SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1997
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
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Commission file number 0-11877
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ELXSI CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 77-0151523
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
3600 Rio Vista Avenue, Suite A, Orlando, Florida 32805
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (407) 849-1090
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4209 Vineland Road, Suite J-1, Orlando, Florida 32811
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(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
On October 29, 1997, the registrant had outstanding 4,658,873 shares of Common
Stock, par value $0.001 per share.
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
ELXSI CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
A S S E T S
September 30, December 31,
1997 1996
------------ -----------
Unaudited
Current assets:
Cash - restricted $ 1,222 $ --
Accounts receivable, net 3,734 3,425
Inventories, net 10,521 11,017
Prepaid expenses and other current assets 340 234
Note receivable - related party 1,156 1,156
Deferred tax asset 1,725 1,142
----------- ---------
Total current assets 18,698 16,974
Property, buildings and equipment, net 28,984 27,677
Intangible assets, net 5,391 5,525
Deferred debt costs, net 128 76
Notes receivable - related party 2,909 6,759
Deferred tax asset - noncurrent 2,392 1,739
Other 810 728
----------- ---------
Total assets $ 59,312 $ 59,478
=========== =========
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
ELXSI CORPORATION
CONSOLIDATED BALANCE SHEETS (Continued)
(Dollars in Thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
1997 1996
------------- ------------
Unaudited
Current liabilities
Accounts payable $ 1,231 $ 3,266
Accrued expenses 5,002 4,649
Capital lease obligations - current 142 142
Current portion of long-term debt 185 268
------------- ------------
Total current liabilities 6,560 8,325
Capital lease obligations - non current 1,482 1,588
Long-term debt 13,930 18,706
Other liabilities 2,508 1,946
------------- ------------
Total liabilities 24,480 30,565
Commitments and contingencies -- --
Stockholders' equity:
Preferred stock, Series A Non-voting
Convertible, par value $0.002 per share
Authorized--5,000,000 shares
Issued and outstanding--none -- --
Common stock, par value $0.001 per share
Authorized--160,000,000 shares
Issued and outstanding--4,658,873 and
4,660,869 at September 30, 1997 and
December 31, 1996, respectively. 5 5
Additional paid-in capital 228,498 228,520
Accumulated deficit (193,489) (199,512)
Cumulative foreign currency translation
adjustment (182) (100)
------------- ------------
Total stockholders' equity 34,832 28,913
------------- ------------
Total liabilities and stockholders' equity $ 59,312 $ 59,478
============= ============
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
ELXSI CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 23,076 $ 21,242 $ 64,719 $ 62,727
Costs and expenses:
Cost of sales 18,017 16,993 50,993 50,920
Selling, general and administrative 2,031 1,814 5,854 5,446
Depreciation and amortization 798 681 2,372 2,036
----------- ----------- ----------- -----------
Operating income 2,230 1,754 5,500 4,325
Other income (expense):
Interest expense (299) (333) (1,103) (1,163)
Interest income 138 27 1,137 82
Other (expense) income (17) 34 (35) 20
----------- ----------- ----------- -----------
Income before income taxes 2,052 1,482 5,499 3,264
Benefit (provision) for income taxes 1,248 (167) 524 (396)
----------- ----------- ----------- -----------
Net income $ 3,300 $ 1,315 $ 6,023 $ 2,868
=========== =========== =========== ===========
Primary net income per common share $ 0.66 $ 0.27 $ 1.22 $ 0.57
=========== =========== =========== ===========
Fully diluted net income per common
share $ 0.64 $ 0.27 $ 1.18 $ 0.57
=========== =========== =========== ===========
Weighted average number of common
and common equivalent shares
Primary 5,038 4,994 4,919 5,055
=========== =========== =========== ===========
Fully Diluted 5,122 4,998 5,122 5,055
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
ELXSI CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
Additional Accum- Foreign
Common Stock Paid-In ulated Translation
Shares Dollars Capital Deficit Adjustment
------------- -------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Balance at December 31, 1996 $ 4,661 $ 5 $ 228,520 $ (199,512) $ (100)
Net income -- -- -- 6,023 --
Purchase and retirement of 2,000
share of Common Stock (2) -- (22) -- --
Foreign currency translation
adjustment -- -- -- -- (82)
------------- -------------- ------------- ------------- ------------
Balance at September 30, 1997 $ 4,659 $ 5 $ 228,498 $ (193,489) $ (182)
============= ============== ============= ============= ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
ELXSI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Nine Months Ended
September 30,
----------------------
1997 1996
---------- ---------
Cash flows provided by operating activities:
Net income $ 6,023 $ 2,868
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,372 2,036
Amortization of deferred debt costs 60 117
Amortization of debt discount -- --
Amortization of note receivable discount (725) 15
Other (82) (46)
(Increase) decrease in assets:
Accounts receivable (309) (23)
Inventories 496 (2,445)
Prepaid expenses and other current assets (106) 25
Deferred tax asset (1,236) --
Other (101) (268)
Increase (decrease) in liabilities:
Accounts payable (2,035) (750)
Accrued expenses 353 369
Other liabilities 562 375
---------- ---------
Net cash provided by operating activities $ 5,272 $ 2,273
---------- ---------
Cash flows used in investing activities:
Proceeds from sale of Abdow's Restaurant -- 1,075
Purchase of property, building and equipment (3,526) (2,301)
Issuance of note receivable - related party (2,000) --
Proceeds from note receivable - related party 6,575 --
---------- ---------
Net cash used in investing activities 1,049 (1,226)
---------- ---------
Cash flows used in financing activities:
Net repayment of long-term debt (7,359) (734)
Proceeds from industrial revenue bonds 2,500 --
Purchase of Common Stock (22) (181)
Payment of deferred debt costs (112) --
Principal payments of capital lease (106) (132)
---------- ---------
Net cash used in financing activities $ (5,099) $ (1,047)
---------- ---------
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
ELXSI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Dollars in Thousands)
(Unaudited)
Nine Months Ended September 30,
-------------------------------
1997 1996
---------- ---------
Increase in cash and cash equivalents $ 1,222 $ --
Cash and cash equivalents, beginning of period -- --
---------- ---------
Cash and cash equivalents, end of period $ 1,222 $ --
========== =========
Supplemental Disclosure of Cash Flow
Information
Cash paid during the period for
Income taxes $ 519 $ 526
Interest 926 1,001
The accompanying notes are an integral part of these consolidated financial
statements.
7
<PAGE>
ELXSI CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
(Unaudited)
Note 1. The Company
General. The information contained in this report is unaudited but, in
management's opinion, all adjustments necessary for a fair presentation have
been included and were of a normal and recurring nature. The results for the
three and nine months ended September 30, 1997 are not necessarily indicative of
results to be expected for the entire year. These financial statements and notes
should be read in conjunction with ELXSI Corporation's Annual Report on Form
10-K for the year ended December 31, 1996.
Prior to 1990, ELXSI Corporation (together with its subsidiaries, the "Company")
operated principally through its wholly-owned California subsidiary, ELXSI.
During that period, the principal business of ELXSI was the design, manufacture,
sale and support of minisupercomputers. In July 1989, the Company announced a
major restructuring of its computer operations. In September 1989, the Company
discontinued all computer operations.
On July 1, 1991, ELXSI acquired 30 Bickford's and 12 Howard Johnson's
restaurants, located in Massachusetts, Vermont, New Hampshire, Rhode Island and
Connecticut, from Marriott Family Restaurants, Inc.
Between 1992 and 1996, ELXSI sold six of its Howard Johnson's restaurants,
converted five others into Bickford's Restaurants, opened eight new Bickford's
restaurants, acquired 16 Abdow's Family Restaurants ("Abdow's"), converted nine
of the Abdow's into Bickford's restaurants, sold one Abdow's restaurant and
closed one Abdow's restaurant. During the first nine months of 1997, ELXSI
opened two new Bickford's restaurants. As of September 30, 1997, ELXSI operated
54 Bickford's, five Abdow's and one Howard Johnson's Restaurant (the
"Restaurants").
On October 30, 1992, ELXSI acquired Cues, Inc. of Orlando, Florida and its two
wholly owned subsidiaries Knopafex, Ltd., a Canadian company and Cues B.V., a
Dutch company, (together referred to as "Cues").
Cues is principally engaged in the manufacture and servicing of video inspection
and rehabilitation equipment for wastewater and drainage systems primarily for
governmental municipalities, service contractors and industrial users.
Note 2. Summary of Significant Accounting Polices
Adoption of New Accounting Standards. In February, 1997, the Financial
Accounting Standards Board issued Statement No. 128 "Earnings Per Share" ("SFAS
No. 128"), which replaces the presentation of primary EPS with basic EPS and
requires diluted EPS be presented for entities with complex capital structures.
This Statement is effective for fiscal periods ending after December 15, 1997
and early application is not permitted. Under SFAS No. 128 reporting
requirements, basic EPS on a pro forma basis would have been $0.71 and $1.29 per
share for the
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three and nine months ended September 30, 1997, respectively compared to $0.28
and $0.60 for the three and nine months ended September 30, 1996, respectively.
Under SFAS No. 128 reporting requirements, diluted EPS on a pro forma basis
would have been $0.65 and $1.22 per share for the three and nine months ended
September 30, 1997, respectively compared to $0.26 and $.57 for the three and
nine months ended September 30, 1996, respectively.
Note 3. Restricted Cash.
Industrial development bond proceeds (see Note 5) in excess of the purchase
price of the building and land and the portion of the transaction costs allowed
to be paid at closing from the bond proceeds are being held by a trustee
pursuant to a trust indenture between the Orange County Industrial Development
Authority (the "IDA") and a commercial bank, as trustee. As of September 30,
1997, the trustee held cash in the amount of $1,222,000, which is restricted for
use by Cues to building improvements and equipment expenditures within the
following three years. The funds are reflected as restricted cash in the
accompanying balance sheet and are invested in a money market mutual fund
pursuant to the trust indenture.
Note 4. Related Party Transactions
Transactions with Azimuth Corporation and Subsidiaries. On December 30, 1996,
ELXSI entered into a Recapitalization Agreement (the "Recapitalization
Agreement") with Azimuth Corporation ("Azimuth") and its three wholly-owned
subsidiaries: Contempo Design, Inc., Contempo Design West, Inc., and Delaware
Electro Industries, Inc. (collectively referred to as the "Azimuth
Subsidiaries"). Certain of the officers, directors and stockholders of Azimuth
and certain of the officers and directors of the Azimuth Subsidiaries' are
officers and directors of the Company. Under the Recapitalization Agreement,
ELXSI purchased from Bank of America Illinois ("BAI"), its lending bank, three
Azimuth Subsidiary revolving notes (the "Azimuth Subsidiary Notes" or "Notes")
which were scheduled to mature on December 31, 1996. The Notes had a combined
face value of $6,650,000 and were purchased by ELXSI at an $800,000 discount.
Under the Recapitalization Agreement, ELXSI received all contract rights and
obligations held by BAI in relation to the Notes and, as a result, became the
provider of a working capital line of credit for the Azimuth Subsidiaries, which
ELXSI increased to $9,650,000 and extended through June 30, 1998. The line of
credit was secured by an Azimuth guaranty and substantially all of the assets of
Azimuth and the Azimuth Subsidiaries.
On June 16, 1997, the Azimuth Subsidiaries prepaid all of the outstanding face
amount of the Notes due to ELXSI by utilizing the proceeds of a new line of
credit negotiated with a third party lender. The working capital line of credit
extended by ELXSI to the Azimuth Subsidiaries was terminated upon such
prepayment.
Transactions with Cadmus Corporation. On June 30, 1997, ELXSI loaned $2,000,000
to Cadmus Corporation ("Cadmus"). The loan, which is fully collateralized,
matures on June 30, 1999 and bears interest at 15%, payable quarterly in
arrears. ELXSI earned a 5%, or $100,000, closing fee, which will be amortized to
interest income utilizing the effective interest method over the life of the
loan. Cadmus will reimburse ELXSI for all costs incurred by ELXSI in making the
loan. Certain officers, directors and or shareholders of Cadmus are officers
and/or directors of the Company and/or ELXSI.
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<PAGE>
Effective June 30, 1997, the management agreement between Cadmus and ELXSI was
extended to at least June 30, 2005. Effective April 1, 1997 the management fee
was increased from $500,000 to $600,000 annually, with a provision that the fee
shall increase 5% on each anniversary of April 1, 1997.
Note 5. Long-Term Debt
On September 24, 1997, ELXSI completed the purchase of a building and land in
Orlando, Florida for $1,240,000. Financing for the purchase was provided by the
Orange County Industrial Development Authority (the "IDA"). The IDA issued a 15
year bond in the amount of $2,500,000, which was purchased by Bank of America
National Trust and Savings Association, formerly BAI. ELXSI will make 180 equal
monthly principal payments of approximately $14,000. Interest is paid monthly in
arrears initially at a taxable rate of either the Bank's reference rate or the
London Eurodollar rate plus 175 basis points. It is anticipated that on or near
January 1, 1998, the bonds will convert to tax-exempt status. Thereafter, ELXSI
will pay interest at approximately 64% of the taxable rate.
Also on September 24, 1997, ELXSI completed a second amendment to the existing
line of credit with Bank of America National Trust and Savings Association. The
second amendment provides for a non-amortizing line of credit in the amount of
$9,000,000, which replaces the previous line of credit extended by BAI. In
addition, the amendment provides for a $2,000,000 increase in the supplemental
line of credit facility from the existing outstanding balance of $5,100,000 to a
maximum balance of $7,100,000. The amendment requires monthly amortization of
the supplemental facility in the amount of approximately $118,000. The second
amendment also extends the termination date of the facility to June 30, 1999 and
modified certain financial covenants.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Forward-Looking Statements. This Quarterly Report on Form 10-Q contains
forward-looking statements, particularly with respect to the Management's
Discussion and Analysis of Financial Condition and Results of Operations.
Additional written or oral forward-looking statements may be made by the Company
from time to time, in filings with the Securities and Exchange Commission or
otherwise. Such forward-looking statements are within the meaning of that term
in Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Such statements may include, but not be limited to
projections of revenue, income, losses, cash flows, capital expenditures, plans
for future operations, financing needs or plans, plans relating to products or
services of the Company, estimates concerning the effects of litigation or other
disputes, as well as assumptions to any of the foregoing.
Forward-looking statement are inherently subject to risks and uncertainties,
some of which can not be predicted. Future events and actual results could
differ materially from those set forth in or underlying the forward looking
statements.
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<PAGE>
RESULTS OF OPERATIONS
The Company's 1997 and 1996 nine-month and third quarter revenues and expenses
result from the operation of ELXSI's Restaurant and Cues Divisions and the
Company's corporate ("Corporate") expenses.
COMPARISON OF FIRST NINE MONTH 1997 RESULTS TO 1996 RESULTS
Nine-month sales increased $1,992,000, gross profit increased $1,919,000,
selling, general and administrative expense increased $408,000 and depreciation
and amortization expense increased $336,000, resulting in an operating income
increase of $1,175,000. Interest expense decreased by $60,000, interest income
increased by $1,055,000, other expense increased by $55,000 and income tax
expense decreased by $920,000, resulting in an increase in net income of
$3,155,000.
Restaurant Division. In the first nine months of 1997, Restaurant sales
increased by $2,549,000, or 5.5%, and gross profit increased $1,479,000, or
20.2%, compared to the same period in the prior year. The gross profit increase
was partially offset by an increase in depreciation and amortization expense of
$324,000, or 19.2%, resulting in an operating income increase of $1,155,000, or
27.3%. The sales increase was mainly due to an increase in same store sales of
$954,000, or 2.9%, sales from the opening of three new Bickford's Restaurants of
$1,701,000, partially offset by a decrease in sales resulting from the sale and
closing of two Abdow's Restaurants totalling $325,000. All of the sales increase
at same store Restaurants resulted from an increase in the average guest check.
Customer counts at Restaurants operated in both periods decreased 2.4% despite
the fairer weather in New England during the first quarter of 1997 as compared
to the record snow falls in 1996. Customer counts at the nine converted and five
remaining Abdow's Restaurants decreased by 3.8% and 6.5%, respectively, compared
to 1996.
The Restaurant gross profit increase resulted from the sales increase and a 2.2%
improvement in the gross profit percentage from 15.9% to 18.1%, in the first
nine months of 1997 compared to the same period in 1996. The increase in the
gross profit percentage was mainly the result of a decrease in food cost as a
percentage of sales of 0.8% and a decrease in labor costs as a percentage of
sales of 0.9% attributable to the conversion of the Abdow's Restaurants into
Bickford's in the latter half of 1996 and an increase in the average guest
check.
Management expected the Restaurant gross profit percentage to decline initially
as a result of the 1995 acquisition of the 16 Abdow's Restaurants, which have a
higher percentage of food, labor and rent costs compared to the Bickford's
Restaurants. It was anticipated that upon conversion of the Abdow's Restaurants
into Bickford's Restaurants the food costs as a percentage of sales would
decline to the average Bickford's level, thereby increasing the gross profit
percentage. Management intends to keep up to five of the acquired Restaurants
operating as lower margin Abdow's Restaurants, and overall margins will continue
to be lower than if all Restaurants were operated as Bickford's Restaurants.
Restaurant selling, general and administrative expense during the first nine
months of 1997 were unchanged in comparison to the same period in the prior
year.
Restaurant Division depreciation and amortization expense increased by $324,000
during the first nine months of 1997 and will continue to increase each year
with the addition of new restaurants,
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or until such time as assets valued and recorded at the date of the Restaurants
acquisition in 1991 become fully depreciated. The equipment acquired in that
acquisition has a seven year useful life, and will become fully depreciated in
1998.
As a result of the above items, operating income increased by $1,155,000, or
27.3%, in the first nine months of 1997. Restaurant Division interest expense
related to the amortization of deferred bank fees and to capital lease
obligations decreased by $81,000 as the fees became fully amortized.
Cues Division. Cues's sales decreased by $557,000, or 3.4%, in the first nine
months of 1997 compared to the same period in the prior year. The sales decline
was primarily the result of a decrease in shipments of truck-based systems due
to a combination of timing and model year preferences. Gross profit increased by
$440,000, or 9.8%, while operating income increased by $414,000, or 39.1%.
Cues's gross profit margins have shown signs of improvement in 1997 despite a
continued competitive environment as production efficiencies and product mix
combined for a favorable outcome. Included in the increase in operating income
is the effect of an increase in selling, general and administrative expense of
$14,000 and an increase in depreciation and amortization expense of $12,000.
Management anticipates that gross and operating margins will continue to
experience pressure in the fourth quarter of 1997 and into 1998 due to the fact
that Cues's customers continue to stress pricing factors in awarding contracts
through the competitive bidding process.
Corporate. Corporate general and administrative expenses increased by $394,000
during the first nine months of 1997 mainly as a result of an increase in the
phantom stock option plan accrual for Bickford's management and an increase in
the management fee payable to Cadmus Corporation. Interest expense decreased by
$26,000 due to a higher average debt balance in 1997 partially offset by a
decrease in the Company's senior debt borrowing rate. During the first half of
1997 and 1996, the Company recorded interest income of $1,128,000 and $82,000,
respectively, in connection with notes receivable due from a related parties.
On December 30, 1996, ELXSI purchased three Azimuth Corporation subsidiary notes
(the "Notes") with a face value of $6,650,000 from Bank of America Illinois
("BAI") for $5,850,000. The Company recorded the $800,000 discount as a
reduction in the face amount of the Notes on the balance sheet. The face value
of the Notes, payable by the Azimuth Corporation subsidiaries, bore interest at
15% per annum payable in arrears on the 1st and 16th of each month. Two of the
Azimuth Corporation subsidiaries design and manufacture trade show booth
displays; the other is a distributor of electrical fuses and fasteners. Certain
of the officers and directors and stockholders of Azimuth Corporation are
officers and directors of the Company and/or ELXSI. As a result of the
transactions described in this paragraph, ELXSI was the senior revolving credit
lender to the Azimuth Corporation subsidiaries. Funding for ELXSI's purchase of
the Notes was provided by BAI under an amendment and restatement of its existing
credit agreement with ELXSI. The Company's return on investment from the
foregoing transactions was in the form of net interest (i.e., the difference
between the Azimuth's Corporation subsidiaries' 15% interest rate and the
Company's cost of borrowing) and the discount earned by the Company.
The purpose of the transactions described above was to prudently utilize the
Company's debt capacity to earn a return not generally available in the
marketplace for the commensurate risk.
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The knowledge of the Azimuth Corporation credit and the short time frame
required to respond to BAI made ELXSI unique in its ability to capture such an
attractive opportunity.
On June 16, 1997, the Azimuth Corporation subsidiaries prepaid all of the
remaining outstanding principal of the Notes due to ELXSI by utilizing the
proceeds of a new line of credit obtained from a third party lender.
The $1,046,000 increase in interest income during the first nine month of 1997
compared to the same period in 1996, primarily resulted from recording $902,000
of interest related to the Notes described above. The $902,000 recorded during
the first half of 1997 consisted of the 15% interest on the face amount of the
Notes and amortization of the discount. Included in interest expense is interest
paid to BAI of approximately $193,000 directly attributable to ELXSI's purchase
of the Notes. As a result of the Notes, the Company recorded net interest income
of approximately $709,000 during the nine months of 1997 and $934,000 in total
during the period the Notes were outstanding.
Income tax expense during the first nine months of 1996 consisted of a current
tax provision of $396,000. During the first nine months of 1997, the Company
recorded a net income tax benefit of $524,000 consisting of a current tax
provision of $568,000 and a deferred tax benefit of $1,092,000. Recording the
deferred tax benefit of $1,092,000 during the nine months ended September 30,
1997, resulted in an increase in primary and fully diluted earnings per share of
$0.22 and $0.21 per share , respectively. Accordingly the Company recognized an
increase in the net deferred tax asset of $1,236,000 from $2,881,000 at December
31, 1996 to $4,117,000 at September 30, 1997. The net deferred tax asset
represents the amount of net operating loss and credit carryforwards which
management believes are more likely than not to be realized in the future. As of
September 30, 1997, the Company continued to believed that it would have a
change of ownership of 50% or more. The increase in the net deferred tax asset
resulted primarily from an increase in the market price of the issued and
outstanding common shares, which are used under the current tax laws to
determine the amount of the tax loss carryforward that can be utilized each
year. It is uncertain, due to the unpredictable nature of the factors involved
in determining the deferred tax asset, what impact SFAS 109 will have on future
results. In the event that a change in ownership does not take place, the
Company may be able to recognize the benefit of additional loss carryforwards.
Earnings Per Share. Primary and fully diluted earnings per share for the nine
months ended September 30, 1997 was $1.22 and $1.18 per share, respectively. The
weighted average number of shares outstanding for primary and fully diluted
earning per share was 4,919,000 and 5,122,000, respectively . This compares to
$0.57 per share for the corresponding period in 1996 when there were 5,055,000
weighted average shares outstanding for both the primary and fully diluted
calculations. The reduction in the primarily weighted average shares outstanding
in the first nine months of 1997 compared to the first nine months of 1996
resulted mainly from the repurchase and retirement of Common Stock in the second
half of 1996 and the repurchase and retirement of a warrant held by an affiliate
of BAI on December 30, 1996 partially offset by an increase in the average stock
market price. The higher weighted average number of shares outstanding for fully
diluted earnings per share compared to primary earnings per share for the nine
months ended September 30, 1997 resulted from using the ending stock market
price at September 30, 1997 for the fully diluted calculation compared to using
the lower average stock market price for the period in the primary earnings per
share calculation. The average stock
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market price for the first nine months of 1997 was $7.23 compared to an average
of $6.03 in the corresponding period of 1996. The ending stock market price at
September 30, 1997 was $10.25. An increase in the stock price results in a
slightly greater number of shares outstanding for purposes of determining the
weighted average shares outstanding used in the earnings per share calculation.
COMPARISON OF THIRD QUARTER 1997 RESULTS TO 1996 RESULTS
The third quarter sales increased $1,834,000, gross profit increased $810,000,
selling, general and administrative expense increased $217,000 and depreciation
and amortization increased $117,000, resulting in an operating income increase
of $476,000. Interest expense decreased by $34,000, interest income increased by
$111,000, other expense increased by $51,000 and income taxes decreased by
$1,415,000, resulting in an increase in net income of $1,985,000.
Restaurant Division. Restaurant sales increased by $1,268,000, or 7.8%, and
gross profit increased by $493,000, or 17.8%, in the third quarter of 1997
compared to the same period in the prior year. Operating income increased
$399,000, or 23.0%, after the effect of a decrease in selling general and
administrative expense of $20,000, or 4.2% and an increase in depreciation and
amortization of $114,000, or 20.2%. The sales increase was mainly due to an
increase in same store sales of $305,000, or 2.6%, sales from the opening of
three new Bickford's Restaurants of $802,000 partially offset by a sales
decrease from the nine converted and five remaining Abdow's Restaurants of
$98,000. All of the sales increase resulted from an increase in the average
guest check. Customer counts at Restaurants operated in both periods decreased
by 2.6%. Customer counts at the nine converted and five remaining Abdow's
Restaurants decreased by 5.2% and 6.8%, respectively, in the third quarter of
1997 as compared to 1996.
The Restaurant gross profit increase resulted form the sales increase and a 1.6%
improvement in the gross profit percentage from 17.1% to 18.7% in the third
quarter of 1997 compared to the same period in 1996. The increase in the gross
profit percentage was mainly the result of a decrease in food costs attributable
to the conversion of the Abdow's Restaurants into Bickford's in the latter half
of 1996 and an increase in the average guest check during the quarter.
As a result of the above items, operating income increased by $399,000, or
23.0%, in the third quarter of 1997.
Cues Division. Cues's sales increased by $566,000, or 11.3%, in the third
quarter of 1997 compared to the same period in the prior year. The sales
increase was primarily the result of an increase in shipments of truck-based
systems due to a combination of timing and model year preferences. As a result
of the sales increase and a 2.7% increase in the gross profit percentage from
29.4% in the third quarter of 1996 to 32.1% in the third quarter of 1997, gross
profit increased by $317,000, or 21.5%. Cues's gross profit margins showed signs
of improvement in this quarter despite a continued competitive environment as
production efficiencies and product mix combined for a favorable outcome.
Operating income increased by $247,000, or 72.4%. Included in the increase in
operating income is the effect of an increase in selling, general and
administrative expense of $67,000 and an increase in depreciation and
amortization expense of $3,000. Management anticipates that gross and operating
margins will continue to experience pressure in the fourth quarter of 1997 and
into 1998 due to the fact that Cues's customers continue to stress pricing
factors in awarding contracts through the competitive bidding process.
14
<PAGE>
Corporate. Corporate general and administrative expenses increased by $170,000
during the third quarter of 1997 mainly as a result of an increase in the
phantom stock option plan accrual for Bickford's management and an increase in
the management fee payable to Cadmus. Interest expense decreased by $14,000.
During the third quarter of 1997, the Company recorded interest income of
$135,000 compared to $27,000 in the same period of 1996.
Income tax expense during the third quarter of 1996 consisted of a current tax
provision of $167,000. During the third quarter of 1997, the Company recorded a
net income tax benefit of $1,248,000 consisting of a current tax provision of
$209,000 and a deferred tax benefit of $1,457,000. Recording the deferred tax
benefit of $1,457,000 during the third quarter of 1997, resulted in an increase
in primary and fully diluted earnings per share of $0.29 and $0.28 per share,
respectively.
Earnings Per Share. Primary and fully diluted earnings per share for the three
months ended September 30, 1997 was $0.66 and $0.64 per share, respectively. The
weighted average number of shares outstanding for primary and fully diluted
earnings per share was 5,038,000 and 5,122,000, respectively . This compares to
$0.27 per share for the corresponding period in 1996 when there were 4,994,000
and 4,998,000 weighted average shares outstanding for primary and fully diluted
calculations, respectively. The increase in the primarily and fully diluted
weighted average shares outstanding in the third quarter of 1997 compared to the
same period in 1996 resulted mainly from an increase in the average stock market
price. The higher weighted average number of shares outstanding for fully
diluted earnings per share compared to primary earnings per share for the third
quarter ended September 30, 1997 resulted from using the ending stock market
price at September 30, 1997 for the fully diluted calculation compared to using
the lower average stock market price for the period in the primary earning per
share calculation. The average stock market price for the third quarter of 1997
was $8.75 compared to an average of $5.46 in the corresponding period of 1996.
The ending stock market price at September 30, 1997 was $10.25.
Liquidity and Capital Resources
Available Resources. The Company's unrestricted consolidated cash positions at
September 30, 1997 and December 31, 1996 was $0. As of September 30, 1997 the
Company had $1,222,000 in restricted cash (see Note 3).
During the first nine months of 1997, the Company had cash flow from operations
of $5,272,000. The cash from operations, the proceeds from the Azimuth
Corporation subsidiary notes receivable of $6,575,000 and the proceeds from the
industrial revenue bonds of $2,500,000 funded the acquisition of property, plant
and equipment totalling $3,526,000, a related party loan to Cadmus Corporation
in the amount of $2,000,000, the repayment of long-term debt of $4,359,000, the
purchase and retirement of Common Stock of $22,000, the payment of deferred debt
costs of $112,000, the repayment of capital leases obligations of $106,000 and
an increase in restricted cash of $1,222,000. During the nine months of 1997,
current assets (excluding restricted cash and deferred taxes) increased by
$81,000. Current liabilities (excluding the current portion of long-term debt
and capital leases) decreased $1,682,000 mainly due to a reduction in Bickford's
and Cues's accounts payable.
15
<PAGE>
During the nine months of 1996, the Company had cash flow from operations of
$2,273,000. The cash from operations and the proceeds from the sale of the
Vernon, Connecticut Abdow's Restaurant of $1,075,000 funded the acquisition of
property, plant and equipment totalling $2,301,000, the repayment of long-term
debt of $734,000, the purchase and retirement of Common Stock of $181,000 and
the repayment of capital lease obligations of $132,000. During the first nine
months of 1996, current assets increased by $1,368,000 primarily due to an
increase in Cues's inventory. In addition, current liabilities (excluding the
current portion of long-term debt and capital leases) decreased $381,000 mainly
due to the timing of payments related to Bickford's accounts payable partially
offset by an increase in accrued expenses.
The Company has a cash management system whereby the net cash generated by
operations is immediately used to reduce bank debt. The immediate reduction of
outstanding debt provides the Company with a reduction in interest expense
greater than the interest income that the cash could earn from alternative
investments. Working capital needs, when they arise, are met by daily
borrowings.
Future Needs For and Sources of Capital. Management believes that cash generated
by operations is sufficient to fund current operations including the interest
payments on the long-term debt. With bank approval, excess funds available under
ELXSI's bank loan agreement may be used to finance additional acquisitions.
Impact of Inflation. Inflationary factors such as increases in food and labor
costs directly affect the Company's operations. Many of the Restaurant employees
are paid hourly rates related to the federal minimum wage, and, accordingly,
increases in the minimum wage will result in increases in the Company's labor
costs. In addition, the cost of food commodities utilized by the Company are
subject to market supply and demand pressures. Shifts in these costs may have an
impact on the Company's food costs. The Company anticipates that food cost
increases can be offset through selective price increases, although no
assurances can be given that the Company will be successful in this regard.
Increases in interest rates could negatively affect the Company's operations.
16
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-K
4.18 Second Amendment to Amended and Restated Loan and Security Agreement,
dated as of September 24, 1997, between ELXSI and Bank of America
National Trust and Savings Association.
4.19 Trust Indenture, dated as of September 24, 1997, between the Orange
County Industrial Development Authority and Sun Trust Bank, Central
Florida, National Association, as Trustee.
4.20 Loan Agreement, dated as of September 24, 1997, between ELXSI and the
Orange County Industrial Development Authority.
4.21 Mortgage and Security Agreement, dated as of September 24, 1997 between
ELXSI and the Orange County Industrial Development Authority.
4.22 Bond Purchase Agreement, dated as of September 24, 1997, by and among
the Orange County Industrial Development Authority, ELXSI and Bank of
America National Trust and Savings Association.
4.23 Guaranty Agreement, dated as of September 24, 1997, by and between ELXSI
Corporation and Bank of America National Trust and Savings Association.
4.24 Security Agreement, dated as of September 24, 1997, between ELXSI and
the Orange County Industrial Development Authority.
27.1 Financial Data Schedule
(b) Reports on Form 8-K.
During the fiscal quarter ended September 30, 1997, the Company filed with the
Securities and Exchange Commission, on July 9, a Form 8-K Current Report dated
July 9, 1997, under which it made Item 5 (Other Events) disclosures; no
financial statements were included in such Form 8-K.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ELXSI CORPORATION
---------------------------------------------
(Registrant)
Date: November 12, 1997 /s/ Alexander M. Milley
---------------------------------------------
Alexander M. Milley, Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
Date: November 12, 1997 /s/ Thomas R. Druggish
---------------------------------------------
Thomas R. Druggish, Vice President,
Treasurer and Secretary (Chief Accounting
Officer and Principal Financial Officer)
18
<PAGE>
SECOND AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT,
dated as of September 24, 1997 (this "Amendment"), is by and between BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as successor by merger to Bank
of America Illinois (the "Lender"), and ELXSI, a California corporation (the
"Borrower").
W I T N E S S E T H:
WHEREAS, the Borrower and Lender are parties to that certain Amended and
Restated Loan and Security Agreement, dated as of December 30, 1996, as amended
by that certain letter agreement dated June 30, 1997 (and as further amended,
restated, supplemented or otherwise modified and in effect from time to time,
collectively, the "Loan Agreement"), pursuant to which the Lender has provided
to the Borrower credit facilities and other financial accommodations; and
WHEREAS, the Borrower has requested that the Lender amend the Loan
Agreement in certain respects as set forth herein, and the Lender is agreeable
to the same, subject to the terms and conditions hereof;
NOW THEREFORE, in consideration of the premises and of the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. Defined Terms. Unless otherwise defined herein, all capitalized
terms used herein have the meanings assigned to such terms in the Loan
Agreement.
SECTION 2. Amendments to the Loan Agreement. The Loan Agreement is, as of
the Effective Date (as defined below), hereby amended as follows:
(a) The definition of "Additional Revolving Credit Amount" appearing
in Section 1.1 of the Loan Agreement is hereby amended by deleting such
definition in its entirety and inserting the following in lieu thereof:
""Additional Revolving Credit Amount" means $0."
(b) The definition of "Credit Reduction Amount" appearing in Section
1.1 of the Loan Agreement is hereby amended by deleting such definition in its
entirety and inserting the following in lieu thereof:
""Credit Reduction Amount" means, for each Credit Reduction Date,
commencing with the first Credit Reduction Date to occur after the Second
Amendment Effective Date, an amount equal to $118,333.33, in each case subject
to adjustment as provided in Section 2.1.
<PAGE>
(c) The definition of "Credit Reduction Date" appearing in Section 1.1
of the Loan Agreement is hereby amended by deleting such definition in its
entirety and inserting the following in lieu thereof:
""Credit Reduction Date" means the last day of each calendar month."
(d) The following new definition shall be inserted between the
definitions of "Hazardous Materials" and "Indebtedness" appearing in Section 1.1
of the Loan Agreement:
""Incremental Supplemental Revolving Loan" is defined in Section
2.1.6"
(e) The definition of "Revolving Credit Amount" appearing in Section
1.1 of the Loan Agreement is hereby amended by deleting such definition in its
entirety and inserting the following in lieu thereof:
""Revolving Credit Amount" means, from and after the Second Amendment
Effective Date, $9,000,000 as adjusted after such date pursuant to this
Agreement, including pursuant to Sections 2.1.3 and 2.1.4."
(f) The following new definition shall be inserted between the
definitions of "Revolving Loan Availability" and "Second Restatement Date"
appearing in Section 1.1 of the Loan Agreement:
""Second Amendment Effective Date" shall mean September 24, 1997."
(g) The definition of "Supplemental Revolving Credit Amount" appearing
in Section 1.1 of the Loan Agreement is hereby amended by deleting such
definition in its entirety and inserting the following in lieu thereof:
""Supplemental Revolving Credit Amount" means, from and after the
Second Amendment Effective Date, $7,100,000 as adjusted after such date pursuant
to this Agreement, including pursuant to Sections 2.1.3 and 2.1.4."
(h) The definition of "Termination Date" appearing in Section 1.1 of
the Loan Agreement is hereby amended by deleting "September 30, 1998" appearing
therein and substituting therefor "June 30, 1999".
(i) Section 2.1.3 of the Loan Agreement is hereby amended by deleting
clause (a) of such Section in its entirety and inserting the following in lieu
thereof:
"(a) On each Credit Reduction Date, the Supplemental Revolving Credit
Amount shall be reduced by the Credit Reduction Amount."
(j) Section 2.1.6 of the Loan Agreement is hereby amended by deleting
such Section in its entirety and inserting the following in lieu thereof: "2.1.6
Supplemental Revolving Loans.
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<PAGE>
"2.1.6 Supplemental Revolving Loans.
(a) Borrower and Lender acknowledge the making of certain loans
or advances (individually each a "Supplemental Revolving Loan" and
collectively the "Supplemental Revolving Loans") by Lender to Borrower
in an aggregate principal amount of $5,100,000 which are outstanding
on the Second Amendment Effective Date in accordance with the terms of
this Agreement and agree that, from and after the Second Amendment
Effective Date, such Supplemental Revolving Loans shall continue to be
outstanding pursuant to the terms and conditions of this Agreement.
Subject to the terms and conditions of this Agreement and the Related
Agreements, and in reliance upon the warranties of Borrower set forth
herein and in the Related Agreements, Lender agrees to make such
additional Supplemental Revolving Loans (the "Incremental Supplemental
Revolving Loans") to the Borrower in the principal amount of up to
$2,000,000 from time to time on or after the Second Amendment
Effective Date and before the Termination Date as Borrower may from
time to time request; provided, however, that the aggregate principal
amount of all outstanding Supplemental Revolving Loans (including the
Incremental Supplemental Revolving Loan) shall not exceed the
Supplemental Revolving Credit Amount. Supplemental Revolving Loans
(including the Incremental Supplemental Revolving Loan) may be repaid
and, subject to the terms and conditions hereof, reborrowed to but not
including the Termination Date unless the Credit is otherwise
terminated as provided in this Agreement.
(b) All Supplemental Revolving Loans (including the Incremental
Supplemental Revolving Loan) hereunder shall be paid by Borrower on
the Termination Date, unless payable sooner pursuant to the provisions
of this Agreement, but may, at Borrower's election, be repaid in whole
or in part at any time prior to such date without premium or penalty.
(k) Section 5.1.3 of the Loan Agreement is hereby amended by deleting
such Section in its entirety and inserting the following in lieu thereof:
"5.1.3 [Intentionally Omitted]"
(l) Section 5.1.4 of the Loan Agreement is hereby amended by deleting
such Section in its entirety and inserting the following in lieu thereof:
"5.1.4 [Intentionally Omitted]"
(m) Section 5.15 of the Loan Agreement is hereby further amended by
deleting clause (f) of such Section in its entirety and inserting the following
new clauses (f), (g) and (h) in lieu thereof:
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<PAGE>
"(f) Indebtedness of Borrower under that certain Loan Agreement dated
as of September 24, 1997 between Borrower and Orange County Industrial
Development Authority in an aggregate principal amount not to exceed $2,500,000
incurred in connection with the issuance of the Industrial Development Revenue
Bonds (ELXSI Project), Series 1997; (g) Indebtedness of Borrower in an aggregate
principal amount not to exceed $520,000 incurred in connection with the
acquisition of that certain real property and related fixtures located at 330
Boston Post Road, Marlboro, Massachusetts; and (h) other Indebtedness approved
in writing by Lender."
(n) Section 5.16 of the Loan Agreement is hereby amended by deleting
clause (n) of such Section in its entirety and inserting the following new
clauses (n), (o), and (p) in lieu thereof:
"(n) Liens on that certain real property located at 3600 Rio Vista
Avenue, Orlando, Orange County, Florida and all buildings, structures and
improvements now or hereafter located on such real property and on certain
property adjacent thereto ("IDB Property") securing Indebtedness permitted under
Section 5.15 (f); (o) Liens on that certain property and related fixtures (and
proceeds thereof and accessions thereto) located at 330 Boston Post Road,
Marlboro, Massachusetts securing Indebtedness permitted under Section 5.15 (g);
and (p) Liens consented to in writing by Lender."
(o) Section 5.18 of the Loan Agreement is hereby amended by deleting
clause (l) of such Section in its entirety and inserting the following in lieu
thereof:
"(l) Investments in the nature of a loan by Borrower to Azimuth of the
proceeds of Incremental Supplemental Revolving Loans in an aggregate principal
amount of up to $2,000,000 to be used by Azimuth solely as provided in Section
5.25(d) (and any accrued interest thereon);"
(p) Section 5.18 of the Loan Agreement is hereby amended by deleting
clause (m) of such Section in its entirety and inserting the following new
clauses (m) and (n) in lieu thereof:
"(m) Investments in the nature of a loan by Borrower to Cadmus in an
aggregate principal amount not to exceed $2,000,000 to be used by Cadmus solely
for the purposes specified in that certain waiver letter dated June 30, 1997;
(n) Investments in the nature of loans by Borrower to the four (4) employees of
Borrower participating in the Bickford's phantom stock option plan in an
aggregate principal amount not to exceed $115,833 and any accrued interest
thereon; and (n) other Investments consented to by Lender in writing."
(q) Section 5.25 of the Loan Agreement is hereby amended by deleting
the phrase "(except as provided in clause (b) below)" appearing in clause (a)(i)
of such Section and inserting "(except as provided in clauses (b) and (d)
below)" in lieu thereof.
(r) Section 5.25 of the Loan Agreement is hereby further amended by
deleting the period at the end thereof and adding the following new clause (d)
at the end of such Section:
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<PAGE>
", or (d) of the Incremental Supplemental Revolving Loan to be used
other than as a loan or loans by Borrower to Azimuth as permitted by Section
5.18(l) to be used by Azimuth solely to purchase equity securities as approved
in writing by Lender"
(s) Section 5.28 of the Loan Agreement is hereby amended by deleting
clauses (b) and (c) of such Section in their entirety.
(t) Supplement A to the Loan Agreement is hereby amended by deleting
such Supplement in its entirety and inserting Exhibit A attached hereto in lieu
thereof.
SECTION 3. Release of Lien. Lender hereby releases any Liens it may have on
any IDB Property and agrees to release any Liens it may have on Borrower's
property located at 330 Boston Post Road, Marlboro, Massachusetts in connection
with the incurrence by Borrower of the Indebtedness permitted under Section
5.15(g) of the Loan Agreement.
SECTION 4. Amendment Fee. In consideration of the execution of this
Amendment by the Lender, the Borrower hereby agrees to pay a fee of $25,000 (the
"Amendment Fee") to Lender.
SECTION 5. Representations and Warranties of the Borrower. The Borrower
represents and warrants to the Lender:
(a) the representations and warranties contained in the Loan Agreement
(as amended hereby) and the other Related Agreements and Supplemental
Documentation are true and correct in all material respects at and as of
the date hereof as though made on and as of the date hereof (except (x) to
the extent specifically made with regard to a particular date and (y) for
such changes as are a result of any act or omission specifically permitted
under the Loan Agreement (or under any Related Agreement) or otherwise
expressly permitted by Lender);
(b) no Event of Default or Default has occurred and is continuing;
(c) the execution, delivery and performance of this Amendment has been
duly authorized by all necessary action on the part of, and duly executed
and delivered by, the Borrower, and this Amendment is a legal, valid and
binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, except as the enforcement thereof may be subject
to the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and
general principles of equity (regardless of whether such enforcement is
sought in a proceeding in equity or at law); and
(d) the execution, delivery and performance of this Amendment does not
conflict with or result in a breach by the Borrower of any term of any
material
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<PAGE>
contract, loan agreement, indenture or other agreement or instrument to which
the Borrower is a party or is subject.
SECTION 6. Conditions Precedent to Effectiveness of Amendment. This
Amendment shall become effective on the date (the "Effective Date") each of the
following conditions precedent is satisfied:
(a) the Lender shall have executed and delivered this Amendment;
(b) the Borrower shall have executed and delivered to Lender a new
Revolving Loan Promissory Note in the principal amount of $9,000,000;
promptly following the Effective Date and its receipt of a new Revolving
Loan Promissory Note, Lender shall deliver its original Revolving Loan
Promissory Note to Borrower for cancellation;
(c) the Borrower shall have executed and delivered to Lender a new
Supplemental Revolving Loan Promissory Note in the principal amount of
$7,100,000; promptly following the Effective Date and its receipt of a new
Supplemental Revolving Loan Promissory Note, Lender shall deliver its
original Supplemental Revolving Loan Promissory Note to Borrower for
cancellation. In addition, Lender shall deliver its original Additional
Revolving Loan Promissory Note to Borrower for cancellation;
(d) the Borrower shall have paid in full the Amendment Fee to Lender;
and
(e) the Lender shall have received all of the following, each duly
executed where appropriate and dated as of the Second Amendment Effective
Date (or such other date as shall be satisfactory to Lender), in form and
substance satisfactory to Lender:
(i) Resolutions. A copy, duly certified by an officer of
Borrower, of (1) resolutions of the Board of Directors of such
corporation authorizing, as applicable, (A) the borrowings by Borrower
hereunder and (B) the execution, delivery and performance of this
Amendment, (2) all documents evidencing any other necessary corporate
action on the part of such corporation with respect to this Amendment,
and (3) all approvals or consents, if any, with respect to this
Amendment;
(ii) Incumbency Certificates. A certificate of an officer of
Borrower certifying the names of the officers of such corporation
authorized to sign this Amendment, and all other documents and
certificates to be delivered by such corporation hereunder, together
with samples of the true signatures of such officers;
(iii) Borrower's Certificate. The certificate of the President or
Chairman of the Board of Borrower certifying to the fulfillment of all
conditions precedent (other than any waived by Lender) to closing the
transaction
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<PAGE>
contemplated by this Amendment and to the truth and accuracy, as of
such date, of the representations and warranties of Borrower contained
in this Amendment, each Mortgage, the Trademark Security Agreement and
each other Related Agreement to which Borrower is a party (except (x)
to the extent specifically made with regard to a particular date and
(y) for such changes as are a result of any act or omission
specifically permitted under the Loan Agreement (or under any Related
Agreement) or otherwise expressly permitted by Lender);
(iv) Bylaws. A copy of Borrower's Bylaws duly certified by an
officer of Borrower (or a certification by such officer that the same
have not been amended since the last date the Bylaws were certified to
Lender);
(v) Articles. A copy of Borrower's Articles of Incorporation,
duly certified by the Secretary of State of the state of its
incorporation or by an officer of Borrower (or a certification by such
officer that the same have not been amended since the last date the
Articles were certified to Lender);
(vi) Registration; Good Standing. A copy, duly certified by the
applicable Secretary of State (or other appropriate officer), a
certificate of good standing for Borrower issued by the Secretary of
State (or other appropriate officer) of the jurisdiction of its
incorporation; and
(vii) Legal Opinion. Legal opinion from Dechert Price & Rhoads,
special counsel to Borrower and Parent, in form and substance
satisfactory to the Lender.
SECTION 7. Execution in Counterparts. This Amendment may be executed in
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.
SECTION 8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS,
WITHOUT REGARD TO THE INTERNAL CONFLICTS OF LAWS PROVISIONS THEREOF.
SECTION 9. Effect of Amendment; Reaffirmation of Loan Documents. The
parties hereto agree and acknowledge that (i) nothing contained in this
Amendment in any manner or respect limits or terminates any of the provisions of
the Loan Agreement or the other Related Agreements or Supplemental Documentation
other than as expressly set forth herein and (ii) the Loan Agreement (as amended
hereby) and each of the other Related Agreements and Supplemental Documentation
remain and continue in full force and effect and are hereby ratified and
reaffirmed in all respects.
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<PAGE>
SECTION 10. Headings. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purposes.
[signature page follows]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
ELXSI
By:___________________________________
Name:_________________________________
Title:________________________________
Address: 3600 Rio Vista Avenue
Suite A
Orlando, Florida 32805
Attention: President
Facsimile number: 407/849-0625
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:___________________________________
Name:_________________________________
Title:________________________________
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Attention: Commercial Banking Division
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<PAGE>
EXHIBIT A
TO SECOND AMENDMENT
TO LOAN AGREEMENT
SUPPLEMENT A
to
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Dated as of December 30, 1996 Between
ELXSI and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
(as successor by merger to Bank of America Illinois)
1. Loan Agreement Reference. This Supplement A, as it may be amended or
modified from time to time, is a part of the Amended and Restated Loan and
Security Agreement, dated as of December 30, 1996, between Borrower and
Lender (together with all amendments, restatements, supplements and other
modifications thereto, the "Loan Agreement"). Terms used and not defined
herein which are defined in the Loan Agreement shall have the meaning
ascribed to them therein unless the context requires otherwise.
