this paragraph providing for the reinstatement of your
right to draw on us by your Interest Draft in a succeeding single drawing shall
be applicable to each successive drawing by your Interest Draft under clause (1)
of the immediately preceding paragraph so long as this Letter of Credit shall
not have terminated as set forth below.
Upon our honoring any Tender Draft presented by you hereunder, the
Amount Available under this Letter of Credit shall be automatically reduced by
the amount drawn under such Tender Draft, the Principal Amount Available to be
drawn hereunder by you shall be automatically reduced by an amount equal to the
principal component of such Tender Draft and the Interest Amount Available to be
drawn hereunder by you shall be automatically reduced by an amount equal to the
amount of the interest component of such Tender Draft.
Upon our honoring any Partial Redemption Draft presented by you
hereunder, the Amount Available under this Letter of Credit shall be
automatically and permanently reduced by the amount drawn under any such Partial
Redemption Draft, the Principal Amount Available to be drawn hereunder by you
shall be automatically and permanently reduced by an amount equal to the
principal component of such Partial Redemption Draft honored by us hereunder and
the Interest Amount Available to be drawn hereunder by you shall be
automatically and permanently reduced by an amount equal to the amount of the
interest which would accrue on an amount of principal equal to the principal
component of such Partial Redemption Draft for one hundred twenty (120) days at
an assumed rate of twelve percent (12%) per annum.
Upon our honoring any Conversion Draft presented by you hereunder, the
Amount Available under this Letter of Credit shall be automatically and
permanently reduced by the amount drawn under any such Conversation Draft, the
Principal Amount Available to be drawn hereunder by you shall be automatically
and permanently reduced by an amount equal to the principal component of such
Conversation Draft honored by us hereunder, and the Interest Amount Available to
be drawn hereunder by you shall be automatically and permanently reduced by an
amount equal to the amount of the interest component of any such Conversation
Draft honored by us hereunder.
A-3
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The Amount Available, the Principal Amount Available and the Interest
Amount Available drawn under this Letter of Credit with respect to any Tender
Draft shall be reinstated as provided in this paragraph to the extent, but only
to the extent, that we are reimbursed by or on behalf of the Borrower in
immediately available funds delivered to us at the Presentation Office on or
before 3:00 p.m. (Charlotte, North Carolina time) on a Business Day for any
amount drawn in respect of principal and interest under any Tender Draft. If we
receive such reimbursement by or on behalf of the Borrower, all in strict
conformity with the terms and conditions of this Letter of Credit, after 3:00
p.m. (Charlotte, North Carolina time) on a Business Day prior to the termination
hereof, such reimbursement will be honored as stated above as if received on the
next succeeding Business Day. Any amount received by us from or on behalf of the
Borrower in reimbursement of amounts drawn hereunder by a Tender Draft shall, if
accompanied by your completed certificate signed by you in the form of Annex F
attached hereto, be applied to the extent of the amount received by us and
indicated therein to reimburse us for amounts drawn hereunder by your Tender
Drafts and we will confirm to you the amount of the Principal Amount Available
and the Interest Amount Available reinstated by such reimbursement by delivering
to you the executed and completed acknowledgment accompanying the form of Annex
F delivered by you in connection with such reimbursement. The Amount Available,
the Principal Amount Available and the Interest Amount Available shall be
reinstated only in compliance with the provisions of this paragraph.
Each draft and certificate presented hereunder shall be dated the date
of its presentation and each such draft and certificate shall be presented at
our office located at Two First Union Center, T-7, Charlotte, North Carolina
28202-0742, Attention: International Operations (or at any other office in the
State of North Carolina which may be designated by us by written notice
delivered to you at least three Business Days prior to a date on which interest
is payable on the Bonds) (the "Presentation Office") and shall be presented on a
Business Day. If we receive any of your drafts and certificates at such office,
all in strict conformity with the terms and conditions of this Letter of Credit,
not later than 11:00 a.m. (Charlotte, North Carolina time) on a Business Day on
or prior to the termination hereof, we will honor the same by initiating the
wire of funds by 2:30 p.m. (Charlotte, North Carolina time) on the same day in
accordance with your payment instructions. If we receive any of your drafts and
certificates at such office, all in strict conformity with the terms and
conditions of this Letter of Credit, after 11:00 a.m. (Charlotte, North Carolina
time) on a Business Day prior to the termination hereof, we will honor the same
on the next succeeding Business Day by initiating the wiring of funds by 2:30
p.m. (Charlotte, North Carolina time) in accordance with your payment
instructions. If requested by you, payment under this Letter of Credit may be
made by wire transfer of Federal Reserve Bank of Richmond funds to your account
in a bank of the Federal Reserve wire system or by deposit of same day funds
into a designated account that you maintain with us.
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In connection with the presentation of any Tender Draft or Conversion
Draft, Bonds in aggregate principal amount equal to the principal amount of such
Tender Draft or Conversion Draft shall be delivered to the Bank or its designee
as promptly as practicable, and in any event within five Business Days after
such presentation, registered in the name of the Bank, or its designee, as
pledgee of the Borrower, pledged to the Bank pursuant to the Pledge Agreement.
With respect to any Tender Draft, the Bank agrees that it shall not release any
Bonds pledged to it until the Trustee shall have received the Bank's executed
acknowledgment accompanying the form of Annex F attached hereto notifying the
Trustee that the Letter of Credit has been reinstated so that the Amount
Available, as so reinstated, shall equal or exceed the aggregate principal and
120 days' interest calculated at an assumed rate of 12% per annum on all Bonds
for which drawings are available hereunder after giving effect to such release.
Upon the earliest of (i) our honoring your Final Draft presented
hereunder, (ii) the second day following the date on which we receive a
certificate signed by you stating that the interest rate on the Bonds has been
converted to a fixed interest rate, (iii) the date on which we receive a
certificate signed by you stating that the Borrower has provided and you have
accepted an Alternate Letter of Credit in accordance with the terms of the
Indenture which is effective the date of such certificate, or (iv) the Stated
Termination Date, this Letter of Credit shall terminate.
This Letter of Credit is transferable only in its entirety to any
transferee whom you certify to us has succeeded you as Credit Facility Trustee
under the Indenture, and may be successively transferred. Transfer of the Amount
Available under this Letter of Credit to such transferee shall be effected by
the presentation to us of this Letter of Credit accompanied by a certificate in
the form of Annex G attached hereto and payment of the transfer commission
referred to therein. Upon such presentation we shall forthwith transfer the same
to your transferee or, if so requested by your transferee, issue a letter of
credit to your transferee with provisions therein consistent with this Letter of
Credit.
This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein
(including, without limitation, the Bonds or the Indenture), except only the
certificates and the drafts referred to herein which are hereby incorporated by
reference; and any such reference shall not be deemed to incorporate herein by
reference any documents, instrument or agreement except for such certificates
and such drafts.
Except as otherwise provided herein, this Letter of Credit shall be
governed by and construed in accordance with the Uniform Customs and Practice
for Documentary Credits (1993 Revisions), International Chamber of Commerce
Publication No. 500 (the "UCP") and, to the extent not inconsistent therewith,
the laws of the State of North Carolina. Communications with
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respect to this Letter of Credit other than presentations of drafts and
certificates hereunder shall be in writing and shall be addressed to us at Two
First Union Center, T-7, Charlotte, North Carolina 28202-0742, Attention:
International Operations, specifically referring to the number of this Letter of
Credit.
Notwithstanding anything to the contrary in Article 17 of the UCP, if
this Letter of Credit expires during an interruption of business as described in
Article 17, the Bank will honor draws under this Letter of Credit that are made
within ten (10) days after the resumption of business by the Bank.
Very truly yours,
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By:
Name: John Wooten
Title: Vice President
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Annex A
[Form of Certificate for Interest Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT
OF UP TO 120 DAYS' INTEREST
Irrevocable Letter of Credit No.
The undersigned, a duly authorized officer of the undersigned Credit
Facility Trustee (the "Credit Facility Trustee"), hereby certifies to First
Union National Bank of North Carolina (the "Bank"), with reference to
Irrevocable Letter of Credit No. __________ (the "Letter of Credit; the terms
defined therein and not otherwise defined herein being used herein as therein
defined) issued by the Bank in favor of the Credit Facility Trustee, as follows:
(1) The Credit Facility Trustee in the Trustee or a
Co-Trustee under the Indenture for the holders of the Bonds.
(2) The Credit Facility Trustee is making a drawing under the
Letter of Credit with respect to a payment of interest on the
Bonds, which payment is due and payable on a regular Interest
Payment Date. On the record date for such Interest Payment
Date, none of such Bonds for which interest is drawn pursuant
to the draft were held of record by the Borrower, or by the
Bank, or its designee, as pledgee of the Borrower.
(3) [The Interest Draft accompanying this Certificate is the
first Interest Draft presented by the Credit Facility Trustee
under the Letter of Credit.]* [The Interest Draft last
presented by the Credit Facility Trustee under the Letter of
Credit was honored and paid by the Bank on _______________,
_______, and the Credit Facility Trustee has not received a
notice within ten days of presentation of such Interest Draft
from the Bank that the Bank has not been reimbursed.]**
(4) The amount of the Interest Draft accompanying this
Certificate is $__________. It was computed in compliance with
the terms and conditions of the Bonds and the Indenture and
does not exceed the Interest Amount Available to be drawn by
the Credit Facility Trustee under the Letter of Credit.
(5) Upon receipt by the undersigned of the amount demanded
hereby, (a) the undersigned will apply the same directly to
the payment when due of the interest amount owing on account
of the Bonds pursuant to the Indenture, (b) no portion of said
amount shall be applied by the undersigned for any other
purpose, and (c) no portion of said amount shall be commingled
with other funds held by the undersigned.
IN WITNESS WHEREOF, the Credit Facility Trustee has executed and
delivered this Certificate as of the ______ day of ________________, 19__.
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BRANCH BANKING AND TRUST
COMPANY, as Credit Facility Trustee
By:
Name:
Title:
* To be used in the Certificate relating to the first Interest Draft only.
** To be used in each Certificate relating to each Interest Draft other than
the first Interest Draft.
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Annex B
[Form of Certificate for Tender Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT
OF PRINCIPAL PURCHASE PRICE AND PORTION OF PURCHASE
PRICE CORRESPONDING TO INTEREST OF BONDS TENDERED
Irrevocable Letter of Credit No.
The undersigned, a duly authorized officer of the undersigned Credit
Facility Trustee (the "Credit Facility Trustee"), hereby certifies to First
Union National Bank of North Carolina (the "Bank"), with reference to
Irrevocable Letter of Credit No. ________ (the "Letter of Credit"; the terms
defined herein and not otherwise defined herein being used herein as therein
defined) issued by the Bank in favor of the Credit Facility Trustee, as follows:
(1) The Credit Facility Trustee is the Trustee of a
Co-Trustee under the Indenture for the holders of the Bonds.
(2) The Credit Facility Trustee is making a drawing under the
Letter of Credit with respect to a payment, upon a tender of
all or less than all of the Bonds, which are Outstanding (as
defined in the Indenture), of the unpaid principal amount of
the Bonds and accrued interest thereon to be purchased as a
result of such tender pursuant to the terms of Article III of
the Indenture (other than Bonds, presently held of record by
the Borrower, or by the Bank, or its designee, as pledgee of
the Borrower) which payment is due on the date on which this
Certificate and the Tender Draft it accompanies are being
presented to the Bank.
(3) The amount of the Tender Draft accompanying this
Certificate is equal to the sum of (i) $________________ being
drawn in respect of the payment of unpaid principal of Bonds
(other than Bonds presently held of record by the Borrower or
by the Bank, or its designee, as pledgee of the Borrower) to
be purchased as a result of a tender, which amount does not
exceed the Principal Amount Available under the Letter of
Credit, and (ii) $____________ being drawn in respect of the
payment of _________ days' [not to exceed 120 days'] accrued
and unpaid interest on such Bonds constituting a portion of
the purchase price of such Bonds being purchased as a result
of a tender, which amount does not exceed the Interest Amount
Available under the Letter of Credit.
(4) The Credit Facility Trustee shall, pursuant to the Pledge
Agreement, deliver or cause to be delivered to the Bank or its
designee a principal amount of Bonds equal to the principal
amount of the Tender
A-B-1
<PAGE>
Draft accompanying this Certificate as promptly as
practicable, and in any event within five Business Days after
presentation of the Tender Draft accompanying this
Certificate.
(5) Upon receipt by the undersigned of the amount demanded
hereby, (a) the undersigned will apply the same directly to
the payment when due of the purchase price of Bonds tendered
pursuant to the Indenture, (b) no portion of said amount shall
be applied by the undersigned for any other purpose, and (c)
no portion of said amount shall be commingled with other funds
held by the undersigned.
(6) The amount of the Tender Draft accompanying this
Certificate was computed in compliance with the terms and
conditions of the Bonds and the Indenture and does not exceed
the Amount Available under the Letter of Credit.
