<PAGE>
UNITED STATES 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 April 1, 2000
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File #0-18018
AEROVOX INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 76-0254329
-------- ----------
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
740 Belleville Avenue, New Bedford, MA 02745
-----------------------------------------------------
(Address of principal executive offices) (Zip Code)
(508) 994-9661
--------------
Registrant's telephone number
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 [_]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date:
At May 15, 2000, 6,129,225 shares of registrant's common stock (par value,
$1.00) were outstanding, 700,000 of which are restricted and redeemable under
Stockholder Agreements as described in the footnotes to the financial statements
included in the registrant's most recent Annual Report on Form 10-K.
<PAGE>
AEROVOX INCORPORATED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
These unaudited condensed consolidated financial statements should be read
in conjunction with Aerovox Incorporated's ("the Company") Annual Report on
Form 10-K for the fiscal year ended January 1, 2000, and the consolidated
financial statements and footnotes included therein. In the opinion of
management, the accompanying consolidated financial statements include all
adjustments, consisting of only normal recurring accruals, necessary to
present fairly the financial position, results of operations and cash flows
of the Company. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
Securities and Exchange Commission rules and regulations. The consolidated
balance sheet data as of January 1, 2000, included herein, is derived from
the Company's audited financial statements as of January 1, 2000.
Fiscal 2000 consists of 52 weeks, and will end on December 30, 2000.
Certain reclassifications have been made to the prior year's consolidated
financial statements to conform to the current presentation.
(2) INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
April 1, 2000 January 1, 2000
-------------------------------------------------------------------------
Domestic Foreign Total Domestic Foreign Total
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Raw materials $ 5,575 $3,735 $ 9,310 $ 5,948 $3,429 $ 9,377
Work in process 2,069 713 2,782 1,949 359 2,308
Finished goods 4,892 999 5,891 4,838 988 5,826
- -------------------------------------------------------------------------------------------------------------
$12,536 $5,447 $17,983 $12,735 $4,776 $17,511
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(3) NET INCOME PER SHARE (BASIC AND DILUTED)
Net income per share is computed based on the weighted average number of
common and common equivalent shares outstanding during the period,
calculated under the treasury stock method.
<TABLE>
<CAPTION>
For the Three Months Ended For the Three Months Ended
April 1, 2000 April 3, 1999
--------------------------------------- ---------------------------------------
Net Income Shares Per Share Amount Net Income Shares Per Share Amount
---------- ------ ---------------- ---------- ------ ----------------
<S> <C> <C> <C> <C> <C> <C>
BASIC EARNINGS PER SHARE $448 5,411,192 $0.08 $330 5,393,803 $0.06
- ----------------------------------------------------------------------------------------------------------------
DILUTIVE SECURITIES:
Options - 40,536 -0-
- ----------------------------------------------------------------------------------------------------------------
Redeemable - 700,000 -0-
Common Stock
- ----------------------------------------------------------------------------------------------------------------
DILUTED EARNINGS PER SHARE $448 6,151,728 $0.07 $330 5,393,803 $0.06
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Options to purchase 293,375 shares of common stock at prices ranging from
$4.50 to $9.625 per share were outstanding at April 1, 2000, but were not
included in the computation of diluted earnings per share because the
exercise prices of the options were greater than the average market price
of common shares for the period. Options to purchase 328,300 shares of
common stock at prices ranging from $2.438 to $3.625 were outstanding at
April 1, 2000, and were included in the calculation of diluted earnings per
share because they had a dilutive effect on earnings per share for the
three months ended April 1, 2000. Under the treasury stock method, the
equivalent of 40,536 common shares were added to the average number of
outstanding common shares in computing diluted earnings per share.
Redeemable common stock aggregating 700,000 shares are included in the
calculation of diluted earnings per share because the average fair market
value of the Company's outstanding common stock for the three months ended
April 1, 2000, exceeds the book value per common share of the Company at
April 1, 2000. The redemption agreement stipulates that these shares can be
redeemed at the book value per common share starting on April 5, 2003
through May 5, 2003, at the holders' discretion. It is presumed under
current conditions that, at the conclusion of the period of restriction,
the redeemable common stock would be registered and held or traded on the
open market, thereby diluting earnings per share.
Options to purchase 848,875 shares of common stock at prices ranging from
$2.813 to $9.625 per share were outstanding at April 3, 1999 but were not
included in the computation of diluted earnings per share because the
exercise prices of the options were greater than the average market price
of common shares.
<PAGE>
(4) COMPREHENSIVE INCOME
The Company's comprehensive income was as follows (in thousands):
<TABLE>
<CAPTION>
For the Three Months Ended
---------------------------------
April 1, 2000 April 3, 1999
--------------- ---------------
<S> <C> <C>
Net income $448 $ 330
Foreign currency translation adjustment,
net of taxes (98) (223)
---- -----
Total comprehensive income $350 $ 107
==== =====
</TABLE>
(5) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). In June 1999, SFAS 137
"Deferral of the Effective Date of SFAS 133" was issued to amend the
effective date of SFAS 133 to fiscal years beginning after June 15, 2000.
The Statement establishes accounting and reporting standards for derivative
instruments and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the balance
sheet and measure those instruments at fair value. Under the new Statement,
the accounting for changes in the fair value of a derivative (that is,
gains and losses) depends on the intended use of the derivative and the
resulting designation. The Company will adopt SFAS 133 for its fiscal year
beginning December 31, 2000. Management estimates that the effect of
adopting SFAS 133 would not have a material impact on the Company's
financial position or results of operations.
In March 2000, the Financial Accounting Standard Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation - an interpretation of APB Opinion No. 25" ("FIN 44"). FIN 44
clarifies the application of APB Opinion No. 25 and among other issues
clarifies the following: the definition of an employee for purposes of
applying APB Opinion No. 25; the criteria for determining whether a plan
qualifies as a noncompensatory plan; the accounting consequence of various
modifications to the terms of previously fixed stock options or awards; and
the accounting for an exchange of stock compensation awards in a business
combination. FIN 44 is effective July 1, 2000, but certain conclusions in
FIN 44 cover specific events that occurred after either December 15, 1998
or January 12, 2000. The Company does not expect the application of FIN 44
to have a material impact on the Company's financial position or results of
operations.
(6) DEBT
On March 21, 2000, the Company entered into a fifteen-year financing
agreement with a bank and an investment company affiliated with the bank.
Under the terms of the agreement, the Company received $10.2 million of
adjustable rate financing collateralized by the Company's new facility in
New Bedford, Massachusetts, which includes real property and manufacturing
equipment. The Company entered into a staged interest rate swap in order to
fix the interest rate at 7.66% over fifteen years. As of July 1, 2000,
$6.5 million of the $10.2 million will be covered by the interest rate swap
and, as of September 1, 2000, the remaining amount borrowed will bear
<PAGE>
interest at the same rate. Until the interest rate swaps become effective,
the outstanding principal balance will bear interest at the prevailing
market rates (6.14% at April 1, 2000). Including all amortizable fees, the
effective interest rate is 9.26%. The agreement contains a financial
covenant requiring the Company to maintain a minimum debt service coverage
ratio. The Company was in compliance with this covenant at April 1, 2000.
(7) In December 1999, the Company recorded charges of $5,676,000 related to the
exit costs from certain activities and asset impairments arising from the
consolidation and relocation of certain facilities. Of this amount, charges
of $4,723,000 related to the impairment of property, plant and equipment
and $344,000 related to the write-off of certain inventory were recorded in
the Company's Consolidated Statements of Operations and against the
respective assets. A charge of $609,000 related to involuntary employee
terminations was recorded in the Company's Consolidated Statement of
Operations and accrued for as of January 1, 2000. The involuntary
terminations were a result of the closure and consolidation of plants in
Mexico and the closure of foil processing operations in the United Kingdom.
As a result of these actions, 54 employees were identified for termination,
primarily from production, supervisory and manufacturing support functions.
In the three months ended April 1, 2000, the Company has terminated 14
employees and paid $51,000 of involuntary termination costs which were
accrued as of January 1, 2000.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
Three Months Ended April 1, 2000 compared with Three Months Ended April 3, 1999.
Net sales for the first quarter of 2000 totaled $30.2 million compared with
$28.4 million for the first quarter of 1999, an increase of $1.8 million or
6.5%. The increase in revenue for the quarter resulted from increased sales at
BHC Aerovox Ltd. ("BHC"), the Company's U.K. subsidiary, and the addition of CGE
Aerovox ("CGE") in Mexico City which was acquired in the second quarter of 1999.
Price declines in the United States and the Company's discontinuation of
unprofitable products partially offset the sales increases.
Gross profits for the first quarter of 2000 increased to $5.2 million or 17.2%
of net sales compared with $5.0 million or 17.5% of net sales for the same
period in 1999. Gross margin declined slightly due to current period
expenditures totaling approximately $120,000 to relocate certain product lines
within Mexico. These activities are part of the Company's previously announced
restructuring initiative.
Selling, general and administrative expenses for the first quarter of 2000
totaled $4.2 million or 13.8% of net sales compared with $3.8 million or 13.5%
of net sales for the same period in 1999. The increase resulted from the
acquisition of CGE.
Income from operations during the first quarter of 2000 declined to $1.0 million
from $1.1 million the first quarter a year earlier due to the relocation costs
noted above.
Interest expense for the first quarter of 2000 totaling $431,000 increased
because of debt incurred to acquire CGE in April 1999.
Income before taxes was $643,000 or 2.1% compared to $602,000 or 2.1% in the
first quarter of 1999.
The provision for income taxes for the first quarter of 2000 was $195,000 or 30%
of pretax income, reflecting the impact of utilization of net operating loss
carryforwards, compared with $272,000 or 45% of pretax income in the first
quarter of 1999, when the benefit of losses at BHC was reduced by alternate
minimum taxes.
Net income for the quarter was $448,000 or $0.08 per common share-basic and
$0.07 per share-diluted, compared with net income in the first quarter of 1999
of $330,000 or $0.06 per common share-basic and diluted.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents at the end of the first quarter of 2000 totaled
$10.7 million compared with $0.7 million as of January 1, 2000. Working capital,
as a result of the increase in cash equivalents and accounts receivable offset
by an increase in accounts payable, totaled $27.1 million at April 1, 2000,
compared to $15.0 million at January 1, 2000. Current ratio at April 1, 2000 was
2.2:1, compared with a
<PAGE>
ratio of 1.7:1 at January 1, 2000. At the end of the first quarter of 2000, the
Company had borrowings of $35.7 million compared with $21.7 million at January
1, 2000. Of the increase, $10.2 million resulted from debt incurred to finance
the Company's new facility in New Bedford, Massachusetts, and approximately
$3.8 million represents funding of operations through the Company's revolving
lines of credit.
On March 21, 2000, the Company entered into a fifteen-year financing agreement
with a bank and an investment company affiliated with the bank. Under the terms
of the agreement, the Company received $10.2 million of adjustable rate
financing collateralized by the Company's new facility in New Bedford,
Massachusetts, which includes real property and manufacturing equipment. The
Company entered into a staged interest rate swap in order to fix the interest
rate at 7.66% over fifteen years. As of July 1, 2000, $6.5 million of the
$10.2 million will be covered by the interest rate swap and, as of September 1,
2000, the remaining amount borrowed will bear interest at the same rate. Until
the interest rate swaps become effective, the outstanding principal balance will
bear interest at the prevailing market rates (6.14% at April 1, 2000). Including
all amortizable fees, the effective interest rate is 9.26%. The agreement
contains a financial covenant requiring the Company to maintain a minimum debt
service coverage ratio. The Company was in compliance with this covenant at
April 1, 2000.
The Company's revolving credit agreement with a U.S. bank provides for a credit
line of $14.4 million and is collateralized by certain accounts receivable and
inventory. The agreement, which matures on May 31, 2002, includes several
borrowing options which, for the quarter ending April 1, 2000, had interest
rates ranging from 7.78% to 9.00%. The outstanding balance of the credit line at
April 1, 2000 was $7.9 million. The Company was in compliance with all financial
covenants specified by the agreement at April 1, 2000.
BHC has an agreement with a bank which provides for (i) a ten-year mortgage on
real property in the amount of 0.5 million British pounds with an outstanding
balance at April 1, 2000 of $0.7 million, (ii) a five-year loan collateralized
by machinery and equipment in the amount of 0.5 million British pounds with an
outstanding balance at April 1, 2000 of $0.7 million and (iii) an "Overdraft"
credit line allowing borrowings in British pounds, euros or U.S. dollars up to
the equivalent of 2.5 million British pounds with an outstanding balance at
April 1, 2000 of $2.1 million. With the exception of the five-year loan
collateralized by plant and machinery, which has a fixed rate of interest of
7.15%, interest is charged at variable rates based upon the bank base rate. The
ten-year mortgage agreement includes certain financial covenants. At January 1,
2000 BHC was in violation of two covenants regarding interest coverage and net
worth. On February 24, 2000 the lender waived its right to accelerate payments
on this loan with respect to the violation through January 1, 2001.
BHC has an agreement with another bank which provides for a five-year loan at
8.00% per annum collateralized by machinery and equipment in the amount of
0.8 million British pounds with an outstanding balance at April 1, 2000 of
$1.5 million.
The Company also has a term loan with an equipment financing company with an
outstanding balance at April 1, 2000 of $7.4 million. This loan, collateralized
by equipment at the Company's New Bedford and Huntsville facilities, matures in
2005, and bears an annual interest rate of 7.8%. The Company was in compliance
with all financial covenants of the agreement at April 1, 2000.
Other long-term debt of the Company consists of an Industrial Revenue Bond
maturing on July 1, 2002, with an annual interest rate of 7.42% and quarterly
payments on the principal. The outstanding balance at April 1, 2000 was
$1.2 million.
<PAGE>
The Company also has two notes payable to the original shareholders of
Capacitores Unidos, S.A. de C.V. in the amounts of $1.1 million and
$0.4 million, accruing interest at rates of 5.22% and 5.32% per annum,
respectively, and due April 4, 2001 and April 5, 2002, respectively.
Aerovox de Mexico, S.A. de C.V., the Company's Mexico subsidiary, has two notes
payable to Compania General de Electronica, S.A. de C.V., in the amounts of
$1.5 million and $0.2 million which bear interest at 5.10% and 5.22% per annum,
respectively, and mature at April 1, 2000 and April 1, 2001, respectively.
Aerovox de Mexico also has a bank loan with an outstanding balance at April 1,
2000 of $1.0 million, bearing interest at 9.67% of which $0.8 million is due
June 5, 2000 and $0.2 million is due June 9, 2000.
Management believes existing cash and short-term investments together with funds
generated from operations will be sufficient to meet operating requirements for
the next 12 months.
OTHER MATTERS
ENVIRONMENTAL STATUS
On December 2, 1999, the Company reached a final agreement with the U.S.
Environmental Protection Agency regarding the remediation of polychlorinated
biphenyls ("PCBs") present in its New Bedford facility. Under the agreement, the
Company has agreed to relocate its Belleville Avenue operations to another site
within 16 months, demolish the existing building, and cap the site by November
2011.
In fiscal 1997, the Company recorded a provision of $13.0 million for
environmental costs, plant remediation and impairment of assets. The provision
included a $7.2 million reserve for environmental remediation and associated
consulting, legal and engineering costs posted as a result of the identification
of PCBs in the plant. From that date through April 1, 2000, $0.6 million was
charged to the reserve, primarily for legal and engineering expenses.
Management believes the reserve is adequate for the cost of activities described
above.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). In June 1999 SFAS 137 "Deferral of the
Effective Date of SFAS 133" was issued to amend the effective date of SFAS 133
to fiscal years beginning after June 15, 2000. The Statement establishes
accounting and reporting standards for derivative instruments and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the balance sheet and measure those instruments at fair
value. Under the new Statement, the accounting for changes in the fair value of
a derivative (that is, gains and losses) depends on the intended use of the
derivative and the resulting designation. The Company will adopt SFAS 133 for
its fiscal year beginning December 31, 2000. Management estimates that the
effect of adopting SFAS 133 would not be material to the consolidated financial
statements.
In March 2000, the Financial Accounting Standard Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation - an interpretation of APB Opinion No. 25" ("FIN 44").
<PAGE>
FIN 44 clarifies the application of APB Opinion No. 25 and among other issues
clarifies the following: the definition of an employee for purposes of applying
APB Opinion No. 25; the criteria for determining whether a plan qualifies as a
noncompensatory plan; the accounting consequence of various modifications to the
terms of previously fixed stock options or awards; and the accounting for an
exchange of stock compensation awards in a business combination. FIN 44 is
effective July 1, 2000, but certain conclusions in FIN 44 cover specific events
that occurred after either December 15, 1998 or January 12, 2000. The Company
does not expect the application of FIN 44 to have a material impact on the
Company's financial position or results of operations.
SAFE HARBOR STATEMENT
This form 10-Q contains forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. Such statements are based on management's current expectations and are
subject to a number of uncertainties and risks that could cause actual results
to differ materially from those described in the forward-looking statements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
6 (a). Exhibits: A list of exhibits filed with this Report on Form 10-Q
appears at page 10 hereof, which list is incorporated herein by reference.
6 (b). Reports on Form 8-K: On May 9, 2000, the Company filed Form 8-K relating
to the promotion of F. Randal Hunt to Senior Vice President of Finance and Chief
Financial Officer.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
AEROVOX INCORPORATED
DATE May 16, 2000 BY /S/ F. RANDAL HUNT
----------------------
F. Randal Hunt
Senior Vice President and Chief Financial Officer
<PAGE>
AEROVOX INCORPORATED
Condensed Consolidated Statements of Operations
(Amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
April 1, April 3,
2000 1999
---- ----
<S> <C> <C>
Net sales $ 30,225 $ 28,375
Cost of sales 25,026 23,402
-------- --------
Gross profit 5,199 4,973
Selling, general and administrative expenses 4,179 3,839
-------- --------
Income from operations 1,020 1,134
Other income (expense):
Interest expense (431) (394)
Other income (expense) 54 (138)
-------- --------
Income before income taxes 643 602
Provision for income taxes 195 272
-------- --------
Net income $ 448 $ 330
======== ========
Earnings per share-basic $ 0.08 $ 0.06
======== ========
Earnings per share-diluted $ 0.07 $ 0.06
======== ========
</TABLE>
The accompanying notes are in integral part of the unaudited
condensed consolidated financial statements.
<PAGE>
AEROVOX INCORPORATED
Condensed Consolidated Balance Sheets
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
April 1, Jan. 1,
2000 2000
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents 10,735 $ 742
Accounts receivable, net 19,569 14,881
Inventories 17,983 17,511
Prepaid expenses and other current assets 2,092 2,214
-------- --------
Total current assets 50,379 35,348
Property, plant and equipment, net 29,085 27,521
Goodwill, net 3,881 3,989
Deferred income taxes 3,592 3,592
Restricted cash 753 -
Other assets 259 70
-------- --------
Total assets $ 87,949 $ 70,520
======== ========
LIABILITIES, REDEEMABLE COMMON STOCK AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 10,962 $ 8,285
Accrued compensation and related expenses 2,695 2,540
Other accrued expenses 2,386 2,090
Current maturities of long-term debt 7,121 7,362
Income taxes 80 47
-------- --------
Total current liabilities 23,244 20,324
Deferred income taxes 4,093 4,100
Industrial revenue bond 673 800
Long-term debt, net of current maturities 27,916 13,571
Reserve for environmental costs and plant
remediation 6,470 6,470
Deferred compensation 389 503
Redeemable common stock 2,581 2,546
Stockholders' equity:
Common stock 5,425 5,404
Additional paid-in capital 1,119 1,078
Retained earnings 16,382 15,969
Accumulated other comprehensive loss (343) (245)
-------- --------
Total stockholders' equity 22,583 22,206
-------- --------
Total liabilities, redeemable common
stock and stockholders' equity $ 87,949 $ 70,520
======== ========
</TABLE>
The accompanying notes are in integral part of the unaudited
condensed consolidated financial statements.
<PAGE>
AEROVOX INCORPORATED
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------------
April 1, April 3,
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 448 $ 330
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 1,124 1,192
Changes in operating assets and liabilities:
Accounts receivable (4,714) (869)
Inventories (468) 596
Prepaid expenses and other current assets 121 (375)
Accounts payable 2,684 (1,679)
Accrued expenses and other liabilities 406 (474)
Income taxes payable 42 196
-------- -------
Net cash used in operating activities (357) (1,083)
-------- -------
Cash flows from investing activities:
Acquisition of property and equipment (2,656) (264)
Deposit into EPA trust fund and cash
interest received (753) -
Other (118) (66)
-------- -------
Net cash used in investing activities (3,527) (330)
-------- -------
Cash flows from financing activities:
Net borrowings under lines of credit 3,932 1,489
Long-term borrowings 10,748 -
Repayment of long-term debt (694) (461)
Cash paid for debt issuance costs (195) -
Proceeds from employee stock purchase
plan and exercise of stock options 62 -
Net cash provided by financing activities 13,853 1,028
-------- -------
Effects of exchange rate on cash 24 56
-------- -------
Increase (decrease) in cash 9,993 (329)
Cash at beginning of year 742 1,149
-------- -------
Cash at end of period $ 10,735 $ 820
======== =======
</TABLE>
The accompanying notes are in integral part of the unaudited
condensed consolidated financial statements.
<PAGE>
EXHIBIT INDEX
Aerovox Incorporated Form 10-Q
(for quarter ended April 1, 2000)
<TABLE>
<CAPTION>
Exhibit Page/SEC
Item Exhibit Document
- ------- ------------ -------------
<S> <C> <C>
(4) Instruments Defining the Rights of Security Holders,
----------------------------------------------------
Including Indentures.
--------------------
4.9 Filed Herewith:
Construction Loan Agreement dated February 29, 2000
between the Company and KeyBank National Association --- ---
4.10 Filed Herewith:
Assignment of Project Agreement, Dated February 29, 2000
between the Company and KeyBank National Association --- ---
4.11 Filed Herewith:
Commercial Note, dated February 29, 2000, between the
Company and KeyBank National Association --- ---
4.12 Filed Herewith:
First Leasehold Mortgage, Security Agreement,
-
Assignment of Leases and Rents, and Financing statement --- ---
dated February 29, 2000, between the Company and KeyBank
National Association
4.13 Filed Herewith:
Environmental Indemnity Agreement dated February 29,
2000, between the Company and KeyBank National ---
Association
4.14 Filed Herewith:
Note Pledge Agreement, dated March 1, 2000, between the
Company, The Huntington National Bank and KeyBank --- ---
National Association
4.15 Filed Herewith:
Offering Memorandum, dated March 1, 2000, between the
Company and The Huntington National Bank --- ---
4.16 Filed Herewith:
Reimbursement Agreement, dated March 1, 2000, between
the Company, The Huntington National Bank and KeyBank --- ---
National Association
4.17 Filed Herewith:
Remarketing Agreement, dated March 1, 2000, between the
Company and McDonald Investments. --- ---
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
4.18 Filed Herewith:
Trust Indenture dated March 1, 2000, between the Company
and The Huntington National Bank --- ---
</TABLE>
<PAGE>
EXHIBIT 4.9
CONSTRUCTION LOAN AGREEMENT
---------------------------
This AGREEMENT made as of the 29/th/ day of February, 2000, by and between
KeyBank National Association, a national banking association having a place of
business at One Canal Plaza, Portland, Maine 04101-4035 (hereinafter referred to
as "Lender"), and Aerovox Incorporated, a Delaware corporation having a place of
business at 740 Belleville Avenue, New Bedford, Massachusetts 02745 (hereinafter
referred to as "Borrower").
W I T N E S S E T H:
- - - - - - - - - -
In consideration of the mutual covenants herein contained and for other
good and valuable consideration, receipt whereof is hereby acknowledged, the
parties hereto hereby agree as follows:
1. Recitals
--------
1.1. Borrower is the owner of a leasehold estate under a certain Sublease
dated January 4, 2000 ("Sublease") between New Bedford Redevelopment Authority,
a body politic and corporate of the Commonwealth of Massachusetts ("Sublessor")
and Borrower, as Sublessee, said Sublease describing premises ("Leased
Premises") located at New Bedford Industrial Park, John Vertente Boulevard
Extension, City of New Bedford, County of Bristol, Commonwealth of Massachusetts
(more particularly described in Exhibit "A" annexed hereto), and proposes to
incur certain costs and expenses in connection with the construction of an
industrial building on the Premise, together with related land improvements
(such construction and improvements being herein sometimes referred to as the
"Project" and hereinafter collectively called the "Improvements") in accordance
with (i) the plans, drawings, and specifications (more particularly described in
Exhibit "B" annexed hereto), and (ii) plans, drawings and specifications to be
developed and prepared after the date hereof which future plans, drawings and
specifications and all amendments must be approved in writing by Lender prior to
the use thereof by Borrower, subject to the provisions of Section 2.5.3 hereof
(all such existing and future plans, drawings and specifications being
hereinafter collectively referred as the "Plans");
1.2. Borrower simultaneously herewith is executing and delivering to
Lender its Commercial Note bearing even date herewith in the principal amount of
Four Million Five Hundred Thousand and 00/100ths Dollars ($4,500,000.00) (the
"Note") and, as security for the obligations of Borrower thereunder and under
this Agreement, a First Leasehold Mortgage, Security Agreement and Fixture
Filing (the "First Leasehold Mortgage") on the Premises and Improvements and the
personal property to be used thereon, an Assignment of Project Documents, and
UCC-1 Financing Statements to be filed with (i) Secretary of the Commonwealth of
Massachusetts, (ii) Bristol County Registry of Deeds, and (iii) New Bedford City
Clerk's Office (the aforementioned legal documents to be filed in connection
therewith being hereinafter collectively referred to as the "Security
Instruments");
<PAGE>
1.3. Borrower has entered into an agreement dated November 3, 1999 with
Dacon Corporation (hereinafter referred to as the "General Contractor") for
supervision of all construction work on the Premises and to design and construct
the Improvements on the Premises. All construction contracts entered into to
construct the Improvements to the Premises are sometimes hereinafter referred to
as the "Construction Contract(s)" and the General Contractor and all other
contractors and subcontractors listed on Exhibit C, together with all additional
contractors, are sometimes hereinafter collectively referred to as the
"Contractors".
1.4. Lender is willing to lend to Borrower sums of money to be evidenced
by the Note of Borrower upon the terms and covenants and subject to the
conditions hereinafter set forth.
2. Agreements
----------
2.1. Lender's Agreement to Advance Proceeds and Provisions
-----------------------------------------------------
2.1.1. Lender agrees (provided the terms, covenants and agreements
hereof shall be observed and performed, and subject to the conditions
hereinafter set forth) to make advances to Borrower of the proceeds of the Note
up to a total amount not exceeding the principal amount thereof, such proceeds
being hereinafter referred to as the "Loan Proceeds".
2.2. Total Project Budget.
--------------------
2.2.1. Borrower understands that advances of the Loan Proceeds by
Lender are keyed to future disbursements according to the Total Project Budget.
Lender is aware that the General Contractor has commenced the Project prior to
the date hereof with Borrower's authorization, and that the Borrower has paid
the General Contractor therefor. Accordingly, Lender shall reimburse Borrower
for such of those prior disbursements as are elsewhere provided herein. Borrower
covenants and represents that Exhibit "D" attached hereto contains a complete
and full enumeration of all costs (hard, soft, and land costs) which Borrower
anticipates will be incurred in connection with the construction of the
Improvements , Exhibit "D" being hereinafter referred to as the "Total Project
Budget", which costs will be incurred by the list of contractors, subcontractors
and materialmen listed on Exhibit "E" attached hereto.
2.2.2. It is understood and agreed that:
2.2.2.1. the Borrower covenants to pay for the completion of
the Improvements and thus the undistributed Loan Proceeds at all times shall
equal or exceed the amount necessary to pay for the completion of the
Improvements, including (i) all items set forth in the Total Project Budget;
(ii) all incurred cost overruns and incurred costs for items not included in the
Total Project Budget; and (iii) all cost overruns and costs not included in the
Total Project Budget which Lender deems likely to be incurred;
2.2.3.2. the undistributed portion of the Loan Proceeds
allocated to each item in the Total Project Budget, plus the undistributed
portion of the Loan Proceeds allocated to
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"Contingency" in the Total Project Budget, at all times shall equal or exceed
the amount necessary to pay for such items;
2.2.3.3. if for any reason the amount of such undistributed Loan
Proceeds with respect to the Improvements or any of the individually budgeted
items set forth in Exhibit "E" plus such undistributed portion of the Loan
Proceeds allocated to Contingency shall at any time be, or become, or in the
judgment of Lender appear reasonably likely to become, insufficient for the
purpose described in subsection 2.2.3.1. or 2.2.3.2. (regardless of how such
condition may be caused), Borrower will, within five (5) days after written
request by Lender, pay bills in an amount equal to the deficiency and provide
Lender with evidence satisfactory to Lender that Borrower has paid bills in an
amount equal to the deficiency before any further disbursement of the Loan
Proceeds shall be made;
2.2.3.4. if Borrower shall realize any so-called "cost savings"
with respect to any of the individually budgeted items set forth in the Total
Project Budget (as verified by proof satisfactory to Lender), then Lender shall
reallocate the amounts represented by such cost savings to the Contingency
portion of the Total Project Budget for disbursement in accordance with the
terms of this Agreement.
2.3. Conditions Precedent.
--------------------
As conditions precedent to Lender's obligation to make advances from time
to time of the Loan Proceeds, Borrower shall have, at the time of the advance in
question:
2.3.1. A valid subleasehold interest in the Premises and full
possession thereof, free and clear of all liens and encumbrances except such as
are approved by Lender in writing and except such permitted exceptions as are
set forth in Exhibit "G" annexed hereto;
2.3.2. Granted to Lender a first mortgage on the Premises and
Improvements, a first security interest in accordance with the Uniform
Commercial Code in the personal property and fixtures located or to be located
on the Premises, and an assignment of the Approved Agreements with respect to
the Premises and the balance of the loan documents in accordance with the terms
of the Lender's Term Sheet to Borrower under date of January 19, 2000, as
amended February 8, 2000, to secure the Note of Borrower and the obligations of
Borrower under this Agreement;
2.3.3. Delivered to Lender a mortgagee's title insurance policy in
the principal amount of Four Million Five Hundred Thousand and 00/100ths Dollars
($4,500,000.00) issued by Lawyers Title Insurance Corporation (hereinafter
referred to as the "Title Insurance Company") in standard form of mortgagee
title insurance policy (or in such other form as may be required by statute);
said policy (i) to show no prior liens or encumbrances except as set forth in
Exhibit "G" or otherwise approved in writing by Lender, (ii) to exclude any
exceptions for lack of a survey, (iii) to insure against mechanic's and
materialmen's liens; (iv) certain endorsement for variable rate loan; and (v) to
be in all other respects satisfactory to Lender;
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<PAGE>
2.3.4. Approved Agreements. Borrower has entered into and shall
-------------------
deposit with Lender the written Construction Contracts with Contractor. For
purposes of this Agreement the term Approved Agreements is defined to be the
executed Construction Contracts and all additional contracts to be executed in
the future which shall be added to Exhibit "C" from time to time (see Exhibit
"C"), all of which:
2.3.4.1. are in form and substance and containing terms and
conditions (including payments) in all respects satisfactory to Lender, and are
from Contractors and subcontractors acceptable to Lender. Borrower understands
that Lender is concerned with the capacity and experience of all Contractors and
may require that each contractor and subcontractor submit a payment and
performance bond for the contract in form and substance acceptable to Lender, or
in the alternative submit current financial statements in form and content
acceptable to Lender in form and content acceptable to Lender in its sole
discretion.
2.3.5. Deliver to Lender construction cost estimates in form and
content and in as much detail as possible so as to enable Lender to make the
determination that there are sufficient funds to complete the costs of
construction within the Total Project Budget.
2.3.6. Delivered to Lender a certificate of registered engineer and
land surveyor in form and substance satisfactory to Lender;
2.3.7. If Lender does not find the Contractor(s) acceptable from a
financial perspective, or in terms of capacity and experience, Lender reserves
the right to require to be delivered to Lender one hundred percent (100%) dual
obligee labor and materials payment and performance bonds covering each
Contractor and each Construction Contract (unless all site work has been
substantially completed, as verified by Lender's inspecting architect, on the
date of execution of this Agreement) and covering such other subcontractors as
Lender may require from a surety company or companies satisfactory to Lender and
containing terms and conditions satisfactory to Lender;
2.3.8. Delivered to Lender a site valuation report from a qualified
environmental engineer or environmental questionnaire satisfactory to Lender
indicating that no "hazardous materials" (as defined in the Mortgage) is or has
been present on the Premises or areas adjacent to the Premises;
2.3.9. Delivered to Lender a certified survey and site plan showing
(i) the location of all proposed Improvements on the Premises, including all
parking, (ii) all easements affecting the Premises, and (iii) the points of
access to the main road upon which the Premises front;
2.3.10. Delivered to Lender an opinion of Borrower's counsel, in form
and substance satisfactory to Lender, that the loan transaction evidenced hereby
has been duly authorized by the Borrower; that the Security Instruments are
binding obligations of the Borrower;
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2.3.11. Delivered to Lender written assurances satisfactory to Lender
from the Contractors that Lender shall have the same rights as Borrower to the
continued use of the Plan and all services related thereto for the construction
of the Improvements;
2.3.12. Delivered to Lender such evidence in all respects
satisfactory to Lender and its counsel that Borrower has obtained (i) all
necessary governmental authorizations and final construction permits for the
construction of the Project;
2.3.13. Not been in default with respect to any of the provisions of
this Agreement to be performed or observed;
2.3.14. Submitted to Lender all future contractors' contracts,
Lender reserving the right at any time (a) to require submission of all
contracts from (i) each and every contractor and material supplier whose bid
represents five percent (5%) or more of the total construction costs and (ii) a
sufficient number of contractors and material suppliers whose bids collectively
represent not less than ninety percent (90%) of the total costs of construction,
(b) to approve or disapprove of each such contractor and contract; and (c) to
require the assignment of each such contract to Lender in form and contract
acceptable to Lender; and
2.3.15. Qualified for a first advance hereunder within fourteen (14)
days from the date hereof or such other date as may be agreed upon in writing by
the parties hereto.
2.4. Representations of Borrower.
---------------------------
Borrower represents and warrants to Lender:
2.4.1. that two copies of the Plans, initialed by Borrower, Lender
and Architect, have been deposited with Lender;
2.4.2. that the Plans have been filed with all governmental
authorities having jurisdiction, that it has obtained all necessary approvals
thereof and all necessary building permits from said authorities, and that
construction and operation of the Improvements on the Premises will not violate
(i) any zoning, building code, subdivision, or land use ordinance, regulation or
law promulgated by an governmental agency, department or subdivision, including
without limiting the generality of the foregoing, the Department of
Environmental Protection Agency and the City of New Bedford or (ii) any
restrictions of any kind affecting the Premises;
2.4.3. that all utilities and services necessary for the operation of
the Improvements for their intended purpose (including, without limitation,
water, gas, electricity, telephone, and storm and sanitary sewer facilities) are
available at the boundary of the Premises, can be tapped into by Borrower, and
are of sufficient capacity to adequately meet all needs and requirements
necessary for the operation of the Improvements for their intended purposes;
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2.4.4. that there is unrestricted access for the passage of motor
vehicles and individuals to and from the Premises, to and from the main road
upon which the Premises fronts, and all required curb cut or access permits (if
any) have been obtained;
2.4.5. that no part of the Premises is located in a designated flood
hazard area (as defined in the Flood Disaster Protection Act of 1973);
2.4.6. that all test borings and other engineering studies
normally performed by prudent developers of similar projects on similar type
land have been performed and have yielded results normally considered favorable
to permit the utilization and development of the Premises for the purchase
herein referred to;
2.4.7. that, to the best of Borrower's knowledge, there are no
easements across or affecting the Premises which will have any adverse effect
upon the operation of the Improvements for their intended purpose, nor which
will in any way interfere with the construction of the Improvements on the
Premises;
2.4.8. that, to the best of Borrower's knowledge, no defaults exist
under this Agreement, the Note, the Security Instruments or any other document
executed in favor of Lender;
2.4.9. that Borrower is the true, sole and lawful subtenant of
the Premises, is lawfully seized and possessed of the same under a sublease and
has good right, full power and lawful authority to mortgage the same and the
Security Instruments, when properly filed and recorded, will all create valid
first liens on the Premises;
2.4.10. that the execution and delivery of, and the performance by the
Borrower of its obligations under this Agreement, the Note, and the Security
Instruments have been authorized by all appropriate action; and that said
Security Instruments, upon delivery, will be the valid and binding obligations
of the Borrower, enforceable in accordance with their respective terms, and will
not violate or conflict with any other agreements or instruments to which the
Borrower is a party or by which the Borrower is bound;
2.4.11. that, to the best of Borrower's knowledge, no litigation or
proceedings are pending or threatened against Borrower or the Premises, or any
properties adjacent to the Premises, which would or might affect the validity or
priority of the lien of the Mortgage or other security for the Note on the
Premises or which could or might materially affect the Borrower's ability to
perform this Agreement; and
2.4.12. that the making of the loan contemplated hereunder or the
Lender's acquisition of the Note or any of the Security Instruments will not
subject the Lender to any claim for a brokerage commission.
Each of the foregoing representations and warranties shall survive the
making of the loan and each advance of the Loan Proceeds hereunder, and the
Borrower shall indemnify and
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hold harmless the Lender from and against any loss, damage or liability
attributable to the breach thereof, including all fees and expenses incurred in
the defense or settlement of any claim arising therefrom against the Lender.
2.5. Covenants of Borrower.
---------------------
Until payment in full of the Note and all other sums required to be paid by
Borrower under the Security Instruments and this Agreement, Borrower shall:
2.5.1. Cause the Improvements to be constructed, equipped and
completed, diligently and continuously and with all reasonable dispatch, in
accordance with all laws, rules, regulations and requirements of all
governmental authorities having jurisdiction with respect to the Improvements,
the appropriate Board of Fire Underwriters, and the Plans and any modifications
and additions to the Plans which may reasonably be deemed necessary or desirable
by Lender and/or Lender's supervising engineer, which modifications and
additions Borrower agrees to provide within five (5) days after Lender's
reasonable request therefor.
2.5.2. In any event, cause the Improvements to be completed and ready
for occupancy within six (6) months from the date of the Note.
2.5.3. Make no material changes or amendments to the Plans and make
no change orders which increase the price of any contract or subcontract of
$25,000.00 or greater by more than five (5%) percent, or which would in the
aggregate cause the Total Project Budget to increase by more than five percent
(5%), without the prior written approval of Lender. Borrower shall notify Lender
monthly in writing of all change orders.
2.5.4. With respect to any amendments or supplements to the Plans, to
which Lender shall have given its prior written approval, file all such
amendments and supplements with, and obtain all necessary approvals from, all
governmental authorities having jurisdiction thereof and promptly deliver true
copies thereof to Lender.
2.5.5. Permit Lender and its representatives to enter upon the
Premises and inspect the Improvements at all times during normal business hours
and examine all detailed plans, shop drawings, specifications and other books
and records relating to the Premises and the Improvements.
2.5.6. Not enter into any subleases with respect to the Premises
which are not approved by Lender, and to otherwise comply with the terms and
conditions outlined in the First Mortgage with respect to subleases of the
Premises.
2.5.7. Permit Lender to erect an appropriate sign on the Premises at
such location as Lender, in its discretion, may determine, indicating that the
Improvements are being financed by Lender.
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2.5.8. Furnish Lender with financial statements of Borrower, details
relating to the financial condition of Borrower, and such budgets and revisions
of budgets as Lender may require in order to show the estimated cost of
construction of the Improvements and the amount of funds required, at any given
time, to pay for the completion thereof.
2.5.9. In the event that the Improvements shall be damaged or
destroyed by fire or any other casualty and if Lender shall have agreed in
accordance with the terms of the Mortgage to make the proceeds of any fire
insurance available, proceed with the restoration thereof and diligently
prosecute the work of restoration to completion. No part of the cost of such
restoration shall be made the basis of any application for advances under this
Agreement unless said proceeds of insurance shall be first exhausted in the
restoration of the damage to the Improvements.
2.5.10. Cooperate fully with Lender with respect to any proceedings
before any court, board or governmental agency which may in any way affect the
rights of Lender hereunder or any rights obtained by Lender under any of the
Security Instruments and, in connection therewith, permit Lender, at its
election, to participate in any such proceedings.
2.5.11. To construct the Project using first-class workmanship and
materials of the quality called for by the Plans, in accordance with all
restrictions, agreements, and governmental requirements applicable to or
affecting the Project, and to use only materials and equipment to which Borrower
has good, unencumbered title;
2.5.12. To comply with the terms of all contracts for construction of
the Project and any surety bonds issued in connection therewith, and to give
Lender immediate notice of any non-compliance by any party under said contracts
or bonds, of which non-compliance the Borrower has knowledge;
2.5.13. To keep the Premises, buildings and improvements, and all
materials stored on the Premises, free from recorded mechanics' liens, other
liens and claims of record whether inferior or superior to the Mortgage (a
discharge of the Mortgage and taking of a new Mortgage in substitution thereof
shall not release or diminish this obligation), and to keep all buildings,
improvements and materials on the Premises in good repair and insured against
loss by fire and other casualty to an amount and by such companies as shall be
satisfactory to the Lender, and maintain such insurance for the benefit of and
first payable in the case of loss to Lender, with disbursement or disposition of
any insurance proceeds to be made by Lender in accordance with the terms of the
Mortgage.
2.5.14. To furnish waivers of liens or claims upon the Premises and
the buildings, improvements or materials thereon and such other surveys,
appraisals, releases and assurances as Lender from time to time may deem
necessary or may request for its protection, including surety bonds or other
assurances of performance and payment by Borrower and any contractors,
subcontractors or materialmen.
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2.5.15. To pay for such additional architectural, appraisal,
engineering, construction and accounting inspections and reports as Lender in
its judgment may require.