2. Additional Covenants. Until all of Borrower's Liabilities are paid in full,
Borrower agrees that, unless Lender otherwise consents in writing, it will:
a. Net Worth. Not permit at any time during any fiscal quarter, measured
as of the last day of the most recently completed fiscal quarter set
forth below, Net Worth to be less than the amount set forth below
across from such fiscal quarter:
Fiscal Quarter Ending Net Worth
09/30/97 $28,000,000
12/31/97 $28,000,000
03/31/98 $28,000,000
06/30/98 $28,000,000
09/30/98 $28,000,000
12/31/98 and thereafter $32,000,000
b. Capital Expenditures. Not, and not permit any Subsidiary to, purchase
or otherwise acquire (including, without limitation, acquisition by
way of Capitalized Lease), or commit to purchase or otherwise acquire,
any fixed asset if, after giving effect to such purchase or other
acquisition, (A) the aggregate
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<PAGE>
capitalized cost of all fixed assets purchased or otherwise acquired
(other than by means of a Capitalized Lease) by Borrower and its
Subsidiaries on a consolidated basis plus (B) the aggregate annual
payments under Capitalized Leases (excluding the portion thereof
representing imputed interest) of Borrower and its Subsidiaries on a
consolidated basis (excluding, in each of (A) and (B), (a) any fixed
asset which constitutes a replacement for an asset which was the
subject of a casualty or governmental taking to the extent the
purchase or other acquisition thereof is funded by insurance proceeds
or other payments received as a result of such casualty or taking; (b)
the first $675,000 of capital expenditures related solely to removal
of underground storage tanks or other environmental problems at
Borrower's restaurant locations; (c) any capital expenditures with the
proceeds from the Florida Industrial Development Bond offering to
finance the purchase of a new 32,000 square foot manufacturing/office
building in Orlando, Florida, construct improvements therein, purchase
certain equipment and renovate Borrower's existing facility; and (d)
any capital expenditures incurred in connection with the purchase of
real property and related fixtures located at 330 Boston Post Road,
Marlboro, Massachusetts) would exceed $3,500,000 in Fiscal Year 1997
and in any Fiscal Year thereafter.
c. Interest Coverage Ratio. Not permit, on the last day of any fiscal
quarter set forth below, the ratio of (a) Borrower's EBITDA for the
four (4) fiscal quarters then ended to (b) Borrower's consolidated
interest expense (but excluding from the calculation thereof all
interest expense with respect to Additional Revolving Loans) for the
four (4) fiscal quarters then ended to be less than the ratio set
forth below opposite such fiscal quarter:
Fiscal Quarter Ending Ratio
09/30/97 3.00:1
12/31/97 3.00:1
03/31/98 and thereafter 4.00:1
d. Funded Debt/EBITDA Ratio. Not permit, on the last day of any fiscal
quarter set forth below, the Funded Debt/EBITDA Ratio to be more than
the ratio set forth below opposite such fiscal quarter:
Fiscal Quarter Ending Ratio
09/30/97 2.50:1
12/31/97 2.25:1
03/31/98 2.25:1
06/30/98 2.25:1
09/30/98 2.25:1
12/31/98 2.25:1
03/31/99 and thereafter 2.00:1
-2-
<PAGE>
================================================================================
ORANGE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
(Issuer)
to
SunTrust Bank, Central Florida, National Association
as Trustee
(Trustee)
TRUST INDENTURE
Dated as of September 24, 1997
Securing
$2,500,000
Orange County Industrial Development Authority,
Industrial Development Revenue Bonds
(ELXSI Project), Series 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.....................................................5
Section 101. Definitions.................................................5
Section 102. Rules of Construction.......................................9
ARTICLE II FORM, EXECUTION AND DELIVERY OF THE BONDS......................10
Section 201. Limitation on Issuance of Bonds............................10
Section 202. Form of the Bonds..........................................10
Section 203. Details of Bonds; Execution and Payment....................10
Section 204. Authentication of Bonds....................................11
Section 205. Exchange of Bonds..........................................11
Section 206. Transfer of Bonds..........................................11
Section 207. Ownership of Bonds.........................................12
Section 208. Authorization of Bonds.....................................12
Section 209. Replacement of Mutilated, Destroyed, Lost or Stolen Bonds..15
Section 210. Initial Rate; Adjustment of Rate...........................15
Section 211. Taxable Rate...............................................15
Section 212. Authorized Representative..................................16
Section 213. Increased Costs............................................17
Section 214. Continuation and Conversion Elections......................17
Section 215. Funding....................................................18
Section 216. Eurodollar Rate Lending Unlawful...........................18
Section 217. Eurodollar Deposits Unavailable............................19
Section 218. Increased Eurodollar Rate Bond Costs, etc..................19
Section 219. Funding Losses.............................................19
Section 220. Bondholder to Calculate and Invoice Payments...............20
ARTICLE III REDEMPTION OF BONDS............................................21
Section 301. Redemption of Bonds........................................21
Section 302. Notice of Redemption.......................................22
Section 303. Effect of Calling for Redemption...........................22
ARTICLE IV PROJECT FUND...................................................23
Section 401. Creation of and Deposits to the Project Fund...............23
Section 402. Payments from the Project Fund.............................23
Section 403. Trustee May Rely on Requisitions...........................23
Section 404. Completion Date............................................24
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Section 405. Transfer to the Bond Fund..................................24
Section 406. Trustee's Records..........................................24
ARTICLE V BOND FUND......................................................25
Section 501. Creation of and Deposits to the Bond Fund..................25
Section 502. Use of Moneys in the Bond Fund.............................25
Section 503. Moneys Withdrawn from the Bond Fund or Received
from Other Sources......................................25
Section 504. Non-Presentment of Bonds; Escheat..........................26
Section 505. Cancellation of any Bond Upon Payment......................26
ARTICLE VI DEPOSITARIES OF MONEYS, SECURITY FOR DEPOSITS
AND INVESTMENT OF FUNDS........................................27
Section 601. Security for Deposits......................................27
Section 602. Investment of Moneys.......................................27
ARTICLE VII PARTICULAR COVENANTS AND PROVISIONS..............................28
Section 701. Covenant to Pay Bonds; Bonds Limited
Obligations of the Issuer...............................28
Section 702. Covenants to Perform Obligations under this Indenture......28
Section 703. Covenant to Perform Obligations under the Loan Agreement...29
Section 704. Trustee May Enforce Issuer's Rights Under Loan Agreement...29
Section 705. Covenant Against Arbitrage.................................29
Section 706. Inspection of Bond Registration Books......................30
ARTICLE VIII DEFAULTS AND REMEDIES...........................................31
Section 801. Defaults...................................................31
Section 802. Acceleration...............................................31
Section 803. Trustee May Bring Suit.....................................31
Section 804. Trustee May File Claim in Bankruptcy.......................32
Section 805. Pro Rata Application of Funds..............................33
Section 806. Effect of Discontinuance of Proceedings....................34
Section 807. Holder of Bond May Control Proceedings.....................35
Section 808. Restrictions Upon Actions by Bondholder....................35
Section 809. Receiver...................................................35
Section 810. Actions by Trustee.........................................35
Section 811. No Remedy Exclusive........................................35
Section 812. No Delay or Omission Construed to be a Waiver..............36
Section 813. Waiver of Defaults.........................................36
Section 814. Remedies Herein Additional to Remedies in Other Agreements.36
ii
<PAGE>
ARTICLE IX CONCERNING THE TRUSTEE.........................................37
Section 901. Acceptance of Trusts.......................................37
Section 902. Trustee to Give Notice.....................................38
Section 903. Trustee Entitled to Indemnity..............................38
Section 904. Trustee Not Responsible for Insurance, Taxes, Execution
of Indenture, Acts of the Issuer or Application of
Moneys Applied in Accordance with this Indenture........38
Section 905. Compensation...............................................39
Section 906. Trustee to Preserve Records................................39
Section 907. Trustee May be Bondholder..................................39
Section 908. Trustee Not Responsible for Recitals.......................39
Section 909. No Trustee Responsibility for Recording or Filing..........39
Section 910. Trustee May Rely on Certificates...........................40
Section 911. Qualification of the Trustee...............................40
Section 912. Resignation and Removal of Trustee.........................40
Section 913. Successor Trustee..........................................41
Section 914. Co-Trustee.................................................42
ARTICLE X EXECUTION OF INSTRUMENTS BY BONDHOLDERS
AND PROOF OF OWNERSHIP OF BONDS................................43
Section 1001. Execution of Instruments by Bondholders and
Proof of Ownership of Bonds.............................43
Section 1002. Preservation of Information...............................43
ARTICLE XI SUPPLEMENTS AND AMENDMENTS TO INDENTURE........................44
Section 1101. Supplements and Amendments Not Requiring Bondholder
Consent.................................................44
Section 1102. Supplements and Amendments Requiring Bondholder Consent...44
Section 1103. Supplements and Amendments Deemed Part of Indenture.......45
Section 1104. Discretion of Trustee in Entering into Supplements
and Amendments.........................................45
Section 1105. Consent of Borrower Required..............................46
ARTICLE XII SUPPLEMENTS AND AMENDMENTS TO THE LOAN AGREEMENT
THE MORTGAGE, THE SECURITY AGREEMENT, AND THE
ENVIRONMENTAL AGREEMENT..........................................47
Section 1201. Supplements and Amendments Requiring Bondholder Consent...47
Section 1202. Amendments to Financial Covenants.........................47
ARTICLE XIII PAYMENT.........................................................48
ARTICLE XIV MISCELLANEOUS PROVISIONS.........................................49
Section 1401. Covenants of Issuer to Bind its Successors................49
Section 1402. Notices...................................................49
Section 1403. Trustee as Paying Agent and Bond Registrar................50
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<PAGE>
Section 1404. Rights Under Indenture....................................50
Section 1405. Form of Certificates and Opinions.........................50
Section 1406. Severability..............................................50
Section 1407. Covenants of Issuer Not Covenants of
Officials Individually.................................50
Section 1408. Florida Law Governs.......................................51
Section 1410. Execution in Counterparts.................................51
EXHIBIT A - FORM OF BOND
EXHIBIT B - REQUISITION AND CERTIFICATE
EXHIBIT C - DESCRIPTION OF REAL PROPERTY
EXHIBIT D - FORM OF INVESTOR LETTER
EXHIBIT E - BOND COUNSEL OPINION LETTER
iv
<PAGE>
TRUST INDENTURE
THIS TRUST INDENTURE, dated as of September 24, 1997 (the "Indenture"),
between ORANGE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY, a public body corporate
and politic and a public instrumentality duly created and existing under and by
virtue of the laws of the State of Florida (the "Issuer") and SUNTRUST BANK,
CENTRAL FLORIDA, NATIONAL ASSOCIATION, a national banking association, as
Trustee (in its capacity as trustee to be hereinafter referred to as the
"Trustee");
W I T N E S S E T H:
WHEREAS, the Issuer intends to (a) issue and sell to Bank of America
National Trust and Savings Association, with a banking office in Chicago,
Illinois (in its capacity as the initial purchaser of the Issuer's bonds and
together with any future holders of bonds, hereinafter referred to as the
"Bondholder" or "Bondholders"), its industrial development revenue bond or bonds
in the aggregate principal amount of $2,500,000.00 (the "Bond" or "Bonds") and
use the proceeds thereof to make a loan to ELXSI, a California corporation (the
"Borrower") to finance the cost of the acquisition and installation
(collectively, "Acquisition") of the "Project" as further defined in the Loan
Agreement referred to below), such Project to be used by the Borrower, for the
primary purpose of manufacturing video inspection and rehabilitation equipment
for wastewater and drainage systems, pursuant to the terms and conditions
contained herein; (b) provide for the Acquisition of the Project pursuant to a
Loan Agreement of even date herewith (the "Loan Agreement") between the Issuer
and the Borrower whereby the Issuer will loan to the Borrower the proceeds of
the sale of the Bonds; and (c) secure the repayment of the Bonds by (i) the
assignment contained herein from the Issuer to the Trustee for the Bondholders,
pursuant to which the Issuer assigns to the Trustee for the benefit of the
Bondholders certain of its rights under the Loan Agreement, endorses without
recourse to the order of, and pledges and assigns to, the Trustee for the
Bondholders, the promissory note issued by the Borrower pursuant to the Loan
Agreement (the "Note"), assigns to the Trustee for the benefit of the
Bondholders, the Mortgage and Security Agreement of even date herewith from the
Borrower to the Issuer (the "Mortgage") upon the Mortgaged Property (as defined
in the Loan Agreement), pursuant to which the Borrower has conveyed to the
Issuer, inter alia, a first lien upon the Mortgaged Property and all additions,
modifications and improvements thereto, assigns to the Trustee for the benefit
of the Bondholders the Security Agreement of even date herewith between the
Borrower and the Issuer (the "Security Agreement"), pursuant to which the
Borrower has granted to the Issuer a security interest in certain collateral of
the Borrower, and assigns to the Trustee for the benefit of the Bondholders the
Environmental Indemnification Agreement of even date herewith from the Borrower
to the Issuer (the "Environmental Agreement"); and (ii) a Guaranty Agreement of
even date herewith from ELXSI Corporation (the "Guarantor") to the Bondholder
pursuant to which the Guarantor guarantees prompt payment of the Bonds; and
WHEREAS, the Trustee has accepted the trusts created by this Indenture and
in evidence thereof has joined in the execution hereof:
<PAGE>
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 Bondholders, 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 Bondholders and
any and all other Persons who shall from time to time be or become holders
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 in
and unto the Trustee and its successors and assigns for the benefit of the
holders of the Bonds of all right, title and interest of the Issuer presently
owned or hereafter acquired in and to the following (collectively, the "Trust
Estate"):
(b) The Loan Agreement (as the same may from time to time be supplemented
or amended), 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;
provided, however, that the Issuer shall continue to have all rights, together
with the Trustee, contained in the following sections of the Loan Agreement:
(i) Section 7.1 (pertaining to the Issuer's right of access to the
Plant and certain records);
(ii) Section 7.4 (pertaining to the Issuer's right to receive certain
information);
(iii) Section 7.5 (pertaining to the Issuer's right to receive payment
for certain costs and expenses);
(iv) Section 7.6 (pertaining to the Issuer's right to certain
payments);
(v) Section 7.8 (pertaining to the Issuer's right to release and
indemnification);
(vi) Section 7.12 (pertaining to the Issuer's right to receive certain
information);
(vii) Section 8.1 (pertaining to the Issuer's right to consent or
withhold consent
2
<PAGE>
to assignment of rights of the Borrower under the Loan Agreement or lease
or sale of the Plant); (viii) Sections 9.2 and 9.5 (pertaining to the
Issuer's right to reimbursement of expenses incurred upon a default);
(ix) Sections 10.1(b), 10.2(a) and 10.3 (pertaining to the Issuer's
right to notice of prepayments and rights upon a Determination of
Taxability or a Cessation of Operation);
(x) Section 11.5 (pertaining to the Issuer's right to receive
notices); and
(xi) Sections 11.12 and 11.13 (pertaining to the limitations on the
liability of the Issuer).
(c) The Note of even date herewith of the Borrower to the Issuer in the
maximum principal amount of $2,500,000.00 evidencing the Borrower's obligation
to repay the loan 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;
(d) The Mortgage covering the Mortgaged Property (as defined in and more
particularly described in the Mortgage);
(e) The Security Agreement covering the Collateral (as defined in and more
particularly described in the Security Agreement);
(f) The Environmental Agreement (as defined in and more particularly
described in the Loan Agreement);
(g) All money or securities (and any investment earnings thereon) at any
time on deposit in, in transit to or credit to any account or fund created
hereunder, including without limitation, the Project Fund and the Bond Fund; and
(h) Any and all other real or personal property and rights of every kind
and nature heretofore or from time to time hereafter, by delivery or by writing
of any kind, granted, bargained, sold, conveyed, assigned, transferred, pledged
or mortgaged to the Issuer, as and for additional security hereunder, by the
Borrower or by anyone on behalf of, or with the written consent of, the
Borrower;
and it is so mutually agreed and covenanted by and between the parties hereto
for the equal and proportionate benefit and security of the Bondholders without
preference, priority or distinction as to lien or otherwise, except as
hereinafter provided, of any one Bond over any other Bond, by
3
<PAGE>
reason of priority in the issue, sale or negotiation thereof or otherwise, for
the benefit of the Bondholders and as security for the fulfillment of the
obligations of the Issuer hereunder;
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 holders 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 XIII hereof, the principal of, premium, if any, and interest on the
Bonds and any other obligations arising hereunder shall have been paid to the
Bondholders and the Trustee, and all sums of money due or to become due to the
Issuer under the provisions of the Loan Agreement, the Note, the Mortgage, the
Security Agreement, the Environmental Agreement, or any other instrument or
agreement executed or delivered in connection therewith (or to the Trustee as
assignee thereof) then, except as provided herein with respect to a
Determination of Taxability, 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.
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 covenanted, and does hereby agree and
covenant, with the Trustee and with the holder and owner of said Bonds, as
follows, that is to say:
4
<PAGE>
ARTICLE I
DEFINITIONS
Section 101. 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:
"Bond Counsel" shall mean Akerman, Senterfitt & Eidson, P.A., or any other
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 and acceptable to the Bondholder and the Issuer.
"Bondholder" or "Holder" shall mean the Registered Owner.
"Bond Registrar" shall mean the Bond Registrar as designated in Section 206
of this Indenture.
"Bond Registration Books" shall have the meaning provided in Section 206 of
this Indenture.
"Business Day" means:
(i) any day which is neither a Saturday or Sunday nor a legal holiday
on which banks are authorized or required to be closed in Chicago, Illinois, or
Orlando, Florida; and
(ii) (a) relative to the date of continuing any Bonds as, or
converting the Bonds from or into, Eurodollar Rate Bonds,
(b) making any payment or prepayment of principal of or payment
of interest on any portion of the principal amount of any Bonds being maintained
as Eurodollar Rate Bonds, or
(c) Borrower's giving any notice (or the number of Business Days
to elapse prior to the effectiveness thereof) in connection with any matter
referred to in clause(ii)(a) or (ii)(b) above,
any day on which dealings in Dollars are carried on in the interbank Eurodollar
market of the Bondholder's Eurodollar Office.
"Compensatory Amount" shall have the meaning ascribed thereto in Section
213 hereof.
"Eurodollar Office" means the office of the Bondholder designated as such
from time to
5
<PAGE>
time by notice from the Bondholder to Borrower, whether or not outside the
United States of America.
"Eurodollar Rate" means, relative to the Interest Period for Eurodollar
Rate Bonds, the rate of interest equal to the average (rounded upwards, if
necessary, to the nearest 0.0625%) of the rates per annum at which Dollar
deposits in immediately available funds are offered to the Bondholder's
Eurodollar Office in the interbank eurodollar market as at or about 10:00 a.m.,
Chicago time, two Business Days prior to the beginning of such Interest Period,
for delivery on the first day of such Interest Period, in an amount
approximately equal or comparable to the principal amount of the Bonds and for a
period equal to such Interest Period. The Eurodollar Rate shall be computed on
the basis of a 360-day year for the actual number of days elapsed.
"Eurodollar Rate (Adjusted)" means, relative to Bonds to be continued, or
maintained as, or converted into, Eurodollar Rate Bonds for any Interest Period,
a rate per annum (rounded upwards, if necessary, to the nearest 0.0625%)
determined pursuant to the following formula:
Eurodollar Rate = Eurodollar Rate
(Adjusted) 1 - the Eurodollar
Reserve Percentage.
"Eurodollar Rate Bonds" means Bonds bearing interest, at all times during
the Interest Period applicable to such Bonds, at a rate of interest determined
by reference to the Eurodollar Rate (Adjusted).
"Eurodollar Reserve Percentage" means, relative to each Interest Period, a
percentage (expressed as a decimal) equal to the daily average during such
Interest Period of the percentages in effect on each day of such Interest
Period, as prescribed by the Federal Reserve Board, for determining the maximum
reserve requirements applicable to "Eurocurrency Liabilities" pursuant to
Regulation D or any other applicable regulation of the Federal Reserve Board
which prescribes reserve requirements applicable to "Eurocurrency Liabilities"
as currently defined in Regulation D.
"Excluded Taxes" means taxes imposed on the net income of Bondholder or
imposed on Bondholder by reason of Bondholder being engaged in a trade or
business in the United States of America or having a fixed place of business
therein.
"Interest Period" means, relative to Eurodollar Rate Bonds, the period from
the date on which such Eurodollar Rate Bonds are continued as, or converted
into, a Eurodollar Rate Bond pursuant to Section 214, and, unless the maturity
of such Eurodollar Rate Bond is accelerated, the day which numerically
corresponds to such date one, two or three months thereafter, as Borrower may
select in its relevant notice pursuant to Section 214; provided that:
(a) if there exists no numerically corresponding day in such month, such
Interest Period shall end on the last Business Day of such month;
(b) if such Interest Period would otherwise end on a day which is not a
Business Day,
6
<PAGE>
such Interest Period shall end on the next following Business Day (unless such
next following Business Day is a Business Day falling in a new calendar month,
in which case such Interest Period shall end on the Business Day next preceding
such numerically corresponding day); and
(c) Borrower shall not be permitted to select, and there shall not be
applicable, any Interest Period that would end later than the date all principal
of the Bonds is due.
"Investment Obligations" means any one or more of the following
investments, if and to the extent the same are then legal investments under the
applicable laws of the State of Florida for moneys proposed to be invested
therein: (i) direct and general obligations of the United States of America or
obligations for which the United States of America has unconditionally
guaranteed or assumed the obligation of the payment of the principal and
interest thereon; (ii) obligations of the Federal Land Bank, Federal Home Loan
Banks, Federal National Mortgage Association, Federal Intermediate Credit
Corporation, Federal Banks for Cooperatives, and direct and general obligations
of any agencies of the United States of America not included in the foregoing
listing; (iii) direct and general full faith and credit obligations of the State
of Florida; (iv) direct and general full faith and credit obligations of any
political unit in the State of Florida; (v) obligations of banks or savings and
loan associations to the extent that the same are insured by the Federal Deposit
Insurance Corporation or the Federal Savings and Loan Insurance Corporation,
respectively; (vi) certificates of deposit or repurchase agreements of any bank
or trust company (including the Trustee) if such certificates or agreements are
collaterally secured by investments, of the type described in clauses (i), (ii)
or (iii) above held by another bank or trust company as escrow agent or
custodian, of a market value not less than the amount, including interest, of
the certificates so secured; (vii) certificates of deposit or other obligations
of banks or trust companies (including the Trustee) organized under the laws of
the United States of America or any state thereof, to the extent such
certificates or other obligations are insured by an agency of the United States
of America; (viii) funds and interests in funds the assets of which consist
solely of obligations of the type described in clauses (i) and (ii) above, which
funds shall have assets in excess of $500,000,000; and (ix) any other investment
authorized in writing by the Bondholder.
"Majority Bondholders" means the Registered Owners of a majority of the
aggregate outstanding principal amount of the Bonds.
"Outstanding" means the Bond or Bonds which have been authenticated and
delivered by the Trustee under this Indenture, except:
(i) Bonds which have been paid or redeemed or delivered to or acquired
by the Trustee for cancellation;
(ii) Bonds which have been deemed to have been paid in accordance with
Article XIII hereof; and
(iii) Bonds in lieu of which another Bond has been authenticated and
delivered under this Indenture;
7
<PAGE>
provided, however, that in determining whether the Registered Owners of the
requisite principal amount of outstanding Bonds have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Bonds owned by
the Issuer or the Borrower or any other obligor (including a guarantor) upon the
Bonds or the Loan Agreement or any Subsidiary or other Affiliate (as defined in
the Loan Agreement) of the Borrower or such other obligor shall be disregarded
and deemed not to be outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Bonds which the
Trustee knows to be so owned shall be so disregarded. Bonds so owned which have
been pledged in good faith may be regarded as outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Bonds and that the pledgee is not the Issuer or the
Borrower or any other obligor upon the Bonds or the Loan Agreement or any
Subsidiary or other Affiliate of the Borrower or such other obligor.
"Principal Office" of the Trustee or Bond Registrar means the office at
which, at the time in question, its corporate trust business is principally
conducted.
"Reference Rate" means, at any time and from time to time, the rate per
annum then most recently announced by the Bondholder at its head office as its
reference rate. The Reference Rate is not necessarily intended to be the lowest
rate of interest determined by the Bondholder in connection with extensions of
credit. Changes in the rate of interest on Reference Rate Bonds shall take
effect simultaneously with each change in the Reference Rate. The Bondholder
shall give notice promptly to Borrower of changes in the Reference Rate. The
Reference Rate shall be computed on the basis of a 365-day year for the actual
number of days elapsed.
"Reference Rate Bond" means a Bond bearing interest at a fluctuating rate
determined by reference to the Reference Rate.
"Registered Owner" shall mean the person or persons in whose name the Bond
or Bonds are registered on the books kept by the Bond Registrar for such purpose
under Section 206 of this Indenture.
"Regulatory Change" means, relative to the Bondholder:
(a) any change after the date of issuance of the Bonds in (or the
adoption, implementation, phase-in or commencement of effectiveness of) any
applicable law, guideline or request (whether or not having the force of law);
or
(b) any change after the date of issuance of the Bonds in the
application to the Bondholder of any applicable law, guideline or request
(whether or not having the force of law), including a determination by the
Bondholder to apply the requirements of changes to Regulations H and Y of the
Federal Reserve Board issued on January 19, 1989 and the regulations of the
Comptroller of the Currency, 12 C.F.R. Part 3, Appendix A, issued on January
8
<PAGE>
27, 1989 to the Bonds.
"Requisite Bondholders" shall mean the holders of more than sixty-six and
two-thirds percent (66-2/3%) of the aggregate outstanding principal amount of
the Bonds.
"Responsible Officer" when used with respect to the Trustee shall mean the
chairman or vice-chairman of the Board of directors, the chairman or
vice-chairman of the executive committee of the board of directors, the
president, any vice president, any assistant vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer or assistant trust officer, the controller,
any assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers of banking institutions with trust powers and also means, 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.
"Taxable Rate" shall mean that rate of interest established pursuant to
Section 211 hereof.
"Tax-Exempt Rate" shall mean 0.632687% of the Taxable Rate, plus .0083.
Section 102. Rules 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 "Bonds," "owner," "holder," "Bondholder,"
"Bondholder of Record" and "person" shall include the plural as well as the
singular number.
(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 reference herein to the Code or any particular provision or section
thereof shall be deemed to refer to any successors, successor provision or
section, thereof, as the case may be.
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ARTICLE II
FORM, EXECUTION AND DELIVERY OF THE BONDS
Section 201. No Bonds may be issued under the provisions of this Indenture
except in accordance with the provisions of this Article.
Section 202. Form of the Bonds. The Bonds shall be issuable as one Bond in
the original principal amount of $2,500,000 in typewritten form as registered
Bonds without coupons. The Bonds shall be substantially in the form hereinabove
set forth, with such appropriate variations, omissions and insertions as are
permitted or required by this Indenture, and may have endorsed thereon such
legends or text as may be necessary or appropriate to conform to any applicable
rules and regulations of any governmental authority or any usage or requirement
of law with respect thereto.
Section 203. Details of Bonds; Execution and Payment. The Bonds shall be
substantially in the form as attached hereto as Exhibit "A" with such variations
as are required or permitted by this Indenture. The Bonds initially issued shall
bear interest from the date thereof. Thereafter, each Bond shall bear interest
from the interest payment date next preceding the date on which it is
authenticated, unless authenticated on an interest payment date, in which case
it shall bear interest from such interest payment date, or, unless authenticated
prior to the first interest payment date, in which case it shall bear interest
from its date; provided, however, that if at the time of authentication of any
Bond interest on such Bond is in default, such Bond shall bear interest from the
date to which it has been paid or, if no interest has been paid, from its date.
The Bonds shall be signed by, or executed with the manual signature of, the
Chairman or Vice Chairman of the Issuer, and the official seal of the Issuer
shall be impressed thereon and attested by the Secretary or Assistant Secretary
of the Issuer.
In case any officer of the Issuer whose signature shall appear on the Bonds
shall cease to be such officer before the delivery of the Bonds, such signature
shall nevertheless be valid and sufficient for all purposes the same as if he
had remained in office until such delivery, and also the Bonds may be signed by
such persons as at the actual time of the execution of the Bonds shall be the
proper officers to sign the Bonds although at the date of the Bonds such persons
may not have been such officers.
The principal of and redemption premium, if any, and interest on and other
amounts payable under the Bonds shall be payable in any coin or currency of the
United States of America which on the respective dates of payment thereof is
legal tender for the payment of public and private debts. The principal of and
interest on and other amounts payable under the Bonds shall be payable to the
Registered Owner thereof by check or draft (or, if requested in writing by any
Bondholder of a Bond in the original principal amount of not less than $100,000,
in immediately available funds by wire transfer, provided the request is
received at least five (5) Business Days
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prior to the payment date) to the Registered Owner at his address (or, in the
case of a wire transfer, his account) as it appears on the Bond Registration
Books of the Bond Registrar on the payment date.
The Bonds shall not be or constitute a debt, liability or obligation of the
Issuer or of the State or any political subdivision thereof, and the Issuer
shall not be obligated to pay the Bonds or the interest or premium, if any,
thereon except from the revenues and property pledged therefor as provided in
Section 701. Neither the faith and credit nor the taxing power of the Issuer or
of the State or of any political subdivision thereof is pledged to the payment
of the principal of, premium, if any, or interest on the Bonds and the holder of
any such Bond shall not have any right to compel any exercise of the taxing
power of the Issuer or of the State or of any political subdivision thereof to
enforce such payment.
All covenants, stipulations, obligations and agreements of the Issuer
contained in the Bonds and 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 such covenant,
stipulation, obligation or agreement shall be deemed to be a covenant,
stipulation, obligation or agreement of any present or future member of the
governing body of the Issuer, or of any officer, agent or employee of the Issuer
in his individual capacity, and neither any such member nor any such officer
executing the Bonds shall be liable personally on the Bonds or be subject to any
personal liability or accountability by reason of the issuance thereof. No such
member and no such officer, agent or employee shall incur any personal liability
in acting or proceeding, or in not acting or not proceeding, in good faith,
reasonably and in accordance with terms of this Indenture.
Section 204. Authentication of Bonds. Only such Bonds having endorsed
thereon a certificate of authentication substantially in the form hereinbefore
set forth, duly executed by the Trustee, shall be entitled to any benefit or
security under this Indenture. No Bond shall be valid or obligatory for any
purpose unless and until such certificate of authentication shall have been duly
executed by the Trustee, and such certificate of the Trustee upon any such Bond
shall be conclusive evidence that such Bond has been duly authenticated and
delivered under this Indenture. The Trustee's certificate of authentication on
any Bond shall be deemed to have been duly executed if signed by an authorized
officer of the Trustee, but it shall not be necessary that the same officer sign
the certificate of authentication on all of the Bonds that may be issued
hereunder at any time.
Section 205. Exchange of Bonds. The Bonds, upon surrender thereof at the
principal office of the Trustee, together with an assignment duly executed by
the Registered Owner or his attorney or legal representative in such form as
shall be satisfactory to the Trustee, may, at the option of the Registered Owner
thereof, be exchanged for an equal aggregate principal amount of Bonds of the
same series and maturity, of any denomination or denominations authorized by
this Indenture, and bearing interest at the same rate, and in the same form as
the Bonds surrendered for exchange.
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Section 206. Transfer of Bonds. The Trustee is hereby appointed as Bond
Registrar and as such shall keep books of the Issuer for the registration and
for the registration of transfer of the Bonds as provided in this Indenture (the
"Bond Registration Books"). The Bonds may be transferred only in whole and not
in part. The transfer of the Bonds may be registered upon the Bond Registration
Books only upon surrender thereof to the Bond Registrar together with an
assignment duly executed by the Registered Owner or his attorney or legal
representative in such form as shall be satisfactory to the Bond Registrar and
an Investor Certificate in the form attached hereto as Exhibit "D". Upon any
such registration of transfer the Issuer shall execute and deliver in exchange
for such Bond a new Bond or Bonds registered in the name of the transferee, of
any denomination or denominations authorized by this Indenture, in an aggregate
principal amount equal to the principal amount of such Bond and bearing interest
at the same rate.
In all cases in which Bonds shall be exchanged or the transfer of the Bonds
shall be registered hereunder, the Issuer shall execute and deliver at the
earliest practicable time Bonds in accordance with the provisions of this
Indenture. The Bonds surrendered in any such exchange or registration of
transfer shall forthwith be cancelled by the Trustee. The Issuer or the Trustee
may make a charge for every such exchange or registration of transfer of Bonds
sufficient to reimburse it for any tax, fee or other governmental charge
required to be paid with respect to such exchange or registration of transfer,
and such charge shall be paid before any such new Bond or Bonds shall be
delivered. Neither the Issuer nor the Trustee shall be required to make any
registration of transfer of Bonds during the 15 days immediately preceding an
interest payment date on the Bonds or, in the case of any proposed redemption of
the Bonds, after any such Bond or any portion thereof has been called for
redemption.
Section 207. Ownership The person in whose name the Bonds shall be
registered upon the Bond Registration Books shall be deemed and regarded as the
absolute owner thereof for all purposes, and payment of or on account of the
principal of and interest on any such Bonds shall be made only to or upon the
order of the Registered Owner thereof or his registered assigns. All such
payment shall be valid and effectual to satisfy and discharge the liability upon
such Bonds, including the interest thereon, to the extent of the sum or sums so
paid.
Section 208. Authorization of Bopnds. There shall be initially issued under
and secured by this Indenture, Bonds of the Issuer, in the maximum aggregate
principal amount of $2,500,000.00, represented by a single Bond, for the purpose
of providing funds for paying a portion of the Cost of Acquisition of the
Project. The Bonds shall be designated "Orange County Industrial Development
Authority, Industrial Development Revenue Bonds (ELXSI Project), Series 1997",
shall be dated the date of delivery, and the aggregate principal amount thereof
shall be payable, solely from the special fund therefor more particularly
described herein, in one hundred eighty (180) monthly installments each in the
amount of $13,888.69, commencing on October 1, 1997, and continuing on the first
day of each calendar month thereafter, with a final installment of the remaining
outstanding principal amount thereof due and payable on September 1, 2012, and
interest thereon shall be payable, solely from said special fund, from the date
hereof, or as otherwise hereinabove provided, until the principal amount thereof
and interest thereon is paid in full, at the Taxable Rate or the Tax-Exempt Rate
as provided in Sections 210 and 211
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hereof. The Bonds shall have such other terms and provisions as are stated in
the form of Bond attached hereto.
The Bonds shall be executed substantially in the form and manner
hereinabove set forth and delivered to the Trustee for delivery to the
Bondholders, but prior to or simultaneously with the delivery of the Bonds by
the Trustee there shall be filed with the Trustee the following documents,
certificates and opinions:
(a) A copy, certified by the Chairman or Vice-Chairman and the Secretary or
Assistant Secretary of the Issuer, of the resolution or resolutions of the
Issuer authorizing the execution and delivery of the Loan Agreement, the
Mortgage, the Security Agreement, the Environmental Agreement, and this
Indenture, the endorsement of the Note, and the issuance of the Bonds, awarding
the Bonds and directing the delivery of the Bonds to or upon the order of the
purchasers therein named upon payment of the purchase price therein set forth.
(b) A copy, certified by the Clerk or Deputy Clerk or Deputy Assistant
Clerk of the County Commission, under its seal, of a resolution of the County
Commission approving the issuance of the Bonds in accordance with Section 147(f)
of the Code.
(c) Executed counterparts of this Indenture, the Loan Agreement, the
Mortgage, the Security Agreement, the Environmental Agreement, the Guaranty, and
the Tax Compliance Certificate.
(d) The Note, endorsed without recourse by the Issuer to the Trustee.
(e) An opinion of Counsel for the Issuer to the effect, inter alia, that
the execution and delivery of this Indenture, the Loan Agreement, the Mortgage,
the Security Agreement, and the Environmental Agreement have been duly
authorized by the Issuer, that each of such documents is in the form so
authorized and has been duly executed by the Issuer and that, assuming proper
authorization and execution of such documents by the other parties thereto, each
of such documents is legal, valid, binding and enforceable in accordance with
its terms, subject to the qualifications that enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and by general equitable
principles.
(f) Opinions of Counsel to the Borrower and the Guarantor to the effect,
inter alia, that the execution and delivery of the Note, the Loan Agreement, the
Mortgage, the Security Agreement, the Guaranty, the Environmental Agreement and
the Borrower's Tax Compliance Certificate have been duly authorized by the
Borrower or the Guarantor, as applicable, that each of such documents have been
duly executed and delivered by the Borrower or the Guarantor, as applicable, and
assuming due authorization, execution and delivery of such documents by the
other parties thereto, each of such documents is legal, valid, binding and
enforceable against the Borrower or the Guarantor, as applicable, in accordance
with its terms, subject to the qualifications that enforceability thereof may be
limited by bankruptcy, insolvency, reorganization,
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moratorium or similar laws affecting enforcement of creditors' rights generally
and by general equitable principles.
(g) An opinion of Counsel to the Borrower to the effect (i) that such
instruments and financing statements (described in such opinion) as are
necessary have been recorded and filed in the manner and places required by law
with the effect that (A) the security interest under the Security Agreement has
been perfected and creates in favor of the Issuer or the Trustee, as applicable,
the security interest intended thereby.
(h) An opinion of Bond Counsel to the effect that the issuance of the Bonds
and the execution of this Indenture have been duly and validly authorized, that
all conditions precedent to the delivery of the Bonds have been fulfilled or
waived by the Issuer, the Trustee and the Bond Purchaser, that the Bonds and
this Indenture are legal, valid and binding in accordance with their terms.
(i) A title insurance policy with respect to the real property described in
the Mortgage satisfactory to the Bond Purchaser (such satisfaction to be
conclusively presumed by its payment of the purchase price of the Bonds).
(j) Evidence satisfactory to the Bond Purchaser that the insurance policies
required by Section 6.4 of the Loan Agreement have been obtained and are in
effect (such satisfaction to be conclusively presumed by its payment of the
purchase price of the Bonds).
(k) An environmental report with respect to the real property described in
the Mortgage satisfactory to the Bond Purchaser (such satisfaction to be
conclusively presumed by its payment of the purchase price of the Bonds).
(l) Such other documents, opinions, resolutions, evidences and proofs as
the Bond Purchaser or Bond Counsel may reasonably request.
When the documents mentioned in clauses (a) through (l) of this Section
have been filed with the Trustee and when the Bonds shall have been executed as
required by this Indenture, the Trustee shall deliver the Bonds to or upon the
order of the purchaser or purchasers named in the resolution mentioned in clause
(a) of this Section but only upon payment to the Trustee for the account of the
Issuer of the portion of the purchase price of the Bonds payable at Closing in
accordance with the terms of the Bond Purchase Agreement. The Trustee shall be
entitled to rely conclusively upon such resolution, or document 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 deposit the
proceeds of the Bonds to the credit of the Project Fund.
Anything herein or in the Bonds to the contrary notwithstanding, the
obligations of the Issuer hereunder shall be subject to the limitation that
payment of interest to the holders of the Bonds shall not be required to the
extent that receipt of any such payment by the holders of the Bonds would be
contrary to the provisions of law applicable to any of such holders which limit
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the maximum rate of interest which may be charged or collected by such holders.
If, from any circumstances whatsoever, fulfillment of any provisions of this
Indenture or of the Bonds secured hereby or of any other agreement existing
between the Issuer and the Trustee, at the time performance of such provisions
shall be due, shall involve payment of interest at a rate which exceeds the
highest lawful rate as so determined, then ipso facto the obligation to be
fulfilled shall be reduced to such maximum rate of interest. If from any
circumstances whatsoever, the holder of the Bonds secured hereby shall ever
receive interest, the amount of which would exceed such maximum rate of
interest, the portion thereof which would be excessive interest shall be applied
to the reduction of the unpaid principal balance due under such Bonds and not to
the payment of interest; provided, however, that nothing contained herein or in
the Bonds shall be deemed to create a defense, contractual or otherwise, to any
sums due or to become due or coming due under this Indenture, under the Bonds
secured hereby or under any other agreement existing between the Issuer and the
Trustee where no such defense exists at law, as for example, when no limit
exists upon the rate of interest which may be charged.
Section 209. Replacement of Mutilated, Destroyed, Lost or Stolen Bonds. In
case any Bond secured hereby shall become mutilated or be destroyed, lost, or
stolen, the Issuer shall cause to be executed, and the Trustee shall deliver, a
new Bond of like tenor, and upon the cancellation of the mutilated Bond or in
lieu of and in substitution for the Bond destroyed, lost or stolen, upon the
holder's paying the reasonable expenses and charges of the Issuer and the
Trustee in connection therewith and, in the case of the Bond being destroyed,
lost or stolen, its filing with the Trustee evidence satisfactory to the Trustee
and to the Issuer that the Bond was destroyed, lost or stolen, and of its
ownership thereof, and its furnishing to the Issuer, the Borrower and the
Trustee indemnity satisfactory to each of them; provided, that if such holder
shall be a recognized financial institution, the agreement of such institution
to indemnify the Issuer and the Trustee, in a form satisfactory to them, shall
constitute satisfactory indemnity under this Section.
Section 2.10. Initial Rate; Adjustment of Rate. The Bonds shall initially
bear interest at the Taxable Rate. At the option of the Borrower, the interest
rate on the Bonds shall be adjusted to the Tax-Exempt Rate. In order to exercise
such option, the Borrower shall deliver written notice to the Bondholder stating
that the Borrower is exercising its option to adjust the interest rate on the
Bonds to the Tax-Exempt Rate, which notice shall state that the Borrower has
been notified by Bond Counsel that all legal pre-conditions to adjustment of the
interest rate (other than notice and filings that will take place on the
adjustment date) have been satisfied, and stating the adjustment date, which
date shall be no sooner than the latter of (i) five (5) Business Days from the
receipt by the Bondholder of the notice, or (ii) if the Bonds are Eurodollar
Rate Bonds, the last day of the Interest Period applicable to the Bonds. On the
adjustment date, the Borrower shall cause to be delivered to the Bondholder an
opinion of Bond Counsel in substantially the form as attached hereto as Exhibit
"E". If the Borrower fails to deliver such opinion, the Bonds shall continue to
bear interest at the Taxable Rate.
Section 211. Taxable Rate.
(a) While the Bonds bear interest at the Taxable Rate, interest shall
accrue on the
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outstanding principal amount of the Bonds at a rate per annum which shall be
either based upon the Reference Rate or based upon the Eurodollar Rate. The
Bonds, while the interest rate thereon is based upon the Reference Rate, shall
be referred to hereinafter as "Reference Rate Bonds", and the Bonds, while the
interest rate thereon is based upon the Eurodollar Rate, shall be referred to
hereinafter as "Eurodollar Rate Bonds". All Bonds outstanding must be either
Reference Rate Bonds or Eurodollar Bonds. Interest shall accrue on the
outstanding principal amount of the Bonds as follows:
(i) in the case of Reference Rate Bonds, at a per annum rate equal to
the Reference Rate from time to time in effect;
(ii) in the case of Eurodollar Rate Bonds, during each Interest Period
applicable thereto, at a per annum rate equal to the Eurodollar Rate
(Adjusted) plus 150 basis points for such Interest Period;
(b) If the Bonds are not paid when due, whether by acceleration or
otherwise, the entire unpaid principal amount of the Bonds shall bear interest
thereafter at the Overdue Rate until such amount is paid in full.
(c) Interest accrued on each Bond shall be payable, without duplication:
(i) on the date all principal of the Bonds is due pursuant to the
terms of this Indenture;
(ii) On Reference Rate Bonds, on the first day of each month;
(iii) On Eurodollar Rate Bonds, on the last day of each applicable
Interest Period, and if, such Interest Period shall exceed three months, on
that day of the third month of such Interest Period numerically
corresponding to the first day of such Interest Period (or, if there is no
such numerically corresponding day in such third month, on the last day of
such third month); and
(iv) upon acceleration of the Bonds pursuant to Section 802 hereof,
immediately upon such acceleration.
(d) Whenever any payment shall otherwise be due on a day that is not a
Business Day, such payment shall (except as otherwise required by clause (d) of
the definition of the term "Interest Period" with respect to payments on
Eurodollar Rate Bonds) be made on the next succeeding Business Day, and such
extension of time shall be included in computing interest and fees, if any, in
connection with such payment.
(e) All determinations by Bondholder of any rate of interest applicable to
the Bonds shall be conclusive absent manifest error.
Section 212. Authorized Representative. Borrower shall provide the
Bondholder
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with documentation satisfactory to the Bondholder indicating the names of those
employees of Borrower authorized by Borrower to sign Continuation/Conversion
Notices on behalf of Borrower and Borrower shall provide the Bondholder with
documentation satisfactory to the Bondholder indicating the names of the
employees of Borrower authorized by Borrower to make telephonic requests for
conversions/continuations, and the Bondholder shall be entitled to rely upon
such documentation until notified in writing by Borrower of any change(s) in the
names of the employees so authorized. The Bondholder shall be entitled to act on
the instructions of anyone reasonably believed by the Bondholder to be one of
the persons authorized to request conversions/continuations by telephone and
Borrower shall (in the absence of the Bondholder's gross negligence or willful
misconduct) be bound thereby in the same manner as if the person were actually
so authorized. Borrower agrees to indemnify and hold the Bondholder harmless
from any and all claims, damages, liabilities, losses, costs and expenses
(including Attorneys' Fees) which may arise or be created by the acceptance of
instructions for conversions/continuations by wire transfer or telephone (in the
absence of the Bondholder's gross negligence or willful misconduct).
Section 213. Increased Costs. If any Regulatory Change imposes, modifies or
deems applicable any capital adequacy, capital maintenance or similar
requirement, and as a result thereof, in the reasonable opinion of the
Bondholder, the rate of return on the Bonds to the Bondholder is reduced to a
level below that which the Bondholder could have achieved but for such
circumstances, then and in each such case upon notice from time to time by the
Bondholder to Borrower, Borrower shall pay to the Bondholder, as additional
interest on the Bonds, such additional amount or amounts as shall compensate the
Bondholder for such reduction in its rate of return (herein such additional
amounts being collectively called a "Compensatory Amount"); provided that (a)
each Compensatory Amount shall be reduced to the extent, if any, that the
Bondholder increases the Reference Rate, or the Eurodollar Rate (Adjusted), in
order to recover all or part of the increased costs which are imposed by such
Regulatory Change and (b) in determining any increased expense, reduction in
rate of return on capital or reduction in an amount received, the Bondholder
shall act reasonably and in good faith and will, to the extent the increased
costs or reductions in amounts received or receivable relate to the Bondholders
loans and commitments in general and are not specifically attributable to the
Bonds, use averaging and attribution methods which are reasonable and which
cover all loans similar to the Bonds, whether or not the loan documentation for
such other loans permits the Bondholder to receive increased costs of the type
described in this Section 213. Such notice shall contain a statement of the
Bondholder as to any such additional amount or amounts (including calculations
thereof in reasonable detail) which shall, in the absence of manifest error, be
conclusive evidence of the matters stated therein and be binding upon Borrower.
Section 214. Continuation and Conversion elections. At the election of
Borrower pursuant to a Continuation/Conversion Notice delivered by either (1)
delivering or telecopying to the Bondholder a Continuation/Conversion Notice or
(2) giving telephonic notice thereof to the Bondholder, in each case at or
before 10:00 a.m., Chicago time (and, in the case of any such telephonic notice,
promptly confirming such notice by delivering or telecopying a
Continuation/Conversion Notice therefor, signed by an authorized officer of
Borrower, to the
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Bondholder), on any Business Day, Borrower may elect, from time to time on not
less than three (3) nor more than five (5) prior Business Days' notice:
(a) that all Bonds be converted from Reference Rate Bonds into Eurodollar
Rate Bonds or from Eurodollar Rate Bonds into Reference Rate Bonds (subject to
the minimum borrowing requirements set forth in Section 214(b)(iii) hereof); and
(b) on the expiration of the Interest Period applicable to the Eurodollar
Rate Bonds, that all such Bonds be continued as Eurodollar Rate Bonds (in the
absence of delivery of such notice under either this clause (b) or clause (a)
above, Borrower will be deemed to have elected that such Eurodollar Rate Bonds
be converted into Reference Rate Bonds);
provided that:
(i) no portion of the outstanding principal amount of any Bonds may be
continued as, or be converted into, Eurodollar Rate Bonds when any Event of
Default has occurred and is continuing;
(ii) no portion of the outstanding principal amount of any Bonds may
be continued as, or be converted into, Eurodollar Rate Bonds if, after
giving effect to such action, the Interest Period applicable thereto shall
extend beyond the date of any mandatory repayment of Bonds; and
(iii) the Bonds may not be continued as, or converted into, Eurodollar
Rate Bonds if, after giving effect to such action, the aggregate principal
amount of all outstanding Bonds is less than $1,000,000.
Section 215. Funding. In the event Borrower elects to convert the principal
amount of Bonds to Eurodollar Rate Bonds pursuant to Section 214, the Bondholder
may, if it so elects, fulfill its obligation to convert the principal amount of
the Bonds into Eurodollar Rate Bonds in accordance with any election made by
Borrower by causing a foreign branch or affiliate of the Bondholder or an
international banking facility created by the Bondholder to purchase the Bonds;
provided that in such event such Eurodollar Rate Bonds shall be deemed to be
held by the Bondholder, and the obligation of Borrower to repay such Eurodollar
Rate Bonds shall nevertheless be to the Bondholder, and shall be deemed to be
held by it, to the extent of such Eurodollar Rate Bonds, for the account of such
foreign branch, affiliate or international banking facility. In addition,
Borrower hereby consents and agrees that, for purposes of any determination to
be made for purposes of this Indenture, it shall be conclusively assumed that
the Bondholder elected to fund Eurodollar Rate Bonds by purchasing Dollar
deposits in its Eurodollar Office's interbank eurodollar market.
Section 216. Eurodollar Rate Lending Unlawful. If, as the result of any
Regulatory Change, the Bondholder shall determine (which determination shall be
conclusive and binding on Borrower) that it is unlawful for the Bondholder to
make, continue, or maintain the Bonds as, or to convert any Bonds into,
Eurodollar Rate Bonds, the obligations of the Bondholder to
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continue, or maintain, as the case may be, the Bonds as, or to convert the Bonds
into, Eurodollar Rate Bonds shall, upon such determination (and telephonic
notice thereof confirmed in writing to Borrower), forthwith be suspended (but
only to the extent unlawful) until the Bondholder shall notify Borrower that the
circumstances causing such suspension no longer exist, and all Eurodollar Rate
Bonds shall automatically convert into Reference Rate Bonds. If prior to the
date on which the Bonds are to be made or continued as, or be converted into,
Eurodollar Rate Bonds, the Bondholder shall have determined (and telephonic
notice thereof, confirmed in writing, shall have been given to Borrower) that:
(a) dollar deposits in the relevant amount and for the relevant Interest
Period are not available to the Bondholder in the interbank eurodollar market;
or
(b) by reason of circumstances affecting the interbank eurodollar market,
adequate means do not exist, for ascertaining the interest rate applicable
hereunder to such Eurodollar Rate Bonds,
then, the obligations of the Bondholder to continue the Bonds as, or to convert
the Bonds into, Eurodollar Rate Bonds shall forthwith be suspended until the
Bondholder shall notify Borrower that the circumstances causing such suspension
no longer exist.
Section 218. Increased Eurodollar Rate Bond Costs, etc. Borrower agrees to
reimburse the Bondholder for any increase in the cost to the Bondholder of the
Bonds as, or of converting (or of its obligation to convert) the Bonds into,
Eurodollar Rate Bonds, and for any reduction in the amount of any sum receivable
by the Bondholder hereunder in respect of the Bonds as, or converting the Bonds
into, Eurodollar Rate Bonds, which increased cost or reduced amount (a) results
from a Regulatory Change and (b) is not attributable to Excluded Taxes
applicable to the Bondholder, in each case imposed by the jurisdiction under the
laws of which it is constituted or in which it is doing business or, a Tax of
any jurisdiction imposed by withholding with respect to a payment hereunder. In
any such event, the Bondholder shall promptly notify Borrower thereof, stating
the reasons therefor and the additional amount required fully to compensate the
Bondholder for such increased cost or reduced amount. Such additional amounts
shall be payable in full on the earlier of each interest payment date occurring
after they have accrued and on demand. A statement as to any such increased cost
or reduced amount or any change therein (including calculations thereof in
reasonable detail) shall be submitted by the Bondholder to Borrower and shall,
in the absence of manifest error, be conclusive and binding on Borrower;
provided that Borrower shall not be liable in respect of any such increased cost
or reduced amount as to which the Bondholder became aware and failed to notify
Borrower promptly if and to the extent that prompt notice could have avoided or
materially lessened payment by Borrower hereunder.
Section 219. Funding Losses. In the event the Bondholder shall incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by the
Bondholder to maintain any portion of the principal
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amount of the Bonds as, or to convert any portion of the principal amount of the
Bonds into, Eurodollar Rate Bonds) as a result of:
(a) repayment or prepayment of the principal amount of Eurodollar Rate
Bonds on a date other than the scheduled last day of the Interest Period
applicable thereto;
(b) any conversion of Eurodollar Rate Bonds to Reference Rate Bonds
pursuant to Section 214 hereof prior to the expiration of the Interest Period
then applicable thereto, then, upon the request of the Bondholder to Borrower,
Borrower shall pay to the Bondholder such amount as will (in the reasonable
determination of the Bondholder) reimburse the Bondholder for such loss or
expense. A statement as to any such loss or expense (including calculations
thereof in reasonable detail) shall be submitted by the Bondholder to Borrower
and shall, in the absence of manifest error, be conclusive and binding on
Borrower. Any payment required under this Section 219 shall not constitute a
premium or penalty under any circumstances.
Section 220. Bondholder to Calculate and Invoice Payments. The Bondholder
shall calculate all principal of and interest due on the Bonds and shall provide
the Trustee and the Company monthly statements of amounts due. Unless the
Bondholder shall have notified the Trustee otherwise, all payments from the
Company representing amounts due on the Bonds shall be paid by the Company
directly to the Bondholder and the Trustee shall have no obligation to invoice
for or collect such monthly payments.
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ARTICLE III
REDEMPTION OF BONDS
Section 301. Redemption of Bonds.
(a) The Bonds issued under the provisions of this Indenture shall not be
subject to prior redemption except in accordance with the provisions of this
Article III.
(b) In the event that the Issuer and the Trustee shall receive written
notice pursuant to Article X of the Loan Agreement that the Borrower shall have
elected or shall have been required to prepay all or a portion of the unpaid
balance of the principal of the Note in accordance with and subject to Article X
of the Loan Agreement and the Bond or Bonds are to be redeemed, the Bond or
Bonds shall be called for redemption in whole or in part on the prepayment date
selected by the Borrower, at the principal amount thereof plus interest accrued
thereon to the date fixed for redemption.
(c) If, while the Bonds bear interest at the Tax-Exempt Rate, there is a
Determination of Taxability, all Bonds then outstanding shall be called for
redemption in whole on the date selected by the Borrower for mandatory payment
of the Note pursuant to Section 10.2(a) of the Loan Agreement and, on such date,
the Issuer shall pay or cause to be paid to the Trustee for the benefit of the
Bondholders and former Bondholders the sum of the following amounts hereunder:
(i) the entire principal amount of the Bonds, if any, outstanding at
the date of payment under this Section 301(c), plus accrued interest
thereon to such date of payment; plus
(ii) an amount equal to the difference between (A) the interest
actually paid on the Bonds at the applicable interest rates during the
period from the Date of Taxability to the date of payment under this
Section 301(c), and (B) the interest which would have been paid had the
Bonds borne interest at all times during such period at the Taxable Rate.