The Credit Facility Trustee acknowledges that, pursuant to the terms of
the Letter of Credit, upon the Bank's honoring of the Tender Draft accompanying
this Certificate, (i) the Amount Available under the Letter of Credit shall be
automatically reduced by the aggregate amount of such Tender Draft, (ii) the
Principal Amount Available under the Letter of Credit shall be automatically
reduced by an amount equal to the amount of the principal component of such
draft set forth in paragraph 3 above, and (iii) the Interest Amount Available
under the Letter of Credit shall be automatically reduced by an amount equal to
the amount of the interest component of such draft set forth in paragraph 3
above, each subject to reinstatement as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Credit Facility Trustee has executed and
delivered this Certificate as of the _____ day of ______________, _____.
BRANCH BANKING AND TRUST
COMPANY, as Credit Facility Trustee
By:
Name:
Title:
A-B-2
<PAGE>
Annex C
[Form of Certificate for Partial Redemption Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT
OF PRINCIPAL AND UP TO 120 DAYS' INTEREST UPON
PARTIAL REDEMPTION
Irrevocable Letter of Credit No.
The undersigned, a duly authorized officer of the undersigned Credit
Facility Trustee (the "Credit Facility Trustee"), hereby certifies to First
Union National Bank of North Carolina (the "Bank"), with reference to
Irrevocable Letter of Credit No. _________ (the "Letter of Credit"; the terms
defined therein and not otherwise defined herein being used herein as therein
defined) issued by the Bank in favor of the Credit Facility Trustee, as follows:
(1) The Credit Facility Trustee is the Trustee or a Co-Trustee
under the Indenture for the holders of the Bonds.
(2) The Credit Facility Trustee is making a drawing under the
Letter of Credit with respect to a payment, upon redemption of
less than all of the Bonds which are Outstanding (as defined
in the Indenture), of the unpaid principal amount of, and up
to 120 days' accrued and unpaid interest on, the Bonds to be
redeemed pursuant to the Indenture (other than Bonds presently
held of record by the Borrower, or by the Bank, or its
designee, as pledgee of the Borrower).
(3) The amount of the Partial Redemption Draft accompanying
this Certificate is $_____________ and is equal to the sum of
(i) $____________ being drawn in respect of the payment of
unpaid principal of Bonds (other than Bonds presently held of
record by the Borrower or by Bank, or its designee, as pledgee
of the Borrower) to be redeemed, which amount does not exceed
the Principal Amount Available under the Letter of Credit and
(ii) $______________ being drawn in respect of the payment of
______ days' [not to exceed 120 days'] accrued and unpaid
interest on such bonds, which amount does not exceed the
Interest Amount Available under the Letter of Credit.
(4) The amount of the Partial Redemption Draft accompanying
this Certificate was computed in accordance with the terms and
conditions of the Bonds and the Indenture and does not exceed
the amount Available under the Letter of Credit.
(5) This Certificate and the Partial Redemption Draft it
accompanies are dated, and are being presented to the Bank on,
the date on which the unpaid principal amount of, and accrued
and unpaid interest on,
A-C-1
<PAGE>
Bonds to be redeemed are due and payable under the Indenture
upon redemption of less than all of the Bonds which are
Outstanding (as defined in the Indenture).
(6) Upon receipt by the undersigned of the amount demanded
hereby (a) the undersigned will apply the same directly to the
payment when due of the principal amount of and accrued and
unpaid interest on the Bonds pursuant to the Indenture, (b) no
portion of said amount shall be applied by the undersigned for
any other purpose and (c) no portion of said amount shall be
commingled with other funds held by the undersigned.
The Credit Facility Trustee acknowledges that, pursuant to the terms of
the Letter of Credit, upon the Bank's honoring the Partial Redemption Draft
accompanying this Certificate, (i) the Amount Available under the Letter of
Credit shall be permanently reduced by the aggregate amount of such Partial
Redemption Draft, (ii) the Principal Amount Available under the Letter of Credit
shall be permanently reduced by an amount equal to the amount of the principal
component of such draft set forth in paragraph 3 above and (iii) the Interest
Amount Available under the Letter of Credit shall be permanently reduced by
$_____________, which is equal to an amount of interest which would accrue on an
amount of principal equal to the principal component set forth in paragraph 3
above for a period of one hundred twenty (120) days at a maximum rate of twelve
percent (12%) per annum.
IN WITNESS WHEREOF, the Credit Facility Trustee has executed and
delivered this Certificate as of the _______ day of _____________, 19___.
BRANCH BANKING AND TRUST
COMPANY, as Credit Facility Trustee
By:
Name:
Title:
A-C-2
<PAGE>
Annex D
[Form of Certificate for Conversion Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE
PAYMENT OF PRINCIPAL PLUS ACCRUED INTEREST
UPON A MANDATORY PURCHASE
(CONVERSION TO A FIXED INTEREST RATE)
Irrevocable Letter of Credit No.
The undersigned, a duly authorized officer of the undersigned Credit
Facility Trustee (the "Credit Facility Trustee"), hereby certifies to First
Union National Bank of North Carolina (the "Bank"), with reference to
Irrevocable Letter of Credit No. _________ (the "Letter of Credit"; the terms
defined therein and not otherwise defined herein being used herein as therein
defined) issued by the Bank in favor of the Credit Facility Trustee, as follows:
(1) The Credit Facility Trustee is the Trustee or a Co-Trustee
under the Indenture for the holders of the Bonds.
(2) The Credit Facility Trustee is making a drawing under the
Letter of Credit with respect to a payment, upon a mandatory
tender for purchase pursuant to Section 202(e) and Section
701(e) of the Indenture (conversion to a Fixed Interest Rate
within the meaning of the Indenture) of all or less than all
of the Bonds which are Outstanding (as defined in the
Indenture), of the unpaid principal amount of, and up to 120
days' accrued and unpaid interest on, the Bonds to be so
purchased (other than Bonds presently held of record by the
Borrower, or the Bank, or its designee, as pledgee of the
Borrower), which payment is due on the date on which this
Certificate and the Conversation Draft it accompanies are
being presented to the Bank.
(3) The amount of the Conversion Date accompanying this
Certificate is $_____________ and is equal to the sum of (i)
$_______________ being drawn in respect of the payment of
unpaid principal of Bonds (other than Bonds presently held of
record by the Borrower, or by the Bank, or its designee, as
pledgee of the Borrower) to be purchased, which amount does
not exceed the Principal Amount Available under the Letter of
Credit, and (ii) $_________ being drawn in respect of the
payment of _______ days' [not to exceed 120 days'] accrued and
unpaid interest on such Bonds, which amount does not exceed
the Interest Amount Available under the Letter of Credit.
(4) The amount of the Conversation Draft accompanying this
Certificate was computed in compliance with the terms and
conditions of the Bonds and the Indenture and does not exceed
the Amount Available under the Letter of Credit.
A-D-1
<PAGE>
(5) Upon receipt by the undersigned of the amount demanded
hereby, (a) the undersigned will apply the same directly to
the payment when due of the principal amount of, interest
accrued unpaid on, the Bonds pursuant to the Indenture, (b) no
portion of said amount shall be applied by the undersigned for
any other purpose and (c) no portion of said amount shall be
commingled with other funds held by the undersigned.
(6) The Credit Facility Trustee shall, pursuant to the Pledge
Agreement, deliver or cause to be delivered to the Bank or its
agent a principal amount of Bonds equal to the principal
amount of the Conversion Draft accompanying this Certificate
as promptly as practicable, and in any event within five
Business Days after presentation of the Conversation Draft
accompanying this Certificate.
IN WITNESS WHEREOF, the Credit Facility Trustee has executed and
delivered this Certificate as of the _____ day of ______________, 19____.
BRANCH BANKING AND TRUST
COMPANY, as Credit Facility Trustee
By:
Name:
Title:
A-D-2
<PAGE>
Annex E
[Form of Certificate for Final Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF
PRINCIPAL PLUS ACCRUED INTEREST, UPON STATED OR ACCELERATED
MATURITY OR OPTIONAL OR MANDATORY REDEMPTION AS A WHOLE
Irrevocable Letter of Credit No.
The undersigned, a duly authorized officer of the undersigned Credit
Facility Trustee (the "Credit Facility Trustee"), hereby certifies to First
Union National Bank of North Carolina (the "Bank"), with reference to
Irrevocable Letter of Credit No. _______ (the "Letter of Credit") the terms
defined therein and not otherwise defined herein being used herein as therein
defined) issued by the Bank in favor of the Credit Facility Trustee, as follows:
(1) The Credit Facility Trustee is the Trustee or a Co-Trustee
under the Indenture for the holders of the Bonds.
(2) The Credit Facility Trustee is making a drawing under the
Letter of Credit with respect to a payment, either at stated
maturity, upon acceleration, or as a result of a redemption as
a whole pursuant to the Indenture of the unpaid principal
amount of and up to 120 days' accrued and unpaid interest on
all of the Bonds which are "Outstanding" within the meaning of
the Indenture (other than Bonds presently held of record by
the Borrower or by the Bank, or its designee, as pledgee of
the Borrower).
(3) The amount of the Final Draft accompanying this
Certificate is $____________ and is equal to the sum of (i)
$____________ being drawn in respect of the payment of unpaid
principal of Bonds (other than Bonds presently held of record
by the Borrower or by the Bank, or its designee, as pledgee of
the Borrower), which amount does not exceed the Principal
Amount Available under the Letter of Credit, and (ii)
$___________ being drawn in respect of the payment of
______________ days' [not to exceed 120 days] accrued and
unpaid interest on such Bonds, which amount does not exceed
the Interest Amount Available under the Letter of Credit.
(4) The amount of the Final Draft accompanying this
Certificate was computed in compliance with the terms and
conditions of the Bonds and the Indenture and does not exceed
the Amount Available under the Letter of Credit.
(5) Upon receipt by the undersigned of the amount demanded
hereby, (a) the undersigned will apply the same directly to
the payment when due of the principal amount and accrued and
unpaid interest thereon owing on account of the Bonds pursuant
to the Indenture, (b) no portion of said amount shall
A-E-1
<PAGE>
be applied by the undersigned for any other purpose and (c) no
portion of said amount shall be commingled with other funds
held by the undersigned.
IN WITNESS WHEREOF, the Credit Facility Trustee has executed and
delivered this Certificate as of the ______ day of __________________, 19___.
BRANCH BANKING AND TRUST
COMPANY, as Credit Facility Trustee
By:
Name:
Title:
A-E-2
<PAGE>
Annex F
[For of Reinstatement Certificate for Tender Draft]
CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS AVAILABLE
UNDER IRREVOCABLE LETTER OF CREDIT NO.
The undersigned, a duly authorized officer of the undersigned Credit
Facility Trustee (the "Credit Facility Trustee"), hereby certifies to First
Union National Bank of North Carolina (the "Bank"), with reference to
Irrevocable Letter of Credit No. _______ (the "Letter of Credit"; the terms
defined therein and not otherwise defined herein being used herein as therein
defined) issued by the Bank in favor of the Credit Facility Trustee, as follows:
(1) The Credit Facility Trustee is the Trustee or a Co-Trustee
under the Indenture for the holders of the Bonds.
(2) The amount of $_________ paid to you today by or on behalf
of the Borrower is a payment made to reimburse you, pursuant
to Section ______ of the Letter of Credit and Reimbursement
Agreement dated as of May 1, 1997 (as amended or supplemented,
the "Reimbursement Agreement") between the Borrower and the
Bank, for amounts drawn under the Letter of Credit by Tender
Drafts. The Credit Facility Trustee hereby requests that you
reinstate the Letter of Credit upon receipt of such payment in
an amount equal to the amount of Payment so received.
(3) Of the amount referred to in paragraph (2), $___________
represents the aggregate principal amount of Bonds resold or
to be sold on behalf of the Borrower.
(4) Of the amount referred to in paragraph (2), $___________
represents accrued and unpaid interest on the Bonds.
IN WITNESS WHEREOF, the Credit Facility Trustee has executed and
delivered this Certificate as of the ______ day of ________________, 19___.
BRANCH BANKING AND TRUST
COMPANY, as Credit Facility Trustee
By:
Name:
Title:
A-F-1
<PAGE>
ACKNOWLEDGMENT
The Bank hereby confirms to the Credit Facility or the Trustee that the
Principal Amount Available under the Letter of Credit has been reinstated by the
amount $______________ and the Interest Amount Available under the Letter of
Credit has been reinstated by the amount of $_________________.
This _______ day of _______________, 19___.
BRANCH BANKING AND TRUST
COMPANY, as Credit Facility Trustee
By:
Name:
Title:
A-F-2
<PAGE>
Annex G
[Form of Transfer Certificate]
INSTRUCTION TO TRANSFER
First Union National Bank of
North Carolina
Two First Union Center
Charlotte, North Carolina 28288-0742
Attention: International Operations
Re: Your Irrevocable Letter of Credit No.