2.5.16. To furnish Lender, upon its request, with executed copies of
all construction contracts and subcontracts, change orders (as outlined in
2.5.3), invoices, bonds, estimates with respect to said construction, and also
upon its request, to give sworn statements setting forth names of contractors,
subcontractors, and all others furnishing labor, materials and services to said
construction, including amounts due, amounts paid and total contract prices, and
Borrower agrees not to change or alter any of the same without Lender's prior
written consent, except change orders as outlined in 2.5.3.
2.5.17. To furnish to Lender monthly within twenty (20) days following
the end of each month a status report of work.
2.6. Advances of Loan Proceeds.
-------------------------
2.6.1. Provided Borrower shall not be in default, and there shall
exist no event of default under this Agreement, or the Note, or any of the
Security Instruments, or any other agreement or instrument executed in
connection herewith, nor shall there exist any condition or event which, with
the giving of notice or lapse of time, or both, would constitute such an event
of default; provided Borrower shall have complied with the provisions of Section
2.3 hereof; and provided Borrower shall have paid all interest charges then due,
and all reasonable supervisory engineers and/or architects' fees and legal fees
incurred in connection with the construction of the Improvements or the Note or
the loan evidenced thereby, and subject to the provisions of Section 2.2 hereof,
Lender, upon written application by Borrower (made not less than five (5)
business days prior to the date of the requested advance under this Section 2.6
and made not more often than once every thirty (30) days), shall make advances
from the Loan Proceeds as hereinafter specified.
2.6.2. The amount of each such advance shall correspond to Paragraph
4 of the Construction Contract, entitled "Progress Payments," the terms and
conditions of said Paragraph 4 being incorporated herein by reference.
2.6.2.1. Notwithstanding anything to the contrary contained
herein or in the Note:
(a) Lender shall not be required to make advances
from loan proceeds if any Contractor whose contract is in excess of $25,000.00
shall (i) declare Borrower in default of a Construction Contract; (ii) file a
lien against the Project which is not bonded and discharged within forty-five
(45) days; and (iii) who is not replaced with a subsequent contractor for a
price which is not in excess of the original contract sum unless such increase
is advanced by the Borrower or if the Architect shall declare Borrower in
default of the Architect's Contract.
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(b) Lender shall not be required to make advances for
materials which have not been installed unless such materials are stored on the
Premises, Lender's inspecting engineer shall have inspected the same and
approved the manner of storage, and Borrower shall have delivered to Lender
certificate(s) of casualty and theft insurance, satisfactory to Lender, covering
such materials. All such materials must be owned by Borrower, free of all liens
and security interests, as evidenced by appropriate bills of sale and such other
evidence as Lender may reasonably require.
2.6.3. Each application for advances pursuant to this Section
2.6. must be accompanied by the following:
2.6.3.1. A completed itemized request for payment,
signed by the Contractor and Borrower on standard AIA Requisition Form or in
such other form approved by Lender;
2.6.3.2. The written report of the Title Insurance
Company as of the date of the making of such advance, affirmatively insuring
such advance and that there are no liens or other encumbrances on the Premises
(other than real estate taxes for the then current year, payment of which is not
in default, the Security Instruments, and such other liens and encumbrances as
appeared in the policy of title insurance delivered prior thereto to Lender) and
no notice of contract or other notice of intention to file liens thereon in any
public office;
2.6.3.3. Lender's inspection and verification, the cost
of such inspection to be borne by Borrower on a per site inspection plus
expenses basis, or, at Lender's option, a certificate of the supervising
engineer or construction supervisor as may be selected by or be satisfactory to
Lender (who will make bi-weekly inspection of the Premises and Improvements on
Lender's behalf, the cost of such inspection to be borne by Borrower), that all
work performed at the site of construction when the advance is requested has
been performed in good and workmanlike manner, that all materials and fixtures
usually furnished and installed at that time have been furnished and installed,
all in accordance with the Plans, and that sufficient hard cost Loan proceeds
remain undisbursed to complete the Improvements in accordance with the Plans and
the Total Project Budget set forth in Exhibit "E";
2.6.3.4. Such lien releases, waivers, or affidavits
from, or the submission of other appropriate forms by Borrower, the Contractor,
subcontractors and materialmen as Lender may require; and
2.6.3.5. An affidavit of Borrower that as of the date of
the advance application, Borrower knows of no material or substantive fact which
will or could in any way prejudice the Improvements or the loan evidenced by the
Note. See the Construction Advance Request Form to be utilized for this purpose
attached hereto as Exhibit "G".
2.6.4. The making of any advance or any part of an advance shall
not be deemed an approval or acceptance by Lender of the work theretofore done
or of materials theretofore furnished.
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2.6.5. Advances of the Loan Proceeds made pursuant to this Section
2.6. shall, at the option of Lender, be made (i) directly to Borrower by check
or wire transfer, or by depositing same in Borrower's checking account with
Lender, (ii) by check payable to Borrower and the applicable Contractor jointly
and delivered either to Borrower or such Contractor, (iii) by check or wire
transfer payable to the applicable Contractor or to other subcontractors,
materialmen, and creditors of the Improvements, (iv) to the Title Insurance
Company by check or wire transfer for disbursement in accordance with Lender's
directions, or (v) by any combination of the above.
2.6.6. Lender shall advance to Borrower the balance of the funds to
be loaned hereunder for the retainage after the last advance requested by
Borrower under Section 2.6.3 above for which Borrower has qualified as soon as
Borrower shall have delivered to Lender all of the items referred to in Section
2.6.3 above and the following:
2.6.6.1. A written certificate of the supervising engineer,
independent architect and/or engineer, or construction supervisor as may be
selected by or be satisfactory to Lender, that the construction of the
Improvements and the installation of the equipment to be installed therein has
been completed in a good workmanlike manner in accordance with the Plans;
2.6.6.2. A certificate by Borrower in form and substance
satisfactory to Lender, listing all categories of Improvement costs and the
amount paid by Borrower with respect to each;
2.6.6.3. The written certificates of the Borrower and the
Contractors that they, and each of them, have received no affidavits or other
notices in connection with the obtaining of a mechanic's lien by any contractor,
subcontractor, materialman or laborer; and
2.6.6.4. A copy of the original permanent certificate of
occupancy and all other applicable certificates, licenses, consents and
approvals issued or required to be issued by the various governmental
authorities having jurisdiction with respect to the Improvements and by the
appropriate Board of Fire Underwriters, or other similar bodies.
2.6.7. Lender, in its discretion, may advance parts or the whole of
any advances before the requirements in Section 2.6.3 or 2.6.6 are complied
with, and all such advances or payments shall be deemed to have been made
pursuant to this Agreement.
2.6.8. Borrower agrees that Lender shall assume no duty with respect
to disbursement of the Loan Proceeds and that any sums disbursed by Lender in
good faith and in reliance upon this Agreement, or the Security Instruments,
shall be secured by the lien of the Security Instruments, and that Lender, in
its discretion, upon notice to Borrower, may make such changes in the method of
disbursing the Loan Proceeds and the conditions precedent thereto as Lender may
deem reasonable.
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2.6.9. At no time shall Lender be under any obligation to make
advances of the Loan Proceeds for any costs or expenses not specifically
provided for in the Total Project Budget or for any costs or expenses in excess
of the specific amount budgeted for such cost or expense in the Total Project
Budget, all of which costs and expenses shall be promptly paid for by Borrower
from Borrower's equity funds unless Lender shall determine, in its sole
discretion, that sufficient funds are otherwise available in the Total Project
Budget and such funds have been reallocated to the Contingency portion of the
Total Project Budget pursuant to Section 2.2.3.4 hereof.
2.6.10. All interest due under the Note shall be paid monthly.
Advances from the Loan Proceeds for payment of other non-interest related soft
costs shall be made (i) only in conjunction with approved advances for hard
construction costs and shall not be the basis for separate advances, and (ii)
only to the extent provided for in the Total Project Budget.
2.6.11. Borrower shall promptly pay when due from Borrower's own
funds, any costs for which Lender shall have no obligation to make advances
pursuant to the terms of this Agreement.
2.6.12. Any sum which, in accordance with any provision of this
Agreement, shall be payable by Borrower to Lender, at the election of Lender,
shall be deemed an advance by Lender to Borrower pursuant to the provisions of
this Agreement, in which event Lender shall notify Borrower of same.
2.6.13. If Borrower shall fail to promptly pay (i) any installment of
interest due under the Note, (ii) any construction inspection/supervisory fee
incurred by Lender pursuant to Section 2.6.3.3 and Section 2.12.5 hereof, (iii)
any reasonable expenses incurred by Lender as set forth in Section 2.10 hereof
(including without limiting the generality of the foregoing, reasonable legal
fees) or (iv) any other sums due to Lender under the Note, this Agreement or any
of the Security Instruments, Lender shall be authorized to charge Borrower's
checking account with Lender for the amount so due without the further approval
of Borrower.
2.7. Insurance
---------
Borrower shall maintain insurance at its own expense in the form, type
(including without limitation, "all risks" property insurance on the Project
written on a builder's risk, completed value nonreporting form and in compliance
with any co-insurance clause, fire, extended coverage, liability, builder's
risk, collapse, business interruption and loss of rents coverage, earthquake,
workers' compensation and business interruption and amounts reasonably required
by Lender, which insurance shall name Lender as an additional insured party (as
to all liability policies) and mortgagee/loss payee (as to all casualty
policies) and shall (to the extent obtainable) provide that (i) such insurance
may not be canceled or amended without at least thirty (30) days prior written
notice to Lender, and (ii) no act or omission or negligence of Borrower, its
agents or employees, shall in any way affect the validity of such insurance
insofar as Lender is concerned. Borrower has the right of free choice in the
selection of the agent and insurer through or by which insurance required
hereunder is to be placed; provided however, that all such insurance coverage
shall be written by a company with a general policyholder's rating of A or A+ in
Best's
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latest Rating Guide. Certificates evidencing such insurance coverage shall be
promptly delivered to Lender. If Borrower shall fail to provide the insurance
herein required, Lender may procure same at Borrower's expense, and such
expenditure shall be secured by the Security Instruments and be considered an
advance by Lender to Borrower pursuant to the provisions of this Agreement.
2.8. Events of Default.
-----------------
The occurrence of any one of the following events shall constitute an event
of default under this Agreement:
2.8.1. If at any time title to the Premises and the Improvements is
not satisfactory to Lender by reason of any lien, charge, encumbrance, title
condition, or execution (other than exceptions contained in the said title
insurance policy to be issued to Lender) and the same is not removed or bonded
to the satisfaction of Lender within thirty (30) days after written notice
thereof from Lender;
2.8.2. If the Title Insurance Company shall refuse to insure any
advance made hereunder to be secured by the Mortgage as a valid first lien on
the Premises and the Improvements (to the extent constructed and equipped) and
such refusal shall continue for a period of more than ten (10) days after
written notice thereof from Lender;
2.8.3. If the Borrower assigns or attempts to assign this Agreement,
or any advance made or to be made hereunder, or any interest herein or therein,
or if the Premises are conveyed or encumbered (except for the execution of
leases consented to by Lender), in any way without the written consent of Lender
and, as to any involuntary encumbrance, the same is not removed or bonded to the
satisfaction of Lender within ten (10) days after written notice thereof from
Lender;
2.8.4. If any survey, report, or examination, discloses that the
Improvements, or any portion thereof, encroach upon or project over a street, or
upon or over adjoining property, or violate any setback or other restriction,
however created, or any zoning regulations, or any building restriction of any
governmental authority having jurisdiction and (if curable) the same is not
cured to the satisfaction of Lender within thirty (30) days after written notice
thereof from Lender;
2.8.5. If, for any reason, construction of the Improvements has not
been commenced by date of closing;
2.8.6. If more than ten percent (10%) of the Improvements then under
construction are materially damaged or destroyed by fire or otherwise;
2.8.7. If Borrower or the Contractors do not construct the
Improvements substantially in accordance with the Plans previously furnished to
and approved in writing by Lender, as the same may be amended and supplemented
with the approval of Lender, and which
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have been filed with and approved by all governmental authorities having
jurisdiction with respect to the Premises, and Borrower shall fail to commence
to cure the same (if curable) within five (5) days after written notice thereof
from Lender and complete such cure to the satisfaction of Lender within thirty
(30) days after such notice;
2.8.8. If any representation or warranty herein, or in any report,
certificate, financial statement, or other instrument furnished in connection
with this Agreement or the advances made hereunder by or on behalf of Borrower
shall prove to be false, misleading, or incomplete in any material respect;
2.8.9. If any mechanics', laborers', materialmen's, or similar
statutory liens or any notice thereof shall be filed against the Premises and/or
the Improvements and shall not be discharged or bonded to the satisfaction of
Lender within thirty (30) days of such filing;
2.8.10. If Borrower shall default in the due observance or
performance of any covenant, condition or agreement contained in this Agreement
on its part to be paid, performed, or observed and such default shall continue
for more than thirty (30) days after written notice thereof from Lender;
2.8.11. If any event of default described in the Note, or any of the
Security Instruments shall occur or any breach or default in the observance or
performance of any condition, term, agreement, or covenant contained in the Note
or the Security Instruments, or any of them, or any other instrument securing
the Note shall occur and (except where a specific time, cure or grace period is
elsewhere specified) such breach or default shall continue beyond the expiration
of any applicable grace period;
2.8.12. If any voucher is submitted at any time which Borrower knows
or has reason to know has not been earned by the payee for services performed or
for materials used in or furnished with respect to the Improvements;
2.8.13. If any cessation occurs at any time in construction of the
Improvements for more than ten (10) days (whether consecutive or in the
aggregate) or if any substantial change is made in the schedule for the
construction thereof from that provided in the Plans or this Agreement;
2.8.14. If the cost to complete the Improvements, as estimated by
Lender in good faith, at any time appears likely to exceed the balance of funds
retained by Lender after deducting from the amount hereof the total of unpaid
vouchers outstanding, and Borrower fails to pay the deficiency as required by
Section 2.2.3.3. hereof;
2.8.15. If any Contractor:
(i) suffers or permits the appointment of a trustee or
receiver, or files a petition under any provision of the federal bankruptcy code
or any other statute for the relief of
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debtors, or if an order for relief under the federal bankruptcy code is entered
against such tenant; or
(ii) cancels any of the Approved Agreements.
2.8.16. If Borrower requests a termination of the loan hereunder or
confesses inability to continue performance in accordance with this Agreement.
2.9. Lender's Right and Remedies Upon Default.
----------------------------------------
2.9.1. Upon the occurrence of any condition or state of facts which,
with the giving of notice or the passage of time or both, would constitute an
event of default hereunder, all obligations on the part of Lender to make
advances under this Agreement, if Lender so elects, shall cease, and, upon the
occurrence of an event of default hereunder, all obligations on the part of
Lender to make advances under this Agreement shall terminate and, at the option
of Lender, the Note shall become immediately due and payable, and Lender shall
thereupon be authorized and empowered to exercise any rights of foreclosure or
as otherwise provided for the realization of any security for the Note covered
by any of the Security Instruments; but Lender may make any advances or portions
of advances, after the occurrence of any such event of default, without thereby
waiving its right to demand payment of Borrower's indebtedness evidenced by the
Note and secured by the Security Instruments, and without becoming liable to
make any other or further advances as hereinabove contemplated by this
Agreement.
2.9.2. In addition to the remedies hereinabove provided, upon the
occurrence of any one or more of said events of default, Lender shall be
authorized and empowered, at its election, (i) to enter upon the Premises and
construct, equip and/or complete the Improvements in accordance with the Plans,
with such changes therein as Lender may from time to time, in its sole
discretion, deem appropriate, and to appoint watchmen to protect the
Improvements, all at the risk, cost, and expense of Borrower; (ii) to
discontinue, at any time, any work with respect to the Improvements commenced by
it or change any course of action undertaken by it in connection therewith, and
shall not be bound by any limitations or requirements of time, whether set forth
herein or otherwise; and/or (iii) to assume any construction contract or related
agreement made by Borrower in any way pertaining to the Improvements and to take
over and use all or any part or parts of the labor, materials, supplies, and
equipment contracted for by Borrower, whether or not previously incorporated
into the Improvements, all in the sole discretion of Lender.
2.9.3. In connection with any construction, equipping, and/or
completion of the Improvements undertaken by Lender pursuant to the provisions
of subsection 2.9.2. (but without intending hereby to limit the powers and
discretions conferred by said subsection), Lender may engage builders,
contractors, architects, engineers, and others for the purpose of furnishing
labor, materials, and equipment for the Improvements; pay, settle, or compromise
all bills or claims which may become liens against the improvements and the
Premises or which have been or shall be incurred in any manner in connection
with such construction, equipping, and/or completion of the Improvements; and
take such action or refrain from acting hereunder as Lender may, in its
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sole discretion, from time to time determine, without limitation, to carry out
the intent of this Section 2.9.
2.9.4. Borrower shall be liable to Lender for all costs paid or
incurred for the construction, completion, and/or equipping of the Improvements,
whether the same shall be paid or incurred pursuant to the provisions of
subsections 2.9.2. or 2.9.3., or otherwise, and all payments made or liabilities
incurred by Lender hereunder of any kind whatsoever shall be paid by Borrower to
Lender on demand, with interest to the date of payment at the rate set forth in
the Note and shall be secured by the Security Instruments.
2.9.5. Upon the occurrence of any of said events of default, the
rights, powers, and privileges provided in this Section 2.9. and all other
remedies available to Lender under this Agreement or at law or in equity may be
exercised by Lender at any time and from time to time, whether or not the
indebtedness evidenced and secured by the Note and the Security Instruments
shall be due an payable, and whether or not Lender shall have instituted any
foreclosure proceedings or other action for the enforcement of its rights under
the Note or any of the Security Instruments.
2.9.6. For the purpose of carrying out the provisions and exercising
the rights, powers, and privileges granted by this Section 2.9., Borrower hereby
irrevocably constitutes and appoints Lender its true and lawful attorney-in-
fact, and with full power of substitution, to execute, acknowledge, and deliver
any instruments, and do and perform any acts which are referred to in this
Section 2.9. in the name and on behalf of Borrower. The power vested in said
attorney-in-fact is, and shall be deemed to be, coupled with an interest and
cannot be revoked.
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2.10. Expenses of Lender.
------------------
Borrower shall pay Lender, on demand, any and all expenses incurred or paid
by Lender which relate to this loan transaction, this Agreement, the Note, and
any Security Instrument, including (without limitation) the examination of title
to the Premises, the cost of title insurance, charges for examining public
records in connection with advances from the Loan Proceeds, inspections, drawing
of papers, recording and filing fees, revenue stamps, if any, and the fees and
disbursements of counsel (but excluding the ordinary and customary in-house
administrative expenses of Lender). At Lender's election all of such fees or
expenses may be paid from the Loan Proceeds hereunder and in such event, Lender
shall notify Borrower of same and such advance(s) shall constitute additional
indebtedness of Borrower evidenced by the Note and secured by the Security
Instruments.
2.11. Assignment of This Agreement.
----------------------------
Lender may assign, negotiate, or pledge all or any portion of its rights
under this Agreement or any of its rights or security with respect to the Note
and the Security Instruments, and, in case of such assignment, Borrower shall
accord full recognition thereto. Borrower shall not assign or attempt to assign
directly or indirectly, any of its rights under this Agreement or under any
instrument referred to herein.
2.12. General Provisions.
------------------
2.12.1. The captions in this instrument are for convenience and
reference only and do not define, limit, or describe the scope of the provisions
hereof.
2.12.2. The terms, covenants, agreements, and conditions contained
herein shall extend to, include, and inure to the benefit of, and be binding
upon Borrower and Lender, and their respective successors and assigns, and may
not be terminated, changed, or amended orally.
2.12.3. This Agreement has been made in the State of Maine, and the
provisions thereof shall be governed by the laws of the State of Maine.
2.12.4. Construction Schedule. Borrower shall submit to Lender prior
to closing a construction progress schedule in a form satisfactory to lender and
thereafter, on demand of Lender, construction progress reports showing the then
present status of construction. If construction progress reports reflect a
substantial deviation from the construction progress schedule initially
submitted to Lender, Borrower shall augment Borrower's construction reports with
detailed explanations of such deviation and of the specific corrective steps
which Borrower proposes to take in response thereto.
2.12.5. Consultants and Inspections. Lender's routine periodic
inspections of the progress of construction of the Project will be conducted at
Borrower's expense at an estimated cost of $750-$900 per inspection, plus
expenses. Borrower understands that Lender reserves the right to increase the
amount of such periodic inspections, as necessary. If at any time and from
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time to time, Lender in good faith determines, in the exercise of its sole
discretion, that additional information is required for purposes hereof, Lender
may require that construction of the Project be the subject of additional
architectural, engineering, construction or accounting inspections and reports,
and in such event, the expenses thereof shall be paid by Borrower. Lender, its
agents, consultants and employees shall have unrestricted access to the Project
and to the Plans, construction contracts, and Borrower's books and accounts, so
far as they relate to the Project, for the purpose of determining compliance
with this Agreement. The function of Lender's consultants shall be solely to
assist Lender, and Lender, its agents, consultants and employees shall not be
liable for any loss, claim, or damage which may arise as a result of negligence,
defective or inappropriate design, materials, workmanship, and supervision or
from any other loss, claim or damage arising in connection with the Project.
Borrower agrees to hold Lender, its agents, consultants and employees harmless
and to indemnify Lender, its agents, consultants and employees from any such
loss, claim or damage. Notwithstanding the foregoing, in the event Lender takes
over possession of the Project after default by Borrower, then after such
possession is taken, Borrower shall no longer indemnify Lender for claims
arising from Lender's or its employee's negligence after taking occupancy of the
Project.
2.12.6. Additional Security. All Security Instruments shall secure the
-------------------
performance of all obligations of Borrower under this Agreement. Borrower hereby
assigns to Lender as additional security for Borrower's obligations under the
Security Instruments, all of Borrower's interests in the Approved Agreements,
and all present and future contracts for design, supervision and construction of
the Project Borrower agrees to execute all instruments required by Lender to
perfect and maintain such assignments and to obtain from all other parties to
such Approved Agreements written assents and acknowledgments to such assignment
satisfactory to Lender. Such Approved Agreements are assigned to Lender solely
as security, and Lender shall have no duty, liability or obligation whatever
under such contracts, unless Lender so elects in writing. Borrower also hereby
grants to Lender as additional security for Borrower's obligations under the
Security Instruments a security interest in all construction materials,
supplies, lumber, machinery, equipment and fixtures of Borrower used for the
construction of the Improvements, now or hereafter owned by Borrower and
situated or to be situated on the mortgaged Premises together with all
additions, accessions, and substitutions and replacements thereto and therefor.
With respect to such collateral, Lender shall have all the rights and remedies
of a secured party under the Uniform Commercial Code. Borrower agrees to execute
promptly, from time to time, any instruments which Lender deems necessary to
perfect and maintain the security interests created hereby. Borrower hereby
warrants and represents that Exhibit "F" attached hereto is a complete list of
all contracts with contractors and materialmen with whom Borrower has a direct
contractual relationship.
2.12.7. Reports. Borrower shall comply with the financial reporting
-------
requirements set forth in the Term Sheet.
2.12.8. Limited Investigations by Lender. It is agreed by and between
--------------------------------
the parties hereto that Borrower has selected all architects, engineers,
contractors, subcontractors, materialmen, as well as all others furnishing
services or materials to the construction project and Lender has and shall have
no responsibility whatsoever for them or for the quality of their
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materials or workmanship, it being understood that Lender's sole function is
that of construction lender and that the only consideration passing from Lender
to Borrower is the Loan proceeds in accordance with and subject to the terms of
this Agreement. It is also agreed that Borrower shall have no right to rely on
any procedures required by Lender herein, such procedures being for the
protection of the Lender as construction lender and no one else. Borrower hereby
agrees to hold and save Lender, its agents, consultants and employees harmless
and indemnify them against and from claims, of any kind, of any person,
including but without limiting the generality of the foregoing, employees of
Borrower, any contractor constructing the improvements and the employees of any
such contractor, any tenant of Borrower, and the employees and invitees of
Borrower or any such tenant, arising from or out of the construction, use,
occupancy, or possession of the improvements in accordance with said plans and
specifications.
2.12.9. Notices. Any notice under this Agreement shall be in writing
-------
and shall be deemed delivered if mailed, certified mail, return receipt
requested to a party at the address indicated immediately below or at such other
address as may be specified by notice duly given after the date hereof.
Lender: Stephen P. Lubelczyk, Senior Vice President
KeyBank National Association
One Canal Plaza
Portland, ME 04101
with a copy to: Dennis C. Sbrega, Esq.
Preti, Flaherty, Beliveau, Pachios & Haley, LLC
P.O. Box 9546
Portland, ME 04112-9546
Borrower: Robert D. Elliott, President and CEO
Aerovox Incorporated
740 Belleville Avenue
New Bedford, MA 02745
with a copy to: Stanley B. Kay, Esq.
85 Wells Avenue
Newton Centre, MA 02459-3215
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, under seal, as of the day and year first above written.
WITNESS: LENDER:
KEYBANK NATIONAL ASSOCIATION
Dennis C. Sbrega By: Stephen P. Lubelczyk
Stephen P. Lubelczyk
Its Senior Vice President
BORROWER:
AEROVOX INCORPORATED
Stanley B. Kay By: F. RANDAL HUNT
F. Randal Hunt
Its Vice President, Finance
20
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EXHIBIT A
Legal Description of Premises
LOT 2
Beginning at a point of intersection of the westerly line of John Vertente
Boulevard Extension said-point in turn being Five Hundred Fifty and 47/100
(550.47) feet north of John Vertente Cul de sac;
Thence westerly, in straight line bearing S 84%-30'-50" W a distance of Eight
Hundred sixty-two and 51/100 (862.51) feet to a point of intersection with the
City of New Bedford and Town of Dartmouth border line;
Thence northerly in a straight line in said New Bedford - Dartmouth border line
bearing N 08%-54'-00" E a distance of One Thousand Three Hundred Five and 66/100
(1305.66) feet to a point of intersection with the westerly line of John
Vertente Boulevard Extension at city and town border line;
Thence easterly in a straight line bearing S 81%-06'-00" E a distance of One
Hundred One and 95/100 (101.95) feet to a point of curvature;
Thence south easterly in a curved line, having a radius of Three Hundred and
00/100 (300.00) feet, and subtending an angle of 39%-52'-18", a distance of Two
Hundred Eight and 77/100 (208.77) feet to a point of tangency;
Thence still southeasterly in a straight line bearing S 41%-13'-42" E a distance
of eighty three and 51/100 (83.51) feet to a point of curvature;
Thence southeasterly in a curved line having a radius of Three Hundred Fifty and
00/100 (350.00) feet, and subtending an angle of 20%-15'-30" a distance of One
Hundred Twenty Three and 75/100 (123.75) feet to a point of tangency:
Thence in a straight line again bearing S 61%-29'-12" E, a distance of
ninety-eight and 56/100 (98.56) feet to a point of curvature;
Thence again southeasterly in a curved line, having a radius of Two Hundred and
00/100 (200.00) feet, and subtending an angle of 64%-42'-06", a distance of Two
Hundred twenty-five and 85/100 (225.85) to a point;
Thence southerly in a straight line bearing S 03%-12'-54" W a distance of One
Hundred Forty Eight and 88/100 (148.88) feet to a point of curvature;
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Thence still southeasterly in a curved line, having a radius of One Thousand
Twenty Five and 00/100 (1025.00) feet, subtending an angle of 08%-42'-04" a
distance of One Hundred Fifty Five and 66/100 (155.66) feet to a point of
tangency;
Thence in a straight line bearing S 05%-29'-10" E a distance of Four Hundred
Seventeen and 13/100 feet to the point of beginning, containing Eight Hundred
Four Thousand Two Hundred thirty-seven (804,237) square feet.
Said parcel is shown as Lot 2 on Sheet 1 of 2 on a plan entitled "MODIFICATION
TO AN APPROVED DEFINITIVE SUBDIVISION PLAN OF LAND IN THE GREATER NEW BEDFORD
INDUSTRIAL PARK", dated December 29, 1999 and prepared by Tibbetts Engineering
Corp.
LOT 3
- -----
Beginning at a point in the easterly line of John Vertente Boulevard extension
said point in turn being Four Hundred Fifty and 11/100 (450.11) feet north of
the cul de sac;
Thence northerly in said easterly line of John Vertente Boulevard extension and
in a straight line bearing N 05%-29'-10" W a distance of Five Hundred Seventeen
and 49/100 (517.49) feet to a point of curvature;
Thence still northerly in a curved line, having a radius of Nine Hundred
seventy-five and 00/100 (975.00) feet, and subtending an angle of 01%-29'-58", a
distance of twenty-five and 52/100 (25.52) feet to a point;
Thence westerly in a straight line bearing N 84%-30'-50" E a distance of Two
Hundred seventy-nine and 67/100 (279.67) feet to a point of intersection with
the westerly limit of Lot No. 4
Thence southerly in the westerly limit of said Lot No. 4 and in a straight line
bearing S 05%-29'-10" E, a distance of Five Hundred forty-three and 00/100
(543.00) feet to a point;
Thence westerly in a straight line bearing S 84%-30'-50" W a distance of Two
Hundred Eighty and 00/100 (280.00) feet to a point of intersection with the
easterly line of John Vertente Boulevard Extension and Point of /Beginning,
containing One Hundred Fifty-two-Thousand thirty-seven (152,037) square feet.
Said parcel is shown as Lot 3 on Sheet 2 of 2 on a plan entitled "MODIFICATION
TO AN APPROVED DEFINITIVE SUBDIVISION PLAN OF LAND IN THE GREATER NEW BEDFORD
INDUSTRIAL PARK", dated December 29, 1999 and prepared by Tibbetts Engineering
Corp.
22
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EXHIBIT B
Plans, Drawings and Specifications
23
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EXHIBIT C
Construction Contracts
24
<PAGE>
EXHIBIT D
Total Project Budget
25
<PAGE>
EXHIBIT E
Contractors, Subcontractors, Materialmen
26
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EXHIBIT F
Permitted Liens and Encumbrances
27
<PAGE>
EXHIBIT G
Construction Advance Request Form
28
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EXHIBIT 4.10
ASSIGNMENT OF PROJECT DOCUMENTS
-------------------------------
THIS ASSIGNMENT OF PROJECT DOCUMENTS ("Assignment") is made and entered
into by AEROVOX INCORPORATED, a Delaware corporation having a place of business
at 740 Belleville Avenue, New Bedford, Massachusetts 02745 ("Borrower") and
KEYBANK NATIONAL ASSOCIATION, a national banking association with a place of
business at One Canal Plaza, Portland, Maine 04101 ("Lender").
WI T N E S S E T H :
WHEREAS, Borrower and Lender have executed a Construction Loan Agreement of
even date herewith (the "Loan Agreement") pursuant to which Lender has agreed to
make a loan to Borrower in the aggregate principal amount of up to $4,500,000.00
(the "Loan") on the terms and conditions set forth in the Loan Agreement; and
WHEREAS, to evidence of the Loan, Borrower has executed and delivered to
Lender a Commercial Note of even date herewith in the principal face amount of
$4,500,000.00 (the "Note"), which is secured in part by a First Leasehold
Mortgage, Security Agreement and Fixture Filing of even date therewith (the
"Security Deed") from Borrower covering the real estate located at the New
Bedford Industrial Park, John Vertente Boulevard Extension, City of New Bedford,
County of Bristol, Commonwealth of Massachusetts, and which is described in the
Security Deed; and
WHEREAS, the execution and delivery of this Assignment is a condition
precedent to the performance by the Lender of its obligations under the Loan
Agreement;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower hereby covenants agrees as follows:
1. Borrower hereby grants, transfers and assigns to Lender all the right,
title and interest of Borrower in, to and under the following agreements,
contracts, guaranties, warranties, plans, licenses, permits and other items of
personal property, whether now or hereafter executed, granted, received,
acquired or issued:
(i) that certain agreement, dated November 2, 1999, between Borrower
and Dacon Corporation (the "General Contractor") relating to the
construction of the Improvements as defined in the Security Deed
(hereinafter, together with any and all extensions, modifications,
amendments and renewals thereof, referred to as the "Construction
Contract");
<PAGE>
(ii) all contracts and subcontracts, together with any and all
extensions, modifications, amendments and renewals thereof, which are
entered into by Borrower or the General Contractor in connection with the
performance of the work or the supply of labor, services or materials
required for the construction of the Improvements;
(iii) all guaranties, warranties and other undertakings, whether
written, oral or statutory, covering the quality or performance of the work
or the quality of the materials required by the General Contract, contracts
and subcontracts, together with any claims which may be asserted
thereunder;
(iv) all building permits, governmental permits, licenses, consents,
approvals and authorizations now or hereafter granted or issued, and all
tradenames, trademarks and logos used, in connection with the construction,
development or operation of the Project (as defined in the Loan Agreement);
and
(v) all plans, specifications, drawings, surveys, renderings and
models prepared for the construction of the Improvements in existence from
time to time, together with all revisions and modifications thereof and all
sketches and notes related thereto.
The items referred to in paragraphs (i) through (vii) above are sometimes
hereinafter collectively referred to as the "Project Documents" and individually
referred to as a "Project Document".
This Assignment is made for the purpose of securing: (a) the full and
prompt payment when due, whether by acceleration or otherwise of the Note; (b)
the full and prompt payment and performance of any and all obligations of
Borrower to Lender hereunder and under the Loan Agreement, the Security Deed,
and any other agreements, documents or instruments now or hereafter evidencing,
securing or otherwise relating to the indebtedness evidenced by the Note (the
Note, the Loan Agreement, the Security Deed and said other agreements, documents
or instruments, together with all renewals, amendments, extensions,
consolidations and modifications thereof, are hereinafter collectively referred
to as the "Loan Documents" and individually referred to as a "Loan Document");
and (c) any and all other indebtedness, however incurred, which may now or
hereafter be due and owing from Borrower to Lender, now existing or hereafter
coming into existence, however and whenever incurred or evidenced, whether
expressed or implied, direct or indirect, absolute or contingent, or due or to
become due, and all renewals, modifications, consolidations and extensions
thereof.
2. Borrower hereby covenants and agrees:
A. To faithfully abide by, perform and discharge each and every
obligation, covenant, condition and agreement of the Project Documents to be
performed by Borrower and to enforce performance by each other party thereto of
each and every obligation, covenant, condition and agreement to be performed by
such other party.
2
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B. To promptly provide Lender with copies of any and all notices received
or given by Borrower which allege, either directly or indirectly, that Borrower
is in default in the performance of any obligation, covenant, condition or
agreement of the Project Documents to be performed by Borrower, or that any
other party to the Project Documents is in default in the performance of any
obligation, covenant, condition or agreement of the Project Documents to be
performed by such other party.
C. That the term "Event of Default", whenever used in this Assignment,
shall mean any one or more of the following conditions or events:
(1) Failure by Borrower to pay as and when due and payable any
interest on or principal of or other sum payable under the Note; or
(2) Failure by Borrower to observe, perform or discharge any
obligation, covenant, condition or agreement of this Assignment; or
(3) Any representation or warranty of Borrower in this Assignment
shall prove to have been false or incorrect in any material respect upon the
date when made; or
(4) The occurrence of any "Event of Default" as defined in any of the
Loan Documents.
D. That an Event of Default by Borrower under this Assignment shall
constitute a default under the Note and an "Event of Default" under all of the
other Loan Documents.
E. That upon the occurrence of any Event of Default, Lender may at its
option, with or without notice or demand of any kind (except as may be provided
herein or in any of the Loan Documents), and without waiving such Event of
Default, exercise any or all of the following rights and remedies: (1) declare
any part or all of the indebtedness evidenced or secured hereby or by the Loan
Documents to be immediately due and payable, whereupon the same shall become
immediately due and payable; (2) exercise any and all rights and remedies
provided for hereunder or under the Loan Documents as well as such remedies as
may be available at law or in equity; and (3) cure any such Event of Default in
such manner and to such extent as Lender may deem necessary to protect the
security hereof, including specifically, without limitation, the right (but not
the obligation) to appear in and defend any action or proceeding purporting to
affect the security hereof or the rights or powers of Lender, and also the right
(but not the obligation) to perform and discharge each and every obligation,
covenant, condition and agreement of Borrower under the Project Documents, and,
in exercising any such powers, to pay necessary costs and expenses, employ
counsel and incur and pay attorneys' fees and expenses. Lender shall not be
obligated to perform or discharge, nor does it hereby undertake to perform or
discharge, any obligation, duty or liability of Borrower under any of the
Project Documents, or by reason of this Assignment, it being agreed that Lender
shall be treated as agreeing to perform or discharge such obligation, duty or
liability if (but only if) Lender shall, by written notice sent to the other
contracting party to, or grantor or licensor of, such Project Document,
expressly so elect.
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F. That at any time after the occurrence of any Event of Default, Lender
may, at its option, without notice, and without regard to the adequacy of
security for the indebtedness hereby secured, either in person or by agent, with
or without bringing any action or proceeding, or by a receiver to be appointed
by a court at any time hereafter, exercise and enforce for its own benefit every
right, power and authority under the Project Documents, or any of them, as fully
as Borrower could itself.
G. That each of the General Contractor, and the contracting party to, or
grantor or licensor of, any Project Document, upon receipt of written notice
from Lender of the occurrence of any Event of Default and Lender's election to
exercise its rights under this Assignment, shall be and is hereby irrevocably
directed and authorized by Borrower to recognize and accept Lender as "owner"
under the Construction Contract, or as holder of such other Project Document, as
the case may be, for any and all purposes as fully as it would recognize and
accept Borrower and the performance of Borrower thereunder, and to perform such
Project Document for the benefit of Lender in accordance with the terms and
conditions thereof, without any obligation to determine whether or not any such
Event of Default has in fact occurred.
H. That further, and without limitation of the foregoing remedies, upon
the occurrence of any Event of Default, Lender shall have the rights and
remedies of a secured party under the Uniform Commercial Code as enacted in the
Commonwealth of Massachusetts with respect to each and every Project Document in
which a security interest may be obtained, in addition to the rights and
remedies otherwise provided for by law or in equity or in any of the Loan
Documents.
I. That in the exercise of the powers herein granted to Lender, no
liability shall be asserted or enforced against Lender, all such liability being
hereby expressly waived and released by Borrower. Borrower hereby agrees to
indemnify and hold Lender free and harmless from and against any and all claims,
demands, liability, expense, cost, loss or damage (including all costs, expenses
and attorneys' fees incurred in the defense thereof) which may be asserted
against, imposed on or incurred by Lender by reason of any act or omission of
Borrower under any of the Project Documents or by reason of this Assignment or
the exercise of Lender's rights and remedies under this Assignment or under any
of the Project Documents or by reason of any alleged obligation or undertaking
of Lender to perform or discharge any obligation, duty or liability of Borrower
under any of the Project Documents; provided, however, that nothing herein shall
be construed to obligate Borrower to indemnify and hold Lender free and harmless
from and against any claim, demand, liability, expense, cost, loss or damage
asserted against, imposed on or incurred by Lender by reason of Lender's willful
misconduct or gross negligence. Should Lender incur any such liability, expense,
cost, loss or damage, or in the defense of any such claims or demands, for which
it is to be indemnified by Borrower as aforesaid, the amount thereof shall be
secured by this Assignment, the Security Deed and the other Loan Documents
(whether or not such amount, when aggregated with other sums secured by the
Security Deed and the other Loan Documents, exceeds the principal face amount of
the Note), shall bear interest at the default rate specified in the Note from
the date incurred until paid, and shall be due and payable immediately upon
demand by Lender.
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J. That Lender shall have the right to assign to any subsequent holder of
the Note or the Security Deed, or to any person acquiring title to the Project
(as defined in the Loan Agreement), the Project Documents and all the right,
title, interest, power and authority of the Borrower in, under and by virtue of
the Project Documents hereby or hereafter assigned.
3. Borrower further hereby covenants, represents and warrants to Lender
that (i) Borrower has not previously assigned, sold, pledged, transferred,
mortgaged, hypothecated or otherwise encumbered the Project Documents or any of
them, or its right, title and interest therein, (ii) Borrower shall not assign,
sell, pledge, transfer, mortgage, hypothecate or otherwise encumber its
interests in the Project Documents or any of them, (iii) Borrower has not
performed, and will not perform, any act which might prevent Borrower from
performing its undertakings hereunder or which might prevent Lender from
operating under or enforcing any of the terms and conditions hereof or which
would limit Lender in such operation or enforcement, (iv) Borrower is not in
default under the Project Documents, or any of them, and to the best knowledge
of Borrower, no other party to the respective Project Documents is in default
thereunder except as disclosed in writing to Lender, (v) except as provided in
the Loan Agreement, no amendments to any of the Project Documents will be made
without the prior written consent of Lender, and (vi) upon execution of any of
the Project Documents, Borrower will deliver a copy of such Project Document (or
the original at Lender's request) to Lender and will require such of the parties
thereto as Lender may designate to execute and deliver to Lender a consent to
this Assignment.
4. All notices, demands, elections or requests provided for or permitted
to be given pursuant to this Assignment shall be in writing and shall be deemed
to have been sufficiently given when delivered or mailed in the manner set forth
in the Loan Agreement.
5. Any provision in the Loan Agreement that pertains to this Assignment
shall be deemed to be incorporated herein as if such provision were fully set
forth in this Assignment. In the event of any conflict between the terms of this
Assignment and the terms of the Loan Agreement, the terms of the Loan Agreement
shall prevail. A provision in this Assignment shall not be deemed to be
inconsistent with the Loan Agreement by reason of fact that no provision in the
Loan Agreement covers such provision in this Assignment.
6. Although this Assignment constitutes a present, current and absolute
assignment of the Project Documents, so long as there shall exist no Event of
Default, Borrower shall have the right to exercise every right, power and
authority under the Project Documents, and to perform and enforce performance of
all obligations under the Project Documents. This Assignment shall terminate
when the indebtedness evidenced by the Note is paid in full and all obligations,
covenants, conditions and agreements of Borrower contained herein and in the
Loan Documents are performed and discharged, and, in such event, upon the
request of Borrower, Lender shall execute and deliver to Borrower instruments
effective to evidence the termination of the Assignment.