In the event of a Determination of Taxability, the Issuer shall also pay or
cause to the paid to each Bondholder and former Bondholder an amount equal to
the sum of the following amounts:
(iii) an amount equal to all penalties and interest paid or payable by
such Bondholder or former Bondholder resulting from a failure to include
interest on any Bond in the gross income of such Bondholder or former
Bondholder; plus
(iv) an amount equal to all administrative, out-of-pocket and other
expenses incurred by such Bondholder or former Bondholder which are
directly or indirectly attributable to the interest on any of the Bonds
becoming subject to federal income tax, including without limitation, costs
incurred by such Bondholder or former Bondholder in
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amending its federal tax returns. Said redemption price shall also include any
reasonable expenses of redemption and fees and expenses of the Trustee.
(d) In the event of a Cessation of Operation of the Project by the
Borrower, all Bonds then outstanding shall be called for redemption in whole on
the date selected by the Borrower for mandatory payment of the Note pursuant to
Section 10.2(b) of the Loan Agreement and, on such date, the Issuer shall pay or
cause to be paid to the Trustee for the benefit of the Bondholders the entire
unpaid principal amount of the Bonds outstanding at the date of payment, plus
accrued interest thereon to the date of payment plus all other amounts otherwise
due under the Note, the Loan Agreement and the Bonds.
(e) The Bonds shall be subject to mandatory sinking fund redemption on a
monthly basis in the amount of $13,888.69, and without notice to the Bondholder.
Section 302. Notice of Redemption. At least 20 days before the redemption
date of all or any portion of the Bonds (except for mandatory sinking fund
redemption pursuant to Section 301(e) hereof), the Trustee shall cause a notice
of any such redemption, signed by the Issuer, to be mailed by first-class mail,
postage prepaid, to each Registered Owner. Each such notice shall set forth the
date fixed for redemption, the redemption price to be paid and, if less than all
of the Bonds shall be called for redemption, the portion of the principal amount
thereof to be redeemed.
Section 303. Effect of Calling for Redemption. On the date so designated
for redemption, notice having been mailed in the manner and under the conditions
hereinabove provided, the Bonds, or portions of any Bonds, so called for
redemption shall become and be due and payable at the redemption price provided
for redemption of the Bonds or portions of any Bonds on such date and, if moneys
for payment of the redemption price shall be held by the Trustee in trust for
the holders of the Bonds or portions thereof to be redeemed, all as provided in
this Indenture, interest on the Bonds or portions of any Bonds called for
redemption shall cease to accrue, the Bonds or portions of any Bond shall cease
to be entitled to any benefit or security under this Indenture, and any holders
or any Registered Owner of the Bonds or portions of any Bonds shall have no
right in respect thereof except to receive payment of the redemption price
thereof and except the right to receive payments pursuant to Section 301(c)
hereof.
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ARTICLE IV
PROJECT FUND
Section 401. Creation of and Deposits to the Project Fund. A special fund
is hereby created and designated "Orange County Industrial Development
Authority, Industrial Development Revenue Bonds (ELXSI Project), Series 1997
Project Fund" (the "Project 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 from any other source for payment of the Cost of
Acquisition of the Project, including all proceeds of the sale of the Bonds and
insurance and condemnation proceeds as provided in the Loan Agreement, shall be
deposited to the credit of the Project Fund.
The moneys in the Project Fund shall be held by the Trustee in trust and,
subject to the provisions of Sections 405 and 602 of this Indenture, shall be
applied to the payment of the Cost of Acquisition of the Project and, pending
such application, shall be and are hereby made subject to a lien and charge in
favor of the holders of the Bonds issued and outstanding under this Indenture
and for the further security of such holders until paid out or transferred as
herein provided.
Section 402. Payments from the Project Fund. Payment of the Cost of
Acquisition of the Project shall be made from the Project Fund. Payment of the
purchase price of the Bonds shall be made to the Trustee in accordance with the
Bond Purchase Agreement, deposited by the Trustee upon receipt in the Project
Fund and disbursed by the Trustee to the Borrower upon presentation of a
requisition and certificate, signed by the Borrower Representative (solely in
the form of the Requisition and Certificate attached hereto as Exhibit "A" and
incorporated herein). 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 Project Fund.
The Trustee is authorized and directed to apply the moneys in the Project
Fund in accordance herewith but only upon receipt of the requisitions required
by this Section 402, duly executed by the persons and in the manner provided for
herein. The Trustee is authorized to disburse funds from the Project Fund upon
approval of the Bondholder without any further inquiry or investigation by the
Trustee. Anything in this Section 402 to the contrary notwithstanding, the
Trustee shall make initial disbursements on the date of issuance of the Bond
without being presented with a Requisition, as follows: (i) the sum of
$1,207,746.90 shall be paid to Akerman, Senterfitt & Eidson, P.A., as closing
agent, representing payment of the purchase price of the New Facility Site, (ii)
the sum of $20,000 shall be paid to the Borrower to reimburse it for prepayment
of a portion of the purchase price of the New Facility Site, and (iii) up to
$50,000 shall be paid at the written direction of the Company to pay costs of
issuance of the Bonds.
All requisitions in the form of Exhibit "A" hereto and any other
statements, orders, certifications and approvals received by the
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Trustee, as required by this Article as conditions of payment from the Project
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 Loan Agreement shall remain in force and effect), the Issuer, any
Bondholder and the agents and representatives thereof.
Section 404. Completion Date. The establishment of the Completion Date
shall be in accordance with Sections 4.3 of the Loan Agreement, respectively.
Section 405. Transfer to the Bond Fund. In the event that the Borrower
should elect or be required to prepay the Note in its entirety pursuant to
Article X of the Loan Agreement or that the Trustee shall declare the Bonds to
be due and payable pursuant to Section 802 hereof, the Trustee shall, without
further authorization, forthwith transfer any balance remaining in the Project
Fund to the Bond Fund.
Section 406. Trustee's Records. The Trustee shall maintain adequate records
pertaining to all disbursements from the Project Fund. After the Completion
Date, the Trustee shall deliver to the Issuer and the Borrower a final
accounting with respect to the Project Fund.
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ARTICLE V
BOND FUND
Section 501. Creation of and Deposits to the Bond Fund. A special fund is
hereby created and designated "Orange County Industrial Development Authority,
Industrial Development Revenue Bonds (ELXSI Project), Series 1997 Bond Fund"
(the "Bond Fund"). The moneys in the Bond Fund shall be held by the Trustee in
trust and, pending their application in accordance with the provisions of this
Article V, shall be subject to a lien and charge in favor of the holders of the
Bonds issued and outstanding under this Indenture and for the further security
of the holders until paid out or transferred as herein provided.
The Issuer covenants that it will cause to be deposited, and the Trustee
agrees to deposit, to the credit of the Bond Fund the following:
(a) any amount in the Project Fund to be transferred to the Bond Fund in
accordance with the provisions of Section 405 hereof;
(b) any payments and any prepayments made on the Note or the Bonds (as the
case may be) provided that such payments, unless elected otherwise by the
Bondholder, shall be made by the Company directly to the Bondholder without
paying such amounts into the Bond Fund; and
(c) all other moneys received by the Trustee which are required, or are
accompanied by directions from the Borrower or the Issuer that such moneys are,
to be paid into the Bond Fund.
Section 502. Use of Moneys in the Bond Fund. If the Bondholder has not
elected to have the Company make payments directly to the Bondholder pursuant to
Section 501(b) hereof, the Trustee shall, on or before each interest payment
date for the Bonds, withdraw from the Bond Fund and remit by check or draft or,
if requested in writing (at least five (5) Business Days prior to the payment
date) by any Bondholder of a Bond in original principal amount of not less than
$100,000, in immediately available funds by wire transfer, to the Registered
Owners of the Bonds the amounts required for paying the interest on the Bonds as
such interest becomes due and payable, and set aside sufficient moneys for
paying, and, in like manner, withdraw from the Bond Fund and pay, on each
principal payment date, the principal of the Bonds as the same becomes due,
whether at maturity or by redemption or declaration or otherwise.
Upon receipt of a written notice from the Borrower pursuant to Article X of
the Loan Agreement, and upon the deposit of cash or Government Obligations in
the Bond Fund sufficient, together with other amounts available therefor in the
Bond Fund, to prepay, in whole or in part, the Bonds, the Issuer and the Trustee
covenant and agree to take and cause to be taken the necessary steps to prepay
such Bonds as specified by the Borrower in such written notice.
Section 503. Moneys Withdrawn from the Bond Fund or Received from Other
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Sources. All moneys which the Trustee shall have withdrawn from the Bond Fund or
shall have received from any other source and set aside for the purpose of
paying the Bonds hereby secured, including without limitation, all amounts
received under the Mortgage, the Environmental Agreement and the Security
Agreement, either at or before the maturity thereof, or at any other time, shall
be held in trust for the holders of the Bonds. Promptly after receipt of any
such amounts paid under the Mortgage, the Environmental Agreement or the
Security Agreement, the Trustee shall distribute said amounts as provided in
Section 805 hereof.
Section 504. Non-Presentment of Bonds; Escheat. Any moneys deposited with
the Trustee or then held by the Trustee in trust for the payment of the
principal of, premium, if any, or interest on the Bonds and remaining unclaimed
for two years, shall be paid to the Borrower. Thereafter, the holders of the
Bonds shall look only to the Borrower for payment and then only to the extent of
the amount so received without any interest thereon, and the Trustee and the
Issuer shall have no responsibility with respect to such moneys.
Section 505. Cancellation of any Bond Upon Payment. The Bonds, when paid,
redeemed or purchased, either at or before maturity shall be cancelled upon
payment, redemption or purchase. The Bonds if cancelled under any of the
provisions of this Indenture shall be cremated, shredded or otherwise destroyed
by the Trustee.
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ARTICLE VI
DEPOSITARIES OF MONEYS, SECURITY FOR DEPOSITS
AND INVESTMENT OF FUNDS
Section 601. Security for Deposits. All moneys deposited with the Trustee
under the provisions of this 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 or the
Borrower.
Section 602. Investment of Moneys. At the request and the direction of the
Borrower Representative (confirmed in writing), moneys held for the credit of
the Project Fund and the Bond Fund shall be invested and reinvested by the
Trustee in Investment Obligations which shall mature on the dates set forth in
such request or direction.
Obligations so purchased as an investment of moneys in any such Fund shall
be deemed at all times to be a part of such Fund, and the interest accruing
thereon and any profit realized from such investment shall be credited to such
Fund, and any loss resulting from such investment shall be charged to such Fund.
The Trustee shall sell at the market price or present for redemption any
obligations 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. 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 602.
For the purpose of the Trustee's determination of the amount on deposit to
the credit of any such Fund, obligations in which moneys in such Fund 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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ARTICLE VII
PARTICULAR COVENANTS AND PROVISIONS
Section 701. Covenant to Pay Bonds; Bonds Limited Obligations of the
Issuer. The Issuer covenants that it will promptly pay the principal of,
premium, if any, 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. Such principal and interest
and other amounts are payable solely from the payments made by the Borrower on
the Note and other revenues and funds derived under the Loan Agreement, the
Mortgage, the Security Agreement, the Environmental Agreement and this
Indenture, which payments on the Note, and the revenues, funds and moneys
derived from the Loan Agreement, the Mortgage, the Security Agreement, the
Environmental Agreement, and this Indenture are hereby pledged to the payment of
the Bonds in the manner and to the extent hereinabove particularly specified.
Neither the Issuer nor any member of the governing body of the Issuer nor
any officer, agent or employee of the Issuer in his individual capacity shall in
any event be liable personally for the payment of the principal of, premium, if
any, or interest on the Bonds, or for the performance of any pledge, mortgage,
obligation or agreement of any kind whatsoever which may be undertaken by the
Issuer or any such member, officer, agent or employee, 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 provision or statutory limitation whatsoever and shall never
constitute or give rise to a pecuniary liability of the Issuer or a charge
against its general credit or taxing power. 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 of Florida 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 or any political
subdivision or any agency thereof is pledged to the payment of the principal of
or the interest on the Bonds.
Section 702. 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 Constitution and laws of the State 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 funds derived
from the Loan Agreement, the Mortgage, the Security Agreement, the Environmental
Agreement, and this Indenture in the manner and to the extent herein set forth
and to assign the Loan Agreement, the Mortgage, the Security Agreement, and the
Environmental Agreement in the manner herein provided; and that all action on
its part for the issuance of the
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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 holders
thereof are and will be the valid and enforceable obligations of the Issuer
according to the tenor and import thereof.
Section 703. Covenant to Perform Obligations under the Loan Agreement.
Subject to the provisions of Section 704 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, the Mortgage, the Security
Agreement or the Environmental Agreement except by a supplement or an amendment
duly executed by the Issuer and the Borrower with the approval of the Bondholder
and upon the further terms and conditions set forth in Article XII of this
Indenture; that it will not agree to any 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; and that it will promptly
notify the Trustee in writing of any actual or alleged Event of Default under
the Loan Agreement, the Note, the Mortgage, the Security Agreement, or the
Environmental Agreement whether by the Borrower or the Issuer, and will further
notify the Trustee at least 30 days before the proposed date of effectiveness of
any proposed termination or cancellation of the Loan Agreement.
Section 704. Trustee May Enforce Issuer's Rights Under Loan Agreement. The
Loan Agreement, a duly executed counterpart of which has been filed with the
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 other Bond Documents may not be
effectively amended, changed, modified, altered or terminated except as provided
in Section 11.9 of the Loan Agreement and Article XII 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, subject to the provisions of the Loan Agreement
and this Indenture reserving certain rights to the Issuer and respecting actions
by the 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 and the other Bond Documents for and on behalf of the Bondholders
whether or not the Issuer is in default hereunder. Notwithstanding the
foregoing, the Issuer may enforce those rights listed in subparagraphs (i)
through (xiv), both inclusive of subparagraph (a) of the granting provisions
hereof relating to the Loan Agreement.
Section 705. Covenant Against Arbitrage. The Issuer covenants and agrees
that it will not make or authorize any use, and directs the Trustee not to make
or permit any use other than at the direction of the Bond Purchaser or in accord
with the terms hereof, of the proceeds of the Bonds which would cause any Bond
to be an "arbitrage bond" within the meaning of Section 148(a) of the Code and
the applicable regulations promulgated from time to time thereunder, and
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further covenants that it will observe and not violate the requirements of
Section 148(a) 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, nor shall the
Trustee be liable by reason of any failure to make investments if not so
directed by the Borrower Representative.
Section 706. Inspection of Bond Registration Books. At reasonable times and
upon reasonable notice, the Bond Registration Books may be inspected pursuant to
the laws of Florida relating to public records and may be photocopied by the
Trustee at the expense of the person requesting copies and delivered to the
person requesting such copies.
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ARTICLE VIII
DEFAULTS AND REMEDIES
Section 801. Defaults. Each of the following events is hereby declared an
"Event of Default", that is to say, if
(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 of or any other amount payable under any of
the Bonds shall not be made when the same shall become due, whether at maturity
or by proceedings for redemption or otherwise; or
(c) An "Event of Default" or a default or an event of default under the
Loan Agreement, the Note, the Mortgage, the Security Agreement, the
Environmental Agreement, or any of the other Bond Documents shall have occurred;
provided, however, the Bondholder, in its sole discretion, may provide an
opportunity for such Event of Default to be cured; or
(d) There shall occur a 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 (d) of this Section above
shall constitute an Event of Default until written notice specifying such
default and requiring the same to be remedied shall have been given to the
Borrower and the Issuer by the Trustee, which may give notice in its discretion
and shall give such notice at the written direction of the holders of at least
twenty-five percent of the principal amount of Bonds 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.
Section 802. Acceleration. Notwithstanding anything contained in the Bonds
or in this Indenture to the contrary (but subject to the provisions of Section
903 hereof), upon the happening of any Event of Default specified in Section 801
hereof which shall not have been waived, then and in every such case the Trustee
may, and upon the written direction of the Bondholder, by a notice in writing to
the Issuer and the Borrower, declare the principal of the Bonds (if not then due
and payable) to be due and payable immediately, and upon such declaration the
same shall, together with all accrued and unpaid interest thereon, become and be
immediately due and payable. Upon any cure of a default, the Trustee may rescind
acceleration upon approval of the Requisite Bondholders.
Section 803. Trustee May Bring Suit. Upon the happening of any Event of
Default specified in Section 801 hereof which shall not have been waived, then
and in every such case the
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Trustee may, and upon the written direction of the holders of at least
twenty-five percent (25%) of the principal amount of Bonds outstanding shall
proceed, subject to the provisions of Section 903 hereof, to protect and enforce
its rights and the rights of the Bondholders under the Loan Agreement, the Note,
the Mortgage, the Security Agreement, the Environmental Agreement, this
Indenture, and the other Bond Documents by mandamus or such other suits, actions
or special proceedings in equity or at law or otherwise, or by proceedings in
the office of any board or officer having jurisdiction, either for the specific
performance of any covenant or agreement contained herein or in aid or execution
of any power herein granted or for the enforcement of any proper legal or
equitable remedy, as the Trustee, being advised by counsel, shall deem most
effectual to protect and enforce such rights.
In the enforcement of any remedy under this Indenture, the Trustee shall be
entitled to sue for, enforce payment of and recover judgment for, in its own
name and as trustee of an express trust, any and all amounts then or after any
default becoming, and at any time remaining, due from the Issuer for principal,
interest, or otherwise under any of the provisions of this Indenture or of the
Loan Agreement, and unpaid, with interest on overdue payments of principal and
interest at the Overdue Rate, together with any and all costs and expenses of
collection and of all proceedings hereunder and under the Bonds, without
prejudice to any other right or remedy of the Trustee or of the Bondholders, and
to recover and enforce any judgment or decree against the Issuer, but solely as
provided herein and in the Bonds, for any portion of such amounts remaining
unpaid and interest, costs and expenses as above provided, and to collect (but
solely from moneys in the Bond Fund and any other moneys available for such
purpose), in any manner provided by law, the moneys adjudged or decreed to be
payable.
Section 804. 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 (including a
guarantor) upon the Loan Agreement or the Bonds or to the property of the
Issuer, the Borrower, or such other obligor or the creditors of any of them, the
Trustee (irrespective of whether the principal of the Bonds shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand on the Borrower for the
payment of 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,
(i) 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 Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel) and of the Bondholders allowed in such judicial proceeding; and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
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and any receiver, assignee, trustee, liquidator, sequestrator (or other similar
official) in any such judicial proceeding is hereby authorized by the
Bondholders to make such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments directly to the
Bondholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 903 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept, or adopt on behalf of the Bondholders, any
plan of reorganization, arrangement, adjustment or composition affecting the
Bonds or the rights of any Bondholder thereof, or to authorize the Trustee to
vote in respect of the claim of the Bondholder in any such proceeding.
All moneys received by the Trustee pursuant to any right given or action
taken under this Indenture shall, after payment of the costs and expenses of the
proceedings resulting in the collection of such moneys and the fees and expenses
of the Trustee, be deposited in the Bond Fund and applied to the payment of the
principal of, premium, if any, and interest then due and unpaid on the Bonds in
accordance with the provisions of the Indenture.
Section 805. Pro Rata Application of Funds. Anything in this Indenture to
the contrary notwithstanding, and subject to the obligations under Section 905,
if at any time the moneys in the Bond Fund shall not be sufficient to pay the
interest on or the principal of the Bonds as the same shall become due and
payable (either by their terms or by acceleration of maturity under the
provisions of Section 802 hereof), such moneys, together with any moneys then
available or thereafter becoming available for such purpose, whether through the
exercise of the remedies provided for in this Article or otherwise, shall be
applied as follows:
(a) If the principal of the Bonds shall not have become due and payable or
shall not have been declared due and payable, all such moneys shall be applied
as follows:
first: to the payment to the Persons entitled thereto of all
installments of interest and other amounts payable under the Bonds then due
and payable in the order in which such installments become due and payable,
with interest on the overdue installments of interest at the Overdue Rate,
and, if the amount available shall not be sufficient to pay in full any
particular installment, then to the payment, ratably, according to the
amounts due on such installment, to the Persons entitled thereto, without
any discrimination or preference;
second: to the payment to the Persons entitled thereto of the unpaid
principal of the Bonds which shall have become due and payable, with
interest on the principal amount of the Bonds at the Overdue Rate, from the
due date thereof to the date of payment hereunder, and, if the amount
available shall be insufficient to make all such payments in full, then to
the payment ratably in accordance with the respective amounts of principal
owing to the Persons entitled thereto, without discrimination or
preference; and
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third: to the payment of the interest on and the principal of the
Bonds, to the purchase and retirement of the Bonds and to the redemption of
the Bonds, all in accordance with the provisions of this Indenture.
Notwithstanding any other provision of this Indenture to the contrary, the
Trustee shall have a lien on all amounts held hereunder for the payment of its
fees and expenses, including attorneys' fees. Such lien shall be prior to all
other liens granted hereunder, including the payment of principal and interest
on the Bonds.
(b) If all the principal of the Bonds shall have become due and payable or
shall have been declared due and payable, all such moneys shall be applied to
the payment of the principal and interest and other amounts then due upon the
Bonds, with interest on the overdue installments of principal and interest at
the Overdue Rate, from the due date thereof to the date of payment hereunder,
without preference or priority of principal over interest or of interest over
principal, or of any installment of interest over any other installment of
interest, ratably, according to the amounts due respectively for principal and
interest, to the Persons entitled thereto without any discrimination or
preference.
(c) If all the principal of the Bonds shall have been declared due and
payable and if such declaration shall thereafter have been rescinded and
annulled under the provisions of Section 813 hereof, then, subject to the
provisions of subsection (b) of this Section 805 in the event that the principal
of the Bonds shall later become due and payable or be declared due and payable,
the moneys remaining in and thereafter accruing to the Bond Fund shall be
applied in accordance with the provisions of subsection (a) of this Section 805.
Whenever moneys are to be applied by the Trustee pursuant to the provisions
of this Section 805, such moneys shall be applied without preference or priority
of one Bondholder over another by the Trustee at such times, and from time to
time, as the Trustee in its sole discretion shall determine, having due regard
to the amount of such moneys available for application and the likelihood of
additional moneys becoming available for such application in the future; the
setting aside of such moneys, in trust for the proper purpose, shall constitute
proper application by the Trustee; and the Trustee shall incur no liability
whatsoever to the Issuer, to the Bondholders or to any other Person for any
delay in applying any such moneys, so long as the Trustee acts with reasonable
diligence, having due regard to the circumstances, and ultimately applies the
same in accordance with such provisions of this Indenture as may be applicable
at the time of application by the Trustee. Whenever the Trustee shall exercise
such discretion in applying such moneys, it shall fix the date (which shall be
an interest payment date unless the Trustee shall deem another date more
suitable) upon which such application is to be made and upon such date interest
on the amounts of principal to be paid on such date shall cease to accrue. The
Trustee shall give such notice as it may deem appropriate of the fixing of any
such date, and shall not be required to make payment to any holder of the Bonds
until each Bond shall be surrendered to the Trustee for appropriate endorsement,
or for cancellation if fully paid.
Section 806. Effect of Discontinuance of Proceedings. In case any
proceeding taken
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by the Trustee on account of any default shall have been discontinued or
abandoned for any reason, then and in every case the Issuer, the Trustee and the
Bondholders shall be restored to their former positions and rights hereunder,
respectively, and all rights, remedies, powers and duties of the Trustee shall
continue as though no proceeding had been taken.
Section 807. Holder of Bond May Control Proceedings. Anything in this
Indenture to the contrary notwithstanding, the Majority Bondholders shall have
the right, subject to the provisions of Section 903 hereof, by an instrument or
concurrent instruments in writing executed and delivered to the Trustee, to
direct the method and place of conducting all remedial proceedings to be taken
by the Trustee hereunder or exercising any trust or power conferred upon the
Trustee, provided that such direction shall not be otherwise then in accordance
with law and the provisions of this Indenture, and provided, further, subject to
the provisions of Section 901 hereof, that the Trustee may take any other action
deemed proper by the Trustee which is not inconsistent with such direction.
Section 808. Restrictions Upon Actions by Bondholder. A Bondholder shall
not have any right to institute any suit, action or proceeding in equity or at
law on the Bonds or for the execution of any trust hereunder or for any other
remedy hereunder except that the Bondholders may institute any such suit, action
or proceeding in their own name for their benefit. It is understood and intended
that, except as otherwise above provided, no Bondholder hereby secured shall
have any right in any manner whatever by his action to affect, disturb or
prejudice the security of this Indenture, or to enforce any right hereunder
except in the manner provided and that all proceedings at law or in equity shall
be instituted, had and maintained in the manner herein provided and for the
benefit of the Bondholders, and that any individual right of action or any other
right given to such holder by law is restricted by this Indenture to the rights
and remedies herein provided. Notwithstanding any other provision in this
Indenture, each Bondholder shall have the right, which is absolute and
unconditional, to receive payment of the principal of, premium, if any, and
interest on their respective Bonds on the respective due dates expressed in each
Bond (or, in the case of redemption, on the redemption date) and to institute
suit for the enforcement of any such payment, and such right shall not be
impaired without the consent of the Bondholder.
Section 809. Receiver. Upon the occurrence of an Event of Default and upon
the filing of a suit or other commencement of judicial proceedings to enforce
the rights of the Trustee and of the Bondholders under this Indenture, the
Trustee shall be entitled, as a matter of strict right and without regard to the
value or occupancy of the security or the solvency of the Issuer or the
Borrower, 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 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 810. Actions by Trustee. All rights of action under this Indenture
or under the Bonds secured hereby, enforceable by the Trustee, may be enforced
by it without the possession of the Bonds or the production thereof in the trial
or other proceeding relative thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name for the
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benefit of the holders of the Bond, subject to the provisions of this Indenture.
Section 811. No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Trustee or to the holders of the Bonds is intended to be
exclusive of any other remedy or remedies herein provided, and each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or, subject to the terms of Section 808 hereof, by law.
Section 812. No Delay or Omission Construed to be a Waiver. No delay or
omission of the Trustee or of the holders of the Bonds to exercise any right or
power accruing upon any default shall impair any such right or power or shall be
construed to be a waiver of any such default or any acquiescence therein; and
every power and remedy given by this Indenture to the Trustee and to the
Bondholders, respectively, may be exercised from time to time and as often as
may be deemed expedient.
Section 813. Waiver of Defaults. Before the entry of final judgment or
decree in any suit, action or proceeding instituted by it under the provisions
of this Indenture or before the completion of the enforcement of any other
remedy under this Indenture, the Trustee, with the consent of the Requisite
Bondholders, shall be permitted to discontinue such suit, action, proceeding, or
enforcement of any remedy if in its opinion any default forming the basis of
such suit, action, proceeding or enforcement of any remedy shall have been
remedied. Upon any such discontinuation, all parties shall be restored to their
respective rights and positions as existing immediately prior to such suit,
action or proceeding.
Section 814. Remedies Herein Additional to Remedies in Other Agreements.
The remedies conferred in this Article shall be in addition to all remedies
provided for in the Loan Agreement, the Mortgage, the Environmental Agreement,
and the Security Agreement, which remedies are hereby incorporated herein by
reference.
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ARTICLE IX
CONCERNING THE TRUSTEE
Section 901. Acceptance of Trusts. The Trustee hereby represents and
warrants to the Issuer (for the benefit of the Borrower and the Bondholders as
well as the Issuer) that it is duly authorized under the laws of the United
States of America and the laws of 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 Bondholders
agree:
(a) Until the occurrence of an Event of Default within the purview of
Section 801 hereof,
(i) 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
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this 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, as the case may
be, the Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Indenture.
(b) In case an Event of Default within the purview of Section 801 hereof
has occurred, 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.
(c) 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
(i) this subsection shall not be construed to limit the effect of
subsection (a) of this Section 901;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a responsible officer or officers of the Trustee unless it
shall be proved that the Trustee was grossly negligent in ascertaining the
pertinent facts; and
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(iii) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Requisite Bondholders 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.
(d) Whether or not herein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee, including without limitation, Sections 903 and 904
hereof, shall be subject to the provisions of this Section 901.
Section 902. Trustee to Give Notice.
(a) Within 30 days after the Trustee's notice of any Event of Default
hereunder, the Trustee shall give to all Bondholders written notice of all
defaults known to it. For the purpose of this Section 902 only, the term
"default" means any event which is, or after notice or lapse of time or both
would become, an Event of Default under Section 801 hereof.
(b) Promptly upon receipt of notice of the occurrence of an Event of
Taxability or a Determination of Taxability, the Trustee shall give notice
thereof to the Borrower and to all Bondholders and former Bondholders.
Section 903. Trustee Entitled to Indemnity. The Trustee shall be under no
obligation to institute any suit, or to take any remedial proceeding under this
Indenture, the Note, the Mortgage, the Security Agreement, the Environmental
Agreement, or the Loan Agreement, or to enter any appearance in or in any way
defend against any suit, in which it may be made a defendant, or to take any
steps in the enforcement of any rights and powers hereunder, under the Note, the
Mortgage, the Security Agreement, the Environmental Agreement, or under the Loan
Agreement, until it shall be indemnified to its satisfaction against any and all
costs and expenses, outlays and counsel fees and other reasonable disbursements,
and against all liability; the Trustee may, nevertheless, begin suit, or appear
in and defend suit, or do anything else in its judgment proper to be done by it
as such Trustee, without indemnity, and in such case the Issuer shall reimburse
the Trustee 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. If the Issuer shall fail to make
reimbursement, the Trustee may reimburse itself from any moneys in its
possession under the provisions of this Indenture and shall be entitled with
respect thereto to a preference over the Bonds.
Section 904. Trustee Not Responsible for Insurance, Taxes, Execution of
Indenture, Acts of the Issuer or Application of Moneys Applied in Accordance
with this Indenture. The Trustee shall not be under any obligation to effect or
maintain insurance or to renew any policies of insurance or to inquire as to the
sufficiency of any policies of insurance carried by the Borrower, or to report,
or make or file claims or proof of loss for, any loss or damage insured
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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.
The Trustee shall have no responsibility in respect of the validity,
sufficiency, due execution or acknowledgment of this Indenture or the validity
or sufficiency of the security provided hereunder or in respect of the validity
of the Bonds or the due execution or issuance thereof. The Trustee shall not be
under any obligation to see that any duties herein imposed upon any party other
than itself, or any covenants herein contained on the part of any party other
than itself to be performed, shall be done or performed, and the Trustee shall
be under no obligation for failure to see that any such duties or covenants are
so done or performed.
The Trustee shall not 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. The Trustee shall not be responsible for
the application of any of the proceeds of the Bonds or any other moneys
deposited with it and paid out, withdrawn or transferred hereunder if such
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 hereunder shall
extend to its directors, officers, employees and agents.
Section 905. Compensation. Subject to the provisions of any contract
relating to the compensation of the Trustee, the Issuer shall cause the Borrower
to pay to the Trustee as Administrative Expenses its reasonable fees and charges
in accordance with Section 7.5 of the Loan Agreement. If the Borrower shall fail
to make any payment required by this Section 905, 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.
Section 906. Trustee to Preserve Records. All records and files pertaining
to the Project in the custody of the Trustee shall be open at all reasonable
times to the inspection of the Issuer and the Borrower and their agents and
representatives.
Section 907. Trustee May be Bondholder. The institution acting as Trustee
under this Indenture, and its 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 Bondholder in any action
which any Bondholder may be entitled to take with like effect as if such
institution were not the Trustee under this Indenture.
Section 908. 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, and
the Trustee shall not be under any responsibility for the correctness of the
same.
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Section 909. No Trustee Responsibility for Recording or Filing. The Trustee
shall not be under any obligation to see to the recording or filing of this
Indenture, the Loan Agreement, the Mortgage, the Assignment, the Security
Agreement, any financing statements or any other instrument related hereto of
thereto or otherwise to see to the giving to any person of notice of the
provisions hereof or thereof.
Section 910. Trustee May Rely on Certificates. Subject to the provisions of
Section 901(a)(ii) hereof, the Trustee shall be protected and shall incur no
liability in acting or proceeding, or in not acting or not proceeding, in good
faith, reasonably and in accordance with the terms of this 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 reasonably believe to be genuine and to have been adopted or signed by the
proper board or person or to have been prepared and furnished pursuant to any of
the provisions of 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 the Trustee shall not be
under any duty to make any investigation or inquiry as to any statements
contained or matters referred to in any such instrument.
Section 911. Qualification of the Trustee. There shall at all times be a
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 $25,000,000, subject to supervision or
examination by Federal or state authority. 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 911, 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. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 911, it shall resign immediately in the manner and
with the effect specified in Section 912 hereof.
Section 912. Resignation and Removal of Trustee.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 913 hereof.
(b) The 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 shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the retiring Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by an instrument or instruments
in
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writing to the Trustee, with copies to the Issuer and the Borrower, signed by
the Majority Bondholders or by their attorneys, legal representatives or agents
and delivered to the Trustee, the Issuer and the Borrower (such instruments to
be effective only when received by the Trustee).
(d) If at any time:
(i) the Trustee shall cease to be eligible under Section 911 hereof,
and shall fail to resign after written request therefor by the Borrower or
by the Majority Bondholders, or
(ii) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
in any such case, (A) the Issuer or the Borrower may remove the Trustee, or (B)
any Bondholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Issuer
with the approval of the Borrower shall promptly appoint a successor. If, within
one year after such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee shall be appointed by act of the Majority
Bondholders delivered to the Borrower and the retiring Trustee, the successor
Trustee or appointed shall, forthwith upon its acceptance of such appointment,
become the successor Trustee and supersede the successor Trustee appointed by
the Issuer and approved by the Borrower. If no successor Trustee shall have been
so appointed by the Issuer and approved by the Borrower or the Majority
Bondholders and accepted appointment in the manner hereinafter provided, any
Bondholder, if he has been a bona fide holder of a Bond for at least six months,
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(f) The Issuer shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor 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 principal corporate
trust office of the successor Trustee.
Section 913. Successor Trustee. Every successor 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 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 905
hereof, execute and deliver an instrument transferring to such
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successor Trustee all the rights, immunities, powers and trusts of such
predecessor hereunder; and every predecessor Trustee shall deliver all property
and moneys held by it hereunder to its successor, subject, nevertheless, to its
preference, if any, provided for in Section 903 and 905 hereof. Should any
instrument in writing from the Issuer be required by any successor Trustee for
more fully and certainly vesting in such Trustee the rights, immunities, powers
and trusts hereby vested or intended to be vested in the predecessor Trustee,
any such instrument in writing shall and will, on request, be executed,
acknowledged and delivered by the 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 hereunder with or into
which the bank or trust company acting as Trustee 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.
Section 914. Co-Trustee. It is the intent 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 and in particular in case of the
enforcement of the assignment and security interest contained in this Indenture
upon the occurrence of any 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 914 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 right, 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 in such
properties, rights, powers, trusts, duties and obligations, any and all such
deeds, conveyances and instruments shall, on request, be executed, acknowledged
and delivered by the Issuer. In case any separate Trustee or Co-Trustee or a
successor to either, shall die, become incapable of acting, resign or be
removed, all the estates, properties, rights, powers, trusts, duties and
obligations of such separate Trustee or Co-Trustee, so far as permitted by law,
shall vest in and be exercised by the Trustee until the appointment of a new
Trustee or successor to such separate Trustee or Co-Trustee.
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Section 915. Covenant to Notify Issuer of Certain Matters. The Trustee
shall notify the Issuer of the following by not later than October 31 of each
year: (a) any change in the identity of the Borrower (of which the Trustee has
been provided notice) or the Trustee occurring during the preceding 12 months,
and (b) the outstanding principal balance of the Bonds as of September 30 of
each year.
ARTICLE X
EXECUTION OF INSTRUMENTS BY BONDHOLDERS
AND PROOF OF OWNERSHIP OF BONDS
Section 1001. Execution of Instruments by Bondholders and Proof of
Ownership of Bonds. Any request, direction, consent or other instrument in
writing required or permitted by this Indenture to be signed or executed by a
Bondholder may be signed or executed by the Bondholder or its attorney or
attorney-in-fact. 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 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 1001 shall be construed as limiting the
Trustee to such proof, it being intended that the Trustee may accept any other
evidence of the matters herein stated which may be sufficient. Any request or
consent of a Bondholder shall bind every future holder of the Bonds or any Bonds
issued in place thereof in respect of anything done by the Trustee in pursuance
of such request or consent.
Notwithstanding any of the foregoing provisions of this Section 1001, the
Trustee shall not be required to recognize any person as a holder of Bonds or to
take any action at his request unless the Bonds shall be deposited with it.
Section 1002. Preservation of Information. The Trustee shall preserve in
the Bond Registration Books, in as current a form as is reasonably practicable,
the name and address of each Bondholder received by the Trustee in its capacity
as Bond Registrar.
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ARTICLE XI
SUPPLEMENTS AND AMENDMENTS TO INDENTURE
Section 1101. Supplements and Amendments Not Requiring Bondholder Consent.
The Issuer and the Trustee may, without consent or approval of the Bondholders,
enter into such supplements and amendments to this Indenture (which supplements
and amendments shall thereafter form a part hereof), for any of the following
purposes:
(a) to cure any ambiguity or formal defect or omission in this Indenture or
in any supplement or amendment to this Indenture, or
(b) to grant to or confer upon the Trustee for the benefit of the
Bondholders any additional rights, remedies, powers, authority or security that
may lawfully be granted to or conferred upon the Bondholders or the Trustee, or
(c) to subject to the liens and pledge of this Indenture additional
payments, revenues, properties or collateral, or
(d) to modify, amend or supplement this Indenture or any supplement or
amendment hereto in such manner as to permit the qualification hereof and
thereof under the Trust Indenture Act of 1939, as amended, or any similar
Federal statute hereafter in effect or to permit the qualification of the Bonds
for sale under the securities laws of any of the states of the United States,
and, if they so determine, to add to this Indenture or any supplement or
amendment hereto such other terms, conditions and provisions as may be permitted
by said Trust Indenture Act of 1939 or similar Federal statute.
Section 1102. Supplements and Amendments Requiring Bondholder Consent. With
the consent of the Requisite Bondholders, the Issuer and the Trustee may, from
time to time and at any time, enter into supplements and amendments to this
Indenture for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Indenture or of any supplement or
amendment to this Indenture or of modifying in any manner the rights of the
Bondholders; provided, however, that no supplement or amendment to this
Indenture which extends the maturity date of the Bonds or the terms of payment
of the Bonds, or alters the rate of interest payable thereunder or the manner or
method of amending or supplementing this Indenture shall be made without the
consent of all Bondholders. Nothing herein contained, however, shall be
construed as making necessary the approval by the Bondholders of the execution
of any supplement or amendment to this Indenture as authorized in Section 1101
hereof.
It shall not be necessary for the consent of the holders of the Bonds under
this Section 1102 that such Bondholders approve the particular form of any
proposed supplement or amendment, but it shall be sufficient if such consent
shall approve the substance thereof.
If at any time the Issuer shall request the Trustee to enter into any
supplement or
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amendment to this Indenture for any of the purposes of this Section 1102, the
Trustee shall, at the expense of the Issuer, cause notice of the proposed
execution of such supplement or amendment to be mailed, postage prepaid to each
Registered Owner. Such notice shall briefly set forth the nature of the proposed
supplement or amendment and shall state that copies thereof are on file at the
principal corporate trust office of the Trustee for inspection by the
Bondholder. The Trustee shall not, however, be subject to any liability to the
Bondholders by reason of its failure to mail the notice required by this Section
1102, and any such failure shall not affect the validity of such supplement or
amendment when consented to as provided in this Section 1102.
Whenever, at any time after the date of the mailing of such notice, the
Issuer shall deliver to the Trustee an instrument or instruments in writing
purporting to be executed by the Requisite Bondholders, which instrument or
instruments shall refer to the proposed supplement or amendment described in
such notice and shall specifically consent to and approve the execution thereof
in substantially the form of the copy thereof referred to in such notice,
thereupon, but not otherwise, the Trustee may execute such supplement or
amendment in substantially such form, without liability or responsibility to the
holder of any Bond.
If the Requisite Bondholders shall have consented to and approved the
execution thereof as herein provided, the holders of the Bonds shall not have
any right to object to the execution of such supplement or amendment, or to
object to any of the terms and provisions contained therein or the operation
thereof or in any manner to question the propriety of the execution thereof, or
to enjoin or restrain the Trustee or the Issuer from executing the same or from
taking any action pursuant to the provisions thereof.
Section 1103. Supplements and Amendments Deemed Part of Indenture. Any
supplement or amendment to this Indenture executed in accordance with the
provisions of this Article shall thereafter form a part of this Indenture, and
all of the terms and conditions contained in any such supplement or amendments
to any provision authorized to be contained therein shall be and shall be deemed
to be a part of the terms and conditions of this Indenture for any and all
purposes. Upon the execution of any supplement or amendment to this Indenture
pursuant to the provisions of this Article, this Indenture shall be and be
deemed to be modified and amended in accordance therewith, and the respective
rights, duties and obligations under this Indenture of the Issuer, the Trustee
and the Bondholders shall thereafter be determined, exercised and enforced
hereunder, subject in all respects to such modifications and amendments.
Section 1104. Discretion of Trustee in Entering into Supplements and
Amendments. In each and every case provided for in this Article, the Trustee
shall be entitled to exercise its discretion in determining whether or not to
execute any proposed supplement or amendment, if the rights, obligations and
interests of the Trustee would be thereby affected, and the Trustee shall not be
under any responsibility or liability to the Issuer, the Borrower, the
Bondholders or to anyone whomsoever for its refusal in good faith to enter into
any such supplement or amendment if such supplement or amendment is deemed by it
to be contrary to the provisions of this Article. The Trustee shall be entitled
to receive, and shall be fully protected in relying upon, an opinion of any
Counsel approved by it, as conclusive evidence that any such proposed supplement
or
45
<PAGE>
amendment does or does not comply with the provisions of this Indenture, and
that it is or is not proper for it, under the provisions of this Article, to
join in the execution of such supplement or amendment.
Section 1105. Consent of Borrower Required. Anything herein to the contrary
notwithstanding, any such supplement or amendment to this Indenture under
Section 1102 hereof shall not become effective unless and until the Borrower
shall have consented thereto.
46
<PAGE>
ARTICLE XII
SUPPLEMENTS AND AMENDMENTS TO THE LOAN AGREEMENT,
THE MORTGAGE, THE SECURITY AGREEMENT, AND THE
ENVIRONMENTAL AGREEMENT
Section 1201. Supplements and Amendments Requioring Bondholder Consent. The
Issuer and the Trustee shall not execute and the Trustee shall not consent to
any supplement or amendment to the Loan Agreement, the Mortgage, the Security
Agreement, or the Environmental Agreement, unless notice of the proposed
execution of such supplement or amendment shall have been mailed first-class
mail, postage prepaid, to each Registered Owner and the Requisite Bondholders
shall have consented to and approved the execution thereof, all as provided for
in Section 1102 hereof in the case of supplements and amendments to the
Indenture; provided that the Trustee and the Borrower shall be entitled to
exercise their discretion in consenting or not consenting to any such supplement
or amendment in the same manner as provided for in Section 1104 and 1105 hereof,
respectively, in the case of supplements and amendments to the Indenture.
Section 1202. Amendments to Financial Covenants. At the direction of the
owners of one hundred percent (100%) of the Outstanding Bonds, and without the
consent of the Issuer, the Trustee shall enter into any supplement or amendment
to the Loan Agreement, the purpose of which is to add to, amend or otherwise
modify any of the covenants contained in Sections 7.7, 7.9, 7.10, 7.11, 7.13,
714, 7.23, 7.24, 7.30, 7.31, 7.32, 7.33, 7.34, 7.35 and 7.36 of the Loan
Agreement.
47
<PAGE>
ARTICLE XIII
PAYMENT
If the Issuer shall pay or cause to be paid in full the principal of,
premium, if any, and interest on the Bonds, together with all other sums payable
hereunder by the Issuer and all amounts payable to the Issuer or the Trustee
under the Loan Agreement, then and in that case the right, title and interest of
the Trustee in and to the estate pledged and assigned to it under this Indenture
shall cease, terminate and become void, and such Bonds shall cease to be
entitled to any lien, benefit or security under this Indenture, except as
provided in Sections 303 and 504 hereof and excepting the right to receive
certain payments upon a Determination of Taxability pursuant to Section 301(c)
hereof, which, unless otherwise specifically provided for herein, shall survive
such payment. In such event, the Trustee shall turn over to the Borrower any
surplus in the Bond Fund and any balance remaining in the Project Fund, shall
transfer and assign to the Borrower all property then held by the Trustee and
shall, unless otherwise specifically provided for herein, execute such documents
as may be reasonably required by the Issuer or the Borrower to evidence said
transfer and assignment.
48
<PAGE>
ARTICLE XIV
MISCELLANEOUS PROVISIONS
Section 1401. 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 1402. 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 or the Borrower 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,
Orange County Industrial Development Authority
200 E. Robinson Street, Suite 600
Orlando, Florida 32801
Attention: Daniel A. Lynch, Secretary
If to the Trustee,
SunTrust Bank, Central Florida, National Association
225 E. Robinson Street, Suite 250
Orlando, FL 32801
Attention: Corporate Trust Department
or if to any successor Trustee or Co-Trustee,
addressed to it at its principal corporate trust
office; and
If to the Borrower,
ELXSI
3600 Rio Vista Avenue
Orlando, FL 32811
Attention: Controller
49
<PAGE>
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 Trustee to the other shall also be given to the Borrower.
All documents received by the 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 of the
Indenture, subject at all reasonable times to the inspection of the Issuer and
the Bondholders and the agents and representatives thereof.
The Issuer, the Trustee 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 1403. Trustee as Paying Agent and Bond Registrar. The Trustee is
hereby designated and agrees to act as paying agent and Bond Registrar for and
in respect of the Bonds.
Section 1404. 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 other than the parties hereto, the Borrower
and the holders 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 holders from time to time of the Bonds issued hereunder.
Section 1405. 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 1406. 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
provisions 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 1407. 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
50
<PAGE>
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 or be subject to any personal liability or
accountability by reason of the issuance thereof. No member of the Issuer and no
officer, agent or employee of the Issuer shall incur any personal liability in
acting or proceeding or in not acting or not proceeding, in good faith,
reasonably and in accordance with the terms of this Indenture.
Section 1408. Florida Law Governs. his Indenture shall be governed by and
construed in accordance with the laws of the State.
Section 1409. If Payment or Performance Date is not 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 Indenture, shall be a day
which is not a Business Day, such payment may be made or act performed or right
exercised on the next succeeding Business Day; provided that interest shall
accrue during any such period during which payment shall not occur.
Section 1410. 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.
51
<PAGE>
IN WITNESS WHEREOF, the Issuer, has caused this Trust Indenture to be
executed in its name and on its behalf by the Chairman or Vice Chairman of the
Issuer and attested by the Secretary or Assistant Secretary of the Issuer; and
the Trustee has caused this Trust Indenture to be executed by a responsible and
duly authorized officer, all as of the date and year first above written.
ORANGE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
By:
---------------------------------------
Name: David A. Winters
Title: Vice Chairman of the Orange County
Industrial Development Authority
Attest:
-------------------------------------------
Name: Daniel A. Lynch
Title: Secretary of the Orange County
Industrial Development Authority
(SEAL)
SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION, as Trustee
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
52
<PAGE>
EXHIBIT "A"
[Form of Bond]
United States of America
State of Florida
ORANGE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY,
INDUSTRIAL DEVELOPMENT REVENUE BOND
(ELXSI Project), Series 1997
No. R- $2,500,000
The Orange County Industrial Development Authority (hereinafter called the
"Issuer"), a public body corporate and politic duly created and existing under
and by virtue of the Constitution and laws of the State of Florida, for value
received, hereby promises to pay, solely from the special fund provided therefor
as hereinafter set forth, to Bank of America National Trust and Savings
Association or registered assigns, the principal sum of TWO MILLION FIVE HUNDRED
THOUSAND DOLLARS ($2,500,000), or so much thereof as has been paid and advanced
pursuant to the Bond Purchase Agreement (as defined in the Loan Agreement) and
remains unpaid, such principal being payable in one hundred eighty (180) equal
consecutive monthly installments in the amount of $13,888.69 each (or such
lesser pro rata amount thereof if the full amount of said principal sum has not
been advanced), commencing on October 1, 1997 and continuing on the first day of
each calendar month thereafter, with a final installment in the amount of the
remaining unpaid principal balance hereunder due and payable on September 1,
2012, and to pay, solely from said special fund, interest thereon from the date
hereof at the rate per annum equal to the Taxable Rate or Tax-Exempt Rate, both
as defined in the Indenture (defined below), as applicable. Interest shall
initially accrue at the Taxable Rate, but may be converted to the Tax-Exempt
Rate upon compliance with Section 210 of the Indenture. While this Bond bears
interest at the Tax-Exempt Rate, the rate of interest charged is subject to
adjustment upon a Determination of Taxability and as further set forth below.
Until the entire principal amount of this Bond shall have been paid in full,
interest shall be payable monthly on the first day of each calendar month
commencing October 1, 1997. The principal of, premium, if any, and interest on
this Bond are payable in immediately available funds in 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, solely from
said special fund, to the registered owner hereof at its address as it appears
on the registration books of SunTrust Bank, Central Florida, National
Association, Bond Registrar.
If at any time after the date of original issue of the Bonds and so long as
the Bonds bear interest at the Tax-Exempt Rate, there should be any change in
the maximum marginal statutory rate of Federal income tax applicable to the
taxable income of the holder hereof (the "Bank Tax Rate"), then the Tax-Exempt
Rate, for so long as there shall not have occurred a Determination of
Taxability, shall be adjusted, effective as of the effective date of any such
change in the Bank Tax
Page 1 of 7 Exhibit "A"
<PAGE>
Rate, by multiplying the Tax-Exempt Rate by a fraction, the denominator of which
is one hundred percent (100%) minus the Bank Tax Rate in effect on the date
hereof and the numerator of which is one hundred percent (100%) minus the Bank
Tax Rate after giving effect to such change.
The interest rate on the Bonds is subject to further adjustment as provided
in the Indenture.
This Bond is secured, to the extent provided in the Indenture referred to
below, solely by a pledge of the revenues and receipts derived by the Issuer
pursuant to the Loan Agreement, by an assignment of the rights of the Issuer
under the Loan Agreement and by the other security referred to herein. This Bond
and the interest payments becoming due hereon are limited obligations of the
Issuer payable solely from the revenues and receipts derived by the Issuer
pursuant to the Loan Agreement, the Note (defined below), the Mortgage (defined
below) and the Security Agreement (defined below), and do not and shall never
constitute an indebtedness of the Issuer within the meaning of any
constitutional provision or statutory limitation and do not and shall never
constitute or give rise to a pecuniary liability of the Issuer or a charge
against its general credit or taxing power. The full faith, credit and taxing
power of the Issuer are not pledged for the payment of the principal or interest
on this Bond.
This Bond is one of the Bonds of a duly authorized issue of industrial
development revenue bonds of the Issuer in the aggregate maximum principal
amount of $2,500,000.00 known as "Orange County Industrial Development
Authority, Industrial Development Revenue Bonds (ELXSI Project), Series 1997",
and is dated as of its date of delivery. The Bonds have been issued for the
purpose of paying part or all of the Cost of the Acquisition of the Project (as
defined in the Loan Agreement).
This Bond is issued under and pursuant to a Trust Indenture dated as of
September 24, 1997 (said Trust Indenture, together with all such supplements and
amendments thereto as therein permitted, being herein called the "Indenture"),
by and between the Issuer and SunTrust Bank, Central Florida, National
Association, as Trustee (said banking institution and any successor trustee or
co-trustee under the Indenture being herein called the "Trustee"). An executed
counterpart of the Indenture, the Loan Agreement, the Note, the Mortgage and the
Security Agreement are on file at the principal corporate trust office of the
Trustee. Any capitalized terms used herein and not otherwise defined shall have
the meanings given to such terms in the Indenture and/or the Loan Agreement, as
applicable. 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 the
Bonds and any other amounts payable under the Bonds, the nature and extent of
the security for the Bonds, the terms 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 holders of the Bonds, and, by the acceptance of
this Bond, the holder hereof assents to all of the provisions of the Indenture.