-------------------------------------
Ladies and Gentlemen:
For value received, the undersigned beneficiary (the "Transferor")
hereby irrevocably transfer to:
[Name of Transferee]
[Address]
(the "Transferee") all rights of the Transferor with respect to the
above-referenced Letter of Credit, including the right to draw under said Letter
of Credit in the Amount Available. Said Transferee has succeeded the Transferor
as Credit Facility Trustee under that certain Trust Indenture dated as of May 1,
1997 by and between the Maryland Industrial Development Financing Authority (the
"Issuer"), First Union National Bank of North Carolina as initial Trustee
thereunder and Branch Banking and Trust Company, as initial Credit Facility
Trustee thereunder (as amended or supplemented, the "Indenture"), all with
respect to the Maryland Industrial Development Financing Authority Economic
Development Revenue Bonds (Alcore, Inc. Facility)
A-G-1
<PAGE>
1996 Issue in the original principal amount of $2,600,000 (the "Bonds"), and has
complied with the provisions of the Indenture.
By virtue of this transfer, the Transferee shall have the sole rights
as beneficiary of said Letter of Credit, including sole rights relating to any
past or future amendments thereof, whether increases or extensions or otherwise.
All amendments are to be advised directly to the Transferee without necessity of
any consent of or notice to the Transferor.
By its signature below, the Transferee acknowledges that it has duly
succeeded the Transferor as Credit Facility Trustee pursuant to the Trust
Indenture.
The advice of such Letter of Credit is returned herewith, along with a
transfer fee of $1,000.00, and we ask you to endorse the transfer on the reverse
side thereof and to forward it directly to the Transferee with your customary
notice of transfer.
Very truly yours,
BRANCH BANKING AND TRUST
COMPANY, as Credit Facility Trustee
By:
Name:
Title:
(CORPORATE SEAL)
Acknowledged by:
[Insert name of Transferee]
By:
[insert name and title of
authorized officer]
A-G-2
<PAGE>
(CORPORATE SEAL)
A-G-3
<PAGE>
EXHIBIT B
---------
Opinion of
Borrower's Counsel
May __, 1997
Maryland Industrial Development
Financing Authority
Baltimore, Maryland
Harford County, Maryland
Bel Air, Maryland 21014
First Union National Bank
of Virginia, as Trustee,
Richmond, Virginia
First Union National Bank
of North Carolina,
as Letter of Credit Bank,
as Placement Agent,
as Remarketing Agent and
as Hedge Counterparty
Branch Banking and Trust Company,
as Credit Facility Trustee
Wilson, North Carolina
First Union National Bank of Maryland
as Secured Party
Baltimore, Maryland
Ladies and Gentlemen:
We have acted as special counsel to Alcore, Inc. a Delaware
corporation (the "Borrower"), and Lunn Industries, Inc., a Delaware corporation
(the "Guarantor"), in connection
<PAGE>
with: (a) the issuance and sale on the date hereof by Maryland Industrial
Development Financing Authority (the "Issuer") of the Issuer's $2,600,000
Economic Development Revenue Bonds (Alcore, Inc. Facility) 1997 Issue (the
"Bonds"), and the loan of the proceeds of the Bonds by the Issuer to the
Borrower; and (b) the issuance on the date hereof by First Union National Bank
of North Carolina (in such capacity, the "Bank") of its Irrevocable Letter of
Credit of even date herewith (the "Letter of Credit") to Branch Banking and
Trust Company (the "Credit Facility Trustee"), as security for the payment of
the principal of and interest on and the purchase price of the Bonds.
In our capacity as counsel to the Borrower, we have examined
the following:
1. The Trust Indenture dated as of May 1, 1997 by and among
the Issuer, First Union National Bank of Virginia (the "Trustee") and the Credit
Facility Trustee.
2. The Loan Agreement dated as of May 1, 1997 (the "Loan
Agreement") by and between the Issuer and the Borrower.
3. The Letter of Credit.
4. The Letter of Credit and Reimbursement Agreement dated as
of May 1, 1997 (the "Reimbursement Agreement") by and between the Bank and the
Borrower.
5. The Placement Letter Agreement dated as of May 1, 1997 (the
"Placement Letter Agreement") by and among First Union National Bank of North
Carolina, as Placement Agent, the Issuer and the Borrower.
6. The Remarketing Agreement dated as, of May 1, 1997 (the
"Remarketing Agreement"), by and between First Union National Bank of North
Carolina, as Remarketing Agent, and the Borrower.
7. The Deed of Trust and Security Agreement dated as of May 1,
1997 (the "Deed of Trust") executed by the Borrower in favor of Robert E.
Linthicum and Louis E. Flori, as Trustees with respect to the real property and
improvements thereto located at 1324 and 1326 Brass Mill Road, Belcamp, Maryland
21017 (the "Facility").
8. The Guaranty Agreement dated as of May 1, 1997 (the
"Guaranty") executed by the Borrower in favor of the Bank and First Union
National Bank of Maryland, in its capacity as hedge counterparty (the "Hedge
Counterparty").
<PAGE>
9. The Security Agreement dated as of May 1, 1997 (the
"Security Agreement") executed by the Borrower and the Guarantor in favor of the
Bank, the Issuer and the Hedge Counterparty.
10. The Financing Statement naming the Issuer as Debtor and
the Credit Facility Trustee and the Trustee as Secured Parties.
11. The Financing Statement naming the Borrower and the
Guarantor as Debtor, naming the Issuer, the Bank, the Hedge Counterparty and
First Union National Bank of Maryland, in its capacity as lender under an
existing line of credit (FUNBMD") as Secured Parties, and naming the Trustee,
the Credit Facility Trustee and the Bank as Assignees (the "Financing
Statement").
12. The Pledge Agreement dated as of May 1, 1997 (the "Pledge
Agreement") by and between the Borrower and the Letter of Credit Bank.
13. The Tender Agency Agreement dated as of May 1, 1997 (the
"Tender Agency Agreement") by and between the Borrower and the Letter of Credit
Bank, in its capacity as Tender Agent.
14. The Intercreditor Agreement dated as of May 1, 1997 (the
"Intercreditor Agreement") by and among the Issuer, the Trustee, the Credit
Facility Trustee, the Borrower, the Bank, the Hedge Counterparty and FUNBMD.
15. The Borrower's Tax Certificate and Compliance Agreement of
even date herewith executed all delivered by the Borrower (the "Compliance
Agreement").
16. Such other laws, records, documents, certificates,
opinions and instruments as we deem necessary in order to render this opinion.
17. The certificate of incorporation and by-laws of the
Borrower, applicable resolutions of the Board of Directors of the Borrower, a
certificate of good standing with respect to the Borrower issued by the
Secretary of State of the State of Delaware and a certificate of good standing
issued by the Maryland State Department of Assessments and Taxation
(collectively, the "Borrower's Governing Documents").
18. The certificate of incorporation and by-laws of the
Guarantor, applicable resolutions of the Board of Directors of the Guarantor,
and a certificate of good standing with respect to the Guarantor issued by the
Secretary of State of the State of Delaware (collectively, the "Guarantor's
Governing Documents").
<PAGE>
The Loan Agreement, the Reimbursement Agreement, the
Remarketing Agreement, the Placement Letter Agreement, the Deed of Trust, the
Security Agreement, the Guaranty, the Financing Statement, the Pledge Agreement,
the Tender Agency Agreement, the Intercreditor Agreement, the Compliance
Agreement, the Subordination Agreement and are hereinafter sometimes
collectively referred to as the "Documents".
We have also examined and relied upon the original or copies
(certified or otherwise identified to our satisfaction) of such records,
documents, instruments and certificates, and have made such other
investigations, as in our judgment are necessary to enable us to render the
opinions expressed below.
We also have reviewed the opinion of even date rendered by
Muenz & Meritz, P.C., Dix Hills, New York, in connection with the transactions
contemplated by the Documents, upon which opinion we have exclusively relied, as
to the opinions expressed therein, in rendering the opinion expressed below.
As to various questions of fact material to our opinion, we
have relied upon the representations and warranties made by the Borrower and the
Guarantor in the Documents and upon certain other certifications of facts made
by the Borrower, upon which representations, warranties and certifications we
believe we are justified in relying. We have discussed such representations and
warranties with officers of the Borrower and Guarantor, and we have no actual
knowledge of any matters contrary to such representations and warranties.
In basing the opinions and other matters set forth herein on
"our knowledge," the words "our knowledge" signify that, in the course of our
representation of the Borrower and the Guarantor in matters for which the
Borrower and the Guarantor have engaged us as counsel, no information has come
to our attention that would give us actual knowledge or actual notice that any
such opinions or other matters are inaccurate or that any of the documents,
representations, warranties and certifications on which we have relied are
inaccurate and incomplete. Except as otherwise stated herein, we have undertaken
no independent investigation or verification of such matters. We intend to limit
the words "our knowledge" and similar language used herein to the knowledge of
the lawyers within our firm who have worked on matters for the Borrower and the
Guarantor.
In reaching the opinions set forth below, we have assumed, and
to our knowledge, there are no facts inconsistent with, the following:
(a) Each of the parties thereto (other than the Borrower and
the Guarantor) has duly and validly executed and delivered each instrument,
document and agreement executed in connection with the transactions contemplated
in the Documents to which such party is a
<PAGE>
signatory, and such party's obligations set forth therein are its legal, valid
and binding obligations, enforceable in accordance with their respective terms.
(b) Each person executing any such instrument, document or
agreement on behalf of any such party (other than the Borrower and the
Guarantor) is duly authorized to do so.
(c) Each natural person executing any such instrument,
document or agreement is legally competent to do so.
(d) There are no oral or written modifications of, or
amendments to, the Documents, and there has been no waiver of any of the
provisions of the Documents by actions or conduct of the parties or otherwise.
(e) As to due recordation of the Deed of Trust and the
existence or priority of the lien of the Deed of Trust, and all other matters of
title, you are relying upon the title insurance commitment issued by
Commonwealth Land Title Insurance Company (the "Title Company") and upon the
judgment and lien searches conducted by _________ dated __________, 1997 (the
"Search Report");
(f) All documents submitted to us as originals are authentic,
all documents submitted to us as certified or photostatic copies conform to the
original document, all signatures (other than the Borrower's and the
Guarantor's) on all documents submitted to us for examination are genuine, all
notarizations on all documents are legal and valid, and all public records
reviewed are accurate and complete.
(g) All descriptions of property in which a security interest
subject to the Maryland Uniform Commercial Code is intended to be created under
the Documents, as contained in the Documents, reasonably identify the property
described or intended to be described, and the Borrower and the Guarantor have
or will have rights in such property within the meaning of Section 9-203(l)(c)
of the Maryland Uniform Commercial Code.
(h) Valid consideration has been given to the Borrower and to
the Guarantor for the execution, delivery and performance by the Borrower of the
Documents, and for the execution, delivery and performance by the Guarantor of
the Documents to which the Guarantor is a party.
Based upon the foregoing and subject to the assumptions
exceptions, qualifications and limitations set forth herein, it is our opinion,
as of the date hereof, that:
<PAGE>
(1) The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
authorized to transact business in the State of Maryland.
(2) The Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(3) The Borrower and Guarantor have full right, power and
authority to own their respective properties, to carry on their respective
businesses, to execute and deliver the Documents to which each of them is a
party, and to perform all of their respective obligations thereunder. The
Borrower and the Guarantor have all powers, governmental licenses,
authorizations, consents and approvals which are material to the operation of
their respective businesses.
(4) The Documents to which the Borrower is a party have been
duly authorized, executed and delivered by the Borrower and constitute valid and
legally binding obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms.
(5) The Guaranty and each of the other Documents to which the
Guarantor is a party have been duly authorized, executed and delivered by the
Guarantor and constitute valid and legally binding obligations of Guarantor,
enforceable against Guarantor in accordance with their terms.
(6) To our knowledge, no approval, consent, order,
authorization, permit, license or exemption of, or registration, declaration or
filing with, any federal, state or local governmental, regulatory or public
agency, authority or court is required in connection with the execution and
delivery by the Borrower and the Guarantor of the Documents to which each of
them is a party.
(7) The execution and delivery of the Documents to which the
Borrower is a party do not, and performance by the Borrower of its obligations
thereunder will not, violate, conflict with or constitute a default under (i)
any provision of the Borrower's Governing Documents, (ii) any provision of law,
rule or regulation or, to our actual knowledge, any order of any court or other
agency of government to which the Borrower is subject, or (iii) any indenture,
agreement or other instrument to which the Borrower is a party or by which it or
its property is bound and of which we have actual knowledge. The execution and
delivery of, and performance by the Borrower of its obligations under, the
Documents to which the Borrower is a party will not result in the creation or
imposition of any lien, charge or encumbrance of any nature, other than the
liens by the Documents.