7. This Assignment constitutes the granting by Borrower to Lender of a
security interest under the Uniform Commercial Code as enacted in the
Commonwealth of Massachusetts
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in the right, title and interest of Borrower in, to and under each and every
Project Document in which a security interest may be obtained. Borrower agrees
to execute and deliver to Lender, at any time or times during which this
Assignment shall be in effect, such further instruments as Lender may deem
necessary to make effective this Assignment and the security interest created
hereby. To evidence such security interest, at the request of Lender, Borrower
shall, in a form satisfactory to Lender, join with Lender in executing one or
more financing statements or other notices of security interest, and any
continuation thereof, and shall pay the cost for filing thereof. A photocopy of
this Agreement may be filed as a financing statement.
8. The exercise of any rights or remedies under this Assignment shall not
be deemed to cure or waive any Event of Default, or waive, modify or affect any
notice of default under any of the Loan Documents, or invalidate any act done
pursuant to such notice. The rights and remedies of Lender herein provided shall
be in addition to and not in substitution for the rights and remedies vested in
Lender in any of the Loan Documents or at law or in equity, all of which rights
and remedies are specifically reserved by Lender. The remedies herein provided
or otherwise available to Lender shall be cumulative and may be exercised
concurrently. The failure to exercise any of the remedies herein provided shall
not constitute a waiver thereof, nor shall use of any of the remedies herein
provided prevent the subsequent or concurrent resort to any other remedy or
remedies.
9. This Assignment shall be interpreted, construed and enforced according
to laws of the State of Maine.
10. It is expressly intended, understood and agreed that this Assignment
and the Loan Documents are made and entered into for the sole protection and
benefit of Borrower and Lender, and their respective legal representatives,
successors and assigns (but in the case of assigns of Borrower, only if and to
the extent that Lender has consented in writing to Borrower's assignment of its
rights or obligations hereunder or thereunder to such assigns); that no other
person or persons shall have any right at any time to action hereon or rights to
the proceeds of the Loan; that such proceeds of the Loan do not constitute a
trust fund for the benefit of any third party; that no third party shall under
any circumstances be entitled to any equitable lien on any such undisbursed
proceeds of the Loan at any time; and that Lender shall have a lien upon and
right to direct application of any such undisbursed proceeds of the Loan as
provided in the Loan Documents.
11. The relationship between Lender and Borrower is solely that of a
lender and borrower, and nothing contained herein or in any of the Loan
Documents shall in any manner be construed as making the parties hereto
partners, joint venturers or any other relationship other than lender and
borrower.
12. Borrower and Lender intend and believe that each provision in this
Assignment comports with all applicable local, state or federal laws and
judicial decisions. However, if any provision or provisions, or if any portion
of any provision or provisions, in this Assignment is found by a court of law to
be in violation of any applicable local, state or federal ordinance, statute,
law, administrative or judicial decision or public policy, and if such court
should declare
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<PAGE>
such portion, provision or provisions of this Assignment to be illegal, invalid,
unlawful, void or unenforceable as written, then it is the intent of both of
Borrower and Lender that such portion, provision or provisions shall be given
force to the fullest possible extent that they are legal, valid and enforceable,
that the remainder of this Assignment shall be construed as if such illegal,
invalid, unlawful, void or unenforceable portion, provision or provisions were
not contained therein and that the rights, obligations and interests of Borrower
and Lender under the remainder of this Assignment shall continue in full force
and effect.
IN WITNESS WHEREOF, Borrower has executed this Assignment under seal as of
the 29/th/ day of February, 2000.
BORROWER:
AEROVOX INCORPORATED
Stanley B. Kay By: F. Randal Hunt
Witness Name: F. Randal Hunt
Title: Vice President, Finance
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EXHIBIT 4.11
KEYBANK NATIONAL ASSOCIATION
COMMERCIAL NOTE
$4,500,000.00 February 29, 2000
Portland, Maine
FOR VALUE RECEIVED, the undersigned (hereinafter called "Borrower")
promises to pay to the order of KeyBank National Association, a national banking
association having a place of business at One Canal Plaza, Portland, Maine
04101-4035 (hereinafter called "Bank"), said Bank being a wholly-owned
subsidiary of KeyCorp, having a principal place of business at 127 Public
Square, Cleveland, Ohio 44114-1306 (hereinafter called "KeyCorp"), at any office
of said Bank, the principal sum of Four Million Five Hundred Thousand and
00/100ths Dollars ($4,500,000.00), or so much thereof as from time to time may
be outstanding and advanced pursuant to a Construction Loan Agreement of even
date, together with interest on the unpaid principal balance computed at a rate
and according to the terms indicated below:
1. MATURITY DATE:
April 30, 2000
2. INTEREST RATE:
A variable Interest Rate equal to Bank's Prime Rate (the "Index"), plus
zero percent (0.0%) per year. The Index is hereinafter defined in this Note. The
Bank will adjust the variable Interest Rate from time to time effective
immediately on the date of each Index change. At the present time, the Index is
eight and one half percent (8.50%) and the Interest Rate is eight and one half
percent (8.50%).
3. PAYMENT TERMS:
Interest only shall be payable monthly commencing March 29, 2000, and on
the 29/th/ day of each month thereafter until the Maturity Date when the
remaining unpaid principal plus accrued interest shall be due and payable.
4. AGREEMENT:
A. This Note is executed under the terms of a Construction Loan Agreement
of even date.
B. This Note is executed under the terms of a Term Sheet dated January
19, 2000.
<PAGE>
5. SECURITY:
This Note is secured by property described in a First Leasehold Mortgage,
Security Agreement and Fixture Filing of even date to be recorded in the Bristol
(MA) County Registry of Deeds on Borrower's leasehold estate in property located
at the New Bedford Industrial Park, New Bedford, Massachusetts all pursuant to a
certain Sublease dated January 4, 2000, between Borrower, as Sublessee, and the
New Bedford Redevelopment Authority, as Sublessor.
In addition, Borrower agrees to provide Bank with additional collateral
upon demand when and if Bank, in good faith, deems itself insecure. Upon any
Event of Default, Borrower agrees that Bank shall have the right, without
notice, to reduce to possession and to set-off against any and all obligations
and liabilities of Borrower, any account, deposit or other property of Borrower
coming into Bank's possession, or any other claim of Borrower against Bank.
The collateral which secures this Note shall also be deemed to secure all
other obligations and liabilities of Borrower to Bank or any KeyCorp affiliate,
now existing or hereafter arising, matured or unmatured, direct or contingent,
whether evidenced by a note or other instrument or otherwise, including any and
all renewals, extensions, modifications and substitutions thereof.
6. DEFINITION OF INDEX:
"The Index" means that interest rate established by Bank as its Prime Rate,
whether or not such rate is publicly announced. The Index may not be the lowest
interest rate charged by Bank for commercial or other extensions of credit.
7. INTEREST RATE CALCULATION:
The Borrower shall pay interest at the rate indicated above. Interest shall
be computed on the basis of a 360 day year. This means that each day a periodic
rate is calculated by dividing the Interest Rate by 360. This daily rate is then
applied to the outstanding balance to determine each day's interest.
8. APPLICATION OF PAYMENTS:
Each payment received on this Note shall be applied first to unpaid late
charges or other costs due Bank from Borrower (if any), then to interest billed,
and the balance, if any, to principal. Interest shall accrue (if not timely
paid) to the date payment is received.
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<PAGE>
9. ADDITIONAL CHARGES IF PAYMENT NOT PAID WHEN DUE:
Borrower shall pay to Bank, prior to maturity, for each payment of
principal or interest not paid in full within ten (10) days after its due date,
a late fee equal to the greater of five percent (5%) of the amount of such
payment or Fifty Dollars ($50), but not more than One Thousand Dollars ($1,000).
All delinquency charges shall each become an additional part of the unpaid
balance, together with, also as an additional part of the unpaid balance, all
costs, expenses, and reasonable Attorneys' Fees (as that term is hereinafter
defined) incurred with respect to any of the following: consultation with the
Bank in connection with this loan, in collection of all or part of this Note,
foreclosure of any mortgage or security interest which may secure either the
debt hereunder or any guaranty thereof (including, but not limited to, fees,
costs and expenses of appraisals, re-appraisals, environmental or other studies,
and all actions taken in response thereto or in connection therewith), any act
to protect or sustain the lien of any such mortgage or security agreement, any
litigation or controversy arising from or connected with this Note or any
mortgage or security agreement which may secure this Note (including, without
limitation, any counterclaim or crossclaim or other action asserted against Bank
by Borrower or any Other Obligors [as that term is hereinafter defined] or any
third parties), or any act to protect, enforce or release any of Bank's rights
or remedies under this Note (including with respect to the existence or extent
of the rights of Bank under this provision) or with regard to any collateral
which may now or in the future secure this Note, or with regard to or against
Borrower or any endorser, guarantor or surety of this Note (said endorsers,
guarantors and sureties of this Note hereinafter collectively called "Other
Obligors"). The payment of any additional charges provided for in this paragraph
shall not be construed as an extension of the date when payment is due (on
demand, at maturity or by acceleration).
As used herein, the term "Attorneys' Fees" shall mean the fees and charges
imposed by any lawyer or lawyers or law firm retained by Bank (the "Attorney")
and may include, without limitation, time and charges for professional services
rendered by attorneys or paralegals (collectively, "Fees"), and for photocopies,
telecopies, long distance telephone calls, computerized legal research, mileage,
filing fees, recording fees and other costs, and third party expert and
consultant fees (collectively, "Disbursements").
Borrower understands and acknowledges that the provisions of this Note
relating to Bank's right to collect Attorneys' Fees, Fees and Disbursements are
a material inducement to the extension of credit to Borrower hereunder.
10. DEFAULT RATE:
After maturity (whether by acceleration or otherwise), or for any period
during which Borrower or any Other Obligors shall be in default of any material
provision of this Note or any other loan document, and until actual payment of
all amounts owing and/or satisfaction of any and all non-payment Defaults, the
principal of this Note and the unpaid interest, Attorney's Fees, Fees and
Disbursements thereon, shall bear interest at a rate per annum equal to the
greater of three percent (3%) in excess of the highest applicable Interest Rate
herein, or
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<PAGE>
sixteen percent (16%). Such increase is in addition to all of the other rights
and remedies of Bank hereunder. Failure of Bank to exercise this right shall not
constitute a waiver or relinquishment of Bank's right to enforce this remedy in
the future.
11. PREPAYMENT:
Bank hereby grants to Borrower, and any other party liable hereto, the
privilege, without prepayment premium, of making prepayment in full of the
principal balance hereof or of making partial payments of the balance of
principal hereof at any time.
All partial prepayments shall be credited to principal in inverse order
of maturity.
12. EVENTS OF DEFAULT AND ACCELERATION:
In addition to the other events of default hereinbefore set forth, Borrower
shall be in default of this Note upon the occurrence of any of the following
events (a "Default" or an "Event of Default"):
(1) Default in the payment or performance of any obligations or
liabilities of Borrower to Bank (whether under this Note or otherwise) or any
KeyCorp affiliate; (2) If any warranty, representation, or statement made or
furnished to Bank by or on behalf of Borrower in connection with this Note
proves to have been false in any material respect; (3) Uninsured loss, theft,
substantial change, destruction, sale or encumbrance to or of the collateral, or
the making or suffering of a levy, seizure, or attachment thereon; (4) If the
collateral securing this Note or any Guaranty of this Note is used in any way
which threatens confiscation or seizure by legal authorities; (5) Dissolution,
termination of existence, insolvency, business failure, bankruptcy,
reorganization, appointment of a receiver of any part of the property or
assignment for the benefit of creditors by, or the commencement of any
proceedings under, a bankruptcy or insolvency law by or against Borrower or any
Other Obligors; (6) Any event which results in the acceleration of the maturity
of the indebtedness of Borrower to others; (7) If Bank, in good faith, deems
itself insecure because the prospect of payment, performance of a warranty or
agreement, or the value or priority of the security interest are impaired; (8)
If the collateral, or any part thereof, is located at premises leased to or
rented by the Borrower, a failure on the Borrower's part to pay rent or
otherwise abide by the terms of the lease; (9) Default in the performance of the
terms of any Term Sheet, Commitment Letter, Loan Agreement or other Agreement
executed by the parties; (10) Transfer, sale or redemption of the stock of the
Borrower, in whole or in part, or if Borrower shall enter into or otherwise be a
constituent entity in respect of any merger, consolidation or corporate
reorganization.
13. WAIVER OF JURY TRIAL:
BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT
TO A JURY TRIAL, WHETHER ARISING UNDER THE MAINE CONSTITUTION, THE MASSACHUSETTS
CONSTITUTION, THE UNITED STATES CONSTITUTION, OR ANY STATE OR
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FEDERAL STATUTE, REGULATION, COMMON LAW, OR RULE OF CIVIL PROCEDURE, WITH
RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THIS NOTE OR ANY RELATED LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. BORROWER (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF BANK HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT BANK WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT BANK HAS BEEN INDUCED TO
ACCEPT THIS NOTE AND TO ENTER INTO THE OTHER LOAN DOCUMENTS TO WHICH IT IS A
PARTY BY, AMONG OTHER THINGS, THE WAIVER AND CERTIFICATION CONTAINED HEREIN.
14. GOVERNING JURISDICTION:
This Note and all actions taken pursuant hereto shall be governed in all
respects by the laws of the State of Maine.
15. WAIVER:
Borrower and Other Obligors hereby jointly and severally waive presentment
for payment, demand, notice of non-payment, notice of protest or dishonor and
protest of this Note.
16. MISCELLANEOUS:
This Note evidences a loan for business and/or commercial purposes.
This Note is to take effect as a sealed instrument.
BORROWER ACKNOWLEDGES RECEIPT OF A COPY OF THIS NOTE, AND ATTESTS THAT ALL
PROCEEDS ARE TO BE USED FOR THE PURPOSE(S) REPRESENTED TO BANK IF ANY
REPRESENTATIONS ARE MADE.
ATTEST: BORROWER:
AEROVOX INCORPORATED
Stanley B. Kay By: F. Randal Hunt
Witness Name: F. Randal Hunt
Title: Vice President, Finance
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<PAGE>
Exhibit 4.12
INSTRUMENT PREPARED BY AND AFTER
RECORDATION RETURN TO:
Dennis C. Sbrega, Esq.
Preti Flaherty Beliveau Pachios & Haley, LLC
One City Center
P.O. Box 9546
Portland, ME 04112-9546
================================================================================
FIRST LEASEHOLD MORTGAGE, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS, AND FINANCING STATEMENT
by and between
KEYBANK NATIONAL ASSOCIATION
as Lender
and
AEROVOX INCORPORATED
as Borrower and Sublessee
dated
February 29, 2000
================================================================================
<PAGE>
FIRST LEASEHOLD MORTGAGE, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS, AND FINANCING STATEMENT
to
KEYBANK NATIONAL ASSOCIATION
THIS INSTRUMENT CONSTITUTES A FINANCING STATEMENT UNDER THE MASSACHUSETTS
UNIFORM COMMERCIAL CODE COVERING THE ITEMS AND TYPES OF COLLATERAL DESCRIBED
HEREIN. THE NAMES OF THE DEBTOR AND THE SECURED PARTY, THE MAILING ADDRESS OF
THE SECURED PARTY FROM WHICH INFORMATION CONCERNING THE SECURITY INTEREST MAY BE
OBTAINED, THE MAILING ADDRESS OF THE DEBTOR AND A STATEMENT INDICATING THE
TYPES, OR DESCRIBING THE ITEMS, OF COLLATERAL ARE AS DESCRIBED BELOW AND ON
EXHIBIT C ATTACHED HERETO, IN COMPLIANCE WITH THE REQUIREMENTS OF ARTICLE 9,
SECTION 402 OF THE UNIFORM COMMERCIAL CODE, AS ENACTED IN THE COMMONWEALTH OF
MASSACHUSETTS. THIS INSTRUMENT IS INITIALLY INTENDED TO SECURE THE FINANCING OF
CONSTRUCTION ON THE PREMISES IN ACCORDANCE WITH A CERTAIN CONSTRUCTION LOAN
AGREEMENT REFERRED TO HEREIN AND IS A "CONSTRUCTION MORTGAGE" UNDER THE LAW OF
THE COMMONWEALTH OF MASSACHUSETTS. A PHOTOCOPY OF THIS INSTRUMENT MAY BE FILED
AS A FINANCING STATEMENT.
UNDER THE TERMS AND PROVISIONS OF THE NOTE WHICH THIS INSTRUMENT SECURES
AND UNDER THE TERMS AND PROVISIONS OF ANY FUTURE OR FURTHER ADVANCES SECURED
HEREBY, THE INTEREST RATE PAYABLE THEREUNDER MAY BE VARIABLE. THE PURPOSE OF
THIS PARAGRAPH IS TO PROVIDE RECORD NOTICE OF THE RIGHT OF LENDER, ITS
SUCCESSORS AND ASSIGNS, TO INCREASE OR DECREASE THE INTEREST RATE ON ANY
INDEBTEDNESS SECURED HEREBY WHERE THE TERMS AND PROVISIONS OF SUCH INDEBTEDNESS
PROVIDE FOR A VARIABLE INTEREST RATE.
THIS FIRST LEASEHOLD MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND
RENTS AND FINANCING STATEMENT (hereinafter referred to as "Security Deed" or
"Leasehold Mortgage") is made and entered into by AEROVOX INCORPORATED, a
Delaware corporation, as grantor or mortgagor (hereinafter referred to as
"Borrower" or "Sublessee"), Borrower having as a mailing address 740 Belleville
Avenue, New Bedford, Massachusetts 02745 and KEYBANK NATIONAL ASSOCIATION, a
national banking association, as grantee or mortgagee (hereinafter referred to
as "Lender"), Lender having as a business address One Canal Plaza, Portland,
Maine 04101-4035.
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<PAGE>
RECITALS:
---------
WHEREAS, Borrower is owner of (i) subleasehold interest in that certain
real property described on Exhibit A attached hereto and made part hereof (the
"Land" as hereinafter defined), and (ii) the Improvements of Borrower located
thereon pursuant to that certain Ground Sublease dated as of January 4, 2000,
between the New Bedford Redevelopment Authority, a body politic and corporate of
the Commonwealth of Massachusetts (the "Authority"), having as a business
address 700 Pleasant Street, New Bedford, Massachusetts 02740, as sublessor and
Borrower as sublessee (as amended from time to time, the "Sublease"); and
WHEREAS, the Authority is owner of a leasehold interest in the Land
pursuant to that certain Ground Lease dated as of December 22, 1999 between the
Authority as lessee and the City of New Bedford, a municipal corporation of the
Commonwealth of Massachusetts (the "City"), having as a business address 133
Williams Street, New Bedford, Massachusetts 02740, as lessor (as amended from
time to time, the "Lease"); and
WHEREAS, the City is owner of a fee interest in the Land; and
WHEREAS, Borrower has agreed to develop and operate a new plant facility to
be constructed on the Land by Borrower, the facility constructed or being
constructed pursuant to certain Construction Contracts and Plans as defined and
described in a certain Construction Loan Agreement of even date between Lender
and Borrower (the "Loan Agreement"), and the use, maintenance and operation
thereof, and all contracts, agreements, instruments, transactions, rights and
obligations related thereto (the "Project"); and
WHEREAS, pursuant to the terms and conditions of the Loan Agreement, Lender
will make a construction loan to Borrower and extend other credit to Borrower
for the purpose of financing the cost of constructing and operating the Project
and related expenses (the "Construction Loan"), which Construction Loan may have
a maximum principal amount of $4,500,000.00 ("Construction Loan Amount"); and
WHEREAS, the Construction Loan shall have a maturity date of April 30, 2000
("Construction Loan Maturity Date"); and
WHEREAS, in order to provide financing for the Project and to pay the
Construction Loan, the Borrower will issue its Taxable Adjustable Rate Notes,
Series 2000, in the aggregate principal amount of up to Eleven Million Dollars
($11,000,000) (the "Notes") under terms and conditions to be more fully set
forth in a Trust Indenture (the "Indenture"), by and between the Borrower and
The Huntington National Bank, Columbus, Ohio, as Trustee; and
WHEREAS, to enhance the marketability of the Notes, the Borrower has
applied to the Lender for the issuance of a letter of credit (the "Letter of
Credit") in favor of the Trustee in an amount of up to $11,500,000 to secure the
payment of the principal of and accrued interest on the Notes; and
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<PAGE>
WHEREAS, the Borrower and the Lender will enter into a Reimbursement
Agreement (the "Reimbursement Agreement") setting forth, among other things, the
Lender's commitment to issue the Letter of Credit and the Borrower's agreement
to reimburse the Bank for any and all payments made by the Bank pursuant to the
Letter of Credit; and
WHEREAS, the Borrower, the Lender and the Trustee will enter into a Note
Pledge Agreement (the "Note Pledge Agreement") as security for the Borrower's
obligations pursuant to the Reimbursement Agreement; and
WHEREAS, execution, delivery and implementation of this Leasehold Mortgage
is required by Lender prior to its funding of the Construction Loan and the
making of disbursements under the Loan Agreement; and
WHEREAS, Borrower has duly authorized the execution, delivery and
performance of this Leasehold Mortgage;
NOW, THEREFORE, with reference to the foregoing Recitals, and for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, Lender and Borrower
agree as follows:
Borrower does hereby give, grant, bargain, sell, transfer, assign, mortgage
and convey unto Lender, and its successors and assigns, WITH MORTGAGE COVENANTS
AND UPON THE STATUTORY CONDITION, all of the following described property
(hereinafter collectively referred to as the "Property"):
(a) The leasehold estate created by the certain Sublease from the New
Bedford Redevelopment Authority dated January 4, 2000, and all easements
and rights appurtenant thereto, including any and all extensions or
renewals thereof, or substitutions or replacements thereof and all rights,
privileges and benefits now existing or hereafter arising under the
Sublease, including, without limitation all rights of reassignment and all
rights to exercise options to extend or renew the Sublease or to purchase
the fee title to Premises and appurtenances thereto, and all rights to tax
refunds, insurance proceeds, eminent domain awards or payments in lieu
thereof ("the Sublease") covering all that certain tract or parcel of land
located in the New Bedford Industrial Park, John Vertente Boulevard
Extension, New Bedford, Massachusetts, more particularly described in
Exhibit A attached hereto and by this reference made a part hereof,
together with all right, title and interest of Borrower, including any
after-acquired title or reversion, in and to the rights-of-way, streets and
alleys adjacent thereto, and all easements, rights-of-way, licenses,
operating agreements, strips and gores of land, vaults, roads, streets,
ways, alleys, passages, sewers, sewer rights, waters, water courses, water
rights and powers, oil, gas and other minerals, flowers, shrubs, crops,
trees, timber and other emblements now or hereafter located on, servicing
or benefiting the land or under or above same, and all estates, rights,
titles, interests, privileges, liberties, tenements, hereditaments,
easements and appurtenances whatsoever, in any way belonging, relating to
or appertaining to said
4
<PAGE>
tract or parcel of land or any part thereof, or which hereafter shall in
any way belong, relate or be appurtenant thereto, whether now owned or
hereafter acquired by Borrower and the reversion and reversions, remainder
and remainders, and all the estate, right, title, interest, property,
possession, claim and demand whatsoever at law, as well as in equity, of
the Borrower of, in and to the same (all hereinafter collectively referred
to as the "Land"); and
(b) All buildings, structures, parking areas, landscaping, and other
improvements of every nature now or hereafter situated, erected or placed
on the Land (hereinafter referred to as the "Improvements"), and all
materials intended for construction, reconstruction, alteration and repairs
of the Improvements now or hereafter erected, all of which materials shall
be deemed to be included within the Improvements immediately upon the
delivery thereof to the Land; and
(c) All goods and items purchased with the proceeds of the Note or Notes
(as to all of which Lender claims a purchase money security interest under
Uniform Commercial Code (S) 9-312(4)), including, but not limited to, all
fixtures, machinery, equipment, furniture, inventory, building supplies,
appliances and other articles of personal property (hereinafter
collectively referred to as the "Personal Property"), including, but not
limited to, all gas and electric fixtures, radiators, heaters, furnaces,
engines and machinery, boilers, ranges, ovens, elevators and motors,
bathtubs, sinks, commodes, basins, pipes, faucets and other plumbing,
heating and air conditioning equipment, mirrors, refrigerating plant,
refrigerators, iceboxes, dishwashers, carpeting, floor coverings,
furniture, light fixtures, signs, lawn equipment, water heaters, and
cooking apparatus and appurtenances, and all other fixtures and equipment
now or hereafter owned by Borrower and located in, on or about, or used or
intended to be used with or in connection with the use, operation, or
enjoyment of the Land or the Improvements, whether installed in such a way
as to become a part thereof or not, including all extensions, additions,
improvements, betterments, renewals and replacements of any of the
foregoing and all the right, title and interest of Borrower in and to any
of the foregoing now owned or hereafter acquired by Borrower, all of which
are hereby declared and shall be deemed to be fixtures and accessions to
the freehold and a part of the Improvements as between the parties hereto
and all persons claiming by, through or under them; and
(d) All right, title and interest of Borrower in and to all policies of
insurance, licenses, franchises, permits, service contracts, maintenance
contracts, property management agreements, equipment leases, tradenames,
trademarks, trade dress, service-marks, logos, goodwill, accounts, chattel
paper and general intangibles as defined in the Uniform Commercial Code as
enacted in the Commonwealth of Massachusetts, which in any way now or
hereafter belong, relate or appertain to the Land, the Improvements or the
Personal Property or any part thereof now owned or hereafter acquired by
Borrower, including, without limitation, all condemnation payments,
insurance proceeds and escrow funds and all other property of Borrower
deposited with Lender or held by Lender pursuant to the Loan Agreement
(hereinafter referred to as the "Intangible Property"); and
5
<PAGE>
(e) All present and future leases, tenancies, occupancies and licenses,
whether written or oral ("Leases"), of the Land, the Improvements, the
Personal Property and the Intangible Property, or any combination or part
thereof, and all income, rents, issues, royalties, profits, revenues,
security deposits and other benefits of the Land, the Improvements, the
Personal Property and the Intangible Property, from time to time accruing,
all payments under Leases, and all payments on account of oil and gas and
other mineral Leases, working interests, production payments, royalties,
overriding royalties, rents, delay rents, operating interests,
participating interests and other such entitlements, and all the estate,
right, title, interest, property, possession, claim and demand whatsoever
at law, as well as in equity, of Borrower of, in and to the same
(hereinafter collectively referred to as the "Revenues"); and
(f) All rights, privileges and benefits, of whatever character, to which
Borrower may hereafter be entitled pursuant to (S)365 of the Bankruptcy
Code, including, without limitation, all of Borrower's rights to retain its
rights under the Sublease in respect of the Property after rejection of the
Sublease by the Authority or the City, or by any Trustee of the Authority
or the City, and all of Borrower's rights to treat the Sublease as
rejected, and together with any and all other rights, privileges and
benefits, of whatever character, to which Borrower may hereafter be
entitled to remain in possession of the Property pursuant to any agreement
among Borrower, the Authority and the City; and
(g) All the rights, title, interest of Borrower in and to all plans and
specifications relating to the Improvements on the Land (hereinafter
collectively referred to as the "Plans"); and
(h) All proceeds, products, substitutions and accessions of the foregoing
of every type; and
(i) All judgments, awards of damages and settlements hereafter made as a
result or in lieu of any taking of the Property or any interest therein or
part thereof under the power of eminent domain, or for any damage (whether
caused by such taking or otherwise) to the Property, or the improvements
thereon or any part thereof, including any award for change of grade of
streets.
TO HAVE AND TO HOLD the Property and all parts, rights, members and
appurtenances thereof, to the use, benefit and behoof of Lender and the
successors and assigns of Lender,in accordance with Borrower's Sublease of the
Land; and Borrower covenants that Borrower is lawfully seized and possessed of
the Property in accordance with Borrower's Sublease of the Land and has good
right to convey the Property and that the conveyances in this Security Deed are
subject to only those matters (hereinafter referred to as the "Permitted
Encumbrances") expressly set forth in Exhibit B attached hereto and by this
---------
reference made a part hereof. Except for the Permitted Encumbrances, Borrower
does warrant and will forever defend the title to the Property against the
claims of all persons whomsoever.
6
<PAGE>
This Security Deed is intended to constitute: (i) a leasehold mortgage
under the laws of the Commonwealth of Massachusetts, and (ii) a security
agreement and financing statement under the Uniform Commercial Code as enacted
in the Commonwealth of Massachusetts. This Security Deed is also intended to
operate and be construed as an absolute present assignment of the rents, issues
and profits of the Property, Borrower hereby agreeing that Lender is entitled to
receive the rents, issues and profits of the Property prior to an Event of
Default and without entering upon or taking possession of the Property.
PROVIDED, NEVERTHELESS, that if Borrower or its successors or assigns pays
and performs or causes to be paid and performed the following described
indebtedness and obligations (hereinafter all collectively referred to as the
"Secured Obligations"), then this Security Deed shall be void; otherwise, shall
remain in full force:
(a) The debt evidenced by that certain Commercial Note (hereinafter,
together with any and all renewals, modifications, consolidations and extensions
thereof, referred to as the "Note") of even or recent date with this Security
Deed, made by Borrower to the order of Lender in the principal face amount of
Four Million Five Hundred Thousand and 00/100ths Dollars ($4,500,000.00),
together with interest, prepayment fees and other fees and charges as provided
therein;
(b) The full and prompt payment and performance of all of the provisions,
agreements, covenants and obligations contained in the said Loan Agreement;
(c) The full and prompt payment and performance of all of the provisions,
agreements, covenants and obligations contained in the said Reimbursement
Agreement and said Note Pledge Agreement;
(d) Any and all future advances made by Lender to Borrower pursuant to the
Note, the Loan Agreement, the Reimbursement Agreement, the Note Pledge
Agreement, this Security Deed, and the Loan Documents as hereinafter defined up
to a maximum principal amount outstanding from time to time (exclusive of
amounts advanced to protect the security) of Sixteen Million and 00/100ths
Dollars ($16,000,000.00) together with interest, in accordance with the
provisions of Paragraph 32 hereof;
(e) The full and prompt payment and performance of all of the provisions,
agreements, covenants and obligations herein contained and contained in any
other agreements, documents or instruments now or hereafter evidencing, securing
or otherwise relating to the indebtedness evidenced by the Note and the
Reimbursement Agreement (the Note, this Security Deed, the Loan Agreement, the
Collateral Assignment of Project Documents, the Reimbursement Agreement, the
Note Pledge Agreement, and such other agreements, documents and instruments,
together with any and all renewals, amendments, extensions and modifications
thereof, are hereinafter collectively referred to as the "Loan Documents"), and
the payment of all other sums therein covenanted to be paid;
7
<PAGE>
(f) Any and all additional advances made by Lender to preserve and protect
the Improvements or to protect or preserve the Property or the security interest
created hereby on the Property, or for taxes, assessments or insurance premiums
as hereinafter provided, or for performance of any of Borrower's obligations
hereunder or under the other Loan Documents or for any other purpose provided
herein or in the other Loan Documents (whether or not the original Borrower
remains the owner of the Property at the time of such advances); and
(g) Any and all other indebtedness, however incurred, which may now or
hereafter be due and owing from Borrower to Lender, now existing or hereafter
coming into existence, however and whenever incurred or evidenced, whether
expressed or implied, direct or indirect, absolute or contingent, or due or to
become due, and all renewals, modifications, consolidations and extensions
thereof.
This Security Deed is upon the STATUTORY CONDITION, upon the breach of
which Lender shall have the STATUTORY POWER OF SALE, which is hereby
incorporated herein by reference.
Borrower hereby further covenants and agrees with Lender as follows:
1. Payment and Performance of Secured Obligations. Borrower shall
----------------------------------------------
promptly pay the Secured Obligations when due, and fully and promptly perform
all of the provisions, agreements, covenants and obligations of the Secured
Obligations.
2. Funds for Impositions. Subject to Lender's option under Paragraphs 3
---------------------
and 4 hereof, Borrower shall pay to Lender on the days that monthly installments
of interest are payable under the Note, until the Note is paid in full, a sum
(hereinafter referred to as the "Funds") equal to one-twelfth (1/12) of the
following items (hereinafter collectively referred to as the "Impositions"): (a)
the yearly water and sewer bills, real estate taxes, ad valorem taxes, personal
property taxes, assessments, betterments, and all governmental charges of every
name and restriction which may be levied on the Property, and (b) the yearly
premium installments for the insurance covering the Property and required by
Lender pursuant to Paragraph 4 hereof. The Impositions shall be estimated
initially and from time to time by Lender on the basis of assessments and bills
and estimates thereof. The Funds shall be held by Lender, free of interest and
free of any liens or claims on the part of creditors of Borrower and as part of
the security for the Secured Obligations. The Funds shall not be, nor be deemed
to be, trust funds but may be commingled with the general funds of Lender.
Lender shall apply the Funds to pay the Impositions with respect to which the
Funds were paid to the extent of the Funds then held by Lender and provided
Borrower has delivered to Lender the assessments or bills therefor. Lender shall
make no charge for so holding and applying the Funds or for verifying and
compiling said assessments and bills. The Funds are pledged as additional
security for the Secured Obligations, and may be applied, at Lender's option and
without notice to Borrower, to the payment of the Secured Obligations upon any
Event of Default hereunder. If at any time the amount of the Funds held by
Lender shall be less than the amount deemed necessary by Lender to pay
Impositions as such become due, Borrower shall pay to Lender any amount
necessary to make up
8
<PAGE>
the deficiency within five (5) days after notice from Lender to Borrower
requesting payment thereof. Upon performance and payment in full of the Secured
Obligations, Lender shall promptly refund to Borrower any Funds held by Lender.
3. Impositions, Liens and Charges. Borrower shall pay all Impositions
------------------------------
and other charges, if any, attributable to the Property, and at Lender's option,
shall pay in the manner provided under Paragraph 2 hereof. Borrower shall
furnish to Lender all bills and notices of amounts due under this Paragraph 3 as
soon as received, and in the event Borrower shall make payment directly,
Borrower shall furnish to Lender receipts evidencing such payments at least five
(5) days prior to the dates on which such payments are due. Borrower shall
promptly discharge (by bonding, payment or otherwise) any lien filed against the
Property and will keep and maintain the Property free from the claims of all
persons supplying labor or materials to the Property.
4. Property and Other Insurance.
----------------------------
(a) Borrower, at its expense, shall procure and maintain for the benefit
of Borrower and Lender, insurance policies issued by such insurance companies,
in such amounts, in such form and substance, and with such coverages,
endorsements, deductibles, and expiration dates as are acceptable to Lender,
providing the following types of insurance covering the Property:
(i) "All Risks" property insurance (including broad form flood,
broad form earthquake and comprehensive boiler and machinery coverages) on the
Improve-ments and Personal Property in an amount not less than one hundred
percent (100%) of the full replacement cost of the Improvements and the Personal
Property determined annually by an insurer or qualified appraiser selected and
paid for by Borrower and acceptable to Lender, with deductibles not to exceed
$25,000 for any one occurrence, with a replacement cost coverage endorsement, an
agreed amount endorsement, and, if requested by Lender, a contingent liability
from operation of building laws endorsement, a demolition cost endorsement and
an increased cost of construction endorsement in such amounts as Lender may
require. Full replacement cost as used herein means the cost of replacing the
Improvements (exclusive of the cost of excavations, foundations and footings
below the lowest basement floor) and the Personal Property without deduction for
physical depreciation thereof;
(ii) During the course of reconstruction or significant repair of any
Improvements on the Land, the insurance required by clause (i) above shall be
written on a builders risk, completed value, non-reporting form, meeting all of
the terms required by clause (i) above covering the total value of work
performed, materials, equipment, machinery and supplies furnished, existing
structures, and temporary structures being erected on or near the Land,
including coverage against collapse and damage during transit or while being
stored off-site, and containing a soft costs (including loss of rents) coverage
endorsement and a permission to occupy endorsement,
4
(iii) Flood insurance if at any time the Improvements are located in
any federally designated "special hazard area" (including any area having
special flood, mudslide
9
<PAGE>
and/or flood-related erosion hazards, and shown on a Flood Hazard Boundary Map
or a Flood Insurance Rate Map) and if the broad form flood coverage required by
clause (i) above is not available, in an amount equal to the full replacement
cost or the maximum amount then available under the Massachusetts Flood
Insurance Program;
(iv) Rent loss insurance in an amount sufficient to recover at least
(1) the total estimated gross receipts from all sources of income for the
Property, including, without limitation, rental income, for a twelve month
period, plus (2) Impositions for a twelve month period to the extent not
included in (1) above;
(v) Commercial general liability insurance against claims for
personal injury (to include, without limitation, bodily injury and personal and
advertising injury) and property damage liability, all on an occurrence basis,
if available, with such coverages as Lender may request (including, without
limitation, contractual liability coverage, completed operations coverage for a
period of two (2) years following completion of construction of any Improvements
on the Land, and coverages equivalent to an ISO broad form endorsement), with a
general aggregate limit of not less than $1,000,000, a completed operations
aggregate limit of not less than $1,000,000, and a combined single "per
occurrence" limit of not less than $1,000,000 for bodily injury, property damage
and medical payments;
(vi) During the course of construction or repair of any Improvements
on the Land, owner's contingent or protective liability insurance covering
claims not covered by or under the terms or provisions of the insurance required
by clause (v) above;
(vii) Employers liability insurance;
(viii) Umbrella liability insurance with limits of not less than
$1,000,000 to be in excess of the limits of the insurance required by clauses
(v), (vi) and (vii) above, with coverage at least as broad as the primary
coverages of the insurance required by clauses (v), (vi) and (vii) above, with
any excess liability insurance to be at least as broad as the coverages of the
lead umbrella policy. All such policies shall be endorsed to provide defense
coverage obligations;
(ix) Workers' compensation insurance for all employees of Borrower
engaged on or with respect to the Land or Improvements; and
(x) Such other insurance in such form and in such amounts as may
from time to time be required by Lender against other insurable hazards and
casualties which at the time are commonly insured against in the case of
properties of similar character and location to the Land and the Improvements.
Borrower shall pay all premiums on insurance policies, and at Lender's
option, shall pay in the manner provided under Paragraph 2 hereof. The insurance
policies provided for in clauses (v), (vi) and above shall name Lender as an
additional insured and shall contain a cross liability/severability endorsement.
The insurance policies provided for in clauses (i), (ii), (iii)
10
<PAGE>
and (iv) above shall name Lender as mortgagee and loss payee, shall be first
payable in case of loss to Lender, and shall contain mortgage clauses and
lender's loss payable endorsements in form and substance acceptable to Lender.
Borrower shall deliver duplicate originals or certified copies of all such
policies to Lender, and Borrower shall promptly furnish to Lender all renewal
notices and all receipts of paid premiums. At least thirty (30) days prior to
the expiration date of the policies, Borrower shall deliver to Lender duplicate
originals or certified copies of renewal policies in form satisfactory to Lender
(b) All policies of insurance required by this Security Deed shall contain
clauses or endorsements to the effect that (i) no act or omission of either
Borrower or anyone acting for Borrower (including, without limitation, any
representations made by Borrower in the procurement of such insurance), which
might otherwise result in a forfeiture of such insurance or any part thereof, no
occupancy or use of the Property for purposes more hazardous than permitted by
the terms of the policy, and no foreclosure or any other change in title to the
Property or any part thereof, shall affect the validity or enforceability or
such insurance insofar as Lender is concerned, (ii) the insurer waives any right
of setoff, counterclaim, subrogation, or any deduction in respect of any
liability of Borrower and Lender, (iii) such insurance is primary and without
right of contribution from any other insurance which may be available, (iv) such
policies shall not be modified, cancelled or terminated without the insurer
thereunder giving at least thirty (30) days prior written notice to Lender by
certified or registered mail, and (v) that Lender shall not be liable for any
premiums thereon or subject to any assessments thereunder, and shall in all
events be in amounts sufficient to avoid any coinsurance liability.
(c) With the prior consent of Lender, which consent is not to be
unreasonably withheld, the insurance required by this Security Deed may be
effected through a blanket policy or policies covering additional locations and
property of Borrower not included in the Property, provided that such blanket
policy or policies comply with all of the terms and provisions of this Paragraph
and contain endorsements or clauses assuring that any claim for recovery will
not be less than that which a separate policy would provide, including, without
limitation, a priority claim endorsement in the case of property insurance and
an aggregate limits of insurance per location endorsement in the case of
liability insurance.
(d) All policies of insurance required by this Security Deed shall be
issued by companies licensed to do business in the state where the policy is
issued and also in the Commonwealth of Massachusetts and having a rating in
Best's Key Rating Guide of at least "A" and a financial size category of at
least "VIII".
(e) Borrower shall not carry separate insurance, concurrent in kind or
form or contributing in the event of loss, with any insurance required under
this Security Deed unless such insurance complies with the terms and provisions
of this Paragraph.
(f) In the event of any loss or damage to the Property, Borrower shall
give immediate written notice to the insurance carrier and Lender. Borrower
hereby irrevocably authorizes and empowers Lender, at Lender's option and in
Lender's sole discretion, as attorney in fact for Borrower, to make proof of
such loss, to adjust and compromise any claim under insurance
11
<PAGE>
policies, to appear in and prosecute any action arising from such insurance
policies, to collect and receive insurance proceeds, and to deduct therefrom
Lender's expenses incurred in the collection of such proceeds. If Borrower is
not then in default under the Loan Documents, Lender will agree to the use of
insurance proceeds for reconstruction or repair of the Property, under Lender's
usual construction loan procedures. Otherwise, Lender is authorized to apply the
balance of such proceeds to the payment of the Secured Obligations whether or
not then due. If Lender shall require or if Borrower desires to proceed with
(and is not otherwise in default) the reconstruction or repair of the Property,
to hold the balance of such proceeds to be used to pay Impositions and the
Secured Obligations as they become due during the course of reconstruction or
repair of the Property and to reimburse Borrower, in accordance with such terms
and conditions as Lender may prescribe, for the costs of reconstruction or
repair of the Property, and upon completion of such reconstruction or repair to
apply any excess to the payment of the Secured Obligations. If under Paragraph
22 hereof the Property is sold or the Property is acquired by Lender, all right,
title and interest of Borrower in and to any insurance policies and unearned
premiums thereon and in and to the proceeds thereof resulting from loss or
damage to the Property prior to the sale or acquisition shall pass to Lender or
any other successor in interest to Borrower or purchaser or grantor of the
Property but receipt of any insurance proceeds and any disposition of the same
by Lender shall not constitute a waiver of any rights of Lender, statutory or
otherwise, and specifically shall not constitute a waiver of the right of
foreclosure by Lender in the event of Default or failure of performance by
Borrower of any of the Obligations.