The Issuer has entered into a Loan Agreement dated as of September 24, 1997
(said Loan
Page 2 of 7 Exhibit "A"
<PAGE>
Agreement, together with all such supplements and amendments thereto as therein
permitted, being herein called the "Loan Agreement"), with ELXSI (herein called
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 a principal
amount, payable in installments, bearing interest at rates and payable at time
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 to pay the cost
of maintaining the Plant in good repair in all material respects and keeping the
same insured.
The Borrower has entered into a Mortgage and Security Agreement dated as of
September 24, 1997 (the "Mortgage"), whereby the Borrower has conveyed to the
Issuer a lien upon the land upon which the Project will be located, all
additions, modifications and improvements thereto and all fixtures and personal
property located thereon, including without limitation, all equipment used in
the operations thereat, for the benefit of the Issuer.
The Borrower has entered into a Security Agreement, dated as of September
24, 1997 (the "Security Agreement"), with the Issuer whereby the Borrower has
pledged to the Issuer a security interest in certain collateral of the Borrower
for the benefit of the Issuer and as security for the Bonds and certain other
amounts.
The Borrower has entered into an Environmental Indemnification Agreement
dated as of September 24, 1997 (the "Environmental Agreement") whereby the
Borrower has agreed to indemnify the Issuer and the Trustee under certain
circumstances.
Pursuant to the Indenture, the Issuer has, for the benefit of the holders
of the Bonds, endorsed without recourse and pledged the Note, and assigned the
Issuer's rights under the Loan Agreement (subject to the reservation of certain
rights of the Issuer under the Loan Agreement, including its rights to notices,
payment of certain expenses and indemnity), the Mortgage (subject to the
reservation of certain rights of the Issuer under the Mortgage, including its
rights to notices and payment of certain expenses), the Security Agreement, the
Environmental Agreement, and all moneys and securities in the Bond Fund created
under the Indenture (the "Bond Fund"), and until applied in payment of any item
of the Cost of Acquisition of the Project (as defined in the Loan Agreement) in
accordance with Section 402 of the Indenture and with the Loan Agreement or
otherwise applied as permitted in the Indenture, all moneys and securities in
the Project Fund created under the Indenture, to the Trustee in trust. All
payments on the Note are to be deposited with the Trustee to the credit of the
Bond Fund.
ELXSI Corporation, a Delaware corporation, (the "Guarantor") has entered
into a Guaranty Agreement, dated as of September 24, 1997 (the "Guaranty"), with
the Bondholder pursuant to which the Corporate Guarantor has unconditionally and
irrevocably guaranteed, inter alia, the full and timely payment of principal of,
premium, if any, and interest on the Bonds.
Page 3 of 7 Exhibit "A"
<PAGE>
This Bond is subject to redemption in whole or in part at the option of the
Borrower at any time upon the optional prepayment by the Borrower of all or a
portion of the unpaid balance of the payments to be made pursuant to the Note,
together with all accrued interest thereon and prepayment premium, in accordance
with and subject to the provisions of Section 10.1 of the Loan Agreement. If all
of the Bonds shall be called for redemption, the redemption payment shall be
applied to the payment of all of the unpaid installments of principal payable on
the Bonds, to interest accrued thereon to the date of redemption and to
prepayment premium. If less than all of the Bonds shall be called for
redemption, the redemption payment shall be applied to the payment of the unpaid
installments of principal on the Bonds in inverse order of their maturities, to
interest accrued on the date of redemption and to prepayment premium; provided,
however, in the event there exists on the date of any such partial redemption
more than one Bond, such redemption payment shall be applied ratably to the
outstanding Bonds.
This Bond is further subject to mandatory redemption upon the occurrence of
a Determination of Taxability (as defined in the Loan Agreement) or a Cessation
of Operation (as defined in the Loan Agreement) or upon the election of the
Bondholder to tender the Bonds on or after June 30, 1999, all in accordance with
the Loan Agreement and the Indenture.
Said redemption price shall also include any expenses of redemption and
fees and expenses of the Trustee.
This Bond is further subject to optional or mandatory redemption in whole
or in part at any time (a) with funds available in the Project Fund following
substantial completion of portions of the Project, and (b) by the application of
certain insurance proceeds upon damage or destruction of the Project, of certain
proceeds of condemnation awards, and of certain proceeds from the sale or other
disposition of property, including the Project, as provided in the Loan
Agreement, the Mortgage and the Security Agreement.
Any such redemption, whether in whole or in part, shall be made upon at
least twenty (20) days' prior notice by mailing to the registered owner of this
Bond at its address as its appears on the registration books kept by the Trustee
as Bond Registrar (other than redemptions from funds transferred from the
Project Fund following substantial completion of portions of the Project, which
redemption may be effected without, or with shorter, notice), and shall be made
in the manner and under the terms and conditions provided in the Indenture;
provided, however, that failure to give such notice or any defect therein shall
not affect the validity of any proceeding for the redemption of this Bond. On
the date designated for redemption, this Bond (or portion hereof) shall become
and be due and payable at the redemption price provided for redemption of this
Bond (or portion hereof) on such date, and, if moneys for payment of the
redemption price and the accrued interest shall be held by the Trustee, all as
provided in the Indenture, interest on this Bond (or portion hereof) so called
for redemption shall cease to accrue, this Bond (or portion hereof) shall cease
to be entitled to any benefit or security under the Indenture, and the
registered owner hereof shall have no rights in respect of this Bond (or portion
hereof) except to receive payment of the redemption price hereof and the accrued
interest so held by the Trustee, to receive certain payments upon the occurrence
of a Determination of Taxability and to cause the Borrower
Page 4 of 7 Exhibit "A"
<PAGE>
to make certain payments as provided in Section 4.7 of the Loan Agreement.
The holder 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. Interest on overdue installments of principal and interest shall
accrue hereunder from the due date thereof to the date of payment thereof at the
Overdue Rate as set forth in the Indenture.
Modifications or alterations of the Loan Agreement, the Note, the Mortgage,
the Security Agreement, the Environmental 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 holders 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 holder of this Bond shall not be required to the
extent that receipt of any such payment by the holder of this Bond would be
contrary to the provisions of law applicable to such holder which limit the
maximum rate of interest which may be charged or collected by such holder.
The transfer of this Bond may be registered by the registered owner hereof
in person or by his attorney-in-fact at the principal office of the Trustee as
Bond Registrar, its successors and assigns, but only in the manner and subject
to the limitations and conditions provided in the Indenture. Upon any such
registration of transfer, the Issuer shall execute and the Trustee shall deliver
in exchange for this Bond a new registered Bond or Bonds without coupons,
registered in the name of the transferee or transferees, in denominations
authorized by the Indenture and in the aggregate amount equal to the principal
amount of this Bond, of the same maturity and bearing interest at the same rate.
THIS BOND SHALL NOT BE OR CONSTITUTE A DEBT, LIABILITY OR OBLIGATION OF THE
ISSUER, ORANGE COUNTY, OR OF THE STATE OF FLORIDA OR OF ANY POLITICAL
SUBDIVISION THEREOF, AND THE ISSUER SHALL NOT BE OBLIGATED TO PAY THIS BOND OR
THE INTEREST OR PREMIUM, IF ANY, HEREON EXCEPT FROM THE REVENUES AND PROCEEDS
PLEDGED THEREFOR; NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE
ISSUER, ORANGE COUNTY, OR OF THE STATE OF FLORIDA OR OF ANY POLITICAL
SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR THE
INTEREST OR PREMIUM, IF ANY, HEREON, AND THE HOLDER OF THIS BOND SHALL NOT HAVE
ANY RIGHT TO COMPEL ANY EXERCISE OF THE TAXING POWER OF THE ISSUER OR OF THE
STATE OF FLORIDA OR ANY POLITICAL SUBDIVISION
Page 5 of 7 Exhibit "A"
<PAGE>
THEREOF TO AND FOR SUCH PAYMENT.
NO COVENANT OR AGREEMENT CONTAINED IN THIS BOND OR IN THE INDENTURE SHALL
BE DEEMED TO BE A COVENANT OR AGREEMENT OF ANY MEMBER OF THE GOVERNING BODY OF
THE ISSUER, OR ANY OFFICER, AGENT OR EMPLOYEE OF THE ISSUER IN HIS INDIVIDUAL
CAPACITY, AND NEITHER ANY SUCH MEMBER NOR ANY SUCH OFFICER EXECUTING THIS BOND
SHALL BE LIABLE PERSONALLY ON THIS BOND OR BE SUBJECT TO ANY PERSONAL LIABILITY
OR ACCOUNTABILITY BY REASON OF THE ISSUANCE OF THIS BOND.
This Bond shall be governed by and construed in accordance with the laws of
the State of Florida. This Bond has all the qualities and incidents, including
negotiability, of investment securities under the Uniform Commercial Code of the
State of Florida.
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, and neither this
Bond nor the issue of which it forms a part exceeds any debt or other limit
prescribed by the Constitution or Statutes of the State of Florida.
This Bond shall not be entitled to any benefit under the Indenture or be
valid or become obligatory for any purpose until this Bond shall have been
authenticated by the manual signature of a duly authorized officer of the
Trustee on the Trustee's Certificate of Authentication hereon.
IN WITNESS WHEREOF, the Issuer has caused this Bond to be executed with the
manual signature of its Chairman or Vice Chairman and its official seal to be
impressed hereon and attested by its Secretary or Assistant Secretary, all as of
the 24th day of September, 1997.
ORANGE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
By:
------------------------------------
[SEAL] Name: Joanie Schirm
Chairman of the Orange County
Industrial Development Authority
ATTEST:
By:
---------------------------------
Name: Daniel A. Lynch, Secretary of
the Orange County Industrial
Development Authority
Page 6 of 7 Exhibit "A"
<PAGE>
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds of the series designated in the
within-mentioned Indenture and is issued under the provisions of the Indenture.
SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION, as Trustee
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Page 7 of 7 Exhibit "A"
<PAGE>
EXHIBIT "B"
$ No.
------------------- -------
REQUISITION AND CERTIFICATE
, 199
----------- --- --
SunTrust Bank, Central Florida,
National Association, as Trustee
225 E. Robinson Street, Suite 250
Orlando, FL 32801
Attention: Corporate Trust Department
Re: $2,500,000 Orange County Industrial Development Authority,
Industrial Development Revenue Bonds (ELXSI Project), Series 1997
Sirs:
On behalf of ELXSI (the "Borrower"), I hereby requisition, from the funds
representing the proceeds of the sale of the Industrial Development Revenue
Bonds (ELXSI Project), Series 1997 issued by Orange County Industrial
Development Authority (the "Issuer"), and dated September 24, 1997 (the
"Bonds"), which funds are held by you in the Orange County Industrial
Development Authority, Industrial Development Revenue Bonds (ELXSI Project),
Series 1997 Project Fund in accordance with the Trust Indenture, dated as of
September 24, 1997 (the "Indenture"), between the Issuer and you, the sum of
$_______________ from the Project Fund to make payment to those payees and in
those amounts set forth on Schedule A attached hereto. The amount requisitioned
hereby is presumed to be paid first from the proceeds of said Bonds (and to be
paid from investment earnings thereon only after requisition of all of said
proceeds).
I hereby certify that (a) the obligation to make such payment(s) was
incurred after April 18, 1997, by the Borrower in connection with the
Acquisition (as defined in the Loan Agreement, of even date with the Indenture,
between the Issuer and the Borrower, hereinafter referred to as the "Loan
Agreement") of the Project (referred to in the Loan Agreement), is a proper
charge against the Cost of Acquisition of the Project (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 any such payee to receive payment of, any
of the money payable under this requisition to any of said payees named on
Schedule A attached hereto, or if any notice of any such lien, attachment or
claim has been received, such lien, attachment or claim either has been released
or discharged or will be released or discharged upon payment of this
requisition; (c) this requisition contains no items representing payment on
account
Page 1 of 3 Exhibit "B"
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of any retained percentages which you or the Issuer are entitled to retain at
this date; (d) the payment of this requisition will not result in less than
ninety-five percent (95%) of the net proceeds of the Bonds 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) of the Internal Revenue Code of 1986, as amended, (e) no Event
of Default (as defined in the Loan Agreement) or event or default which after
notice or lapse of time or both would constitute such an Event of Default has
occurred and not been waived; and (f) the amount requisitioned hereby is being
expended in a manner consistent in all material respects with the
representations, warranties and covenants of the Borrower set forth in the Loan
Agreement and the Borrower's Tax Compliance Certificate.
[The following paragraph is to be completed when any requisition and
certificate includes any item for payment of machinery, equipment and other
personal property]
Attached hereto is a true and correct listing (including serial numbers, if
applicable, or other appropriate identification) of all items of machinery,
equipment and other personal property for which payment is requested hereunder.
[The following paragraph is to be completed when any requisition and
certificate includes any item for payment for labor 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 equipment, materials or supplies, in
connection with the Acquisition of the Project, (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 in or about the Project and are a proper charge against the Cost of
Acquisition of the Project, and (iii) such equipment, materials or supplies
either are not subject to any lien 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.
----------------------------------
Authorized Borrower Representative
Requisite Bondholder Approval
The Bondholder hereby approves and authorizes disbursement according to the
above Requisition.
By:
--------------------------
Name:
------------------------
Page 2 of 3 Exhibit "B"
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Title:
-----------------------
Page 3 of 3 Exhibit "B"
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SCHEDULE A
LIST OF PAYEES AND AMOUNTS
Name of Payee Amount
Page 4 of 3 Exhibit "B"
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EXHIBIT "C"
Description of Real Property
Lots 1 through 12, Block M and all of Block N lying North and West of
Interstate 4, PLAT OF WOODHAVEN, as recorded in Plat Book J, Page 127, Public
Records of Orange County, Florida.
<PAGE>
EXHIBIT "D"
Form of Investor Certificate
The undersigned Investor (the "Purchaser") hereby certifies in connection
with the purchase by it of the Orange County Industrial Development Authority
Industrial Development Revenue Bonds, (ELXSI Project), Series 1997 (the "Bond")
as follows:
1. The Purchaser is an "accredited investor" as defined in Regulation D or
a "qualified institutional buyer" as defined in Rule 144A as promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as amended
("Qualified Purchaser").
2. The Purchaser has conducted its own independent investigation of, with
full opportunities to ask questions of and receive answers from representatives
of the parties involved with the Bonds, the documents, the Project and the
transactions relating thereto.
3. The Purchaser is able to bear the economic risk of the investment and
understands and acknowledges that the Bond may be sold, transferred or otherwise
disposed of only to another investor who is a Qualified Purchaser and executes
an Investor Certificate substantially the same as this Investor Certificate,
that the Bond will bear a legend reflecting this limitation, and that any sale
or disposition of all or any portion of the Bond must be in compliance with
applicable federal and state securities laws.
4. The Purchaser hereby expressly waives any right to receive any
information from the Orange County Industrial Development Authority (the
"Issuer") and relieves the Issuer and its agents and representatives of any
liability for failure to provide such information. The Purchaser understands
that the holder of the Bond has no right to demand payment from the Issuer from
any sources other than that described in the Bond.
5. The individuals executing this Certificate have been duly authorized to
execute and deliver this Certificate on behalf of the Purchaser.
Dated this day of , .
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Investor
By:
--------------------------------
Date:
------------------------
<PAGE>
================================================================================
ELXSI
(Borrower)
and
ORANGE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
(Issuer)
LOAN AGREEMENT
Dated as of September 24, 1997
Relating to
$2,500,000
Orange County Industrial Development Authority,
Industrial Development Revenue Bonds
(ELXSI Project), Series 1997
================================================================================
ALL RIGHTS OF THE ISSUER UNDER THIS AGREEMENT (EXCEPT FOR CERTAIN RESERVED
RIGHTS) HAVE BEEN ASSIGNED TO, AND ARE SUBJECT TO A SECURITY INTEREST IN FAVOR
OF SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, AS TRUSTEE FOR THE
HOLDERS OF THE BONDS UNDER A TRUST INDENTURE DATED AS OF SEPTEMBER 24, 1997, AS
AMENDED OR SUPPLEMENTED FROM TIME TO TIME.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION.............................3
Section 1.1 Definitions.........................................3
Section 1.2 Rules of Construction..............................14
ARTICLE II REPRESENTATIONS..................................................16
Section 2.1 Representations by the Issuer......................16
Section 2.2 Representations, Warranties and Covenants
by the Borrower....................................17
ARTICLE III ACQUISITION OF THE PROJECT.......................................20
Section 3.1 Agreement as to Acquisition of the Project.........20
Section 3.2 Borrower to Obtain Approvals Required for
the Project and the Plant..........................20
Section 3.3 Plans and Specifications...........................20
ARTICLE IV ISSUANCE OF THE BONDS; COMPLETION DATE...........................21
Section 4.1 Agreement to Issue the Bonds.......................21
Section 4.2 Disbursements from the Project Fund................21
Section 4.3 Certificate as to Completion.......................21
Section 4.4 Reserved...........................................21
Section 4.5 Borrower Required to Pay in Event Project
Fund Insufficient..................................21
Section 4.6 No Third Party Beneficiary.........................22
Section 4.7 Rebate Provisions..................................22
Section 4.8 Arbitrage Certifications and Covenants.............22
ARTICLE V LOAN BY THE ISSUER TO THE BORROWER; REPAYMENT....................23
Section 5.1 Loan by the Issuer; Repayment......................23
Section 5.2 No Set Off.........................................23
Section 5.3 Prepayments........................................24
Section 5.4 Credits Against the Note...........................24
ARTICLE VI MAINTENANCE AND MODIFICATIONS; TAXES AND UTILITY CHARGES;
INSURANCE AND EMINENT DOMAIN.....................................25
Section 6.1 Maintenance and Modification of the Plant by
Borrower...........................................25
Section 6.2 Taxes and Utility Charges..........................25
Section 6.3 Title Insurance and Survey.........................26
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Section 6.4 Casualty and Liability Insurance Required..........26
Section 6.5 General Requirements Applicable to Insurance.......27
Section 6.6 Advances by the Bondholder or the Trustee..........28
Section 6.7 Borrower to Make up Deficiency in Insurance
Coverage...........................................28
Section 6.8 Eminent Domain.....................................28
Section 6.9 Application of Net Proceeds of Insurance and
Eminent Domain.....................................29
Section 6.10 Parties to Give Notice.............................30
ARTICLE VII SPECIAL COVENANTS................................................31
Section 7.1 Access to the Plant and Inspection.................31
Section 7.2 Further Assurances and Corrective
Instruments; Survey................................31
Section 7.3 Recording and Filing; Other Instruments............31
Section 7.4 Notice of Event of Taxability......................32
Section 7.5 Administrative Expenses. ..........................32
Section 7.6 Covenants with Respect to Tax Exemption............32
Section 7.7 Financial Covenants................................33
Section 7.8 Release and Indemnification Covenants..............34
Section 7.9 Encumbrance Covenants..............................36
Section 7.10 Financial Statements...............................37
Section 7.11 Indebtedness.......................................38
Section 7.12 Additional Information.............................38
Section 7.13 Restricted Payments ...............................38
Section 7.14 Sale of Assets.....................................39
Section 7.15 Litigation.........................................39
Section 7.16 Patents, Trademarks................................39
Section 7.17 Default Certificates...............................40
Section 7.18 Notification to Trustee............................40
Section 7.19 Books of Record and Account........................40
Section 7.20 Observe Laws.......................................40
Section 7.21 Acceptance of Indenture............................40
Section 7.22 Reserved...........................................40
Section 7.23 Merger, Purchase and Sale..........................41
Section 7.24 Changes in Control.................................41
Section 7.25 ERISA..............................................41
Section 7.26 Notice of Plan Events, Termination and Litigation..41
Section 7.27 Plan Annual Reports................................42
Section 7.28 Plan Liabilities...................................42
Section 7.29 Notice of Adoption of Plan.........................42
Section 7.30 Guaranties.........................................42
Section 7.31 Subsidiaries.......................................43
Section 7.32 Leases.............................................43
Section 7.33 Unconditional Purchase Options.....................43
Section 7.34 Use Of Proceeds....................................43
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Section 7.35 Transactions with Related Parties..................43
Section 7.36 Borrower's and Subsidiaries' Stock.................43
ARTICLE VIII ASSIGNMENT, LEASING, SELLING AND ENCUMBERING.....................44
Section 8.1 Assignment of Loan Agreement, Sale or
Encumbering of Plant by the Borrower...............44
Section 8.2 Restrictions on Transfer of Issuer's Rights. .....44
Section 8.3 Assignment by the Issuer...........................44
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES...................................45
Section 9.1 Events of Default Defined..........................45
Section 9.2 Remedies on Default................................46
Section 9.3 Application of Amounts Realized in
Enforcement of Remedies............................47
Section 9.4 No Remedy Exclusive................................47
Section 9.5 Agreement to Pay Attorneys' Fees and Expenses......47
ARTICLE X PREPAYMENTS......................................................49
Section 10.1 Optional Prepayments...............................49
Section 10.2 Mandatory Prepayments..............................49
Section 10.3 Other Mandatory Prepayments........................50
ARTICLE XI MISCELLANEOUS....................................................51
Section 11.1 References to the Bonds Ineffective
After Bonds Paid...................................51
Section 11.2 No Implied Waiver..................................51
Section 11.3 Issuer Representative..............................51
Section 11.4 Borrower Representative............................51
Section 11.5 Notices............................................51
Section 11.6 If Payment or Performance Date is not a
Business Day.......................................52
Section 11.7 Binding Effect.....................................52
Section 11.8 Severability.......................................52
Section 11.9 Amendments, Changes and Modifications..............52
Section 11.10 Execution in Counterparts..........................53
Section 11.11 Applicable Law.....................................53
Section 11.12 No Charge Against Issuer Credit....................53
Section 11.13 Issuer Not Liable..................................53
Section 11.14 Expenses...........................................53
Section 11.15 Amounts Remaining with the Trustee.................53
Signatures.................................................................55-56
<PAGE>
EXHIBIT A - FORM OF NOTE
EXHIBIT B -THE NEW FACILITY SITE
EXHIBIT C - THE EXISTING FACILITY SITE
EXHIBIT D - SCHEDULE OF INDEBTEDNESS
<PAGE>
LOAN AGREEMENT
This LOAN AGREEMENT, dated as of September 24, 1997 between ORANGE
COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY, a public body corporate and politic and
a public instrumentality duly created and existing under and by virtue of the
laws of the State of Florida (the "Issuer"), and ELXSI, a California corporation
(the "Borrower").
W I T N E S S E T H:
RECITALS
1. The Issuer is authorized and empowered by Parts II and III of
Chapter 159, Florida Statutes, as amended from time to time (the "Enabling Act",
as defined herein) to issue industrial development revenue bonds for the purpose
of financing the cost of acquisition, construction, reconstruction, improvement,
rehabilitation, renovation, expansion and enlargement, or additions to,
furnishing and equipping of capital projects for industrial or manufacturing
plants, including land, rights in land, buildings and other structures,
machinery, equipment, appurtenances and facilities incidental thereto, and all
improvements necessary or convenient therefor, and to lend the proceeds of the
bonds for such purpose to any financially responsible party pursuant to a
financing agreement providing for the repayment of the loan.
2. The Borrower has applied to the Issuer for a loan to finance the
Cost of Acquisition of the Project (as hereinafter defined).
3. The Issuer has determined that the Project (as hereinafter defined)
complies with the provisions of the Enabling Act and serves a public purpose by,
among other things, increasing opportunities for gainful employment and
advancing the economic prosperity and general welfare of the State of Florida
and its people.
4. The Issuer intends to issue its Orange County Industrial Development
Authority, Industrial Development Revenue Bonds (ELXSI Project), Series 1997
(the "Bonds", as defined herein), pursuant to the Indenture (as hereinafter
defined) in order to obtain funds to lend to the Borrower pursuant to this Loan
Agreement. This Loan Agreement provides for the repayment by the Borrower of the
loan contemplated hereunder and further provides that the loan shall be
evidenced by the Note (as hereinafter defined) of the Borrower and that the loan
and the Note shall be secured by a mortgage and security interest and certain
other security pursuant to certain collateral documents being executed
concurrently herewith.
5. Pursuant to the Indenture, the Issuer has, inter alia, assigned and
pledged the rights of the Issuer in, to and under the Note, the Mortgage (as
hereinafter defined), the Security Agreement (as hereinafter defined), and the
Environmental Agreement (as hereinafter defined), to the Trustee (as hereinafter
defined) as security for the Bonds.
<PAGE>
6. As further security for the Bonds, the Borrower has caused the
Guarantor (hereinafter defined) to guaranty the prompt payment of the Bonds and
certain other amounts pursuant to the Guaranty (hereinafter defined).
NOW, THEREFORE, in consideration of the promises and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereby agree, covenant, grant, pledge, assign, represent and warrant as follows
(it being understood and agreed that any obligation of the Issuer for the
payment of money shall not be a general obligation on its part and shall not
constitute or give rise to a debt, liability or obligation, or constitute a
pledge of the full faith and credit or the taxing power, of the Issuer, or of
the State of Florida or of any political subdivision thereof, but shall be a
special and limited obligation of the Issuer payable solely out of the revenues
and proceeds pledged therefor):
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ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section I.1 Definitions. In addition to words and terms elsewhere
defined in this Loan Agreement the following words and terms shall have the
following meanings:
"Acquisition" when used in connection with the Project, shall mean,
without limitation, the acquisition, construction, installation and equipping of
the Project.
"Additional Revolving Loan" means "Additional Revolving Loan" as such
term is defined in the Amended and Restated Loan and Security Agreement dated as
of December 30, 1996, between the Borrower and Bank of America Illinois as
subsequently amended, supplemented, restated and modified.
"Administrative Expenses" shall mean the amounts payable pursuant to
Section 7.5 hereof by the Borrower to or for the account of the Issuer or the
Trustee to provide for payment of the costs, expenses, including attorney's
fees, incurred by the Issuer or the Trustee.
"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.
"Amended and Restated Loan Agreement" shall mean the Amended and
Restated Loan and Security Agreement dated as of December 30, 1996 between the
Borrower and Bank of America Illinois, as such agreement may be supplemented,
amended, restated or modified. If the Amended and Restated Loan Agreement
expires or is terminated or, if all liabilities of Borrower thereunder have been
paid in full, references to such agreement for defined terms shall be deemed
references to such terms as defined on the date such agreement expires or is
terminated.
"Bankruptcy Code" shall mean 11 U.S.C ss.101 et seq., as amended.
"Bickford's Business" shall mean "Bickford's Business" as such term is
defined in the Amended and Restated Loan Agreement.
"Bond" or "Bonds" shall mean the Orange County Industrial Development
Authority, Industrial Development Revenue Bonds (ELXSI Project), Series 1997,
authorized to be issued pursuant to a resolution of the Issuer in accordance
with the Indenture in the aggregate principal amount of $2,500,000.00 including
such Bonds issued in replacement for mutilated, destroyed, lost or stolen Bonds
pursuant to Section 209 of the Indenture, and any amendments and supplements
thereto, and any renewals and extensions thereof, permitted by the Indenture.
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"Bond Documents" shall mean, collectively, the Indenture, the Bonds,
this Loan Agreement, the Note, the Mortgage, the Security Agreement, the
Environmental Agreement, and the Tax Compliance Certificate of the Borrower,
respectively.
"Bondholder" or "holder" shall mean the initial holders and any future
holders of the Bond or Bonds as registered on the books and records of the Bond
Registrar pursuant to Section 206 of the Indenture.
"Bond Fund" shall mean the fund created under Section 501 of the
Indenture.
"Bond Purchase Agreement" shall mean that certain Bond Purchase
Agreement executed as of the date of issuance and delivery of the Bonds by and
between the Issuer and the Bond Purchaser.
"Bond Purchaser" shall mean Bank of America National Trust and Savings
Association.
"Borrower" shall mean ELXSI, a California corporation, and its
successors and assigns.
"Borrower Representative" shall mean any one of the Persons at the time
designated to act on behalf of the Borrower by written certificate furnished to
the Issuer and the Trustee containing the specimen signatures of such Persons
and signed by the Borrower.
"Business Day" shall mean a day upon which banks in Chicago, Illinois
and Orlando, Florida are open for the transaction of business of the nature
required pursuant to this Loan Agreement and the Indenture.
"Capitalized Lease" means any lease which is or should be capitalized
on the balance sheet of the lessee in accordance with GAAP.
"Cessation of Operation" shall mean that the Borrower has ceased, in
the opinion of the Issuer and the Trustee, to operate the Project as a "project"
within the meaning of the Enabling Act. A Cessation of Operation shall not be
deemed to have occurred until 60 days shall have elapsed after written notice
has been given to the Borrower by the Issuer or the Trustee that operations at
the Project shall have ceased and the Borrower shall not have demonstrated to
the satisfaction of the Issuer and the Trustee that the Borrower (or an
assignee, lessee or buyer pursuant to Section 8.1 hereof) has resumed the
operations of the Project as a "project" within the meaning of the Enabling Act
or that the Borrower is, in good faith, seeking to arrange resumption of an
economically reasonable operation of the Project as such a "project"; provided
that a temporary shutdown due to a strike or other labor dispute, lack of fuel
or similar occurrence shall not be deemed a Cessation of Operation.
"Closing Date" means September 24, 1997.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
all Tax Regulations thereunder.
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"Completion Date" shall mean that date certified as provided in 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 Bond Purchaser.
"Cost of Acquisition of the Project" shall mean all costs and
allowances for the Acquisition of the Project which include, but are not limited
to, all capital costs of the Project, including the following:
(1) The Acquisition of the Project at the Project Site;
(2) Preparation of the plans and specifications for the Project
(including any preliminary study or plan of the Project or any aspect thereof),
any labor, services, materials and supplies used or furnished in the Acquisition
of the Project, 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 Project;
(3) The fees for architectural, engineering, supervisory and
consulting services in connection with Acquisition of the Project;
(4) 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 Project;
(5) Any fees and expenses incurred in connection with acquisition,
perfection and protection of title to the Project 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 or the
Issuer or the Trustee may deem desirable to perfect or protect the rights of the
Issuer or the Trustee under this Loan Agreement, the Note, the Indenture, the
Mortgage, the Environmental Agreement, the Security Agreement, and the Bonds;
(6) 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 this Loan Agreement, the Note, the Indenture, the Mortgage, the
Security Agreement, the Environmental Agreement, and the Bonds, and all other
documents prepared in connection with the authorization, issuance and sale of
the Bonds;
(7) Interest prior to and during construction of the Project; and
(8) Any administrative and processing or other fees and expenses
charged by
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the Issuer or the State in connection with the Project to the Completion Date
and any initial or acceptance fee and expenses charged by the Trustee in
connection with the acceptance of the trusts under the Indenture.
"Counsel" shall mean an attorney or a firm of attorneys acceptable to
the Trustee, and may, but need not, be counsel to the Issuer or the Borrower.
"County" shall mean Orange County, Florida.
"County Commission" shall mean the Board of County Commissioners of
Orange County, Florida.
"Cues Business" shall mean "Cues Business" as such term is defined in
the Amended and Restated Loan Agreement.
"Date of Taxability" shall mean the earliest date as of which interest
on any Bond shall be or have become includable in the gross income of any
Bondholder or former Bondholder pursuant to a Determination of Taxability.
"Depository Accounts" shall mean "Depository Accounts" as such term is
defined in the Amended and Restated Loan Agreement.
"Determination of Taxability" shall mean and shall be deemed to have
occurred on the first to occur of the following:
(a) on that date when the Borrower files any statement,
supplemental statement or other tax schedule, return or document which discloses
that an Event of Taxability, as hereinafter defined, shall have in fact
occurred;
(b) on that date when any Bondholder or former Bondholder notifies
the Borrower or the Trustee that it has received a written opinion by an
attorney or firm of attorneys of recognized standing on the subject of municipal
bonds to the effect that an Event of Taxability shall have occurred unless,
within one hundred twenty (120) 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 the Internal
Revenue Service (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;
(c) on that date when the Borrower shall be advised in writing by
the Commissioner or any District Director of the Internal Revenue Service (or
any other government official or agent exercising the same or a substantially
similar function from time to time) that,
6
<PAGE>
based upon filings of the Borrower, or upon any review or audit of the Borrower,
or upon any other ground whatsoever, an Event of Taxability shall have occurred;
or
(d) 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, that 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, that no Determination of Taxability shall occur until such
contest, if made, has been finally determined; provided further, however, that
upon demand from any Bondholder or former Bondholder, the Borrower shall
immediately reimburse such Bondholder or former Bondholder for any payments such
Bondholder or former Bondholder shall be obligated to make as a result of the
Determination of Taxability during any such contest.
"EBITDA" means Borrower's consolidated net earnings before interest
expense, depreciation, amortization and provision for Taxes for the fiscal
quarter of Borrower ending on the date of determination. For purposes of this
definition, (i) net earnings shall not include any gains on the sale or other
disposition of Investments (other than cash equivalents) or fixed assets and any
extraordinary or nonrecurring items of income in any fiscal quarter to the
extent that the aggregate of all such gains and extraordinary or nonrecurring
items of income exceeds the aggregate of losses on such sales or other
dispositions and extraordinary or nonrecurring charges during such quarter, and
(ii) interest expense shall include, without limitation, implicit interest
expense on Capitalized Leases.
"Eminent Domain" shall mean the taking of title to, or the temporary
use of, the Project or any part thereof pursuant to eminent domain or
condemnation proceedings, or any voluntary conveyance of any part of the Project
during the pendency of, or as a result of a threat of, such proceedings.
"Enabling Act" shall mean Parts II and III of Chapter 159, Florida
Statutes, as amended.
"Environmental Agreement" shall mean that certain Environmental
Indemnity Agreement dated as of the date hereof from the Borrower to the Issuer,
and any amendments and supplements thereto permitted by the Indenture.
"ERISA" shall mean the Employment Retirement Income Security Act of
1974, as amended.
"Event of Default" or "Default" shall have the meaning set forth in
Section 9.1 hereof.
"Event of Taxability" shall mean, with respect to Bonds bearing
interest at the Tax-
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<PAGE>
Exempt Rate, a change in law or fact or the interpretation thereof, or the
occurrence or existence of any fact, event or circumstance whatsoever
(including, without limitation, the issuance of obligations or the incurring of
capital expenditures in excess of those permitted by Section 144(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 of any Bond 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.
"Excess Cash Flow" shall mean "Excess Cash Flow" as such term is
defined in the Amended and Restated Loan Agreement.
"Existing Facility Site" shall mean the real property located in Orange
County, Florida, more particularly described in Exhibit "D" attached hereto and
by reference made a part hereof upon which the Borrower's existing manufacturing
facilities are located.
"Existing Loan Agreement" shall mean "Existing Loan Agreement" as such
term is defined in the Amended and Restated Loan Agreement.
"Fiscal Year" means any period of 12 consecutive calendar months ending
on the 31st day of December. References to a Fiscal Year with a number
corresponding to any calendar year (e.g., "Fiscal Year 1996) refer to the Fiscal
Year ending on the 31st day of December occurring during such calendar year.
"Funded Debt" means, as of any date of determination, the principal
amount of Borrower's Indebtedness outstanding which would be reflected as
liabilities on a balance sheet prepared in accordance with GAAP (but excluding
from the determination thereof all Indebtedness owing with respect to Additional
Revolving Loans).
"Funded Debt/EBITDA Ratio" means the ratio of Borrower's Funded Debt
determined as of the last day of any specified fiscal quarter of Borrower
divided by Borrower's EBITDA for the four (4) fiscal quarters then ended.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles as in effect from time to time; provided that the
financial tests set forth in Sections 7.7(a) through 7.7(d) shall at all times
be calculated in accordance with generally accepted accounting principles as in
effect on the Closing Date unless Borrower and the Bondholder shall have agreed
to modifications to such covenants to account for any changes in such principles
after the date hereof.
"Government Obligations" shall mean (i) direct obligations of the
United States of America for the payment of which the full faith and credit of
the United States of America is
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pledged, or (ii) obligations of the Government National Mortgage Association,
Federal Intermediate Credit Banks, Federal Banks for Cooperatives, Federal Land
Banks, Federal Farm Credit Banks and Federal Home Loan Banks.
"Guarantor" shall mean ELXSI Corporation. A Delaware corporation, and
its successors and assigns.
"Guaranty" shall mean that certain Guaranty Agreement dated as of the
date hereof from ELXSI Corporation to the Bond Purchaser, and any amendments and
supplements thereto as permitted by the Indenture.
"Indebtedness" of any Person means, without duplication, (i) any
obligation of such Person for borrowed money, including, without limitation, (a)
any obligation of such Person evidenced by bonds, debentures, notes or other
similar debt instruments and (b) any obligation for borrowed money which is
non-recourse to the credit of such Person but which is secured by a Lien on any
asset of such Person, (ii) any obligation of such Person on account of deposits
or advances, (iii) any obligation of such Person for the deferred purchase price
of any property or services, except Trade Accounts Payable, (iv) any obligation
of such Person as lessee under a Capitalized Lease and (v) any Indebtedness of
another Person secured by a Lien on any asset of such first Person, whether or
not such Indebtedness is assumed by such first Person. For all purposes of this
Agreement, the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture in which such Person is a general partner or joint
venturer. Notwithstanding the foregoing, for purposes of computing Borrower's
compliance with Sections 7.7(b) and 7.7(c), and for purposes of computing Funded
Debt, there shall be excluded from the determination of "Indebtedness" the
Subordinated Note and all Indebtedness of Borrower to Parent.
"Indenture" shall mean the Trust Indenture dated as of the date hereof
by and between the Issuer and the Trustee, together with any amendments or
supplements thereto permitted thereby.
"Investment" of any Person means any investment, made in cash or by
delivery of any kind of property or asset, in any other Person, whether by
acquisition of shares of stock or similar interest, Indebtedness or other
obligation or security, or by loan, advance or capital contribution, or
otherwise.
"Issuer" shall mean Orange County Industrial Development Authority, a
public body corporate and politic and a public instrumentality duly created and
existing under and by virtue of the laws of the State of Florida, and its
successors and assigns and any body resulting from or surviving any
consolidation or merger to which it or its successors may be a party.
"Issuer Representative" shall mean any one of the 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.
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"Liabilities" means all of the liabilities, obligations, reimbursement
obligations in connection with any letter of credit and Indebtedness of
Borrower, any Subsidiary or any other Obligor to the Bondholder of any kind or
nature, however created, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing or due or to become due, and
including but not limited to (i) Borrower's obligations under any note, (ii)
Borrower's obligations under this Agreement, (iii) interest, charges, expenses,
attorneys' fees and other sums chargeable to Borrower by the Bondholder under
this Loan Agreement or any related agreement, (iv) the obligations of Borrower,
any Subsidiary or any other obligor under any related agreement, including
obligations of performance, and (v) Borrower's obligations with respect to any
letter of credit or application therefor. "Liabilities" shall also include any
and all amendments (including any amendment and restatement), extensions or
renewals of any of the foregoing.
"Lien" means any mortgage, pledge, hypothecation, judgment lien or
similar legal process, title retention lien, or other lien, encumbrance or
security interest, including, without limitation, the interest of a vendor under
any conditional sale or other title retention agreement and the interest of a
lessor under any Capitalized Lease.
"Loan Agreement" shall mean this Loan Agreement and any amendments and
supplements hereto permitted by the Indenture.
"Management Agreement" shall mean "Management Agreement" as such term
is defined in the Amended and Restated Loan Agreement.
"Maturity Date" shall mean the final date of maturity of this loan
which shall be September 1, 2012.
"Mortgage" shall mean the Mortgage and Security Agreement dated as of
the date hereof from the Borrower to the Issuer, and any amendments and
supplements thereto permitted by the Indenture.
"Mortgaged Property" shall mean the New Facility and the New Facility
Site.
"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.
"Net Worth" means at any time, the sum of (a) the consolidated
shareholder's equity (including capital stock, additional paid-in capital and
retained earnings after deducting treasury stock) of Borrower calculated in
accordance with GAAP and (b) the outstanding principal amount of all
Subordinated Debt.
"New Facility" shall mean all buildings, structures and improvements
now or hereafter
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located on the New Project Site including, but not limited to, the approximately
32,000 square foot manufacturing facility of the Borrower, now or hereafter
located at the New Project Site and the equipment installed therein, and all
other fixtures, furniture, machinery, equipment and other personal property
installed in or on, or located at, such premises, including such modifications
thereof, substitutions therefor, and repairs thereto, and excluding deletions
therefrom, as shall be made in accordance with this Loan Agreement.
"New Facility Site" shall mean the real property located in Orange
County, Florida, more particularly described in Exhibit "C" attached hereto and
by reference made a part hereof which shall be acquired with the proceeds of the
Bonds, be subject to the lien of the Mortgage, and upon which the New Facility
shall be located.
"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.
"Obligor" means Borrower and each other Person who is or shall become
primarily or secondarily liable on any of the Liabilities, or who grants to the
Bondholder a Lien on any property of such Person as security for any of the
Liabilities.
"Original Loan Agreement" shall mean "Original Loan Agreement" as such
term is defined in the Amended and Restated Loan Agreement.
"Overdue Rate" shall mean the Reference Rate plus two percent (2%) per
annum or the maximum rate of interest permitted by law, whichever is lower.
"Parent" means ELXSI Corporation, a Delaware corporation and the owner
of 100% of the issued and outstanding capital stock of Borrower, and any
successor thereto.
"Payment of the Bonds" shall mean payment of (i) the principal of and
interest on the Bonds in accordance with their terms whether through payment at
maturity, upon acceleration or prepayment, (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, (i)
liens for ad valorem taxes and special assessments, if any, which are not then
delinquent or which are being contested in good faith and for which the Person
liable for payment thereof has set aside adequate reserves, unless the property
subject to any such lien or any part thereof shall be in danger of being lost or
forfeited as a result of the failure to pay such taxes or assessments, (ii) the
liens created pursuant to the Indenture, the Mortgage and the Security
Agreement, and (iii) all liens and encumbrances listed as exceptions to the
title insurance policy required by Section 6.3 hereof and which liens and
exceptions are not objected to by the Trustee in writing prior to the date of
the endorsement of the Note.
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"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, entity, or government (whether national, federal, state, county,
city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Plan" shall mean an employee benefit plan or plans and any trust
created thereunder which has been established or maintained or hereafter is
established or maintained for employees of the Borrower or any Subsidiary,
provided such plan is covered by title I or IV of ERISA.
"Plans and Specifications" shall mean the plans and specifications used
in the Acquisition of the Project, as the same may be revised from time to time
by the Borrower in accordance with Section 3.3 hereof.
"Plant" shall mean the Project Site and the Project and all buildings,
structures and improvements now or hereafter located on the Project Site
including, but not limited to, the New Facility and the equipment installed at
the Project Site, and all other fixtures, furniture, machinery, equipment and
other personal property installed in or on, or located at, such premises,
including such modifications thereof, substitutions therefor, and repairs
thereto, and excluding deletions therefrom, as shall be made in accordance with
this Loan Agreement.
"Prohibited Transaction" shall have the meaning assigned to that term
in Section 406 of Title I of ERISA.
"Project" shall mean the New Facility and the improvements and
modifications at the existing manufacturing facilities of the Borrower located
on the Existing Site, as more particularly set forth in the Plans and
Specifications.
"Project Fund" shall mean the fund created pursuant to Section 401 of
the Indenture.
"Project Site" shall mean the Existing Facility Site and the New
Facility Site.
"Recapitalization Agreement" shall mean "Recapitalization Agreement" as
such term is defined in the Amended and Restated Loan Agreement.
"Reference Rate" shall mean, at any time and from time to time, the
rate per annum then most recently announced by the Bond Purchaser at its head
office as its reference rate. The Reference Rate is not necessarily intended to
be the lowest rate of interest determined by the Bond Purchaser in connection
with extensions of credit. Changes in the rate of interest on that portion of
any loan maintained at the Reference Rate shall take effect simultaneously with
each change in the Reference Rate.
"Related Entity" shall mean any entity if, with respect to the
Borrower, any of the entity's employees fall within any of the following
categories: (a) employees of a controlled group of
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corporations as defined in Section 414(b) of the Internal Revenue Code; (b)
employees of partnerships, proprietorships or other entities that are under
common control as defined in Section 414(c) of the Internal Revenue Code; (c)
employees of affiliated service groups as defined in Section 414(m) of the
Internal Revenue Code; or (d) employees of entities that are deemed affiliated
with or related to the Borrower in accordance with Sections 414(n) or (o) of the
Internal Revenue Code.
"Related Party" shall mean any Person (other than a Subsidiary) (i)
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, Borrower, (ii) which
beneficially owns or hold ten percent (10%) or more of the equity interest of
Borrower, or (iii) ten percent (10%) or more of the equity interest of which is
beneficially owned or held by Borrower or a Subsidiary. The term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Reportable Event" shall have the meaning assigned to that term in
Section 4043 of Title IV of ERISA.
"Revolving Loan" shall mean "Revolving Loan" as such term is defined in
the Amended and Restated Loan Agreement.
"Revolving Loan Availability" shall mean "Revolving Loan Availability"
as such term is defined in the Amended and Restated Loan Agreement.
"Second Restatement Date" shall mean "Second Restatement Date" as such
term is defined in the Amended and Restated Loan Agreement.
"Security Agreement" shall mean the Security Agreement dated as of the
date hereof from the Borrower to the Issuer covering certain pledged collateral
of the Borrower, and all amendments and supplements thereto permitted by the
Indenture.
"State" shall mean the State of Florida.
"Subordinated Debt" means (a) the Subordinated Note and (b) that
portion of any other Indebtedness of Borrower which contains terms satisfactory
to the Bondholder and is subordinated, in a manner satisfactory to the
Bondholder, as to right and time of payment of principal and interest thereon,
to all of the Liabilities.
"Subordinated Note" means that certain 15% subordinated Promissory Note
dated June 27, 1991 issued by Borrower to Parent in the original principal
amount of $4,500,000.
"Subsidiary" means any Person of which or in which Borrower and its
other Subsidiaries own directly or indirectly 50% or more of (i) the combined
voting power of all classes of stock
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having general voting power under ordinary circumstances to elect a majority of
the board of directors of such Person, if it is a corporation, (ii) the capital
interest or profits interest of such Person, if it is a partnership, joint
venture or similar entity or (iii) the beneficial interest of such Person, if it
is a trust, association or other unincorporated organization. Unless otherwise
indicated, the term "Subsidiary", refers to a Subsidiary of Borrower.
"Supplemental Revolving Loan" shall mean "Supplemental Revolving Loan"
as such term is defined in the Amended and Restated Loan Agreement.
"Tax Regulations" shall mean the applicable regulations under the Code
whether at the time proposed, temporary, final or otherwise, and the applicable
rulings of the Internal Revenue Service under the Code (including published
revenue rulings and private letter rulings).
"Tax Compliance Certificate" shall mean the Tax Compliance Certificate
of the Borrower dated as of the date of issuance of the Bonds and any amendments
or supplements thereto permitted thereby.
"Taxes" with respect to any Person means taxes, assessments or other
governmental charges or levies imposed upon such Person, its income or any of
its properties, franchises or assets.
"Trade Accounts Payable" of any Person means trade accounts payable of
such Person with a maturity of not greater than 90 days incurred in the ordinary
course of such Person's business.
"Trustee" shall mean the banking institution at the time serving as
Trustee under the Indenture.
"Unmatured Event of Default" shall mean, collectively, "Unmatured Event
of Default" and "Event of Default" as such terms are defined in the Amended and
Restated Loan Agreement.
Section I.2 Rules of Construction.
(1) 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.
(2) 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.
(3) All references herein to particular articles or sections are
references to articles or sections of this Loan Agreement unless some other
reference is established.
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(4) All accounting terms not specifically defined herein shall be
construed in accordance with Generally Accepted Accounting Principles applied on
a Consistent Basis.
(5) All references herein to the Borrower shall be deemed to refer
to each of the Persons if more than one are 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.
(6) Any terms not defined herein but defined in any of the other
Bond Documents shall have the same meaning herein.
(7) 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.
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ARTICLE II
REPRESENTATIONS
Section II.1 Representations by the Issuer. The Issuer represents and
warrants as follows:
(1) The Issuer is a public body corporate and politic and a public
instrumentality created and existing under and by virtue of the laws of the
State.
(2) Under the provisions of the Enabling Act, the Issuer is duly
authorized to enter into, execute and deliver the Bond Documents to which it is
a party, to undertake the transactions contemplated by the Bond Documents to
which it is a party and to carry out its obligations hereunder and thereunder.
(3) The Issuer has found and determined that the criteria and
requirements set forth in Section 159.29, Florida Statutes, for the acquisition,
construction and equipping of the Project, the issuance of the Bonds to provide
funds to pay all of, or part of, the Cost of Acquisition of the Project and the
financing of the Cost of Acquisition of the Project have been complied with.
(4) The Issuer has further found and determined that the financing
of the Cost of Acquisition of the Project through the issuance of the Bonds
constitutes an appropriate use of the Issuer's bonding powers and will result in
a substantial public benefit, which finding and determination has been accepted
by the County Commission, which has approved the Bond issue, including the
Bonds.
(5) The Issuer proposes to issue the Bonds in the aggregate
principal amount of $2,500,000.00 to finance all or a portion of the Cost of
Acquisition of the Project, presently estimated by the Borrower to equal or
exceed $2,500,000.00.
(6) By duly adopted resolution, the Issuer has authorized the
execution, delivery and performance of the Bond Documents to which it is a
party, including the borrowing under, and the sale, issuance and performance of,
the Bonds and as security for the Bonds, the pledge of the Note (endorsed
without recourse to the order of the Trustee), the Mortgage, the Security
Agreement, and the Environmental Agreement to the Trustee, and has approved the
form of the other Bond Documents to which the Issuer is a party.
(7) The Bonds will be issued under and pursuant to the Indenture
and will mature, bear interest, and have the other terms and provisions set
forth or provided for in the Indenture.
(8) No other consent or approval is required by any governmental
or public agency or authority as a condition to the performance by the Issuer of
its obligations under this
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Agreement or the other Bond Documents to which the Issuer is a party or to the
issuance or sale of the Bonds.
(9) The execution delivery and performance of the Bond Documents
to which the Issuer is a party will not (i) conflict with, or constitute a
breach of or default under, the bylaws of the Issuer, any order of any court,
regulatory body or arbitral tribunal or any agreement or instrument to which the
Issuer is a party or by which it is bound, or (ii) require any consent pursuant
to any law or regulation presently applicable to the Issuer (except for such
consents and approvals as have heretofore been obtained).
(10) There are no judicial, regulatory, arbitral or other actions,
suits, proceedings, inquiries or investigations pending or, to the knowledge of
the Issuer, threatened against the Issuer which, if decided adversely to the
Issuer, would have a material adverse effect on the existence or organization of
the Issuer or the title to office of any of the members of the Board of the
Issuer or officers of the Issuer, the issuance and sale of the Bonds or any of
the transactions or proceedings of the Issuer in connection therewith.
(11) When duly executed and delivered on behalf of the Issuer, and
assuming the due authorization, execution and delivery of the Bond Documents by
the other parties thereto, each of the Bond Documents to which the Issuer is a
party shall constitute a legal, valid and binding obligation of the Issuer
enforceable in accordance with its terms.
Section II.2 Representations, Warranties and Covenants by the Borrower.
The Borrower represents, warrants and covenants as follows:
(1) The Borrower has legal authority and capacity to enter into,
and to perform the agreements and covenants on its part contained in the Bond
Documents to which it is a party.
(2) The Borrower is lawfully seized of a valid title to the
Project Site, and has a good and sufficient right to bargain, sell, grant,
convey, mortgage and assign the Mortgaged Property to the Issuer in the manner
provided herein, subject only to Permitted Encumbrances.
(3) The borrowing under the Note, the execution and delivery of
the Bond Documents to which it is a party, 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
any law or regulation 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.
(4) The Borrower will cause the proceeds of the Bonds to be
applied to the payment of, or the reimbursement of the Borrower for the payment
of, the Cost of Acquisition of the Project.