<PAGE>
(8) The execution and delivery of the Guaranty and each of the
other Documents to which the Guarantor is a party does not, and performance by
the Guarantor of its obligations thereunder will not, violate, conflict with or
constitute a default under (i) any provision of the Guarantor's Governing
Documents, (ii) any provision of law, rule or regulation or, to our actual
knowledge, any order of any court or other agency of government to which the
Guarantor is subject, or (iii) any indenture, agreement or other instrument to
which the Guarantor is a party or by which it or its property is bound and of
which we have actual knowledge. The execution and delivery of, and performance
by the Guarantor of its obligations under, the Guaranty and each of the other
Documents to which the Guarantor is a party will not result in the creation or
imposition of any lien, charge or encumbrance of any nature, other than the
liens created by the Documents.
(9) To our knowledge, based upon the Search Report and
representations made to us by officers of the Borrower and the Guarantor, there
is no action, suit, proceeding or investigation at law or in equity by or before
any court, governmental instrumentality or other agency now pending or
threatened in writing against the Borrower or the Guarantor or any of the
Borrower's or the Guarantor's properties or rights which, if determined
adversely to the Borrower or the Guarantor, would impair or materially affect
(i) the Borrower's or the Guarantor's right to carry on its business
substantially as now conducted, (ii) the value of the collateral securing the
Borrower's or the Guarantor's obligations under the Documents, (iii) the
Borrower's or the Guarantor's ability to carry out its obligations under the
Documents to which it is a party, or (iv) the validity or enforceability of each
of the Documents executed by the Borrower or the Guarantor. To our knowledge,
neither the Borrower nor the Guarantor is in default with respect to any order,
judgment, writ, injunction, decree or demand of any court or governmental
authority.
(10) The Financing Statement is in proper form for filing with
the Maryland State Department of Assessments and Taxation and among the Land
Records of Harford County, Maryland. Upon the proper filing of the Financing
Statement, there will have been created under the Documents, and the Borrower
and the Guarantor will have granted to the Issuer, the Bank, the Hedge
Counterparty and FUNBMD, a valid perfected security interest in and upon the
property described in the Financing Statement, but only to the extent that a
security interest may be perfected in such property by filing under the Maryland
Uniform Commercial Code.
(11) The Deed of Trust is in proper form for recording among
the Land Records of Harford County, Maryland. Upon the proper recording of the
Deed of Trust among such Land Records, there will have been created under the
Deed of Trust, and the Borrower will have granted to the Trustees named therein,
a valid and enforceable perfected lien and security interest in and upon the
real and personal property, respectively, described in the Deed of Trust, but
only to the extent that a lien or security interest, as the case may be, may be
perfected upon such real or personal property by filing among the Land Records
of Harford County, Maryland.
<PAGE>
The enforceability of the Documents may be subject to (a) the
exercise of judicial discretion in accordance with general principals of equity
(whether applied by a court of law or by a court of equity), which may limit the
availability of enforcement of certain remedies; (b) the valid exercise of the
constitutional powers of the United States of America and of the sovereign
police and taxing powers of state or other governmental units having
jurisdiction; and (c) bankruptcy, insolvency, reorganization, moratorium and
other similar laws heretofore or hereafter enacted affecting creditor's rights,
to the extent constitutionally applicable. Without limiting the generality of
the foregoing, under the Bankruptcy Reform Act of 1978, as amended, provisions
of the Documents, providing for acceleration of maturity in the event of
insolvency or bankruptcy may be invalid, and the rights and remedies of
acceleration and foreclosure, if any, under such circumstances may not be
enforceable.
Certain remedies and other provisions of the Documents may not
be enforceable; nevertheless, such unenforceability will not render the
Documents invalid as a whole or preclude (a) the judicial enforcement of the
obligation of the Borrower or the Guarantor to repay the amounts owing under the
Documents, together with interest thereon (to the extent not deemed a penalty),
as provided in the Documents, (b) the acceleration of the obligation of the
Borrower or the Guarantor to repay such principal, together with such interest,
upon a default by the Borrower or the Guarantor in the payment of such principal
or interest, and (c) the foreclosure in accordance with applicable law of the
liens and security interests created by the Documents upon maturity or upon the
acceleration pursuant to (b) above.
In addition to the qualifications and assumptions set forth
above, the opinions set forth herein are also subject to the following
qualifications:
(i) The provisions regarding the remedies available to any
party on default as set forth in the Documents are subject to certain procedural
requirements which, with regard to several of the remedies, are not reflected in
the Documents. These procedural requirements affect and may restrict rights and
remedies stated to be available to the parties to the Documents.
(ii) We express no opinion on the enforceability of the
self-help, non-judicial remedies provided in certain of the Documents, such as
those regarding the rights, without judicial process, upon default, to enter
upon, to take possession of, to collect, retain, use, or enjoy the rents,
issues, and profits from, and to manage any security subject to the liens and
security interests created by the Documents.
(iii) We express no opinion on the enforceability of any
provisions of the Documents that entitle any party thereto, as a matter of
right, to the appointment of a receiver after the occurrence of a default.
<PAGE>
(iv) We express no opinion on the enforceability of any
provisions of the Documents imposing increased interest rates and/or late
payment charges upon delinquency in payment or the occurrence of a default,
liquidated damages, or prepayment premiums, to the extent they are deemed to be
penalties or forfeitures.
(v) We express no opinion on the enforceability of any
provisions requiring any party to waive or alter procedural, judicial, or
substantive rights, such as rights to notice, right to a jury trial, statutes of
limitations, appraisal or valuation rights, and marshalling of assets, and other
such procedural, judicial or substantive rights.
(vi) We express no opinion on the enforceability of any
provisions permitting modifications of the Documents only if in writing.
(vii) We express no opinion on the enforceability of any
provision stating that the provisions of the Documents are severable.
(viii) We have not made or undertaken to make any
investigation of the state of title to any real property or any personal
property constituting security for the obligation of the Borrower or the
Guarantor under the Documents. We express no opinion concerning title to any
real property or any personal property, not do we express any opinion concerning
the existence of encumbrances upon any property (other than the creation by the
Documents of the lien and security interests insofar as described in the
opinions set forth in Paragraphs (9) and (10) above) or the priority of any
security interests or liens created by the Documents. It is our understanding
that, with regard to these matters, you are relying exclusively on the title
insurance commitment and title insurance policy issued by the Title Company and
upon financing statement record searches performed by others.
(ix) The enforceability of any instrument referred to herein
may be limited to the extent that remedies are sought for a breach that a court
concludes is immaterial or does not adversely affect the non-defaulting party.
(x) We express no opinion on the application of federal or
state securities laws to the transactions contemplated in the Documents.
(xi) The enforceability of any instrument referred to herein
may be limited by any unconscionable or inequitable conduct on the Issuer's, the
Trustee's, the Credit Facility Trustee's, the Bank's or FUNBMD's part, defenses
arising from the Issuer's, the Trustee's, the Credit Facility Trustee's, the
Bank's or FUNBMD's failure to act in accordance with the terms and conditions of
the Documents, defenses arising as a consequence of the passage of time or
defenses arising as a result of the Issuer's, the Trustee's the Credit Facility
Trustee's, the Bank's or FUNBMD's failure to act reasonably or in good faith.
<PAGE>
(xii) We express no opinion with respect to any security
interest created under any of the Documents which purport to secure any present
or future obligations or liabilities of the Borrower or the Guarantor (other
than the respective obligations and liabilities of the Borrower or the Guarantor
created or arising under the Documents) that are determined, in the case of
obligations or liabilities of the Borrower or of the Guarantor created in the
future, not to constitute "future advances" within the meaning of Section
9-204(3) of the Maryland Uniform Commercial Code, are determined not to have
been within the contemplation of the Borrower, the Issuer, the Trustee, the
Credit Facility Trustee, the Bank or FUNBMD at the time the Documents were
executed, or are determined not to be of the same character or class as the
respective obligations and liabilities of the Borrower or of the Guarantor to
the Issuer, the Trustee, the Credit Facility Trustee, the Bank or FUNBMD created
or arising under the Documents.
(xiii) We express no opinion with respect to compliance by the
Borrower with any law, order, rule or regulation relating to the development of
the Facility or the construction or operation of any improvements by the
Borrower on the Facility.
(xiv) We express no opinion with respect to any matters
affecting zoning, subdivision or other matters affecting the use, occupancy or
operation of the real property encumbered by the Deed of Trust, including
environmental laws.
(xv) We express no opinion as to the laws of any jurisdiction
other than the laws of the State of Maryland and the laws of the United States
of America, and we express no opinion as to the enforceability of any choice of
laws provisions contained in any of the Documents. As to matters of Delaware
law, we have relied upon the opinion of Muenz & Meritz, P.C., referred to above.
The opinion expressed herein concern only the effect of the laws (excluding the
principles of conflict of laws) of the State of Maryland and the United States
of America as currently in effect. We assume no obligation to supplement this
opinion if any applicable laws change after the date hereof or if we become
aware of any facts that might change the opinions expressed herein after the
date hereof. We call your attention to the fact that the Remarketing Agreement
provides that it is governed by the laws of the State of North Carolina and the
Interest Rate Swap Agreement that is governed by the State of New York.
This opinion letter is to be interpreted in accordance with
the report of the Special Joint Committee on Lawyers' Opinions in Commercial
Transactions of the Maryland State Bar Association, Inc. and The Bar Association
of Baltimore City dated January 18, 1989.
Except for legal advice and assistance to the Borrower in
connection with its preparation of information concerning the Borrower and the
Facility to be included in the Private Placement Memorandum dated May 15, 1997
with respect to the Bonds (the "Private Placement Memorandum"), we have not
participated in the preparation of the Private Placement
<PAGE>
Memorandum. To our knowledge, we believe that the statements and information
contained in the Private Placement Memorandum under the headings "USE OF
PROCEEDS," "THE FACILITY," and "LITIGATION" (to the extent that litigation
affecting the Borrower is described under that heading) and in Appendix A to the
Private Placement Memorandum do not contain any untrue statement of material
fact. We do not express any opinion or belief as to the accuracy or completeness
of any other statements or information contained in the Private Placement
Memorandum; however, nothing has come to our attention which would lead us to
believe that the Private Placement Memorandum contains any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (except that we express no opinion
about (a) the information concerning the validity and tax-exempt status of the
Bonds, (b) the information concerning the Bank or the Issuer, or (c) the
financial and statistical data contained in the Private Placement Memorandum).
No person or entity other than the addresses and their
respective counsel may rely on this opinion without our prior written consent.
Very truly yours,
<PAGE>
EXHIBIT C
[FORM OF BOND COUNSEL RELIANCE LETTER]
________, 1997
First Union National Bank of
North Carolina
One First Union Center, CORP-3
301 South College Street
Charlotte, North Carolina 28288
RE: Maryland Industrial Development Financing Authority
Economic Development Revenue Bonds
(Alcore, Inc. Facility)
1997 Issue in the principal amount of $2,600,000
------------------------------------------------
Ladies and Gentlemen:
Reference is made to the Trust Indenture dated as of May 1, 1997 between,
the Maryland Industrial Development Financing Authority (the "Issuer"), First
Union National Bank of Virginia, as Trustee, and Branch Banking and Trust
Company, as Credit Facility Trustee, pursuant to which the Maryland Industrial
Development Financing Authority Economic Development Revenue Bonds (Alcore,
Facility) 1997 Issue in the principal amount of $2,600,000 (the "Bonds") were
issued as of the date hereof.
Delivered herewith is a signed copy of our opinion of even date herewith
relating to the validity of the Bonds and to other matters as set forth therein.
Please be advised that you are entitled to rely upon such opinion as if such
opinion had also been addressed to you. Terms defined in such opinion are used
herein with the same meanings.
Very truly yours,
<PAGE>
Exhibit 10.6
The principal amount of $_____________
secured by this Security Agreement
is exempt from Recordation Tax
The balance of the principal amount
secured hereby ($___________) is subject to recordation tax.