5. Preservation and Maintenance. Borrower (a) shall not permit or commit
----------------------------
waste, impairment, or deterioration of the Property or abandon the Property, (b)
shall restore or repair promptly and in a good and workmanlike manner all or any
part of the Property in the event of any damage, injury or loss thereto, to the
equivalent of its condition prior to such damage, injury or loss, or such other
condition as Lender may approve in writing, provided that Lender shall release
net insurance proceeds, to the extent actually received by Lender, to Borrower
in accordance with the construction disbursement procedures specified in the
Loan Agreement (provided, however, the insufficiency of such proceeds shall not
relieve Borrower of its obligations to restore hereunder), (c) shall keep the
Property, including the Improvements and the Personal Property, in good order,
repair and tenantable condition and shall replace fixtures, equipment, machinery
and appliances on the Property when necessary to keep such items in good order,
repair, and tenantable condition, and (d) shall comply with all laws,
ordinances, regulations and requirements of any governmental body applicable to
the Property. Borrower covenants and agrees to give Lender prompt notice of any
non-compliance with such laws, ordinances, regulations or requirements and of
any notice of non-compliance therewith which it receives or any threatened or
pending proceedings in respect thereto or with respect to the Property
(including, without limitation, changes in zoning). Neither Borrower nor any
tenant or other person shall remove, demolish or alter any Improvements now
existing or hereafter erected on the Property or any Personal Property in or on
the Property except when incident to the replacement of Personal Property with
items of like kind. Borrower further covenants and agrees that, without the
prior written consent of Lender herein, no part of the Property shall be
declared, or become the subject of, a condominium under the Maine Condominium
Act, as it may be amended or supplemented, or become the subject of any
covenants or restrictions, or any planned unit development, or any other type of
development that would control or restrict the uses to
12
<PAGE>
which the Land and Improvements may be put or the scheme or arrangement or its
development or the design, location or character of its buildings or
improvements, or which would impose Obligations or assessments of any type upon
any owners or tenants of the Property, or upon any other parties who may use or
enjoy the Property.
6. Transfers. Borrower will not, directly or indirectly, voluntarily or
---------
involuntarily, without the prior written consent of Lender in each instance: (a)
sell, convey, assign, transfer, lease, option, mortgage, pledge, hypothecate or
dispose of the Property, or any part thereof or interest therein, except as
expressly permitted by the terms of this Security Deed; or (b) create or suffer
to be created or to exist any lien, encumbrance, security interest, mortgage,
pledge, restriction, attachment or other charge of any kind upon the Property,
or any part thereof or interest therein, except for Permitted Encumbrances.
7. Hazardous Materials Warranties and Indemnification.
--------------------------------------------------
(a) Definitions. The following definitions shall apply for purposes of
-----------
this Paragraph 7:
(i) "Environmental Laws" shall mean and include each and every
federal, state or local statute, regulation or ordinance or any judicial or
administrative decree or decision, whether now existing or hereafter enacted,
promulgated or issued, with respect to any Hazardous Materials (as hereinafter
defined), drinking water, groundwater, wetlands, landfills, open dumps, storage
tanks, underground storage tanks, solid waste, waste water, storm water run-off,
waste emissions or wells. Without limiting the generality of the foregoing, the
term shall encompass each of the following statutes and regulations promulgated
thereunder as well as any amendments and successors to such statutes and
regulations, as may be enacted and promulgated from time to time: (i) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(codified in scattered sections of 26 U.S.C., 33 U.S.C., 42 U.S.C. and 42
U.S.C.(S)9601 et seq.); (ii) the Resource Conservation and Recovery Act of 1976
-- ---
(42 U.S.C.(S)6901 et seq.); (iii) Hazardous Materials Transportation Act (49
-- ---
U.S. C.(S)1801 et seq.); (iv) the Toxic Substances Control Act (15 U.S.C.(S)2061
-- ---
et seq.); (v) the Clean Water Act (33 U.S.C.(S)1251 et seq.), (vi) the Clean Air
- -- --- -- ---
Act (42 U.S.C.(S)7401 et seq.); (vii) the Safe Drinking Water Act (21
-- ---
U.S.C.(S)349 42 U.S.C.(S)201 and (S)300f et seq.);; (viii) the Superfund
-- ---
Amendment and Reauthorization Act of 1986 (codified in scattered sections of 10
U.S.C., 29 U.S.C., 33 U.S.C. and 42 U.S.C.); (ix) Title III of the Superfund
Amendment and Reauthorization Act (40 U.S. C.(S)1101 et seq.); (x) the
-- ---
Massachusetts Oil and Hazardous Materials Release Prevention and Response Act,
M.G.L. c. 21E; and (xi) the Massachusetts Hazardous Waste Management Act, M.G.L.
c. 21C.
(ii) "Hazardous Materials" shall mean each and every element,
compound, chemical mixture, contaminant, pollutant, material, waste or other
substance which is defined, determined or identified as hazardous or toxic under
any Environmental Law. Without limiting the generality of the foregoing, the
term shall mean and include:
(A) "hazardous substances" as defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Superfund
13
<PAGE>
Amendment and Reauthorization Act of 1986, or Title III of the Superfund
Amendment and Reauthorization Act, each as amended, and regulations promulgated
thereunder;
(B) "hazardous waste" as defined in the Resource Conservation
and Recovery Act of 1976, as amended, and regulations promulgated thereunder;
(C) "hazardous materials" as defined in the Hazardous Materials
Transportation Act, as amended, and regulations promulgated thereunder;
(D) "chemical substance or mixture" as defined in the Toxic
Substances Control Act, as amended, and regulations promulgated thereunder;
(E) "hazardous matter" as defined in the Hazardous Matter
Control Law, as amended, and regulations promulgated thereunder; and
(F) "hazardous waste" as defined in the Maine Hazardous Waste,
Septage and Solid Waste Management Act, as amended, and regulations promulgated
thereunder.
(iii) "Indemnified Parties" shall mean Lender, Lender's parent,
subsidiaries and affiliates, each of their respective shareholders, directors,
officers, employees and agents, and the successors and assigns of any of them,
and "Indemnified Party" shall mean any one of the Indemnified Parties.
(iv) "Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, storing, escaping, leaching,
dumping, discarding, burying, abandoning, or disposing into the environment.
(v) "Threat of Release" shall mean a substantial likelihood of a
Release which requires action to prevent or mitigate damage to the environment
which may result from such Release.
(b) Environmental Representations and Warranties of Borrower. Borrower
--------------------------------------------------------
represents and warrants to Lender as follows except as has been disclosed to
Lender in a certain Environmental Site Assessment dated August 28, 1998, done by
Sitec Environmental, Inc. for the City, and in a certain Supplemental Subsurface
Investigation dated July 20, 1999, done by Vanasse Hangen Vrustlin, Inc. for the
City:
(i) To the best of Borrower's knowledge, no condition, activity or
conduct exists on or in connection with the Property which constitutes a
violation of any Environmental Law.
(ii) To the best of Borrower's knowledge, there has been no Release
or Threat of Release of any Hazardous Materials on, upon or into the Property,
nor, to the best of Borrower's knowledge, has there been any such Release or
Threat of Release of any Hazardous
14
<PAGE>
Materials on, upon or into any real property in the vicinity of the Property
which, through soil or groundwater migration, could reasonably be expected to
come to be located on the Property.
(iii) There are no existing or closed underground storage tanks on
the Property.
(iv) None of the following are or will be located in, on, under or
constitute a part of the Property: asbestos or asbestos-containing material in
any form or condition; urea formaldehyde insulation, transformers or other
equipment which contain dicletric fluid containing polychlorinated biphenyls; or
leaded paint.
(v) There are no existing or closed sanitary landfills, solid waste
disposal sites, or hazardous waste treatment, storage or disposal facilities on
or affecting the Property.
(vi) No notice has been issued to Borrower by any agency, authority,
or unit of government that Borrower has been identified as a potentially
responsible party under any Environmental Law.
(vii) There exists no investigation, action, proceeding, or claim by
any agency, authority, or unit of government or by any third party which could
result in any liability, penalty, sanction, or judgment under any Environmental
Law with respect to any condition, use or operation of the Property or any other
real property owned. leased or operated by Borrower.
(viii) There has been no claim by any party that any use, operation,
or condition of the Property has caused any nuisance or any other liability or
adverse condition on any other property
(ix) There is presently no condition on the Land or Improvements
that would constitute any form of pollution, contamination, discharge, spillage,
uncontrolled loss, seepage or filtration of hazardous materials.
(c) Environmental Covenants of Borrower. The Borrower covenants and agrees
-----------------------------------
with Lender that Borrower shall
(i) comply with all Environmental Laws;
(ii) not store (except in compliance with all Environmental Laws
pertaining thereto), dispose of, Release or allow the Release of any Hazardous
Materials on the Property;
(iii) neither directly nor indirectly transport or arrange for the
transport of any Hazardous Materials (except in compliance with all
Environmental Laws pertaining thereto); and
(iv) upon the request of Lender, take all such action (including,
without limitation, the conducting of environmental assessments at the sole
expense of the Borrower in accordance with subparagraph (e) hereof) to confirm
that no Hazardous Materials are or ever were stored, Released or disposed of on
the Property.
15
<PAGE>
(d) Environmental Indemnity. Borrower covenants and agrees, at Borrower's
-----------------------
sole cost and expense, to indemnify, defend (at trial and appellate levels, and
with attorneys, consultants and experts acceptable to Lender) and hold each
Indemnified Party harmless from and against any and all liens, damages, losses,
liabilities, obligations, settlement payments, penalties, assessments,
citations, directives, claims, litigation, demands, defenses, judgments, suits,
proceedings, costs, disbursements or expenses of any kind or of any nature
whatsoever (including, without limitation, attorneys', consultants' and experts'
fees and disbursements incurred in investigating, defending, settling or
prosecuting any claim, litigation or proceeding) which may at any time be
imposed upon, incurred by or asserted or awarded against such Indemnified Party
or the Property and arising directly or indirectly from or out of: (A) the
Release or Threat of Release of any Hazardous Materials on, in, under or
affecting all or any portion of the Property or any surrounding areas,
regardless of whether or not caused by or within the control of Borrower; (B)
the violation of any Environmental Laws relating to or affecting the Property or
the Borrower, whether or not caused by or within the control of Borrower; (C)
the failure of Borrower to comply fully with the terms and conditions of this
Paragraph; (D) the violation of any Environmental Laws in connection with other
real property of Borrower which gives or may give rise to any rights whatsoever
in any party with respect to the Property by virtue of any Environmental Laws;
(E) the breach of any representation or warranty contained in this Paragraph or
(F) the enforcement of this Paragraph, including, without limitation (i) the
costs of assessment, containment and/or removal of any and all Hazardous
Materials from all or any portion of the Property or any surrounding areas, (ii)
the costs of any actions taken in response to a Release or Threat of Release of
any Hazardous Materials on, in, under or affecting all or any portion of the
Property or any surrounding areas to prevent or minimize such Release or Threat
of Release so that it does not migrate or otherwise cause or threaten danger to
present or future public health, safety, welfare or the environment, and (iii)
costs incurred to comply with the Environmental Laws in connection with all or
any portion of the Property or any surrounding areas. Lender's rights under this
Paragraph shall be in addition to all other rights of Lender under this Security
Deed, the Note, the Construction/Term Loan Agreement, and the other Loan
Documents and payments by Borrower under this Paragraph shall not reduce
Borrower's obligations and liabilities under any of the Loan Documents.
(e) Notice to Lender. If Borrower receives any notice or obtains knowledge
----------------
of (i) any potential or known Release or Threat of Release of any Hazardous
Materials at or from the Property, notification of which must be given to any
governmental agency under any Environmental Law, or notification of which has,
in fact, been given to any governmental agency, or (ii) any complaint, order,
citation or notice with regard to air emissions, water discharges, or any other
environmental health or safety matter affecting Borrower or the Property (an
"Environmental Complaint") from any person or entity (including, without
limitation, the Environmental Protection Agency), then Borrower shall
immediately notify Lender orally and in writing of said Release or Threat of
Release or Environmental Complaint. Upon such notification, Lender may, at its
election without regard to whether an Event of Default has occurred, obtain one
or more environmental assessments of the Property prepared by a geohydrologist,
an independent engineer or other qualified consultant or expert approved by the
Lender which evaluates or confirms (i) whether any Hazardous Materials are
present in the soil
16
<PAGE>
or water at or adjacent to the Property, and (ii) whether the use and operation
of the Property comply with all Environmental Laws. Environmental assessments
may include detailed visual inspections of the Property, including, without
limitation, any and all storage areas, storage tanks, drains, dry wells and
leaching areas, and the taking of soil samples, surface water samples and ground
water samples, as well as such other investigations or analyses as are necessary
or appropriate for a complete determination of the compliance of the Property
and the use and operation thereof with all applicable Environmental Laws. All
such environmental assessments shall be at the cost and expense of the Borrower.
(f) Survival, Assignability, and Transferability.
--------------------------------------------
(i) The warranties, representations and indemnity set forth in
subparagraphs (b) and (d) of this Paragraph shall survive the payment and
performance of the Secured Obligations and any exercise by Lender of any
remedies under this Security Deed including, without limitation, the power of
sale, or any other remedy in the nature of foreclosure, and shall not merge with
any deed given by Borrower to Lender in lieu of foreclosure or any deed under a
power of sale.
(ii) It is agreed and intended by Borrower and Lender that the
warranties, representations, and indemnity set forth above in subparagraphs (b)
and (d) of this Paragraph may be assigned or otherwise transferred by Lender to
its successors and assigns and to any subsequent purchasers of all or any
portion of the Property by, through or under Lender, without notice to Borrower
and without any further consent of Borrower. To the extent consent or any such
assignment or transfer is required by law, advance consent to any such
assignment or transfer is hereby given by Borrower in order to maximize the
extent and effect of the warranties, representations, and indemnity given hereby
8. Use of Property. Unless required by applicable law or unless Lender
---------------
has otherwise agreed in writing, Borrower shall not allow changes in the nature
of the occupancy or use for which the Property was intended at the time this
Security Deed was executed. Borrower shall not initiate or acquiesce in a change
in the zoning classification of the Property or subject the Property to
restrictive or negative covenants without Lender's written consent. Borrower
shall comply with, observe and perform all zoning and other laws affecting the
Property, all restrictive covenants affecting the Property, and all licenses and
permits affecting the Property.
9. Protection of Lender's Security. If Borrower fails to perform the
-------------------------------
covenants and agreements contained in this Security Deed, or if any action or
proceeding is commenced which affects the Property or title thereto or the
interest of Lender therein, including, but not limited to, eminent domain,
insolvency, code enforcement or arrangements or proceedings involving a bankrupt
or decedent, then Lender at Lender's option may make such appearances, disburse
such sums and take such action as Lender deems necessary to protect Lender's
interest, including, but not limited to, disbursement of attorneys' fees,
payment, contest or compromise of any lien or security interest which is prior
to the lien or security interest of this Security Deed, and entry upon the
Property to make repairs. At its option, and without limitation, Lender may pay
any Impositions, or provide for the maintenance and preservation of the
Property. Any amounts
17
<PAGE>
disbursed by Lender pursuant to this Paragraph 9, with interest thereon, shall
become a portion of the Secured Obligations. Unless Borrower and Lender agree to
other terms of payment, such amounts shall be payable upon notice from Lender to
Borrower requesting payment thereof and shall bear interest from the date of
disbursement at the Default Rate as that term is defined in the Note unless
collection from Borrower of interest at such rate would be contrary to
applicable law, in which event such amounts shall bear interest at the highest
rate which may be collected from Borrower under applicable law. Borrower shall
have the right to prepay such amounts in whole or in part at any time. Nothing
contained in this Paragraph shall require Lender to incur any expense or do any
act.
10. Inspection. Lender may, at Borrower's expense, make or cause to be
----------
made reasonable entries upon and inspections of the Property during normal
business hours, or at any other time when necessary to protect or preserve the
Property.
11. Books and Records.
-----------------
(a) Borrower shall keep and maintain at all times at Borrower's
address stated in this Security Deed, or such other place as Lender may approve
in writing, complete, proper and accurate records and books of account in which
full, true and correct entries shall be made in accordance with generally
accepted accounting principles reflecting the results of the operation of the
Property, and copies of all written contracts, leases and other instruments
which affect the Property. Such records, books of account, contracts, leases and
other instruments shall be subject to examination, inspection and copying by
Lender at any reasonable time by Lender and at Borrower's expense.
(b) Upon request of Lender in writing, Borrower shall promptly
provide Lender with all documents reasonably requested by Lender prepared in the
form and the manner called for in such request and as may reasonably relate to
the Property or the use, maintenance, operation or condition thereof, or the
financial condition of Borrower or any party obligated on the Note or under any
guaranty, including, without limitation, all leases or leasehold interests
granted to or by Borrower, rent rolls and tenant lists, rent and damage deposit
ledgers, operating statements, profit and loss statements and balance sheets,
personal financial statements of Borrower or income tax returns (including
quarterly returns), any or all of which documents shall be audited or certified
as true and accurate by a certified public accountant, if requested by Lender,
and shall cover such period or periods as may be specified by Lender
12. Condemnation. If all or substantially all of the Property shall be
------------
damaged or taken through condemnation (which term, when used in this Security
Deed, shall include any damage or taking by any governmental authority,
quasi-governmental authority, any party having the power of condemnation, or any
transfer by private sale in lieu thereof), either temporarily or permanently,
then the entire Secured Obligations shall, at the option of Lender, become
immediately due and payable. Borrower authorizes Lender, at Lender's option, as
attorney in fact for Borrower, to commence, appear in and prosecute, in Lender's
or Borrower's name, any action or proceeding relating to any condemnation or
other taking of the Property and to settle or compromise any claim in connection
with such condemnation or other taking. The proceeds of
18
<PAGE>
any award or claim for damages, direct or consequential, in connection with any
condemnation, or other taking of the Property, or part thereof, or for
conveyances in lieu of condemnation, are hereby assigned and shall be paid to
Lender. Borrower authorizes Lender to apply such awards, proceeds or damages,
after the deduction of Lender's expenses incurred in the collection of such
amounts, and at Lender's option, to restoration or repair of the Property or to
payment of the Secured Obligations, whether or not then due, with the balance,
if any, to Borrower. Borrower agrees to execute such further assignment of any
awards, proceeds, damages or claims arising in connection with such condemnation
or injury that Lender may require. For the purposes of this Paragraph,
"substantially all of the Property" shall mean a taking of or damage to less
than the entire Property through condemnation, which in the good faith judgment
of Lender, renders the Property remaining after such taking or damage unsuitable
for restoration for the use intended to be made of the Property or substantially
the same value, condition, character or general utility as the then use which
existed on the Property before such condemnation.
In the event that Borrower is required by the terms of its Sublease of the
Property to repair or restore the Property, following a partial taking, and if
Borrower is not then otherwise in default of the Secured Obligations, then
Lender agrees to release the proceeds of such partial taking, under its usual
construction loan disbursement procedures, with Borrower providing any necessary
equity injection required in the judgment of Lender to assure proper completion
of such repair or restoration, PROVIDED, HOWEVER, that prior to release of any
such proceeds, Borrower must pay down the Secured Obligations to the extent
required to maintain compliance with an 85% loan-to-value ratio, based upon
appraisals preceding the following completion of the work.
13. Borrower and Lien Not Released. From time to time, without affecting
------------------------------
the obligation of Borrower or Borrower's successors or assigns to pay or perform
the Secured Obligations and to observe the covenants of Borrower contained in
this Security Deed and the other Loan Documents, and without affecting the
guaranty of any person, corporation, partnership or other entity for payment or
performance of the Secured Obligations, and without affecting the lien or
priority of lien of this Security Deed on the Property, Lender may, at Lender's
option, without giving notice to or obtaining the consent of Borrower,
Borrower's successors or assigns or of any guarantor, and without liability on
Lender's part, grant extensions or postponements of the time for payment or
performance of the Secured Obligations or any part thereof, release anyone
liable on any of the Secured Obligations, accept a renewal note or notes
therefor, release from this Security Deed any part of the Property, take or
release other or additional security, re-convey any part of the Property,
consent to any map or plat or subdivision of the Property, consent to the
granting of any easement, join in any extension or subordination agreement and
agree in writing with Borrower to modify the rate of interest or terms and time
of payment or period of amortization of the Note or change the amount of the
monthly installments payable thereunder. Borrower shall pay Lender a reasonable
service charge, together with such title insurance premiums and attorneys' fees
as may be incurred, at Lender's option, for any such action if taken at
Borrower's request.
14. Forbearance Not Waiver. Any forbearance by Lender in exercising any
----------------------
right or remedy hereunder, or otherwise afforded by applicable law, shall not be
a waiver of or preclude
19
<PAGE>
the exercise of any right or remedy hereunder. The procurement of insurance or
the payment of taxes or other liens or charges by Lender shall not be a waiver
of Lender's right to accelerate the maturity of the Secured Obligations or to
exercise any remedy in connection with the Secured Obligations. Lender's receipt
of any awards, proceeds or damages under Paragraphs 4 and 12 hereof shall not
operate to cure or waive Borrower's default in payment or performance of the
Secured Obligations.
15. Estoppel Certificates. Borrower shall within ten (10) days of a
---------------------
written request from Lender furnish Lender with a written statement, duly
acknowledged, setting forth the amount of the Secured Obligations and any right
of set-off, counterclaim or other defense which may exist or be claimed by
Borrower against the Secured Obligations and the obligations of Borrower under
this Security Deed.
16. Security Agreement. Insofar as any item of property included in the
------------------
Property which is or might be deemed to be "personal property" is concerned,
this Security Deed is hereby made and declared to be a security agreement,
granting a security interest in and to each and every item of such property
included in the Property (hereinafter collectively referred to as the
"Collateral"), in compliance with the provisions of the Uniform Commercial Code
as enacted in the Commonwealth of Massachusetts. A financing statement or
statements reciting this Security Deed to be a security agreement, covering all
of the Collateral, shall be executed by Borrower and Lender and appropriately
filed. The remedies for any violation of the covenants, terms and conditions of
the security agreement herein contained shall be (i) as prescribed herein, or
(ii) as prescribed by general law, or (iii) as prescribed by the specific
statutory consequences now or hereafter enacted and specified in said Uniform
Commercial Code, all at Lender's sole election. Borrower and Lender agree that
the filing of such financing statement(s) in the records normally having to do
with personal property shall never be construed as in any wise derogating from
or impairing this declaration and hereby stated intention of Borrower and Lender
that everything used in connection with the production of income from the
Property and/or adapted for use therein and/or which is described or reflected
in this Security Deed, is, and at all times and for all purposes and in all
proceedings both legal or equitable shall be, regarded as part of the real
estate irrespective of whether (i) any such item is physically attached to the
Land or the Improvements, (ii) serial numbers are used for the better
identification of certain items capable of being thus identified in a recital
contained herein, or (iii) any such item is referred to or reflected in any such
financing statement(s) so filed at any time. Similarly, the mention in any such
financing statement(s) of the rights in and to the proceeds of any hazard
insurance policy, or any award in eminent domain proceedings for a taking or for
loss of value, or Borrower's interest as lessor in any present or future lease
or rights to income growing out of the use and/or occupancy of the Property,
whether pursuant to lease or otherwise, shall never be construed as in any wise
altering any of the rights of Lender as determined by this instrument or
impugning the priority of Lender's lien granted hereby or by any other recorded
document, but such mention in such financing statement(s) is declared to be for
the protection of Lender in the event any court shall at any time hold, with
respect to any such matter, that notice of Lender's priority of interest, to be
effective against a particular class of persons, must be filed in the records of
the Uniform Commercial Code kept with (a) the Secretary of State of the
Commonwealth of Massachusetts, (b) the Bristol County Registry of Deeds, and (c)
the New Bedford City Clerk's Office. Borrower warrants that
20
<PAGE>
(i) Borrower's (that is, "Debtor's") name, identity or organizational structure
and residence or principal place of business are as set forth in Exhibit C
---------
attached hereto and by this reference made a part hereof, (ii) Borrower (that
is, "Debtor") has been using or operating under said name, identity or
organizational structure without change for the time period set forth in Exhibit
-------
C attached hereto and by this reference made a part hereof, and (iii) the
- -
location of all collateral constituting fixtures is upon the Land. Borrower
covenants and agrees that Borrower will furnish Lender with notice of any change
in name, identity, organizational structure, residence or principal place of
business within thirty (30) days of the effective date of any such change and
Borrower will promptly execute any financing statements or other instruments
deemed necessary by Lender to prevent any filed financing statement from
becoming misleading or losing its perfected status. The information contained in
this Paragraph is provided in order that this Security Deed shall comply with
the requirements of the Uniform Commercial Code, as enacted in the Commonwealth
of Massachusetts, for instruments to be filed as financing statements. The names
of the "Debtor" and the "Secured Party", the identity or organizational
structure and residence or principal place of business of "Debtor", and the time
period for which "Debtor" has been using or operating under said name and
identity or organizational structure without change, are as set forth in
Schedule 1 of Exhibit C attached hereto and by this reference made a part
---------
hereof, the mailing address of the "Secured Party" from which information
concerning the security interest may be obtained, and the mailing address of
"Debtor", are as set forth in Schedule 2 of said Exhibit C attached hereto; and
---------
a statement indicating the types, or describing the items, of collateral is set
forth in this Security Deed.
17. Assignment of Leases and Revenues.
---------------------------------
(a) As part of the consideration for the Secured Obligations, Borrower has
absolutely and unconditionally assigned and transferred to Lender all of
Borrower's right, title and interest in and to the Leases and the Revenues,
including those now due, past due or to become due by virtue of any Sublease for
the occupancy or use of all or any part of the Property. Borrower hereby
authorizes Lender or Lender's agents to collect the Revenues and hereby directs
such tenants, lessees and licensees of the Property to pay the Revenues to
Lender or Lender's agents; provided, however, that prior to written notice given
by Lender to Borrower of any Event of Default by Borrower, Borrower shall
collect and receive the Revenues as trustee for the benefit of Lender, to apply
the Revenues so collected to the Secured Obligations, to the extent then due,
with the balance, so long as no Event of Default has occurred, to the account of
Borrower. Borrower agrees that each and every tenant, lessee and licensee of the
Property shall pay, and hereby irrevocably authorizes and directs each and every
tenant, lessee and licensee of the Property to pay, the Revenues to Lender or
Lender's agents on Lender's written demand therefor without any obligation on
the part of said tenant, lessee or licensee to inquire as to the existence of an
Event of Default and notwithstanding any notice or claim of Borrower to the
contrary, and Borrower agrees that Borrower shall have no right or claim against
said tenant, lessee or licensee for or by reason of any Revenues paid to Lender
following receipt of such written demand.
(b) Borrower hereby covenants that Borrower has not executed any prior
assignment of the Leases or the Revenues, that Borrower has not performed, and
will not perform, any acts or has not executed, and will not execute, any
instruments which would prevent Lender from
21
<PAGE>
exercising the rights of holder under this Security Deed, and that at the time
of execution of this Security Deed, there has been no anticipation or prepayment
of any of the Revenues for more than one (1) month prior to the due dates of
such Revenues. Borrower further covenants that Borrower will not hereafter
collect or accept payment of any Revenues more than one (1) month prior to the
due dates of such Revenues.
(c) Borrower agrees that neither the foregoing assignment of Leases and
Revenues nor the exercise of any of Lender's rights and remedies under Paragraph
22 hereof shall be deemed to make Lender a mortgagee-in-possession or otherwise
responsible or liable in any manner with respect to the Leases, the Property or
the use, occupancy, enjoyment or operation of all or any portion thereof, unless
and until Lender, in person or by agent, assumes actual possession thereof. Nor
shall the appointment of any receiver for the Property by any court at the
request of Lender or by agreement with Borrower, or the entering into possession
of any part of the Property by such receiver, be deemed to make Lender a
mortgagee-in-possession or otherwise responsible or liable in any manner with
respect to the Leases, the Property or the use, occupancy, enjoyment or
operation of all or any portion thereof.
(d) If Lender or a court-appointed receiver enters upon, takes possession
of and maintains control of the Property pursuant to this Security Deed, all
Revenues thereafter collected shall be applied first to the costs of taking
control of and managing the Property and collecting the Revenues, including, but
not limited to, reasonable attorneys' fees actually incurred, receiver's fees,
premiums on receiver's bonds, costs of repairs to the Property, premiums on
insurance policies, Impositions and other charges on the Property, and the costs
of discharging any obligation or liability of Borrower as landlord, lessor or
licensor of the Property and then to the Secured Obligations. Lender or the
receiver shall have access to the books and records used in the operation and
maintenance of the Property and shall be liable to account only for those
Revenues actually received. Lender shall not be liable to Borrower, anyone
claiming under or through Borrower or anyone having an interest in the Property
by reason of anything done or left undone by Lender. If the Revenues are not
sufficient to meet the costs of taking control of and managing the Property and
collecting the Revenues, any monies expended by Lender for such purposes shall
become a portion of the Secured Obligations. Unless Lender and Borrower agree in
writing to other terms of payment, such amounts shall be payable upon notice
from Lender to Borrower requesting payment thereof and shall bear interest from
the date of disbursement at the Default Rate as that term is defined in the Note
unless payment of interest at such rate would be contrary to applicable law, in
which event such amounts shall bear interest at the highest rate which may be
collected from Borrower under applicable law. The entering upon and taking
possession of and maintaining of control of the Property by Lender or the
receiver and the application of Revenues as provided herein shall not cure or
waive any Event of Default or invalidate any other right or remedy of Lender
hereunder.
18. Leases of the Property. Borrower will not enter into any sublease of
----------------------
all or any portion of the Property unless such sublease shall be upon a form of
lease previously approved by Lender or as approved under the Loan Agreement
provided, however, that after any Event of Default shall have occurred hereunder
and until such time as such Event of Default has either been cured with a
written consent of Lender or the Event of Default has been waived in writing
22
<PAGE>
by Lender, Borrower will not enter into any sublease of all or any portion of
the Property, Borrower will not enter into any sublease of all or any portion of
the Property or amend, supplement or otherwise modify, or terminate or cancel,
or accept the surrender of, or consent to the assignment or subletting of, or
grant any concessions to or waive the performance of any obligations of any
tenant, lessee or licensee under, any now existing or future sublease of the
Property, without the prior written consent of Lender. Borrower, at Lender's
request, shall furnish Lender with executed copies of all Leases hereafter made
of all or any part of the Property, and all Leases now or hereafter entered into
will be in form and substance subject to the approval of Lender. Upon Lender's
request, Borrower shall make a separate and distinct assignment to Lender, as
additional security, of all Leases hereafter made of all or any part of the
Property.
19. Remedies Cumulative. All remedies provided in this Security Deed are
-------------------
distinct and cumulative to any other right or remedy under this Security Deed or
under the other Loan Documents or afforded by law or equity, and may be
exercised concurrently, independently or successively.
20. Taxation of Security Deeds. In the event of the enactment of any law
--------------------------
deducting from the value of the Property any mortgage lien thereon, or imposing
upon Lender the payment of all or part of the taxes, charges or assessments
previously paid by Borrower pursuant to this Security Deed, or changing the law
relating to the taxation of mortgages or debts secured by mortgages or Lender's
interest in the Property so as to impose new incidents of tax on Lender, then
Borrower shall pay such taxes or assessments or shall reimburse Lender therefor;
provided, however, that if in the opinion of counsel to Lender, such payment
cannot lawfully be made by Borrower, and such change in the law cannot be
remedied and lawful payment made by Borrower to the reasonable satisfaction of
Lender within thirty (30) days following notice to Borrower by Lender of the
occurrence of such change, then Lender may, at Lender's option, declare the
Secured Obligations to be immediately due and payable and invoke any remedies
permitted by Paragraph 22 of this Security Deed.
21. Events of Default and Acceleration. The term "Event of Default",
----------------------------------
wherever used in this Security Deed, shall mean any one or more of the following
conditions or events:
(a) Failure by Borrower to pay as and when due and payable any interest on
or principal of or other sum payable under the Note; or
(b) Failure by Borrower to pay as and when due and payable any sums to be
paid by Borrower under this Security Deed (including, but not limited to, any
payment of Funds) or the Reimbursement Agreement; or
(c) Failure by Borrower to duly observe or perform any term, covenant,
condition or agreement contained in this Security Deed (other than the
obligations to make payments referred to in subparagraph (b) above) contained in
Paragraphs 3 or 4 of this Security Deed and continuance of such failure for a
period of thirty (30) days after written notice thereof from Lender; or
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<PAGE>
(d) Failure by Borrower to duly observe or perform any other term,
covenant, condition or agreement contained in Paragraphs 6 or 7 of this Security
Deed; and with respect to Borrower's obligations to comply with all applicable
Environmental Laws, including either or both the clean-up and removal of
Hazardous Materials present on the Property, Borrower shall have at least twenty
(20) days to achieve such full compliance after written notice from Lender
requiring such compliance, if Borrower shall commence and diligently pursue to
full compliance in accordance with the terms of Paragraph 7, plus such
additional time as Lender, in its sole judgment, shall allow Borrower for such
compliance; provided, however, Lender may in its sole judgment, declare an Event
of Default to exist by written notice thereof to Borrower at any time after the
expiration of such twenty (20) day period if such full compliance with all
applicable Environmental Laws shall not have been so achieved at the time of
such notice; or hand continuance of such failure for a period of five (5) days
after notice thereof from Lender; or
(e) Failure by Borrower to duly observe or perform any other term,
covenant, condition or agreement contained in this Security Deed or the Loan
Agreement and continuance of such failure for a period of twenty (20) days after
written notice thereof from Lender; or
(f) Any representation or warranty of Borrower contained in this Security
Deed or the Reimbursement Agreement or the Note Pledge Agreement or the Loan
Agreement shall prove to have been false or incorrect in any material respect
upon the date when made; or
(g) Without the prior written consent of Lender, any change in the
majority of the voting stock of Borrower, any merger, reorganization,
dissolution or termination of existence of Borrower as a corporation; or
(h) The filing by Borrower or any guarantor of the Obligations of a
voluntary petition in bankruptcy under Title 11 of the United States Code, or
the issuing of an order for relief against Borrower or any guarantor in any
involuntary petition in bankruptcy under Title 11 of the United States Code, or
the filing by Borrower or any guarantor of any petition or answer seeking or
acquiescing in any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief for itself under any present or
future federal, state or other law or regulation relating to bankruptcy,
insolvency or, other relief for debtors, or Borrower's or any guarantor's
seeking or consenting to or acquiescing in the appointment of any custodian,
trustee, receiver, conservator or liquidator of Borrower or such guarantor,
respectively, or of all or any substantial part of its respective property, or
the making by Borrower or any guarantor of any assignment for the benefit of
creditors, or Borrower's or any guarantor's failure generally to pay its debts,
as such debts become due, or Borrower's or any guarantor's giving of notice to
any governmental authority or body of insolvency or pending insolvency or
suspension of operations; or
(i) The entry by a court of competent jurisdiction of any order, judgment
or decree approving a petition filed against Borrower or any guarantor of the
Obligations seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future federal,
state or other law or regulation relating to bankruptcy,
24
<PAGE>
insolvency or other relief for debtors, or appointing any custodian, trustee,
receiver, conservator or liquidator of all or any substantial part of Borrower's
or any guarantor's property; or
(j) The occurrence of any "Event of Default" as defined in the Sublease,
the Reimbursement Agreement or any of the other Loan Documents executed by
Borrower and continuation of such default beyond any grace period set forth
therein for the curing thereof, or
(k) Such a change in the condition or affairs (financial or otherwise) of
the Borrower or of any obligor, endorser, guarantor or surety under or for any
of the Secured Obligations, or decline in the value of the Property as, in the
opinion of the Lender, materially impairs the Lender's security or increases its
risk or if the Lender in good faith deems itself insecure; or
(l) Default after the expiration of any applicable cure period in the
prompt payment, performance or observance of any material term, provision,
condition, covenant, warranty or representation set forth in any mortgages,
liens, lease or encumbrances affecting the Property, whether or not such
mortgage, lien, lease or encumbrance is senior or junior to this Mortgage, and
whether or not such mortgage, lien, lease or encumbrance has been consented to
by Lender, provided, however, that nothing herein shall be deemed to be a
consent by Lender, implied or otherwise, to the granting of any mortgage, lien
or encumbrance on the Premises.
If an Event of Default shall have occurred, Lender may, at Lender's option,
by notice to Borrower declare the entire Secured Obligations to be immediately
due and payable, whereupon the same shall become immediately due and payable,
and without presentment, protest, demand or other notice of any kind, all of
which are hereby expressly waived by Borrower and Lender may exercise any and
all of its remedies; provided that if any Event of Default specified in clauses
--------
(g), (h), (i), (k) or (l) of this Paragraph shall occur, the Secured Obligations
automatically shall become and be immediately due and payable and Lender may
exercise any and all of its remedies, without any declaration or other act on
the part of Lender, unless a notice of grace period shall be given therein for
any specific type of Event of Default. No omission on the part of Lender to
exercise such option when entitled to do so shall be construed as a waiver of
such right.
22. Rights and Remedies.
-------------------
(a) Power of Sale and other Remedies. Upon the occurrence of any Event of
--------------------------------
Default, and whether or not Lender shall have accelerated the maturity of the
Secured Obligations pursuant to Paragraph 21 hereof, Lender, at its option, may
take the following actions or any one or more of them from time to time:
(i) Declare any one or more of the Secured Obligations immediately
due and payable;
(ii) Cease advancing money or extending credit to or for the benefit
of the Borrower under any agreement, whether or not secured hereby;
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<PAGE>
(iii) Foreclose this Security Deed under any legal method of
foreclosure in existence at the time or now existing, or under any other
applicable law, including, without limitation, the Statutory Power of Sale,
which is incorporated herein by reference, and if the Property consists of
multiple parcels or units, to foreclose against the entire Property or such
portions thereof in such order and at such times as Lender may determine all in
its discretion, and the deferral or delay in foreclosure against any portion of
the Property shall not impair the right of Lender to subsequently foreclose;
(iv) either with or without entering upon or taking possession of
the Property, demand, collect and receive any or all Revenues;
(v) take possession of all or any part of the Collateral, and for
such purpose Lender may, so far as Borrower can give authority, enter upon any
premises on which the Collateral or any part thereof may be situated and remove
the same;
(vi) either with or without taking possession of the Collateral,
sell, lease or otherwise dispose of the Collateral in its then condition or
following such preparation as Lender deems advisable;
(vii) either with or without entering upon or taking possession of
the Property, and without assuming any obligations of Borrower thereunder,
exercise the rights of Borrower under, use or benefit from, any of the Plans,
Leases, the Sublease or Intangible Property;
(viii) in person, by agent or by court appointed receiver, enter
upon, take possession of, and maintain full control of the Property in order to
perform all acts necessary or appropriate to complete the Improvements and to
maintain and operate the Property, including, but not limited to, the execution,
cancellation or modification of Leases, the making of repairs to the Property
and the execution or termination of contracts providing for the improvement,
management or maintenance of the Property, all on such terms as Lender, in its
sole discretion, deems proper or appropriate;
(ix) proceed by a suit or suits in law or in equity or by other
appropriate proceeding against Borrower or any other party liable to enforce
payment of the Secured Obligations or the performance of any term, covenant,
condition or agreement of this Security Deed, the Loan Agreement, the
Reimbursement Agreement, or any of the other Loan Documents, or any other right,
and to pursue any other remedy available to it, all as Lender shall determine
most effectual for such purposes;
(x) institute and maintain such suits and proceedings as Lender
may deem expedient to prevent any impairment of the Property by any acts which
may be unlawful or in violation of this Security Deed, to preserve or protects
its interest in the Property and the Revenues, and to restrain the enforcement
of or compliance with any legislation or other governmental enactment, rule or
order that would impair the security hereunder or be prejudicial to the interest
of Lender. Borrower recognizes that in the event Borrower defaults, no remedy of
law will provide adequate relief to Lender, and therefore Borrower agrees that
Lender shall be
26
<PAGE>
entitled to temporary and permanent injunctive relief to cure any such Default
without the necessity of proving actual damages;
(xi) apply all or any portion of the Property, or the proceeds
thereof, towards (but not necessarily in complete satisfaction of) the Secured
Obligations without being deemed to have waived any Event of Default;
(xii) foreclose any and all rights of Borrower in and to the
Property, whether by sale, entry or in any other manner provided for hereunder
or under the laws of the Commonwealth of Massachusetts whether now existing or
as hereafter arising;
(xiii) in the case of any receivership, insolvency, bankruptcy,
reorganization, arrangement, adjustment, composition or other proceedings
affecting Borrower or the creditors or property of Borrower, Lender, 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 the claims of
Lender allowed in such proceedings for the entire amount of the Secured
Obligations at the date of the institution of such proceedings and for any
additional portion of the Secured Obligations accruing after such date;
(xiv) exercise any other right or remedy of a mortgagee or secured
party under the laws of the Commonwealth of Massachusetts; and
(xv) Set-off against any and all deposits, accounts, certificate of
deposit balances, claims, or other sums at any time credited by or due from
Lender to Borrower and against all other property of Borrower in the possession
of Lender or under its control.
(b) Receiver. If an Event of Default shall have occurred, Lender, upon
--------
application to a court of competent jurisdiction, shall be entitled as a matter
of strict right, without notice and without regard to the occupancy or value of
any security for the Secured Obligations or the solvency of any party bound for
its payment, to the appointment of a receiver to take possession of and to
operate the Property and to collect and apply the Revenues. The receiver shall
have all of the rights and powers permitted under the laws of the Commonwealth
of Massachusetts or otherwise existing. Borrower will pay to Lender upon demand,
all expenses, including receiver's fees, attorneys' fees, costs and agent's
compensation, incurred pursuant to such appointment and all such expenses shall
be a portion of the Secured Obligations.