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(5) The commencement of the Acquisition of the Project, including
the letting of purchase orders for components thereof, did not occur prior to
April 18, 1997 (60 days prior to adoption by the Issuer of a resolution
declaring its intention to finance the Project).
(6) The Project being acquired, constructed and installed at the
Plant constitutes and will constitute a "project" within the meaning of the
Enabling Act, and the Borrower presently expects to operate the Plant or cause
the same to be operated by the Company as a manufacturing facility from the
Completion Date until payment of the Bonds.
(7) The Borrower presently estimates the Cost of Acquisition of
the Project to equal or exceed $2,500,000.00.
(8) The Project will be located wholly within the County.
(9) When executed and delivered, the Bond Documents to which the
Borrower is a party will be the legal, valid and binding obligations or
agreements of the Borrower enforceable in accordance with their respective
terms.
(10) 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 impair the right of the Borrower to carry on its business
substantially as now conducted or would materially adversely affect the
financial condition, business or operations of the Borrower or the transactions
contemplated by, or the validity of, any of the Bond Documents.
(11) 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 which, if adversely determined, would materially and
adversely affect the financial condition or operations of the Borrower.
(12) Neither the Bond Documents to which the Borrower is a party
nor any other document 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 not misleading.
(13) 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.
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(14) The Project Site is properly zoned, and its intended use and
the operation of the Plant comply with the uses permitted by applicable zoning
regulations.
(15) The Plant conforms or will conform with all planning,
building, land use, environmental and other regulations of governmental
authorities having jurisdiction of the Plant, all necessary utilities are
available or will be provided for the Plant, and the Borrower has obtained or
will obtain all requisite planning, building, land use, environmental and other
permits necessary for the Acquisition of the Project and the use and occupancy
of the Plant.
(16) No notice of commencement with respect to the Acquisition of
the Project has been filed or posted by the Borrower and, further, all
contractors, suppliers and materialmen who have provided services or materials
with respect to the Acquisition of the Project, if any, have been paid all
amounts due them through the date hereof.
(17) No approval, consent or authorization of, or registration,
declaration or filing with, any governmental or public body or authority not
already obtained by the Borrower is required in connection with the valid
execution, delivery and performance by the Borrower of the Bond Documents to
which it is a party.
(18) Once the Bonds bear interest at the Tax-Exempt Rate, the
Borrower will not take or fail to take any action which would impair the
exclusion of interest on the Bonds from gross income for federal income tax
purposes.
(19) All of the representations, warranties and covenants of the
Borrower contained in the Borrower's Tax Compliance Certificate are hereby
reaffirmed and incorporated herein by reference.
All of the above representations, warranties and covenants shall
survive the making of this Loan Agreement and the issuance of the Note.
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ARTICLE III
ACQUISITION OF THE PROJECT
Section III.1 Agreement as to Acquisition of the Project. The Issuer
and the Borrower hereby agree that the Borrower shall complete the Acquisition
of the Project with all reasonable dispatch (delays incident to strikes, riots,
acts of God or the public enemy or any delay beyond its reasonable control which
do not delay the Completion Date by more than two (2) years from the date hereof
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 III.2 Borrower to Obtain Approvals Required for the Project and
the Plant. The Borrower shall obtain or cause to be obtained all necessary
permits and approvals for the Acquisition of the Project and the operation and
maintenance of the Plant and shall comply with all lawful requirements of any
governmental body regarding the use or condition of the Project Site and the
Plant. The Borrower may, however, contest any such requirement by an appropriate
proceeding diligently prosecuted.
Section III.3 Plans and Specifications. The Borrower shall maintain a
set of Plans and Specifications at the Project Site which shall be available to
the Issuer, the Trustee and the Bondholder for inspection and examination during
the Borrower's regular business hours, and the Issuer and the Borrower agree
that the Borrower may supplement, amend and add to the Plans and Specifications,
and that the Borrower shall be authorized to omit or make substitutions for
components of the Project, without the approval of the Issuer, provided that no
such change shall be made which shall be contrary to subsections (b), (c), (d),
(e), (f), (g) and (h) of Section 2.2 hereof, and provided further that if any
such change would render materially incorrect or incomplete the description of
the initial components of the Project or the description of the Project or
Project Site as set forth in Exhibits "B" or "C" to this Loan Agreement, the
Borrower and the Issuer shall amend such Exhibits "B" or "C" to reflect such
change, upon receipt by the Trustee of an opinion of bond counsel that such
change will not result in an Event of Taxability. No approvals of the Issuer or
the Trustee shall be required for the Acquisition of the Project or for the
solicitation, negotiation, award or execution of contracts relating thereto.
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ARTICLE IV
ISSUANCE OF THE BONDS; COMPLETION DATE
Section IV.1 Agreement to Issue the Bonds. To provide funds for payment
of the Cost of Acquisition of the Project, the Issuer agrees that it will sell,
issue and deliver the Bonds in the aggregate maximum principal amount of
$2,500,000.00 in the manner set forth in the Indenture and cause the proceeds of
the Bonds to be applied as provided in the Indenture.
Section IV.2 Disbursements from the Project Fund. All payments from the
Project Fund to pay the Cost of Acquisition of the Project, or to reimburse the
Borrower for any Cost of Acquisition of the Project paid or incurred by the
Borrower before or after the execution and delivery of this Agreement and the
issuance and delivery of the Bonds shall be made by the Trustee pursuant to the
Indenture with monies drawn down under the Note following receipt of a
requisition and certificate substantially in the form of Exhibit "A" attached to
the Indenture.
Section IV.3 Certificate as to Completion. The completion Date shall be
promptly established and evidenced to the Trustee and shall be the date on which
the Borrower Representative delivers to the Trustee a Completion Certificate
stating that, except for amounts retained by the Trustee at the Borrower's
direction for any Cost of Acquisition of this Project not then due and payable,
the Acquisition of the Project 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. Within twenty (20) days of the completion of the
Project, the Borrower shall deliver to the Trustee an itemized description of
all machinery, equipment and other personal property for which payment has been
made or is to be made from the Project Fund with amounts theretofore or
thereafter to be drawn down.
Section IV.4 Reserved.
Section IV.5 Borrower Required to Pay in Event Project Fund
Insufficient. In the event the moneys in the Project Fund should not be
sufficient to pay the Cost of the Acquisition of the Project in full, the
Borrower agrees to complete the Project and to pay that portion of such cost in
excess of the moneys available therefor in the Project Fund. THE ISSUER MAKES NO
WARRANTY, EITHER EXPRESS OR IMPLIED, THAT THE MONEYS PAID INTO THE PROJECT FUND
AND AVAILABLE FOR PAYMENT OF THE COST OF ACQUISITION OF THE PROJECT WILL BE
SUFFICIENT TO PAY THE TOTAL COST OF ACQUISITION OF THE PROJECT. The Borrower
agrees that if after exhaustion of the moneys in the Project Fund, the Borrower
should pay any portion of the Cost of Acquisition of the Project pursuant to the
provisions of this section, it shall not be entitled to any reimbursement
therefor from the Issuer, the 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.
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Section IV.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 create the public or any
member thereof, other than as may be expressly provided herein or as
contemplated in the Indenture, 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.
Section IV.7 Rebate Provisions. The Issuer and the Borrower shall
comply with the provisions of the Tax Compliance Certificates providing, under
the circumstances set forth therein, for the rebate of certain amounts to the
United States.
Section IV.8 Arbitrage Certifications and Covenants.
(1) The Borrower reasonably expects, and hereby certifies and
represents to the Issuer, and the Issuer hereby certifies that it reasonably
expects, that the proceeds of the Bonds will not be used in a manner that would
cause the Bonds to be classified as "arbitrage bonds" under Section 148(a) of
the Code. To the best knowledge and belief of the Borrower, there are no facts
or circumstances that would materially change the foregoing expectations.
(2) The Borrower certifies and covenants with the purchasers and
the holders of the Bonds from time to time outstanding that so long as any of
the Bonds remain outstanding, moneys on deposit in any fund or account in
connection with the Bonds, whether or not such moneys were derived from the
proceeds of the sale of the Bonds or from any other sources, will not be used in
a manner which will cause the Bonds to be "arbitrage bonds" within the meaning
of Section 148(a) of the Code, as the same exists on the date of this Loan
Agreement or may from time to time hereafter be amended, supplemented or
revised.
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ARTICLE V
LOAN BY THE ISSUER TO THE BORROWER; REPAYMENT
Section V.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 for the purpose of providing funds to pay the
cost of the Acquisition of the Project.
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, the Note, in the form attached as Exhibit "A" hereto, the
Mortgage, the Security Agreement, and the Environmental Agreement to the Issuer
and the Issuer will endorse the Note without recourse to the order of, and
pledge and assign this Loan Agreement, the Note, the Mortgage, the Security
Agreement, and the Environmental Agreement 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. In addition to the payments required to be
made by the Borrower on the loan under the Note and this Loan Agreement, the
Borrower also shall pay, at the time or times set forth herein, Administrative
Expenses pursuant to Section 7.5 hereof and all other amounts due the Issuer,
the Trustee or the Bondholder, pursuant to the Bond Documents, including,
without limitation, payments due the Bondholder for increased cost pursuant to
Sections 213, 218 and 219 of the Indenture.
Notwithstanding anything else in the Note or in this Loan Agreement to
the contrary, in no contingency or event whatsoever shall the amount paid or
agreed to be paid to the Issuer or the Trustee for the use, forbearance or
detention of the money to be advanced thereunder exceed the highest lawful rate
permitted under the law applicable thereto. If, from any circumstances
whatsoever, fulfillment of any provision of the Note or this Loan Agreement, at
the time performance of such provisions shall be due, shall involve payment of
interest at a rate which exceeds the highest lawful rate as so determined, then
ipso facto the obligation to be fulfilled shall be reduced to the highest lawful
rate. If, from any circumstances whatsoever, the Issuer or the Trustee shall
ever receive interest, the amount of which would exceed such highest lawful
rate, a portion thereof which would be excessive interest shall be applied to
the reduction of the unpaid principal balance due under the Note and to the
payment of interest, or if the Note is no longer outstanding, shall be repaid to
the Borrower. Provided, however, that nothing contained in the Note or in this
Loan Agreement shall be deemed to create a defense, contractual or otherwise, to
any sums due or to become due or coming due under the Note, this Loan Agreement
or under any other agreement existing between the Issuer and the Borrower where
no such defense exists at law, as for example, wherein no limit exists upon the
rate of interest which may be charged.
Section V.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,
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any Bondholder or any other Person.
The Borrower (a) will not suspend or discontinue, or permit the
suspension or discontinuance of, any of the payments required by Section 5.1
hereof, (b) will perform and observe all of its other agreements contained in
the Note and in this Loan Agreement, the Mortgage, the Security Agreement, and
the Environmental Agreement and (c) will not suspend the performance of its
obligations under the Note or this Loan Agreement, the Mortgage, the Security
Agreement, or the Environmental Agreement for any cause whatsoever including,
without limiting the generality of the foregoing, failure to complete the
Project, any acts or circumstances that may constitute failure of consideration,
failure of or a defect of title to the Plant or Project Site or any part
thereof, eviction or constructive eviction, destruction of damage to the Plant
or Project Site, commercial frustration of purpose, any change in the tax or
other laws or administrative rulings of or administrative actions by the United
States of America or the State or any political subdivision of either, or any
failure of the Issuer or the Trustee to perform and observe any agreement,
whether expressed or implied, or any duty, liability or obligation arising out
of or connected with this Loan Agreement.
Section V.3 Prepayments. The Borrower may, at any time, prepay all or
any part of the Note as provided in, and subject to the terms and conditions of,
Section 10.1 hereof. The Borrower shall prepay all of the amounts it is required
to prepay as provided in Sections 10.2 and 10.3 hereof.
Section V.4 Credits Against the Note. To the extent that principal of,
premium, if any, or interest on the Bonds shall be paid, there shall be credited
against the unpaid principal of, premium, if any, or interest on the Note, as
the case may be, an amount equal to the principal of, premium, if any, or
interest on the Bonds so paid. If the principal of, premium, if any, 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.
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ARTICLE VI
MAINTENANCE AND MODIFICATIONS; TAXES AND UTILITY
CHARGES; INSURANCE AND EMINENT DOMAIN
Section VI.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, (a) keep the Plant or cause the Plant to be kept in as reasonably
safe condition as the operations thereat shall permit, (b) make or cause to be
made from time to time all necessary repairs thereto and renewals and
replacements thereof and otherwise keep or cause to be kept the Plant in good
repair and in good operating condition and (c) not permit or suffer others to
commit a nuisance on or about the Plant. The Borrower shall pay or cause to be
paid all costs and expenses of operation and maintenance of the Plant. Subject
to the terms of the Mortgage and the Security Agreement, 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 Plant.
Section VI.2 Taxes and Utility Charges.
(1) 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
Plant (including, without limiting the generality of the foregoing, any tax upon
or with respect to the income or profits of the Issuer 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 thereon created by
the Indenture and including ad valorem, sales and excise taxes, assessments and
charges upon the Borrower's interest in the Plant) or any of the Bond Documents
(including, without limiting the generality of the foregoing, documentary stamp
tax or intangible tax if, and to the extent, applicable), all utility and other
charges incurred in the operation, maintenance, use, occupancy and upkeep of the
Plant and all assessments and charges lawfully made by any governmental body for
public improvements that may be secured by a lien on any portion of the Plant.
(2) 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 notifies the
Bondholder and the Trustee that, in the opinion of Counsel, by nonpayment of any
such items, the liens of the Mortgage and the Security Agreement and the rights
of the Trustee with respect to the Mortgage, the Security Agreement, this Loan
Agreement and the Note created by the assignment under the Indenture, as to the
rights assigned under this Loan Agreement, the Mortgage or the Security
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 Project 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 unpaid items or furnish, at the expense of
the Borrower, indemnity satisfactory
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to the Bondholder and the 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 Bondholder and the
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 Bondholder 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
from the date of payment, the Borrower agrees to pay on demand therefor.
(3) The Borrower shall furnish the Bondholder and the Trustee,
tupon 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 VI.3 Title Insurance and Survey. The Borrower will deliver to
the Issuer and the Trustee as named insureds at or prior to closing a title
insurance policy issued by a financially responsible title insurance company
qualified to do business in the State and acceptable to the Bondholder in the
amount of $2,500,000 (a) insuring that the Borrower has fee simple title to the
New Facility Site (and insuring the assignment of the Mortgage under the
Indenture) and that the Mortgage (as so assigned) constitutes a valid and
existing first lien on such real property, subject only to Permitted
Encumbrances and (b) insuring the Trustee's interest in such real property. At
the request of the Bondholder, the Borrower will thereafter deliver to the
Bondholder and the Trustee such endorsements to said title insurance policy as
may be necessary or required to show that there have been no changes in the
state of title since the last preceding advance of loan proceeds.
The Borrower will also deliver to the Issuer and the Trustee at or
prior to closing a current survey showing the New Facility Site to be free from
all encroachments and encumbrances, which survey shall meet all the requirements
of the aforesaid title insurance company so as to enable such company to
eliminate any exception for survey matters from the title insurance policy, and
the survey shall locate all recorded restrictions and easements on the New
Facility Site by recording references. At the request of the Bondholder, the
Borrower will, from time to time thereafter, furnish a supplemental survey or
surveys showing all foundations of the New Facility to be in place and so as not
to be in violation of any covenant, restriction or zoning ordinance affecting
the New Facility. Upon completion of the Acquisition of the Project, the
Borrower will furnish to the Trustee an as-built survey as required by Section
7.2(b) hereof.
Section VI.4 Casualty and Liability Insurance Required. Until Payment
of the Bonds shall be made, the Borrower will keep or cause to be kept the New
Facility 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 (including business interruption insurance) including,
without limiting the generality of the foregoing:
(1) prior to completion of the portion of the Project involving
improvements to
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real property, builder's risk insurance on the Plant on an "all risk" basis in
an amount acceptable to the Bondholder and with such other provisions as are
required by the Bondholder;
(2) casualty insurance on the New Facility in an amount not less
than the full insurable value of all property located at, and all improvements
to, the Project Site, against loss or damage by 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 broad form of extended
coverage endorsement at the time in use in the State;
(3) general comprehensive liability insurance, naming the Issuer
and the Trustee as loss payees, against claims for bodily injury, death or
property damage occurring on, in or about the New Facility (such coverage to
include provisions waiving subrogation against the Issuer and the Trustee) in
amounts not less than $1,000,000.00 with respect to bodily injury to any one
person, $1,000,000.00 with respect to bodily injury to two or more persons in
any one accident and $1,000,000.00, with respect to property damage resulting
from any one occurrence;
(4) liability insurance with respect to the New Facility 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
(5) if at any time any portion of the New 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 Project Site with amounts
and coverage satisfactory to the Bondholder.
Section VI.5 General Requirements Applicable to Insurance.
(1) Each insurance policy obtained in satisfaction of the
requirements of Section 6.4 hereof:
(1) shall be by such insurer (or insurers) as shall be
financially responsible, qualified to do business in the
State, and of recognized standing;
(2) 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
Bondholder;
(3) shall prohibit cancellation or substantial modification,
termination or lapse in coverage by the insurer without
at least 30 days' prior written notice to the Trustee;
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(4) 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
(5) without limiting the generality of the foregoing, all
insurance policies carried on the New Facility shall
name the Borrower, the Issuer and the Trustee as parties
insured thereunder as the respective interests of each
of such parties may appear, and any loss thereunder
shall be made payable and shall be applied as provided
in Section 6.9 hereof.
(2) Prior to expiration of any such policy, the Borrower shall, at
the request of the Trustee or the Bondholder, furnish the Trustee and the
Bondholder with evidence satisfactory to the Trustee and the Bondholder that the
policy or certificate has been renewed or replaced or is no longer required by
this Loan Agreement.
Section VI.6 Advances by the Bondholder 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 New Facility in good repair and good operating condition,
the Bondholder or the Trustee may (but shall be under no obligation to), after
10 days written notice to the Borrower (unless such insurance coverage shall
terminate or expire within that time period, in which case, no notice will be
required), 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 Bondholder and the Trustee to the extent of the
amounts so advanced by them or any of them with interest thereon at the Overdue
Rate from the date of advance to the date of reimbursement. Any amounts so
advanced by the Bondholder 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 secured by the lien of the Mortgage.
Section VI.7 Borrower to Make up Deficiency in Insurance Coverage. The
Borrower agrees that to the extent that it shall not carry insurance required by
Sections 6.3 and 6.4 hereof, it shall pay promptly to the Trustee for
application in accordance with the provisions of Section 6.9 hereof, such amount
as would have been received as Net Proceeds by the Trustee under the provisions
of Section 6.9 hereof had such insurance been carried to the extent required.
Section VI.8 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 the temporary use of, 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 with respect to the Mortgaged Property shall be
applied as provided in Section 6.9(b) hereof.
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Section VI.9 Application of Net Proceeds of Insurance and Eminent
Domain.
(1) The Net Proceeds of the insurance carried pursuant to the
provisions of Sections 6.3, 6.4(c) and 6.4(d) 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, provided
that if the Borrower does not cause promptly, and in any event within ninety
(90) days of receipt, the Net Proceeds of the insurance carried pursuant to the
provisions of Section 6.3 to be so applied to the full and complete
extinguishment of the applicable defect or claim, then such Net Proceeds shall
be applied to the prepayment of the Bonds as provided in Article X hereof.
(2) The Net Proceeds of the insurance carried with respect to the
New Facility pursuant to the provisions of Sections 6.4(a), 6.4(b) and 6.4(e)
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 to the Trustee and applied as follows:
(1) If the amount of the Net Proceeds does not exceed
$50,000.00, the Net Proceeds shall be paid to the
Borrower and shall be applied to the repair,
replacement, renewal or improvement of the New Facility
as necessary.
(2) If the amount of the Net Proceeds exceeds $50,000.00,
the Net Proceeds shall be paid to and held by the
Trustee as a special account in the Project 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 ninety (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 New Facility (such funds to remain
with the Trustee and to be drawn down by the Borrower as
provided in the Indenture in the case of withdrawals
from the Project 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 ninety (90) days that it
elects to proceed under clause (A) to use such Net
Proceeds for the repair, replacement, renewal or
improvement of the New Facility, 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 thirty (30) days
after the expiration of said period of ninety (90) days
without an election by the Borrower.
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The Borrower agrees that if it shall elect to use the moneys paid to
the Trustee pursuant to subsection (b)(ii) of this Section 6.9 for the repair,
replacement, renewal or improvement of the New Facility, it will restore the New
Facility, 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 New Facility, the Borrower shall use its own funds to
restore or replace the New Facility. Prior to the commencement of such work, the
Trustee 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 paid
to the Borrower. The Borrower shall be entitled to the Net Proceeds of any
insurance or proceeds resulting from Eminent Domain relating to property of the
Borrower not included in the Mortgaged Property and not providing security for
the Note or this Loan Agreement.
Section VI.10 Parties to Give Notice. In case of any material damage to
or destruction of all or any part of the Mortgaged Property, 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 Mortgaged Property 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.
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ARTICLE VII
SPECIAL COVENANTS
Section VII.1 Access to the Plant and Inspection. The Issuer
Representative, the Bondholder and the Trustee shall have the right, at all
reasonable times upon the furnishing of reasonable notice to the Borrower under
the circumstances, to enter upon the Project Site and to examine and inspect the
Plant. The Issuer Representative, the Bondholder and the Trustee and their duly
authorized agents shall also have such right of access to the Plant as may be
reasonably necessary to cause to be completed the, Acquisition of the Project,
and thereafter for the proper maintenance of the Plant, in the event of failure
by the Borrower to perform its obligations relating to maintenance under this
Loan Agreement, the Mortgage or the Security 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
Representative, the Bondholder and the Trustee such right of entry. The Issuer
Representative, the Bondholder and the Trustee shall also be permitted, at all
reasonable times, to examine the books and records of the Borrower with respect
to the Acquisition of the Project and the obligations of the Borrower hereunder,
but neither shall be entitled to access to trade secrets or other proprietary
information (other than financial information) of the Borrower.
Section VII.2 Further Assurances and Corrective Instruments; Survey.
(1) 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 correcting any inadequate or incorrect description of the Plant and for
carrying out the intention or facilitating the performance of this Loan
Agreement.
(2) No later than the Completion Date, the Borrower shall deliver
to the Trustee an "as built" survey (complying with the requirements of Section
6.3 hereof) showing the location of the completed New Facility and all other
improvements on the New Facility Site.
Section VII.3 Recording and Filing; Other Instruments.
(1) The Borrower covenants that it will, at its expense, cause
Counsel to take all steps as are reasonably necessary to render an opinion to
the Bondholder and the Trustee not earlier than sixty (60) nor later than thirty
(30) days prior to each anniversary date occurring at five-year intervals after
the issuance of the Bonds, and upon completion of any application of the Net
Proceeds of insurance or Eminent Domain pursuant to Section 6.9(b)(ii) hereof,
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 refiled in such manner and in such places required by law in
order fully to preserve and protect the rights of the Trustee (i) in the lien
granted pursuant to the Mortgage in the Mortgaged Property, (ii) in the security
interest granted
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pursuant to the Security Agreement, and (iii) in the granting by the Issuer of
certain rights of the Issuer, pursuant to the Indenture, under this Loan
Agreement, the Note, the Mortgage and the Security Agreement, as against
creditors of or purchasers for value from, the Issuer or the Borrower.
(2) 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 it to render the opinion referred to in
subsection (a) of this Section. The Borrower shall file and refile and record
and re-record or cause to be filed and refiled and recorded and re-recorded all
instruments required to be filed and refiled 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 VII.4 Notice of Event of Taxability. The Borrower shall give
prompt written notice to the Issuer, the Bondholder and the Trustee of the
filing by the Borrower of any statement, tax schedule, return or document with
the Internal Revenue Service which discloses that an Event of Taxability shall
have occurred and its receipt of any oral or written advice from the Internal
Revenue Service that an Event of Taxability shall have occurred.
Section VII.5 Administrative Expenses. The Borrower shall pay to or for
the account of the Issuer , the Bondholder or the Trustee, as applicable, within
thirty (30) days after notice thereof all reasonable costs and expenses incurred
by such person in connection with the financing, construction and administration
of the Project, except such as may be paid out of the proceeds of the Bonds,
including, without limitation, the costs of administering and enforcing this
Loan Agreement and the other Bond Documents, the fees and expenses of the
Issuer, the Bondholder and Trustee and the fees and expenses of attorneys,
consultants and others retained by or on behalf of such person. To the extent
permitted by law, all elements of Administrative Expenses shall bear interest at
the Overdue Rate from and after the date upon which payment of the same becomes
due and payable and the term "Administrative Expenses" shall automatically be
deemed to include such interest at the Overdue Rate.
Section VII.6 Covenants with Respect to Tax Exemption. While the Bonds
bear interest at the Tax-Exempt Rate, the Borrower represents, warrants and
covenants to the Issuer, for the benefit of any Person who shall at any time be
or become a holder of the Bonds that it has taken no action and will take no
action or fail to take any required action the consequence of which would be to
forego, jeopardize or terminate the exemption of interest on the Bonds from
Federal income tax; provided, however, that failure to comply with this covenant
shall result in a Determination of Taxability and shall not constitute an Event
of Default under Section 9.1 of this Loan Agreement.
The Borrower covenants that it will comply with all requirements of the
Enabling Act (and the Code while the Bonds bear interest at the Tax-Exempt Rate)
with respect to the use of the proceeds of the Bonds and that it will file,
deliver or execute, or cause to be filed, all statements
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or notices required thereby.
Whenever the Issuer shall be required to file, deliver or execute, or
produce any reports, notices or other documents while the Bonds are Outstanding,
the Borrower shall furnish or cause the proper Person to furnish in due time to
the Issuer, through Counsel for the Issuer, the completed form of such report,
notice or other required document, together with (a) a certification by the
Borrower or other proper Person required to provide information that such
document is accurate and (b) an opinion of bond counsel addressed to the Issuer
that the report or other document is not in violation of any provision of law or
of the documents constituting the complete transcript of proceedings relating to
the issuance of the Bonds and that such report, notice or other required
document meets the legal requirements for such filing, delivery or execution. In
the event of the failure or refusal of the Borrower or other proper Person to
comply with this provision, the Borrower agrees to pay the statement for
attorney's fees and administrative time presented by the Issuer for filing,
delivering or executing such report or document, such statement to be paid
within thirty (30) days after presentation by the Issuer.
Section VII.7 Financial Covenants. Until all of Borrower's obligations
under the Bond Documents are paid in full, Borrower agrees that, unless the
Bondholder otherwise consents in writing, it will:
(1) Net Worth. Not permit at any time during any fiscal quarter,
measured as of the last day of the most recently completed fiscal quarter set
forth below, Net Worth to be less than the amount set forth below across from
such fiscal quarter:
Fiscal Quarter Ending Net Worth
09/30/97 $28,000,000
12/31/97 $28,000,000
03/31/98 $28,000,000
06/30/98 $28,000,000
09/30/98 $28,000,000
12/31/98 and thereafter $32,000,000
(2) Capital Expenditures. Not, and not permit any Subsidiary to,
purchase or otherwise acquire (including, without limitation, acquisition by way
of Capitalized Lease), or commit to purchase or otherwise acquire, any fixed
asset if, after giving effect to such purchase or other acquisition, (A) the
aggregate capitalized cost of all fixed assets purchased or otherwise acquired
(other than by means of a Capitalized Lease) by Borrower and its Subsidiaries on
a consolidated basis plus (B) the aggregate annual payments under Capitalized
Leases (excluding the portion thereof representing imputed interest) of Borrower
and its Subsidiaries on a consolidated basis (excluding, in each of (A) and (B),
(a) any fixed asset which constitutes a replacement for an asset which was the
subject of a casualty or governmental taking to the extent the purchase or other
acquisition thereof is funded by insurance proceeds or other payments received
as a result of such casualty or taking; (b) the first $675,000 of capital
expenditures
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related solely to removal of underground storage tanks or other environmental
problems at Borrower's restaurant locations; and (c) any capital expenditures
(excluding the capital expenditures financed with the proceeds from the Bonds))
would exceed $3,500,000 in Fiscal Year 1997 and in any Fiscal Year thereafter.
(3) Interest Coverage Ratio. Not permit, on the last day of any
fiscal quarter set forth below, the ratio of (a) Borrower's EBITDA for the four
(4) fiscal quarters then ended to (b) Borrower's consolidated interest expense
(but excluding from the calculation thereof all interest expense with respect to
Additional Revolving Loan) for the four (4) fiscal quarters then ended to be
less than the ratio set forth below opposite such fiscal quarter:
Fiscal Quarter Ending Ratio
09/30/97 3.00:1
12/31/97 3.00:1
03/31/98 and thereafter 4.00:1
(4) Funded Debt/EBITDA Ratio. Not permit, on the last day of any
fiscal quarter set forth below, the Funded Debt/EBITDA Ratio to be more than the
ratio set forth below opposite such fiscal quarter:
Fiscal Quarter Ending Ratio
09/30/97 2.50:1
12/31/97 2.25:1
03/31/98 2.25:1
06/30/98 2.25:1
09/30/98 2.25:1
12/31/98 2.25:1
03/31/99 and thereafter 2.00:1
Section VII.8 Release and Indemnification Covenants.
(1) The Borrower shall and hereby agrees to indemnify, defend and
hold harmless the Issuer, the Trustee, and the Bondholder and their respective
members, officers, employees, and agents and officials from and against any and
all losses, claims, damages, taxes (including interest and penalties), costs and
expenses (including reasonable attorneys' fees, whether prior to, during or
after trial or in the event of any appeal) and liabilities arising from, in
connection with, or as a result of the issuance of the Bonds, the execution and
delivery of this Loan Agreement, the Mortgage, the Security Agreement, the
Environmental Agreement, the Indenture, and other documents executed in
connection with the foregoing, the performance and observance by or on behalf of
the Issuer and the Trustee of those things on the part of the Issuer and the
Trustee agreed to be performed or observed hereunder and thereunder, or the
Acquisition of the Project or the use and operation of the Plant, or the costs
of enforcement (including reasonable attorneys' fees) of any obligations of the
Borrower hereunder or under the Bonds, the
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Mortgage, the Security Agreement or any related documents, including any and all
liability or loss, costs or expense, including reasonable attorneys' fees
incurred in connection with, or pertaining to the issuance, sale or delivery of
the Bonds, and arising under the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, or any applicable state securities
laws; provided, however, that such indemnity for liabilities under securities
law shall be subject to the limitation that such indemnity shall not have been
determined by a binding legal precedent to be void as contrary to public policy.
The Borrower shall indemnify and hold the Issuer and the Trustee harmless as
aforesaid, and upon notice from the Issuer or the Trustee, the Borrower shall,
at its own expense, defend them or any of them in any such action or proceeding.
(2) Notwithstanding the fact that it is the intention of the
parties hereto that the Issuer shall not incur any pecuniary liability by reason
of the terms of this Loan Agreement or the undertakings required of the Issuer
hereunder, by reason of the issuance of the Bonds, by reason of the execution of
the Indenture or by reason of the performance of any act requested of the Issuer
by the Borrower, including all claims, liabilities or losses arising in
connection with the violation of any statutes or regulation pertaining to the
foregoing; nevertheless, if the Issuer should incur any such pecuniary
liability, then in such event the Borrower shall indemnify and hold the Issuer
harmless against all claims, demands or causes of action whatsoever, by or on
behalf of any Person arising out of the same or out of any offering statement or
lack of offering statement in connection with the sale or resale of the Bonds
and all costs and expenses incurred in connection with any such claim or in
connection with any action or proceeding brought thereon, and upon notice form
the Issuer, the Borrower shall defend the Issuer in any such action or
proceeding. All references to the Issuer in this Section 7.8 shall be deemed to
include its commissioners, members, directors, officers, employees, attorneys,
and agents.
(3) Notwithstanding anything to the contrary contained herein or
in any of the Bonds or the Indenture, or in any other instrument of document
executed by or on behalf of the Issuer in connection herewith, no stipulation,
covenant, agreement or obligation contained herein or therein shall be deemed or
construed to be a stipulation covenant, agreement or obligation of any present
or future member, commissioner, director, trustee, officer, employee or agent of
the Issuer, or of any incorporator, member, commissioner, director, trustee,
officer, employee or agent of any successor to the Issuer, in any such person's
individual capacity, and no such person, in his individual capacity, shall be
liable personally for any breach or non-observance of or for any failure to
perform, fulfill or comply with any such stipulations, covenants, agreements or
obligations, nor shall any recourse be had for the payment of the principal of,
premium, if any, or interest on any of the Bonds or for any claim based thereon
or on any such stipulation, covenant, agreement or obligation, against any such
person, in his individual capacity, either directly or through the Issuer or any
successor to the Issuer, under any rule of law or equity, statute or
constitution or by the enforcement of any assessment or penalty or otherwise,
and all such liability of any such person, in his individual capacity, is hereby
expressly waived and released.
(4) Notwithstanding anything to the contrary contained herein or
in any of the Bonds or the Indenture, or in any other instrument or document
executed by or on behalf of the Issuer in connection herewith, (i) the Issuer
shall have no obligation to take action under this
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Loan Agreement, the Indenture, the Bonds or such other instruments or documents,
unless the Issuer is requested in writing by an appropriate Person to take such
action and is provided with indemnity and assurances satisfactory to it or
payment of or reimbursement for any expenses (including attorneys' fees) to be
incurred in such action, (ii) no member of the Issuer or any officer, attorney,
employee or agent of the Issuer shall be personally liable to the Borrower, the
Trustee or any other person for any action taken by the Issuer or by its
officers, attorneys, agents or employees, or for any failure to take action,
under this Loan Agreement, the Indenture, the Bonds or such other instruments or
documents, except that the Issuer agrees to take or refrain from taking any
action required by an injunction or required to comply with any final judgment
for specific performance; and (iii) any judgment rendered against the Issuer for
breach of its obligations under this Loan Agreement, the Indenture, the Bonds or
such other instruments or documents, shall be payable solely from the Project
Fund, and no personal liability or charge payable directly or indirectly from
the general funds of the Issuer shall arise therefrom.
The foregoing provisions of this Section 7.8 shall survive the payment,
prepayment or redemption of the Bonds and the termination of this Loan Agreement
and the Indenture.
Notwithstanding anything to the contrary contained herein, the Borrower
shall have no liability to indemnify the Issuer against claims or damages
resulting from the Issuer's own gross negligence or willful misconduct.
Section VII.9 Encumbrance Covenants. Until Payment of the Bonds shall
have occurred, the Mortgaged Property shall remain free and clear of any lien,
encumbrance, mortgage, security interest, and secondary financing whatsoever,
and shall not be sold, conveyed, transferred, or leased with the exception of
any Permitted Encumbrances.
The Borrower shall not, and shall not permit any Subsidiary to, create
or permit to exist any Lien with respect to any of its property, revenue or
assets now owned or hereafter acquired, except: (a) Liens for Taxes which are
not delinquent or which are being contested in good faith and by appropriate
proceedings and as to which such reserves or other appropriate provisions as may
be required by GAAP are being maintained; (b) carriers', warehousemen's,
mechanics', materialmen's, repairmen's, and other like statutory Liens arising
in the ordinary course of business securing obligations which are not overdue or
which are being contested in good faith and by appropriate proceedings and as to
which such reserves or other appropriate provisions as may be required by GAAP
are being maintained; (c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other similar legislation or
regulations; (d) Liens in connection with the acquisition of property after the
date of this Loan Agreement by way of purchase money mortgage, conditional sale
or other title retention agreement, Capitalized Lease or other deferred payment
contract, and attaching only to the property being acquired (and proceeds
thereof and accessions thereto), if (i) except in the case of a Capitalized
Lease, the Indebtedness secured thereby does not exceed 75% of the fair market
value of such property at the time of the acquisition thereof and (ii) the
aggregate principal and interest payments of the Indebtedness of Borrower and
its Subsidiaries secured by such Liens does not exceed (w) $450,000 in Fiscal
Year 1996, (x) $900,000 in Fiscal Year 1997, (y) $1,350,000 in Fiscal
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Year 1998, and (z) $1,500,000 in any Fiscal Year thereafter; (e) liens on real
property and any related fixtures (and proceeds thereof and accessions thereto)
securing loans to Borrower obtained after the date of this Loan Agreement,
provided the initial amount of the loan secured by any such Lien is not more
than 75% of the appraised value of the real property securing such loan; (f)
Liens in favor of Bond Purchaser; (g) Liens listed on Schedule 5.16 of the
Amended and Restated Loan Agreement (and in the case of Capitalized Leases
listed or referred to thereon, Capitalized Leases entered into after the date of
this Loan Agreement for the same property or assets, provided that any increase
in the Indebtedness payable under such new Capitalized Leases shall be
permitted, and count against the limitations set forth, under clause (d)(ii)
above); (h) lessor's Liens and reasonable deposits pursuant to operating leases
permitted hereunder under which Borrower or a Subsidiary is the lessee; (i)
Liens disclosed in the ALTA Title Loan Insurance Policies and ALTA Class A
Surveys delivered pursuant to Section 8.1.10(c) of the Original Loan Agreement,
or otherwise under the Original Loan Agreement or the Existing Loan Agreement,
or disclosed in the title insurance policies delivered pursuant to Section 6.3
hereof, and not objected to by Bond Purchaser on or prior to the Second
Restatement Date; (j) zoning or building restrictions and other minor
encumbrances on and defects in title to real property which do not materially
impair the use or value thereof; (k) Liens incurred or deposits made to secure
the performance of surety or appeal bonds and attaching to property not
exceeding $200,000; (l) attachment or judgment Liens not exceeding $200,000; (m)
bankers' liens arising by operation of law in connection with the Depositary
Accounts; and (n) Liens consented to in writing by Bond Purchaser.
Section VII.10 Financial Statements. The Borrower shall furnish to Bond
Purchaser in form reasonably satisfactory to Bond Purchaser:
(1) Annual Audit Report. Within ninety (90) days after each Fiscal
Year of Borrower, a copy of the annual audit report of Borrower and its
consolidated Subsidiaries prepared on a consolidated (and, if requested by Bond
Purchaser, consolidating) basis in conformity with GAAP and certified by an
independent certified public accountant who shall be of recognized national
standing or otherwise reasonably satisfactory to Bond Purchaser, together with
(i) a letter from such accountant in the form acceptable to the Bond Purchaser,
(ii) a certificate from such accountant containing a computation of, and showing
compliance with, each of the financial covenants contained herein, and (iii) a
certificate from such accountant to the effect that, in making the examination
necessary for the signing of such annual audit report, such accountant has not
become aware of any Event of Default or Unmatured Event of Default that has
occurred and is continuing, or, if such accountant has become aware of any such
event, describing it;
(2) Quarterly Financial Statement. Within forty-five (45) days
after the end of each calendar quarter of each Fiscal Year, a copy of the
unaudited financial statement of (x) Parent and its consolidated Subsidiaries,
(y) the Bickford's Business, and (z) the Cues Business prepared on a
consolidated basis in conformity with GAAP (subject to normal year-end
adjustments and except that such statements need not include notes), signed by
Borrower's chief financial officer and consisting of at lest a balance sheet as
at the close of such quarter and
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statements of earnings and cash flows for such quarter and for the period from
the beginning of such Fiscal Year to the close of such quarter;
(3) Officer's Certificate. Together with the financial statements
furnished by Borrower under the preceding clauses (a) and (b) (but only for the
calendar quarters ended on March, June and September), a certificate of
Borrower's chief financial officer or treasurer, dated the date of such annual
audit report or such monthly financial statements, as the case may be,
containing a statement that no Event of Default or Unmatured Event of Default
has occurred and is continuing, or, if there is any such event, describing it
and the steps, if any, being taken to cure it, and containing a computation of,
and showing compliance with, each of the financial covenants contained herein;
and
(4) Management Letters. Promptly upon receipt thereof, a copy of
any "management letter" or other material communication from Borrower's auditors
(including a copy of any such letter which accompanies the audit report referred
to in clause (a)).
(5) Same Store Sales Reports. Not later than July 31 and January
31 of each year, a report for each of Borrower's restaurants and stores of sales
for the preceding six months and year-to-date, with a comparison of such sales
figures to the corresponding period in the prior Fiscal Year, all in form
reasonably satisfactory to Bond Purchaser.
(6) SEC and Other Reports. Copies of each filing and report made
by Parent with or to any securities exchange or the Securities and Exchange
Commission and of each communication from Parent to shareholders generally,
promptly upon the filing or making thereof;
(7) Other Reports. Promptly from time to time, such other reports
and information as Bond Purchaser may reasonably request.
Section VII.11 Indebtedness. The Borrower shall not, and shall not
permit any Subsidiary to, incur or permit to exist any Indebtedness (including,
but not limited to, Indebtedness as lessee under Capitalized Leases), except:
(a) Indebtedness under the terms of this Loan Agreement; (b) Subordinated Debt;
(c) other Indebtedness outstanding on the date hereof and listed on Schedule
5.15 to the Amended and Restated Loan Agreement; (d) Indebtedness hereafter
incurred in connection with Liens permitted under Section 7.9; and (e) other
Indebtedness approved in writing by Bond Purchaser.
Section VII.12 Additional Information. Until Payment of the Bonds shall
have occurred, the Borrower shall promptly, from time to time, deliver or cause
to be delivered to the Bondholder, the Trustee and the Issuer such information
regarding the operations, business affairs and financial condition of the
Borrower and the Guarantor as the Bondholder, the Trustee and the Issuer may
reasonably request in writing.
Section VII.13 Restricted Payments . The Borrower shall not purchase or
redeem any shares of its stock (other than for stock of Borrower), declare or
pay any dividends thereon (other
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than stock dividends), make any distribution to stockholders as such (other than
distributions of stock of Borrower) or set aside any funds for any such purpose,
not prepay, purchase or redeem, and not permit any Subsidiary to purchase, any
Subordinated Debt, not make any advances to Parent and, if an Event of Default
or Unmatured Event of Default exists or would result therefrom, not, and not
permit any Subsidiary to, pay any management or similar fees to Parent or any of
its affiliates pursuant to the terms of the Management Agreement (except that
any such fees may be paid whether or not an Event of Default or Unmatured Event
of Default exists or would result therefrom, solely to the extent such fees are
to pay regular salaries (and not bonuses) of any employees or officers of
Parent); provided, however, that: (a) Borrower may pay dividends and advances to
Parent in an aggregate amount not exceeding 50% of Borrower's Excess Cash Flow
for the immediately preceding Fiscal Year so long as (i) Bond Purchaser shall
have received Borrower's annual audit report pursuant to Section 7.10 for such
preceding Fiscal Year, (ii) after giving effect to any such proposed dividend or
advance, the amount of the Revolving Loan Availability will exceed the
outstanding principal amount of the Revolving Loans by at least $500,000, (iii)
no Event of Default or Unmatured Event of Default shall then exist or will
result from any such dividend payment or advance, and (iv) Borrower shall have
given Bond Purchaser prior written notice of any such proposed dividend or
advance and certified its compliance with this Section 7.13; (b) Borrower may,
within 60 days after obtaining the proceeds of any loan permitted pursuant to
Section 5.15(e) of the Amended and Restated Loan Agreement, pay a dividend or
advance to Parent in an amount not exceeding 25% of the proceeds of such loan so
long as the conditions specified in sub-clauses (ii), (iii) and (iv) of clause
(a) above have been met; (c) Borrower may make scheduled payments of principal
of and interest on the Subordinated Note, so long as the conditions specified in
sub-clauses (ii), (iii) and (iv) of clause (a) above have been met (it being
understood that each reference to a "dividend" in such sub-clauses shall be
deemed, for purposes of this clause (c), to be a reference to the relevant
payment on the Subordinated Note); and (d) Borrower may, within ten (10) days
after obtaining the proceeds of any Supplemental Revolving Loan, pay a dividend
or advance in the amount of such proceeds of such Loan to Parent to be used by
Parent as specified by Section 5.25 of the Amended and Restated Loan Agreement
so long as the conditions specified in sub-clauses (iii) and (iv) of clause (a)
above have been met. Dividends and advances permitted and paid under clause (a),
(b) or (d) of the foregoing sentence shall not reduce the amount of dividends or
advances payable under any other such sub-clause.
Section VII.14 Sale of Assets. The Borrower covenants that, unless the
Bondholder otherwise consents in writing, it will not sell, assign, transfer,
convey, grant a lien on or security interest in or otherwise dispose of all or
substantially all of its assets (including, but not limited to, the Plant).
Section VII.15 Litigation. The Borrower shall notify the Trustee and
the Bondholder of any pending litigation or claims against it wherein another
party seeks damages against it where the aggregate of such litigation or claims
(or portions thereof) is in excess of $50,000.00, which is not fully covered by
insurance, or any litigation or claims seeking damages or equitable relief
which, if granted, would materially interfere with the Acquisition of the
Project or the operation of the Plant as hereby contemplated.
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Section VII.16 Patents, Trademarks. The Borrower shall take all
reasonable steps to preserve and protect its patents, licenses, permits,
trademarks, trademark rights, trade names, trade name rights, copyrights, trade
secrets and other proprietary information used or useful in connection with its
operation at the Plant and shall maintain all of its other properties and assets
used or useful in the conduct of its business at the Plant in good repair,
working order and condition and from time to time cause to be made all proper
replacements, betterments and improvements thereto.
Section VII.17 Default Certificates. The Borrower shall deliver to the
Trustee and the Bondholder forthwith, upon obtaining knowledge of an Event of
Default hereunder or under the Note, the Indenture, the Mortgage, the Security
Agreement, the Guaranty, the Environmental 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, 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 VII.18 Notification to Trustee. The Borrower shall notify the
Trustee and the Bondholder in writing promptly, but in any event within five (5)
Business Days, of the occurrence of any of the following with respect to the
Borrower:
(1) any event or condition which shall constitute an event of
default under any other agreement for borrowed money;
(2) 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;
(3) any change in any existing agreement or contract which may
materially adversely affect its business or affairs, financial or otherwise; and
(4) any change in the ownership or control of the Borrower
(provided, however, any such change in ownership or control shall be subject to
the limitations of Section 7.23 hereof).
Section VII.19 Books of Record and Account.
(1) The Borrower shall keep proper books of record and accounts in
which full, true and correct entries shall be made of its transactions in
accordance with Generally Accepted Accounting Principles applied on a Consistent
Basis.
(2) The Borrower shall set aside on its books from its earnings
for each Fiscal Year all such proper reserves, including reserves for
depreciation, depletion, obsolescence and amortization of its properties during
such Fiscal Year, as shall be required in accordance with Generally Accepted
Accounting Principles applied on a Consistent Basis.
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Section VII.20 Observe Laws. The Borrower shall observe or cause to be
observed all laws, regulations and other valid requirements of any regulatory
authority with respect to the operations at the Plant.
Section VII.21 Acceptance of Indenture. The Borrower accepts the terms
and provisions of the Indenture and agrees to perform or cause to be performed
all duties and obligations, expressed or implied, of the Borrower thereunder.
Section VII.22 Reserved.
Section VII.23 Merger, Purchase and Sale. The Borrower shall not, and
shall not permit any Subsidiary to: (a) be a party to any merger, liquidation or
consolidation, provided that any Subsidiary may merge with and into, or
liquidate into, Borrower or another Subsidiary; (b) except in the normal course
of its business or as otherwise permitted herein, sell, transfer, convey, lease
or otherwise dispose of any of the Project; or (c) purchase or otherwise acquire
all or substantially all the assets of any Person (unless and to the extent that
such assets constitute no more than two (2) restaurant locations in any Fiscal
Year; it being understood and agreed that the addition of new restaurant
locations solely through the assumption or incurrence of lease obligations shall
not be deemed to be a purchase for purposes of this clause (c)).
Section VII.24 Changes in Control. Until Payment of the Bonds shall
have occurred, unless the Bondholder has otherwise given its prior written
consent, the Parent shall own all of the Borrower's issued and outstanding
voting stock and shall control the Borrower. For purposes of this Loan
Agreement, 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
of voting securities, by contract, or otherwise.
Section VII.25 ERISA. No material employee benefit plan established or
maintained by the Borrower or any Subsidiary or Affiliate of the Borrower
(including any multiemployer plan to which the Borrower or any Affiliate of the
Borrower contributes) which is subject to Part 3 of Subtitle B of Title I of
ERISA had a material accumulated funding deficiency (as such term is defined in
Section 302 of ERISA) as of the last day of the most recent fiscal year of such
plan ended prior to the date hereof, or would have had an accumulated funding
deficiency (as so defined) on such day if such year were the first year of such
plan to which Part 3 of Subtitle B of Title I of ERISA applied, and no material
liability to the Pension Benefit Guaranty Corporation, has been, or is expected
by the Borrower or any Affiliate of the Borrower to be, incurred with respect to
any such plan by the Borrower or any Affiliate of the Borrower.
Neither the Borrower nor any Subsidiary is required to contribute to or
is contributing to a "Multiemployer Pension Plan" (as such term is defined in
the Multiemployer Pension Plan Amendments Act of 1980). Neither the Borrower nor
any Subsidiary has any "withdrawal liability" (as also defined in such Act) to
any multiemployer pension plan.
Section VII.26 Notice of Plan Events, Termination and Litigation. As
soon as possible
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and in any event within 30 Days after the Borrower knows or has reason to know
that any Reportable Event or a Prohibited Transaction with respect to any plan
has occurred or that the Pension Benefit Guaranty Corporation or the Borrower or
any Related Entity has instituted or will institute proceedings under ERISA to
terminate a Plan, or a partial termination of a Plan has or is alleged to have
occurred, or more than twenty percent (20%) of the total number of employees who
are participants in a Plan will sever, or have severed, their employment due to
a decision to cease operations at a facility or facilities or to reduce the work
force, or any litigation regarding a Plan or naming the trustee of a Plan or the
Borrower or any Related Entity with respect to a Plan is threatened or
instituted, or the purchase, acceptance, holding or sale of customer notes by a
Plan fails to comply with Prohibited Transactions Exemption 85-68 published on
April 3, 1985, the Borrower will provide the Bondholder and the Trustee copies
of the written statement of the chief financial officer of the Borrower setting
forth details of such Reportable Event, Prohibited Transaction, termination
proceeding, partial termination, litigation or prohibited transaction and the
action being or proposed to be taken with respect thereto, together with copies
of the notice of such Reportable Event or any other notices, applications or
forms submitted to the Pension Benefit Guaranty Corporation, Internal Revenue
Service or the United States Department of Labor, and copies of any notices or
correspondence received from the Pension Benefit Guaranty Corporation, Internal
Revenue Service or the United States Department of Labor, and copies of any
pleadings, notices or other documents relating to such litigation.
Section VII.27 Plan Annual Reports. Promptly after the filing thereof
with the Internal Revenue Service or the Pension Benefit Guaranty Corporation,
the Borrower will provide to the Bondholder copies of each annual report and
annual premium filing form which is filed with respect to each Plan for each
plan year, including (i) a statement of assets and liabilities of such Plan as
of the end of such plan year and statements of changes in fund balance and in
financial position, or a statement of changes in net assets available for plan
benefits, for such plan year, certified by the trustee of the Plan or the
independent certified public accountants for such and (ii) if required by law or
applicable regulations, an actuarial statement of such Plan applicable to such
plan year, certified by the actuary for the Plan.
Section VII.28 Plan Liabilities. Neither the Borrower nor any Related
Entity will permit the aggregate present value of accrued benefits of any Plan,
computed in accordance with actuarial principles and assumptions applied on a
uniform and consistent basis by an enrolled actuary of recognized standing
acceptable to the Bondholder, to exceed the aggregate value of asserts of the
Plans, computed on a fair market value basis, or permit the aggregate present
value of vested benefits of the Plans, computed in accordance with actuarial
principles and assumptions applied on a uniform and consistent basis by an
enrolled actuary of recognized standing acceptable to the Bondholder and the
Trustee, to exceed the aggregate value of assets of the Plans, computed on a
fair market value basis.
Section VII.29 Notice of Adoption of Plan. As soon as possible and in
any event within 30 Days after the Borrower or any Related Entity adopts a new
Plan, the Borrower or such
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Related Entity shall notify the Bondholder and the Trustee of the adoption of
the new Plan. Adoption of a new Plan shall include the adoption of the new Plan
by the Borrower or such Related Entity as well as inclusion of employees of the
Borrower or such Related Entity under the Plan of another corporation.