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made as of May 1, 1997,
from ALCORE, INC., a Delaware corporation (the "Borrower"), and LUNN INDUSTRIES,
INC., a Delaware corporation (the "Guarantor") (the Borrower and the Guaran tor
being herein sometimes collectively called the "Grantor"), to FIRST UNION BANK
OF NORTH CAROLINA, a national banking association (the "Bank"), THE MARYLAND IN
DUSTRIAL DEVELOPMENT FINANCING AUTHORITY, a body corporate and politic and a
public instrumentality of the State of Maryland (the "Issuer"), and FIRST UNION
NATIONAL BANK OF MARYLAND in its capacity as the counterparty to the Hedge Agree
ment described herein (the "Hedge Counterparty") (the Bank, the Issuer and the
Hedge Counterparty being herein sometimes collectively called the "Secured
Parties"):
RECITALS
WHEREAS, pursuant to a Trust Indenture of even date herewith (as
amended, modified, supplemented or restated from time to time, the "Indenture")
between the Issuer, and First Union National Bank of Virginia, as Trustee, and
Branch Banking and Trust Company, as Credit Facility Trustee (collectively, in
such capacities, the "Bond Trustee"), the Issuer has issued and sold its
Maryland Industrial Development Financing Authority Economic Development Revenue
Bonds (Alcore, Inc. Facility) 1997 Issue in the original aggregate principal
amount of $2,600,000 (the "Bonds"). The proceeds of the sale of the Bonds will
be loaned (such loan of the proceeds of the Bonds being hereinafter referred to
as the "Loan") by the Issuer to the Borrower pursuant to a Loan Agreement of
even date herewith (as amended, modified, supplemented or restated from time to
time, the "Loan Agreement") between the Issuer and the Borrower, and used by the
Borrower to finance the acquisition of a certain facility to consist of and
include (a) the acquisition by the Borrower of two adjacent parcels of land
containing approximately 7.26 acres in the aggregate in the Riverside Business
Park at 1324 and 1326 Brass Mill Road in Belcamp, Harford County, Maryland,
together any and all improvements located thereon including, without limitation,
a building containing approximately 50,000 square feet (the "Building"), (b) the
renovation and expansion of such building to add approximately 15,000 square
feet (the "Addition"), (c) the acquisition and installation of certain necessary
and useful machinery and equipment as described in Exhibit A attached hereto and
made a part hereof, and (d) the acquisition of such other interests in land or
improvements as may be necessary or suitable for the foregoing, including roads
and rights of access, utilities and other necessary site
<PAGE>
preparation facilities, all of which shall be used by the Borrower in its
business of making honey comb aluminum products (such real property, Building,
Addition and equipment being herewith collectively referred to as the
"Facility").
WHEREAS, as used herein, the term "Bond Documents" means the Indenture,
the Loan Agreement, the Bonds, the Intercreditor Agreement (hereinafter defined)
and any other documents now or hereafter executed by the Issuer, the Bond
Trustee, the Borrower or any other party to evidence, secure or in connection
with, the Bonds, as the same may be amended, modi fied or supplemented from time
to time in accordance with their respective terms. As used herein, the term
"Bond Obligations" means the obligations of the Borrower (a) to pay the
principal of, premium (if any) and interest on the Loan, when and as the same
becomes due and payable, (b) to pay all other payments required by the Bond
Documents to be paid by the Borrower to the Issuer, to the Bank, to the Bond
Trustee or to others, when and as the same shall become due and pay able, and
(c) to timely perform, observe and comply with all of the terms, covenants,
conditions, stipulations, and agreements express or implied, which the Borrower
is required by any of the Bond Documents to perform or observe.
WHEREAS, in order to enhance the marketability of the Bonds, pursuant
to a Letter of Credit and Reimbursement Agreement of even date herewith (the
"Letter of Credit Agreement") by and between the Borrower and First Union
National Bank of North Carolina (the "Bank"), the Bank has agreed to issue to
the Bond Trustee an irrevocable direct pay letter of credit in the stated amount
of $2,704,000 (such letter of credit and all amendments and supplements thereto,
or any successor or substitute letter of credit issued by the Bank with respect
thereto being hereinafter called the "Letter of Credit").
WHEREAS, as used herein, the term "Letter of Credit Documents" means
the Letter of Credit, the Letter of Credit Agreement, the Guaranty (hereinafter
defined), a Deed of Trust of even date herewith executed by the Borrower
covering the Facility (the "Deed of Trust"), and any other documents now or
hereafter executed by the Borrower or any other party to evidence, secure or in
connection with, the Letter of Credit, as the same may be amended, modified or
supplemented from time to time in accordance with their respective terms. As
used herein, the term "Letter of Credit Obligations" means the obligations of
the Borrower and the Guarantor under the Letter of Credit Documents (a) to make
all payments required by the Letter of Credit Documents (including, without
limitation, the Guaranty), when and as the same become due and payable,
including without limitation, all drafts drawn under the Letter of Credit, and
(b) to timely perform, observe and comply with all of the terms, covenants,
conditions, stipulations and agreements, express or implied, which the Grantor
is required by the Letter of Credit Documents to observe or perform.
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<PAGE>
WHEREAS, the Borrower and the Hedge Counterparty have entered into an
ISDA Master Agreement dated April 17, 1997 but effective as of the date hereof
(the "Hedge Agreement") providing for an interest rate swap or other hedge
arrangement (the "Hedge") for the Loan (the Hedge Agreement and any other
documents now or hereafter executed in connection with the Hedge, including
without limitation any other "swap agreement", as defined in 11 U.S.C. 101
executed in substitution for the Hedge Agreement being hereinafter collectively
referred to as the "Hedge Documents"). As used herein, the term "Hedge
Obligations" means any and all obligations, whether absolute or contingent, now
or hereafter due or becoming due or owing by the Borrower and the Guarantor (if
any) to the Hedge Counterparty under the Hedge Documents.
WHEREAS, as conditions precedent to issuing the Letter of Credit and to
extending the Hedge, the Bank and the Hedge Counterparty have required, among
other things, that the Guarantor execute and deliver a Guaranty Agreement (as
amended, modified, supplemented and restated from time to time, the "Guaranty
Agreement") pursuant to which the Guarantor has guaranteed to the Bank and to
the Hedge Counterparty the Guarantor's prompt and timely payment and performance
of the Letter of Credit Obligations and the Hedge Obligations.
WHEREAS, pursuant to a Credit Agreement dated November 22, 1996 (the
"Revolving Credit Agreement") between First Union National Bank of Maryland
("FUNBMD") and the Grantor, FUNBMD extended a revolving line of credit to the
Grantor (the "Line of Credit"). The Revolving Credit Agreement and all other
documents executed and delivered to evidence or secure or in connection with the
Line of Credit are hereinafter referred to collectively as the "Revolving Credit
Documents", and the obligations of the Grantor under the Revolving Credit
Documents are hereinafter referred to as the "Revolving Credit Obligations". The
Revolving Credit Obligations are secured by the Collateral (hereinafter
defined), and it is the intention of the parties that the interests of the
Secured Parties in the Collateral under this Agreement be subject and
subordinate to the interests of FUNBMD in the Collateral under the Revolving
Credit Documents.
WHEREAS, as a condition precedent to the issuance of the Bonds, and the
issuance of the Letter of Credit and the extension of the Hedge, the Issuer, the
Bank and the Hedge Counterparty have required, among other things, that this
Security Agreement be executed and delivered to secure the full and punctual
payment of all of the following obligations (collectively, the "Obligations"):
(a) the Letter of Credit Obligations up to the principal amount of $2,704,000,
(b) the Bond Obligations up to the principal amount of $2,600,000, (c) the Hedge
Obligations up to the maximum notional principal amount of $220,000 and (d) all
present and future liabilities and obligations of the Grantor under the
provisions of this Agreement, including,
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<PAGE>
without limitation, all Enforcement Costs (hereinafter defined). The Bond
Documents, the Letter of Credit Documents and the Hedge Documents are
hereinafter sometimes collectively referred to as the "Financing Documents."
WHEREAS, as used herein, the term "Secured Parties" means (a) the
Issuer and its successors and assigns with respect to the Bond Obligations
(including, without limitation, the Bond Trustee and its successors and
assigns), and (b) the Bank and its successors and assigns with respect to the
Bond Obligations and the Letter of Credit Obligations, and (c) the Hedge
Counterparty with respect to the Hedge Obligations.
WHEREAS, the rights and remedies of the Secured Parties hereunder are
subject to the terms of the Intercreditor Agreement of even date herewith by and
among the Issuer, the Bond Trustee, the Grantor, the Bank, the Hedge
Counterparty, and FUNBMD (as the same may be supplemented or amended from time
to time, the "Intercreditor Agreement".
AGREEMENTS
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.1. Definitions. The terms defined in the Preamble and
Recitals hereto shall have the respective meanings specified therein, and the
following terms shall have the following meanings:
"Account Debtor" means any Person who is obligated on a Receivable or
for the purchase or lease of Inventory.
"Bond Documents" shall have the meaning given such term in the Recitals
of this Agreement.
"Bond Obligations" shall have the meaning given such term in the
Recitals of this Agreement.
"Collateral" has the meaning set forth in Section 2.1 hereof.
- 4 -
<PAGE>
"Collection Account" has the meaning specified in Section 4.8 hereof.
"Documents" means all now and hereafter existing documents, documents
of title or receipts covering, evidencing or representing any Inventory, goods
or other property both now and hereafter owned or purchased by the Grantor or
for which the Grantor has contracted to purchase.
"Enforcement Costs" means any and all funds, costs, expenses and
charges of any nature whatsoever (including, without limitation, reasonable
attorneys' fees and expenses) reasonably advanced, paid or incurred by or on
behalf of the Secured Parties under or in connection with the administration or
enforcement of this Agreement, including, without limitation, (a) the compliance
of the Grantor with any covenant, warranty, representation or agreement of the
Grantor made in or pursuant to this Agreement or any of the other Financing
Documents, (b) the collection or enforcement of any of the Obligations, this
Agreement and any of the other Financing Documents, and (c) the exercise,
preservation, maintenance, protection, operation, management, collection, sale
or other disposition of, or realization upon, all or any part of the Collateral,
the Security Interests and the rights and remedies of the Secured Parties
hereunder, under the other Financing Documents, under applicable law and
otherwise.
"Equipment" means, collectively, the Financed Equipment and the Other
Equipment.
"Event of Default" means an event which, with the giving of notice or
the lapse of time, or both, could or would constitute a Default under the
provisions of this Agreement.
"Financing Documents" shall have the meaning given such term in the
Recitals of this Agreement.
"Financed Equipment" means all equipment (as such term is defined by
the UCC), furnishings and fixtures of the Grantor acquired with proceeds of the
Loan, wherever located, as more particularly described in Exhibit A attached
hereto and made a part hereof, together with (a) all additions, parts, fittings,
accessories, special tools, attachments, and accessions now and hereafter
affixed thereto and/or used in connection therewith, and (b) all replacements
thereof and substitutions therefor.
"General Intangibles" means any and all of the following property of
the Grantor, both now and hereafter owned, acquired or existing and whether
arising by operation of law, agreement or otherwise: (a) all general intangibles
(as such term is defined by the UCC), contractual rights, causes of action,
judgments and awards, general and limited partnership interests, tax refunds and
any rights or claims with respect to taxes paid, all indebtedness,
- 5 -
<PAGE>
obligations and liabilities owing to the Grantor (other than Receivables and
other than any account not yet earned by performance and arising under a written
contract or agreement containing a provision prohibiting the assignment by
Grantor of such contract or agreement or any rights of Grantor thereunder) for
any reason and arising from any source whatsoever and all other transferable and
assignable intangible personal property of the Grantor of any kind and nature,
(b) all business records, data, mailing and customer lists, software, source
codes and rights thereto, inventions, blueprints, processes, designs, patents,
patent applications, patent licenses, trademarks and the goodwill of the
business of the Grantor relating thereto, trademark applications, trademark
licenses, service marks, service mark applications, service mark licenses, trade
names, trade secrets, goodwill, licenses, copyrights and all tangible property
embodying such copyrights, permits and franchises, together with right to sue
for any or all infringements of any of the foregoing, and (c) all rights in
respect of any pension plan or similar arrangement maintained for employees of
the Grantor.
"Hedge Counterparty" shall have the meaning given such term in the
Recitals of this Agreement.
"Hedge Obligations" shall have the meaning given such term in the
Recitals of this Agreement.
"Hedge Documents" shall have the meaning given such term in the
Recitals of this Agreement.
"Instruments" means any and all of the Grantor's instruments (as such
term is defined by the UCC) and, to the extent that the Grantor may assign
and/or grant a security interest therein pursuant to the terms thereof, chattel
paper (as such term is defined by the UCC) and letters of credit issued to or
for the benefit of the Grantor, both now and hereafter owned, existing or
acquired.
"Intercreditor Agreement" shall have the meaning given such term in the
Recitals of this Agreement.
"Inventory" means all inventory (as such term is defined by the UCC) of
Grantor, both now owned and hereafter acquired by the Grantor, wherever located
and as the same may now and hereafter from time to time be constituted,
including, without limitation, (a) all raw materials and other materials and
supplies, work-in-process and finished goods and any products made or processed
therefrom and all substances, if any, commingled therewith or added thereto, and
(b) all goods or property, the sale, lease or other disposition of which has
given rise to, or
- 6 -
<PAGE>
contributed to the creation of, a Receivable and which have been returned to,
repossessed, or stopped in transit by or on behalf of the Grantor.
"Letter of Credit Documents" shall have the meaning given such term in
the Recitals of this Agreement.
"Letter of Credit Obligations" shall have the meaning given such term
in the Recitals of this Agreement.
"Lien" means any mortgage, deed of trust, pledge, security interest,
assignment, encumbrance, judgment, lien, claim or charge of any kind in, on, of
or in respect of, any asset or property or any rights to any asset or property,
including, without limitation, (a) any interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to any such asset or property, and (b) the filing of, or any agreement
to give, any financing statement relating to any such asset or property under
the Uniform Commercial Code of any jurisdiction.