(c) Sale or Other Disposition of Property. Any sale or other disposition
-------------------------------------
of the Collateral may be at public or private sale, to the extent such private
sale is authorized under the provisions of the Uniform Commercial Code as
enacted in the Commonwealth of Massachusetts, upon such terms and in such manner
as Lender deems advisable. Lender may conduct any such sale or other disposition
of the Property upon the Land, in which event Lender shall not be liable for any
rent or charge for such use of the Land. Lender may purchase the Property, or
any portion of it, at any sale held under this Paragraph. With respect to any
Collateral to be sold pursuant to the Uniform Commercial Code, Lender shall give
Borrower at least seven (7) days written notice of the date, time, and place of
any proposed public sale, or such additional notice
27
<PAGE>
as may be required under the laws of the Commonwealth of Massachusetts, and of
the date after which any private sale or other disposition may be made. Lender
may sell any of the Collateral as part of the real property comprising the
Property, or any portion or unit thereof, at the foreclosure sale or sales
conducted pursuant hereto. If the provisions of the Uniform Commercial Code are
applicable to any part of the Collateral which is to be sold in combination with
or as part of the real property comprising the Property, or any part thereof, at
one or more foreclosure sales, any notice required under such provisions shall
be fully satisfied by the notice given in execution of any method of
foreclosure, including, without limitation, the STATUTORY POWER OF SALE, with
respect to the real property or any part thereof. Borrower waives any right to
require the marshalling of any of its assets in connection with any disposition
conducted pursuant hereto. In the event all or part of the Property is included
at any foreclosure sale conducted pursuant hereto, a single total price for the
Property, or such part thereof as is sold, may be accepted by Lender with no
obligation to distinguish between the application of such proceeds amongst the
property comprising the Property. The obligations of Borrower to pay such
amounts shall be included in the Secured Obligations of Borrower to Lender and
shall accrue interest at the default rate of interest set forth in the Note.
Borrower agrees that all rights and remedies of Lender as to the Personal
Property and as to the Property, and all rights and interests appurtenant
thereto, shall be cumulative and may be exercised together or separately without
waiver by Lender of any other of its rights or remedies. Borrower further agrees
that any sale or other disposition by Lender of any of the Personal Property and
any rights and interests therein or appurtenant thereto, or any part thereof,
may be conducted either separately from or together with any foreclosure, sale
or other disposition of the Property, or any rights or interests therein or
appurtenant thereto, or any part thereof, all as the Lender may in its sole
discretion elect.
(d) Collection of Revenues. In connection with the exercise by Lender of
----------------------
the rights and remedies provided for in subparagraph (a)(ii) of this Paragraph:
(i) Lender may notify any tenant, lessee or licensee of the
Property, either in the name of Lender or Borrower, to make payment of Revenues
directly to Lender or Lender's agents, may advise any person of Lender's
interest in and to the Revenues, and may collect directly from such tenants,
lessees and licensees all amounts due on account of the Revenues;
(ii) At Lender's request, Borrower will provide written notification
to any or all tenants, lessees and licensees of the Property concerning Lender's
interest in the Revenues and will request that such tenants, lessees and
licensees forward payment thereof directly to Lender;
(iii) Borrower shall hold any proceeds and collections of any of the
Revenues in trust for Lender and shall not commingle such proceeds or
collections with any other funds of Borrower; and
(iv) Borrower shall deliver all such proceeds to Lender immediately
upon the receipt thereof by Borrower in the identical form received, but duly
endorsed or assigned on behalf of Borrower to Lender.
28
<PAGE>
The acceptance of payments and funds, and the application of such payments
and funds after the commencement of any foreclosure proceedings shall not waive
or impair such foreclosure or the defaults in the Secured Obligations.
(e) Use and Occupation of Property. In connection with the exercise of
------------------------------
Lender's rights under Subparagraph (a)(vi) of this Paragraph, Lender may enter
upon, occupy, and use all or any part of the Property and may exclude Borrower
from the Land and the Improvements or portion thereof as may have been so
entered upon, occupied, or used. Lender shall not be required to remove any
Personal Property from the Land and the Improvements upon Lender's taking
possession thereof, and may render any Personal Property unusable to Borrower.
In the event Lender manages the Land and the Improvements, Borrower shall pay
to Lender on demand a reasonable fee for the management thereof in addition to
the Secured Obligations. Further, Lender may make such alterations, renovations,
repairs, and replacements to the Improvements, as Lender, in its sole
discretion, deems proper or appropriate. The obligation of Borrower to pay such
amounts and all expenses incurred by Lender in the exercise of its rights
hereunder shall be included in the Secured Obligations and shall accrue interest
at the default rate of interest stated in the Note.
(f) Partial Sales. Borrower agrees that in case Lender, in the exercise of
-------------
the power of sale contained herein or in the exercise of any other rights
hereunder given, elects to sell in parts or parcels, said sales may be held from
time to time and that the power shall not be exhausted until all of the Property
not previously sold shall have been sold, notwithstanding that the proceeds of
such sales exceed, or may exceed, the Secured Obligations.
(g) Assembly of Collateral. Upon the occurrence of any Event of Default,
----------------------
Lender may require Borrower to assemble the Collateral and make it available to
Lender, at Borrower's sole risk and expense, at a place or places to be
designated by Lender which are reasonably convenient to both Lender and
Borrower.
(h) Actions by Lender. Upon the occurrence of any Event of Default that
continues beyond any applicable grace or cure period, Borrower hereby
irrevocably constitutes and appoints Lender or any receiver appointed in
accordance with this Security Deed to be Borrower's true and lawful attorney in
fact to take any action with respect to the Property to preserve, protect, or
realize upon Lender's interest therein, each at the sole risk, cost and expense
of Borrower, but for the sole benefit of Lender. The rights and powers granted
by the within appointment include, but are not limited to, the right and power
to: (i) prosecute, defend, compromise, settle, or release any action relating to
the Property; (ii) endorse the name of Borrower upon any and all checks or other
items constituting Revenues; (iii) sign and endorse the name of Borrower on, and
to receive as secured party, any of the Collateral; (iv) sign and file or record
on behalf of Borrower any financing or other statement in order to perfect or
protect Lender's security interest; (v) enter into leases or subleases relative
to all or a portion of the Land or the Improvements; (vi) enter into any
contracts or agreements relative to, and to take all action deemed necessary in
connection with, any Improvements on the Land (vii) manage, operate, maintain,
or repair the Land and the Improvements; and (viii) exercise the rights of
Borrower under any Plans, Leases, or Intangible Personal Property. Such receiver
or Lender shall not be
29
<PAGE>
obligated to perform any of such acts or to exercise any of such powers, but if
it so elects so to perform or exercise, it shall not be accountable for more
than it actually receives as a result of such exercise of power, and shall not
be responsible to Borrower except for willful misconduct or gross negligence.
All powers conferred by this Security Deed, being coupled with an interest,
shall be irrevocable until terminated by a written instrument executed by a duly
authorized officer of Lender or until payment of this Security Deed as shall
entitle the Borrower to a discharge of record of the lien hereof, whichever
shall first occur.
23. Sublease Covenants. Borrower, in its capacity as Sublessee under the
------------------
Sublease, covenants and agrees with Lender as follows regarding the Sublease:
A. (a) Borrower holds a valid leasehold interest in the Property
described in the Sublease and that it may lawfully mortgage and assign the same
to Lender under this Security Deed.
(b) The description of the Sublease set forth in the Recitals hereof
contains a correct and complete description of the Sublease.
(c) Borrower has furnished to Lender a true and correct copy of the
Sublease.
(d) The Sublease has not been modified or assigned by Borrower or, to
the best knowledge of Borrower, assigned by the Authority as Sublessor
thereunder.
(e) The Sublease is in full force and effect, and to the best
knowledge of Borrower, there is no default under the Sublease and there exists
no condition which, with the giving of notice or passage of time or both, would
cause a default under the Sublease.
(f) The execution, delivery and performance of this Security Deed by
Borrower do not require any consent (other than those consents that have been
obtained and are in full force and effect) under, and will not contravene any
provision of or cause a default under, the Sublease.
(g) Borrower shall duly and punctually pay, perform and observe all
of its obligations under the Sublease.
(h) Borrower shall do all things necessary or appropriate to enforce,
preserve and keep unimpaired the rights of Borrower in its capacity as Sublessee
under the Sublease.
(i) Borrower shall not terminate, cancel, sever or surrender, or
suffer the termination, cancellation, severance or surrender, of the Sublease or
the subleasehold interest in the Sublease, and any attempt on the part of
Borrower to exercise any such right without the prior written consent of Lender
shall be void.
(j) Borrower shall not modify or amend the Sublease or otherwise
waive, excuse, release or discharge Sublessor without the prior written consent
of Lender.
30
<PAGE>
(k) Borrower irrevocably assigns to Lender the right to exercise (i)
any right to extend the term of the Sublease and (ii) any option to purchase or
otherwise acquire the interest of either the Authority or the City, if any,
under the Sublease.
(l) Borrower shall notify Lender (i) promptly after receipt
contemporaneously when given, as the case may be, of the receipt or giving by
Borrower of any notice of default under the Sublease or of any notice of the
possible or actual termination thereof, or of the possible or actual termination
of any material right of Borrower thereunder or any material obligation of any
other party thereunder, accompanied by a copy of such notice, (ii) promptly
after learning about any condition, or the existence of any condition which,
with or without the giving of notice or the passage of time or both, would
constitute a default under the Sublease or any termination thereof, (iii)
promptly after receiving or learning of the existence of any assignment, or the
existence of any assignment of the interest of the Authority under the Sublease,
accompanied by a copy of such assignment received by Borrower, and (iv) promptly
after receipt or contemporaneously when given, as the case may be, of the
receipt or giving of any notice relating to any option to purchase or right of
first refusal under the Sublease, accompanied by a copy of such notice.
B. The provisions of this Paragraph 22 shall also apply to any right of
Borrower, in its capacity as Sublessee under the Sublease, to retain its rights
under the Sublease under (S)365 of the Bankruptcy Code in the event the Sublease
is rejected by any other party thereunder or its Trustee pursuant to said
(S)365.
C. In the event Borrower in its capacity as sublessee under the sublease
acquires the fee simple title or any other greater estate or interest in the
Land, such acquisitions will not merge with the leasehold estate created by the
Sublease, but such other title, estate or interest will remain discrete, shall
immediately and automatically become subject to the lien of this Security Deed,
and such title, estate or interest shall be part of the Property and included
within the term and definition of "Land". Borrower in its capacity as sublessor
under the Sublease shall execute, acknowledge and deliver any instruments
requested by Lender to confirm the coverage of the lien hereof upon such other
greater estate or interest. Borrower in its capacity as sublesee under the
Sublease shall pay any and all conveyance or mortgage taxes, and filing or
similar fees in connection with the execution, delivery, filing or recording of
any such instrument.
D. Borrower in its capacity as sublessee under the Sublease hereby
unconditionally assigns, transfers and sets over to Lender all of Borrower's
claims and rights to the payment of damages that may hereafter arise from any
rejection of Borrower's subleasehold interest in the Sublease by the Authority
or the City or by any trustee of any such party pursuant to the Bankruptcy Code.
Lender shall have the right, and is hereby granted the right, to proceed in its
own name or in the name of Borrower in its capacity as sublessee under the
Sublease in respect of any claim, suit, action or proceeding relating to the
rejection of the Sublease including, without limitation, the right to file and
prosecute, to the exclusion of Borrower in its capacity as sublessee under the
Sublease, any proofs of claim, complaints, motions, applications, notices and
other documents, in any case in respect of the Authority or the City under the
Bankruptcy Code.
31
<PAGE>
This assignment constitutes a present, irrevocable and unconditional assignment
of the foregoing claims, rights and remedies, and shall continue in effect until
the termination of this Security Deed in the manner and at the time provided in
Paragraph 29. Any amounts received by Lender as damages arising out of any such
rejection of the Sublease as a foresaid shall be applied and paid as set forth
herein.
E. Borrower in its capacity as Sublessee under the sublease shall not,
without Lender's prior written consent, elect to treat the Sublease or
Borrower's subleasehold interest under the Sublease as terminated under Section
365(h)(1) of the Bankruptcy Code after the rejection of the Sublease or the
subleasehold interest under the sublease by the Authority or the City, as
applicable, or by any trustee of such party. Any election made without Lender's
prior consent shall be void. Borrower hereby expressly assigns, releases,
relinquishes and surrenders unto Lender all of its right, power and authority to
cancel, terminate, surrender, sever, amend, modify or alter in any respect the
terms and provisions of the Sublease or the subleasehold interest under the
Sublease.
F. If pursuant to Section 365(h)(1) of the Bankruptcy Code, Borrower in
its capacity as sublessee under the Sublease seeks to offset against the rent or
other charges reserved in the Sublease, the amount of any damages caused by the
non-performance of the Authority of any of the Authority's obligations under
this Sublease after the rejection by the Authority of the Sublease under the
Bankruptcy Code, Borrower in its capacity as sublessee under the Sublease shall,
prior to effecting such offset, notify Lender of its intention to do so, setting
forth the amounts proposed to be so offset and the basis therefor. Lender shall
have the right, within ten (10) days after receipt of such notice from Borrower,
to reasonably object to all or any part of such offset and, in the event of such
reasonable objection, Borrower shall not effect any offset of the amount so
objected to by Lender for a period of sixty (60) days after Lender has delivered
its objection notice to Borrower, during which time Lender shall have the right
to bring its objections to the attention of any court supervising the bankruptcy
of the City or the Authority under the Sublease, and both Lender and Borrower in
its capacity as sublessee under the Sublease agreed to abide by the decision of
any such court. If (Y) Lender has failed to object as aforesaid within the ten
(10) days, after notice from Borrower, or (Z) the court fails to render its
decision within the above mentioned sixty (60) days, Borrower in its capacity as
sublessee under the Sublease may proceed to effect such offset in the amounts
set forth in Borrower's notice. Neither Lender's failure to object as aforesaid
nor any objection or other communication between Lender and Borrower in its
capacity as sublessee under the Sublease relating to such offset shall
constitute an approval of any such offset by Lender. Borrower in its capacity as
sublessee under the Sublease shall indemnify and hold Lender harmless of, from
and against any and all claims, demands, actions, suits, proceedings, damages,
losses, costs and expenses of every nature whatsoever (including, without
limitation, reasonable attorneys fees and disbursements) arising from or
relating to any offset by Borrower in its capacity as sublessee under the
Sublease.
G. If any action, proceeding, application, motion or notice shall be
commenced or filed in respect of the Authority or the City or in respect of all
or any part of the Property (including, without limitation, any proceeding
relating to the rejection of the Sublease or the subleasehold interest under the
Sublease) in connection with any case under the Bankruptcy Code
32
<PAGE>
(other than a case under the Bankruptcy Code commenced with respect to Borrower
in any capacity), Lender shall have, and is hereby granted the right, but not
the obligation, to the exclusion of Borrower in its capacity as sublessee under
the Sublease, exercisable upon notice to Borrower in its capacity as sublessee
under the Sublease, to conduct and control any litigation with counsel of
Lender's choice. Lender may proceed in its own name or in the name of Borrower
in its capacity as sublessee under the Sublease in connection with any such
litigation, and Borrower in its capacity as sublessee under the Sublease agrees
to execute any and all powers, authorizations, consents and other documents
required by Lender in connection therewith. Borrower in its capacity as
sublessee under the Sublease shall pay to Lender or any person or entity that
Lender may designate all costs and expenses (including, without limitation,
reasonable attorneys fees and disbursements) and liabilities paid or incurred by
Lender in connection with the prosecution or conduct of any such proceeding
within five (5) days after notice from Lender setting forth such costs, expenses
and liabilities and reasonable detail. Any such costs, expenses or liabilities
not paid by Borrower in its capacity as sublessee under the Sublease as
aforesaid, shall be part of the Secured Obligations and shall be secured by this
Security Deed. Borrower in its capacity as sublessee under the Sublease shall
not commence any action, suit, proceeding or case, or file any application or
make any motion in any such case under the Bankruptcy Code (other than a case
under the Bankruptcy Code commenced with respect to Borrower in any capacity) in
respect of the Sublease without the prior written consent Lender, which consent
shall not be unreasonably withheld.
H. Borrower in its capacity as sublessee under the Sublease shall
promptly, after obtaining knowledge thereof, notify Lender orally of any filing
by or against the Authority under the Sublease of a petition under the
Bankruptcy Code. Borrower in its capacity as sublessee under the Sublease shall
thereafter forthwith give written notice of such filing to Lender setting forth
any information available to Borrower in its capacity as sublessee under the
Sublease as to the date of such filing, the court in which such petition was
filed and the relief sought therein. Borrower in its capacity as sublessee under
the Sublease shall promptly deliver to Lender following receipt of any and all
notices, summonses, pleadings, applications and other documents received by
Borrower in such capacity in connection with any such petition and any
proceedings relating thereto.
I. Borrower in its capacity as sublessee under the Sublease shall
promptly notify Lender orally of any filing by or against Borrower in its
capacity as sublessee under the Sublease of a petition under the Bankruptcy
Code. Borrower in its capacity as sublessee under the Sublease shall thereafter
forewith give notice of filing to Lender, setting forth any information
available to Borrower in its capacity as sublessee under the Sublease as to the
date of such filing, the court in which such petition was filed and the relief
sought therein. Borrower in its capacity as sublessee under the Sublease shall
promptly deliver to Lender following (i) filing, any and all notices, summonses,
pleadings, applications and other documents filed by Borrower in such capacity
with a court in connection with any such petition in any proceedings relating
thereto and (ii) receipt, any and all notices, summonses, pleadings,
applications and other documents received by Borrower in its capacity as
sublessee under the Sublease in connection with any such petition in any
proceedings relating thereto.
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<PAGE>
J. If there shall be filed by or against Borrower in any capacity a
petition under the Bankruptcy Code, and Borrower, as a sublessee under the
Sublease or any trustee of the Borrower, shall determine to reject the Sublease
pursuant to Section 365(a) of the Bankruptcy Code, then Borrower in its capacity
as sublessee under the Sublease shall give Lender not less than ten (10) days
prior written notice of the date on which Borrower shall apply to the Bankruptcy
Court for authority to reject the Sublease. In that event, within such ten (10)
day period, or in the event that no affirmative action to assume or reject the
Sublease pursuant to the Bankruptcy Code shall have been taken within thirty
(30) days after the date of filing of such petition, Lender shall have the
right, but not the obligation, to serve upon Borrower or such trustee a notice
stating that (i) Lender demands that Borrower in its capacity as sublessee under
the Sublease or such trustee assume and assign its subleasehold interest under
the Sublease to Lender pursuant to Section 365 of the Bankruptcy Code and (ii)
Lender covenants to cure or provide adequate assurance of prompt cure of all
defaults (except defaults of the types specified in Section 365(b)(2) of the
Bankruptcy Code) and provide adequate assurance of future performance of
Borrower's obligations under the Sublease. If Lender serves upon Borrower in its
capacity as sublessee under the Sublease or such trustee, the notice described
in the preceeding sentence, either Borrower nor trustee shall seek to reject the
Sublease and Borrower and such trustee shall seek court approval to comply with
the demand provided for in clause (i) of the preceding sentence within thirty
days after the notice shall have been given, subject to the performance by
Lender of the covenants provided for in clause (ii) of the preceding sentence.
K. Effective upon the entry of an order for relief in respect of Borrower
in any capacity under the Bankruptcy Code, Borrower in its capacity as sublessee
under the Sublease hereby assigns and transfers to Lender a non-exclusive right
to apply to the Bankruptcy Court under Section 365(d)(4) of the Bankruptcy Code
for an order extending the period during which the Sublease or Borrower's
subleasehold interest thereunder may be rejected or assumed.
L. In the event that the Sublease shall be amended or modified
(including, without limitation, obtaining the prior written consent of Lender as
required under this Security Deed) which amendment or modification shall be
evidenced by a supplement to the Sublease to be executed and a memorandum
thereof to be executed and recorded by the parties thereto, Borrower in its
capacity as sublessee of the Sublease shall simultaneously with the recordation
of the memorandum of the supplement to the Sublease execute and record an
amendment to this Security Deed reflecting changes required to make this
Security Deed consistent with the sublease, as so supplemented.
24. Intentionally Omitted.
---------------------
25. Intentionally Omitted.
---------------------
26. Notices. Except as otherwise specified in this Security Deed, any and
-------
all notices, demands, elections or requests provided for or permitted to be
given pursuant to this Security Deed (hereinafter in this Paragraph referred to
as "Notice") shall be in writing and shall be deemed to have been properly given
or served by personal delivery or by sending same by overnight courier or by
depositing same in the United States Mail, postpaid and registered or
34
<PAGE>
certified, return receipt requested, and addressed to the addresses set forth in
the commencement of this Security Deed. Each Notice shall be effective upon
being personally delivered or upon being sent by overnight courier or upon being
deposited in the United States Mail as aforesaid. However, the time period in
which a response to such Notice must be given or any action taken with respect
thereto, if any, shall commence to run from the date of receipt if personally
delivered or sent by overnight courier, or, if so deposited in the United States
Mail, the earlier of three (3) business days following such deposit and the date
of receipt as disclosed on the return receipt. Rejection or other refusal to
accept or the inability to deliver because of changed address for which no
Notice was given shall be deemed to be receipt of the Notice sent. By giving at
least thirty (30) days prior Notice thereof, Borrower or Lender shall have the
right from time to time and at any time during the term of this Security Deed to
change their respective addresses and each shall have the right to specify as
its address any other address within the United States of America.
27. Successors and Assigns Bound; Captions. The covenants and agreements
--------------------------------------
herein contained shall bind, and the rights hereunder shall inure to, the
respective successors and assigns of Lender and Borrower, subject to the
provisions of Paragraph 6 hereof. The captions and headings of the paragraphs of
this Security Deed are for convenience only and are not to be used to interpret
or define the provisions hereof
28. Governing Law; Severability. This Security Deed and the obligations of
---------------------------
Borrower hereunder shall be governed by and interpreted and determined in
accordance with the laws of the Commonwealth of Massachusetts. In the event that
any provision or clause of this Security Deed or the Note conflicts with
applicable law, such conflict shall not affect other provisions of this Security
Deed or the Note which can be given effect without the conflicting provision,
and to this end, the provisions of this Security Deed and the Note are declared
to be severable. In the event that any applicable law limiting the amount of
interest or other charges permitted to be collected from Borrower is interpreted
so that any charge for which provision is made in this Security Deed or in the
Note, whether considered separately or together with other charges permitted to
be collected from Borrower, is interpreted so that any such charge, whether
considered separately or together with other charges that are considered a part
of the transaction represented by this Security Deed and the Note, violates such
law, and Borrower is entitled to the benefit of such law, such charge is hereby
reduced to the extent necessary to eliminate such violation. The amounts, if
any, previously paid to Lender in excess of the amounts payable to Lender
pursuant to such charges as reduced shall be applied by Lender to reduce the
principal of the indebtedness evidenced by the Note.
29. Discharge. Upon payment and performance of the Secured Obligations,
---------
Lender shall discharge this Security Deed. Borrower shall pay Lender's
reasonable costs incurred in discharging this Security Deed.
30. Waivers. Borrower agrees to the full extent permitted by law, that in
-------
case of an Event of Default hereunder, neither Borrower nor anyone claiming
through or under Borrower shall or will set up, claim or seek to take advantage
of any appraisement, valuation, stay, extension, homestead, exemption or
redemption laws now or hereafter in force, in order to
35
<PAGE>
prevent or hinder the enforcement or foreclosure of this Security Deed, or the
absolute sale of the Property, or the final and absolute putting into possession
thereof, immediately after such sale, of the purchasers thereat, and Borrower,
for Borrower and all who may at any time claim through or under Borrower, hereby
waives to the fullest extent that Borrower may lawfully so do, the benefit of
all such laws, and any and all right to have the assets comprised in the
security intended to be created hereby marshaled upon any foreclosure of the
lien hereof. No delay or omission of Lender 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 be a
waiver of any such default, or acquiescence therein; and every right, power and
remedy given by this Security Deed to Lender may be exercised from time to time
and as often as may be deemed expedient by Lender. No consent or waiver,
expressed or implied, by Lender to or of any Event of Default shall be deemed or
construed to be a consent or waiver to or of any other Event of Default. Failure
on the part of Lender to complain of any act or failure to act which constitutes
an Event of Default, irrespective of how long such failure continues, shall not
constitute a waiver by Lender of Lender's rights hereunder or impair any rights,
powers or remedies consequent on any Event of Default. No act or omission of
Lender as described in Paragraph 13 above shall preclude Lender from exercising
any right, power or privilege herein granted or intended to be granted in the
event of any Event of Default then made or of any subsequent Event of Default;
nor, except as otherwise expressly provided in an instrument or instruments
executed by Lender, shall the lien of this Security Deed be altered thereby. No
acceptance of partial payment or performance shall waive, affect or diminish any
right of Lender or Borrower's duty of compliance and performance therewith. Any
Obligation which this Security Deed secures is a separate instrument and may be
negotiated, extended or renewed by Lender without releasing Borrower or any
guarantor or co-maker. In the event of the sale or transfer by operation of law
or otherwise of all or any part of the Property, Lender, without notice, is
hereby authorized and empowered to deal with any such vendee or transferee with
reference to the Property or the Secured Obligations or with reference to any of
the terms, covenants, conditions or agreements 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 liabilities, obligations or undertakings
(including, without limitation, the restrictions upon transfer contained in
Paragraph 6).
31. Further Assurances. At any time and from time to time, upon request by
------------------
Lender, Borrower will make, execute and deliver, or cause to be made, executed
and delivered, to Lender and, where appropriate, cause to be recorded and/or
filed and from time to time thereafter to be re-recorded and/or re-filed, at
such time and in such offices and places as shall be deemed desirable by Lender,
any and all such other and further assignments, mortgages, security agreements,
financing statements, continuation statements, instruments of further assurance,
certificates and other documents as may, in the opinion of Lender, be necessary
or desirable in order to effectuate, complete, or perfect, or to continue and
preserve (a) the obligations of Borrower under this Security Deed, and (b) the
lien and security interest created by this Security Deed upon the Property. Upon
any failure by Borrower so to do, Lender may make, execute, record, file, re-
record and/or re-file any and all such assignments, mortgages, security
agreements, financing statements, continuation statements, instruments,
certificates, and
36
<PAGE>
documents for and in the name of Borrower, and Borrower hereby irrevocably
appoints Lender as the agent and attorney in fact of Borrower so to do.
32. Subrogation. Lender shall be subrogated to all right, title, lien or
-----------
equity of all persons to whom Lender may have paid any monies in settlement of
liens, charges or assessments, or in acquisition of title or for its benefit
hereunder, or for the benefit or account of Borrower upon execution of the Note
or subsequently paid under any provisions hereof.
33. Time of the Essence. Time is of the essence with respect to each and
-------------------
every covenant, agreement and obligation of Borrower under this Security Deed,
the Note and any and all other Loan Documents.
34. Indemnification; Subrogation; Waiver of Offset.
----------------------------------------------
(a) Borrower shall indemnify, defend and hold Lender harmless against: (i)
any and all claims for brokerage, leasing, finders or similar fees which may be
made relating to the Property or the Secured Obligations, and (ii) any and all
liability, obligations, losses, damages, penalties, claims, actions, suits,
costs and expenses (including Lender's reasonable attorneys' fees, together with
reasonable appellate counsel fees, if any) of whatever kind or nature which may
be asserted against, imposed on or incurred by Lender in connection with the
Secured Obligations, this Security Deed, the Property, or any part thereof, or
the exercise by Lender of any rights or remedies granted to it under this
Security Deed; provided, however, that nothing herein shall be construed to
obligate Borrower to indemnify, defend and hold harmless Lender from and against
any and all liabilities, obligations, losses, damages, penalties, claims,
actions, suits, costs and expenses enacted against, imposed on or incurred by
Lender by reason of Lender's willful misconduct or gross negligence.
(b) If Lender is made a party defendant to any litigation or any claim is
threatened or brought against Lender concerning the Secured Obligations, this
Security Deed, the Property, or any part thereof, or any interest therein, or
the maintenance, operation or occupancy or use thereof, then Borrower shall
indemnify, defend and hold Lender harmless from and against all liability by
reason of said litigation or claims, including reasonable attorneys' fees
(together with reasonable appellate counsel fees, if any) and expenses incurred
by Lender in any such litigation or claim, whether or not any such litigation or
claim is prosecuted to judgment. If Lender commences an action against Borrower
to enforce any of the terms hereof or to prosecute any breach by Borrower of any
of the terms hereof or to recover any sum secured hereby, Borrower shall pay to
Lender its reasonable attorneys' fees (together with reasonable appellate
counsel, fees, if any) and expenses. The right to such attorneys' fees (together
with reasonable appellate counsel fees, if any) and expenses shall be deemed to
have accrued on the commencement of such action, and shall be enforceable
whether or not such action is prosecuted to judgment. If Borrower breaches any
term of this Security Deed, Lender may engage the services of an attorney or
attorneys to protect its rights hereunder, and in the event of such engagement
following any breach by Borrower, Borrower shall pay Lender reasonable
attorneys' fees (together with reasonable appellate counsel fees, if any) and
expenses incurred by Lender, whether or not an action is actually commenced
against Borrower by reason of such breach. All references to
37
<PAGE>
"attorneys" in this Subparagraph and elsewhere in this Security Deed shall
include without limitation any attorney or law firm engaged by Lender and
Lender's in-house counsel, and all references to "fees and expenses" in this
Subparagraph and elsewhere in this Security Deed shall include, without
limitation, any fees of such attorney or law firm and any allocation charges and
allocation costs of Lender's in-house counsel.
(c) A waiver of subrogation shall be obtained by Borrower from its
insurance carrier and, consequently, Borrower waives any and all right to claim
or recover against Lender, its officers, employees, agents and representatives,
for loss of or damage to Borrower, the Property, Borrower's property or the
property of others under Borrower's control from any cause insured against or
required to be insured against by the provisions of this Security Deed.
(d) All sums payable by Borrower hereunder shall be paid without notice
(except as may otherwise be provided herein), demand, counterclaim, setoff,
deduction or defense and without abatement, suspension, deferment, diminution or
reduction, and the obligations and liabilities of Borrower hereunder shall in no
way be released, discharged or otherwise affected by reason of: (i) any damage
to or destruction of or any condemnation or similar taking of the Property or
any part thereof; (ii) any restriction or prevention of or interference with any
use of the Property or any part thereof; (iii) any title defect or encumbrance
or any eviction from the Land or the Improvements on the Land or any part
thereof by title paramount or otherwise; (iv) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation, or other like
proceeding relating to Lender, or any action taken with respect to this Security
Deed by any trustee or receiver of Lender, or by any court, in such proceeding;
(v) any claim which Borrower has, or might have, against Lender; (vi) any
default or failure on the part of Lender to perform or comply with any of the
terms hereof or of any other agreement with Borrower; or (vii) any other
occurrence whatsoever, whether similar or dissimilar to the foregoing, whether
or not Borrower shall have notice or knowledge of any of the foregoing. Borrower
waives all rights now or hereafter conferred by statute or otherwise to any
abatement, suspension, deferment, diminution, or reduction of any sum secured
hereby and payable by Borrower.
35. Future Advances by Lender. Lender may from time to time, at its sole
-------------------------
option, make further advances to Borrower, to be secured hereby; provided,
however, that the total principal secured hereby and remaining unpaid, including
any such advances, shall not at any time exceed the sum of Twenty Million and
00/100ths Dollars ($20,000,000.00). Borrower shall execute and deliver to Lender
a note or other agreement evidencing each and every such further advance which
Lender may make, which note or agreement shall contain such terms and conditions
as Lender may require. Borrower shall pay when due all such further advances
with interest and other charges thereon, as applicable, and the same, and each
note and agreement evidencing the same, shall be fully secured hereby. All
provisions of this Security Deed shall apply to each such further advance as
well as to any other indebtedness secured hereby. Nothing herein contained,
however, shall limit the amount secured by this Security Deed if such amount is
increased by advances make by Lender to protect or preserve the Property as
provided elsewhere herein. Any future advances made hereunder may be made to
Borrower or to any successor to Borrower in ownership of the Property.
38
<PAGE>
THIS SECURITY DEED IS GIVEN PRIMARILY FOR BUSINESS, COMMERCIAL OR AGRICULTURAL
PURPOSES. THE PREMISES SUBJECT TO THIS SECURITY DEED ARE NOT USED EXCLUSIVELY
FOR RESIDENTIAL PURPOSES AND ARE NOT THE PRIMARY RESIDENCE OF THE GRANTOR OR IF
THE GRANTOR IS A TRUST, OF ANY BENEFICIARY OF THE TRUST.
IN WITNESS WHEREOF, Borrower has executed this Security Deed, under seal,
as of February 29, 2000.
AEROVOX INCORPORATED
Stanley B. kay By: F. Randal Hunt
Witness Name: F. Randal Hunt
Title: Vice President - Finance
Commonwealth of Massachusetts
County of Bristol, ss. February 29, 2000
Then personally appeared before me the above-named Robert D. Elliott in his
said capacity and acknowledged the foregoing to be his free act and deed and the
free act and deed of said Aerovox Incorporated.
Before me,
Deborah J. Jenkins
Notary Public/Attorney-at-Law
Printed Name: Deborah J. Jenkins
Notary Public
Commission Expires July 3, 2003
39
<PAGE>
EXHIBIT A
---------
Legal Description of Land
LOT 2
Beginning at a point of intersection of the westerly line of John Vertente
Boulevard Extension said-point in turn being Five Hundred Fifty and 47/100
(550.47) feet north of John Vertente Cul de sac;
Thence westerly, in straight line bearing S 84%-30'-50" W a distance of Eight
Hundred sixty-two and 51/100 (862.51) feet to a point of intersection with the
City of New Bedford and Town of Dartmouth border line;
Thence northerly in a straight line in said New Bedford - Dartmouth border line
bearing N 08%-54'-00" E a distance of One Thousand Three Hundred Five and 66/100
(1305.66) feet to a point of intersection with the westerly line of John
Vertente Boulevard Extension at city and town border line;
Thence easterly in a straight line bearing S 81%-06'-00" E a distance of One
Hundred One and 95/100 (101.95) feet to a point of curvature;
Thence south easterly in a curved line, having a radius of Three Hundred and
00/100 (300.00) feet, and subtending an angle of 39%-52'-18", a distance of Two
Hundred Eight and 77/100 (208.77) feet to a point of tangency;
Thence still southeasterly in a straight line bearing S 41%-13'-42" E a distance
of eighty three and 51/100 (83.51) feet to a point of curvature;
Thence southeasterly in a curved line having a radius of Three Hundred Fifty and
00/100 (350.00) feet, and subtending an angle of 20%-15'-30" a distance of One
Hundred Twenty Three and 75/100 (123.75) feet to a point of tangency;
Thence in a straight line again bearing S 61%-29'-12" E, a distance of
ninety-eight and 56/100 (98.56) feet to a point of curvature;
Thence again southeasterly in a curved line, having a radius of Two Hundred and
00/100 (200.00) feet, and subtending an angle of 64%-42'-06", a distance of Two
Hundred twenty-five and 85/100 (225.85) to a point;
Thence southerly in a straight line bearing S 03%-12'-54" W a distance of One
Hundred Forty Eight and 88/100 (148.88) feet to a point of curvature;
Thence still southeasterly in a curved line , having a radius of One Thousand
Twenty Five and 00/100 (1025.00) feet, subtending an angle of 08%-42'-04" a
distance of One Hundred Fifty Five and 66/100 (155.66) feet to a point of
tangency;
40
<PAGE>
Thence in a straight line bearing S 05%-29'-10" E a distance of Four Hundred
Seventeen and 13/100 feet to the point of beginning, containing Eight Hundred
Four Thousand Two Hundred thirty-seven (804,237) square feet.
Said parcel is shown as Lot 2 on Sheet 1 of 2 on a plan entitled MODIFICATION TO
AN APPROVED DEFINITIVE SUBDIVISION PLAN OF LAND IN THE GREATER NEW BEDFORD
INDUSTRIAL PARK/2/, dated December 29, 1999 and prepared by Tibbetts Engineering
Corp.
LOT 3
Beginning at a point in the easterly line of John Vertente Boulevard extension
said point in turn being Four Hundred Fifty and 11/100 (450.11) feet north of
the cul de sac;
Thence northerly in said easterly line of John Vertente Boulevard extension and
in a straight line bearing N 05%-29'-10" W a distance of Five Hundred Seventeen
and 49/100 (517.49) feet to a point of curvature;
Thence still northerly in a curved line, having a radius of Nine Hundred
seventy-five and 00/100 (975.00) feet, and subtending an angle of 01%-29'-58", a
distance of twenty-five and 52/100 (25.52) feet to a point;
Thence westerly in a straight line bearing N 84%-30'-50" E a distance of Two
Hundred seventy-nine and 67/100 (279.67) feet to a point of intersection with
the westerly limit of Lot No. 4;
Thence southerly in the westerly limit of said Lot No. 4 and in a straight line
bearing S 05%-29'-10" E, a distance of Five Hundred forty-three and 00/100
(543.00) feet to a point;
Thence westerly in a straight line bearing S 84%-30'-50" W a distance of Two
Hundred Eighty and 00/100 (280.00) feet to a point of intersection with the
easterly line of John Vertente Boulevard Extension and Point of /Beginning,
containing One Hundred Fifty-two-Thousand thirty-seven (152,037) square feet.
Said parcel is shown as Lot 3 on Sheet 2 of 2 on a plan entitled MODIFICATION TO
AN APPROVED DEFINITIVE SUBDIVISION PLAN OF LAND IN THE GREATER NEW BEDFORD
INDUSTRIAL PARK/2/, dated December 29, 1999 and prepared by Tibbetts Engineering
Corp.
41
<PAGE>
EXHIBIT B
---------
Permitted Encumbrances
The Permitted Encumbrances are those encumbrances referred to in the
Schedule B- Section 2 of the Lawyers Title Insurance Corporation policy issued
as of the date of recording of this instrument in the Bristol County Registry of
Deeds; provided, however, that notwithstanding such reference and the listing of
-------- -------
such encumbrances in Exhibit A to this instrument, Borrower represents and
-
warrants to Bank that such encumbrances do not materially interfere with the use
and enjoyment of the Land, Improvements and Personal Property and appurtenant
easements as presently carried on as a manufacturing facility.
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<PAGE>
EXHIBIT C
---------
Schedule I
----------
Description of "Debtor" and "Secured Party"
------------------------------------------
A. Debtor: AEROVOX INCORPORATED
------
1. Name and Identity or Organizational Structure: Delaware Corporation
2. The principal place of business and chief executive office of Debtor in the
Commonwealth of Massachusetts is located at 740 Belleville Avenue, New
Bedford, Massachusetts 02745.
Debtor has been using or operating under said name and identity or
organizational structure without change since 1922.
B. Secured Party: KEYBANK NATIONAL ASSOCIATION
-------------
**********************************
Schedule 2
----------
Notice Mailing Addresses of "Debtor" and "Secured Party"
-------------------------------------------------------
A. The mailing address of Debtor is:
AEROVOX INCORPORATED
740 Belleville Avenue
New Bedford, Massachusetts 02745
Attn: Chief Financial Officer
B. The mailing address of Secured Party is:
KEYBANK NATIONAL ASSOCIATION
One Canal Plaza
Portland, Maine 04101-4035
Attn: Commercial Lending Department
43
<PAGE>
SCHEDULE A
----------
DEBTOR: AEROVOX INCORPORATED
SECURED PARTY: KEYBANK NATIONAL ASSOCIATION
a) All buildings, structures, parking areas, landscaping, and other
improvements of every nature now or hereafter situated, erected or placed on the
Land (hereinafter referred to as the "Improvements"), and all materials intended
for construction, reconstruction, alteration and repairs of the Improvements now
or hereafter erected, all of which materials shall be deemed to be included
within the Improvements immediately upon the delivery thereof to the Land; and
(b) All goods and items purchased with the proceeds of the Note or Notes (as to
all of which Secured Party claims a purchase money security interest under
Uniform Commercial Code ss. 9-312(4)), including, but not limited to, all
fixtures, machinery, equipment, furniture, inventory, building supplies,
appliances and other articles of personal property (hereinafter collectively
referred to as the "Personal Property"), including, but not limited to, all gas
and electric fixtures, radiators, heaters, furnaces, engines and machinery,
boilers, ranges, ovens, elevators and motors, bathtubs, sinks, commodes, basins,
pipes, faucets and other plumbing, heating and air conditioning equipment,
mirrors, refrigerating plant, refrigerators, iceboxes, dishwashers, carpeting,
floor coverings, furniture, light fixtures, signs, lawn equipment, water
heaters, and cooking apparatus and appurtenances, and all other fixtures and
equipment now or hereafter owned by Borrower and located in, on or about, or
used or intended to be used with or in connection with the use, operation, or
enjoyment of the Land or the Improvements, whether installed in such a way as to
become a part thereof or not, including all extensions, additions, improvements,
betterments, renewals and replacements of any of the foregoing and all the
right, title and interest of Borrower in and to any of the foregoing now owned
or hereafter acquired by Borrower, all of which are hereby declared and shall be
deemed to be fixtures and accessions to the freehold and a part of the
Improvements as between the parties hereto and all persons claiming by, through
or under them; and
(c) All right, title and interest of Borrower in and to all policies of
insurance, licenses, franchises, permits, service contracts, maintenance
contracts, property management agreements, equipment leases, tradenames,
trademarks, trade dress, servicemarks, logos, goodwill, accounts, chattel paper
and general intangibles as defined in the Uniform Commercial Code as enacted in
the Commonwealth of Massachusetts, which in any way now or hereafter belong,
relate or appertain to the Land, the Improvements or the Personal Property or
any part thereof now owned or hereafter acquired by Borrower, including, without
limitation, all condemnation payments, insurance proceeds and escrow funds and
all other property of Borrower deposited with Lender or held by Lender pursuant
to the Loan Agreement (hereinafter referred to as the "Intangible Property");
and
(d) All present and future leases, tenancies, occupancies and licenses, whether
written or oral ("Leases"), of the Land, the Improvements, the Personal Property
and the Intangible Property, or any combination or part thereof, and all income,
rents, issues, royalties, profits, revenues,
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<PAGE>
security deposits and other benefits of the Land, the Improvements, the Personal
Property and the Intangible Property, from time to time accruing, all payments
under Leases, and all-.payments on account of oil and gas and other mineral
Leases, working interests, production payments, royalties, overriding royalties,
rents, delay rents, operating interests, participating interests and other such
entitlements, and all the estate, right, title, interest, property, possession,
claim and demand whatsoever at law, as well as in equity, of Borrower of, in and
to the same (hereinafter collectively referred to as the "Revenues");
(e) All the right, title, interest of Borrower in and to all plans and
specifications relating to the Improvements on the Land (hereinafter
collectively referred to as the "Plans"); and
(f) All proceeds, products, substitutions and accessions of the foregoing of
every type. (g) All judgments, awards of damages and settlements hereafter made
as a result or in lieu of any taking of the Property or any interest therein or
part thereof under the power of eminent domain, or for any damage (whether
caused by such taking or otherwise) to the Property, or the improvements thereon
or any part thereof, including any award for change of grade of streets.