Section VII.30 Guaranties. The Borrower shall not, and shall not permit
any Subsidiary to, become or be a guarantor or surety of, or otherwise become or
be responsible in any manner (whether by agreement to purchase any obligations,
stock, assets, goods or services, or to supply or advance any funds, assets,
goods or services, or otherwise) with respect to, any undertaking of any other
Person, except for the endorsement, in the ordinary course of collection , of
instruments payable to it or its order.
Section VII.31 Subsidiaries. The Borrower shall not, and shall not
permit any Subsidiary to, acquire any stock or similar interest in any Person,
and not create, establish or acquire any Subsidiaries other than those existing
on the Second Restatement Date.
Section VII.32 Leases. The Borrower shall not enter into or permit to
exist, or permit any Subsidiary to enter into or permit to exist, any
arrangements for the leasing by Borrower or such Subsidiary, as lessee under a
lease which is not a Capitalized Lease, of any real or personal property (or any
interest therein) other than under (a) leases in existence on the Second
Restatement Date and listed on Schedule 4.15 to the Amended and Restated Loan
Agreement and extensions and renewals thereof (provided that any increase in the
rental payments thereunder will count against the permitted lease rentals in
clause (b) below) and (b) leases entered into after the Second Restatement Date
having base rentals not exceeding (in the aggregate for all such leases) (i)
$400,000 in Fiscal Year 1996, (ii) $800,000 in Fiscal Year 1997, and (iii)
$1,200,000 in Fiscal Year 1998.
Section VII.33 Unconditional Purchase Options. The Borrower shall not
enter into or be a party to, or permit any Subsidiary to enter into or be a
party to, any contract for the purchase of materials, supplies or other property
or services, if such contract requires that payment be made by it regardless of
whether or not delivery is ever made of such materials, supplies or other
property or services.
Section VII.34 Use Of Proceeds. The Borrower shall not use or permit
any proceeds of the Bonds to be used, either directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of (i) "purchasing or
carrying" any Margin Stock, and shall furnish to Bond Purchaser, upon request, a
statement in conformity with the requirements of Federal Reserve Form U-1
referred to in Regulation U of the Federal Reserve Board or (ii) funding all or
any part of any hostile take-over or tender offer.
Section VII.35 Transactions with Related Parties. The Borrower shall
not, and shall not permit any Subsidiary to, enter into or be a party to any
transaction or arrangement, including, without limitation, the purchase, sale,
lease or exchange of property or the rendering of any service, with any Related
Party, except in the ordinary course of and pursuant to the reasonable
requirements of Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to Borrower or such Subsidiary than would
obtain in a comparable arm's-length
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transaction with a Person not a Related Party; provided, however, that the
foregoing shall not prohibit (a) the existence or performance of the Management
Agreement; (b) the transactions contemplated under the Recapitalization
Agreement; or (c) any other transaction or arrangement permitted by any other
provision of this Agreement.
Section VII.36 Borrower's and Subsidiaries' Stock. The Borrower shall
not permit any Subsidiary to purchase or otherwise acquire any shares of the
stock of Borrower, and not take any action, or permit any Subsidiary to take any
action, which will result in a decrease in Borrower's ultimate ownership
interest in any Subsidiary.
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ARTICLE VIII
ASSIGNMENT, LEASING, SELLING AND ENCUMBERING
Section VIII.1 Assignment of Loan Agreement, Sale or Encumbering of
Plant by the Borrower. Except as expressly permitted under the terms of the
Mortgage and the Security Agreement, or otherwise with the prior written consent
of the Issuer and the Bondholder (which consent may be withheld for any reason),
the rights of the Borrower under this Loan Agreement may not be assigned, and
the Mortgaged Property may not be leased, sold, encumbered or otherwise disposed
of as a whole or in part.
Section VIII.2 Restrictions on Transfer of Issuer's Rights. The Issuer
agrees that, except for the assignment made pursuant to the Indenture of certain
of its rights under this Loan Agreement, the Mortgage, the Security Agreement,
the Environmental 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, it will not during the term of this Loan Agreement sell, assign,
transfer or convey any of its interests in this Loan Agreement, the Mortgage,
the Security Agreement, the Environmental Agreement, or the Note except as
hereinafter provided in Section 8.3.
Section VIII.3 Assignment by the Issuer. It is understood, agreed and
acknowledged that the Issuer, as security for payment of the principal of,
premium, if any, and interest on the Bonds, will grant to the Trustee pursuant
to the Indenture, inter alia, certain of its rights, title and interest in and
to this Loan Agreement, the Mortgage, the Security Agreement, the Environmental
Agreement, and pledge the Note, endorsed as aforesaid, to the Trustee as
security, and the Borrower hereby assents to such assignment and pledge.
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ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section IX.1 Events of Default Defined. The term "Event of Default"
shall mean any one or more of the following events:
(1) The failure by the Borrower to pay when due any payment of
principal of, or interest on or other amount payable under the Note or this Loan
Agreement.
(2) The failure of the Borrower to perform any of its obligations
under or otherwise comply with the provisions of Section 6.4, 7.4, 7.7, 7.8, or
7.23 hereof.
(3) The occurrence of an "Event of Default" or a default or event
of default under any of the Indenture, the Mortgage, the Security Agreement, the
Guaranty, or the Environmental Agreement.
(4) 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 shall be false, misleading or incomplete in any material respect on
the date as of which made.
(5) 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 thirty (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.
(6) The commencement against the Borrower of an involuntary case
under the Bankruptcy Code, 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 thirty (30) consecutive days.
(7) The commencement by the Borrower of a voluntary case under the
Bankruptcy Code, 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 failure of the
Borrower generally to pay its debts as such debts become due, or the taking of
any action by the Borrower in furtherance of any of the foregoing.
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(8) Failure by the Borrower to pay, when due or within any
applicable grace period, any amount owing on account of any Indebtedness, or the
failure by the Borrower to observe or perform any covenant or undertaking on its
part to be observed or performed in any agreement evidencing, securing or
relating to such Indebtedness, if the effect of such default is to cause, or
permit the holder or holders of such obligation (or a trustee for such holder or
holders) to cause such obligation to become due prior to its stated maturity.
(9) The entry of a final judgment, which with other outstanding
final judgments against the Borrower exceeds an aggregate of $250,000.00 and not
covered by insurance shall be rendered against the Borrower, and if within sixty
(60) days after entry thereof such judgment shall not have been discharged 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.
(10) If a Reportable Event, which the Bondholder determines, in
its sole discretion, has created or is likely to create a material adverse
effect on the Borrower's or any Subsidiary's overall business operation, shall
have occurred in connection with any Plan maintained by the Borrower or any
Related Entity.
(11) Default in the payment, when due or declared due, of any of
the Liabilities.
(12) Non-Payment of or Default under Other Indebtedness. Default
in the payment when due, whether by acceleration or otherwise (subject to any
applicable grace period), of any Indebtedness of, or guaranteed by, Borrower,
any other Obligor or any Subsidiary (other than (i) any Indebtedness under this
Agreement and the Note, or (ii) any Indebtedness of any Subsidiary to Borrower
or to any other Subsidiary), or any event or condition shall occur which results
in the acceleration of the maturity of any such Indebtedness or enables the
holder or holders of any such Indebtedness or any trustee or agent for such
holders (any required notice of default having been given and any applicable
grace period having expired) to accelerate the maturity of such other
Indebtedness; provided that the aggregate amount of all such Indebtedness which
is so affected shall equal or exceed $200,000.
Section IX.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:
(1) The Issuer or the Trustee may, by written notice declare all
installments of principal payable pursuant to the Note for the remainder of the
term thereof and all Administrative Expenses to be immediately due and payable,
whereupon the same, together with accrued interest thereon as provided for in
the Note and this Loan Agreement, 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(g) or 9.1(h)
hereof, which notice the Borrower hereby expressly waives.
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(2) The Issuer or the Trustee may take whatever other action at
law or in equity may appear necessary or desirable to collect the amounts
payable pursuant to the Note and this Loan Agreement 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.
(3) The Issuer or the Trustee may exercise any and all remedies
available to it under this Loan Agreement, the Note, the Mortgage, the Security
Agreement, the Guaranty, or the Environmental Agreement.
(4) The Trustee shall have all remedies available to a "secured
party" under the Uniform Commercial Code of the State and shall have all
remedies provided for in the Indenture and may foreclose its security interest
against any one or more (or all) items of machinery, equipment or other personal
property comprising a part of the Mortgaged Property.
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 (whether or not suit is instituted and whether incurred in connection with
trial or any appellate proceeding), accounting and advertising fees and
expenses, as additional Administrative Expenses 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 IX.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 and the 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, all
remaining moneys as required by law.
Section IX.4 No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Issuer or the Trustee 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 any of the other Bond Documents 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 IX.5 Agreement to Pay Attorneys' Fees and Expenses. In any
Event of Default, if the Issuer or the Trustee employs attorneys or incurs other
expenses for the collection of amounts payable hereunder or for the enforcement
of the performance or observance of any
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covenants or agreements on the part of the Borrower herein contained, the
Borrower agrees that it will on demand therefor pay to the Issuer or the Trustee
the reasonable fees of such attorneys (whether or not suit is instituted and
whether incurred in connection with trial, rehearing or retrial or any appellate
or bankruptcy proceeding) and such other reasonable expenses so incurred by the
Issuer or the Trustee the amount of such fees of attorneys to be without regard
to any statutory presumption.
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ARTICLE X
PREPAYMENTS
Section X.1 Optional Prepayments.
(1) The Borrower may, at any time, prepay all or any part of the
principal of the Note; 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.
(2) To exercise the option granted in subsection (a) 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 5 nor more than 30 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 X.2 Mandatory Prepayments.
(1) In the event of a Determination of Taxability, the Borrower
shall (i) on a date selected by the Borrower not more than 60 days following the
date of the Determination of Taxability, pay to or for the account of the
Bondholder and former Bondholder those amounts required to be paid pursuant to
Section 301(c)(i) and 301(c)(ii) of the Indenture and (ii) pay within 10 days of
receipt of written demand therefor from any Bondholder or former Bondholder the
amounts required to be paid pursuant to Section 301(c)(iii) and 301(c)(iv) of
the Indenture. Immediately upon the occurrence of a Determination of Taxability,
the Borrower shall notify the Issuer and the Trustee of the date selected for
payment pursuant to this Section 10.2. The obligation of the Borrower contained
herein with respect to the payment of amounts required to be paid in the event
of a Determination of Taxability shall survive the termination of this Loan
Agreement and the payment in full of the Note or the Bonds.
(2) In the event of a Cessation of Operation of the Plant by the
Borrower, the Borrower shall, on a date selected by the Borrower within 45 days
after the date of Cessation of Operation, pay to or for the account of the then
Bondholder the entire unpaid principal balance of the Note, if any, outstanding
at the date of payment hereunder, plus accrued interest thereon to the date of
such payment plus all other amounts otherwise due under the Note, this Loan
Agreement and the Bonds.
(3) Bondholder shall be entitled to tender the Bonds on the
earlier of (i) any date on or after June 30, 2002, provided that Borrower shall
have received not less than ninety
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(90) days' prior written notice thereof from Bondholder, or (ii) the date on
which the Amended and Restated Loan Agreement expires or is terminated for any
reason, and the Borrower shall, on a date selected by the Bondholder, pay to or
for the account of the then Bondholder the entire unpaid principal balance of
the Note, if any, outstanding at the date of payment hereunder, plus accrued
interest thereon to the date of such payment plus all other amounts otherwise
due under the Note, this Loan Agreement and the Bonds.
Section X.3 Other Mandatory Prepayments. The amounts required to be
applied to the prepayment of the Note by Sections 4.3, 5.3 and 6.9 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 (a) for
payment of the Bonds, whether by redemption prior to the maturity or by payment
at maturity, or (b) 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.
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ARTICLE XI
MISCELLANEOUS
Section XI.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 those that shall have theretofore vested
and the right to receive certain payments pursuant to Section 10.2 (a) hereof as
a result of a Determination of Taxability and the rights to the computation,
reporting and payment of Rebate Amounts pursuant to the Tax Compliance
Certificates.
Section XI.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
Issuer or 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 XI.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 Bondholder shall be authorized to rely on any such
approval or action.
Section XI.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 and the Bondholder shall be authorized to act on any such
approval or action.
Section XI.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, to
Orange County Industrial Development Authority
c/o Economic Development Commission of Mid-Florida, Inc.
200 E. Robinson Street, Suite 600
Orlando, Florida 32801
Attention: Daniel A. Lynch, Secretary
If to the Borrower, to
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ELXSI
3600 Rio Vista Avenue
Orlando, FL 32811
Attention: Controller
If to the Trustee, to
SunTrust Bank, Central Florida, National Association
225 E. Robinson Street, Suite 250
Orlando, FL 32801
Attention: Corporate Trust Department
If to the initial Bondholder, to
Bank of America National Trust
and Savings Association
231 S. LaSalle Street
Chicago, IL 60697
Attention: Marc J. Crady
The Issuer, the Borrower, the Trustee or the Bondholder 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 XI.6 If Payment or Performance Date is not 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 which is not a Business Day, such payment may be made or act performed or
right exercised on the next succeeding Business Day; provided that interest
shall accrue during any such period during which payment shall not occur.
Section XI.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, subject to the provisions of Section 8.3
hereof.
Section XI.8 Severability. In the event any provision of this Loan
Agreement or the other Bond Documents 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.
Section XI.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.
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Section XI.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.
Section XI.11 Applicable Law. This Loan Agreement shall be governed by
and construed in accordance with the laws of the State.
Section XI.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 member of the governing board,
official, employee or agent of the Issuer.
Section XI.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 expenses 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, employee or agent of the Issuer
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, 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 XI.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 bond counsel,
counsel for the Issuer and any counsel for the Trustee. The Borrower also agrees
to pay all expenses incurred by the Trustee or the Issuer in the protection of
or enforcement of any of its rights in the collateral described in the Mortgage
or the Security Agreement, or 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 XI.15 Amounts Remaining with the Trustee. Any amounts remaining
in the Project Fund, 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.
Section XI.16 WAIVER OF JURY TRIAL. THE UNDERSIGNED HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY
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MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS LOAN
AGREEMENT OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS LOAN AGREEMENT OR
ANY DOCUMENT OR INSTRUMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH THIS
LOAN AGREEMENT, INCLUDING WITHOUT LIMITATION, THE BOND DOCUMENTS, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PARTY WITH RESPECT HERETO OR THERETO. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE ISSUER'S ISSUANCE OF THE BONDS AND LOAN OF THE PROCEEDS
THEREOF TO THE BORROWER AND FOR ISSUER'S ACCEPTANCE OF AND/OR ENTRY INTO ALL
DOCUMENTS AND INSTRUMENTS EXECUTED IN CONNECTION WITH THIS LOAN AGREEMENT,
INCLUDING WITHOUT LIMITATION, THE OTHER BOND DOCUMENTS FROM, OR WITH, THE
BORROWER AND/OR THE GUARANTOR.
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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, all as of the date first above written.
ELXSI
By:
----------------------------------------
Name: Alexander M. Milley
Title: President
Attest:
-------------------------------------------
Name: David Doolittle
Title: Vice President
(CORPORATE SEAL)
"BORROWER"
ORANGE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
By:
----------------------------------------
Name: David A. Winteres
Title: Vice Chairman of the Orange County
Industrial Development Authority
Attest:
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-------------------------------------------
Name: Daniel A. Lynch
Title: Secretary of the Orange County
Industrial Development Authority
(SEAL)
"ISSUER"
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EXHIBIT "A"
Form of Note
AFTER THE ENDORSEMENT OF THIS NOTE AS HEREON PROVIDED, THIS NOTE MAY NOT BE
ASSIGNED, PLEDGED, ENDORSED OR OTHERWISE TRANSFERRED EXCEPT TO A SUCCESSOR OR
ASSIGN OF THE TRUSTEE UNDER THE TRUST INDENTURE REFERRED TO IN THE LOAN
AGREEMENT REFERRED TO HEREIN.
PROMISSORY NOTE
$2,500,000.00 September 24, 1997
FOR VALUE RECEIVED, ELXSI, a California corporation (the "Borrower"),
by this promissory note promises to pay to the order of Orange County Industrial
Development Authority (the "Issuer") or holder hereof, the principal sum of Two
Million Five Hundred Thousand Dollars ($2,500,000.00), or so much thereof as has
been advanced under the Loan Agreement (as hereinafter defined) and remains
unpaid, in one hundred eighty (180) equal consecutive monthly installments each
in the amount of $13,888.69, commencing October 1, 1997, with a final
installment in the amount of the remaining unpaid principal balance hereof due
and payable on September 1, 2012, together with interest on the unpaid principal
amount hereof, from the date hereof until the principal amount hereof and
accrued and unpaid interest hereon is paid in full, payable at such times and at
such rates as interest is payable on the Issuer's Industrial Development Revenue
Bonds (ELXSI Project) Series 1997 (the "Bonds"), as set forth in the Bonds and
the Trust Indenture dated September 24, 1997 between the Issuer and SunTrust
Bank, Central Florida, National Association, as trustee, and subject to
adjustment as provided therein.
This Promissory Note is the "Note" referred to in the Loan Agreement
dated as of the date hereof (the "Loan Agreement"), between the Borrower and the
Issuer and is entitled to the benefits thereof (including the security therefor)
and is subject to the conditions thereof. Terms not otherwise defined herein
shall have the definitions set forth in the Loan Agreement. This Note is
secured, inter alia, by the collateral described in the Mortgage and the
Security Agreement. Neither the Issuer nor any other holder of this Note shall
be required to enforce payment hereof out of any collateral at any time securing
this Note.
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) and interest on the Bonds.
To the extent that principal of or interest on the Bonds shall be paid, there
shall be credited against the unpaid principal of or interest on this Note, as
the case may be, an amount equal to the principal of or interest on such Bonds
so paid. The principal of 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.
Exhibit "A" Page 1 of 3
<PAGE>
In addition, the Borrower agrees to pay 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
setoff 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 the Overdue Rate.
The Borrower may at its option at certain times 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 and with a prepayment
premium as set forth therein. Upon a Determination of Taxability (during a
period when this Note would otherwise bear interest at the Tax-Exempt Rate), the
Borrower shall be required to make payments on this Note in the amounts provided
in the Loan Agreement, including those required by Section 10.2 thereof, and
from and after the Date of Taxability this Note shall bear interest at a rate
per annum equal to the Taxable Rate.
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 Florida.
Exhibit "A" Page 2 of 3
<PAGE>
IN WITNESS WHEREOF, the Borrower has executed this instrument as of the
date first above written.
ELXSI
By:
----------------------------------------
Name: Alexander M. Milley
Title: President
Attest:
-------------------------------------------
Name: David Doolittle
Title: Vice President
(CORPORATE SEAL)
ENDORSEMENT
Pay to the order of SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL
ASSOCIATION, as Trustee for the benefit of the Bondholder under the Trust
Indenture dated as of September 24, 1997, between the Issuer and the 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 24th day of September, 1997.
ORANGE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
[SEAL] By:
---------------------------------
Name: David A. Winters
Title: Vice Chairman of the Orange County
Industrial Development Authority
ATTEST:
- ----------------------------------------
Name: Daniel A. Lynch
Title: Secretary of the Orange County
Industrial Development Authority
Exhibit "A" Page 3 of 3
<PAGE>
EXHIBIT "B"
The New Facility Site
Lots 1 through 12, Block M and all of Block N lying North and West of
Interstate 4, PLAT OF WOODHAVEN, as recorded in Plat Book J, Page 127, Public
Records of Orange County, Florida.
Exhibit "A" Page 4 of 3
<PAGE>
EXHIBIT "C"
The Existing Facility Site
<PAGE>
THIS DOCUMENT PREPARED BY:
T. Dickson
AKERMAN, SENTERFITT & EIDSON, P.A.
Post Office Box 231
Orlando, FL 32802-0231
(407) 843-7860
- --------------------------------------------------------------------------------
THIS MORTGAGE SECURES THE REPAYMENT OF
NDUSTRIAL DEVELOPMENT REVENUE BONDS
ISSUED BY THE MORTGAGEE AND PURSUANT
TO CHAPTER 159, FLORIDA STATUTES, IS
EXEMPT FROM DOCUMENTARY STAMP TAX AND
INTANGIBLE TAX.
MORTGAGE AND SECURITY AGREEMENT
THIS MORTGAGE AND SECURITY AGREEMENT (this "Mortgage") made as of the
24th day of September, 1997, between ELXSI, a California corporation
("Mortgagor"), whose address is 3600 Rio Vista Ave., Orlando, Florida, and
ORANGE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY, a public body corporate and
politic and a public instrumentality duly created and existing under and by
virtue of the laws of the State of Florida, its successors and assigns
("Mortgagee") whose address is 200 E. Robinson Street, Suite 600, Orlando,
Florida 32801.
W I T N E S S E T H :
WHEREAS, Mortgagor is indebted to Mortgagee in the principal sum of Two
Million Five Hundred Thousand Dollars ($2,500,000.00), together with interest
thereon, pursuant to a promissory note in the principal amount of $2,500,000.00
executed by Mortgagor and delivered to Mortgagee, the final payment of which is
due on or before September 1, 2012 (the "Note"), which by reference is made a
part hereof to the same extent as though set out in full herein;
NOW, THEREFORE, (a) to secure the performance and observance by
Mortgagor of all covenants and conditions contained in the Note, including any
renewal, extension or modification thereof, and in this Mortgage and the other
Bond Documents (as used herein, such term shall have the meaning set forth in
the Loan Agreement referred to below); and (b) also in order to charge the
properties, interests and rights hereinafter described with such payment,
performance and observance; and (c) for and in consideration of the sum of One
and No/100 ($1.00) Dollar paid by Mortgagee to Mortgagor this date, and for
other valuable consideration, the receipt of which is acknowledged, Mortgagor
does hereby grant, bargain, sell, alien, remise, release, convey, assign,
<PAGE>
transfer, mortgage, hypothecate, pledge, deliver, set over, warrant and confirm
unto Mortgagee, its successors and assigns forever, all right, title and
interest of Mortgagor in and to:
THE MORTGAGED PROPERTY:
(B) THE LAND. All the land located in the County of Orange, State of
Florida (the "Land"), described in Exhibit A attached hereto and made a part
hereof.
(C) THE IMPROVEMENTS, THE PERSONALTY, EASEMENTS AND OTHER INTERESTS.
TOGETHER WITH all improvements of every nature whatsoever now or hereafter
situated on the Land and those rights and properties set forth and described in
Exhibit B attached hereto and made a part hereof.
(D) ASSIGNMENT OF RENTS. TOGETHER WITH all rents, royalties, issues,
profits, revenue, income and other benefits from the property described in
paragraphs (A) and (B) hereof to be applied against the indebtedness and other
sums secured hereby, provided, however, that permission is hereby given to
Mortgagor so long as no default has occurred hereunder, to collect, receive,
take, use and enjoy such rents, royalties, issues, profits, revenue, income and
other benefits as they become due and payable, but not in advance thereof. The
foregoing assignment shall be fully operative without any further action on the
part of either party and specifically Mortgagee shall be entitled, at its option
upon the occurrence of a default hereunder, to all rents, royalties, issues,
profits, revenue, income and other benefits from the property described in
paragraphs (A) and (B) hereof whether or not Mortgagee takes possession of the
property described in paragraphs (A) and (B) hereof. Upon any such default
hereunder, the permission hereby given to Mortgagor to collect such rents,
royalties, issues, profits, revenue, income and other benefits from the property
described in paragraphs (A) and (B) hereof shall terminate and such permission
shall not be reinstated upon a cure of the default without Mortgagee's specific
written consent. Neither the exercise of any rights under this paragraph by
Mortgagee nor the application of any such rents, royalties, issues, profits,
revenue, income or other benefits to the indebtedness and other sums secured
hereby, shall cure or waive any default or notice of default hereunder or
invalidate any act done pursuant hereto or to any such notice, but shall be
cumulative of all other rights and remedies.
This instrument constitutes an absolute and present assignment of the
rents, royalties, issues, profits, revenue, income and other benefits from the
Mortgaged Property, subject, however, to the conditional permission given to
Mortgagor to collect, receive, take, use and enjoy the same as provided
hereinabove; provided, further, that the existence or exercise of such right of
Mortgagor shall not operate to subordinate this assignment to any subsequent
assignment, in whole or in part, by Mortgagor, and any such subsequent
assignment by Mortgagor shall be subject to the rights of Mortgagee hereunder.
Everything referred to in paragraphs (A), (B) and (C) hereof and any
additional property hereafter acquired by Mortgagor and subject to the lien of
this Mortgage or intended to be so is herein referred to as the "Mortgaged
Property."
2
<PAGE>
TO HAVE AND TO HOLD the Mortgaged Property and all parts thereof unto
Mortgagee, its successors and assigns, to its own proper use and benefit
forever, subject, however, to the terms and conditions herein;
PROVIDED, HOWEVER, that if Mortgagor shall promptly pay or cause to be
paid to Mortgagee the principal of, interest on and all other amounts payable
under the Note, this Mortgage and the other Bond Documents at the times and in
the manner stipulated in the Note, this Mortgage and such other Bond Documents,
all without any deduction or credit for taxes or other similar charges paid by
Mortgagor, and shall keep, perform and observe all the covenants and premises in
the Note, and any renewal, extension or modification thereof, and in this
Mortgage and the other Bond Documents, and in any amendments or supplements
thereto, to be kept, performed or observed by Mortgagor, then this Mortgage, and
all the properties, interest and rights hereby granted, conveyed and assigned
shall cease and be void, but shall otherwise remain in full force and effect.
Mortgagor covenants and agrees with Mortgagee as follows:
ARTICLE I
COVENANTS OF MORTGAGOR
Section I.1 Performance of Note, Mortgage, etc. Mortgagor shall perform,
observe and comply with all provisions of the Note, and any renewal, extension
or modification thereof and of this Mortgage and every other instrument securing
the Note, and any and all amendments or supplements thereto, and will promptly
pay to Mortgagee the principal with interest thereon and all other sums required
to be paid by Mortgagor under the Note and pursuant to the provisions of this
Mortgage and of every other instrument securing the Note when payment shall
become due, all without deduction or credit for taxes or other similar charges
paid by Mortgagor.
Section I.2 Performance of Loan Agreement. Mortgagor shall perform,
observe and comply with all provisions of that certain Loan Agreement between
Mortgagor and Mortgagee of even date herewith, and any and all amendments and
supplements thereto (the "Loan Agreement," the capitalized terms used herein and
not otherwise defined having the meanings given to such terms in said Loan
Agreement).
Section I.3 Performance of Indenture. Mortgagor shall perform, observe
and comply with all provisions of the Indenture, and any and all amendments and
supplements thereto, to the extent the provisions thereof are applicable to
Mortgagor or describe performance, observance or compliance by Mortgagor.
Section I.4 Performance of Other Bond Documents. Mortgagor shall
perform, observe and comply with all provisions of each and all of the other
Bond Documents, and any and all amendments and supplements thereto, to the
extent the provisions thereof are applicable to Mortgagor or describe
performance, observance or compliance by Mortgagor.
3
<PAGE>
Section I.5 Warranty of Title. Mortgagor covenants and warrants that it
is seized of an indefeasible estate in fee simple in the Land and real property
hereby mortgaged, is the owner of the personal property in which a security
interest is granted hereunder and has good right, full power and lawful
authority to convey, mortgage and encumber the same as provided herein; that
Mortgagee may at all times peaceably and quietly enter upon, hold, occupy and
enjoy the Land and real property hereby mortgaged and every part thereof; that
the Land and real property and the personal property in which a security
interest is granted hereunder is or will be free and clear of all liens,
security interests, charges and encumbrances whatsoever, except for the lien for
property taxes not yet due and payable and those Permitted Encumbrances, if any,
as defined and described in the Loan Agreement. Mortgagor shall and will make
such further assurances to perfect Mortgagee's fee simple title to the Land and
the real property hereby mortgaged, and the title to the personal property
hereby mortgaged or made subject to the security interest hereby created as may
reasonably be required. Mortgagor fully warrants the title to the Land and real
property and the personal property in which a security interest is granted
hereunder and will forever defend the same against the claims of all persons
whomsoever claiming.
Section I.6 Zoning and Environmental Laws.
(1) Mortgagor represents, covenants and warrants that all
applicable zoning laws, ordinances and regulations affecting the Land permit the
use and occupancy of the Plant as a manufacturing facility.
(2) For purposes of this Mortgage, "Hazardous Materials" shall
mean all hazardous and toxic substances, wastes or materials, all pollutants or
contaminants, asbestos, or other similar substances and all raw materials
containing such substances which are regulated under any Environmental Law and
includes, but is not limited to, all petroleum based substances such as gasoline
and oil based products. As such, reference to "Hazardous Materials" is not
limited to substances which are of necessity "hazardous or toxic" but includes
any substances regulated under any local, state or federal law whether or not
those substances are "hazardous or toxic". For purposes of this Mortgage,
"Environmental Laws" shall mean all applicable environmental laws, rules and
regulations whether federal, state or local including, without limitation, the
Federal Resource Conservation and Recovery Act and the Comprehensive
Environmental Response Compensation and Liability of 1980 and all amendments and
supplements thereto. With respect to Hazardous Materials, Mortgagor represents,
warrants and covenants as follows:
(1) Neither Mortgagor nor, to the best knowledge
of Mortgagor after due inquiry, any other
Person has ever caused or permitted any
Hazardous Materials to be placed, held,
located or disposed of on, under or at the
Land or any part thereof, nor has the Land or
any part thereof ever been used (whether by
the Mortgagor or, to the best knowledge of the
Mortgagor after due inquiry, by any Person) as
a dump site or storage site (whether permanent
or temporary) for any
4
<PAGE>
Hazardous Materials; or (ii) Mortgagor has
fully disclosed to Mortgagee in writing the
existence, extent and nature of any Hazardous
Materials, which Mortgagor is legally
authorized and empowered to maintain on, in or
under the Land or used in connection
therewith, and Mortgagor has obtained and will
maintain all licenses, permits and approvals
required with respect thereto, and is in full
compliance with all of the terms, conditions
and requirements of such licenses, permits and
approvals;
(2) The Land is now, and at all times hereafter
will continue to be, in full compliance with
all Environmental Laws;
(3) Mortgagor hereby agrees to indemnify Mortgagee
and hold the Mortgagee harmless from and
against any and all losses, liabilities,
judgments, damages, penalties, fines, liens,
suits, injuries, costs (including clean-up
costs), expenses (including attorneys',
consultants' or experts' fees and expenses)
and claims of any and every kind whatsoever
paid, incurred or suffered by, or asserted
against Mortgagee for, with respect to, or as
a direct or indirect result of, (i) the
presence on or under, or the escape, seepage,
leakage, spillage, discharge, emission,
discharging or release from, the Land of any
Hazardous Materials (including, without
limitation, any losses, liabilities,
judgments, damages, penalties, fines, liens,
suits, injuries, costs (including clean-up
costs), expenses (including attorneys',
consultants' or experts' fees and expenses or
claims asserted or arising under any
Environmental Laws which may require the
elimination or removal of such Hazardous
Materials by Mortgagor, Mortgagee or any
successors or assigns thereof), regardless of
whether or not caused by, or within the
control of, Mortgagor or (ii) any
representation or warranty by Mortgagor
contained in this Section 1.6(b) being false
or untrue in any material respect;
(4) If Mortgagor receives any notice of (i) the
happening of any event involving the
generation, use, spill, discharge or storage,
disposal or cleanup of any Hazardous Materials
(a "Hazardous Discharge") affecting Mortgagor
or the Land or (ii) any complaint, order,
citation or notice with regard to air
emissions, water discharges, surface
contaminations, noise emissions or any other
environmental, health or safety matter
affecting Mortgagor or the Land (an
"Environmental Complaint") from any Person,
including, without limitation, the United
States Environmental Protection ("EPA") or any
agency, department or authority of the State
of Florida, then Mortgagor will give, within
seven (7) Business Days, oral and written
notice of same
5
<PAGE>
to Mortgagee. Mortgagor will also give
Mortgagee oral and written notice of any
change in the nature or extent of any
Hazardous Materials maintained on, in or under
the Land within seven (7) Business Days of
such change;
(5) Without limitation of Mortgagee's rights under
this Mortgage, Mortgagee shall have the right,
but not the obligation, to enter onto the Land
or to take such other actions as it deems
necessary or advisable to cleanup, remove,
resolve or minimize the impact of, or
otherwise deal with, or participate in such
actions with respect to any such Hazardous
Discharge or Environmental Complaint upon its
receipt of any notice from any Person,
including, without limitation, the EPA,
asserting the existence of any Hazardous
Discharge or Environmental Complaint on or
pertaining to the Land which, if true, could
result in an order, suit or other action
against Mortgagor affecting any part of the
Land by any governmental agency or otherwise
which, in the sole opinion of Mortgagee, could
jeopardize Mortgagee's security under this
Mortgage. All reasonable costs and expenses
incurred by Mortgagee in the exercise of any
such rights shall be secured by this Mortgage
and shall be payable by Mortgagor upon demand,
together with interest thereon at a rate equal
to the Overdue Rate.
(3) Mortgagor shall indemnify and hold Mortgagee, the Trustee and
each Bondholder harmless from and against all claims, damages, losses, costs and
expenses resulting from a violation of the covenants contained in this Section
1.6 or as a result of a violation by Mortgagor of any federal or similar state
law relating to Hazardous Materials, which indemnification shall survive Payment
of the Bonds (as defined in the Loan Agreement) and cancellation of this
Mortgage.
(4) The provisions of this Section 1.6 shall be in addition to and
not in derogation of the Environmental Agreement; provided, however, to the
extent of any conflict between the provisions of this Section 1.6 and the
provisions of the Environmental Agreement, Mortgagee and the Bondholder shall be
entitled to elect, in its sole discretion, which provisions shall control.
Section I.7 Taxes and Liens.
(1) Subject to any right of contest granted under the Loan
Agreement, Mortgagor shall pay or bond promptly, when and as due, and shall
promptly, upon request by Mortgagee, exhibit to Mortgagee receipts for the
payment of all taxes, assessments, rates, dues, charges, fees, levies, fines,
impositions, liabilities, obligations and encumbrances of every kind whatsoever
now or hereafter imposed, levied or assessed upon or against the Mortgaged
Property or any part thereof, or upon or against this Mortgage or the
indebtedness or other sums secured
6
<PAGE>
hereby, or upon or against the interest of Mortgagee in the Mortgaged Property,
as well as all income taxes, assessments and other governmental charges levied
and imposed by the United States of America or any state, county, municipality,
borough or other taxing authority upon or against Mortgagor or in respect of the
Mortgaged Property or any part thereof, and any charge which, if unpaid, would
become a lien or charge upon the Mortgaged Property prior to or equal to the
lien of this Mortgage before they become delinquent and before any interest
attaches or any penalty is incurred.
(2) Subject to any right of contest granted under the Loan
Agreement, Mortgagor shall not permit or suffer for more than sixty (60) days
any mechanics', laborers', materialmen's, statutory or other lien upon any of
the Mortgaged Property.
(3) If an Event of Default shall occur and shall not have been
waived, Mortgagee may require Mortgagor to deposit with Mortgagee on the first
day of each month, in addition to making any required payments of principal and
interest, until the Note is fully paid, an amount equal to one-twelfth (1/12) of
the yearly taxes and assessments as estimated by Mortgagee to be sufficient to
enable Mortgagee to pay at least thirty (30) days before they become due all
taxes, assessments and other similar charges against the Mortgaged Property or
any part thereof. Such deposits shall not be, nor be deemed to be, trust funds,
but may be commingled with the general funds of Mortgagee, and no interest,
shall be payable in respect thereof. Upon demand by Mortgagee, Mortgagor shall
deliver to Mortgagee such additional monies as are required to make up any
deficiencies in the amounts necessary to enable Mortgagee to pay such taxes,
assessments and similar charges. In the event of a default under any of the
terms, covenants and conditions of the Note, this Mortgage or any of the other
Bond Documents to be kept, performed or observed by Mortgagor, Mortgagee may
apply to the reduction of the sums secured hereby, in such manner as Mortgagee
shall determine, any amount held by Mortgagee under this Section 1.7(c).
(4) Mortgagor shall not claim, demand or be entitled to receive
any credit or credits on the principal or interest payable under the terms of
the Note or on any other sums secured hereby, for so much of the taxes,
assessments or similar impositions assessed against the Mortgaged Property or
any part thereof as are applicable to the indebtedness secured hereby or to
Mortgagee's interest in the Mortgaged Property. No deduction shall be claimed
from the taxable value of the Mortgaged Property or any part thereof by reason
of the Note, this Mortgage or any other instrument securing the Note.
Section I.8 Eminent Domain. Unless the Mortgagor shall have prepaid the
Note pursuant to the provisions of the Loan Agreement, in the event that title
to, or the temporary use of, the Mortgaged Property or any part thereof shall be
taken pursuant to eminent domain or condemnation proceedings, or any voluntary
conveyance of any part of the Mortgaged Property during the pendency of, or as a
result of a threat of, such proceedings ("Eminent Domain"), the Mortgagor shall
be obligated to continue to make the payments required to be made pursuant to
the Note and the gross proceeds from such proceeds, award or other amount, less
all expenses (including attorneys' fees) incurred in the realization thereof
("Net Proceeds") received as a result
7
<PAGE>
of such Eminent Domain shall be paid to the Trustee and applied as follows:
(1) If the amount of the Net Proceeds does not exceed $50,000.00,
the Net Proceeds shall be paid to the Mortgagor and shall be applied to the
repair, replacement, renewal or improvement of the Mortgaged Property as
necessary.
(2) If the amount of the Net Proceeds exceeds $50,000.00, the Net
Proceeds shall be paid to and held by the Trustee as a special account in the
Project Fund and invested in accordance with Section 602 of the Indenture
pending receipt of written instructions from the Mortgagor. At the option of the
Mortgagor, to be exercised within the period of ninety (90) days from the
receipt by the Trustee of such Net Proceeds, the Mortgagor shall advise the
Trustee that (A) the Mortgagor will use the Net Proceeds for the repair,
replacement, renewal or improvement of the Mortgaged Property (such funds to
remain with the Trustee and to be drawn down by the Mortgagor as provided in the
Indenture in the case of withdrawals from the Project Fund), or (B) the Net
Proceeds shall be applied to the prepayment of the Bonds as provided in Article
X of the Loan Agreement. If the Mortgagor does not advise the Trustee within
said period of ninety (90) days that it elects to proceed under clause (A) to
use such Net Proceeds for the repair, replacement, renewal or improvement of the
Mortgaged Property, such Net Proceeds shall be applied to the prepayment of the
Bonds pursuant to Article X of the Loan Agreement. Any prepayment pursuant to
the preceding sentence shall be effected on the next interest payment date not
less than thirty (30) days after the expiration of said period of ninety (90)
days without an election by the Mortgagor.
The Mortgagor agrees that if it shall elect to use the moneys paid to
the Trustee pursuant to paragraph (b) of this Section 1.8 for the repair,
replacement, renewal or improvement of the Mortgaged Property, it will restore
the Mortgaged Property, 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 Mortgaged Property, the Mortgagor
shall use its own funds to restore or replace the Mortgaged Property. Prior to
the commencement of such work, the Trustee may require the Mortgagor to furnish
a completion bond, escrow deposit or other satisfactory evidence of the
Mortgagor'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 paid to the Mortgagor. The Mortgagor
shall be entitled to the Net Proceeds of any insurance proceeds resulting from
Eminent Domain relating to property of the Borrower not included in the
Mortgaged Property and not providing security for the Note.
In case of a taking or proposed taking of all or any part of the
Mortgaged Property or any right therein by Eminent Domain, the Mortgagor shall
give prompt notice thereof to the Mortgagee. Each such notice shall describe
generally the nature and extent of such taking, loss, proceeding or
negotiations.
Section I.9 Care of Property.
8
<PAGE>
(1) Mortgagor shall preserve and maintain the Mortgaged Property
in good condition and repair. Mortgagor shall not remove, demolish, alter or
change the use of any building, structure or other improvement presently or
hereafter on the Land without the prior written consent of Mortgagee, except as
provided in the Loan Agreement. Mortgagor shall not permit, commit or suffer any
waste, impairment or deterioration of the Mortgaged Property or of any part
thereof, and will not take any action which will increase the risk of fire or
other hazard to the Mortgaged Property or to any part thereof.
(2) Except as otherwise provided in this Mortgage or the Loan
Agreement, no fixture or other part of the Mortgaged Property shall be removed,
demolished or altered, without the prior written consent of the Bondholder.
(3) Mortgagee may enter upon and inspect the Mortgaged Property at
any reasonable time during the life of this Mortgage.
(4) Mortgagor will promptly comply with all present and future
laws, ordinances, rules and regulations of any governmental authority affecting
the Mortgaged Property or any part thereof.
(5) If all or any part of the Mortgaged Property shall be lost,
damaged or destroyed by fire or any other cause, Mortgagor will give immediate
written notice thereof to Mortgagee and the Bondholder and, subject to the terms
of the Loan Agreement, shall promptly restore the Mortgaged Property to the
equivalent of its original condition regardless of whether or not there shall be
any insurance proceeds therefor. Subject to the terms of the Loan Agreement, if
a part of the Mortgaged Property shall be lost, physically damaged or destroyed
through condemnation, Mortgagor will promptly restore, repair or alter the
remaining property in a manner satisfactory to Mortgagee.
Section I.10 Transfer of Property. Mortgagor shall not sell, convey,
transfer, lease or further encumber any interest in all or any part of the
Mortgaged Property, except as provided in the Loan Agreement, without the prior
written consent of Mortgagee.
Section I.11 Further Assurances. At any time and from time to time,
upon Mortgagee's request, Mortgagor shall make, execute and deliver or cause to
be made, executed and delivered to Mortgagee and, from time to time thereafter
to be rerecorded or refiled at such time and in such offices and places as shall
be deemed desirable by Mortgagee any and all such further mortgages, instruments
of further assurance, certificates and other documents as Mortgagee may consider
necessary or desirable in order to effectuate, complete, enlarge in accordance
with the Loan Agreement or perfect, or to continue and preserve the obligations
of Mortgagor under the Note and this Mortgage, and the lien of this Mortgage as
a first and prior lien upon all of the Mortgaged Property, whether now owned or
hereafter acquired by Mortgagor. Upon any failure by Mortgagor to do so,
Mortgagee may, at the expense of the Mortgagor, make, execute, record, file,
rerecord or refile any and all such mortgages, instruments, financing
statements, certificates and documents for and in the name of Mortgagor, and
Mortgagor hereby irrevocably appoints
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<PAGE>
Mortgagee the agent and attorney-in-fact of Mortgagor to do so which agency
shall be deemed coupled with an interest and irrevocable.
Section I.12 Leases Affecting Mortgaged Property. Mortgagor shall
comply with and observe its obligations as landlord under all leases affecting
the Mortgaged Property or any part thereof. Mortgagor, if required by Mortgagee,
shall furnish promptly to Mortgagee executed copies of all such leases now
existing or hereafter created, all of which shall be in form and substance
satisfactory to the Mortgagee. Mortgagor shall not, except as provided in the
Loan Agreement, without the express written consent of Mortgagee, amend, modify,
surrender, terminate or extend any such lease now existing or hereafter created,
or permit or suffer an assignment or sublease. Mortgagor shall not accept
payment of rent more than one (1) month in advance without the prior written
consent of Mortgagee.
Section I.13 Expenses. Mortgagor shall pay or reimburse Mortgagee for
all costs, charges and expenses, including reasonable attorney's fees and
disbursements, and costs incurred or paid by Mortgagee in any action which is
threatened, pending or completed (and any rehearing or retrial in connection
with or appeal from any such action) or proceeding or dispute in which Mortgagee
is or might be made a party in interest or appears as a party plaintiff or party
defendant and which affects or might affect the Note, or the Mortgaged Property
or any part thereof, or the interests of Mortgagor or Mortgagee therein,
including but not limited to, the foreclosure of this Mortgage, condemnation or
bankruptcy involving all or part of the Mortgaged Property or any action to
protect the security hereof. All costs, charges and expenses (except where
Mortgagor and Mortgagee are adverse parties) so incurred or paid by Mortgagee,
unless awarded by the Court, shall become due and payable immediately, whether
or not there be notice, demand, attempt to collect or suit pending. The amounts
so incurred or paid by Mortgagee, together with interest thereon at the Overdue
Rate until paid by Mortgagor, shall be deemed Administrative Expenses and shall
be added to the indebtedness and secured by the lien of this Mortgage.
Section I.14 Mortgagee's Performance of Defaults. If Mortgagor defaults
in the payment of any tax, assessment, encumbrance or other imposition, in its
obligation to furnish insurance hereunder or in the performance or observance of
any other covenant, condition or term in this Mortgage or in any other
instrument securing the Note, Mortgagee may at its option perform or observe the
same, and all payments made (whether such payments are regular or accelerated
payments) and costs and expenses incurred or paid by Mortgagee in connection
therewith shall become due and payable immediately by Mortgagor. The amounts so
incurred or paid by Mortgagee, together with interest thereon at the Overdue
Rate from the date incurred until paid by Mortgagor, shall be added to the
indebtedness and secured by the lien of this Mortgage. Nothing contained herein
shall be construed as requiring Mortgagee to advance or expend monies for any
purposes mentioned in this paragraph, or for any other purpose. Mortgagee is
hereby empowered to enter and to authorize others to enter upon the Mortgaged
Property or any part thereof for the purpose of performing or observing any such
defaulted covenant, condition or terms, without thereby becoming liable to
Mortgagor or any Person in possession holding under Mortgagor.
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Section I.15 Books and Records. Mortgagor shall keep and maintain at
all times complete, true and accurate books of accounts and records reflecting
the results of the operation of the Mortgaged Property. Mortgagor shall furnish
to Mortgagee financial statements and other financial information in accordance
with and at the times required by the terms of the Loan Agreement. Mortgagor
shall permit Mortgagee to inspect said books and records in accordance with the
terms of the Loan Agreement.
Section I.16 Estoppel Affidavits. Mortgagor, within ten (10) days after
written request from Mortgagee, shall furnish a written statement, duly
acknowledged, setting forth the unpaid principal of and interest on the Note,
and any other unpaid sums secured hereby, and whether or not any offsets or
defenses exist against such principal and interest or other sums.
Section I.17 Security Agreement. With respect to any portion of the
Mortgaged Property which constitutes personal property, fixtures or other
property governed by the Uniform Commercial Code as adopted in the State of
Florida ("UCC"), this Mortgage shall constitute a security agreement between
Mortgagor as the Debtor and Mortgagee as the Secured Party, and Mortgagor hereby
grants to Mortgagee a security interest in such portion of the Mortgaged
Property and all cash or non-cash proceeds thereof (including insurance
proceeds). Cumulative of all other rights of Mortgagee hereunder, Mortgagee
shall have all of the rights conferred upon secured parties by the UCC. Upon
request of Mortgagee, Mortgagor shall, at its expense, assemble such property
and make it available to Mortgagee at a convenient place acceptable to
Mortgagee. Mortgagor will execute and deliver to Mortgagee all financing
statements that may from time to time be required by Mortgagee to establish and
maintain the validity and priority of the security interest of Mortgagee, or any
modification thereof, and pay all costs and expenses of any searches reasonably
required by Mortgagee. Mortgagee may exercise any or all of the remedies of a
secured party available to it under the UCC with respect to such property, and
it is expressly agreed that if upon an Event of Default Mortgagee should proceed
to seize, take possession of and dispose of such property in accordance with the
provisions of the UCC or other applicable law, ten (10) days' notice by
Mortgagee to Mortgagor shall be deemed to be reasonable notice under any
provision of the UCC or other applicable law requiring such notice; provided,
however, that Mortgagee may at its option dispose of such property in accordance
with Mortgagee's rights and remedies with respect to the real property pursuant
to the provisions of this Mortgage, in lieu of proceeding under the UCC or other
applicable law.
ARTICLE II
DEFAULTS
Section II.1 Event of Default. The term "Event of Default," wherever
used in this Mortgage, shall mean any one or more of the following events (each
of which shall be and constitute a default hereunder):
(1) Occurrence of an "Event of Default" or a default or an event
of default under
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the Loan Agreement or the Indenture.
(2) Failure by Mortgagor to duly keep, perform and observe any
covenant, condition or agreement in this Mortgage, which failure is not cured by
Mortgagor within thirty (30) days after written notice of the same is delivered
by Mortgagee to Mortgagor.
(3) Default by Mortgagor under any agreement, document or
instrument securing any other indebtedness of Mortgagor to Mortgagee, if such
default is not cured within any grace period permitted therein and if such
default permits the holder to cause such obligation to become due prior to its
stated maturity. Mortgagor shall notify Mortgagee in writing of the occurrence
of such default, specifying the nature of such default.
(4) Material breach of any warranty or covenant or material
untruth of any representation of Mortgagor contained in this Mortgage.
Section II.2 Acceleration of Maturity. If an Event of Default shall
have occurred, Mortgagee may (with the prior written direction of the
Bondholder) declare the outstanding principal amount of the Note and the
interest accrued thereon, and all other sums secured hereby, to be due and
payable immediately, and upon such declaration such principal and interest and
other sums shall immediately become and be due and payable without demand or
notice.
Section II.3 Mortgagee's Power of Enforcement. If an Event of Default
shall have occurred, Mortgagee may, either with or without entry or taking
possession as hereinabove provided or otherwise, proceed by suit or suits at law
or in equity or by any other appropriate proceeding or remedy: (a) to enforce
payment of the Note of the performance of any term hereof or any other right;
(b) to foreclose this Mortgage and to sell, as an entirety or in separate lots
or parcels, the Mortgaged Property, under the judgment or decree of a court or
courts of competent jurisdiction; and (c) to pursue any other remedy available
to it. Mortgagee shall take action either by such proceedings or by the exercise
of its powers with respect to entry or taking possession, or both, as the
Mortgagee may determine. In the event the Mortgaged Property is comprised of
more than one parcel of real property, Mortgagor hereby waives any right to
require Mortgagee to foreclose or exercise any of its other remedies against all
of the Mortgaged Property as a whole or to require Mortgagee to foreclose or
exercise such remedies against one portion of the Mortgaged Property prior to
the foreclosure or exercise of said remedies against other portions of the
Mortgaged Property.
Section II.4 Mortgagee's Right to Enter and Take Possession, Operate
and Apply Income.
(1) If an Event of Default shall have occurred, Mortgagor, upon
demand of Mortgagee, shall forthwith surrender to Mortgagee the actual
possession of the Mortgaged Property, and if and to the extent permitted by law,
Mortgagee itself, or by such officers or agents as it may appoint, may enter and
take possession of all the Mortgaged Property, and may exclude Mortgagor and its
agents and employees wholly therefrom and may have joint access with
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Mortgagor to the books, papers and accounts of Mortgagor.
(2) If Mortgagor shall for any reason fail to surrender or deliver
the Mortgaged Property or any part thereof after Mortgagee's demand, Mortgagee
may obtain a judgment or decree conferring on Mortgagee the right to immediate
possession or requiring Mortgagor to deliver immediate possession of all or part
of the Mortgaged Property to Mortgagee along with all books, papers and accounts
of Mortgagor, to the entry of which judgment or decree Mortgagor hereby
specifically consents.
Section II.5 Mortgagor shall pay to Mortgagee, upon demand, all
reasonable costs and expenses of obtaining such judgment or decree and
reasonable compensation to Mortgagee, its attorneys and agents, and all such
costs, expenses and compensation shall, until paid, be secured by the lien of
this Mortgage.