"Line of Credit" shall have the meaning given such term in the Recitals
of this Agreement.
"Obligations" means, collectively, the Letter of Credit Obligations,
the Bond Obligations and the Hedge Obligations, and shall include, without
limitation, the Enforcement Costs.
"Other Equipment" means all equipment (as such term is defined by the
UCC), furnishings and fixtures of the Grantor whether now owned or hereafter
acquired, wherever located (but excluding all Financed Equipment), together with
(a) all additions, parts, fittings, accessories, special tools, attachments, and
accessions now and hereafter affixed thereto and/or used in connection
therewith, and (b) all replacements thereof and substitutions therefor.
"Permitted Liens" means, with respect to the Collateral:
(a) The prior lien in favor of FUNBMD created pursuant to the
Revolving Credit Documents;
(b) Liens imposed by law securing the charges, claims, demands
or levies of carriers, warehousemen, mechanics and other like persons
which were incurred in the ordinary course of business which (i) do not
in the aggregate materially detract from the value of the property or
assets subject to such Lien or materially impair the use thereof in the
operation of the business of the Grantor, or (ii) are being contested
in good faith by appropriate proceedings, which proceedings have the
effect of preventing the forfeiture or sale of the property or assets
subject to such lien; and
- 7 -
<PAGE>
(c) Liens (other than any Liens imposed by ERISA (as defined
in the Letter of Credit Agreement) or pursuant to any Environmental Law
(as defined in the Letter of Credit Agreement)) not securing debt of
the Grantor or derivatives obligations of the Grantor incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory
obligations, surety bonds (other than appeal bonds), bids, leases,
government contracts, performance and return-of-money bonds and other
similar obligations incurred in the ordinary course of business.
(d) Any Lien created by the MICRF Documents (as defined in the
Letter of Credit Agreement), so long as it is subordinate to all Liens
created under this Agreement.
(e) Any Lien created by the County Documents (as defined in
the Letter of Credit Agreement) so long as it is subordinate to all
Liens created under this Agreement.
"Person" means and includes an individual, a corporation, a
partnership, a joint venture, a trust, an unincorporated association, a
government or political subdivision or agency thereof, or any other entity.
"Prime Rate" means the floating and fluctuating per annum rate of
interest of the Bank at any time or from time to time established and declared
by the Bank in its sole and absolute discretion as its prime rate. The Prime
Rate does not necessarily represent the lowest rate of interest charged by the
Bank to borrowers.
"Proceeds" means all cash and non-cash proceeds of, and all other
profits, rentals or receipts, in whatever form, arising from the collection,
sale, lease, exchange, assignment, licensing, or other disposition of, or
realization upon, any asset or property which constitutes Collateral, including
without limitation all claims of the Grantor against third parties for loss of,
damage to, or theft or destruction of, or for proceeds payable under, or
unearned premiums with respect to, policies of insurance covering any asset or
property which constitutes Collateral, any condemnation or requisition payments
with respect to any asset or property which constitutes Collateral, in each case
whether both now existing and hereafter arising, and all cash, checks, drafts
and instruments received or held for the benefit of the Secured Parties pursuant
to this Agreement or any of the Financing Documents.
"Receivable Rights" means (a) any and all present and future rights of
the Grantor in any goods and other property returned, repossessed or stopped in
transit, the sale, lease or other disposition of which gave rise to, or
contributed to the creation of, a Receivable,
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and (b) any and all now or hereafter existing letters of credit, guaranties,
claims, security interests or other Liens on property held by or granted to the
Grantor as security for the payment or performance of any or all of the
Receivables and all now or hereafter existing invoices, promissory notes,
guaranties, security agreements, mortgages, deeds of trust, leases and any and
all other instruments, agreements, documents and papers of any nature whatsoever
executed, delivered and/or furnished to or for the benefit of the Grantor
evidencing, securing, guarantying and/or in connection with any or all of the
Receivables.
"Receivables" means any and all present and future rights of the
Grantor to payment for, or monetary obligations owed to the Grantor on account
of, goods or other property sold, leased, or otherwise disposed of by the
Grantor, or for services rendered by the Grantor, or for loans or extensions of
credit granted or made by the Grantor, whether or not such rights or monetary
obligations have been earned by performance and whether due or to become due,
including, without limitation, any such rights or monetary obligations which are
evidenced by accounts, chattel paper, instruments, general intangibles, contract
rights, book debts, accounts receivable, open accounts, notes, notes receivable,
documents, drafts or any other contract, agreement or document, but excluding
any account not yet earned by performance and arising under a written contract
or agreement containing a provision prohibiting the assignment by Grantor of
such contract or agreement or any rights of Grantor thereunder.
"Records" has the meaning specified in Section 2.1 hereof.
"Revolving Credit Agreement" shall have the meaning given such term in
the Recitals of this Agreement.
"Revolving Credit Documents" shall have the meaning given such term in
the Recitals of this Agreement.
"Revolving Credit Obligations" shall have the meaning given such term
in the Recitals of this Agreement.
"Security Interests" means the security interests and other Liens in
the Collateral granted hereunder.
"Secured Parties" shall have the meaning given such term in the
Recitals of this Agreement.
"UCC" means the Uniform Commercial Code as in effect on the date hereof
in the State of Maryland.
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SECTION 1.2. Rules of Construction. Unless otherwise defined herein and
unless the context otherwise requires, all terms used herein which are defined
by the UCC shall have the same meanings assigned to them by the UCC unless and
to the extent varied by this Agreement. The words "hereof", "herein", and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and section, subsection, schedule, and exhibit references are
references to sections or subsections of, or schedules or exhibits to, as the
case may be, this Agreement unless otherwise specified. As used herein, the
singular number shall include the plural, the plural the singular, and the use
of the masculine, feminine or neuter gender shall include all genders, as the
context may require.
ARTICLE II
THE COLLATERAL
SECTION 2.1. The Security Interests. In order to secure the full and
punctual payment of the Obligations in accordance with the terms thereof, and to
secure the performance of this Agreement and the other Financing Documents, the
Grantor hereby pledges, assigns and grants to the Secured Parties a continuing
lien and security interest in and to all of the following property of the
Grantor, both now owned and existing, and hereafter created, acquired and
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arising, and regardless of where located (all such property being herein
collectively referred to as the "Collateral"), together with all right, title
and interest of the Grantor in and to the Collateral:
(a) Receivables and Receivable Rights;
(b) Inventory;
(c) General Intangibles;
(d) Documents;
(e) Instruments;
(f) Equipment;
(g) The Collection Account, all cash deposited therein from time to
time and other monies and property of any kind of the Grantor in the possession
or under the control of the Bank;
(h) All correspondence, agreements, documents, papers, books, files,
records and other transcribed information of any type, whether expressed in
ordinary, machine or computer language pertaining to the Grantor's business or
to and any of the Collateral described in clauses a through g hereof (all being
collectively referred to as the "Records") including, without limitation,
customer lists, credit files, computer programs, computer software, computer
source codes, disks, tapes, printouts and other materials; and
(i) All cash and non-cash Proceeds and products of all or any of the
Collateral described in clauses (a) through (h) hereof.
SECTION 2.2. Security Interests as Security Only. The Security
Interests are granted as security only and shall not subject the Secured Parties
to, or transfer or in any way affect or modify, any obligation or liability of
the Grantor with respect to any of the Collateral or any transaction in
connection therewith.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
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The Grantor represents and warrants to the Secured Parties that the
following statements are true, correct and complete:
SECTION 3.1. Title and Authority. The Grantor is the owner of, and has
rights in and good and marketable title to the Collateral. The Grantor has full
power and authority to grant the Security Interests to the Secured Parties in
the Collateral pursuant hereto and to execute, deliver and perform its
obligations in accordance with the terms of this Agreement without the consent
or approval of any Person other than any consent or approval which has been
obtained. The Collateral is free and clear of any Liens other than Permitted
Liens, is not on consignment, and if acquired from a Person in a sale
transaction, such Person's primary and customary business to the best of the
Grantor's knowledge is the sale of such Collateral in the ordinary course of
business.
SECTION 3.2. Names and Locations. The correct legal name of the Grantor
is that specified on the signature page of this Agreement and the Grantor has
conducted its business under such legal name for more than twelve (12) years.
The chief executive office of the Borrower and the place where its Records are
kept as of the date hereof is 1324 Brass Mill Road, Belcamp, Harford County,
Maryland 21017. The only other location at which the Borrower conducts business
or keeps any of the Collateral is 8280 Patuxent Range Road, Jessup, Howard
County, Maryland 20794. The chief executive office of the Guarantor and the
place where its records are kept is 1 Garvies Point Road, Glen Cove, New York
11542-2828.
SECTION 3.3. Equipment Not Fixtures. All Equipment is personalty and is
not and will not be affixed to real estate in such a manner as to become a
fixture and a part of such real estate.
SECTION 3.4. Survival. All representations and warranties contained in
or made under or in connection with this Agreement (a) shall survive the
execution, delivery and performance of this Agreement, and (b) shall be true,
correct and complete at all times during which any of the obligations (or
commitments therefor) are outstanding with the same effect as if such
representations and warranties had been made at such times.
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ARTICLE IV
COVENANTS OF BORROWER
The Grantor covenants and agrees with the Secured Parties as follows:
SECTION 4.1. Title, Liens and Taxes. The Grantor shall, at its cost and
expense, take any and all actions necessary to defend its title to the
Collateral against all Persons and to defend the Security Interests of the
Secured Parties in the Collateral and the priority (or intended priority)
thereof, against any adverse Lien of any nature whatsoever except Permitted
Liens. Except to the extent contested in good faith, the Grantor will pay all
taxes and assessments levied or placed on the Collateral prior to the date when
any interest or penalty would accrue for the nonpayment thereof.
SECTION 4.2. Further Assurances. The Grantor shall, from time to time,
and at its expense, take any action, and execute, deliver, acknowledge, and
cause to be duly filed, recorded or registered, any statement, assignment,
instrument, paper, agreement or other document and take any other action that
from time to time may be necessary or desirable, or that the Secured Parties may
reasonably request, in order to create, preserve, continue, perfect, confirm or
validate the Security Interests or to enable the Secured Parties to obtain the
full benefits of this Agreement or to exercise and enforce any of its rights,
powers and remedies hereunder. The Grantor shall pay all costs of, and
incidental to, the filing, recording or registration of any such document as
well as any recordation, transfer or other tax required to be paid in connection
with any such filing, recordation or registration. The Grantor hereby covenants
to save harmless and indemnify the Secured Parties from and against any
liability resulting from the failure to pay any required documentary stamps,
recordation and transfer taxes and recording costs incurred by the Secured
Parties in connection with this Agreement which covenant shall survive the
termination of this Agreement and the payment of the Obligations.
SECTION 4.3. Change of Name, Location, Etc., The Grantor will not (a)
change its legal name, identity or structure, (b) change the location of its
chief executive office or its chief place of business, (c) change the location
where it keeps its Records concerning the Collateral, (d) change the location of
any Collateral, or (e) open a new place of business, unless it shall have given
the Secured Parties prior written notice thereof and shall at its own cost and
expense have executed, delivered, acknowledged, filed, recorded or registered
all financing statements and other documents as may be required by the Secured
Parties in order to create, perfect, continue, preserve, confirm or validate the
Security Interests and their priority; provided, that the Grantor shall not in
any event change the location of any Collateral if such change would
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cause the Security Interests (or the perfection thereof) to lapse, or if
required to be perfected prior to such change, to cease to be perfected.
SECTION 4.4. Records, Inspection and Verification. The Grantor shall
keep full and accurate books and records relating to the Collateral, and stamp
or otherwise mark such books and records and, where appropriate, the Collateral,
in such manner as the Secured Parties may reasonably require in order to reflect
the Security Interests. Upon request of the Secured Parties, the Grantor shall
furnish to the Secured Parties in form and content reasonably required by the
Secured Parties an aging statement of Receivables, a schedule of Inventory
itemizing and describing the type, current value and location of Inventory, a
schedule of Equipment itemizing and describing the type, current value and
location of Equipment and such other information and data concerning the
Collateral as the Secured Parties may from time to time reasonably specify.
Promptly upon request by the Secured Parties, the Grantor will execute and
deliver to the Secured Parties written collateral assignments and/or
endorsements, in form and content reasonably satisfactory to the Secured
Parties, of specific Receivables, but the Security Interests of the Secured
Parties hereunder shall not be limited in any way by such assignment or
endorsement. Such Receivables are to secure payment and performance of the
Obligations and are not sold to the Secured Parties whether or not any
assignment thereof which is separate from this Agreement is in form absolute.