TOGETHER WITH:
A. All leases, tenancies, agreements or licenses, written or oral, now
existing or hereafter entered into by Borrower as "landlord", "lessor" or
"licensor", for the use or occupancy of all or any portion of the property
(hereinafter referred to as the "Property") located in the New Bedford
Industrial Park, John Vertente Boulevard Extension, New Bedford, Massachusetts,
more particularly described in Schedule A(l) attached hereto and by this
-------------
reference made a part hereof, including any and all extensions, renewals and
modifications thereof and guaranties of the performance or obligations of any
tenants, lessees or licensees thereunder (said leases, tenancies, agreements and
licenses are hereinafter referred to collectively as the "Leases," and said
tenants, lessees and licensees are hereinafter referred to collectively as
"Tenants" or individually as a "Tenant" as the context requires), together with
all of Borrower's right, title and interest in and to all payments, rents,
issues and profits from the Leases and from the Property.
B. All rights, privileges and benefits now existing or hereafter arising under
the Leases, including, without limitation, all rights to exercise options to
extend or renew the Leases or to purchase the Premises and appurtenances
thereto, and all rights to insurance proceeds, eminent domain awards or payments
in lieu thereof, and
C. All rights of the Borrower in and to the fixtures, improvements,
alterations, or additions now or hereafter erected on the Premises; and
D. All subleases of the Premises or any portion thereof, and all monies,
rents, incomes and profits from the Premises or subleases thereof and rights
derived therefrom all whether now existing or hereafter arising, provided that
the Borrower shall not sublease the Premises or any portion thereof without
Lender's prior written consent.
45
<PAGE>
TOGETHER WITH:
(i) those certain agreements, dated on or about November 2, 1999,
between Borrower and Dacon Corporation (the "General Contractor") relating to
the construction of the Improvements including related infrastructure
(hereinafter, together with any and all extensions, modifications, amendments
and renewals thereof, referred to as the "Construction Contract");
(ii) all contracts and subcontracts, together with any and all
extensions, modifications, amendments and renewals thereof, which are entered
into by Borrower or the General Contractor in connection with the performance of
the work or the supply of labor, services or materials required for the
construction of the Improvements;
(iii) all guarantees, warranties and other undertakings, whether written,
oral or statutory, covering the quality or performance of the work or the
quality of the materials required by the General Contract, contracts and
subcontracts, together with any claims which may be asserted thereunder;
(iv) all building permits, governmental permits, licenses, consents,
approvals and authorizations now or hereafter granted or issued and all
tradenames, trademarks and logos used in connection with the construction,
development or operation of the Project (as defined in the Loan Agreement); and
(v) all plans, specifications, drawings, surveys, renderings and models
prepared for the construction of the Improvements in existence from time to
time, together with all revisions and modifications thereof and all sketches and
notes related thereto.
46
<PAGE>
SCHEDULE A(1)
-------------
Leases
Ground Sublease dated January 4, 2000, between New Bedford Redevelopment
Authority as Sublessor and Aerovox Incorporated as Sublessee relating to the
Land and Improvements located at the New Bedford Industrial Park, John Vertente
Boulevard Extension, New Bedford, Massachusetts, as more particularly described
in Exhibit A, attached hereto.
47
<PAGE>
EXHIBIT A
---------
Legal Description of Leased Premises
LOT 2
Beginning at a point of intersection of the westerly line of John Vertente
Boulevard Extension said-point in turn being Five Hundred Fifty and 47/100
(550.47) feet north of John Vertente Cul de sac;
Thence westerly, in straight line bearing S 84%-30'-50" W a distance of Eight
Hundred sixty-two and 51/100 (862.51) feet to a point of intersection with the
City of New Bedford and Town of Dartmouth border line;
Thence northerly in a straight line in said New Bedford - Dartmouth border line
bearing N 08%-54'-00" E a distance of One Thousand Three Hundred Five and 66/100
(1305.66) feet to a point of intersection with the westerly line of John
Vertente Boulevard Extension at city and town border line;
Thence easterly in a straight line bearing S 81%-06'-00" E a distance of One
Hundred One and 95/100 (101.95) feet to a point of curvature;
Thence south easterly in a curved line, having a radius of Three Hundred and
00/100 (300.00) feet, and subtending an angle of 39%-52'-18", a distance of Two
Hundred Eight and 77/100 (208.77) feet to a point of tangency;
Thence still southeasterly in a straight line bearing S 41%-13'-42" E a distance
of eighty three and 51/100 (83.51) feet to a point of curvature;
Thence southeasterly in a curved line having a radius of Three Hundred Fifty and
00/100 (350.00) feet, and subtending an angle of 20%-15'-30" a distance of One
Hundred Twenty Three and 75/100 (123.75) feet to a point of tangency;
Thence in a straight line again bearing S 61%-29'-12" E, a distance of
ninety-eight and 56/100 (98.56) feet to a point of curvature;
Thence again southeasterly in a curved line, having a radius of Two Hundred and
00/100 (200.00) feet, and subtending an angle of 64%-42'-06", a distance of Two
Hundred twenty-five and 85/100 (225.85) to a point;
Thence southerly in a straight line bearing S 03%-12'-54" W a distance of One
Hundred Forty Eight and 88/100 (148.88) feet to a point of curvature;
Thence still southeasterly in a curved line , having a radius of One Thousand
Twenty Five and 00/100 (1025.00) feet, subtending an angle of 08%-42'-04" a
distance of One Hundred Fifty Five and 66/100 (155.66) feet to a point of
tangency;
48
<PAGE>
Thence in a straight line bearing S 05%-29'-10" E a distance of Four Hundred
Seventeen and 13/100 feet to the point of beginning, containing Eight Hundred
Four Thousand Two Hundred thirty-seven (804,237) square feet.
Said parcel is shown as Lot 2 on Sheet 1 of 2 on a plan entitled MODIFICATION TO
AN APPROVED DEFINITIVE SUBDIVISION PLAN OF LAND IN THE GREATER NEW BEDFORD
INDUSTRIAL PARK/2/, dated December 29, 1999 and prepared by Tibbetts Engineering
Corp.
LOT 3
Beginning at a point in the easterly line of John Vertente Boulevard extension
said point in turn being Four Hundred Fifty and 11/100 (450.11) feet north of
the cul de sac;
Thence northerly in said easterly line of John Vertente Boulevard extension and
in a straight line bearing N 05%-29'-10" W a distance of Five Hundred Seventeen
and 49/100 (517.49) feet to a point of curvature;
Thence still northerly in a curved line, having a radius of Nine Hundred
seventy-five and 00/100 (975.00) feet, and subtending an angle of 01%-29'-58", a
distance of twenty-five and 52/100 (25.52) feet to a point;
Thence westerly in a straight line bearing N 84%-30'-50" E a distance of Two
Hundred seventy-nine and 67/100 (279.67) feet to a point of intersection with
the westerly limit of Lot No. 4;
Thence southerly in the westerly limit of said Lot No. 4 and in a straight line
bearing S 05%-29'-10" E, a distance of Five Hundred forty-three and 00/100
(543.00) feet to a point;
Thence westerly in a straight line bearing S 84%-30'-50" W a distance of Two
Hundred Eighty and 00/100 (280.00) feet to a point of intersection with the
easterly line of John Vertente Boulevard Extension and Point of /Beginning,
containing One Hundred Fifty-two-Thousand thirty-seven (152,037) square feet.
Said parcel is shown as Lot 3 on Sheet 2 of 2 on a plan entitled MODIFICATION TO
AN APPROVED DEFINITIVE SUBDIVISION PLAN OF LAND IN THE GREATER NEW BEDFORD
INDUSTRIAL PARK/2/, dated December 29, 1999 and prepared by Tibbetts Engineering
Corp.
49
<PAGE>
Exhibit 4.13
ENVIRONMENTAL INDEMNITY AGREEMENT
---------------------------------
FOR VALUE RECEIVED, namely the loan of Four Million Five Hundred
Thousand and 00/100ths Dollars ($4,500,000.00), or any portion thereof, by
KEYBANK NATIONAL ASSOCIATION, a national banking association having a place of
business at One Canal Plaza, Portland, Maine 04101-4035 ("Bank") to AEROVOX
INCORPORATED, a Delaware corporation having a place of business at 740
Belleville Avenue, New Bedford, Massachusetts 02745 ("Borrower"), under the
terms and conditions of a certain Commercial Note of even date ("Note") given by
Borrower to Bank, which Note is secured by a First Leasehold Mortgage, Security
Agreement and Fixture Filing of even date ("Leasehold Mortgage") on Borrower's
leasehold estate evidenced by a Sublease dated January 4, 2000, between
Borrower, as Sublessee, and New Bedford Redevelopment Authority, as Sublessor
("Lease"), which Lease describes certain premises located at the New Bedford
Industrial Park, City of New Bedford, County of Bristol, and Commonwealth of
Massachusetts ("Premises"), Borrower does hereby unconditionally and irrevocably
agree to pay on demand to the Bank, and to reimburse, defend, hold harmless and
indemnify the Bank for, any and all liabilities, executions, awards, judgments,
claims, damages, demands, penalties, fines, actions, debts, suits, proceedings,
expenditures, indemnities, losses, charges or other amounts that are or may
become due from, claimed, asserted or entered against the Bank, including
reasonable attorneys' fees, in connection with, or arising directly or
indirectly out of, any hazardous, toxic, dangerous, radioactive, noxious or
unhealthful materials, substances, gases, and/or wastes, including, without
limitation, all of the following: (a) asbestos in any form; (b) urea
formaldehyde foam insulation; (c) transformers or other equipment which contain
dielectric fluid containing any level of polychlorinated biphenyls or (d) any
other chemical, material, gas, substance, or waste which is prohibited, limited,
or regulated by any federal, state, county, regional, local, or other
governmental authority, or which, even if not so prohibited, limited or
regulated, may or could pose a hazard to or be injurious to the environment,
health or safety of the occupants of the Premises, or which, even though not
posing a danger to the environment, health or safety, may or could constitute a
pollutant that could be subject to regulatory action by any Governmental
Authority (hereinafter "Hazardous Substances"); or (e) wetlands as
<PAGE>
defined pursuant to any applicable Environmental Laws (as defined herein)
situated in, over, upon, or under, or transported to, from, or near said
Premises; Borrower does hereby mean and intend to assume the obligation to pay,
and to indemnify and hold harmless the Bank for, without limitation, (1) all
costs incurred or expended by the Bank in connection with the removal of all
Hazardous Substances from said Premises, including, without limitation, all
costs of investigation, monitoring, remedial response, removal, restoration,
feasibility studies, remedial work, cleanup, engineering reports, and permit
acquisitions incurred in connection therewith; (2) all costs incurred and sums
expended by the Bank in determining the compliance of such removal with all
applicable regulations and standards; (3) all liability of, or expense to, the
Bank incurred as a result of the improper removal or disposal of Hazardous
Substances from said Premises, by whomever performed, or arising out of exposure
to Hazardous Substances of any individual while in or on said Premises, or
otherwise in connection with the existence or removal of, or failure to remove
any and all Hazardous Substances, on or from said Premises, together with (4)
all of the Bank's costs of defending against any action, suit or proceedings
brought or threatened by or on behalf of any Governmental Authority, individual
or entity allegedly injured as a result of the presence of Hazardous Substances
on said Premises, or emanating therefrom in any manner, whether such claim is
decided or settled adversely to or in favor of the Bank, and (5) any reasonable
attorneys' or consultants' fees incurred in connection with any of the foregoing
matters.
Borrower does hereby further unconditionally assume and agree to
indemnify and make the Bank whole, as aforesaid, if the Bank should incur any
liability whatsoever under 38 M.R.S.A. (S)1301 et seq. (Pamph. 1987-1988), or
-- ---
any similar law in effect in any state or jurisdiction where any Collateral is
located, or the Massachusetts Oil and Hazardous Materials Release Prevention and
Response Act, M.G.L. c. 21E, or the Massachusetts Hazardous Waste Management
Act, M.G.L. c. 21C, or the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, 42 U.S.C. (S)9601 et seq. (1983) ("CERCLA"), or the
-- ---
Superfund Amendments and Reauthorization Act of 1986 ("SARA") or the Clean Water
Act, 33 U.S.C. (S)1251 et seq., or the Resource Conservation and Recovery Act
-- ---
("RCRA"), 42 U.S.C. 6901 et seq., or any regulation promulgated thereunder or
-- ---
any other local, state or federal regulation, law or ordinance relating in any
way to any Hazardous
2
<PAGE>
Substances, now or hereafter adopted (hereinafter "Environmental Laws"), because
of or arising out of the Bank's connection with the Premises. The foregoing
indemnity shall not apply to any claims concerning the presence of Hazardous
Substances on the Premises caused or created by Bank.
The Bank shall not be required to pursue or exhaust its remedies
against any other party liable for the payment of any amounts or for any
performance for which Borrower herein agrees to indemnify the Bank, or for which
Borrower herein assumes liability or which the Borrower does hereby guaranty, or
against the property mortgaged or pledged as security for the payment of said
Note, but upon the incurring of any obligation, damage, penalty, loss, charge,
expense, execution, debt, suit, expenditure, cost or liability, the Bank may
immediately demand and enforce payment or performance from the Borrower pursuant
to this Environmental Indemnity Agreement. The obligations of the Borrower
hereunder shall survive the repayment in full of the Note, and shall remain in
full force and effect for all time. The obligations of the Borrower hereunder
shall bind Borrower's respective heirs, administrators, executors, personal
representatives, successors and assigns to the maximum extent permitted by law.
Borrower hereby waives demand, notice and protest and waive all
recourse to suretyship and guarantorship defenses generally, including, but not
limited to, any extensions of time for payment or performance which may be
granted to any other liable party, any modifications or amendments to any of the
documents executed in connection with said Note, any act or omission to act by
or on behalf of the Bank, its successors and assigns, any release of security,
any release of a liable party or parties, and all other indulgences of any type
which may be granted by the Bank, its successors and assigns, to any other party
liable for the obligations assumed by Borrower herein, and does also agree to
pay all costs of enforcement hereof, and all costs of collection of amounts due
thereunder, including reasonable attorneys' fees incurred in connection
therewith; hereby meaning to waive any and all matters whatsoever whereby
Borrower would or might be released, in whole or in part, from the obligations
hereof.
All amounts due hereunder shall bear interest from the initial date of
demand by the Bank, until paid, at a rate that shall be equal to the Default
Rate, as that term is defined under said Note.
3
<PAGE>
Borrower hereby irrevocably agrees that any legal action or proceeding
arising out of or relating to this Environmental Indemnity Agreement may be
brought in any state or federal court in the State of Maine, at the election of
the Bank, its successors and assigns. By the execution and delivery hereof,
Borrower hereby irrevocably submits to the non-exclusive jurisdiction of any
such court in any such action or proceeding, and hereby waive the benefit of
jurisdiction derived from present or future domicile, and further waive personal
service of any and all process upon the undersigned in connection herewith, and
consent that any or all such service of process be made by registered or
certified mail, return receipt requested, postage prepaid, directed to Borrower
at the address given above (or such other address as Borrower may from time to
time provide to the Bank in writing), and any service so made shall be deemed to
have been completed three (3) days after the same shall have been so mailed.
Final judgment against Borrower in any such action, suit or proceeding shall be
conclusive and may be enforced in any other jurisdiction by suit on the
judgment, a certified or exemplified copy of which shall be conclusive evidence
of the fact.
It is agreed that if this Environmental Indemnity Agreement be signed
by more than one person or entity, then the instrument becomes the joint and
several obligation of all the signers. This Environmental Indemnity Agreement is
to take effect as a sealed instrument.
Dated: February 29th, 2000.
WITNESS: BORROWER:
AEROVOX INCORPORATED
STANLEY B. KAY By: F. RANDAL HUNT
Name: F. Randal Hunt
Title: Vice President - Finance
4
<PAGE>
Exhibit 4.14
NOTE PLEDGE AGREEMENT
---------------------
NOTE PLEDGE AGREEMENT dated as of March 1, 2000 made by and among
Aerovox Incorporated, a Delaware corporation (the "Pledgor"), The Huntington
National Bank, Columbus, Ohio, as Trustee and as Tender Agent ("Trustee") under
the Indenture (as hereinafter defined), and KeyBank National Association, as
Letter of Credit Bank (the "Bank"):
W I T N E S S E T H:
-------------------
WHEREAS, the Pledgor and the Trustee are entering into a certain Trust
Indenture (the "Indenture") dated as of March 1, 2000, pursuant to which the
Pledgor will issue its Taxable Adjustable Rate Notes, Series 2000 (the "Notes")
in the maximum principal amount of Eleven Million Dollars ($11,000,000);
WHEREAS, pursuant to the Indenture, a holder of any of the Notes may
instruct McDonald Investments Inc. (the "Remarketing Agent") to sell and
transfer such Notes and if the Remarketing Agent notifies the Trustee that no
sale can be made as contemplated by the Indenture, the Remarketing Agent may
instruct the Trustee to sell and transfer the Notes to the Pledgor;
WHEREAS, in connection with the issuance of the Notes, the Pledgor has
agreed to enter into a Reimbursement Agreement dated as of March 1, 2000, with
the Bank (hereinafter referred to, as the same may from time to time be amended
or supplemented, as the "Reimbursement Agreement") in order to cause the Bank to
issue the Letter of Credit thereunder which shall be used, inter alia, to pay
the purchase price of any Notes so purchased by the Pledgor (any of such Notes
so purchased by the Pledgor from a draw under the Letter of Credit being
hereinafter referred to as the "Drawing Notes"); and
WHEREAS, it is a condition precedent to the obligation of the Bank to
enter into the Reimbursement Agreement that the Pledgor shall have executed and
delivered this Note Pledge Agreement to the Bank.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Bank to enter into the Reimbursement Agreement and issue the Letter of
Credit thereunder and for other good and valuable consideration, receipt of
which is hereby acknowledged, the Pledgor and Trustee hereby agree with the Bank
as follows:
1. Defined Terms. Unless otherwise defined herein, words and terms
-------------
used as defined words and terms herein and in the above recitals shall have the
meanings given them in the Reimbursement Agreement.
2. Pledge. The Pledgor hereby pledges, assigns, hypothecates,
------
transfers, and delivers to the Bank or its designee all its right, title and
interest in and to the Drawing Notes
-1-
<PAGE>
and hereby grants to the Bank a first lien on, and security interest in, its
right, title and interest in and to the Drawing Notes, the interest thereon and
all proceeds thereof, as collateral security for the prompt and complete
reimbursement by the Pledgor to the Bank of all monies paid by the Bank to the
Trustee pursuant to a Remarketing Drawing (as defined in the Letter of Credit)
(the "Obligations"). The Trustee shall hold any and all Drawing Notes as agent
for the Bank subject to the terms and conditions of this Note Pledge Agreement.
Trustee and Pledgor acknowledge that (i) the Bank's payment of
Remarketing Drawings (A) may create, under the Reimbursement Agreement, loans by
the Bank to, or for the benefit of, the Pledgor; and (B) are especially
conditioned upon the Trustee's certification, as Trustee, to the Bank, made in
the certificate accompanying the Remarketing Drawing, that the Trustee is either
contemporaneously delivering to the Bank an amount of money equal to the
Remarketing Drawing, or that the Trustee is holding for the benefit of the Bank
Drawing Notes together with an amount of money to be transmitted to the Bank,
the aggregate amount of such Notes and money to be delivered as is equal to the
amount of the Remarketing Drawing; (ii) upon such Drawing Notes being
remarketed, the Bank will automatically reinstate the amount of any Remarketing
Drawing under the Letter of Credit as being available for future drawings under
the Letter of Credit; and (iii) Drawing Notes are security for the repayment of
loans created by Remarketing Drawings.
3. Disposition of Drawing Notes.
----------------------------
(a) The Trustee, pursuant to the terms of the Indenture, shall, on
behalf of the Bank, accept delivery of all Drawing Notes delivered to it by or
for the account of the Pledgor, and shall hold all such Drawing Notes on behalf
of the Bank and subject to the security interest of the Bank therein. The
Pledgor hereby acknowledges that the Trustee is holding the Drawing Notes on
behalf of the Bank hereunder.
(b) Drawing Notes held by the Trustee may be registered in the name
of the Pledgor or the Trustee or its nominee, if the Trustee deems it advisable,
but upon the written request of the Bank, all Drawing Notes shall be registered
in the name of the Bank, as pledgee, or its nominee. No merger of ownership of
or title to the Notes or extinguishment of the Notes shall occur by virtue of
their registration in the name of the Pledgor or by virtue of any other
provision herein. While so registered in the name of the Pledgor, such Trustee,
its nominee, or the Bank, as pledgee, all interest on such Drawing Notes paid on
any Interest Payment Date shall be paid to the Bank and shall not be paid from
moneys drawn under the Letter of Credit. All such interest payments shall be
used to offset any payments due and owing under the Reimbursement Agreement. The
proceeds of the sale, redemption or other disposition of Drawing Notes shall be
delivered to the Bank and used to offset any amounts due and owing the Bank
under the Reimbursement Agreement. The foregoing notwithstanding, all accrued
interest on the Drawing Notes redeemed for any reason whatsoever shall be paid
to the Bank.
(c) Drawing Notes shall be released from the pledge of the Pledgor
herein created, and may be delivered to the Pledgor or otherwise pursuant to the
written direction of the
-2-
<PAGE>
Pledgor, upon either the Trustee's receipt of written instructions from the Bank
directing the Trustee to release a specified principal amount of such Drawing
Notes or upon (i) the Trustee, holding for the benefit of the Bank an amount of
money equal to the principal amount of Drawing Notes being released and (ii) the
Trustee's being satisfied that the Pledgor has delivered, or is delivering, to
the Bank the accrued interest on the principal sum being delivered by the
Trustee, all pursuant to the Reimbursement Agreement. The Trustee shall
immediately deliver to the Bank any amounts of monies delivered to it for the
release of the Notes by Federal Reserve wire transfer in accordance with written
instructions from the Bank in regard thereto.
(d) If the Drawing Notes are issued in "book entry form" and are not
held by a "securities intermediary" (as defined in Article 8-A of the Maine
Uniform Commercial Code), the Bank shall be registered as a pledgee on the books
and records of the Pledgor or the Bank shall otherwise have "control" (as
defined in the Maine Uniform Commercial Code) of the Drawing Notes. If the
Drawing Notes are issued in "book entry form" and are held by a "securities
intermediary" (other than the Trustee on behalf of the Bank"), the Pledgor
shall, and shall cause the securities intermediary to, enter into an agreement
with the Bank, in form and substance reasonably satisfactory to the Bank,
pursuant to which the Bank shall have "control" (as defined in the Maine Uniform
Commercial Code) of the Drawing Notes. The parties hereto agree to execute such
documents, instructions and instruments as may be necessary to effectuate the
lien of the Bank on the Drawing Notes.
(e) In order to effect the transfer of the record ownership of the
Drawing Notes from that of the Pledgor or the Bank, as pledgee, each of the
Pledgor and the Bank hereby authorize the Trustee, its officers, employees and
agents, to endorse the Pledgor's, or the Bank's, name, as the case may be, to
the Drawing Notes (including any appropriate separate Note powers) to be
transferred hereunder, the Pledgor and the Bank each intending to grant hereby
to the Trustee sufficient authority and powers of transfer to effect the
purposes of this Note Pledge Agreement.
4. Collateral. All property at any time pledged to the Bank
----------
hereunder (whether described herein or not) and all income therefrom and the
proceeds thereof, are herein collectively sometimes called the "Collateral".
5. Rights of the Bank. The Bank shall not be liable for failure to
------------------
collect the Obligations or for failure to realize upon any collateral security
or guarantee therefor, or any part thereof, or for any delay in so doing nor
shall the Bank be under any obligation to take any action whatsoever with regard
thereto. If an Event of Default under the Reimbursement Agreement has occurred
and is continuing, the Bank may, thereafter without notice, exercise all rights,
privileges or options pertaining to any Notes as if it were the absolute owner
thereof, upon such terms and conditions as it may determine, all without
liability except to account for property actually received by it, but the Bank
shall have no duty to exercise any of the aforesaid rights, privileges or
options and shall not be responsible for any failure to do so or delay in so
doing.
-3-
<PAGE>
6. Remedies. In the event that any portion of the Obligations has
--------
been declared due and payable, the Bank, without demand of performance or other
demand, advertisement or notice of any kind (except the notice specified below
of time and place of public or private sale) to or upon the Pledgor or any other
person (all and each of which demands, advertisements and/or notices are hereby
expressly waived), may forthwith collect, receive, appropriate and realize upon
the Collateral, or any part thereof.
The Bank shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all reasonable
costs and expenses of every kind incurred therein or incidental to the care,
safekeeping or otherwise of any and all of the Collateral or in any way relating
to the rights of the Bank hereunder, including reasonable attorneys' fees and
legal expenses, to the payment in whole or in part of the Obligations in such
order as the Bank may elect, the Pledgor remaining liable for any deficiency
remaining unpaid after such application, and only after so paying over such net
proceeds and after the payment by the Bank of any other amount required by any
provision of law, the Bank shall account for the surplus, if any, to the
Pledgor. The Bank agrees to give the Pledgor and the Trustee not less than ten
(10) days written notice of the time and place any public disposition is to take
place. The Pledgor agrees that such notice is reasonable notification of such
matters. No notification need be given to the Pledgor if, after default, it has
signed a statement renouncing or modifying any right to notification of sale or
other intended disposition.
In addition to the rights and remedies granted to the Bank in this Note
Pledge Agreement and in any other instrument or agreement securing, evidencing
or relating to any of the Obligations, the Bank shall have all the rights and
remedies of a secured party under the Uniform Commercial Code of the State of
Maine. The Pledgor further agrees to waive and agrees not to assert any rights
or privileges which it may acquire under 11 M.R.S.A. ss.9-112 and the Pledgor
shall be liable for the deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay all amounts to which the
Bank is entitled, and the fees of any attorneys employed by the Bank to collect
such deficiency.
7. Representations, Warranties and Covenants of the Pledgor. The
--------------------------------------------------------
Pledgor represents and warrants that: (a) except as otherwise permitted herein,
on the date of delivery to the Trustee, the Bank or the Bank's designee of any
Drawing Notes in accordance with Section 2 hereof, neither the Pledgor, the
Remarketing Agent nor the Trustee will have any right, title or interest in and
to the Drawing Notes; (b) it has, and on the date of delivery of any such
Drawing Notes to the Trustee, the Bank or the Bank's designee will have, full
power, authority and legal right to pledge all of Pledgor's right, title and
interest in and to the Drawing Notes pursuant to this Note Pledge Agreement; (c)
the pledge, assignment and delivery of such Drawing Notes pursuant to this Note
Pledge Agreement will create a valid first lien on, and a first perfected
security interest in, all right, title or interest of the Pledgor in or to such
Drawing Notes, and the proceeds thereof, subject to no prior pledge, lien,
mortgage, hypothecation, security interest, charge, option or encumbrance or to
any agreement purporting to grant to any third party a security interest in the
property or assets of the Pledgor which would include the Drawing Notes. The
Pledgor covenants and agrees that it will defend the Bank's right, title and
security interest in and to the Drawing Notes and the
-4-
<PAGE>
proceeds thereof against the claims and demands of all persons whomsoever; and
covenants and agrees that it will have like title to and right to pledge any
other property at any time hereafter pledged to the Bank as Collateral hereunder
and will likewise defend the Bank's right thereto and security interest therein.
8. No Disposition, etc. The Pledgor agrees that it will not, without
-------------------
the prior written consent of the Bank, sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with respect to, the Collateral, nor
will it create, incur or permit to exist any pledge, lien, mortgage,
hypothecation, security interest, charge, option or any other encumbrance with
respect to any of the Collateral, or any interest therein, or any proceeds
thereof, except for the lien and security interest provided for by this Note
Pledge Agreement.
9. Sale of Collateral.
------------------
(a) The Pledgor recognizes that the Bank may be unable to effect a
public sale of any or all of the Drawing Notes by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws, but may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers who will be obliged to agree, among
other things, to acquire such securities for their own account for investment
and not with a view to the distribution or resale thereof. The Pledgor
acknowledges and agrees that any such private sale may result in prices and
other terms less favorable to the seller than if such sale were a public sale
and, notwithstanding such circumstances, agrees and consents to any such private
sale. The Bank shall be under no obligation to delay a sale of any of the Notes
for the period of time necessary to permit the Pledgor to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if the Pledgor would agree to do so.
(b) The Pledgor further agrees to do or cause to be done all such
other acts and things as may be necessary to make such sale or sales of any
portion or all of the Drawing Notes valid and binding and in compliance with any
and all applicable laws, regulations, orders, writs, injunctions, decrees or
awards of any and all courts, arbitrators or governmental instrumentalities,
domestic or foreign, having jurisdiction over any such sale or sales, all at the
Pledgor's expense. The Pledgor further agrees that a breach by Pledgor of any of
the covenants contained in this paragraph 9 will cause irreparable injury to the
Bank, that the Bank has no adequate remedy at law in respect of such breach and,
as a consequence, agrees that each and every covenant contained in this
paragraph shall be specifically enforceable against the Pledgor and the Pledgor
hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants except for a defense that no Event of
Default has occurred under the Reimbursement Agreement. The Pledgor further
acknowledges the impossibility of ascertaining the amount of damages which would
be suffered by the Bank by reason of a breach of any of such covenants and,
consequently, agrees that if the Bank shall sue for damages for breach, the
Pledgor shall pay, as liquidated damages and not as a penalty, an amount equal
to the value of the Notes on the date the Bank shall demand compliance with this
paragraph.
-5-
<PAGE>
10. No Sale Without Reinstatement. Notwithstanding any other
-----------------------------
provision of this Agreement, the Bank shall not sell, transfer or otherwise
dispose of any of the Collateral in a manner that results in any of the Notes
comprising the Collateral being outstanding under and as defined in the
Indenture unless the Bank shall have reinstated the Letter of Credit in full
with respect to such Notes.
11. Further Assurances. The Pledgor agrees that at any time and from
------------------
time to time upon the written request of the Bank, the Pledgor will execute and
deliver such further documents and do such further acts and things as the Bank
may reasonably request in order to effect the purposes of this Note Pledge
Agreement.
12. Severability. Any provision of this Note Pledge Agreement which
------------
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
13. No Waiver, Cumulative Remedies. The Bank shall not by any act,
------------------------------
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder and no waiver shall be valid unless in writing, signed by the
Bank, and then only to the extent therein set forth. A waiver by the Bank of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which the Bank would otherwise have on any future occasion.
No failure to exercise nor any delay in exercising, on the part of the Bank, any
right, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided are
cumulative and may be exercised singly or concurrently, and are not exclusive of
any rights or remedies provided by law.
14. Waivers, Notices, Amendments; Applicable Law. None of the terms
--------------------------------------------
or provisions of this Note Pledge Agreement may be waived, altered, modified or
amended except by an instrument in writing, duly executed by all parties hereto.
This Note Pledge Agreement and all obligations of the Pledgor hereunder shall be
binding upon the successors and assigns of the Pledgor, and shall, together with
the rights and remedies of the Bank hereunder, inure to the benefit of the Bank
and its successors and assigns. This Agreement shall be governed by, and be
construed and interpreted in accordance with, the laws of the State of Maine.
Notices shall be delivered as the parties may from time to time agree. This Note
Pledge Agreement may be executed in one or more counterparts, all of which shall
be considered but one agreement.
IN WITNESS WHEREOF, the undersigned parties have caused this Note
Pledge Agreement to be duly executed and delivered by their duly authorized
officers on the day and year first above written.
AEROVOX INCORPORATED
-6-
<PAGE>
By: ROBERT D. ELLIOTT
Robert D. Elliott, President and Chief
Executive Officer
THE HUNTINGTON NATIONAL BANK, as Trustee
By: CANDADA J. MOORE
Candada J. Moore, Vice President
KEYBANK NATIONAL ASSOCIATION,
as Letter of Credit Bank
By: STEPHEN P. LUBELCZYK
Stephen P. Lubelczyk, Senior Vice
President
-7-
<PAGE>
Exhibit 4.15
LIMITED OFFERING MEMORANDUM
$10,170,000
AEROVOX INCORPORATED
TAXABLE ADJUSTABLE RATE NOTES
SERIES 2000
Aerovox Incorporated, a Delaware corporation (the "Issuer") will issue its
Taxable Adjustable Rate Notes, Series 2000 (the "Notes") in the aggregate
principal amount of up to $10,170,000. The Notes will be dated as of the date of
their original issuance and delivery, will be priced at 100% and will mature on
March 1, 2015. The Notes will bear interest, initially at the Weekly Rate, from
the date of their delivery, payable on the first Thursday of each March, June,
September, and December, and at maturity (each being an "Interest Payment Date")
so long as the Notes remain in the Weekly Rate Mode. The Interest Rate Mode for
the Notes may be changed from time to time to and from the Weekly Rate and the
Semi-Annual Rate. Each interest rate for an Interest Rate Mode for the Notes
will be determined by the Remarketing Agent, initially McDonald Investments Inc.
The Notes will be issued pursuant to a Trust Indenture to be dated as of
March 1, 2000 (the "Indenture") between the Issuer and Trustee, initially The
Huntington National Bank, Columbus, Ohio (the "Trustee").
The Notes are payable from and secured by a pledge of certain funds to the
Trustee under the Indenture, including certain payments to be made by the Issuer
under the Indenture (as hereinafter described). The Notes are also secured by
and paid from draws under an irrevocable direct pay Letter of Credit issued by
Keybank National Association
The Letter of Credit will permit the Trustee, to draw with respect to the
Notes up to (a) an amount sufficient to pay the principal thereof (or that
portion of the purchase price corresponding to principal), plus (b) an amount
equal to 98 days' interest thereon (calculated at a maximum rate of 10% per
annum) to pay interest (or that portion of the purchase price corresponding to
interest), all as described in this Limited Offering Memorandum. The Letter of
Credit will expire on March 22, 2005 or on such earlier date as described
herein.
THE NOTES WILL BE PURCHASED ON THE DEMAND OF THE OWNERS THEREOF AT THE
TIMES AND SUBJECT TO THE CONDITIONS DESCRIBED HEREIN. THE NOTES WILL ALSO BE
SUBJECT TO MANDATORY PURCHASE AND OPTIONAL AND MANDATORY REDEMPTION PRIOR TO
MATURITY AS DESCRIBED HEREIN.
The Notes are issuable as fully registered Notes in denominations of
$100,000 or any larger denomination constituting an integral multiple of $5,000.
The Notes will be issued initially under a book-entry system, registered in the
name of Cede & Co., as registered Noteholder and nominee for The Depository
Trust Company ("DTC"). Purchasers of book-entry interests in the Notes will not
receive certificates representing their interest in the Notes. See "THE NOTES --
Book Entry System" herein.
Interest on the Notes will be payable by check mailed (or, at the option of
certain owners of Notes as described herein, by wire transfer made) to the
persons in whose names such Notes are registered at the close of business on the
record date described herein. Principal of all Notes will be payable at the
principal corporate trust office of The Huntington National Bank, Columbus,
Ohio, as Paying Agent.
The Notes are offered for placement when, as and if issued by the Issuer
and accepted for placement by the Placement Agent named below, subject to prior
sale, withdrawal or modification of the offer without notice. Certain legal
matters will be passed on by Stanley B. Kay, Esq., as counsel to the Issuer,
Calfee, Halter & Griswold LLP, as co-counsel to the Letter of Credit Bank, and
Calfee, Halter & Griswold LLP, as counsel to the Placement Agent. It is expected
that delivery of the Notes will be made on or about March 22, 2000 in the
offices of DTC in New York, New York, against payment for the Notes.
McDonald Investments Inc.,
A KeyCorp. Company
Placement Agent
Dated: March 22, 2000
<PAGE>
Exhibit 4.15
No person has been authorized to give any information or to make any
representations other than those contained in this Limited Offering Memorandum
in connection with the offering made hereby and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Placement Agent, the Issuer or the Letter of Credit Bank. The information
herein is subject to change without notice, and neither the delivery of this
Limited Offering Memorandum nor any sale hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Issuer or the Letter of Credit Bank since the date hereof.
This Limited Offering Memorandum has been prepared solely for a limited
offering to accredited investors without general solicitation or advertising.
The Issuer and Placement Agent will make available, during the offering and
prior to any sale of Notes to any investor who receives this Limited Offering
Memorandum and such investor's purchaser representative(s), if any, the
opportunity to ask questions of, and receive answers from, Jeffrey S. Freese,
Managing Director of the Placement Agent, who may be contacted by calling (216)
689-8174, concerning the terms and conditions of the offering, to obtain without
charge and review any documents summarized in this Limited Offering Memorandum,
and to obtain any additional information necessary to verify the accuracy of the
information presented, to the extent that the Issuer possesses such information
or can acquire it without unreasonable effort or expense. Generally, the Notes
will be purchased by accredited investors directly from the Issuer and not from
the Placement Agent; however, in some instances, the Placement Agent may
temporarily take Notes into its own inventory until it can place them with
accredited investors.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INTRODUCTORY STATEMENT...................................................... 1
THE ISSUER.................................................................. 3
THE LETTER OF CREDIT BANK................................................... 3
THE PROJECT................................................................. 3
THE NOTES................................................................... 4
SUMMARY OF CERTAIN PROVISIONS OF NOTES...................................... 12
THE LETTER OF CREDIT........................................................ 16
THE REIMBURSEMENT AGREEMENT................................................. 18
THE INDENTURE............................................................... 22
LEGAL MATTERS............................................................... 27
PLACEMENT OF THE NOTES...................................................... 27
MISCELLANEOUS............................................................... 27
</TABLE>
<PAGE>
Exhibit 4.15
APPENDIX A--CERTAIN INFORMATION CONCERNING
KEYBANK NATIONAL ASSOCIATION........................... A-1
<PAGE>
Exhibit 4.15
LIMITED OFFERING MEMORANDUM
Relating to
$10,170,000
AEROVOX INCORPORATED
TAXABLE ADJUSTABLE RATE NOTES
SERIES 2000
INTRODUCTORY STATEMENT
This Limited Offering Memorandum, including Appendix A hereto, is provided
to furnish certain information in connection with the offer by Aerovox
Incorporated (the "Issuer"), of the above-referenced notes (the "Notes")
pursuant to the Trust Indenture dated as of March 1, 2000 (the "Indenture")
between the Issuer and The Huntington National Bank, Columbus, Ohio, as Trustee
(the "Trustee").
The proceeds of the Notes, together with other available funds, will be
used to finance the construction of a commercial facility to be located in New
Bedford, Massachusetts and the purchase of related equipment and to finance
related costs and expenses (collectively, the "Project"). Under the Indenture,
the Issuer will be obligated to make payments to the Trustee at such times and
in such amounts as are sufficient to pay the principal, interest and redemption
premium, if any, and purchase price required to be paid by the Issuer on the
Notes when and as the same become due (the "Note Service Charges"); however,
notwithstanding the foregoing, the Issuer shall make payments directly to the
issuer of the Letter of Credit (as hereinafter described) or other issuer of a
Credit Facility under the circumstances described herein under "THE INDENTURE".
Concurrently with the issuance of the Notes, the Issuer will cause to be
delivered to the Trustee an irrevocable direct pay Letter of Credit (the "Letter
of Credit") issued by KeyBank National Association (the "Letter of Credit
Bank"). The Trustee is entitled to draw under the Letter of Credit (1) an amount
equal to the principal of the outstanding Notes (i) to pay the principal of the
Notes when due at maturity or upon redemption or acceleration or (ii) to pay the
portion of the purchase price corresponding to the principal of Notes purchased
pursuant to the Indenture to the extent remarketing proceeds are not available
for such purpose, plus (2) an amount equal to 98 days' interest thereon
(calculated at a maximum rate of 10% per annum) (i) to pay interest on the Notes
when due or (ii) to pay the portion of the purchase price of Notes purchased
pursuant to the Indenture corresponding to the accrued interest, if any, on such
Notes to the extent remarketing proceeds are not available for such purchase.
See "THE LETTER OF CREDIT".
Information concerning the Letter of Credit Bank is set forth in Appendix A
to this Limited Offering Memorandum. THE NOTES ARE OFFERED PRINCIPALLY ON THE
FINANCIAL STRENGTH OF THE LETTER OF CREDIT BANK; ACCORDINGLY, NO FINANCIAL
INFORMATION IS BEING PROVIDED WITH RESPECT TO THE ISSUER.
A-1
<PAGE>
The Letter of Credit expires on March 22, 2005, and may be terminated or
replaced by a letter of credit of another commercial bank or other credit
facility as described under "THE LETTER OF CREDIT--Alternate Credit Facility".
The Letter of Credit, as amended from time to time, and any replacement letter
of credit or other credit facility is herein called the "Credit Facility". Any
bank or other financial institution which at the time is the issuer of the
Credit Facility is herein called the "Letter of Credit Bank". Upon expiration of
any Alternate Credit Facility, or if the Issuer, at its option, causes any
Credit Facility to be replaced, the Notes will be subject to mandatory purchase.