(1) Upon every such entering upon or taking of possession,
Mortgagee may hold, store, use, operate, manage and control the Mortgaged
Property and conduct the business thereof, and, from time to time:
(1) make all necessary and proper maintenance,
repairs, renewals, replacements, additions,
betterments and improvements thereto and
thereon and purchase or otherwise acquire
additional fixtures, personalty and other
property;
(2) insure or keep the Mortgaged Property insured;
(3) manage and operate the Mortgaged Property and
exercise all the rights and powers of
Mortgagor in its name or otherwise, with
respect to the same; and
(4) enter into agreements with others to exercise
the powers herein granted Mortgagee;
all as Mortgagee in its reasonable judgment from time to time may determine; and
Mortgagee may collect and receive all the income, revenues, rents, issues and
profits of the same, including those past due as well as those accruing
thereafter; and shall apply the monies so received by Mortgagee in such priority
as Mortgagee may determine to (A) the reasonable compensation, expenses and
disbursements of the agents and attorneys; (B) the cost of insurance, taxes,
assessments and other proper charges upon the Mortgaged Property or any part
thereof; (C) the deposits for taxes and assessments and insurance premiums due;
and (D) the payment of accrued interest and then principal on the Note.
Mortgagee shall surrender possession of the Mortgaged Property to
Mortgagor only when all that is due upon such interest, tax and insurance
deposits and principal installments, and under any of the terms of this
Mortgage, shall have been paid and all defaults made good. The same
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right of taking possession, however, shall exist if any subsequent Event of
Default shall occur and not be waived.
Section II.6 Leases. Mortgagee, at its option, is authorized to
foreclose this Mortgage, and the failure to make any tenants party defendant to
any such foreclosure proceedings and to foreclose their rights will not be, nor
be asserted by Mortgagor to be, a defense to any proceedings instituted by
Mortgagee to collect the sums secured hereby or to collect any deficiency
remaining unpaid after the foreclosure sale of the Mortgaged Property.
Section II.7 Purchase by Mortgagee. Upon any such foreclosure sale,
Mortgagee may bid for and purchase the Mortgaged Property and, upon compliance
with the terms of sale, may hold, retain and possess and dispose of such
property in its own absolute right without further accountability.
Section II.8 Application of Indebtedness Toward Purchase Price. Upon
any such foreclosure sale, Mortgagee may, if permitted by law, after allowing
for the proportion of the total purchase price required to be paid in cash and
for the costs and expenses of the sale, compensation and other charges, in
paying the purchase price apply any portion of or all sums due to Mortgagee
under the Note, this Mortgage or any of the other Bond Documents, in lieu of
cash, to the amount which shall, upon distribution of the net proceeds of such
sale, be payable thereon.
Section II.9 Waiver of Appraisement, Valuation, Stay, Extension and
Redemption Laws. Mortgagor agrees to the full extent permitted by law that in
case of a default on its part hereunder, neither Mortgagor nor anyone claiming
through or under it shall or will set up, claim or seek to take advantage of any
appraisement, valuation, stay, extension or redemption laws now or hereafter in
force, in order to prevent or hinder the enforcement of foreclosure of this
Mortgage, or the absolute sale of the Mortgaged Property or the final and
absolute putting into possession thereof, immediately after such sale, of the
purchaser thereat, and Mortgagor, for itself and all who may at any time claim
through or under it, hereby waives, to the full extent that it may lawfully so
do, the benefit of all such laws, and any and all right to have the assets
comprising the Mortgaged Property marshalled upon any foreclosure of the lien
hereof and agrees that Mortgagee or any court having jurisdiction to foreclose
such lien may sell the Mortgaged Property in part or as an entirety.
Section II.10 Receiver. If an Event of Default shall have occurred,
Mortgagee, to the extent permitted by law and without regard to the value or
occupancy of the security or the solvency of the Borrower, shall be entitled as
a matter of strict right if it so elects to the appointment of a receiver to
enter upon and take possession of the Mortgaged Property and to collect all
rents, revenues, issues, income, products and profits thereof and apply the same
as the court may direct. The receiver shall have all rights and powers permitted
under the laws of the state where the Land is located and such other powers as
the court making such appointment shall confer. The expenses, including
receiver's fees, attorney's fees, costs and agent's compensation, incurred
pursuant to the powers herein contained shall be secured by this Mortgage. The
right to enter and take possession of and to manage and operate the Mortgaged
Property, and to collect
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the rents, issues and profits thereof, whether by a receiver or otherwise, shall
be cumulative to any other right or remedy hereunder or afforded by law, and may
be exercised concurrently therewith or independently thereof. Mortgagee shall be
liable to account only for such rents, issues and profits actually received by
Mortgagee, whether received pursuant to this Section or Section 2.3 hereof.
Notwithstanding the appointment of any receiver or other custodian, Mortgagee
shall be entitled as secured party hereunder to the possession and control of
any cash, deposits, or instruments at the time held by, or payable or
deliverable under the terms of this Mortgage to, Mortgagee.
Section II.11 Suits to Protect the Mortgaged Property. Mortgagee shall
have the power and authority to institute and maintain any suits and proceedings
as Mortgagee may deem advisable (a) to prevent any impairment of the Mortgaged
Property by any acts which may be unlawful or any violation of this Mortgage,
(b) to preserve or protect its interest in the Mortgaged Property, and (c) to
restrain the enforcement of or compliance with any legislation or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid, if the enforcement of or compliance with such enactment, rule or order
might impair the security hereunder or be prejudicial to Mortgagee's interest.
Section II.12 Proofs of Claim. In the case of any receivership,
insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceedings affecting Mortgagor, any Person guaranteeing or
endorsing any of Mortgagor's obligations, its creditors or its property,
Mortgagee, to the extent permitted by law, shall be entitled to file such proofs
of claim and other documents as may be necessary or advisable in order to have
its claims allowed in such proceedings for the entire amount due and payable by
Mortgagor under the Note, this Mortgage and any other instrument securing the
Note, at the date of the institution of such proceedings, and for any additional
amounts which may become due and payable by Mortgagor after such date.
Section II.13 Mortgagor to Pay the Note on Any Default in Payment;
Application of Monies by Mortgagee.
(1) If default shall be made in the payment of any amount due
under the Note, this Mortgage or any other instrument securing the Note, then,
upon Mortgagee's demand, Mortgagor will pay to Mortgagee the whole amount due
and payable under the Note and all other sums secured hereby; and if Mortgagor
shall fail to pay the same forthwith upon such demand, Mortgagee shall be
entitled to sue for and to recover judgment for the whole amount so due and
unpaid together with costs and expenses including the reasonable compensation,
expenses and disbursements of Mortgagee's agents and attorneys incurred in
connection with such suit and any appeal in connection therewith. Mortgagee
shall be entitled to sue and recover judgment as aforesaid either before, after
or during the pendency of any proceedings for the enforcement of this Mortgage,
and the right of Mortgagee to recover such judgment shall not be affected by any
taking, possession or foreclosure sale hereunder, or by the exercise of any
other right, power or remedy for the enforcement of the terms of this Mortgage,
or the foreclosure of the lien hereof.
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(2) In case of a foreclosure sale of all or any part of the
Mortgaged Property and of the application of the proceeds of sale to the payment
of the sums secured hereby, Mortgagee shall be entitled to enforce payment of
and to receive all amounts then remaining due and unpaid and to recover judgment
for any portion thereof remaining unpaid, with interest.
(3) Mortgagor hereby agrees, to the extent permitted by law, that
no recovery of any such judgment by Mortgagee and no attachment or levy or any
execution upon any of the Mortgaged Property or any other property shall in any
way affect the lien of this Mortgage upon the Mortgaged Property or any part
thereof or any lien, rights, powers or remedies of Mortgagee hereunder, but such
lien, rights, powers and remedies shall continue unimpaired as before.
(4) Any monies collected or received by Mortgagee under this
Section 2.13 shall be applied in the manner provided in the Trust Indenture.
Section II.14 Delay or Omission No Waiver. No delay or omission of
Mortgagee or of any holder of the Note to exercise any right, power or remedy
accruing upon any Event of Default shall exhaust or impair any such right, power
or remedy or shall be construed to waive any such Event of Default or to
constitute acquiescence therein. Every right, power and remedy given to
Mortgagee may be exercised from time to time and as often as may be deemed
expedient by Mortgagee.
Section II.15 No Waiver of One Default to Affect Another. No waiver of
any Event of Default hereunder shall extend to or affect any subsequent or any
other Event of Default then existing, or impair any rights, powers or remedies
consequent thereon. If Mortgagee (a) grants forbearance or an extension of time
for the payment of any sums secured hereby; (b) takes other or additional
security for the payment thereof; (c) waives or does not exercise any right
granted in the Note, this Mortgage or any other instrument securing the Note;
(d) releases any part of the Mortgaged Property from the lien of this Mortgage
or any other instrument securing the Note; (e) consents to the filing of any
map, plat or replat of the Land; (f) consents to the granting of any easement on
the Land; or (g) makes or consents to any agreement changing the terms of this
Mortgage or subordinating the lien or any charge hereof, no such act or omission
shall release, discharge, modify, change or affect the original liability under
the Note, this Mortgage or otherwise of Mortgagor, or any subsequent purchaser
of the Mortgaged Property or any part thereof or any maker, cosigner, endorser,
surety or guarantor. No such act or omission shall preclude Mortgagee from
exercising any right, power or privilege herein granted or intended to be
granted in case of any Event of Default then existing or of any subsequent Event
of Default nor, except as otherwise expressly provided in an instrument or
instruments executed by Mortgagee, shall the lien of this Mortgage be altered
thereby. In the event of the sale or transfer by operation of law or otherwise
of all or any part of the Mortgaged Property, Mortgagee, without notice to any
Person, is hereby authorized and empowered to deal with any such vendee or
transferee with reference to the Mortgaged Property or the indebtedness secured
hereby, or with reference to any of the terms or conditions hereof, as fully and
to the same extent as it might deal with the original parties hereto and without
in any way releasing or discharging any of the liabilities or undertakings
hereunder.
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Section II.16 Discontinuance of Proceedings; Position of Parties
Restored. If Mortgagee shall have proceeded to enforce any right or remedy under
this Mortgage by foreclosure, entry or otherwise, and such proceedings shall
have been discontinued or abandoned for any reason, or shall have been
determined adversely to Mortgagee, then and in every such case Mortgagor and
Mortgagee shall be restored to their former positions and rights hereunder, and
all rights, powers and remedies of Mortgagee shall continue as if no such
proceeding had occurred or had been taken.
Section II.17 Remedies Cumulative. No right, power or remedy conferred
upon or reserved to Mortgagee by the Note, this Mortgage or any other instrument
securing the Note is exclusive of any other right, power or remedy, but each and
every such right, power and remedy shall be cumulative and concurrent and shall
be in addition to any other right, power and remedy given hereunder or under the
Note or any of the other Bond Documents, or now or hereafter existing at law, in
equity or by statute.
ARTICLE III
MISCELLANEOUS PROVISIONS
Section III.1 Legal Representatives, Successors, and Assigns Included
in Parties. Whenever one of the parties hereto is named or referred to herein,
the legal representatives, successors and assigns of such party shall be
included and all covenants and agreements contained in this Mortgage, by or on
behalf of Mortgagor or Mortgagee, shall bind and inure to the benefit of their
respective legal representatives, successors and assigns, whether so expressed
or not. Further, it is specifically provided that this Mortgage shall be
assigned by Mortgagee to the Trustee pursuant to the Indenture and, upon such
assignment, all rights and remedies granted to Mortgagee hereunder shall inure
to and may be exercised by the Trustee which shall be deemed to be the mortgagee
hereunder.
Section III.2 Addresses for Notices, etc. Any notice, report, demand or
other instrument authorized or required to be given or furnished under this
Mortgage to Mortgagor or Mortgagee shall be deemed given or furnished in
accordance with the provisions of the Loan Agreement or the Indenture.
Section III.3 Headings. The headings of the articles, sections,
paragraphs and subdivision of this Mortgage are for convenience of reference
only, are not to be considered a part hereof, and shall not limit to expand or
otherwise affect any of the terms hereof.
Section III.4 Invalid Provisions to Affect No Others. In the event that
any of the covenants, agreements, terms or provisions contained in the Note,
this Mortgage or any other instrument securing the Note shall be invalid,
illegal or unenforceable in any respect, the validity of the remaining
covenants, agreements, terms or provisions contained herein and in the Note and
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any other instrument securing the Note shall be in no way affected, prejudiced
or disturbed thereby.
Section III.5 Changes, etc. Neither this Mortgage nor any term hereof
may be changed, waived, discharged or terminated orally, or by any action or
inaction, but only by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought. Any
agreement hereafter made by Mortgagor and Mortgagee relating to this Mortgage
shall be superior to the rights of the holder of any intervening lien or
encumbrance.
Section III.6 Governing Law. This Mortgage is made by Mortgagor and
accepted by Mortgagee in the State of Florida, with reference to the laws of
such State, and shall be construed, interpreted, enforced and governed by and in
accordance with such laws (excluding the principles thereof governing conflicts
of law).
Section III.7 Overdue Rate. The Overdue Rate shall be as provided in
Loan Agreement or the Note; in the event no such rate is provided therein, the
Overdue Rate shall be the maximum rate of interest permitted by law at the time
of default or the Reference Rate plus two percent (2%) per annum, whichever is
lower.
Section III.8 Joint and Several. If there is more than one Mortgagor
hereunder, the duties, liabilities and obligations of Mortgagor hereunder shall
be joint and several.
Section III.9 Non-Homestead. The Mortgaged Property does not now
constitute, and has not ever constituted, the homestead of Mortgagor.
Section III.10 WAIVER OF JURY TRIAL. MORTGAGOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED ON THIS MORTGAGE OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS MORTGAGE OR ANY DOCUMENT OR INSTRUMENT CONTEMPLATED TO BE
EXECUTED IN CONNECTION WITH THIS MORTGAGE, INCLUDING WITHOUT LIMITATION, THE
OTHER BOND DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT HERETO OR
THERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR MORTGAGEE'S ISSUANCE OF THE
BONDS AND LOAN OF THE PROCEEDS THEREOF TO MORTGAGOR AND FOR MORTGAGEE'S
ACCEPTANCE OF AND/OR ENTRY INTO ALL DOCUMENTS AND INSTRUMENTS EXECUTED IN
CONNECTION WITH THIS MORTGAGE, INCLUDING WITHOUT LIMITATION, THE OTHER BOND
DOCUMENTS, FROM, OR WITH, MORTGAGOR AND/OR THE GUARANTORS.
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IN WITNESS WHEREOF, the undersigned have executed this instrument the
day and year above first write
Signed, sealed and delivered ELXSI
in the presence of:
By:
- ----------------------------- -------------------------------------
Name: Name: Alexander M. Milley
------------------------ Title: President
- -----------------------------
Name:
------------------------
Attest:
By:
- ----------------------------- -------------------------------------
Name: Name: David Doolittle
------------------------ Title: Vice President
- -----------------------------
Name: (CORPORATE SEAL)
------------------------
As to "Mortgagor"
ORANGE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
By:
- ----------------------------- -------------------------------------
19
<PAGE>
Name: Name: David A. Winters
------------------------ Title: Vice Chairman of the Orange County
Industrial Development Authority
- -----------------------------
Name:
------------------------
Attest:
- ----------------------------- -----------------------------------------
Name: Name: David A. Winters
------------------------ Title: Vice Chairman of the Orange County
(SEAL) Industrial Development Authority
As to "Mortgagee"
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this 24th day of
September, 1997, by Alexander M. Milley and David Doolittle as the President and
Vice President, respectively, of ELXSI, a California corporation, on behalf of
the corporation.
-------------------------------------------
Name:
--------------------------------------
Notary Public, State of Florida
Personally Known
---------------------------
Produced Identification
--------------------
Type of Identification:
--------------------
(NOTARIAL SEAL)
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this 24th day of
September, 1997, by David A. Winters as Vice Chairman of the Orange County
Industrial Development Authority, a public body corporate and politic and a
public instrumentality duly created and existing under and by virtue of the laws
of the State of Florida, on behalf of said Authority.
-------------------------------------------
Name:
--------------------------------------
Notary Public, State of Florida
Personally Known
---------------------------
Produced Identification
--------------------
Type of Identification:
--------------------
(NOTARIAL SEAL)
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this 24th day of
September, 1997, by Daniel A. Lynch as Secretary of the Orange County Industrial
Development Authority, a public body corporate and politic and a public
instrumentality duly created and existing under and by virtue of the laws of the
State of Florida, on behalf of said Authority.
-------------------------------------------
Name:
--------------------------------------
Notary Public, State of Florida
Personally Known
---------------------------
20
<PAGE>
Produced Identification
--------------------
Type of Identification:
--------------------
(NOTARIAL SEAL)
21
<PAGE>
EXHIBIT "A"
Legal Description of the Land
Lots 1 through 12, Block M and all of Block N lying North and West of
Interstate 4, PLAT OF WOODHAVEN, as recorded in Plat Book J, Page 127, Public
Records of Orange County, Florida.
<PAGE>
EXHIBIT "B"
Description of Additional Property
(b) All of the structures, buildings and improvements now or hereafter situated
upon the Land.
(c) Any and all easements, rights-of-way, gores of land, streets, ways, alleys,
passages, sewer rights, air rights, water, water stock, water rights,
titles, interests, privileges, tenements, hereditaments and appurtenances
whatsoever, in any way belonging, relating or appertaining to any of the
Land or which hereafter shall in any way belong, relate or be appurtenant
thereto, whether now owned or hereafter acquired by the Mortgagor, and the
reversion and reversions, remainder and remainders, rents, issues, profits
thereof, and all of the estate, right, title, interest, property,
possession, "claim and demand whatsoever at law, as well as in equity, of
the Mortgagor of, in and to the same.
(d) All right, title and interest of the Mortgagor, if any, in and to the land
lying in the bed of any streets, roads or avenues, opened or proposed, in
front of or adjoining the Land, and in and to the appurtenances thereto.
(e) All rents, profits, issues and revenue of the Land and the buildings on the
Land from time to time accruing, whether under leases or tenancies now
existing or hereafter created.
(f) All of the Mortgagor's right, title and interest in and to any judgments,
awards of damages, condemnation payments and settlements, including
interest thereon, and the right to receive the same, which may be made with
respect to the Land as a result of the exercise of the right of eminent
domain, the alteration of the side of any street, any other injury or a
decrease in the value of the Land, or proceeds of insurance awards.
(g) All machinery, apparatus, equipment, fittings, fixtures and tangible
personal property of every kind and nature whatsoever now or hereafter
located on the Land or in any buildings or improvements upon the Land, or
any part thereof, and used or usable in connection with the construction of
or any occupancy of any buildings on the Land or the operation of the Land,
all additions thereto, and all substitutions and replacements therefor, but
specifically excluding all fixtures, equipment, machinery, furniture and
other items of tangible personal property owned by tenants occupying
buildings on the Land.
(h) The Mortgagor's interest in all leases of the Land or portions thereof now
existing or hereafter entered into by the Mortgagor, and all right, title
and interest of the Mortgagor thereunder, including, without limitation,
cash or securities deposited thereunder to secure performance by the
lessees and vendees of their obligations thereunder, subject, however, to
the terms of the leases pursuant to which such deposits are held.
(i) All deposits made with, or other security given to, utility companies by
the Mortgagor
Page 1 of 2 Exhibit "B"
<PAGE>
with respect to the Land.
(j) All of the Mortgagor's rights relating to the Land or the operation
thereof, or used in connection therewith, including, without limitation,
the non-exclusive right to use trade names, service marks and trademarks.
(k) All proceeds of the conversion, voluntary or involuntary, or any of the
foregoing into cash or liquidated claims, including proceeds of insurance
and condemnation awards.
(l) All rights to other permits, authorizations and approvals granted the
Mortgagor in regard to the Land such as, but not limited to, all building
permits, certificates of occupancy, etc.
(m) All rights of the Mortgagor to any contracts relating to the Land such as,
but not limited to, all contracts with any general contractors with regard
to improvements to be constructed on the Land, engineer contracts,
architects contracts, marketing contracts, management contracts, service or
maintenance contracts, etc., and all claims or causes of actions arising
therefrom in favor of the Mortgagor.
(n) All intangible rights of the Mortgagor regarding the Land such as, but not
limited to, all impact fee credits, sewer fee credits, sewer rights and
development rights, including, but not limited to, rights regarding to
concurrency and the right to develop.
(o) All building materials, whether located upon or off the Land, and all
warranties (seller's, manufacturer's, contractor's or other) given in
connection with the Land, and all architectural or engineering plans,
specifications and drawings, and surveys used in connection with or
relating to the Land.
Page 2 of 2 Exhibit "B"
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, ORANGE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY, hereby
assigns, transfers and sets over to SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL
ASSOCIATION, as Trustee, the within Mortgage and Security Agreement, without
recourse, this 24th day of September, 1997.
Signed, sealed and delivered ORANGE COUNTY INDUSTRIAL
in the presence of: DEVELOPMENT AUTHORITY
By:
- ----------------------------- -------------------------------------
Name: Name: David A. Winters
------------------------ Title: Vice Chairman of the Orange County
Industrial Development Authority
- -----------------------------
Name:
------------------------
Attest:
- ----------------------------- By:
Name: -------------------------------------
------------------------ Name: David A. Winters
(SEAL) Title: Vice Chairman of the Orange County
Industrial Development Authority
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this 24th day of
September, 1997, by David A. Winters as the Vice Chairman of the Orange County
Industrial Development Authority, a public body corporate and politic and a
public instrumentality duly created and
<PAGE>
existing under and by virtue of the laws of the State of Florida, on behalf of
said Authority.
-------------------------------------------
Name:
--------------------------------------
Notary Public, State of Florida
Personally Known
---------------------------
Produced Identification
--------------------
Type of Identification:
--------------------
(NOTARIAL SEAL)
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this 24th day of
September, 1997, by Daniel A. Lynch as the Secretary of the Orange County
Industrial Development Authority, a public body corporate and politic and a
public instrumentality duly created and existing under and by virtue of the laws
of the State of Florida, on behalf of said Authority.
-------------------------------------------
Name:
--------------------------------------
Notary Public, State of Florida
Personally Known
---------------------------
Produced Identification
--------------------
Type of Identification:
--------------------
(NOTARIAL SEAL)
<PAGE>
BOND PURCHASE AGREEMENT
BY AND AMONG
ORANGE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
ELXSI
AND
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
Dated as of
September 24, 1997
RE:
$2,500,000 ORANGE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
INDUSTRIAL DEVELOPMENT REVENUE BONDS (ELXSI PROJECT), SERIES 1997
[ ]
<PAGE>
BOND PURCHASE AGREEMENT
$2,500,000
ORANGE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
INDUSTRIAL DEVELOPMENT REVENUE BONDS (ELXSI PROJECT), SERIES 1997
This BOND PURCHASE AGREEMENT (this "Bond Purchase Agreement"), dated as of
September 24, 1997, among ORANGE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY (the
"Issuer"), a public body corporate and politic and an instrumentality of the
State of Florida, County of Orange, ELXSI (the "Company"), a California
corporation, and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the
"Original Purchaser").
1. Background.
1. The Issuer proposes to enter into a Loan Agreement, dated as of
September 24, 1997 (the "Loan Agreement") with the Company pursuant to the terms
of which the Company agrees to make loan payments (the "Loan Payments") to the
Issuer equal to the principal of, premium, if any, and interest on the Issuer's
$2,500,000 Industrial Development Revenue Bonds (ELXSI Project) , Series 1997
(the "Bonds") issued in accordance with Chapter 159, Part II, Florida Statutes,
and other applicable provisions of law (the "Act"). The Issuer proposes to issue
and sell to the Original Purchaser the Bonds, the proceeds of which will be used
together with Company funds to finance the Project (as hereinafter defined).
The Bonds are being issued to provide funds which, together with
interest earnings thereon and certain other amounts, will be used to provide
funds to the Company in order (i) to acquire, construct, install and equip the
Company's new facility to be constructed at 3600 Rio Vista Avenue, Orlando,
Florida for the manufacture of video inspection and rehabilitation equipment for
wastewater and drainage systems, and to provide funds to finance improvements at
the Company's existing facility at 3501 Rio Vista Avenue, Orlando, Florida (the
"Project") and (ii) to pay certain costs of issuance.
2. The Bonds will be issued pursuant to a Bond Resolution (The "Bond
Resolution") adopted by the Issuer on September 23, 1997 and will be secured
under the Issuer's Trust Indenture, dated as of September 24, 1997 (the
"Indenture") with SunTrust Bank, Central Florida, National Association, as
trustee (the "Trustee"). The Bonds will be payable solely out of the Company's
Loan Payments under the Loan Agreement and other monies paid by the Company
thereunder. To evidence and to secure its obligation to make Loan Payments, the
Company will, under the Loan Agreement, deliver a promissory note (the "Note")
to the Trustee.
The Company will enter into a Mortgage and Security Agreement (the
"Mortgage") and a Security Agreement (the "Security Agreement") pursuant to
which the Company shall grant solely to the Trustee (as assignee of the Issuer)
a lien and security interest in the land, building and equipment comprising the
Project as security for the performance and observance of the Company's
obligations under the Loan Agreement and the Promissory Note dated September 24,
1997 in the principal amount of $2,500,000 (the "Note").
3. In order to induce the Original Purchaser to enter into this Bond
Purchase Agreement and purchase the Bonds at the price and bearing interest at
the rates set forth therein, the Company has joined in this Bond Purchase
Agreement.
2
<PAGE>
4. The proceeds of the sale of the Bonds, excluding accrued interest,
are to be applied as set forth in the second paragraph of this Bond Purchase
Agreement. If the Bonds are sold, the Company will pay either from Bond proceeds
(up to 2% of the face amount of the Bonds) or from its own funds (i) the
financing costs of the Bonds, including the costs of preparing and reproducing
the Loan Agreement, the Indenture, the Bonds, the Bond Resolution of the Issuer,
this Bond Purchase Agreement and other documents; (ii) fees and disbursements of
bond counsel, counsel for the Company, the Issuer, the counsel for the Issuer,
the Trustee, counsel for the Trustee and counsel for the Original Purchaser; and
(iii) out-of-pocket costs incurred by the Original Purchaser and related to the
Project and/or the Bonds, including but not limited to, costs of real estate
appraisals, architect inspections, construction escrows, title policies and
environmental site assessments.
5. The professional advisors referred to in this Bond Purchase
Agreement are:
Counsel to Issuer: Maguire, Voorhis & Wells, P.A.
Orlando, Florida
Bond Counsel: Akerman, Senterfitt & Eidson, P.A.
Orlando, Florida
Counsel to the Company: Lowndes, Drosdick, Doster, Kantor &
Reed, P.A.
Orlando, Florida
Counsel to the Original Winston & Strawn
Purchaser: Chicago, Illinois
2. Purchase, Sale and Closing. On the terms and conditions and in reliance
on the representations, warranties and covenants set forth herein and in the
Bond Documents, as defined in the Indenture, the Original Purchaser shall buy
from the Issuer, and the Issuer shall sell to the Original Purchaser, the Bonds.
The purchase price shall be $2,500,000 and shall be payable in immediately
available funds by wire transfer to the Trustee. Closing (the "Closing") will be
at the offices of Akerman, Senterfitt & Eidson, P.A., at 10:00 A.M. prevailing
local time on September 24, 1997 or at such other place or other date or time as
may be agreed to by the parties hereto. At the Closing the Original Purchaser
will accept the delivery of the Bonds from the Issuer, and will make payment
therefor upon satisfaction of the conditions contained in this Bond Purchase
Agreement.
3. Representations and Warranties of the Issuer. The Issuer, by its
acceptance hereof, represents and warrants to the Original Purchaser that:
1. The Issuer is a local unit of special purpose government, duly
organized and established and validly existing under the Act and the
Constitution and laws of the State of Florida, with full legal right, power and
authority (1) to finance the Project, to execute and deliver and perform its
obligations under the Mortgage, Security Agreement, Loan Agreement, Indenture
and the other documents entered into by the Issuer in connection with the
issuance of the Bonds (the "Issuer Documents"), (2) to issue the Bonds, for the
purposes for which they are to be issued, (3) to secure the Bonds as provided by
the Indenture, (4) to enter into the obligations under the Bond Resolution, and
(5) to carry out and consummate all of the transactions contemplated by the Bond
Resolution and the Issuer Documents.
<PAGE>
2. The Issuer has complied with the Bond Resolution, the Act, and the
Constitution and laws of the State of Florida in all matters relating to the
Bonds and the Issuer Documents
3. The Issuer has duly authorized and approved (1) the execution and
delivery, or adoption, as the case may be, and performance of the Bond
Resolution, the Issuer Documents and the Bonds, and (2) the taking of any and
all such action as may be required on the part of the Issuer to carry out, give
effect to and consummate the transactions contemplated by the Issuer Documents
and the Bonds.
4. Each of the Issuer Documents constitutes a legally valid and
binding obligation of the Issuer enforceable against the Issuer in accordance
with its respective terms, and, upon due authorization, execution and delivery
hereof and thereof by the parties thereto, will constitute the legal, valid and
binding obligation of the Issuer enforceable against the Issuer in accordance
with its respective terms.
5. When delivered to and paid for by the Original Purchaser at the
Closing in accordance with the provisions of this Bond Purchase Agreement, the
Bonds will have been duly authorized, executed, authenticated, issued and
delivered and will constitute legal, valid and binding special obligations of
the Issuer, conforming to the Act, and entitled to the benefit and security of
the Indenture.
6. Other than any approvals that might be required under the
securities laws of any state, no approval, permit, consent or authorization of,
or registration or filing with, any governmental or public agency or authority
or any other entity not already obtained or made, or to be made simultaneously
with the issuance of the Bonds, is required to be obtained by the Issuer in
connection with the issuance and sale of the Bonds, or the execution and
delivery by the Issuer of, or the due performance of its obligations under, the
Issuer Documents, the Bonds and the Bond Resolution, and any such approvals,
permits, consents or authorizations so obtained are in full force and effect.
7. No approval, permit, consent or authorization of any governmental
or public agency or any other entity not already obtained is required at this
time in connection with the acquisition, construction and equipping of the
Project.
8. The Issuer is not in breach of or in default under any applicable
constitutional provision, law or administrative regulation of the State of
Florida or the United States, the Bond Resolution, the Bonds, the Issuer
Documents or any applicable judgment or decree or any other loan agreement,
indenture, bond, note, resolution, agreement or other instrument to which the
Issuer is a party or to which the Issuer or any of its property or assets is
otherwise subject, that could have a materially adverse effect on the business
or operations of the Issuer, and no event of default by the Issuer has occurred
and is continuing under any such instrument.
9. The adoption of the Bond Resolution, the execution and delivery by
the Issuer of the Issuer Documents, the Bonds, and any other instrument to which
the Issuer is a party and which is used or contemplated for use in conjunction
with the transactions contemplated by the Bond Resolution, the Issuer Documents
or the Bonds, and the compliance with the provisions of each such instrument and
the consummation of any transactions contemplated hereby and thereby, will not
conflict with or constitute a breach of, or default under, any indenture,
commitment, agreement, or other instrument to which the Issuer is a party or by
which it is bound, or under any provision of the Constitution of the State of
Florida or any existing law, rule, regulation, Resolution, judgment, order or
decree to which the Issuer (or any of its members or officers in their
respective capacities as such) or its properties is subject.
10. There is no action, suit, hearing, inquiry or investigation, at
law or in equity, before or by any court, public board, agency or body, pending
or, to the best knowledge of the Issuer, threatened against or affecting the
Issuer or any of its supervisors in their respective capacities as such, in
which an unfavorable decision, ruling or finding would, in any material way,
adversely affect (1) the transactions contemplated by the Bond Resolution, the
Issuer Documents or the proceedings relating thereto, (2) the organization,
existence or
<PAGE>
powers of the Issuer or any of its supervisors or officers in their respective
capacities as such, (3) the business, properties or assets or the condition,
financial or otherwise, of the Issuer, (4) the validity or enforceability of the
Issuer Documents or any other agreement or instrument to which the Issuer is a
party and which is used or contemplated for use in the transactions contemplated
hereby or by the Bond Resolution, (5) to the extent applicable, the exclusion
from gross income for federal income tax purposes of the interest on the Bonds,
(6) to the extent applicable, the exemption under the Act of the Bonds and the
interest thereon from taxation imposed by the State of Florida, (7) the
issuance, sale or delivery of the Bonds, or (8) the receipt and pledge of the
amounts pledged under the Indenture to pay the principal or premium, if any, or
interest on the Bonds.
11. The Issuer has not issued, assumed or guaranteed any indebtedness,
incurred any material liabilities, direct or contingent, or entered into any
contract or arrangement of any kind payable from or secured by a pledge of the
Trust Estate, as defined in the Indenture, with a lien thereon prior to or on a
parity with the lien of the Bonds.
12. The Issuer has not been notified of any listing or proposed
listing by the Internal Revenue Service to the effect that the Issuer is a bond
issuer whose arbitrage certifications may not be relied upon.
13. Any certificates signed by any official of the Issuer authorized
to do so shall be deemed a representation and warranty by the Issuer to the
Original Purchaser as to the statements made therein.
14. No representation or warranty by the Issuer in this Bond Purchase
Agreement nor any statement, certificate, document or exhibit furnished to or to
be furnished by the Issuer pursuant to this Bond Purchase Agreement or in
connection with the transactions contemplated hereby contains or will contain on
the date of Closing any untrue statement of a material fact or omits or will
omit a material fact necessary to make the statements contained therein, in the
light of the circumstances under which they were made, not misleading, provided,
however, that no representation is made with respect to information concerning
the Project, the Original Purchaser or the Company.
15. Rule 3E-400.003, Rules for Government Securities, promulgated by
the Florida Department of Banking and Finance, Division of Securities, under
Section 517.051(I), Florida Statutes ("Rule 3E-400.003"), requires the Issuer to
disclose each and every default as to the payment of principal and interest with
respect to an obligation issued by the Issuer after December 31, 1975. Rule
3E-400.003 further provides, however, that if the Issuer in good faith believes
that such disclosures would not be considered material by a reasonable investor,
such disclosures may be omitted.
The issuer, in the case of the Bonds (as well as certain other bonds
of the Issuer), is merely a conduit for payment, in that the Bonds do not
constitute a general debt, liability or obligation of the Issuer, but are
instead secured by payments of the Company under the Agreement and by other
security discussed herein. The Bonds are not being offered on the basis of the
financial strength of the Issuer. The Issuer believes, therefore, that
disclosure of any default related to a financing not involving the Company or
any person or entity related to the Company would not be material to a
reasonable investor. Accordingly, the Issuer has not taken affirmative steps to
contact the various trustees of other conduit bond issues of the Issuer to
determine the existence of prior defaults and although the Issuer is aware of
the existence of certain defaults (none of which, to the knowledge of the
Issuer, involve the Company or persons or entities related thereto), such
defaults are not described in this Bond Purchase Agreement. No obligations or
bonds as to which the Issuer is the direct obligor and which are not conduit
obligations are in default or have been in default as to the payment of
principal or interest.
<PAGE>
16. That the Issuer is a public body corporate and politic of the
County of Orange (the "County"), State of Florida (the "State"), duly organized
and validly existing as such under the laws of the County and State, and its
members have been duly appointed.
4. Company's Representations and Warranties. The Company makes the
following representations and warranties, all of which will continue in effect
subsequent to the Closing:
1. That the Company is a corporation duly incorporated, organized and
existing under the laws of the State of California and is qualified to do
business in Florida and in each other jurisdiction in which the failure to so
qualify would have a material adverse effect on the Company, with full power to
execute and deliver the Loan Agreement, the Note, the Mortgage, the Security
Agreement, the Tax Certificate and attached Tax Questionnaire (the "Tax
Certificate"), dated as of September 24, 1997, the Environmental Indemnity
Agreement (the "Indemnity"), dated as of September 24 1997, from the Company to
and in favor of the Trustee, and this Bond Purchase Agreement.
2. That the Company has duly authorized the execution, delivery and
performance of the Loan Agreement, the Note, the Mortgage, the Security
Agreement, the Tax Certificate, the Indemnity and this Bond Purchase Agreement
and no approval or other action by any governmental authority is required in
connection with the execution or performance by the Company of the same, and
that neither the making nor the performance of the Loan Agreement, the Note, the
Mortgage, the Indemnity, the Security Agreement, the Tax Certificate or this
Bond Purchase Agreement will conflict with, violate or constitute a default
under (i) the Articles of Incorporation or By-Laws of the Company or (ii) any
indenture, mortgage, deed of trust, agreement or other instrument to which the
Company is a party or by which the Company or any of its properties may be bound
or any order, rule or regulation of any court or Federal or state regulatory
body or administrative agency having jurisdiction over the Company or any of its
properties; and no consent, approval, authorization or order of any court or
government agency or body not already obtained is required for the consummation
of the transactions contemplated hereby.
3. That there is no action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, public board or
body, pending or, to the knowledge of the Company, threatened against the
Company (or, to the knowledge of the Company, any meritorious basis therefor)
wherein an unfavorable decision, ruling or finding would have a material adverse
effect on the financial condition of the Company, the operation by the Company
of its properties, the acquisition, construction, installation and equipping or
operation of the Project, the transactions contemplated by this Bond Purchase
Agreement, the validity or enforceability of the Loan Agreement, the Indenture,
the Mortgage, the Security Agreement, the Tax Certificate, the Note, the
Indemnity or this Bond Purchase Agreement, or the corporate existence or powers
of the Company.
4. The officers of the Company and executing the Loan Agreement, the
Note, the Mortgage, the Indemnity, the Security Agreement, the Tax Certificate
and this Bond Purchase Agreement, as applicable, are duly and properly in office
and fully authorized to execute the same.
5. Except as disclosed to the Original Purchaser in writing prior to
the date hereof, the Company is not in breach of or default under, as
applicable, (i) the Security Agreement, the Mortgage, the Indemnity, the Tax
Certificate, the Loan Agreement, or the Note, (ii) any applicable state or
federal law or administrative regulation or any applicable judgment or decree
thereof, to the extent such breach or default would have a material adverse
effect on the financial condition of the Company, or the operations of the
Company, or any of its properties, (iii) any loan agreement, indenture, bond,
note, resolution, agreement or other instrument to which the Company is a party
or is otherwise subject, and (iv) no event has occurred and is continuing which,
with the passage of time or the giving of notice or both, would constitute an
event of default under any such instrument.
6. The Company lawfully owns and is lawfully possessed, and at the
Closing Date will so own and be so possessed, of its property, including but not
limited to the Project, and has, and at the Closing Date will have, fee simple
title and estate to such property, including but not limited to the Project,
subject only to
<PAGE>
permitted liens which do not now, and will not as of the Closing Date,
materially adversely affect the operations or the properties of the Company.
7. Between the date hereof and the Closing Date, the Company will not,
without the prior written consent of the Original Purchaser, incur any material
liabilities, direct or contingent, other than in the ordinary course of
business.
8. The Company has complied in all material respects with all
applicable requirements of the United States and the relevant states, and of
their respective agencies and instrumentalities, to operate its respective
facilities substantially as they are being operated and are fully qualified by
all necessary permits, licenses, certifications, accreditations and
qualifications, including, without limitation, accreditation of its existing
facilities, and to conduct its business as it is presently being conducted.
5. Issuer's Covenants. To the extent that interest on the Bonds is or may
become excludable from gross income for federal income tax purposes, the Issuer
will refrain from taking any action, that results in the loss of the status of
the exclusion from gross income of interest on the Bonds for federal income tax
purposes.
6. Company's Covenants.
1. To the extent that interest on the Bonds is or may become
excludable from gross income for federal income tax purposes, the Company will
refrain from taking any action, or from permitting any action with regard to
which the Company may exercise control to be taken, that results in the loss of
the exclusion of the interest on the Bonds for federal income tax purposes.
2. (1) The Company hereby agrees to indemnify and hold harmless the
Issuer, its members, officers, attorneys and agents, the Original Purchaser and
each person, if any, who is an officer or employee of the Original Purchaser or
who controls the Original Purchaser within the meaning of the 1933 Act or the
Securities Exchange Act of 1934, as amended (the "1934 Act") (the "Indemnified
Parties") against any and all losses, claims, damages, liabilities and expenses
(or actions in respect thereof) that arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact concerning the
Company, its facilities and the application of the proceeds of the Bonds, or
arise out of or are based upon the omission or alleged omission therefrom of any
statement or information concerning the Company, its facilities and the
application of the proceeds of the Bonds necessary to make the statements, in
light of the circumstances under which they were made, not misleading in any
material respect in and, to the extent of the aggregate amount paid in
settlement of any litigation commenced or threatened arising from a claim based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission if such settlement is effected with the written consent of the
Company, and further agrees to reimburse any legal or other expenses reasonably
incurred by any such Indemnified Party in connection with investigating or
defending any such loss, claim, damage, liability or action;
(2) The Company further agrees to indemnify and hold harmless the
Issuer, its members, officers, attorneys and agents and each person, if any, who
controls any of the foregoing within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act (also referred to herein as the "Indemnified
Parties"), against any and all losses, claims, damages, liabilities or expenses
whatsoever caused by or in any way related to (A) the use of the proceeds of the
Bonds, and (B) the execution and performance of this Bond Purchase Agreement,
the issuance and sale of the Bonds, actions taken under the Indenture, the Loan
Agreement, the Note, the Mortgage, the Security Agreement, the Assignment of
Rents, the Tax Certificate or any other cause whatsoever pertaining to the use
of the Bond proceeds and approval thereof under the Act;
(3) The Company, will assume the defense of any action against
any Indemnified Party based upon allegations of any such loss, claim, damage,
liability or action, including the
<PAGE>
retention of counsel satisfactory to the Indemnified Party and the payment of
reasonable counsel fees and all other expenses relating to such defense;
provided, however, that any Indemnified Party may retain separate counsel in any
such action and may participate in the defense thereof at the expense of such
Indemnified Party unless the retention of separate counsel has been specifically
authorized by the Company; provided further, that if any Indemnified Party shall
have been advised by counsel experienced in such matters that there may be legal
defenses available to such Indemnified Party which are different from or in
addition to those available to the Company, then the Company shall not have the
right to assume the defense of such action on behalf of such Indemnified Party,
and in such event the reasonable fees and expenses of the Indemnified Party in
defending such action shall be borne by the Company; provided, further, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage, liability and expense arise out of or are based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
any such documents in reliance upon and in conformity with written information
furnished by any Indemnified Party specifically for use therein. The indemnity
contained herein will be in addition to any liability which the Company may
otherwise have and shall survive any termination of this Bond Purchase
Agreement, the offering and sale of the Bonds and the payment or provision for
payment of the Bonds;
(4) Promptly after receipt by an Indemnified Party of notice of
the commencement of any action, such Indemnified Party will, if a claim for
indemnity in respect thereof is to be made against the Company, notify the
Company of the commencement thereof, and thereupon the Company, (A) will assume
the defense thereof if and as required hereunder or (B) if not required to
assume such defense, will be entitled to participate in, and to the extent that
it may wish, to assume the defense thereof, with counsel reasonably satisfactory
to such Indemnified Party, except as otherwise provided in the preceding
paragraph.
7. Conditions of Closing. The Original Purchaser's obligation to purchase
the Bonds is subject to fulfillment of the following conditions at or before
Closing, any of which the Original Purchaser may waive:
1. The Issuer's and the Company's representations hereunder shall be
true on the date hereof and on and as of the Closing and shall be confirmed by
certificates dated as of the date of Closing, including but not limited to, a
certificate of the Company as to its continuing compliance with all agreements,
covenants and warranties, and the non-existence of any Event of Default under
the Indenture, the Loan Agreement, the Note, the Security Agreement, the
Mortgage, the Indemnity and the Tax Certificate.
2. Neither the Issuer nor the Company shall have defaulted in any
material respect in any of their covenants hereunder.
3. The Original Purchaser shall have received:
(1) an opinion and a supplemental opinion of Bond Counsel, dated
as of Closing, substantially in the form of Exhibit A-1 and A-2 hereto;
(2) an opinion of the Issuer's counsel, dated as of Closing,
substantially in the form of Exhibit B hereto;
(3) an opinion of counsel to the Company, dated as of Closing,
substantially in the form of Exhibit C-1 hereto and an opinion of counsel to
ELXSI Corporation substantially in the form of Exhibit C-2 hereto;
(4) a certified copy of the Bond Resolution;
<PAGE>
(5) a copy of the following:
1. executed Indenture;
2. executed Loan Agreement;
3. executed Note;
4. executed Mortgage;
5. executed Security Agreement;
6. the Bonds;
7. executed Tax Certificate;
8. executed Indemnity; and
9. executed Guaranty Agreement dated as of September 24,
1997 between ELXSI Corporation and Bank of America
National Trust and Savings Association in form acceptable
to the Original Purchaser;
(6) evidence satisfactory to the Original Purchaser that an
A.L.T.A. Loan Policy of Title Insurance, insuring the Trustee and in an amount
equal to the aggregate principal amount of the Bonds (to the extent that the
proceeds of the Bonds are used for property insurable under such title policy,
otherwise in an amount equal to the property so insurable) insuring the
Company's title to the insurable portion of the Project, is in full force and
effect; and
4. The satisfaction by the Company and the Issuer of all conditions
required by Bond Counsel prior to the delivery of its Bond Counsel opinion in
connection with the issuance of the Bonds.
8. Events Permitting the Original Purchaser to Terminate. The Original
Purchaser may terminate its obligation to purchase the Bonds at any time before
Closing if any of the following occur:
1. any legislative, executive or regulatory action or any court
decision which, in the reasonable judgment of the Original Purchaser, casts
sufficient doubt on the legality of, obligations such as the Bonds so as to
materially impair the marketability or lower the market price of such
obligations;
2. a stop order, ruling, regulation or official statement by or on
behalf of the Securities and Exchange Commission shall be issued or made to the
effect that the issuance, offering or sale of the Bonds, or of obligations of
the general character of the Bonds as contemplated hereby, is in violation of
any provision of the 1933 Act, the 1934 Act or the Trust Indenture Act of 1919,
as amended;
If the Original Purchaser terminates its obligations hereunder because any
of the conditions specified in Sections 7 or 8 shall not have been fulfilled at
or before the Closing, such termination shall not result in any liability on the
part of the Issuer or the Original Purchaser.
9. Execution in Counterparts. This Bond Purchase Agreement may be executed
in any number of counterparts, all of which taken together shall be one and the
same instrument.
10. Notices and Other Actions. All notices, demands and formal actions
hereunder shall be in writing mailed, telegraphed or delivered to:
<PAGE>
The Issuer:
Orange County Industrial
Development Authority
200 Robinson St., Suite 600
Orlando, Florida 32801
The Company:
ELXSI
4209 Vineland Road
Orlando, Florida 32811
The Original Purchaser:
Bank of America National Trust and Savings Association
231 South LaSalle Street
Chicago, Illinois 60697
Attn: Marc J. Crady
11. Successors. This Bond Purchase Agreement will inure to the benefit of
and be binding upon the parties and their successors, and will not confer any
rights upon any other person.
[ ]
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IN WITNESS WHEREOF, the Issuer, the Company and the Original Purchaser
intending to be legally bound, have caused their duly authorized representatives
to execute and deliver this Bond Purchase Agreement as of the date first written
above.
"ISSUER"
ORANGE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
By:
------------------------------------
Title:
------------------------------------
"COMPANY"
ELXSI
By:
------------------------------------
Title:
------------------------------------
"ORIGINAL PURCHASER"
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By:
------------------------------------
Marcia K. Clausen
Title: Managing Director
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GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, dated as of September 24, 1997 (this "Agreement"),
by and between ELXSI CORPORATION, a Delaware corporation ("Guarantor") and BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a National banking
corporation (the "Bank").
W I T N E S S E T H:
WHEREAS, the Orange County Industrial Development Authority, (the
"Issuer"), pursuant to authority granted under Chapter 159, Part II, Florida
Statutes, and other applicable provisions of law, will issue, sell and deliver
its $2,500,000 aggregate principal amount Industrial Development Revenue Bonds,
Series 1997 (ELXSI Project) (the "Bonds") to finance the costs of acquiring,
constructing, rehabilitating, equipping and furnishing a facility (the
"Project") located within the corporate boundaries of Orange County, Florida;
WHEREAS, the Issuer has loaned or will lend the proceeds received from the
sale of the Bonds to ELXSI, a California corporation and wholly-owned subsidiary
of Guarantor (the "Account Party"), pursuant to that certain Loan Agreement,
dated as of September 24, 1997 (the "Loan Agreement"), between the Issuer and
the Account Party and pursuant to that certain promissory note of the Account
Party in favor of the Issuer dated as of September 24, 1997 (the "Note");
WHEREAS, the Bonds were issued and secured by that certain Trust Indenture,
dated as of September 24, 1997 (as amended, restated, supplemented or otherwise
modified from time to time, hereinafter called the "Indenture"), between the
Issuer, Sun Trust Bank, Central Florida, National Association, as Trustee (the
"Trustee");
WHEREAS, the Bonds have been or will be purchased by the Bank from the
Issuer pursuant to a Bond Purchase Agreement dated as of September 24, 1997
between the Issuer, the Account Party and the Bank (the "Bond Purchase
Agreement");
WHEREAS, it is a condition to the Bank's obligation to purchase the Bonds
under the Bond Purchase Agreement that Guarantor enter into this Guaranty
Agreement;
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WHEREAS, Guarantor will derive substantial benefit from the loaning of the
Bond proceeds to the Account Party to acquire, construct, rehabilitate, equip
and furnish the Project and the purchase by the Bank of the Bonds; and
WHEREAS, in order to induce the Bank to purchase the Bonds, the Guarantor,
pursuant to this Agreement, has issued a continuing, absolute, unconditional and
irrevocable guarantee of payment of the Account Party's obligations to the
Issuer under the Loan Agreement, the Note, the Mortgage (as defined herein), the
Security Agreement (as defined herein) and the Environmental Indemnity Agreement
(as defined herein), which obligations have been assigned to the Trustee for the
benefit of the Bank as the purchaser of the Bonds;
NOW THEREFORE, in consideration of the premises and to induce the Bank to
purchase the Bonds, and intending to be legally bound hereby, the Guarantor and
the Bank hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Certain Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural:
"Account Party Agreement" means any of the Loan Agreement, the Note ,
the Mortgage, the Security Agreement and the Environmental Indemnity
Agreement.
"Affiliate" means any Person (other than a Subsidiary) which directly
or indirectly through one or more intermediaries controls, or is controlled
by, or is under common control with the Account Party or with the
Guarantor. The term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities,
by contract or otherwise.
"Agreement" is defined in the preamble.
"Bank" is defined in the preamble.
"Bond Purchase Agreement" is defined in the fourth recital.
"Bonds" is defined in the first recital.
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"Capitalized Lease" means a lease of property, real or personal,
which, in accordance with generally accepted accounting principles, would
be required to be capitalized on a balance sheet of the lessee.
"Environmental Indemnity Agreement" means the environmental indemnity
agreement dated as of September 24, 1997, between the Issuer and the
Account Party.
"Environmental Laws" shall mean any federal, state, local or other
laws, statutes, rules, regulations, orders, consent decrees, permits or
licenses, relating to prevention, remediation, reduction or control of
pollution, or protection of the environment, natural resources and/or human
health and safety, including without limitation, such laws, statutes,
rules, regulations, orders, consent decrees, permits or licenses relating
to (i) solid waste and/or Hazardous Material treatment, storage, disposal,
generation and transportation, (ii) air, water and noise pollution, (iii)
soil, ground, water or groundwater contamination, (iv) the generation,
handling, storage, transportation or release into the environment of
Hazardous Materials, and (v) regulation of underground and aboveground
storage tanks.
"ERISA" is defined in Section 3.11.
"Event of Default" is defined in Article V.
"Fiscal Quarter End" shall mean, for the first fiscal quarter, the
Saturday next preceding or next following (whichever is closer) March 31 of
any calendar year, for the second fiscal quarter, the Saturday next
preceding or next following (whichever is closer) June 30 of any calendar
year, and for the third fiscal quarter, the Saturday next preceding or next
following (whichever is closer) September 30 of any calendar year. The
Fiscal Quarter End for the fourth quarter will be the same date as the
Fiscal Year End, as defined in the definition "Fiscal Year End".
"Fiscal Year End" shall mean, as of any fiscal year of the Guarantor,
the Saturday next preceding or next following (whichever is closer)
December 31 of any calendar year.
"Guaranteed Obligations" is defined in Section 2.01.
"Guarantor" is defined in the preamble.
"Hazardous Material" is defined in Section 3.10.