The Secured Parties and such Persons as the Secured Parties may reasonably
designate, shall have the right, at any reasonable time or times after
reasonable notice if no Event of Default shall have occurred, (a) to enter any
business premises of the Grantor or any other premises where the Collateral and
the Records may be located and to audit, appraise, examine and inspect the
Collateral and all Records related thereto and to make extracts therefrom and
copies thereof, (b) to discuss the affairs of the Grantor with officers and
independent accountants of the Grantor, and (c) to verify under reasonable
procedures the validity, amount, quality, quantity, value and condition of, and
any other matter relating to, the Collateral, including (following the
occurrence of an Event of Default hereunder, and so long as such Event of
Default is continuing) contacting Account Debtors or any Person possessing any
of the Collateral.
SECTION 4.5. Insurance. The Grantor shall, at the expense of the
Grantor, keep the insurable Collateral at all times insured against loss or
damage from such risks and casualties and in such amounts as may be required by
the Secured Parties. Such insurance shall be with insurance companies, and upon
insurance policy forms, reasonably acceptable to the Secured Parties. The
Grantor shall pay all premiums on such policies when due and, upon request,
shall furnish to each Secured Party evidence of payment of such premiums, and
such mortgagee, additional insured or loss-payee endorsements in favor of each
Secured Party of such policies as each Secured Party may require. The Grantor
shall immediately notify each Secured Party in writing of any cancellation or
change of any such policy and of any loss believed to be covered by any such
policy. Each Secured Party is hereby irrevocably authorized as the
attorney-in-fact of
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the Grantor, with power of substitution, to negotiate, adjust, settle or
compromise in their names or in the name of the Grantor all losses covered by
such policies and any amounts received on account of any such losses shall be
applied in the manner set forth in the Letter of Credit Agreement.
SECTION 4.6. Care, Use and Protection of Collateral. The Grantor will
keep and maintain the Collateral in good working condition and repair and will
not do or permit anything to be done to the Collateral that may impair its value
or that will violate the terms of any insurance covering the Collateral. The
Grantor shall promptly notify the Secured Parties of any event causing
deterioration, loss or depreciation in value of any substantial portion of the
Collateral and the amount of such loss or depreciation (other than normal and
customary wear and tear). The Grantor shall perform, observe, and comply in all
material respects with all of the terms and provisions to be performed, observed
or complied with by it under each contract, agreement or obligation relating to
the Collateral. The Secured Parties shall have no duty to, and the Grantor
hereby releases the Secured Parties from, all claims for loss or damage caused
by the failure of the Secured Parties to, collect, protect, preserve, or enforce
any of the Collateral, or to preserve rights against Account Debtors and prior
parties to the Collateral. Without the prior written consent of the Secured
Parties, the Grantor will not sell, lease, assign, transfer, dispose of, pledge
or grant or permit a Lien to exist on, the Collateral except for Permitted Liens
and as otherwise permitted by this Agreement and the Financing Documents.
Notwithstanding the foregoing, so long as no Event of Default or Default has
occurred which is continuing, the Grantor may, in the ordinary course of
business, sell their Inventory and otherwise use the Collateral in any lawful
manner not inconsistent with the provisions of this Agreement and of the
Financing Documents, and may sell or dispose of Equipment if such Equipment is
replaced with Equipment of equivalent or greater value provided that any such
sale or disposition of Equipment must first be approved by the Secured Parties.
Upon the occurrence of an Event of Default which is continuing, the Grantor may,
unless otherwise notified by the Secured Parties, sell their Inventory in the
ordinary course of business. Upon the request of the Secured Parties (following
the occurrence of an Event of Default and so long as such Event of Default is
continuing), the Grantor will immediately (a) deliver to the Secured Parties,
with all endorsements and assignments required by the Secured Parties, all
Records, agreements, Documents, Instruments, bills of sale, certificates of
title, certificates of origin and any other papers constituting, evidencing or
relating to any of the Collateral, and (b) notify any warehouseman, bailee or
other Person who is in possession or control of any of the Collateral to hold
such Collateral for the Secured Parties' account subject to the Secured Parties'
instructions.
SECTION 4.7. Modification of Receivables. Without the prior written
consent of the Secured Parties, the Grantor will not (a) permit or agree to any
extension of time for the payment of any Receivable, (b) agree to any
modification, compromise or settlement of any
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Receivable for less than the full amount, (c) release any Person obligated on a
Receivable, or (d) allow any credit or discount on a Receivable, other than
extensions, compromises, settlements, credits or discounts made in the ordinary
course of business.
SECTION 4.8. Collections. (a) Until the Grantor's authority to do so is
terminated by the Secured Parties pursuant to subsection (b) below, the Grantor
shall have the authority, and the Grantor agrees that at the Grantor's sole cost
and expense, and in accordance with the collection practices customary in the
Grantor's business, the Grantor shall enforce and collect payment of all amounts
due and payable on or with respect to Receivables and/or the sale or lease of
Inventory on the Secured Parties' behalf and for the Secured Parties' account as
the Secured Parties' property in trust for the Secured Parties, and the Grantor
agrees to use the proceeds of all such payments for the Grantor's general
business purposes so long as such use is not inconsistent with the provisions of
this Agreement or the Financing Documents.
(b) At any time upon or after the occurrence of an Event of Default and
so long as the same shall be continuing, the Secured Parties, in addition to any
other of their rights and remedies, may terminate the authority given to the
Grantor in subsection (a) above whereupon (i) the Secured Parties shall have the
right to notify and direct, and/or require the Grantor to notify and direct, all
Account Debtors to make all payments on or in respect of Receivables and/or the
sale or lease of Inventory directly to the Secured Parties for deposit into a
special banking account maintained by the Bank over which the Secured Parties
have exclusive dominion, control, and power of access and withdrawal (the
"Collection Account"), (ii) unless otherwise agreed by the Secured Parties, any
cash, checks, drafts, money orders, instruments or other remittances on or with
respect to Receivables and/or the sale or lease of Inventory received by the
Grantor shall be delivered to the Secured Parties within one day of receipt
thereof by the Grantor for deposit to the Collection Account in precisely the
form in which received, except for the addition thereto of the endorsement of
the Grantor where required for collection of any checks, drafts, money orders,
instruments or other remittances which endorsement the Grantor agrees to make,
and with respect thereto the Grantor hereby waives notice of presentment,
protest and non-payment, (iii) pending such deposit, the Grantor will not
commingle any such cash, checks, drafts, money orders, instruments or other
remittances with other funds or property, but will hold them separate and apart
and in trust for the Secured Parties subject to the Security Interests
hereunder, and (iv) the Bank shall have the right at any time and from time to
time, to apply funds held by it in the Collection Account to the payment of all
or any part of the Obligations, whether matured or unmatured, in such order and
manner as the Secured Parties may determine in their sole discretion.
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ARTICLE V
DEFAULT
The occurrence of any one or more of the following events shall
constitute a default under the provisions of this Agreement, and the term "Event
of Default" shall mean, whenever it is used in this Agreement, any one or more
of the following events:
SECTION 5.1. Payment of Obligations. If any of the Obligations are not
paid as and when due and payable in accordance with the provisions of this
Agreement and/or any of the other Financing Documents after giving effect to any
applicable cure or grace periods, if any;
SECTION 5.2. Perform, etc., Certain Provisions of this Agreement. The
failure of the Grantor to perform, observe or comply with any of the provisions
of Sections 4.1, 4.5 and 4.8 of this Agreement;
SECTION 5.3. Perform, etc. Other Provisions of This Agreement. The
failure of the Grantor to perform, observe or comply with any of the provisions
of this Agreement, other than those covered by Sections 5.1 and 5.2 above, and
such failure is not cured to the satisfaction of the Secured Parties within a
period of thirty (30) days after the date of written notice thereof by the
Secured Parties to the Grantor;
SECTION 5.4. Representations and Warranties. If any representation and
warranty contained herein or any statement or representation made in any
officer's certificate or any other information at any time given to the Secured
Parties by or on behalf of the Grantor, or otherwise furnished by or on behalf
of the Grantor in connection with this Agreement or any of the other Financing
Documents shall prove to be false or incorrect in any material respect on the
date as of which made; or
SECTION 5.5. Default under Other Financing Documents. The failure of
the Grantor to perform, observe or comply with any of the provisions of any of
the Financing Documents (other than this Agreement) to which the Grantor is a
party and such failure is not cured within applicable cure or grace periods, if
any, or if an "Event of Default" (as defined and described therein) occurs under
the provisions of any of the other Financing Documents (other than this
Agreement) which is not cured within applicable cure or grace periods, if any.
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ARTICLE VI
RIGHTS AND REMEDIES
SECTION 6.1. Rights and Remedies of the Secured Parties. Upon and after
the occurrence of an Event of Default, the Secured Parties, without notice or
demand other than as expressly provided for under the provisions of this
Agreement may exercise in any jurisdiction in which enforcement hereof is
sought, the following rights and remedies, in addition to the rights and
remedies available to the Secured Parties under the other provisions of this
Agreement and the other Financing Documents, the rights and remedies of a
secured party under the UCC and all other rights and remedies available to the
Secured Parties under applicable law, all such rights and remedies being
cumulative and enforceable alternatively, successively or concurrently:
(a) The Secured Parties shall have the right to take possession of the
Collateral, and for that purpose, so far as the Grantor may give authority
therefor, or to the extent permitted under applicable laws, the Secured Parties
shall have the right to enter upon any premises on which the Collateral or any
part thereof may be situated, to exclude the Grantor therefrom, and to remove
therefrom all or any of the Collateral without any liability for suit, action or
other proceeding, THE GRANTOR HEREBY WAIVING ANY AND ALL RIGHTS TO PRIOR NOTICE
AND TO JUDICIAL HEARING WITH RESPECT TO REPOSSESSION OF COLLATERAL, and the
Secured Parties shall have the right to require the Grantor, at the Grantor's
expense, to assemble and deliver all or any of the Collateral to such place or
places as the Secured Parties may designate.
(b) The Secured Parties shall have the right to operate, manage and
control all or any of the Collateral (including use of the Collateral and any
other property or assets of the Grantor in order to continue or complete
performance of the Grantor's obligations under any contracts of Grantor), or to
permit the Collateral or any portion thereof to remain idle, or to store the
same, and the Secured Parties shall have the right to collect all rents and
revenues therefrom, and to sell, lease or otherwise dispose of any or all of the
Collateral upon such terms and under such conditions as the Secured Parties, in
their sole discretion, may determine, and purchase or acquire any of the
Collateral at any such sale or other disposition, all to the extent permitted by
applicable law. Any purchaser or lessee of any of the Collateral so sold or
leased shall hold the property so sold or leased free from any claim or right of
the Grantor, and the Grantor hereby waives (to the extent permitted by law) all
rights of redemption, stay, or appraisal with respect thereto. The Secured
Parties and the Grantor agree that commercial reasonableness and good faith
require the Secured Parties to give to the Grantor no more than five (5) days
prior written notice of any public sale or other disposition of the Collateral,
or of the time after which any private sale or other disposition of the
Collateral is to be made.
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(c) The Secured Parties shall have the right, and the Grantor hereby
irrevocably designates and appoints the Secured Parties and their designees as
the attorney-in-fact of the Grantor, with power of substitution and with power
and authority in the Grantor's name, the name of the Secured Parties or
otherwise, and for the use and benefit of the Secured Parties (i) to notify
Account Debtors and other Persons obligated to make payments or other
remittances on or with respect to the Collateral to make such payments and other
remittances directly to the Secured Parties, (ii) to demand, collect, sue for,
take control of, compromise, settle, change the terms of, release, exchange,
substitute, extend, renew or otherwise deal with, the Collateral or any Account
Debtor or other Person obligated on or under the Collateral in any manner as the
Secured Parties may deem advisable, (iii) to remove any Records from any place
of business of the Grantor and, at the cost and expense of the Grantor, to make
use of any place of business of the Grantor as may be necessary or desirable to
administer, control, collect, sell or otherwise dispose of the Collateral, (iv)
to receive any checks, drafts, money orders or other instruments of payment
relating to any of the Collateral, and to endorse the Grantor's name thereon,
(v) to sign and send verifications of Receivables or other Collateral, and to
sign any proofs of claim or loss, (vi) to commence, prosecute or defend any
action, suit or proceeding relating to the Collateral, or relating to the
collection, enforcement or realization upon the Collateral, (vii) to receive,
open and dispose of all mail addressed to the Grantor, and to notify the postal
authorities to change the address for delivery of mail addressed to the Grantor
to such other address as the Secured Parties may designate, (viii) to adjust and
compromise any claims under insurance policies, and (ix) to use, sell, assign,
transfer, pledge, make any agreement with respect to, or otherwise to deal with
any or all of the Collateral, and to do all other acts and things necessary to
carry out this Agreement as though the Secured Parties were absolute owner of
the Collateral. This power of attorney, being coupled with an interest, is
irrevocable, and all acts by the Secured Parties and their designees pursuant to
this power of attorney are hereby ratified and confirmed by the Grantor. Neither
the Secured Parties nor any of their designees shall be liable for any acts of
commission or omission, nor for any error of judgment or mistake of fact or law,
other than for acts of actual fraud or negligence. The provisions of this
subsection shall not (a) be construed to require or obligate the Secured Parties
or any of their designees to take any action authorized hereunder, and any
action taken or any action not taken hereunder shall neither give rise to any
liability on the part of the Secured Parties or their designees, nor give rise
to any defense, claim, counterclaim or offset in favor of the Grantor, (b) be
construed to mean that the Secured Parties have assumed any of the obligations
of the Grantor under any instrument or agreement, and the Secured Parties shall
not be responsible in any way for the performance by the Grantor of any of the
obligations of the Grantor under any instrument or agreement, and (c) relieve
the Grantor of any of the Grantor's obligations hereunder, or in any way limit
the exercise by the Secured Parties of any other or further rights they may have
hereunder, under the other Financing Documents, by law or otherwise.