See "THE LETTER OF CREDIT--Alternate Credit Facility" and "THE NOTES--Mandatory
Purchase of Notes". The Letter of Credit will be issued pursuant to a
Reimbursement Agreement, dated as of March 1, 2000 (the "Reimbursement
Agreement"), between the Letter of Credit Bank and the Issuer. The Reimbursement
Agreement or any subsequent agreement between the Issuer and a Letter of Credit
Bank relating to any replacement letter of credit or credit facility is herein
called the "Reimbursement Agreement".
The Notes initially will bear interest at the Weekly Rate as determined by
the remarketing agent (the "Remarketing Agent"), initially McDonald Investments
Inc., until converted to another permitted interest rate mode as described
herein. In no event may the interest rate on the Notes exceed the lesser of (i)
15% per annum, or (ii) the maximum interest rate with respect to the Notes
specified in the Credit Facility then in effect (currently 10% per annum).
The Notes are subject to purchase by The Huntington National Bank acting as
the tender agent (the "Tender Agent") upon the demand of the Noteholders as
described herein. The Notes are also subject to mandatory purchase and optional
and extraordinary optional redemption prior to maturity as described herein.
---------------------------------
Brief descriptions of the Issuer, the Letter of Credit Bank, the Notes, the
Letter of Credit, the Reimbursement Agreement and the Indenture are included in
this Limited Offering Memorandum and the Appendix hereto. Specifically, certain
financial and other information regarding the Letter of Credit Bank is included
in Appendix A hereto. Such information and description do not purport to be
comprehensive or definitive and no part of such information is to be construed
as a representation or a guaranty of accuracy or completeness by the Placement
Agent, the Issuer (other than the information under "The Issuer", "The Project"
and to the extent pertaining to the Issuer, the Project or the Use of Note
Proceeds, "Introductory Statement"), or the Letter of Credit Bank (other than
the information under "THE LETTER OF CREDIT BANK" and in Appendix A). The
descriptions herein of the Letter of Credit, the Reimbursement Agreement, and
the Indenture are qualified in their entirety by reference to such documents,
and the descriptions herein of the Notes are qualified in their entirety by
reference to the forms thereof and the information with respect thereto included
in the aforesaid documents. All such descriptions are further qualified in their
entirety by reference to laws and principles of equity relating to or affecting
generally the enforcement of creditors' rights. Copies of such documents will be
available for inspection at the principal corporate trust office of the Trustee
and, during the initial offering period, can be obtained by potential purchasers
of the Notes at no
A-2
<PAGE>
cost from the Placement Agent. Potential purchasers of the Notes are encouraged
to review all documents prior to investing in the Notes.
Generally, the Notes will be purchased by accredited investors directly
from the Issuer and not from the Placement Agent; however, in some instances,
the Placement Agent may temporarily take Notes into its own inventory until it
can place them with accredited investors.
THE ISSUER
Aerovox Incorporated, the Issuer, is a corporation organized and existing
under the laws of the State of Delaware. The Issuer manufactures AC capacitors,
DC film capacitors, aluminum electrrolitic capacitors, power factor correction
capacitors and EMI filters which it sells primarily to original equipment
manufacturers of electrical and electronic equipment.
The Issuer represents that it is not directly or indirectly controlled by,
or under common control with, KeyBank National Association, that KeyBank
National Association does not directly or indirectly control the voting
securities or interests of the Issuer, and that the Issuer does not directly or
indirectly control the voting securities of KeyBank National Association. For
purposes of the foregoing sentence, the terms "control" and controlled" have the
meanings ascribed to such terms in the Investment Company Act of 1940, as
amended.
THE NOTES ARE BEING OFFERED ON THE BASIS OF THE CREDIT OF THE LETTER OF
CREDIT BANK AND NOT ON THE BASIS OF THE CREDIT OF THE ISSUER. THE ISSUER IS
PROVIDING NO SECURITY TO THE NOTEHOLDERS AND THE NOTES ARE NOT SECURED BY A
MORTGAGE ON, OR A SECURITY INTEREST IN, THE PROJECT OR ANY OTHER OF THE ISSUER'S
ASSETS OR A GUARANTY FROM PERSONS RELATED TO THE ISSUER.
THE LETTER OF CREDIT BANK
Certain information concerning KeyBank National Association is set forth in
Appendix A to this Limited Offering Memorandum.
KeyBank National Association represents that it is not directly or
indirectly controlled by, or under common control with, the Issuer, that the
Issuer does not directly or indirectly control the voting securities of KeyBank
National Association and that KeyBank National Association does not directly or
indirectly control the voting securities or interests of the Issuer. For
purposes of the foregoing sentence, the terms "control" and "controlled" have
the meanings ascribed to such terms in the Investment Company Act of 1940, as
amended.
THE PROJECT
The proceeds of the Notes, together with other available funds, will be
used to finance the construction of a commercial facility to be located in New
Bedford, Massachusetts and the
A-3
<PAGE>
purchase of related equipment and to finance related costs and expenses
(collectively, the "Project").
THE NOTES
General
- -------
The Notes will be dated as of the date of their original issuance, will be
issued in the maximum aggregate principal amount of $10,170,000 and will mature,
subject to prior redemption as herein described, on March 1, 2015. The Notes
will bear interest from the date of their delivery, initially at the Weekly
Rate.
The Notes will be delivered under the Indenture on or about March 22, 2000.
For the period from and including the date of issuance and delivery to
maturity, the Notes shall bear interest at interest rates determined for the
Weekly Rate until converted to a different interest rate mode (an "Interest Rate
Mode") permitted under the Indenture. The permitted Interest Rate Modes are (i)
the "Weekly Rate" and (ii) the "Semi-Annual Rate". The interest rates in each
Interest Rate Mode shall be determined by the Remarketing Agent appointed under
the Indenture (the "Remarketing Agent"); provided that the interest rate on the
Notes shall not exceed the lesser of 15% per annum or the maximum rate specified
in the Credit Facility then in effect (currently 10%). The Interest Rate Mode
for the Notes is subject to conversion (a "Conversion") to a different Interest
Rate Mode from time to time by the Issuer.
Interest on the Notes at the interest rate or rates for the Weekly Rate
will be computed on the basis of a year of 365 or 366 days, as appropriate, and
paid for the actual number of days elapsed. Interest on the Notes for the Semi-
Annual Rate will be computed on the basis of a 360-day year of twelve 30-day
months.
Interest on the Notes is payable (a) while the Notes bear interest at the
Weekly Rate, on the first Thursday of each March, June, September, and December
and at maturity, and (b) while the Notes bear interest at the Semi-Annual Rate,
on March 1 and September 1 of each year and at maturity (each an "Interest
Payment Date"). The first Interest Payment Date with respect to the Notes is the
first Thursday of June, 2000.
Payment of principal of, redemption price of or interest on the Notes while
they are held in a book-entry only system will be as described in "THE NOTES--
Book-Entry Only System" below.
In the event that Notes are no longer held in a book-entry only system,
interest payable on any Interest Payment Date will be paid to the registered
owner of the Note on the record date for such payment, which record date shall
be the close of business on the last Business Day preceding each Interest
Payment Date.
A-4
<PAGE>
In the event that Notes are no longer held in a book-entry only system, the
principal or redemption price of the Notes is payable at the principal corporate
trust office of The Huntington National Bank, as Paying Agent (the "Paying
Agent"), in Columbus, Ohio, and interest on the Notes will be payable by check
mailed to the owner of record; provided that at the request of an owner of
record of at least $1,000,000 aggregate principal amount of Notes, interest
accrued on such Notes will be paid by wire transfer within the United States in
immediately available funds; and provided further, interest payable at maturity
of a Note shall be paid only upon presentation and surrender of such Note at the
principal corporate trust office of the Trustee.
The Notes are issuable in denominations of $100,000 and any larger
denomination constituting an integral multiple of $5,000. Notes may be
transferred or exchanged for an equal total principal amount of Notes of other
authorized denominations upon surrender of such Notes at the principal corporate
trust office of The Huntington National Bank, as Note Registrar (the "Note
Registrar"), in Columbus, Ohio, duly endorsed for transfer or accompanied by an
assignment executed by the registered owner or the owner's duly authorized
attorney. Except as provided in the Indenture, the Notes will not be
transferable, and the Note Registrar will not register the transfer or exchange
of any Note, during the 15 days before any redemption or after such Note has
been called for redemption or as described under "Purchase of Notes" below.
Registration of transfers and exchanges shall be made without charge to the
Noteholders, except that the Note Registrar may require the Noteholder
requesting registration of transfer or exchange to pay any required tax or
governmental charge.
The Notes are being initially issued without registration under the
provisions of the Securities Act of 1933, as amended (the "Securities Act")
pursuant to exemption from such registration under Section 3(a)(2) of the
Securities Act and without registration under any state securities laws. The
Notes may only be sold, transferred, pledged or hypothecated, in whole or in
part, if they are registered under the Securities Act and all applicable state
securities laws or if an exemption from registration is available thereunder. If
the Letter of Credit or an Alternate Credit Facility that was issued by a "bank"
as defined in Section 3(a)(2) of the Securities Act is not then in effect, the
Note Registrar shall not register on the registration books any transfer of the
Notes by any Noteholder including a sale or transfer occurring after the tender
for purchase of a Note by the holder thereof in accordance with Section 3.01 of
the Indenture, unless all of the following conditions are satisfied:
(a) The proposed transferee represents and warrants to the
Trustee, the Issuer, the Remarketing Agent, the Note Registrar and the
former Noteholder that it is acquiring such Notes for investment
purposes and not with a view to the resale or distribution thereof,
within the meaning of the Securities Act and any applicable state
securities laws, and the proposed transferee acknowledges that the
Notes have not been registered under the Securities Act or any state
securities laws and therefore may not be resold, transferred, pledged
or hypothecated, in whole or in part, unless they are registered under
the Securities Act and any applicable state securities laws or unless
an exemption from registration is available; and
A-5
<PAGE>
(b) (i) If such sale or transfer is to an affiliate (as defined
in Rule 501 promulgated by the Securities and Exchange Commissioner
under the Securities Act) of the former Noteholder, the proposed
transferee represents and warrants to the Trustee, the Remarketing
Agent, the Note Registrar and the Issuer that (A) it is an affiliate
of the former Noteholder, (B) it is an investment company registered
under the Investment Company Act of 1940, as amended, (C) it qualifies
as an "accredited investor" within the meaning of said Rule 501, and
(D) such sale or transfer is exempt from registration under the
Securities Act and all applicable state securities laws: or
(ii) An opinion of counsel, satisfactory to the Issuer, the
Remarketing Agent, the Registrar and the Trustee, is delivered to the
Trustee, the Remarketing Agent, the Registrar and the Issuer to the
effect that such sale or transfer is exempt from registration under
the Securities Act and all applicable state securities laws.
The Huntington National Bank has also been appointed as Tender Agent under
the Indenture. The Principal Office of the Tender Agent is 41 South High Street,
HC 1112, Columbus, Ohio 43215. McDonald Investments Inc. has been appointed as
Remarketing Agent for the Notes. Any Remarketing Agent may be removed at any
time by the Issuer, if so directed by the Issuer, in accordance with the
Indenture, upon notice to the Trustee and such Remarketing Agent. Any
Remarketing Agent may resign upon 30 days prior notice to the Issuer, the
Trustee, the Tender Agent and any other Remarketing Agent.
The Notes will be issued initially solely in book-entry form. See "THE
NOTES - Book-Entry Only System" below.
In the event that the Notes are no longer held in a book-entry system, the
principal or redemption price of the Notes is payable at the principal corporate
trust office of The Huntington National Bank, as Paying Agent (the "Paying
Agent"), in Columbus, Ohio, and interest payable on any Interest Payment Date
will be paid to the registered owner of the Note on the record date for such
payment, which record date shall be the close of business on the last Business
Day preceding each Interest Payment Date.
As used herein, each of the following terms shall have the meaning
indicated:
"Business Day" means any day of the year other than (i) a Saturday or
Sunday, (ii) any day on which banks located in either Albany, New York, or in
the city in which the principal corporate trust office of the Trustee is located
are required or authorized by law to remain closed or (iii) any day on which the
New York Stock Exchange is closed.
"Conversion" means any conversion from time to time in accordance with the
terms of the Indenture of the Notes from one Interest Rate Mode to another
Interest Rate Mode.
"Conversion Date" means the first date any Conversion becomes
effective.
A-6
<PAGE>
"Purchase Date" means any date on which Notes are to be purchased on the
demand of the owners thereof or are subject to mandatory purchase.
"Semi-Annual Rate Period" means any period beginning on, and including, the
Conversion Date to the Semi-Annual Rate and ending on, and including, the day
preceding the Interest Payment Date thereafter and each successive six (6) month
period thereafter until the day preceding the Conversion to a different Interest
Rate Mode or the maturity of the Notes.
"Weekly Rate Period" means the period beginning on, and including, the date
of issuance of the Notes, and ending on, and including, the next Wednesday and
thereafter the period beginning on, and including, any Thursday and ending on,
and including, the next Wednesday; provided that if the date of issuance is a
Wednesday, such Wednesday shall constitute an initial one-day Weekly Rate
Period.
Book-Entry Only System
- ----------------------
The Notes initially will be issued solely in book-entry form to be held in
the book-entry only system maintained by The Depository Trust Company ("DTC"),
New York, New York. So long as such book-entry system is used, only DTC will
receive or have the right to receive physical delivery of Notes and, except as
otherwise provided herein with respect to Beneficial Owners of Beneficial
Ownership Interests (as such terms are hereafter defined), Beneficial Owners
will not be or be considered to be, and will not have any rights as, owners or
holders of the Notes under the Indenture.
The following information about the book-entry only system applicable to
the Notes has been supplied by DTC. None of the Issuer, the Trustee, the Issuer,
the Letter of Credit Bank, the Placement Agent or the Remarketing Agent makes
any representations, warranties or guarantees with respect to its accuracy or
completeness.
DTC will act as securities depository for the Notes. The Notes initially
will be issued as fully-registered securities registered in the name of Cede &
Co. (DTC's partnership nominee). One fully-registered Note certificate will be
issued, in the aggregate principal amount of the Notes, and will be deposited
with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participants ("Participants") deposit
with DTC. DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. "Direct
Participants" include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations. DTC is
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<PAGE>
owned by a number of its Direct Participants and by the New York Stock Exchange,
Inc., the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others
such as securities brokers and dealers, banks, and trust companies that clear
through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Securities and Exchange Commission.
Purchases of Notes under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Notes on DTC's records. The
ownership interest of each actual purchaser of each Note ("Beneficial Owner") is
in turn to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of their
purchase, but Beneficial Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the Direct or Indirect Participant through which the Beneficial
Owner entered into the transaction. Transfers of ownership interests in the
Notes ("Beneficial Ownership Interest") are to be accomplished by entries made
on the books of Participants acting on behalf of Beneficial Owners. Beneficial
Owners will not receive certificates representing their Beneficial Ownership
Interests in Notes, except in the event that use of the book-entry system for
the Notes is discontinued.
To facilitate subsequent transfers, all Notes deposited by Participants
with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The
deposit of Notes with DTC and their registration in the name of Cede & Co.
effect no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Notes; DTC's records reflect only the identity of the
Direct Participants to whose accounts such Notes are credited, which may or may
not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners, will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Notes are being redeemed, DTC's practice is to determine by lot the amount of
the interest of each Direct Participant in the Notes to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the Notes.
Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts the
Notes are credited on the record date (identified in a listing attached to the
Omnibus Proxy).
Principal and interest payments on the Notes will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the payable date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive
A-8
<PAGE>
payment on the payable date. Payments by Participants to Beneficial Owners will
be governed by standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such Participant and not of
DTC, the Trustee, or the Issuer, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal and
interest to DTC is the responsibility of the Issuer or the Trustee, disbursement
of such payments to Direct Participants shall be the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners shall be the
responsibility of Direct and Indirect Participants.
A Beneficial Owner shall give notice to elect to have its Beneficial
Ownership Interests purchased or tendered, through its Participant, to the
Trustee, and shall effect delivery of such Beneficial Ownership Interests by
causing the Direct Participant to transfer the Participant's interest in the
Notes on DTC's records, to the purchaser or the Trustee, as appropriate. The
requirements for physical delivery of Notes in connection with a demand for
purchase or a mandatory purchase will be deemed satisfied when the ownership
rights in the Notes are transferred by Direct Participants on DTC's records.
DTC may discontinue providing its services as securities depository with
respect to the Notes at any time by giving reasonable notice to the Issuer or
the Trustee. Under such circumstances, in the event that a successor securities
depository is not obtained, Note certificates are required to be printed and
delivered, as described below under "THE NOTES-Revision of Book-Entry System;
Replacement Notes."
NEITHER THE ISSUER, THE LETTER OF CREDIT BANK NOR THE TRUSTEE WILL HAVE ANY
RESPONSIBILITY OR OBLIGATION TO ANY DIRECT PARTICIPANT, INDIRECT PARTICIPANT OR
ANY BENEFICIAL OWNER, EXCEPT AS PROVIDED WITH RESPECT TO THE PURCHASE OF A
BENEFICIAL OWNERSHIP INTEREST, OR ANY OTHER PERSON NOT SHOWN ON THE REGISTRATION
BOOKS OF THE TRUSTEE AS BEING A HOLDER WITH RESPECT TO: (1) THE NOTES; (2) THE
ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT
PARTICIPANT; (3) THE PAYMENT BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT
PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PURCHASE
PRICE OF TENDERED NOTES, EXCEPT AS PROVIDED WITH RESPECT TO THE PURCHASE OF A
BENEFICIAL OWNERSHIP INTEREST, OR THE PRINCIPAL OR REDEMPTION PRICE OF OR
INTEREST ON THE NOTES; (4) THE DELIVERY BY ANY DIRECT PARTICIPANT OR INDIRECT
PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED
UNDER THE TERMS OF THE INDENTURE TO BE GIVEN TO HOLDERS; (5) THE SELECTION OF
THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION
OF THE NOTES; OR (6) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS HOLDER.
Each Beneficial Owner for whom a Direct Participant or Indirect Participant
acquires an interest in the Notes, as nominee, may desire to make arrangements
with such Direct Participant or Indirect Participant to receive a credit balance
in the records of such Direct Participant or
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<PAGE>
Indirect Participant, to have all notices of redemption, elections to tender
Notes or other communications to or by DTC which may affect such Beneficial
Owner forwarded in writing by such Direct Participant or Indirect Participant,
and to have notification made of all debt service payments.
Beneficial Owners may be charged a sum sufficient to cover any tax, fee, or
other governmental charge that may be imposed in relation to any transfer or
exchange of their interests in the Notes.
The Issuer cannot and does not give any assurances that DTC, Direct
Participants, Indirect Participants or others will distribute payments of debt
service on the Notes made to DTC or its nominee as the registered owner, or any
redemption or other notices, to the Beneficial Owners, or that they will do so
on a timely basis, or that DTC, Direct Participants or Indirect Participants
will serve and act in the manner described in this Offering Memorandum.
DTC Letter of Representations
- -----------------------------
Certain duties of DTC and procedures to be followed by DTC, the Trustee and
the Remarketing Agent will be set forth in a Letter of Representations (the "DTC
Letter of Representations") among the Issuer, the Trustee, the Remarketing Agent
and DTC. In the event of any conflict between the provisions of the Indenture
and the provisions of the DTC Letter of Representations relating to delivery of
Notes to the Trustee, the provisions of the DTC Letter of Representations shall
control.
Revision of Book-Entry System; Replacement Notes
- ------------------------------------------------
The Indenture provides for the issuance and delivery of fully registered
Notes (the "Replacement Notes") directly to owners other than DTC only in the
event that DTC determines not to continue to act as securities depository for
the Notes.
Upon occurrence of such event, the Issuer may attempt to establish a
securities depository book-entry relationship with another securities
depository. If the Issuer does not do so, or is unable to do so, and after the
Trustee has notified the Beneficial Owners or their representatives with respect
to the Notes by appropriate notice to DTC, the Issuer will issue and the Trustee
will authenticate and deliver Replacement Notes with minimum denominations of
$100,000 to the assignees of the Depository or its nominee.
In the event that the book-entry only system is discontinued, the principal
or redemption price of and interest on the Notes will be payable in the manner
described above in the seventh and eighth paragraphs under "THE NOTES--
General", and the following provisions would apply. The Notes may be transferred
or exchanged for one or more Notes in different authorized denominations upon
surrender thereof at the designated office of the Trustee as Registrar or at the
designated office of any Authenticating Agent (initially, the Trustee) by the
registered owners or their duly authorized attorneys or legal representatives.
Upon surrender of any Notes to be transferred or exchanged, the Issuer will
execute, and the Registrar will record the transfer or
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<PAGE>
exchange in its registration books and the Registrar or Authenticating Agent
shall authenticate and deliver, new Notes appropriately registered and in
appropriate authorized denominations. Neither the Issuer, the Registrar nor any
Authenticating Agent shall be required to transfer or exchange any Note during a
period beginning at the opening of business 15 days before the day of the
mailing of a notice of redemption of the Notes and ending at the close of
business on the day of such mailing, nor any Note all or part of which has been
selected for redemption.
[Balance of Page Intentionally Left Blank]
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<PAGE>
SUMMARY OF CERTAIN PROVISIONS OF NOTES
The following table summarizes certain provisions of the Notes for each of
the permitted Interest Rate Modes.
<TABLE>
<CAPTION>
WEEKLY RATE SEMI-ANNUAL RATE
<S> <C>
Interest Payment Date On the first Thursday of each March, June, On each March 1 and September 1.
September, and December, or if not a
Business Day, the next succeeding Business
Day.
In any Interest Rate Mode, the maturity date of the Notes, March 1, 2015, is
the final Interest Payment Date.
Interest Rate Each Wednesday preceding Interest Tenth Business Day preceding Interest
Determination Rate Period or, if not a Business Day, Rate Period.
Dates the next succeeding Business Day.
Rate Periods From and including each Thursday to and Each six month period (or portion
including the following Wednesday. thereof) from and including each March 1
or September 1 or Conversion Date to
Semi-Annual Rate to and including the day
immediately preceding the next Interest
Payment Date thereafter.
Purchase on Any Business Day; by written notice to On each Interest Payment Date; by
Demand of Tender Agent at least seven days prior written notice to Tender Agent
Owner; Required to Purchase Date. eighth Business Day prior to Purchase
Notice Date.
Mandatory Conversion, Interest Payment Date at least Conversion, Interest Payment Date at
Purchase Dates 15 days prior to expiration of Letter of least 15 days prior to expiration of
Credit, Interest Payment Date on which an Letter of Credit, Interest Payment Date
Alternate Credit Facility becomes on which an Alternate Credit Facility
effective, and date determined by Trustee becomes effective and date determined by
following an Event of Bankruptcy of the Trustee following an Event of Bankruptcy
Issuer. of the Issuer.
Redemption Optional at par in whole on any date and in Optional at par in whole on any date and
part on any Interest Payment Date. in part on any Interest Payment Date.
Notices of Redemption 30 days. 30 days.
</TABLE>
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<PAGE>
Determination of Interest Rates for Interest Rate Modes
- -------------------------------------------------------
Weekly Rate. If the Interest Rate Mode for the Notes is the Weekly Rate,
-----------
the interest rate on the Notes for a particular Weekly Rate Period shall be the
rate established by the Remarketing Agent no later than 2:00 p.m. (Cleveland,
Ohio time) on the Wednesday preceding the Weekly Rate Period (or the seventh day
preceding the Conversion of the Interest Rate Mode to the Weekly Rate) or if
such day is not a Business Day, the next succeeding Business Day, as the minimum
rate of interest necessary, in the judgment of the Remarketing Agent, to enable
the Remarketing Agent to sell the Notes on such Business Day at a price equal to
the principal amount thereof, plus accrued interest, if any, thereon.
Semi-Annual Rate. If the Interest Rate Mode for the Notes is the Semi-
----------------
Annual Rate, the interest rate on the Notes for a particular Semi-Annual Rate
Period shall be the rate established by the Remarketing Agent no later than 2:00
p.m. (Cleveland, Ohio time) on the tenth Business Day next preceding the first
day of such Semi-Annual Rate Period as the minimum rate of interest necessary,
in the judgment of the Remarketing Agent, to enable the Remarketing Agent to
sell the Notes on such first day at a price equal to the principal amount
thereof.
Failure of Remarketing Agent to Determine Rate. If for any reason the
----------------------------------------------
interest rate for a Note is not determined by the Remarketing Agent, the
Interest Rate Mode will remain the same and the interest rate for such Note for
the next succeeding interest rate period shall be the interest rate in effect
for the preceding interest rate period.
Conversion of Interest Rate Modes
- ---------------------------------
Conversion Directed by the Issuer. The Interest Rate Mode for the Notes, in
---------------------------------
whole but not in part, is subject to Conversion from time to time at the option
of the Issuer upon notice to the Trustee, the Letter of Credit Bank, the Tender
Agent and the Remarketing Agent. Such notice must be accompanied, if the stated
amount of the Credit Facility to be held by the Trustee after such Conversion is
increased over that of the then current Credit Facility, by an opinion of
counsel (which may be counsel to the Issuer) stating that payments of principal
of and interest on the Notes from funds drawn on such Credit Facility will not
constitute avoidable preferences with respect to the bankruptcy of the Issuer
under the United States Bankruptcy Code.
Limitation on Conversion. No Conversion of the Interest Rate Mode for the
------------------------
Notes may be made: (i) except on an Interest Payment Date which is a date on
which the Notes are subject to optional redemption (see "Redemptions--Optional
Redemption" below), and (ii) unless any Credit Facility to be held by the
Trustee after such Conversion covers accrued interest on the Notes for 98 days,
if the Conversion is to the Weekly Rate, or for 183 days, if the Conversion is
to the Semi-Annual Rate.
Notice to Noteholders of Conversion in Interest Rate Mode. The Trustee will
---------------------------------------------------------
notify the Noteholders by first class mail at least 30 days but not more than 60
days before each Conversion Date. The notice will state, among other things (i)
the new Interest Rate Mode, (ii) the Conversion Date, (iii) the Interest Payment
Dates, and (iv) that the Notes are subject to
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<PAGE>
to mandatory purchase on the Conversion Date. Except as otherwise described
herein, so long as the Notes are held by DTC or its nominee, CEDE & CO., in
book-entry only form, the Trustee will recognize and treat DTC or its nominee,
CEDE & CO., as the Holder of Notes for all purposes under the Indenture. (See
"THE NOTES --Book-Entry Only System" herein). Consequently, the foregoing
notices of conversion will be sent by the Trustee only to DTC or its nominee and
any corresponding notice to the Beneficial Owners will be the responsibility of
DTC and the applicable Direct Participant or Indirect Participant.
Purchase of Notes
- -----------------
Purchase of the Notes on Demand of Owner.
----------------------------------------
Weekly Rate. If the Interest Rate Mode for the Notes is the Weekly Rate,
-----------
any Note shall be purchased on the demand of the owner thereof on any Business
Day or any Interest Payment Date therefor, at a purchase price equal to the
principal amount thereof plus accrued interest, if any, to the Purchase Date
upon written notice to the Tender Agent at its Principal Office not later than
the seventh calendar day prior to the Purchase Date.
Semi-Annual Rate. If the Interest Rate Mode for the Notes is the Semi-
----------------
Annual Rate, any Note shall be purchased, on the demand of the owner thereof, on
any Interest Payment Date for a Semi-Annual Rate Period at a purchase price
equal to the principal amount thereof upon written notice to the Tender Agent at
its Principal Office on a Business Day not later than the eighth Business Day
prior to such Purchase Date.
Limitations on Purchases on Demand of Owner. Notwithstanding the foregoing,
-------------------------------------------
there shall be no purchase of less than the entire amount of any Note unless the
amount to be purchased and the amount to be retained by the owner are in
authorized denominations.
Notice Required for Purchases. Any written notice delivered to the
-----------------------------
Remarketing Agent or the Tender Agent for the purchase of Notes must (A) state
the number and principal amount (or portion thereof) of such Note to be
purchased, (B) state the Purchase Date on which such Note shall be purchased and
(C) irrevocably request such purchase and state that the owner agrees to deliver
such Note, duly endorsed in blank for transfer, with all signatures guaranteed,
to the Tender Agent at or prior to 12:00 Noon (Columbus, Ohio time) on such
Purchase Date.
So long as the Notes are held by DTC or its nominee, CEDE & CO., in book-
entry only form, the Trustee will recognize and treat DTC or its nominee, CEDE &
CO., as the Holder of the Notes for all purposes under the Indenture, provided
however that the Trustee will recognize a Beneficial Owner with respect to the
purchase of Beneficial Ownership Interests. (See "THE NOTES - Book-Entry Only
System" herein). Each Beneficial Owner is responsible for observing the
procedures applicable to DTC, the Direct Participant, any Indirect Participant
and the Trustee, as set forth in the Indenture.
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<PAGE>
Mandatory Purchase of Notes
- ---------------------------
Mandatory Purchase on Conversion Dates. The Notes shall be subject to
--------------------------------------
mandatory purchase, in whole, at a purchase price equal to the principal amount
thereof, plus accrued interest, if any, thereon to the Purchase Date on each
Conversion Date for any Conversion.
Mandatory Purchase Upon Replacement of Current Credit Facility. The Notes
--------------------------------------------------------------
shall be subject to mandatory purchase, in whole, at a purchase price equal to
the principal amount thereof, plus accrued interest, if any, thereon to the
Purchase Date, upon replacement of the current Credit Facility with an Alternate
Credit Facility. See "THE LETTER OF CREDIT--Alternate Credit Facility." The
Purchase Date shall be the Interest Payment Date that is to be the effective
date of the Alternate Credit Facility.
Mandatory Purchase Upon Expiration of Current Credit Facility. The Notes
-------------------------------------------------------------
shall be subject to mandatory purchase, in whole, at a purchase price equal to
the principal amount thereof, plus accrued interest, if any, thereon to the
Purchase Date, upon expiration of the term of the current Credit Facility. The
Purchase Date will be the Interest Payment Date immediately preceding (by at
least fifteen days) the date of expiration of the current Credit Facility.
Mandatory Purchase Upon Event of Bankruptcy of Issuer. The Notes shall be
-----------------------------------------------------
subject to mandatory purchase, in whole, at a purchase price equal to the
principal amount thereof plus accrued interest, if any thereon to the Purchase
Date, upon the occurrence of an Event of Bankruptcy of the Issuer. The Purchase
Date will be a date determined by the Trustee (which date shall be within the
period for which principal and interest on the Notes are covered by the amounts
available under the current Credit Facility).
Notice of Mandatory Purchase. Notice of any mandatory purchase shall be
----------------------------
given by the Trustee at least thirty (30) days prior to the date of purchase
(except the timing of notice of mandatory purchase upon an Event of Bankruptcy
of the Issuer shall be given as set forth in the preceding paragraph), in all
cases, in the same manner as a notice of redemption hereinafter described under
"Redemptions - Notice of Redemption"), provided that failure to receive notice
by mailing, or any defect in that notice, as to any Note shall not affect the
validity of the proceedings for the purchase of any other Note.
Payment of Purchase Price. Payment of the purchase price of any Note shall
-------------------------
be made only on surrender of such Note, accompanied by an appropriate instrument
of transfer, executed in blank, with signature guarantee, to the Tender Agent.
Delivery of any Note to be purchased at the Principal Office of the Tender Agent
at or prior to 12:00 noon (Columbus, Ohio time) on the Purchase Date shall be
required for payment of the purchase price due on such Purchase Date in same-day
funds. Any Note as to which a notice of demand for purchase has been given or
which is subject to mandatory purchase and for which moneys for the payment of
the purchase price have been deposited with the Tender Agent shall not be
transferable and shall be purchased on the Purchase Date whether or not such
Note has been surrendered to the Tender Agent. Thereafter, the owner of such
Note shall be entitled only to payment of the purchase price of such Note by the
Tender Agent.
A-15
<PAGE>
Notwithstanding anything herein to the contrary, when any Note is
registered in the name of a Depository or its nominee, the principal and
redemption price of and interest on such Note shall be payable in federal funds
delivered or transmitted to the Depository or its nominee.
Redemptions
- -----------
Optional Redemption.
-------------------
The Notes shall be subject to redemption at the option of the Issuer, upon
the direction of the Issuer, in whole on any date or in part on any Interest
Payment Date, at a redemption price of 100% of the principal amount redeemed.
No Mandatory Sinking Fund Requirements. The Notes are not subject to
--------------------------------------
mandatory redemption pursuant to any mandatory sinking fund requirements;
however, under the Reimbursement Agreement the Issuer is required to use its
right under the optional redemption provisions to make scheduled payments to
reduce the outstanding principal of the Notes. Such requirement under the
Reimbursement Agreement can be changed by the Letter of Credit Bank and the
Issuer at any time without the consent of or notice to the Noteholders.
Notice of Redemption. The Trustee shall cause notice of the redemption to
--------------------
be given by first class mail, postage prepaid, to all registered owners of Notes
to be redeemed at their registered addresses not more than 60 days and not fewer
than 30 days prior to the redemption date. Failure to mail any such notice or
defect in the mailing thereof in respect of any Note shall not affect the
validity of the redemption of any other Note. All Notes, or portions thereof, so
called for redemption will cease to bear interest on the specified redemption
date, provided funds for their redemption are on deposit with the Trustee at
that time, and shall no longer be considered outstanding under the Indenture.
Notice of the call for redemption of Notes held under a book entry system
will be sent by the Trustee only to DTC or its nominee as registered owner.
Selection of book entry interests in the Notes called, and notice of call to the
Beneficial Owners is the responsibility of DTC, Direct Participants and Indirect
Participants. Any failure of DTC to advise any Direct Participant, or of any
Direct Participant or any Indirect Participant to notify the Beneficial Owners,
of any such notice and its content or effect will not affect the validity of any
proceedings for the redemption of the Notes. See "THE NOTES -Book-Entry Only
System" herein.
Obligation of Issuer to Pay Note Service Charges. The Issuer agrees in the
------------------------------------------------
Indenture to make payments to the Trustee for the benefit of the Noteholders to
pay the Note Service Charges, from the sources provided therein, on the dates,
at the places and in the manner provided in the Indenture. Drawings under the
Credit Facility will be treated as a credit with respect to the Issuer's
obligation to pay Note Service Charges under the Notes and the Indenture.
THE LETTER OF CREDIT
A-16
<PAGE>
The Letter of Credit is an irrevocable obligation of the Letter of Credit
Bank issued in an amount equal to the principal amount of the Notes plus an
amount equal to 98 days' interest on the Notes at an interest rate of 10% per
annum. The Trustee, upon compliance with the terms of the Letter of Credit, is
authorized to draw under the Letter of Credit (l) an amount equal to the
principal of the Notes to pay (a) principal of the Notes when due whether at
stated maturity, upon redemption or acceleration or (b) the principal portion of
the purchase price of Notes subject to mandatory purchase or purchased on demand
of the owner and not remarketed plus (2) an amount up to 98 days' interest
accrued on the Notes at an interest rate of 10% per annum, to pay interest on
the Notes when due or to pay the interest portion of the purchase price of Notes
subject to mandatory purchase or purchased on demand of owners and not
remarketed.
The Letter of Credit terminates automatically on the earliest of (i) the
payment to the Trustee of the final drawing available to be made under the
Letter of Credit; (ii) receipt by the Letter of Credit Bank of a certificate of
the Trustee accepting an Alternate Credit Facility (as hereinafter defined),
(iii) receipt by the Letter of Credit Bank of a certificate of the Trustee
stating that no Notes remain outstanding; and (iv) March 22, 2005, the
expiration date of the Letter of Credit.
The Trustee is directed under the Indenture to draw upon the Letter of
Credit (i) to pay principal or redemption price of and interest on the Notes
when due; (ii) to enable the Tender Agent to pay the purchase price of Notes to
be purchased on the demand of the owner thereof; and (iii) to enable the Tender
Agent to pay the purchase price of Notes subject to mandatory purchase, in all
cases to the extent that other moneys permitted by the Indenture to be applied
to such purposes are not available.
The obligation of the Letter of Credit Bank under the Letter of Credit will
be reduced to the extent of any drawing thereunder. With respect to a drawing to
pay interest or the portion of the purchase price of Notes equal to interest,
the Letter of Credit shall be automatically reinstated in an amount equal to any
such drawing on the date of such drawing. With respect to a drawing to pay the
purchase price of Notes purchased on the demand of the owner thereof or subject
to mandatory purchase, the amount available under the Letter of Credit for
payment of principal or redemption price of the Notes or the principal portion
of the purchase price of Notes shall be reinstated but only to the extent that
the Letter of Credit Bank is reimbursed in accordance with the terms of the
Reimbursement Agreement for the amounts so drawn. In no event will the Trustee
be entitled to make drawings under the Letter of Credit for payment of any
amount due on any Note purchased with the proceeds of a drawing under the Letter
of Credit and not remarketed.
Upon an acceleration of the maturity of the Notes due to an Event of
Default under the Indenture, the Trustee will be entitled to draw on the Letter
of Credit to the extent of the aggregate principal amount of the Notes then
outstanding plus, to the extent available under the Letter of Credit, an amount
sufficient to pay interest on all outstanding Notes, less amounts for which the
Letter of Credit has not been reinstated.
Renewal of Letter of Credit
- ---------------------------
A-17
<PAGE>
Annually, at the Letter of Credit Bank's option, the expiration date of the
Letter of Credit may be extended for a year beyond the current expiration date.
Pursuant to the Indenture, the Trustee shall notify the Noteholders of the
extension of the expiration date of the current Credit Facility within five (5)
days of its receipt of an amendment to such Credit Facility or other writing
extending the expiration date. The notice will set forth the new expiration
date.
Alternate Credit Facility
- -------------------------
The Indenture provides that the Issuer may, at its option, as provided in
the Reimbursement Agreement, provide for the delivery to the Trustee of an
Alternate Credit Facility which shall be an irrevocable direct pay letter of
credit or another credit enhancement or support facility in favor of the Trustee
for the benefit of the Noteholders issued by a financial institution, the terms
of which shall in all respects material to the Noteholders be the same as the
Letter of Credit (except for the term and maximum interest rate but including
coverage of interest on the Notes for 98 days if the Notes bear interest at the
Weekly Rate or for 183 days if the Notes bear interest at the Semi-Annual Rate)
(the "Alternate Credit Facility"). Such Alternate Credit Facility shall have a
term of not less than one year and set forth a maximum interest rate on the
Notes with respect to which drawings may be made. The Alternate Credit Facility
must become effective on an Interest Payment Date. The Issuer must also furnish
to the Trustee (a) an opinion of counsel stating that (i) the delivery of such
Alternate Credit Facility to the Trustee is authorized under the Indenture and
complies with its terms, and (ii) so long as such Alternate Credit Facility is
issued by a "bank" as defined in Section 3(a)(2) of the Securities Act and
remains in effect, the Notes may be sold or transferred without registration
under the provisions of the Securities Act, and (b) an opinion of counsel to the
financial institution issuing such Alternate Credit Facility stating that such
Alternate Credit Facility is a legal, valid, binding and enforceable obligation
of such financial institution in accordance with its terms.
The Trustee must give notice of the pending replacement of the current
Credit Facility with an Alternate Credit Facility or of the expiration of the
term of the current Credit Facility which, in either case, will subject the
Notes to mandatory purchase. Such notice must be delivered by first class mail
at least 30 days but not more than 60 days before any Purchase Date resulting
from such replacement or expiration. The Purchase Date upon expiration of the
current Credit Facility shall be the Interest Payment Date preceding (by at
least fifteen days) the expiration date of the current Credit Facility. The
Purchase Date upon replacement of the current Credit Facility with an Alternate
Credit Facility shall be the Interest Payment Date on which the Alternate Credit
Facility becomes effective.
THE REIMBURSEMENT AGREEMENT
The following is a summary of certain provisions of the Reimbursement
Agreement pursuant to which the Letter of Credit will be issued. This summary is
not a complete recital of the terms of the Reimbursement Agreement or the
documents that secure the Reimbursement Agreement and reference is made to the
Reimbursement Agreement and those documents in their
A-18
<PAGE>
entirety. During the initial offering period, potential purchasers of the Notes
can obtain a copy of the Reimbursement Agreement and of the other documents
referenced below in connection with the Reimbursement Agreement from the
Placement Agent at no cost and are encouraged to review same before investing in
the Notes. Following the initial offering period, potential purchasers can
examine such documents at the office of the Trustee. Among other matters of
concern to purchasers of the Notes that are set forth in such documents, if an
Event of Default occurs under the Reimbursement Agreement, the Letter of Credit
Bank can cause the Notes to be accelerated and redeemed.
Any Reimbursement Agreement pursuant to which an Alternate Credit Facility
is issued may have terms substantially different from those of the Reimbursement
Agreement. The rights and obligations of the parties to the Reimbursement
Agreement and the documents that secure the Reimbursement Agreement do not
extend to the Trustee or to the Noteholders.
Reimbursement by the Issuer
- ---------------------------
The Issuer agrees to pay to the Letter of Credit Bank all amounts that are
drawn under the Letter of Credit, together with interest on all such amounts, in
accordance with its terms and the terms of the Reimbursement Agreement.
Fees, Commissions and Expenses
- ------------------------------
Pursuant to the Reimbursement Agreement, the Issuer also agrees to pay to
the Letter of Credit Bank a commission on the face amount of the Letter of
Credit, an origination fee, and an administrative fee for each drawing under the
Letter of Credit. The Issuer must also pay any costs and expenses incurred by
the Letter of Credit Bank with respect to each drawing under the Letter of
Credit, each transfer of the Letter of Credit from the Trustee to a successor
trustee under the Indenture, the enforcement of the Letter of Credit Bank's
rights under the Reimbursement Agreement, and the preparation and issuance by
the Letter of Credit Bank of the Letter of Credit, the Reimbursement Agreement,
and the documents securing the Issuer's obligations under the Reimbursement
Agreement. Further, if a change in any law or regulation or interpretation
thereof causes an increase or decrease in the costs of the Letter of Credit Bank
to issue or maintain letters of credit, such increase or decrease will be passed
on to the Issuer pursuant to the Reimbursement Agreement.