"Indebtedness" means: (i) all items of indebtedness for borrowed
money, (ii) all indebtedness for borrowed money secured by any mortgage,
pledge or lien existing on
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property whether or not the indebtedness secured thereby shall have been
assumed, (iii) Capitalized Lease obligations (but not operating lease
obligations), and (iv) all guarantees, letters of credit, and endorsements
and other agreements or obligations (other than of notes, bills and checks
presented to banks for collection or deposit in the ordinary course of
business or operating lease obligations), in each case to support
Indebtedness of other Persons, including any partnership or joint venture
of which the Guarantor or any of its Subsidiaries is a general partner or
joint venturer. For purposes of Sections 3.03, 4.05 and 4.06,
"Indebtedness" shall not include Intercompany Indebtedness.
"Indenture" is defined in the third recital.
"Interim Financials" is defined in Section 3.03.
"Issuer" is defined in the first recital.
"Loan Agreement" is defined in the second recital.
"Material Subsidiary" means (i) each of ELXSI, a California
corporation; and (ii) any Subsidiary which now or hereafter has on any
given date total assets equal to or greater than ten percent (10%) of the
consolidated assets of the Guarantor and its Subsidiaries on such date. For
the purposes of this Agreement, a Subsidiary which now or hereafter
qualifies as a Material Subsidiary under clause (ii) of the foregoing
definition shall continue to be deemed to be a Material Subsidiary
notwithstanding the fact that its total assets may at any given time
subsequent to such qualification as a Material Subsidiary be equal to or
less than ten percent (10%) of the consolidated assets of the Guarantor and
its Subsidiaries.
"Mortgage" means the mortgage and security agreement dated as of
September 24, 1997 between the Account Party and the Issuer.
"1996 Financials" is defined in Section 3.03.
"Person" means any individual, corporation, limited liability company
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Project" is defined in the first recital.
"Revolving Credit Agreement" means the Amended and Restated Loan and
Security Agreement dated as of December 30, 1996 between the Account Party
and Bank of America Illinois as subsequently modified, amended and/or
restated.
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"Security Agreement" means the security agreement dated as of
September 24, 1997, between the Account Party and the Issuer.
"Subsidiary" means any Person of which greater than 50% of the
outstanding shares of voting stock are owned or controlled by the
Guarantor.
"Trustee" is defined in the third recital.
"Unmatured Event of Default" means an event which would become an
Event of Default with notice or the passage of time or both.
Except as and unless otherwise specifically provided herein, all accounting
terms in this Agreement shall have the meanings given to them by generally
accepted United States accounting principles and shall be applied and all
reports required by this Agreement shall be prepared, in a manner consistent
with the most recent financial statements provided to the Bank before this
Agreement was signed.
Section 1.02 Loan Agreement Definitions. Unless otherwise defined herein or
the context otherwise requires, terms used in this Agreement, including its
preamble and recitals, shall have the meanings provided in the Loan Agreement.
ARTICLE II
THE GUARANTY
Section 2.01 Guaranty. The Guarantor hereby absolutely, unconditionally and
irrevocably (a) guarantees the prompt payment in full when due (whether at
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise) of all obligations of the Account Party now or hereafter existing
which arise out of or in connection with the Loan Agreement, whether for
principal, interest, fees, expenses or otherwise and all other Liabilities of
the Account Party and all other amounts from time to time owing to the Issuer or
any other person under the Loan Agreement or obligations under any other Account
Party Agreement, howsoever created, arising or evidenced whether direct or
indirect, absolute or contingent or now or hereafter existing or due or to
become due (including in all cases all such amounts which would become due but
for the operation of the automatic stay under Section 362(a) of the United
States Bankruptcy Code 11 U.S.C. ss. 362(a), and the operation of Sections
502(b) and 506(b) of the United States Bankruptcy Code 11 U.S.C. ss. 502(b) and
ss. 506(b), and (b) indemnifies and holds harmless the Bank for any and all
reasonable costs and expenses (including reasonable attorney fees (including the
allocated cost of internal legal services and all disbursements of internal
counsel) and expenses) incurred by the Bank in enforcing any rights under this
Guaranty, in each
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case strictly in accordance with the terms thereof (such obligations being
herein collectively called the "Guaranteed Obligations").
This Guaranty constitutes a guaranty of payment when due and not of
collection, and the Guarantor specifically agrees that it shall not be necessary
or required that the Bank exercise any right, assert any claim or demand or
enforce any remedy whatsoever against the Account Party (or any other Person)
before or as a condition to the obligations of the Guarantor hereunder.
Section 2.02 Obligations Unconditional. The obligations of the Guarantor
under Section 2.01 shall in all respects be a continuing, absolute,
unconditional and irrevocable guaranty of payment, and shall remain in full
force and effect until all Guaranteed Obligations have been paid in full and all
obligations of the Guarantor hereunder shall have been paid in full.
The Guarantor guarantees that the Guaranteed Obligations will be paid
strictly in accordance with the terms of the Account Party Agreement under which
they arise, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the Bank
with respect thereto. The liability of the Guarantor under this Guaranty shall
be absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of the Loan
Agreement or any other Account Party Agreement or any other agreement or
instrument evidencing Guaranteed Obligations;
(b) the failure of the Bank
(i) to assert any claim or demand or to enforce any right or
remedy against the Account Party or any other Person (including any
other guarantor) under the provisions of the Loan Agreement or any
other Account Party Agreement or any other agreement or instrument
evidencing Guaranteed Obligations or otherwise, or
(ii) to exercise any right or remedy against any other guarantor
of, or collateral securing, any Guaranteed Obligations;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations, or any other
extension, compromise or renewal of any Guaranteed Obligation;
(d) any reduction, limitation, impairment or termination of any
Guaranteed Obligations for any reason including any claim of waiver,
release, surrender, alteration or compromise, and the Guaranty shall not be
subject to (and the Guarantor hereby waives any right to or claim of) any
defense or setoff, counterclaim, recoupment or termination
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whatsoever by reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event or
occurrence affecting, any Guaranteed Obligations other than payment
thereon;
(e) any amendment to, rescission, waiver, or other modification of, or
any consent to departure from, any of the terms of the Loan Agreement or
any other Account Party Agreement;
(f) any addition, exchange, release, surrender or nonperfection of any
collateral, or any amendment to or waiver or release or addition of, or
consent to departure from, any other guaranty, held by the Bank securing
any of the Guaranteed Obligations; or
(g) any other circumstance which might otherwise constitute a defense
available to, or a legal or equitable discharge of, the Account Party, any
surety or any of the Guaranteed Obligations.
Section. 2.03 Waiver, etc. The Guarantor hereby expressly waives
promptness, diligence, presentment, demand of payment upon the Account Party,
protest and all notices whatsoever (other than demand of payment upon the
Guarantor), and any requirement that the Bank protect, secure, perfect or insure
any security interest or lien upon any property subject thereto, or exhaust any
right, power or remedy or proceed against (i) the Account Party under the Loan
Agreement, the other Account Party Agreements or any other agreement or
instrument referred to herein or therein or (ii) against any other Person under
any other guarantee of, or security for, any of the Guaranteed Obligations.
Section 2.04 Reinstatement. The obligations of the Guarantor under this
Article II shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of the Account Party in respect of any of the
Guaranteed Obligations is rescinded or must be otherwise restored by any holder
of any of the Guaranteed Obligations, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise, and the Guarantor agrees that it will
indemnify the Bank on demand for all reasonable costs and expenses (including,
without limitation, reasonable fees of counsel) incurred by the Bank in
connection with such rescission or restoration.
Section 2.05 Subrogation, etc. The Guarantor will not exercise any rights
which it may acquire by reason of any payment made hereunder, whether by way of
subrogation, reimbursement or otherwise, until the prior payment, in full and in
cash, of all Guaranteed Obligations. Any amount paid to the Guarantor on account
of any payment made hereunder prior to the payment in full of all Guaranteed
Obligations shall be held in trust for the benefit of the Bank and shall
immediately be paid to the Bank and credited and applied against the Guaranteed
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Obligations, whether matured or unmatured, in accordance with the terms of the
Agreement (or the Pledge Agreement); provided, however, that if
(a) the Guarantor has made payment to the Bank of all or any part of
the Guaranteed Obligations, and
(b) all Guaranteed Obligations have been paid in full,
the Bank agrees that, at the Guarantor's request, the Bank will execute and
deliver to the Guarantor appropriate documents (without recourse and without
representation or warranty) necessary to evidence the transfer by subrogation to
the Guarantor of an interest in the Guaranteed Obligations resulting from such
payment by the Guarantor. In furtherance of the foregoing, for so long as any
Guaranteed Obligations remain outstanding, the Guarantor shall refrain from
taking any action or commencing any proceeding against the Guarantor (or its
successors or assigns, whether in connection with a bankruptcy proceeding or
otherwise) to recover any amounts in respect of payments made under this
Agreement to the Bank.
Section 2.06 Remedies. The Guarantor agrees that, as between the Guarantor
and the Bank, the Liabilities of the Account Party under the Loan Agreement may
be declared to be forthwith due and payable as provided in Section 9.2 of the
Loan Agreement (and shall be deemed to have become automatically due and payable
in the circumstances provided in said Section 9.2) for purposes of Section 2.01,
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such obligations from becoming automatically due and payable) as
against the Account Party and that, in the event of such declaration (or such
obligations being deemed to have become automatically due and payable), such
obligations (whether or not due and payable by the Account Party) shall
forthwith become due and payable by the Guarantor for purposes of Section 2.01.
Section 2.07 Continuing Guaranty. The guaranty in this Article II is a
continuing guaranty, and shall apply to all Guaranteed Obligations whenever
arising.
ARTICLE III
GUARANTOR'S REPRESENTATIONS
The Guarantor represents to the Bank that:
Section 3.01 Organization. The Guarantor is a corporation existing and in
good standing under the laws of the State of Delaware; each Material Subsidiary
is a corporation duly existing and in good standing under the laws of the state
of its incorporation; the Guarantor and each Material Subsidiary are duly
qualified, in good standing and authorized to do business in
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each jurisdiction where failure to so qualify would have a material adverse
effect on their business or properties and because of the nature of their
activities or properties, such qualification is required; and the Guarantor and
each Material Subsidiary have the corporate power and authority to own their
properties and to carry on their businesses in a manner substantially the same
as now being conducted.
Section 3.02 Authorization; No Conflict; Binding Effect. The execution and
delivery of this Agreement and the performance by the Guarantor of its
obligations under this Agreement are within the Guarantor's corporate powers,
have been authorized by all necessary corporate action, have received all
necessary governmental approval (if any shall be required) and do not and will
not contravene or conflict with any provision of law or of the charter or
by-laws of the Guarantor or any Subsidiary or of any agreement binding upon the
Guarantor or any Subsidiary. This Agreement has been duly executed and delivered
by Guarantor and is the legal, valid and binding obligation of Guarantor
enforceable against Guarantor in accordance with its terms.
Section 3.03 Financial Statements; Contingent Liabilities; Indebtedness.
The Guarantor's audited consolidated and consolidating (as applicable) financial
statements as of and for the fiscal year ended December 31, 1996 (the "1996
Financials"), as certified by Price Waterhouse L.L.P., the Guarantor's certified
public accountants for such period, copies of which have been furnished to the
Bank, have been prepared in conformity with generally accepted accounting
principles applied on a basis consistent with that of the preceding fiscal year,
and fairly present the financial condition of the Guarantor and its Subsidiaries
as of such dates and the results of their operations for the periods then ended.
To the best of the Guarantor's knowledge, the Guarantor's unaudited consolidated
and consolidating (as applicable) financial statement as of June 30, 1997 (the
"Interim Financials") a copy of which has been furnished to the Bank, fairly
presents the financial condition of the Guarantor and its Subsidiaries as of
such date and the results of their operations for the period then ended. Since
the date of the 1996 Financials, no material adverse change in the business,
properties, assets, operations, conditions or prospects of the Guarantor and its
Subsidiaries taken as a whole has occurred of which the Bank has not been
advised in writing before this Agreement was signed. There is no known
contingent liability of the Guarantor or any Subsidiary which is known to be in
an amount in excess of $50,000 which is not reflected in the 1996 Financials or
which is not set forth in Schedule 3.03.
Section 3.04 Taxes. No examination of any Federal income tax return filed
by or on behalf of the Guarantor or any Material Subsidiary is pending or, to
the best knowledge of the Guarantor, threatened. The Guarantor and its
Subsidiaries have filed or caused to be filed all federal, state and local tax
returns which, to the knowledge of the Guarantor or its Subsidiaries, are
required to be filed, and have paid or have caused to be paid all taxes as shown
on such returns or on any assessment received by them, to the extent that such
taxes have become due (except for current taxes not delinquent and taxes being
contested in good faith and by appropriate proceedings for which adequate
reserves have been provided on the books of the
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Guarantor or the appropriate Subsidiary, and as to which no foreclosure,
distraint, sale or similar proceedings have been commenced).
Section 3.05 Liens. None of the material assets of the Guarantor or its
Subsidiaries are subject to any mortgage, pledge, title retention lien, or other
lien, encumbrance or security interest, except for: (a) current taxes not
delinquent or taxes being contested in good faith and by appropriate
proceedings; (b) liens arising in the ordinary course of business for sums not
due or sums being contested in good faith and by appropriate proceedings, but
not involving any deposits or advances or borrowed money or the deferred
purchase price of property or services; (c) to the extent specifically shown in
the financial statements referred to above; and (d) as shown on Schedule 3.05.
Section 3.06 Adverse Contracts. Neither the Guarantor nor any of its
Subsidiaries is a party to any agreement or instrument or subject to any charter
or other corporate restriction, nor is any of them subject to any judgment,
decree or order of any court or governmental body, which may have a material,
adverse effect on the business, assets, liabilities, financial condition,
operations or business prospects of the Guarantor and its Subsidiaries taken as
a whole or on the ability of the Guarantor to perform its obligations under this
Agreement. Neither the Guarantor nor its Subsidiaries has, nor with reasonable
diligence should have had, knowledge of or notice that it is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any such agreement, instrument, restriction, judgment,
decree or order.
Section 3.07 Regulation U. The Guarantor is not engaged principally in, nor
is one of the Guarantor's important activities, the business of extending credit
for the purpose of purchasing or carrying "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System as now and
from time to time hereinafter in effect.
Section 3.08 Litigation. No litigation (including derivative actions but
excluding product liability claims as to which the amount claimed is completely
covered by satisfactory insurance other than self-insurance), arbitration
proceedings or governmental proceedings or investigations are pending or, to the
best knowledge of the Guarantor, threatened against the Guarantor which would
(singly or in the aggregate) if adversely determined, have a material, adverse
effect on the financial condition, continued operations or prospects of the
Guarantor and its Subsidiaries taken as a whole, except as set forth (including
estimates of the dollar amounts involved) on Schedule 3.08.
Section 3.09 Subsidiaries. Schedule 3.09 sets forth a correct and complete
list of all Subsidiaries and Affiliates of the Guarantor.
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Section 3.10 Environmental Matters. Except as disclosed on Schedule 3.10,
(i) the Guarantor and its Material Subsidiaries and all properties owned or
operated by the Guarantor or its Material Subsidiaries comply in all material
respects with all Environmental Laws; (ii) neither the Guarantor nor any
Material Subsidiary is subject to any actual or threatened judicial or
administrative proceeding, investigation or inquiry into the possibility of
violation of any Environmental Laws; (iii) neither the Guarantor nor any
Material Subsidiary is the subject of an actual or threatened federal, state or
local investigation or inquiry evaluating whether any remedial action is needed
under any Environmental Laws to respond to a release of any material classified
as "hazardous" by any Environmental Laws ("Hazardous Material") into the
environment; (iv) neither the Guarantor nor any Material Subsidiary has
knowledge or notice of the presence of any Hazardous Material on or under any
property owned or operated by the Guarantor or any Material Subsidiary; (v)
there is no claim pending or threatened against the Guarantor or any Material
Subsidiary relating to damage, contribution, cost recovery compensation, loss,
or injury resulting from the release of, or exposure to, any Hazardous Material;
(vi) neither the Guarantor nor any Material Subsidiary has any known contingent
liability in connection with any release of Hazardous Material into the
environment; and (vii) neither the Guarantor nor any Material Subsidiary has
received notice, nor has reasons to expect notice, of any potential liability
under federal, state or local laws, arising from or relating to any release into
the environment of any Hazardous Material.
Section 3.11 ERISA. The Guarantor and each Material Subsidiary is in
compliance with all material requirements of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and the regulations promulgated
thereunder as to any employee benefit plan defined in Section 3(3) of ERISA, and
there exists no event described in Section 4043(b) of ERISA, excluding
subsections 4043(b)(2) and 4043(b)(3) thereof, with respect to which the
Guarantor or any Material Subsidiary has any obligation, which could result in
such Person incurring any liability, fine or penalty, other than a liability
reflected in the funding schedule for such plan which is not yet due and
payable. Within the past five years, neither the Guarantor nor any Material
Subsidiary has terminated or withdrawn from, nor is the Guarantor aware of any
withdrawal liability assessed against the Guarantor or any Material Subsidiary
with respect to, any multi-employer employee benefit plan.
Section 3.12 True and Complete Disclosure. (i) All factual information
relating to the Guarantor furnished to the Bank heretofore or contemporaneously
herewith by or on behalf of the Guarantor for purposes of or in connection with
this Agreement or any transaction contemplated hereby is true and complete in
every material respect on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary to
make such information not misleading at such time provided, however, the dated
date of the Schedules shall be the date hereof and (ii) there is no fact known
to the Guarantor on the date hereof that, in the reasonable judgment of the
Guarantor, materially adversely affects the business or financial prospects of
the Guarantor that has not been disclosed in writing to the Bank.
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Section 3.13 Solvency. Guarantor is solvent and will continue to be solvent
following the consummation of the transactions contemplated by this Agreement.
Section 3.14 Survival. All representations and warranties contained in this
Agreement shall survive the execution and delivery of this Agreement.
ARTICLE IV
GUARANTORS' COVENANTS
Section 4.01 Corporate Existence, Mergers Etc. The Guarantor and each of
its Material Subsidiaries shall preserve and maintain its corporate existence,
rights, franchises, licenses and privileges, and will not liquidate, dissolve,
or merge, or consolidate with or into any other corporation, or sell, lease,
transfer or otherwise dispose of all or a substantial part of its assets, except
that:
(ii) Any Subsidiary may merge or consolidate with or into any one or
more wholly-owned subsidiaries;
(iii) Any Subsidiary which is not a Material Subsidiary may liquidate
or dissolve upon the prior written consent of the Bank (which consent shall
not be unreasonably withheld); and
(iv) In any given fiscal year of the Guarantor, the Guarantor and its
Material Subsidiaries may sell, transfer, or otherwise dispose of a portion
of their respective assets and those Subsidiaries which are not Material
Subsidiaries may sell, transfer or otherwise dispose of all or a portion of
their respective assets; provided, however, that the aggregate net book
value of assets so sold, transferred or disposed of by the Guarantor and
its subsidiaries (including both Material Subsidiaries and Subsidiaries
which are not Material Subsidiaries) in such fiscal year shall not exceed
ten percent (10%) of the net book value of the total consolidated assets of
the Guarantor and its Subsidiaries in the immediately preceding fiscal
year. The restrictions of this subsection 4.01(iii) shall not apply to the
lease (as lessor) of any assets of the Guarantor and its Subsidiaries.
Section 4.02 Reports, Certificates and Other Information. The Guarantor
shall furnish to the Bank:
(i) Interim Reports. Within forty-five (45) days after the end of the
first, second, and third quarters of each fiscal year of the Guarantor, a
copy of an unaudited financial statement of the Guarantor and its
Subsidiaries prepared on a
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consolidated and consolidating (as applicable) basis consistent with the
unaudited consolidated and consolidating (as applicable) financial
statement of the Guarantor and its Subsidiaries as at June 30, 1997
referred to above, signed by an authorized officer of the Guarantor and
consisting of at least (i) a balance sheet as at such Fiscal Quarter End,
and (ii) a consolidated cash flow statement of the Guarantor and its
Subsidiaries for such quarter and for the period from the beginning of such
fiscal year to such Fiscal Quarter End.
(ii) Annual Report. As soon as available and in any event within
ninety (90) days after each Fiscal Year End of the Guarantor, a copy of a
consolidated and consolidating (as applicable) balance sheet and profit and
loss statement of the Guarantor and its Subsidiaries as of such Fiscal Year
End and the related consolidated statement of cash flows for such fiscal
year, in each case setting forth in comparative form figures for the
preceding fiscal year, all in reasonable detail, prepared in accordance
with generally accepted accounting principles consistently applied
throughout the period involved (including disclosure required by Accounting
Principles Board Statement 28) (except for such changes as are disclosed in
such financial statements or in the notes thereto and concurred in by
independent certified public accountants) and accompanied by an audit
report of any firm of independent public accountants of recognized national
standing selected by the Guarantor; provided, however, that such audit
report shall not be required with respect to the consolidating financial
statements.
(iii) Notice of Default, Litigation and ERISA Matters. Immediately
upon learning of the occurrence of any of the following, written notice
describing the same and the steps being taken by the Guarantor or any one
of its Subsidiaries affected in respect thereof to remedy or cure: (i) the
occurrence of an "Event of Default" or an "Unmatured Event of Default"
(each as defined in the Loan Agreement) or an Event of Default or Unmatured
Event of Default; or (ii) the institution of, or any adverse determination
in, any litigation, arbitration or governmental proceeding which is
material to the Guarantor or any one of its Subsidiaries on a consolidated
basis; or (iii) the occurrence of a reportable event under, or the
institution of steps by the Guarantor or any one of its Subsidiaries to
withdraw from, or the institution of any steps to terminate, any employee
benefit plans as to which the Guarantor or any of its Subsidiaries may have
any liability.
(v) Subsidiaries. Promptly from time to time a written report of any
changes in Schedule 3.09 hereto.
(vi) Other Information. From time to time such other information,
financial or otherwise, concerning the Guarantor or any of its Subsidiaries
as the Bank may reasonably request.
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Section 4.03 Inspection. Upon reasonable prior notice from the Bank and its
agents, the Guarantor and its Subsidiaries shall permit the Bank and its agents
at any time during normal business hours to inspect their respective properties
and to inspect and make copies of their respective books and records so long as
no unnecessary interruption is caused to the operation of the business of the
Guarantor and its Subsidiaries by any such inspection.
ARTICLE V
EVENT OF DEFAULT
Section 5.01 Events of Default. Each of the following shall constitute an
Event of Default under this Agreement:
b. Nonpayment of Guaranteed Obligations. Default by the Guarantor in
the payment when due of any Guaranteed Obligation.
c. Noncompliance With this Agreement. (i) Failure by the Guarantor to
comply with or to perform any provision of Section 4.01, Section 4.02 or
Section 4.03 or (ii) failure by the Guarantor to comply with or to perform
any other provision of this Agreement (if such failure does not constitute
an Event of Default under any of the other subsections and clauses of this
Section, including, without limitation, clause (i) of this subsection) and
continuance of such failure for 30 days after notice thereof to the
Guarantors from the Bank.
c. Cross-Default. The occurrence of a default or event of default
under Section 9.1 of the Loan Agreement or a default or event of default
shall occur under any other Account Party Agreement, the occurrence of a
default or event of default under Section 6.1 of the Revolving Credit
Agreement or there shall occur any default or event of default, or any
event which might become such with notice or the passage of time or both,
or any similar event, or any event which requires the prepayment of
borrowed money (other than prepayment of loans under the Revolving Credit
Agreement) in a principal amount in excess of $200,000 in the aggregate or
the acceleration of maturity thereof, under the terms of any evidence of
Indebtedness or other agreement issued or assumed or entered into by the
Guarantor or any of its Subsidiaries or under the terms of any indenture,
agreement or instrument under which any such evidence of Indebtedness or
other agreement is issued, assumed, secured or guaranteed (and such event
shall continue beyond any applicable period of grace; or
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d. Dissolutions, etc. The Guarantor shall fail to comply with any
provision concerning its existence or that of any of its Material
Subsidiaries or any prohibition against dissolution, liquidation, merger,
consolidation or sale of assets; or
e. Warranties. Any material representation, warranty, schedule,
certificate, financial statement, report, notice or other writing furnished
by or on behalf of the Guarantor to the Bank is false or misleading in any
material respect on the date as of which the facts therein set forth are
stated or certified; or
f. Change in Control. A majority of the outstanding voting stock of
the Guarantor shall be acquired, directly or indirectly, by a Person or
group of Persons acting in concert, who own on the date hereof less than 5%
of such voting stock; or
g. ERISA. The Pension Benefit Guaranty Corporation, or any entity
succeeding to any or all of its functions under ERISA, applies to a United
States District Court for the appointment of a trustee to administer any
Plan or for a decree adjudicating that any such Plan must be terminated; a
trustee is appointed to administer any such Plan; any action is taken to
terminate any such Plan or any such Plan is permitted or caused to be
terminated if, at the time such action is taken or such termination of any
such Plan occurs, the Plan's "vested liabilities", as defined in Section
3(25) of ERISA, exceed the then value of its assets at the time of such
termination (for purposes of this Section 5.01(g), "Plan" shall have the
meaning given to such term in Section 3(3) of ERISA and established or
maintained by the Guarantor or any of its Material Subsidiaries and
includes any Plan as to which the Guarantor or any of its Material
Subsidiaries may have any liability); or
h. Litigation. Any suit, action or other proceeding (judicial or
administrative) shall be commenced against the Guarantor or any of its
Subsidiaries, or with respect to any assets of the Guarantor or any of its
Subsidiaries, and such proceeding shall, in the reasonable opinion of the
Bank and its counsel, threaten to have a material, adverse effect on the
future operations of the Guarantor and its Subsidiaries taken as a whole,
or a final judgment in excess of $250,000 shall be entered or a settlement
in excess of $250,000 shall be reached in any such suit, action or
proceeding; provided, however, that such occurrence shall not be deemed an
Event of Default if as to the amount involved, claimed, awarded in final
judgment or agreed to in settlement, one hundred percent (100%) of that
portion (if any) of such amount which exceeds $250,000 is, in the
reasonable opinion of the Bank and its counsel, completely covered by
satisfactory insurance (other than self-insurance); or
i. Bankruptcy - Filing of Petition.
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(i) The Guarantor or any of its Material Subsidiaries shall file
a petition or answer or otherwise commence any action or proceeding
seeking reorganization, arrangement or readjustment of its debts or
for any other relief under the federal Bankruptcy Code, as amended, or
under any other bankruptcy or insolvency act or law, federal, state or
foreign, now or hereafter existing, or the Guarantor or any Material
Subsidiary shall consent to, approve of, or acquiesce in, any such
petition, action or proceeding; or the Guarantor or any of its
Material Subsidiaries shall consent to the institution of such
proceedings or the filing of any such petition or to the appointment
of a receiver, liquidator, assignee, trustee, custodian, sequestrator
or similar official for all or any part of the property of the
Guarantor or any of its Material Subsidiaries; or
(ii) an involuntary petition shall be filed or an action or
proceeding otherwise commenced seeking reorganization, arrangement or
readjustment of the debts of the Guarantor or any Material Subsidiary
or for any other relief under the federal Bankruptcy Code, as amended,
or under any other bankruptcy or insolvency act or law, federal, state
or foreign, now or hereafter existing, and such action has not been
stayed within thirty (30) days of the filing or commencement, as the
case may be; or
j. Bankruptcy - Entry of Order for Relief. There shall be entered a
decree or order by a court (i) constituting an order for relief in respect
of the Guarantor or any of its Material Subsidiaries under the federal
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency
act or law, federal, state or foreign, now or hereafter existing; or (ii)
appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or similar official for all or any part of the property of the
Guarantor or any of its Material Subsidiaries, or (iii) ordering the
winding-up of or liquidation of the affairs of the Guarantor or any of its
Material Subsidiaries; and any such decree or order shall continue unstayed
and in effect for a period of thirty (30) consecutive days; or
k. Insolvency. The Guarantor or any of its Material Subsidiaries shall
become insolvent or shall fail or be unable to pay its debts as they
mature, or shall admit in writing its inability to pay its debts as they
mature, or shall make a general assignment for the benefit of its
creditors, or shall enter into any composition or similar agreement, or
shall suspend the transaction of all or a substantial portion of its usual
business.
Section 5.02 Effect of Events of Default. The Guarantor acknowledges and
agrees that the occurrence of an Event of Default under Section 5.01 hereof
shall also constitute an event of default for purposes of Section 9.1 of the
Loan Agreement.
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ARTICLE VI
MISCELLANEOUS
Section 6.1 Binding on Successors, Transferees and Assigns; Assignment of
Guaranty. This Agreement shall be binding upon the Guarantor and its successors,
transferees and assigns and shall inure to the benefit of and be enforceable by
the Bank and its successors, transferees and assigns; provided, however, that
the Guarantor may not assign any of its obligations hereunder without the prior
written consent of the Bank.
Section 6.2 Amendments, etc. No amendment to or waiver of any provision of
this Agreement, nor consent to any departure by the Guarantor therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Bank, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
Section 6.3 Addresses for Notices to the Guarantor. All notices and other
communications provided for hereunder shall be in writing and shall be given (i)
by first class or certified mail, postage prepaid; (ii) by facsimile
transmission and confirmed by the sender's telephone call to the recipient and
by mailing or delivering a copy as provided in clause (i) , clause (iii) or
clause (iv) hereof; (iii) by hand delivery or (iv) by courier service (including
overnight courier service). Notices to the Guarantor shall be directed as
follows:
ELXSI Corporation
4209 Vineland Road
Suite J-1
Orlando, Florida 32811
Attention: Controller
Facsimile: (407) 425-1569
with a copy to:
Kenneth R. Artin, Esq.
Lowndes Drosdick Doster Kantor & Reed, P.A.
215 North Eola Drive
Orlando, Florida 32802
Telephone: (407) 843-4600
Facsimile: (407) 423-4495
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Notices to the Bank shall be directed as follows:
Bank of America National Trust
and Savings Association
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Marc J. Crady
Telephone: (312) 828-6686
Facsimile: (312)828-1974
Notice given as provided in clause (i) hereof shall be effective five days from
the date of mailing. Notice given as provided in clauses (ii) and (iii) hereof
shall be effective on the day sent if sent by 4:00 p.m. (local time at Chicago,
Illinois) on a Business Day and otherwise on the next Business Day following the
day of sending. Notice given as provided in clause (iv) hereof shall be
effective on the Business Day following the day of sending.
Section 6.04 No Waiver; Remedies. In addition to, and not in limitation of,
Section 2.3 and Section 2.6, no failure on the part of the Bank to exercise, and
no delay in exercising, any right hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
Section 6.05 Section Captions. Section captions used in this Agreement are
for convenience of reference only, and shall not affect the construction of this
Agreement.
Section 6.06 Right of Set-off. For so long as any amount is due or owing to
the Bank under the Loan Agreement, so long as an Event of Default has occurred
and is continuing, the Bank shall have the right to immediately and without
notice set-off against any of the Guarantor's obligations to it under this
Agreement any sum owed by the Bank in any capacity to the Guarantor. The Bank
shall be deemed to have exercised such right of set-off and to have made a
charge against any such sum immediately upon the occurrence of any Event of
Default, even though the actual book entries may be made at the time subsequent
thereto.
Section 6.07 Severability. Wherever possible each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such 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 Agreement.
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Section 6.08 Governing Law; Jury Trial Waiver; Venue. This Agreement shall
be governed by, and construed in accordance with, the law of the State of
Illinois without giving effect to Illinois choice of law principles.
THE GUARANTOR HEREBY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING (I) TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN CONNECTION
WITH THIS AGREEMENT, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR
(II) ARISING FROM ANY DISPUTE OR CONTROVERSY IN CONNECTION WITH OR RELATED TO
THIS AGREEMENT, OR ANY SUCH AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT, AND
AGREES THAT ANY SUCH ACTION OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
THE GUARANTOR IRREVOCABLY AGREES THAT, SUBJECT TO THE BANK'S SOLE AND
ABSOLUTE ELECTION, ANY ACTION OR PROCEEDING IN ANY WAY, MANNER OR RESPECT
ARISING OUT OF THIS AGREEMENT, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH, OR ARISING FROM ANY DISPUTE OR CONTROVERSY ARISING IN CONNECTION WITH
OR RELATED TO THIS AGREEMENT, OR ANY SUCH AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT SHALL BE LITIGATED ONLY IN THE COURTS HAVING SITUS WITHIN THE CITY OF
CHICAGO, ILLINOIS, AND THE GUARANTOR HEREBY CONSENTS AND SUBMITS TO THE
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SUCH CITY AND
STATE. THE GUARANTOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE
THE VENUE OF ANY LITIGATION BROUGHT AGAINST THE GUARANTOR AND/OR BY THE BANK IN
ACCORDANCE WITH THIS SECTION 6.08.
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IN WITNESS WHEREOF, the Guarantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
ELXSI CORPORATION
By:____________________________
Its:___________________________
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SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Security Agreement") is made and entered
into as of September 24, 1997, between ELXSI, a California corporation (the
"Debtor"), 4209 Vineland Road, Orlando, Florida 32811, and Orange County
Industrial Development Authority, a public body corporate and politic and a
public instrumentality of the State of Florida (the "Secured Party") with
offices at 200 E. Robinson Street, Suite 600, Orlando, Florida 32801.
PREMISES:
The Secured Party proposes to enter into a Loan Agreement dated as of
September 24, 1997 (the "Loan Agreement") with Debtor pursuant to the terms of
which the Debtor agrees to make loan payments (the "Loan Payments") to the
Secured Party equal to the principal of, premium, if any, and interest on the
$2,500,000 Orange County Industrial Development Authority, Industrial
Development Revenue Bonds (ELXSI Project), Series 1997 (the "Bonds" or the
"Obligations") issued in accordance with Chapter 159, Part II, of the Florida
Statutes (the "Act").
The Bonds are being issued to provide funds which, together with
interest earnings thereon and certain other amounts, will be used to provide
funds to the Debtor in order (i) to acquire, construct, install and equip the
Debtor's new facility to be constructed at 3600 Rio Vista Avenue, Orlando,
Florida, for the manufacture of video inspection and rehabilitation equipment
for wastewater and drainage systems, and to provide funds to finance
improvements at the Debtor's existing facility at 3501 Rio Vista Avenue,
Orlando, Florida (the "Project"); and (ii) to pay certain costs of issuance.
The Bonds will be secured under the Secured Party's Trust Indenture
dated as of September 24, 1997 (the "Indenture") with Sun Trust Bank, Central
Florida, National Association as trustee (the "Trustee"). The Bonds will be
payable solely out of the Debtor's Loan Payments under the Loan Agreement and
other monies paid by the Debtor thereunder. To evidence and to secure its
obligation to make Loan Payments, the Debtor will, under the Loan Agreement,
deliver a promissory note (the "Note") to the Secured Party, which Note will be
assigned by the Secured Party to the Trustee.
The Debtor will enter into a Mortgage and Security Agreement (the
"Mortgage") in addition to this Security Agreement pursuant to which the Debtor
shall grant solely to the Secured Party a lien and security interest in the
land, buildings and fixtures comprising the Project as security for the
performance and observance of the Borrower's obligations under the Loan
Agreement and ultimately the Bonds.
The Debtor desires to secure the payment and performance of the
Obligations by granting to the Secured Party a security interest in the
Collateral, as hereinafter defined.
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NOW, THEREFORE, the Debtor and the Secured Party agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in the
Loan Agreement are used herein as therein defined, and the following terms shall
have the following meanings (such meanings being equally applicable to both the
singular and plural forms of the terms defined):
"Collateral" shall have the meaning assigned to such term in Section 2
of this Security Agreement.
"Equipment" means all equipment of Debtor of every description,
including, without limitation fixtures, furniture, vehicles, trucks, trailers,
vans, cars, and trade fixtures, together with any and all accessions, parts and
equipment attached thereto or used in connection therewith, and any
substitutions therefor and replacements thereof.
"hereby," "herein," "hereof," "hereunder" and words of similar import
refer to this Security Agreement as a whole (including, without limitation, any
schedules hereto) and not merely to the specific section, paragraph or clause in
which the respective word appears.
"Proceeds" shall mean "proceeds," as such term is defined in the UCC
and, in any event, shall include, without limitation, (i) any and all proceeds
of any insurance, indemnity, warranty or guaranty payable to Debtor from time to
time with respect to any of the Collateral, (ii) any and all payments (in any
form whatsoever) made or due and payable to Debtor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental body,
authority, bureau or agency (or any person acting under color of governmental
authority), and (iii) any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral.
"Secured Obligations" shall mean (i) the obligations of the Debtor
under the Loan Agreement and the Note, and (ii) all other indebtedness,
liabilities and obligations of Debtor to the Secured Party, whether now existing
or hereafter incurred, and as created under, arising out of or in connection
with the Loan Agreement, the Note, this Security Agreement and any other
agreement or instrument in favor of the Secured Party.
"Security Agreement" shall mean this Security Agreement, as the same
may from time to time be amended, modified or supplemented and shall refer to
this Security Agreement as in effect on the date such reference becomes
operative.
"UCC" shall mean the Uniform Commercial Code as the same may, from time
to time, be in effect in the State of Florida; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the Secured Party's security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of Florida, the term "UCC" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof
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<PAGE>
relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.
2. Grant of Security Interest.
(a) To secure the prompt and complete payment, performance and
observance of all of the Secured Obligations, and to induce the Secured Party to
issue the Bonds and to enter into the Loan Agreement and to make the loans and
other extensions of credit provided for therein in accordance with the
respective terms thereof, Debtor hereby grants to the Secured Party a security
interest in all of Debtor's right, title and interest in, to and under the
following whether now owned by or owing to, or hereafter acquired by or arising
in favor of Debtor (including, without limitation, under any trade names, styles
or divisions thereof), and whether owned or consigned by, or leased to Debtor,
and regardless of where located, (all of which being hereinafter collectively
referred to as the "Collateral"):
(i) all Equipment of Debtor;
(ii) to the extent not otherwise included, all Proceeds of the
foregoing and all accessions to, substitutions and replacements for,
and rents, profits and products of, each of the foregoing.
(b) In addition, to secure the prompt and complete payment, performance
and observance of the Secured Obligations and in order to induce the Secured
Party as aforesaid, Debtor hereby grants to the Secured Party, a security
interest in all property of Debtor held by the Secured Party, including, without
limitation, all property of every description, now or hereafter in the
possession or custody of or in transit to the Secured Party for any purpose,
including safekeeping, collection or pledge, for the account of Debtor, or as to
which Debtor may have any right or power.
3. Obligations Secured. The security interest created hereby secures
payment and performance of all of the Obligations and all other obligations of
the Debtor to the Secured Party, as well as all amendments, renewals,
extensions, modifications and changes in form thereof, whether or not, either
now or hereafter, evidenced by any note, instrument or other writing (the
"Secured Obligations").
4. Representations and Warranties. To induce the Secured Party to enter
into this Security Agreement, the Debtor represents and warrants as follows:
1. The Debtor has full power and authority to enter into and
perform this Security Agreement; this Security Agreement has been duly entered
into and delivered and constitutes a legal, valid and binding obligation of the
Debtor enforceable in accordance with its terms except as the enforcement hereof
may be limited by bankruptcy, insolvency, reorganization, arrangement,
moratorium or other laws of general application relating to or affecting the
enforcement of creditors' rights and by general equitable principles (regardless
of whether considered in a proceeding in equity or at law).
2. The Debtor has good and marketable title to the Collateral and
the Collateral is not subject to any liens, encumbrances or security interests
except as provided herein and in the Mortgage.
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3. The Debtor is keeping the Collateral at the locations listed on
Schedule A hereto.
4. The Debtor's chief executive office is at 3600 Rio Vista
Avenue, Orlando, Florida 32811. The Debtor also maintains an office at 3501 Rio
Vista Avenue, Orlando, Florida 32811.
5. The Collateral will be used for commercial or business purposes
only.
5. Covenants of the Debtor. The Debtor agrees that it shall:
1. not secrete or abandon any of the Collateral and shall not
remove any of the Collateral or the records concerning the Collateral from their
present location or change the location of its registered office or chief
executive office without prior written notice to the Secured Party given at
least thirty (30) days prior to such removal or change and then only if the
Debtor assists the Secured Party in filing or recording any financing statements
or other notices deemed necessary by the Secured Party to maintain the continued
perfection of its security interest in the Collateral;
2. promptly send notice to the Secured Party of any damage or loss
of any of the Collateral having a value of more than $25,000;
3. allow the Secured Party full access to the Collateral and the
records pertaining thereto as provided in the Loan Agreement;
4. reimburse the Secured Party upon demand for all expenses,
including without limitation, reasonable attorneys' fees and expenses incurred
by the Secured Party in connection with perfecting the security interest granted
herein or the satisfaction thereof;
5. unless waived by the Secured Party, obtain and furnish to the
Secured Party a landlord waiver and/or mortgagee waiver, if any of the
Collateral is maintained in leased, rented or mortgaged facilities;
6. keep the Collateral insured against loss or damage by fire and
extended coverage naming Secured Party as mortgagee and loss payee under all
policies of insurance insuring the Collateral, and shall assign and deliver the
policies and/or certificates thereof (including without limitation any renewals
and/or changes) to Secured Party. If the Debtor fails to obtain any insurance
required by this subsection (f), it shall be lawful for Secured Party to effect
such insurance, and any amounts paid by Secured Party in respect thereof shall
become an addition to the Debtor's Obligations secured hereby. Each insurance
policy issued with respect to the Collateral shall provide that no termination,
cancellation, expiration, material modification or lapse of any such insurance
policy or policies shall occur without at least thirty (30) days advance written
notice to the Debtor and to the Secured Party. In the event that any of the
aforesaid policies procured by the Debtor shall fail to provide that all losses
thereunder shall be payable to the Secured Party, the Debtor hereby assigns to
said Secured Party all of the proceeds of any and all of said policies as
security for the Secured Obligations and agrees to accept said proceeds in trust
for Secured Party, and to forthwith deliver the same to the Secured Party in the
exact form received (with the endorsement of the Debtor where necessary),
provided, however, that so long as no Event of Default or Potential Default has
occurred and is continuing, the Secured Party shall promptly remit proceeds
received by it to the Debtor. Secured Party is irrevocably appointed
attorney-in-fact for the Debtor, with full power of substitution and revocation,
to compromise, settle or release any claims pertaining to or arising out of said
policies, and to take possession of and endorse in the name of the Debtor any
check or other instrument for the payment of money representing the proceeds of
said policies. The Debtor shall not effect any settlement, compromise or release
of any insurance claim involving a loss of $25,000 or more without Secured
Party's prior written consent;
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7. keep the Collateral under conditions which preserve the value
thereof and maintain the Collateral in good repair, making all necessary repairs
and replacements, and whenever in the Secured Party's sole judgment the
Collateral or any part thereof shall require any repairs or replacements in
order to maintain it in a first class and marketable condition or to preserve it
from excessive depreciation or wear, the Debtor will within thirty (30) days
after having been so advised by the Secured Party make such repairs or
replacements or cause the same to be made;
8. not assign, transfer, dispose of, sell, encumber or grant a
security interest in the Collateral to any person or entity;
9. not use or permit the Collateral to be used for any unlawful
purpose or in violation of any federal, state or municipal law, statute or
ordinance or any rules, decrees, or regulations issued thereunder, or for hire,
unless the consent of the Secured Party is first obtained; and
10. not permit the Collateral to become a part of or to be affixed
to any real property of any person or entity (including, without limitation,
Debtor) without first making arrangements satisfactory to Secured Party to
protect its security interest.
6. Duration of Security Interest. The Secured Party, and its successors
and assigns, shall hold the security interest created hereby upon the terms of
this Security Agreement, and this Security Agreement shall continue, until all
the Secured Obligations have been paid in full or performed in full. The
foregoing sentence notwithstanding, if any payment by the Debtor is rescinded or
must otherwise be restored or returned by the Secured Party for any reason
(including without limitation (a) the invalidity or unenforceability of the
obligation paid, for any reason; (b) the failure or insufficiency of
consideration for the obligation paid; or (c) the insolvency, bankruptcy or
reorganization of the Debtor), then this Security Agreement and the security
interests arising hereunder shall continue to be effective, or be reinstated, as
the case may be, as though such payment had not been made.
7. Default. At the option of the Secured Party, the happening of any of
the following events shall constitute a default under this Security Agreement
(an "Event of Default"):
1. the occurrence of any default under the Loan Agreement or the
Indenture;
2. failure of the Debtor to keep or perform or observe any term,
obligation or provision of this Security Agreement;
3. the loss, theft, damage or destruction of the Collateral if not
covered by insurance, the encumbrance of the Collateral, or any part thereof or
the making of a levy, seizure or attachment thereof or thereon; or
4. if the Collateral should become the subject matter of
litigation which would, in the reasonable opinion of the Secured Party, result
in substantial impairment or loss of the security intended to be provided by
this Security Agreement.
8. Remedies. Upon the occurrence of any Event of Default, the Secured
Party may at its option declare any and all of the Secured Obligations to be
immediately due and payable; and, in addition to exercising all other rights or
remedies available under applicable law, this Security Agreement or any other
agreement between the parties, proceed to exercise with respect
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to the Collateral all rights, options and remedies of a secured party upon
default as provided for under the Uniform Commercial Code. The rights of the
Secured Party upon any Event of Default shall include, without limitation, the
following:
1. The right to enter any premises where any Collateral may be
located for the purpose of taking possession or removing the same;
2. The right to require the Debtor to assemble the Collateral and
make them available to the Secured Party at a place to be designated by the
Secured Party which is reasonably convenient to the Debtor and the Secured
Party;
3. The right to sell the Collateral at public or private sale in
one or more lots. The Secured Party may bid upon and purchase any or all of the
Collateral at any public sale thereof, and shall be entitled to apply the unpaid
portion of the Secured Obligations as a credit against the purchase price. The
Secured Party may bid or become a purchaser at any such sale, if public. The
Secured Party shall be entitled to apply the proceeds of any such sale to the
satisfaction of the Secured Obligations and to expenses incurred in realizing
upon the Collateral in accordance with the Uniform Commercial Code;
4. The right to recover the reasonable expenses of taking
possession of any of the part of Collateral that may be reduced to possession,
preparing the Collateral for sale, selling the Collateral, and other like
expenses, together with court costs and reasonable attorneys' fees incurred in
realizing upon the Collateral or enforcing any provision of this Security
Agreement;
5. The right to retain the Collateral and become the owner
thereof, in accordance with the provisions of the Uniform Commercial Code;
6. The right to proceed by appropriate legal process at law or in
equity to enforce any provision of this Security Agreement or in aid of the
execution of any power of sale, or for foreclosure of the security interest of
the Secured Party, or for the sale of the Collateral under the judgment or
decree of any court.
9. Cumulative Remedies. The rights and remedies of the Secured Party
shall be deemed to be cumulative, and any exercise of any right or remedy shall
not be deemed to be an election of that right or remedy to the exclusion of any
other right or remedy. Notwithstanding the foregoing, the Secured Party shall be
entitled to recover by the cumulative exercise of all remedies no more than the
sum of (a) the Secured Obligations remaining outstanding at the time of exercise
of remedies, plus (b) the reasonable costs, fees and expenses the Secured Party
is otherwise entitled to recover.
10. Filing Fees. The Debtor shall pay all costs of filing any
financing, continuation or termination statement necessary to perfect or protect
or to maintain or terminate the perfection or protection of the Secured Party's
security interest created by this Security Agreement; or shall upon demand
reimburse the Secured Party for such costs, and until reimbursement such costs
shall be a part of the Secured Obligations secured by this Security Agreement.
11. Further Assurance and Acknowledgment. The Debtor shall sign from
time to time such other documents and instruments, and take such other action,
as the Secured Party may request to more fully create and maintain the security
interest in the Collateral intended to be created in this Security Agreement,
and to perfect any such interest. The Debtor acknowledges
-6-
<PAGE>
that the Secured Party does not assume any of the Debtor's obligations or duties
under any agreement containing rights to payment which are Collateral and does
not assume the Debtor's obligations connected with the acquisition, preparation
or holding (except to the extent required by the Uniform Commercial Code) of the
Collateral. The Debtor hereby authorizes the Secured Party to file financing
statements, signed only by the Secured Party, in all places where it is
necessary or appropriate to perfect the Secured Party's security interest in the
Collateral.
12. Other Provisions.
1. Failure by the Secured Party to exercise any right shall not be
deemed a waiver of that right, and any single or partial exercise of any right
shall not preclude the further exercise of that right. Every right of the
Secured Party shall continue in full force and effect until such right is
specifically waived in a writing signed by the Secured Party.
2. If any part, term or provision of this Security Agreement is
held by any court to be prohibited by any law applicable to this Security
Agreement, the rights and obligations of the parties shall be construed and
enforced with that part, term or provision enforced to the greatest extent
allowed by law, or if it is totally unenforceable, as if this Security Agreement
did not contain that particular part, term or provision.
3. The headings in this Security Agreement have been included for
ease of reference only, and shall not be considered in the construction or
interpretation of this Security Agreement.
4. This Security Agreement shall inure to the benefit of the
Secured Party, its successors and assigns, and all obligations of the Debtor
shall bind its successors and assigns.
5. To the extent allowed under the Uniform Commercial Code, this
Security Agreement shall in all respects be governed by and construed in
accordance with the laws of the State of Florida.
6. The security interest granted by this Security Agreement shall
continue to be effective irrespective of any retaking of possession of
Collateral until all Secured Obligations have been paid or performed in full.
7. Any requirement of the Uniform Commercial Code or other
applicable law of reasonable notice shall be met if such notice is given at
least ten (10) Business Days before the time of sale, disposition or other event
or thing giving rise to the requirement of notice.
8. All notices and other communications hereunder shall be in
writing and shall be delivered by hand, sent by telex or telecopy, or mailed by
certified mail, return receipt requested, postage prepaid, addressed as
indicated below:
(i) If to the Debtor:
ELXSI
4209 Vineland Road
Orlando, Florida 32811
Attn: President
-7-
<PAGE>
(ii) If to the Secured Party:
Orange County Industrial Development Authority
c/o Economic Development
Commission of Mid-Florida, Inc.
200 Robinson Street, Suite 600
Orlando, Florida 32801
The address of any party for any purpose may be changed at any
time and from time to time in the manner provided for in this Section 12(h) and
shall be the most recent such address furnished in writing to the other party. A
notice shall be deemed to have been given when dispatched, if by telex or
telecopy, addressed as aforesaid (or to such other designated address), or if by
mail on the third Business Day after it is enclosed in an envelope, addressed to
the party to be notified at such address stated above (or to such other
designated address), properly stamped, sealed and deposited in the United States
mail.
9. The Debtor and the Secured Party may at any time, and from time
to time, change the address to which notice shall be mailed by written notice
setting forth the changed address.
-8-
<PAGE>
IN WITNESS WHEREOF, the Debtor and the Secured Party have caused this
instrument to be effective as of the date first above written.
DEBTOR:
ELXSI
BY:
----------------------------------------
TITLE:
-------------------------------------
SECURED PARTY:
ORANGE COUNTY INDUSTRIAL DEVELOPMENT
AUTHORITY
BY:
----------------------------------------
TITLE:
-------------------------------------
-9-
<PAGE>
SCHEDULE A
LOCATIONS OF COLLATERAL
3600 Rio Vista Avenue
Orlando, Florida, 32811
3501 Rio Vista Avenue
Orlando, Florida, 32811
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,222,000
<SECURITIES> 0
<RECEIVABLES> 3,821,000
<ALLOWANCES> 87,000
<INVENTORY> 10,521,000
<CURRENT-ASSETS> 18,698,000
<PP&E> 28,984,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 59,312,000
<CURRENT-LIABILITIES> 6,560,000
<BONDS> 0
<COMMON> 5,000
0
0
<OTHER-SE> 34,827,000
<TOTAL-LIABILITY-AND-EQUITY> 59,312,000
<SALES> 64,719,000
<TOTAL-REVENUES> 64,719,000
<CGS> 50,993,000
<TOTAL-COSTS> 59,219,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,103,000
<INCOME-PRETAX> 5,499,000
<INCOME-TAX> (524,000)
<INCOME-CONTINUING> 6,023,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,023,000
<EPS-PRIMARY> 1.22
<EPS-DILUTED> 1.18
</TABLE>