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SECTION 6.2. Application. The proceeds of any collection, sale, lease
or other disposition of all or any part of the Collateral coming into the
possession of the Secured Parties may be applied by the Secured Parties to any
of the Obligations, whether matured or unmatured, in such order and manner
(subject to the terms of the Intercreditor Agreement) as the Secured Parties may
determine in their sole discretion. If the proceeds of collection, sale, lease
or other disposition of the Collateral fail to fully satisfy the Obligations,
the Grantor or any other obligor on any of the unsatisfied Obligations shall
remain liable for any deficiency thereon.
SECTION 6.3. No Waiver, Etc. No failure or delay by the Secured Parties
to insist upon the strict performance of any term, condition, covenant or
agreement of this Agreement or of the other Financing Documents, and no failure
or delay by the Secured Parties to exercise any right, power or remedy
consequent upon a breach of any term, condition, covenant or agreement of this
Agreement or of the other Financing Documents, shall constitute a waiver of any
such term, condition, covenant or agreement or of any such breach, or shall
operate to preclude the Secured Parties from exercising any such right, power or
remedy at any later time or times. By accepting payment after the due date of
any amount payable under this Agreement or under any of the other Financing
Documents, the Secured Parties shall not be deemed to waive the right either to
require the prompt payment when due of all other amounts payable under this
Agreement or under any of the other Financing Documents, or to declare a Default
for failure to effect such prompt payment of any such other amount. The payment
by the Grantor or any other Person and the acceptance by the Secured Parties or
any other amount due and payable under the provisions of this Agreement or the
other Financing Documents at any time during which a Default exists shall not in
any way or manner be construed as a waiver of such Default by the Secured
Parties, and shall not preclude the Secured Parties from exercising any right of
power or remedy consequent upon such Default.
SECTION 6.4. Intercreditor Agreement. Notwithstanding anything herein
to the contrary, all rights and remedies of the Secured Parties hereunder are
subject to the terms and provisions of the Intercreditor Agreement. In the event
of any conflict between the terms and provisions of this Agreement and the terms
and provisions of the Intercreditor Agreement, the terms and provisions of the
Intercreditor Agreement shall control.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Course of Dealing: Amendment. No course of dealing between
the Secured Parties and the Grantor shall be effective to amend, modify or
change any provision
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of this Agreement, or any provision of the other Financing Documents. The
Secured Parties shall have the right at all times to enforce the provisions of
this Agreement and the other Financing Documents in strict accordance with the
provisions hereof and thereof, notwithstanding any conduct or custom on the part
of the Secured Parties in refraining from so doing at any time or times. The
failure of the Secured Parties at any time or times to strictly enforce its
rights in accordance with such provisions shall not be construed as having
either created a custom in any way or manner contrary to the specific provisions
of either this Agreement or the other Financing Documents, or of having in any
way or manner modified or waived the same. This Agreement may not be amended,
modified, or changed in any respect except by an agreement in writing signed by
the Secured Parties and the Grantor.
SECTION 7.2. Waiver of Default. The Secured Parties may, at any time
and from time to time, execute and deliver to the Grantor a written instrument
waiving, on such terms and conditions as the Secured Parties may specify in such
written instrument, any of the requirements of this Agreement, or any Event of
Default and its consequences, provided that any such waiver shall be subject to
such conditions, and shall be only for such period, as shall be specified in any
such instrument. In the case of any such waiver, the Grantor and the Secured
Parties shall be restored to their former positions prior to such Event of
Default or Default and shall have the same rights as they had hereunder. No such
waiver shall either extend to any subsequent or other Event of Default or
Default, or shall impair any right consequent thereto, and any such waiver shall
be effective only in the specific instance and for the specific purpose for
which given.
SECTION 7.3. Notices. All notices, requests and demands to or upon the
parties to this Agreement shall be deemed to have been given or made, when
delivered by hand, or when deposited in the mail, postage prepaid by registered
or certified mail, return receipt requested, addressed as follows or to such
other address as may be hereafter designated in writing by one party to the
others:
Borrower: Alcore, Inc.
1324 Brass Mill Road
Belcamp, Maryland 21017
Attention: Edward A. Kiley,
President/General Manager
With a
copy to: S. Nelson Weeks, Esquire
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<PAGE>
Ballard Spahr Andrews & Ingersoll
Suite 1900
300 East Lombard Street
Baltimore, Maryland 21201
Guarantor: Lunn Industries, Inc.
1 Garvies Point Road
Glen Cove, New York 11542-2828
Bank: First Union National Bank of North Carolina
Two First Union Center, T-7
Charlotte, North Carolina 28288
Attention: International Operations
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<PAGE>
Issuer: Maryland Industrial Development
Financing Authority
217 East Redwood Street, 22nd Floor
Baltimore, Maryland 21202
Attention: Executive Director
Hedge
Counterparty: First Union National Bank of Maryland
c/o First Union National Bank of North Carolina
1 First Union Center, DC-8
301 S. College Street
Charlotte, NC 28288-0601
Attention: Joseph Nenichka
except in cases where it is expressly herein provided that such notice, request
or demand is not effective until received by the party to whom it is addressed.
SECTION 7.4. Performance for Grantor. The Grantor hereby authorizes the
Secured Parties to, and the Secured Parties may, at any time and from time to
time, whether or not an Event of Default or Default exists, advance funds on
behalf of the Grantor in order to insure the Grantor's compliance with any
covenant, warranty, representation or agreement of the Grantor made in or
pursuant to this Agreement or any of the other Financing Documents, including,
without limitation (a) to continue or complete, or cause to be continued or
completed, the performance of the Grantor's obligations under any contracts or
other agreements, (b) to cover any overdrafts in any checking or other accounts
of the Grantor with the Bank, (c) to pay or discharge any insurance premiums for
insurance on or with respect to the Collateral, (d) to pay or discharge any
taxes, liens, security interests or other encumbrances on or with respect to the
Collateral except for Permitted Liens which are paid current and not past due,
and (e) to preserve, maintain or protect the Collateral and the Security
Interests; provided, however, that the Secured Parties are under no obligation
whatsoever to make any such advance(s) of funds on behalf of the Grantor, and
the making of any such advance(s) by the Secured Parties shall not constitute
the waiver of any Event of Default nor relieve the Grantor of any of its
obligations hereunder or under any of the other Financing Documents. All such
advances shall be a part of the Enforcement Costs and shall be included in the
Obligations secured hereby.
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<PAGE>
SECTION 7.5. Enforcement Costs. The Grantor shall pay to the Secured
Parties upon demand all Enforcement Costs, together with interest accruing
thereon from the date such Enforcement Costs are incurred or advanced until paid
in full at a per annum rate of interest equal at all times to the Bank's Prime
Rate as announced from time to time, plus four percent (4%) per annum.
Enforcement Costs together with interest thereon shall be included in the
Obligations secured hereby.
SECTION 7.6. Severability. If any provision hereof is invalid or
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(a) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Secured Parties in
order to carry out the intentions of the parties hereto as nearly as may be
possible, (b) the invalidity or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of such provision
in any other jurisdiction, and (c) the parties hereto shall endeavor in good
faith negotiations to replace the invalid or unenforceable provisions with valid
and enforceable provisions, the economic effect of which comes as close as
possible to that of the invalid or unenforceable provisions.
SECTION 7.7. Assignment. Without notice to, or the consent of, the
Grantor, the Secured Parties may sell, assign or transfer to any Person or
Persons (except for a competitor of the Grantor as reasonably determined by the
Secured Parties) all or any part of the Obligations, and in the event of any
such assignment, the Security Interests and rights and remedies of the Secured
Parties hereunder shall extend to, and vest in, any such assignee or assignees
who shall have the right to enforce the provisions of this Agreement as fully as
the Secured Parties, provided that the Secured Parties shall continue to have
the unimpaired right to enforce the provisions of this Agreement as to so much
of the Obligations that it has not sold, assigned or transferred. The Grantor
will fully cooperate with the Secured Parties in connection with any such
assignment, and will execute and deliver such consents and acceptances to any
such assignment, and such amendments to this Agreement as may be required, in
order to effect any such assignment (including, without limitation, the
appointment of the Secured Parties as agent for itself and all assignees).
SECTION 7.8. Survival. All representations, warranties and covenants
contained among the provisions of this Agreement shall survive the execution and
delivery of this Agreement and all other Financing Documents.
SECTION 7.9. Binding Effect. This Agreement shall be binding upon, and
shall inure to the benefit of, the Grantor and the Secured Parties, and their
respective personal representatives, successors and assigns, except that the
Grantor shall not have the right to assign
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<PAGE>
its rights hereunder, or any interest herein, without the prior written consent
of the Secured Parties.
SECTION 7.10. Continuing Agreement. This Agreement and the Security
Interests shall be continuing and binding on the Grantor regardless of how long
before or after the date hereof any of the Obligations were or are incurred.
This Agreement and the Security Interests shall terminate when all of the
Obligations have been indefeasibly paid in full and no commitments therefor are
outstanding, at which time the Secured Parties will execute and deliver to the
Grantor all proper Uniform Commercial Code termination statements and other
releases of the Collateral prepared by the Grantor which are reasonably
requested by the Grantor to evidence such termination.
SECTION 7.11. Applicable Law. This Agreement and the rights and
obligations of the parties hereunder shall be construed and interpreted in
accordance with the laws of the State of Maryland (including, without
limitation, conflict of laws), both in interpretation and performance.
SECTION 7.12. Duplicate Originals and Counterparts. This Agreement may
be executed in any number of duplicate originals or counterparts, each of which
duplicate originals or counterparts shall be deemed to be an original and all of
which duplicate originals or counterparts taken together shall constitute but
one and the same instrument.
SECTION 7.13. Exhibits and Schedules. Any exhibits and schedules
attached to this Agreement are an integral part hereof and are hereby
incorporated herein and included in the term "this Agreement".
SECTION 7.14. Headings. Article and Section headings in this Agreement
are included herein for convenience of reference only, shall not constitute a
part of this Agreement for any other purpose and shall not be deemed to affect
the meaning or construction of any of the provisions hereof.
SECTION 7.15. Lien Subordination. Notwithstanding anything herein to
the contrary:
(a) Financed Equipment: (i) the lien of the Hedge Documents (including
this Agreement) in and to the Financed Equipment is subordinate to the lien of
the Letter of Credit Documents in and to the Financed Equipment; (ii) the lien
of the Revolving Credit Documents (including this Agreement) in and to the
Financed Equipment is subordinate to the liens of the Letter of Credit
Documents; and (iii) the lien of the Letter of Credit Documents in and to the
Financed Equipment shall be deemed to be prior and senior to both the lien of
the Hedge
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<PAGE>
Documents in and to the Financed Equipment, and the lien of the Revolving Credit
Documents in and to the Financed Equipment; and
(b) Other Equipment. the lien of the Hedge Documents (including the
lien granted pursuant to this Security Agreement) in and to the Other Equipment
is subordinate to (i) the lien of the Letter of Credit Documents, and (ii) the
lien of the Revolving Credit Documents in and to the Other Equipment; (b) the
lien of the Letter of Credit Documents in and to the Other Equipment shall be
deemed to be prior and senior to the lien of the Hedge Documents in and to the
Collateral; and (c) the lien of the Revolving Credit Documents in and to the
Other Equipment shall be prior and senior to the lien of the Letter of Credit
Documents and the Hedge Documents.
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<PAGE>
IN WITNESS WHEREOF, the Grantor has executed and delivered this Agreement under
seal as of the day and year first written above.
ATTEST: ALCORE, INC.
By: (SEAL)
- ----------------------------- -----------------------------
[CORPORATE SEAL] Name: Edward A. Kiley
Title: President/General Manager
ATTEST: LUNN INDUSTRIES, INC.
By: (SEAL)
- ----------------------------- -----------------------------
[CORPORATE SEAL] Name: Alan W. Baldwin
Title: CEO and Chairman
List of Exhibits:
Exhibit A: Financed Equipment
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<PAGE>
EXHIBIT A
Financed Equipment
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