Certain Affirmative and Negative Covenants
- ------------------------------------------
The Issuer makes certain affirmative and negative covenants in the
Reimbursement Agreement with respect to their legal, business and financial
affairs. The Issuer is also required under the Reimbursement Agreement to make
scheduled payments to reduce the outstanding principal of the Notes pursuant to
the Issuer's right to optionally redeem the Notes; however, this requirement of
the Reimbursement Agreement can be changed or waived at any time by the Letter
of Credit Bank and the Issuer without the consent of or notice to the
Noteholders.
Security for Reimbursement Agreement
- ------------------------------------
A-19
<PAGE>
As security for its obligations under the Reimbursement Agreement, the
Issuer has granted the Bank a leasehold mortgage lien pursuant to a First
Leasehold Mortgage, Security Agreement, Assignment of Leases and Rents, and
Financing Statement (the "Mortgage") on the Project, and the Issuer has granted
an assignment in favor of the Letter of Credit Bank pursuant to an Assignment of
Project Documents (the "Assignment") in all contracts, plans and other
agreements of the Issuer relating to the construction portion of the Project.
The Issuer has also executed a note pledge agreement (the "Note Pledge
Agreement") in favor of the Letter of Credit Bank. The Mortgage, the Assignment
and the Note Pledge Agreement are hereinafter collectively referred to as the
"Reimbursement Collateral Documents". The Reimbursement Agreement, the
Construction Loan Agreement between the Issuer and the Letter of Credit Bank,
the Recognition Agreement and Estoppel Certificate by and among the Letter of
Credit Bank, the Issuer the New Bedford (Massachusetts) Redevelopment Authority
and the City of New Bedford (Massachusetts), and the Reimbursement Collateral
Documents are hereinafter collectively referred to as the "Credit Documents".
THE REIMBURSEMENT COLLATERAL DOCUMENTS SOLELY SECURE PAYMENTS DUE FROM THE
ISSUER TO THE LETTER OF CREDIT BANK UNDER THE REIMBURSEMENT AGREEMENT AND DO NOT
SECURE THE NOTES OR THE PAYMENT OF NOTE SERVICE CHARGES UNDER THE INDENTURE AND
ARE NOT FOR THE BENEFIT OF THE HOLDERS OF THE NOTES.
Events of Default
- -----------------
The occurrence of any of the following events constitutes an event of
default under the Reimbursement Agreement:
(a) If the Issuer fails to make or cause to be made any payment to the
Letter of Credit Bank required under the Reimbursement Agreement, or any of the
other Credit Documents to which the Issuer is a party.
(b) If any representation or warranty made by the Issuer in the
Reimbursement Agreement in any of the other Credit Documents, or in other
writings provided to the Letter of Credit Bank in connection with the
Reimbursement Agreement proves to be incorrect in any material respect when
made.
(c) If the Issuer fails to perform or observe any other provision,
covenant, or agreement contained in the Reimbursement Agreement or in any of the
other Credit Documents, and such failure remains unremedied for 30 days after
the Letter of Credit Bank gives written notice to the Issuer.
(d) If the Issuer (i) fails to pay any Indebtedness (as defined in the
Reimbursement Agreement) for borrowed money (other than Indebtedness arising
under the Reimbursement Agreement) when due, whether at maturity, by
acceleration, or otherwise or (ii) fails to timely perform under any agreement
relating to such Indebtedness or is otherwise in default thereunder, if the
effect of such failure is to accelerate, or permits the holder(s) or trustee(s)
under any such
A-20
<PAGE>
agreement to accelerate such Indebtedness, whether or not such failure is waived
by such holder(s) or trustee(s).
(e) If an Event of Default under the Indenture occurs.
(f) If the Issuer discontinues business, or if there occurs a material
adverse change in the business, property or the condition of operations,
financial or otherwise, of the Issuer.
(g) If any of the following events occurs: (i) any Reportable Event (as
defined in the Reimbursement Agreement) which the Letter of Credit Bank
determines in good faith might constitute grounds for the termination of any
Plan (as defined in the Reimbursement Agreement) or for the appointment by the
appropriate United State district court of a trustee to administer any Plan,
continues for 30 days after the Letter of Credit Bank has given written notice
thereof to the Issuer, (ii) any Plan incurs any "accumulated funding deficiency"
(as such term is defined in ERISA) whether waived or not, (iii) the Issuer
engages in any Prohibited Transaction (as defined in the Reimbursement
Agreement), (iv) a trustee is appointed by an appropriate United States district
court to administer any Plan, or (v) the PBGC institutes proceedings to
terminate any Plan or to appoint a trustee to administer any Plan.
(h) If the Issuer (i) is adjudicated a debtor or insolvent, or ceases, is
unable, or admits in writing its inability, to pay its debts as they mature or
makes an assignment for the benefit of creditors, (ii) applies for, or consents
to, the appointment of any receiver, trustee or similar officer for it or for
all or any substantial part of its property, or any such receiver, trustee or
similar officer is appointed without the application or consent of the Issuer,
(iii) institutes, or consents to the institution of by a petition, application
or otherwise any bankruptcy reorganization, arrangement, readjustment of debt,
dissolution, liquidation or similar proceeding relating to it under the laws of
any jurisdiction, (iv) has such proceeding described in clause (iii) instituted
against it which remains thereafter undismissed for a period of 60 days, or (v)
has any judgment, writ, warrant of attachment or execution or similar process
issued or levied against a substantial part of its property and such judgment,
writ or similar process is not released, vacated or fully bonded within 60 days
after its issue or levy.
(i) If an Event of Default occurs under any of the Credit Documents.
(j) Except as otherwise permitted in the Reimbursement Agreement if at any
time, (i) the sum of the undisbursed portion of the Project fund is less than
the amount determined by the Letter of Credit Bank to be necessary for the
timely and full payment of (a) all work done and not theretofore paid for or to
be done in connection with the completion of the Project in accordance with the
Plans and Specifications, including installation of all fixtures, furniture and
equipment contemplated by the Plans and Specifications, and (b) all other costs
incurred and not theretofore paid for, or to be incurred in connection with the
Project, and (ii) the Borrower fails, within fifteen (15) Business Days after
written request by the Letter of Credit Bank, to deposit the deficiency with the
Letter of Credit Bank.
A-21
<PAGE>
If an Event of Default occurs, the Letter of Credit Bank may exercise
any and all remedies, legal or equitable, to collect the amounts due from the
Issuer pursuant to the Reimbursement Agreement, and in its sole discretion, may
instruct the Trustee to accelerate the maturity of or redeem the Notes. Upon
receipt by the Trustee of such instructions from the Letter of Credit Bank, the
Notes shall be accelerated or redeemed pursuant to the Indenture. No failure on
the part of the Letter of Credit Bank to exercise, and no delay in exercising,
any right thereunder shall operate as a waiver thereof.
Notice by the Letter of Credit Bank to the Trustee that an event of
default under the Reimbursement Agreement has occurred and is continuing
constitutes an Event of Default under the Indenture. See "THE
INDENTURE--Defaults."
Liability of the Letter of Credit Bank
- --------------------------------------
As between the Issuer and the Letter of Credit Bank, the Issuer assumes
all risks of the acts or omissions of the Trustee and any transferee of the
Letter of Credit with respect to the use of the Letter of Credit.
THE INDENTURE
Pursuant to the Indenture, the Issuer will be obligated to make
payments to the Trustee at such times and in such amounts as are sufficient to
pay Note Service Charges on the Notes when and as the same become due.
Notwithstanding the foregoing, while a Credit Facility (i.e. the Letter of
Credit or another Credit Facility) is in effect the Issuer shall make such
payments directly to the issuer of the Credit Facility ("Credit Facility
Issuer") and the Credit Facility Issuer shall apply such amounts to the
reimbursement obligation owed by the Issuer to the Credit Facility Issuer;
provided, however, if there is a default by the Credit Facility Issuer, the
Issuer shall make such payments directly to the Trustee for deposit into the
Note Fund (described below).
Pledge of Revenues
- ------------------
Pursuant to the Indenture, all of the right, title and interest of the
Issuer in and to the Letter of Credit and any Alternate Credit Facility and all
amounts on deposit from time to time in the Note Fund and the Project Fund,
subject to the provisions of the Indenture permitting the application thereof
for the purposes and on the terms and conditions set forth therein, are assigned
and pledged to the Trustee to secure the payment of the principal or redemption
price of and interest on the Notes.
Project Fund
- ------------
A Project Fund will be established with the Trustee under the
Indenture. The Trustee will deposit in the Project Fund the proceeds from the
sale of the Notes to be disbursed to pay a portion of the costs of the Project.
A-22
<PAGE>
Note Fund
- ---------
A Note Fund will be established and maintained with the Trustee under
the Indenture. The amounts with respect to the payment of principal of and
interest on the Notes and certain other amounts specified in the Indenture will
be deposited in the Note Fund. While the Notes are outstanding, moneys in the
Note Fund will be used solely for the payment of the principal or redemption
price of and interest on the Notes as they mature or become due. Any amounts
remaining in the Note Fund, after payment in full of the principal or redemption
price of, premium, if any, and interest on the Notes (or provision for the
payment thereof) shall be paid to the Letter of Credit Bank, to the extent of
any amounts that the Issuer owes the Letter of Credit Bank pursuant to the
Reimbursement Agreement. Any amounts remaining in the Note Fund after such
payment to the Letter of Credit Bank shall be paid to the Issuer.
Investments
- -----------
Any moneys held as a part of the Note Fund shall be invested by the
Trustee as provided in the Indenture. Any such investments shall be held by or
under the control of the Trustee and shall be deemed at all times a part of the
Note Fund. The interest and income received upon, and any profit or loss
resulting from, the investment of moneys in the Note Fund shall be credited to
or charged to the Note Fund.
Remarketing of Notes
- --------------------
The Indenture provides that, with certain exceptions, the Remarketing
Agent will, subject to the terms of a Remarketing Agreement with the Issuer,
offer for sale Notes purchased upon demand of the owners thereof and upon
mandatory purchase, provided that Notes will be offered for sale during the
continuance of any Event of Default under the Indenture only in the sole
discretion of the Remarketing Agent. Each such sale will be at 100% of the
principal amount thereof, plus interest accrued, if any; provided that the
Remarketing Agent shall not sell any Note if the amount to be received from the
sale of such Note plus the amount available to be drawn by the Trustee under the
Credit Facility with respect to the Available Moneys (as defined in the
Indenture) available to the Trustee for such purpose is less than the purchase
price to be paid for such Note. The Trustee, the Tender Agent or the Letter of
Credit Bank may buy any Notes offered for sale for its own account.
Defaults
- --------
The Indenture provides that each of the following events will
constitute an "Event of Default" thereunder:
(a) Payment of the principal or redemption price of any Note is
not made when it becomes due and payable at maturity or upon
call for redemption; or
(b) Payment of any interest on any Note is not made when it
becomes due and payable; or
A-23
<PAGE>
(c) Failure by the Issuer to observe and perform any covenant,
condition or agreement under the Indenture (other than any
such failure which results in an Event of Default under the
Indenture relating to the payment of the principal, interest,
premium and/or purchase price of the Notes) for a period of
thirty days after written notice requesting that it be
remedied, given to the Issuer by the Trustee; provided, that
if such failure is of such nature that it can be corrected (as
agreed to by the Trustee) but not within such period, the same
shall not constitute an Event of Default so long as the Issuer
institutes prompt corrective action and is diligently pursuing
the same; or
(d) The Trustee receives notice from the Credit Facility Issuer
then held by the Trustee that an "Event of Default" under the
Reimbursement Agreement has occurred and is continuing and the
Trustee is to accelerate the maturity of the Notes; or
(e) Payment of the purchase price of any Note required to be
purchased by the demand of the owner thereof is not made when
such payment becomes due and payable; or
(f) A decree or order of a court or agency or supervisory
authority, having jurisdiction in the premises for the
appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceeding, or for the winding-up or
liquidation of its affairs, shall have been entered against
the Letter of Credit Bank or the Letter of Credit Bank shall
have consented to the appointment of a conservator or receiver
or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings
of or relating to the Letter of Credit Bank or of or relating
to all or substantially all of its property.
Remedies
- --------
The Indenture provides that if any Event of Default described in clause
(a), (b), (d), (e) or (f) occurs, the principal of and interest on all Notes
shall become, without notice, declaration or demand, immediately due and
payable. If any other Event of Default occurs and is continuing, the Trustee
may, and upon request of the owners of 25% in principal amount of all Notes then
outstanding shall, by notice in writing delivered to the Issuer, declare the
principal of and interest on all Notes immediately due and payable; and such
principal and interest shall thereupon become immediately due and payable. Upon
the occurrence of any such acceleration, the Trustee shall immediately exercise
such rights as it may have to declare all payments under the Indenture and the
Notes to be due and payable immediately, and to the extent it has not already
done so, shall immediately draw upon the Credit Facility to the extent permitted
by its terms.
Within five days of the occurrence of any such acceleration, the
Trustee shall notify by first class mail, postage prepaid, the owners of all
Notes then outstanding of the occurrence of such acceleration.
A-24
<PAGE>
In addition, upon the occurrence and continuation of an Event of
Default under the Indenture, the Trustee may pursue any available remedy at law
or in equity by suit, action, mandamus or other proceeding to enforce the
payment of principal of, premium, if any, and interest on the Notes.
The above provisions, however, are subject to the condition that if,
after the principal of all Notes has become due and payable, all arrears of
interest on the Notes are paid by the Issuer, and the Issuer performs all other
things in respect to which it may have been in default under the Indenture and
pays the reasonable charges of the Trustee and of the owners of the Notes,
including reasonable attorneys' fees, then owners of a majority in principal
amount of the Notes then outstanding, by notice to the Trustee, may annul such
acceleration and its consequences. The Trustee shall not annul any declaration
resulting from (i) an Event of Default under (d) above without the prior written
consent of the Letter of Credit Bank, or (ii) any Event of Default which has
resulted in a drawing under the Credit Facility unless the Trustee has received
written confirmation from the Letter of Credit Bank that the Credit Facility has
been reinstated to an amount equal to the amount thereof prior to such drawing.
The owners of a majority in principal of the Notes then outstanding
will have the right, after furnishing indemnity satisfactory to the Trustee, to
direct the method and place of conducting all remedial proceedings by the
Trustee under the Indenture, except that such direction will not be in conflict
with the provisions of law and of the Indenture or unduly prejudice the rights
of minority Noteholders.
Modifications and Amendments
- ----------------------------
The Indenture provides that it may be amended or supplemented at any
time without the consent of any of the owners of the Notes, but with the consent
of the Letter of Credit Bank which shall not be withheld unreasonably, by a
supplemental indenture authorized by the Issuer filed with the Trustee for any
one or more of the following purposes:
(a) to add additional covenants of the Issuer or to surrender any
right or power conferred upon the Issuer in the Indenture;
(b) for any purposes not inconsistent with the terms of the
Indenture or to cure any ambiguity or to correct or supplement
any provision of the Indenture or in any supplemental
indenture which may be defective or inconsistent with any
other provision in the Indenture or in any supplemental
indenture, or to make such other provisions in regard to
matters or questions arising under the Indenture which shall
not adversely affect the interests of the Noteholders;
(c) to permit the Notes to be converted at any time to
certificateless securities or securities by a master
certificate held in trust, ownership of which, in either case,
is evidenced by book entries on the books of the note
registrar for any period of time;
A-25
<PAGE>
(d) to permit the appointment of a co-trustee under the Indenture;
(e) to authorize different authorized denominations of the Notes
and to make correlative amendments and modifications to the
Indenture regarding exchangeability of Notes of different
authorized denominations, redemptions of portions of Notes of
particular authorized denominations and similar amendments and
modifications of a technical nature;
(f) to modify, alter, supplement or amend the Indenture in such
manner as shall permit qualification under the Trust Indenture
Act of 1939, as from time to time amended; and
(g) to modify, alter, amend or supplement the Indenture in any
other respect which is not materially adverse to the owners.
The Indenture may be amended from time, except with respect to (a) the
principal, redemption price, purchase price or interest payable upon any of the
Note, (b) the Interest Payment Dates, the dates of maturity or the redemption or
purchase provisions of any of the Notes, (c) the provisions relating to
amendments of the Indenture or the Credit Facility, (d) the creation of a
priority of one Note over another and (e) the imposition of any lien on the
trust estate other than the lien of the Trustee for the benefit of the
Noteholders and the Credit Facility Issuer, by a supplemental indenture
consented to by the Credit Facility Issuer and approved by the owners of at
least a majority in aggregate principal amount of the Notes then outstanding
which would be affected by the action proposed to be taken. The Indenture may be
amended with respect to the matters enumerated in clauses (a) through (e) in the
preceding sentence with the unanimous consent of all Noteholders, the Facility
Issuer and the Issuer.
Discharge of Indenture
- ----------------------
The Indenture provides that when the principal or redemption price (as
the case may be) of, and interest on the Notes have been paid, or provision has
been made for their payment, together with the compensation of the Trustee and
all other sums payable by the Issuer, the right, title and interest of the
Trustee shall cease and the Trustee, on demand of the Issuer, will release the
Indenture; provided however that the right of each owner to demand purchase of
his Notes as provided in the Notes will survive the release of the Indenture. If
payment or provision for payment is made for less than all of the Notes, the
particular Notes (or portion thereof) to be deemed paid shall be selected by lot
by the Trustee, and the Trustee shall release the Indenture with respect to such
Notes.
Any Note shall be deemed to be paid within the meaning of the Indenture
when the Trustee holds in the Note Fund, in trust and irrevocably set aside
exclusively for such payment (i) moneys sufficient to make such payment in
accordance with the Indenture and/or (ii) non-callable Governmental Obligations
(hereinafter defined) maturing as to principal and interest in such amounts and
at such times as will provide sufficient moneys (without consideration of any
reinvestment of such moneys) to make such payment in accordance with the
Indenture.
A-26
<PAGE>
"Governmental Obligations" means (i) direct obligations of the United
States of America, (ii) obligations unconditionally guaranteed by the United
States of America and (iii) securities or receipts evidencing ownership interest
in obligations or specified portions (such as principal or interest) of
obligations described in clauses (i) or (ii).
The Trustee
- -----------
The Indenture provides that the Trustee shall not be answerable for the
exercise of any discretion or power under the Indenture or for anything
whatsoever in connection with the trust created except only its own willful
misconduct or negligence. The Trustee may in good faith buy, sell, own and hold
any of the Notes and may join in any action which any Noteholders may be
entitled to take with like effect as if the Trustee were not a party to the
Indenture. The Trustee may also engage in or be interested in any financial or
other transaction with the Issuer; provided that if the Trustee determines that
any such relation is in conflict with its duties under the Indenture, it shall
eliminate the conflict or resign as Trustee.
The Trustee may resign and be discharged by written resignation filed
with the Issuer not less than thirty (30) days before the date when it is to
take effect. Notice of such resignation should be furnished by mail to the
Noteholders as required by the Indenture.
Covenants of the Issuer
- -----------------------
Expenses and Indemnity. The Issuer agrees to pay the Trustee's and any
----------------------
Paying Agent's compensation and expenses under the Indenture and agrees to
indemnify the Trustee against all liabilities incurred by the Trustee without
negligence or bad faith on the Trustee's part on account of any action taken or
permitted to be taken by the Trustee under the Indenture or the Notes.
LEGAL MATTERS
The Placement Agent will receive opinions with respect to certain legal
matters from Stanley B. Kay, Esq., as counsel to the Issuer and Calfee, Halter &
Griswold LLP, as co-counsel to the Letter of Credit Bank, and Calfee, Halter &
Griswold LLP, as counsel to the Placement Agent.
PLACEMENT OF THE NOTES
McDonald Investments Inc., the Placement Agent named on the cover page,
has agreed, subject to the approval of certain legal matters by counsel and to
certain other conditions, to arrange for the private placement of the Notes.
Generally, accredited investors will purchase the Notes directly from the Issuer
and not from the Placement Agent; however, in some instances the Placement Agent
may temporarily take Notes into its own inventory until it can place them with
accredited investors. The Issuer has agreed to indemnify the Placement Agent
against certain liabilities, including liabilities under federal securities
laws.
MISCELLANEOUS
A-27
<PAGE>
The foregoing summaries do not purport to be complete and are expressly
made subject to the provisions of the definitive documents. For specific
details, reference is made to the Indenture and the Reimbursement Agreement
(including the form of the Letter of Credit), copies of which, together with
related documents, may be obtained at no cost from the Placement Agent during
the period of the initial offering. The Appendices to this Limited Offering
Memorandum contain or incorporate by reference information concerning the Letter
of Credit Bank, including certain financial information.
The Issuer does not represent that information furnished by the Letter
of Credit Bank is accurate or complete nor does the Issuer assume any
responsibility for the accuracy or completeness of such information.
A-28
<PAGE>
Exhibit 4.16
REIMBURSEMENT AGREEMENT
-----------------------
This REIMBURSEMENT AGREEMENT ("Agreement"), dated as of March 1, 2000,
is by and between AEROVOX INCORPORATED, a Delaware corporation (the "Borrower")
and KEYBANK NATIONAL ASSOCIATION, a national banking association (the "Bank").
WHEREAS, in order to provide financing for (i) a new building to be
constructed on the Premises (the "Building"), (ii) related equipment to be
purchased for the Premises (the "Equipment") and (iii) related costs and
expenses, the Borrower proposes to issue its Taxable Adjustable Rate Notes,
Series 2000, in the aggregate principal amount of up to Ten Million, One Hundred
Seventy Thousand Dollars ($10,170,000) (the "Notes") under the terms and
conditions more fully set forth in the Trust Indenture, dated as of March 1,
2000 (the "Indenture"), by and between the Borrower and The Huntington National
Bank, Columbus, Ohio, as Trustee; and
WHEREAS, to enhance the marketability of the Notes, the Borrower has
applied to the Bank for the issuance of a letter of credit (the "Letter of
Credit") in favor of the Trustee in an amount of up to Ten Million, Four Hundred
Forty-Three Thousand, Fifty-Eight Dollars ($10,443,058.00) to secure the payment
of the principal of and accrued interest on the Notes; and
WHEREAS, it is the purpose of this Agreement to set forth the Bank's
commitment to issue the Letter of Credit and the Borrower's agreement to
reimburse the Bank for any and all payments made by the Bank pursuant to the
Letter of Credit; and
NOW THEREFORE, in consideration of the mutual agreements made herein
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION ONE
-----------
DEFINITIONS
-----------
Section 1.1. Terms Defined. As used in this Agreement, the following
-------------
terms have the following respective meanings. Any accounting term used but not
specifically defined herein shall be construed in accordance with GAAP. The
definition of each agreement, document, and instrument set forth in this Section
1.1 shall be deemed to mean and include such agreement, document, or instrument
as amended, restated, or modified from time to time:
"Assignment" shall mean the Assignment of Project Documents dated as of
----------
February 29, 2000 and given by the Borrower to the Bank with respect to the
Premises.
"Bank Obligation" shall mean an amount equal to the aggregate
---------------
outstanding liability of the Bank from time to time under the Letter of Credit.
"Bank" shall mean KeyBank National Association, its successors and
----
assigns.
<PAGE>
"Borrower" shall mean Aerovox Incorporated, a Delaware corporation.
--------
"Business Day" means any day of the year other than (i) a Saturday or
------------
Sunday, (ii) any day on which banks located in either Albany, New York,
Portland, Maine, or the city in which the principal corporate trust office of
the Trustee is located are required or authorized by law to remain closed, or
(iii) any day on which the New York Stock Exchange is closed.
"Capital Expenditures" shall mean the Borrower's capital expenditures
--------------------
as determined in accordance with GAAP.
"Closing Date" shall mean March 22, 2000, or another date agreed upon
------------
in writing by the Borrower and the Bank.
"Completion Date" shall mean August 1, 2000 or another date agreed upon
---------------
in writing by the Borrower and the Bank.
"Construction Loan Agreement" shall mean the Construction Loan
---------------------------
Agreement dated as of February 29, 2000 between the Borrower and the Bank.
"Credit Documents" shall mean, collectively, this Reimbursement
----------------
Agreement, the Mortgage, the Assignment, the Recognition Agreement, the Note
Pledge Agreement and the Construction Loan Agreement.
"Date of Issuance" shall mean the date of issuance of the Letter of
----------------
Credit.
"Debt Service Coverage Ratio" shall mean the ratio of (i) EBITDA, less
---------------------------
the sum of cash taxes paid, unfinanced capital expenditures, distributions and
dividends to (ii) the sum of the Borrower's interest expense and scheduled
payments of principal of long-term Indebtedness.
"Default Rate" shall mean interest at a rate per annum equal to one
------------
percent (1%) in excess of the Prime Rate, with each change in the Prime Rate
automatically changing the Default Rate.
"EBITDA" shall mean, for the previous twelve (12) months, the
------
Borrower's earnings before taxes, interest expense, depreciation, amortization
and extraordinary charges.
"Environmental Law" means any federal, state, or local statute, law,
-----------------
ordinance, code, rule, regulation, order or decree regulating, relating to, or
imposing liability upon a Person in connection with the use, release or disposal
of any hazardous, toxic or dangerous substance, waste or material.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
-----
as the same may from time to time be amended or supplemented, and all
regulations thereunder.
"Event of Default" shall have the meaning assigned thereto in Section 8
----------------
hereof.
"Expiration Date" means March 22, 2005, unless extended by the Bank in
---------------
writing pursuant to Section 2.5.
2
<PAGE>
"Fee Calculation Amount" shall have the meaning set forth in Section
----------------------
2.2(b).
"GAAP" shall mean generally accepted accounting principles as then in
----
effect, which shall include the official interpretations thereof by the
Financial Accounting Standards Board, consistently applied.
"General Contractor" shall mean Dacon Corporation.
------------------
"Indebtedness" shall mean, at a particular date, the liabilities of a
------------
Person, as determined in accordance with GAAP, consistently applied, including,
without limitation, all indebtedness for money borrowed or for the deferred
purchase price of property and lease obligations of such Person which have been,
or which in accordance with Statement of Financial Accounting Standards No. 13,
as from time to time amended, should be, capitalized.
"Indenture" shall mean the Trust Indenture, dated as of March 1, 2000
---------
between the Borrower and the Trustee.
"Indenture Default" shall mean an Event of Default under and pursuant
-----------------
to the Indenture.
"Interest Commitment" shall have the meaning set forth in the Letter of
-------------------
Credit.
"Interest Drawing" shall have the meaning set forth in the Letter of
----------------
Credit.
"Interest Payment Date" shall mean Interest Payment Date as defined in
---------------------
the Indenture.
"Letter of Credit" shall mean the Letter of Credit to be issued by the
----------------
Bank on the Closing Date pursuant to this Agreement, such Letter of Credit to be
substantially in the form of Exhibit A attached hereto and any extensions,
renewals, amendments or replacements thereof.
"Letter of Credit Commitment" shall have the meaning set forth in the
---------------------------
Letter of Credit.
"Letter of Credit Fee" shall have the meaning set forth in Section
--------------------
2.2(b) of this Agreement.
"Mortgage" shall mean the First Leasehold Mortgage, Security Agreement,
--------
Assignment of Leases and Rents, and Financing Statement, executed and delivered
by the Borrower, dated as of February 29, 2000 and recorded in the Bristol
County (Massachusetts), South District, Registry of Deeds in Book 4630,
beginning at Page 166.
"Note Documents" shall mean, collectively the Indenture and any other
--------------
document executed by the Borrower in connection with the issuance of the Notes
(other than the Credit Documents).
"Note Pledge Agreement" shall mean the Note Pledge Agreement dated as
---------------------
of March 1, 2000, among the Borrower, the Bank, and the Trustee.
"Notes" shall mean the Ten Million, One Hundred Seventy Thousand
-----
Dollars ($10,170,000.00) Aerovox Incorporated Taxable Adjustable Rate Notes,
Series 2000, issued by
3
<PAGE>
the Borrower pursuant to the Indenture.
"Organizational Documents" shall mean with respect to a corporation,
------------------------
its articles of incorporation and bylaws, with respect to a limited liability
company, its articles of organization and operating agreement, with respect to a
partnership, its partnership agreement, and with respect to other entities, such
documents as create and continue the existence of the entity and specify the
manner in which its affairs are governed.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
----
pursuant to Title IV of ERISA.
"Permitted Encumbrances" shall mean, as of any particular time, (a)
----------------------
liens for ad valorem taxes and special assessments not then delinquent, (b) this
Agreement, the Mortgage, the Assignments, the Note Pledge Agreement and any
security interest or other lien created thereby, (c) such minor defects,
irregularities, encumbrances and clouds on title as normally exist with respect
to property similar in character to the Pledged Collateral and as do not, in the
written opinion of counsel to the Borrower, interfere with or impair the use or
value of the property affected thereby, (d) any security interest granted from
time to time to the Bank, and (e) any items set forth on Exhibit B attached
hereto.
"Person" means any natural person, corporation (which shall be deemed
------
to include business trust), association, partnership, political entity, or
political subdivision thereof.
"Plan" shall mean any plan defined in Section 4021(a) of ERISA in
----
respect of which Borrower is an "employer" or a "substantial employer" as
defined in Section 3(5) and 4001(a)(2) of ERISA, respectively.
"Plans and Specifications" shall mean the plans and specifications for
------------------------
the Project accepted by the Bank as of the Closing Date, as the same may be
modified in accordance with section 6.12.
"Pledged Collateral" shall mean the collateral in which the Borrower
------------------
has given the Bank a mortgage lien or a security interest pursuant to the
Mortgage, Assignment, and/or the Note Pledge Agreement.
"Premises" shall mean the leased premises which are described in the
--------
Mortgage and which are located in the New Bedford Industrial Park, John Vertente
Boulevard Extension, New Bedford, Massachusetts, consisting of Borrower's
leasehold estate in a certain Ground Sublease dated January 4, 2000, between
Borrower as sublessee and the New Bedford Redevelopment Authority as sublessor.
"Prime Rate" shall mean that interest rate established from time to
----------
time by the Bank as Bank's Prime Rate, whether or not such rate is publicly
announced. The Prime Rate may not be the lowest rate charged by the Bank for
commercial or other extensions of credit.
"Principal Commitment" shall have the meaning set forth in the Letter
--------------------
of Credit.
"Principal Drawing" shall have the meaning set forth in the Letter of
-----------------
Credit.
4
<PAGE>
"Prohibited Transaction" shall mean any prohibited transaction as that
----------------------
term is defined for purposes of ERISA.
"Project" shall mean the Building and the Equipment.
-------
"Project Fund" shall have the meaning ascribed to such term in the
------------
Indenture.
"Purchaser" shall mean the original purchaser or purchasers of the
---------
Notes.
"Recognition Agreement" shall mean the Recognition Agreement and
---------------------
Estoppel Certificate dated as of February 29, 2000 by and between Bank as
Lender, Borrower as Sublessee, New Bedford (Massachusetts) Redevelopment
Authority as Lessee and Sublessor, and the City of New Bedford (Massachusetts)
as Owner and Lessor and recorded in the Bristol County (Massachusetts), South
District, Registry of Deeds in Book 4638, beginning at Page 100.
"Remarketing Agent" shall mean, initially, McDonald Investments Inc.
-----------------
"Remarketing Commitment" shall have the meaning set forth in the Letter
----------------------
of Credit.
"Remarketing Drawing" shall have the meaning set forth in the Letter of
-------------------
Credit.
"Reportable Event" shall mean any reportable event as that term is
----------------
defined in ERISA.
"Subordinated Debt" shall mean Indebtedness of the Borrower which is
-----------------
subordinated, in a manner satisfactory to the Bank, to all Indebtedness owing to
the Bank and to all other indebtedness which is pari passu therewith or senior
thereto.
"Subsidiary" shall mean (i) any for profit corporation more than fifty
----------
percent (50%) of the capital stock of which is owned or controlled, directly or
indirectly, by a Person or any Subsidiary and whose accounts are required to be
consolidated with those of such Person in accordance with GAAP and (ii) any
non-profit corporation which is controlled, directly or indirectly, by such
Person.
"Tender Agent" shall have the meaning ascribed to such term in the
------------
Indenture.
"Title Company" shall mean Lawyers Title Insurance Corporation.
-------------
"Title Policy" shall mean the ALTA Loan Policy issued by the Title
------------
Company with respect to the Premises.
"Total Funded Debt" shall mean the sum of all debt for borrowed money
-----------------
and similar monetary obligations evidenced by bonds, notes, debentures, all
liabilities secured by any lien existing on any property owned or acquired
subject thereto, whether or not the liability secured thereby shall have been
assumed, all capitalized lease obligations, all reimbursement obligations under
outstanding letters of credit, bankers acceptances and similar instruments and
all guarantees and other contingent liabilities with respect to any obligations
or liabilities of the type described above.
5
<PAGE>
"Trustee" means The Huntington National Bank, Columbus, Ohio, or any
-------
successor Trustee under the Indenture.
SECTION TWO
-----------
ISSUANCE OF LETTER OF CREDIT
----------------------------
Section 2.1. Issuance of Letter of Credit. Subject to the terms and
----------------------------
conditions hereof, the Bank agrees to execute and deliver the Letter of Credit.
The obligations of the Bank under the Letter of Credit shall be absolute and
irrevocable and shall be performed strictly in accordance with the terms of the
Letter of Credit and this Agreement.
The Borrower hereby confirms and approves of the issuance and terms of
the Letter of Credit. The Borrower will promptly notify the Bank of any
irregularity or claim of non-compliance with the Borrower's instructions. The
Borrower is conclusively deemed to have waived any such claim against the Bank
and its correspondents unless such notice is given.
Section 2.2. Fees and Reimbursement for Letter of Credit
-------------------------------------------
(a) The Borrower hereby agrees to pay to the Bank:
(i) Before 2:00 p.m., Albany, New York time, on each date that
any amount is drawn under the Letter of Credit pursuant to
a Principal Drawing or an Interest Drawing and/or a
Remarketing Drawing, each as defined in the Letter of
Credit, a sum equal to the amount drawn under the Letter of
Credit, plus (x) interest accrued, if any, on the amount so
drawn under the Letter of Credit as determined pursuant to
clause (iii) of this subsection (a) of this Section 2.2,
plus (y) any and all charges and expenses which the Bank
may pay or incur relative to such drawing under the Letter
of Credit, plus (z) a fee in the amount of Two Hundred
Dollars ($200) for each Principal Drawing, Remarketing
Drawing, or Interest Drawing under the Letter of Credit.
(ii) Upon a Remarketing Drawing under the Letter of Credit,
provided there is then no uncured Event of Default, the
Borrower shall have until the Expiration Date to reimburse
the Bank for the amount of the Remarketing Drawing, subject
to the right of the Bank to require redemption or
acceleration of the Notes pursuant to Section 8.2 hereof.
Any amounts received by the Bank from the remarketing of
Notes purchased out of a Remarketing Drawing and registered
to the Bank or, at the direction of the Bank, to the
Borrower, shall be applied against the Borrower's
obligation to reimburse the Bank for the amount of the
Remarketing Drawing. The amount of any unreimbursed
Remarketing Drawing shall bear interest from the date of
the Remarketing Drawing at a rate per annum equal to the
Prime Rate. Such interest shall be payable on each Interest
Payment Date for so long as such Remarketing Drawing or any
portion thereof is unreimbursed. The payments of interest
hereunder shall be credited against the interest accrued on
the Notes pledged to the Bank under the
6
<PAGE>
Note Pledge Agreement. Interest hereunder shall be
calculated based on a 360-day year, but calculated on the
number of actual days elapsed.
(iii) Upon each transfer of the Letter of Credit in accordance
with its terms and as a condition thereto, a transfer fee
of Five Hundred Dollars ($500.00) and such additional
amounts as shall be reasonably necessary to cover the
costs and expenses to the Bank incurred in connection
with such transfer;
(iv) The Borrower shall pay interest at the Default Rate,
payable on demand on any and all amounts of any Principal
Drawing, Interest Drawing and/or Remarketing Drawing not
paid by the Borrower when due under any section of this
Agreement from the date such amounts become due until
payment in full.
(v) For any payment of principal and/or interest not paid
within ten (10) days when due, the Borrower shall pay a
late charge of an amount equal to the greater of fifty
dollars ($50) or five percent (5%) of the amount of the
payment.
(vi) The Borrower shall pay on demand, reasonable costs, fees
and expenses incurred by the Bank in connection with the
issuance or sale of the Notes or issuance of the Letter
of Credit or the preparation or execution of any
documents or opinions related thereto.
(vii) The Borrower shall pay on demand, any and all reasonable
expenses incurred by the Bank in enforcing any of its
rights under the Credit Documents;
(viii) On or prior to the Closing Date, the Borrower shall pay
an origination fee equal to the greater of (A) seventy-
five hundredths of one percent (0.75%) of the principal
amount of the Notes, issued on such date, or (B) $82,500;
and
(ix) On or prior to the Closing Date, the Borrower shall pay
any and all appraisal fees relating to appraisal of all
or any portion of the Premises.
(b) The Borrower hereby agrees to pay to the Bank a fee (the "Letter
of Credit Fee") in an amount equal to the Fee Calculation Rate
(as hereinafter defined) multiplied by the Fee Calculation Amount
(as hereinafter defined) multiplied by one or any portion of a
year for which the Letter of Credit Fee is paid (using a 360-day
year but calculated on the number of actual days elapsed). The
Letter of Credit Fee shall be payable in annual installments in
advance on March 31 (the "Fee Payment Date") of each year until
the Expiration Date or the date of earlier termination of the
Letter of Credit; provided, however, that upon the Date of
Issuance, the Borrower shall pay an installment of the Letter of
Credit Fee for the period from the Date of Issuance to and
including the day prior to the Fee Payment Date in 2001. The "Fee
Calculation Amount" shall be the sum of (i) the maximum amount
available on each date of payment of the Letter of Credit Fee to
7
<PAGE>
be drawn under the Letter of Credit with respect to the Principal
Commitment plus (ii) the maximum amount available on each date of
payment of the Letter of Credit Fee to be drawn under the Letter
of Credit with respect to the Interest Commitment. On the Date of
Issuance, the "Fee Calculation Rate" shall be two percent (2.00%)
per annum. On each Fee Payment Date after the Date of Issuance,
the "Fee Calculation Rate" shall be the rate per annum, set forth
below, for certain ratios of Total Funded Debt to EBITDA, set
forth below:
(i) If the ratio of Total Funded Debt to EBITDA for the prior fiscal
year of the Borrower is less than 2.5 to 1.0, then the Fee
Calculation Rate shall be one percent (1.00%) per annum;
(ii) If the ratio of Total Funded Debt to EBITDA for the prior fiscal
year of the Borrower is less than (A) 3.75 for the fiscal year
ending December 31, 2000, or (B) 3.5 for the fiscal year ending
December 31, 2001 and each fiscal year thereafter, to 1.0 but
greater than or equal to 2.5 to 1.0, then the Fee Calculation
Rate shall be one and five tenths percent (1.5%) per annum; and
(iii) If the ratio of Total Funded Debt to EBITDA for the prior fiscal
year of the Borrower is equal to or greater than (A) 3.75 for the
fiscal year ending December 31, 2000, or (B) 3.5 for the fiscal
year ending December 31, 2001 and each fiscal year thereafter, to
1.0, then the Fee Calculation Rate shall be two percent (2.00%)
per annum.
(c) If any change in any law or regulation or in the interpretation
thereof by any court or administrative or governmental authority
charged with the administration thereof shall impose, modify or
deem applicable any reserve, special deposit or similar
requirement which would increase or decrease the Bank's costs (i)
generally upon the issuance or maintenance of letters of credit
by the Bank, (ii) specifically in respect of this Agreement or
the Letter of Credit, or (iii) in respect of any capital adequacy
requirement (including, without limitation, a requirement which
affects the manner in which the Bank allocates capital resources
to its commitments), and the result of such an increase or
decrease in costs as described in clause (i), (ii), or (iii)
above shall be to increase or decrease the costs to the Bank of
issuing or maintaining the Letter of Credit (which increase or
decrease in costs shall be the result of the Bank's reasonable
allocation, of the aggregate of such cost increases or decreases
resulting from such events), then, (x) within thirty (30) days of
the Bank's obtaining knowledge of such change in law, regulations
or interpretation thereof, the Bank shall so notify the Borrower
and (y) upon receipt of such notice from the Bank, accompanied by
a certificate as to such increased or decreased cost, the
Borrower shall pay or receive a refund of, as of the effective
date of such change or interpretation, all additional amounts
which are necessary to compensate the Bank or the Borrower for
such increased or decreased cost incurred by the Bank.
(d) The Borrower's obligations to make payments to the Bank under
this Section 2.2 shall be deemed satisfied to the extent of
payments made by the Trustee to the
8
<PAGE>
Bank from funds on deposit with and held by the Trustee pursuant
to the Indenture.
Section 2.3. Borrower's Obligations Unconditional. The payment
------------------------------------
obligations of the Borrower under this Agreement shall be absolute,
unconditional and irrevocable and shall be satisfied strictly in accordance with
the terms of this Agreement, under all circumstances whatsoever, including,
without limitation, the following circumstances:
(a) Any lack of validity or enforceability of the Credit Documents,
the Note Documents or any other agreement or instrument relating
thereto;
(b) Any amendment or waiver of or any consent to departure from the
terms of the Letter of Credit, the Credit Documents, the Note
Documents or any other agreement or instrument relating thereto;
(c) The existence of any claim, setoff, defense or right which the
Borrower may have at any time against any beneficiary or any
transferee of the Letter of Credit (or any persons or entities
for whom any such beneficiary or any such transferee may be
acting), the Bank, or any other person or entity, whether in
connection with this Agreement, the transactions contemplated by
the Credit Documents, the Note Documents, or any unrelated
transaction;
(d) Any statement or any other document presented under the Letter of
Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever;
(e) Payment by the Bank under the Letter of Credit against
presentation of a request which on its face appears to be in
accordance with the terms of the Letter of Credit; or
(f) Any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
Section 2.4. Payments. The payments and amounts due the Bank under
--------
Sections 2.2 and 2.3 above shall be made by the Bank's debiting the Borrower's
operating account with the Bank presently identified as Account No. 199681002614
("Operating Account"). The Borrower covenants and agrees that on the date any
payment or other amount is due under Section 2.2 above, the Borrower will have
unrestricted funds in the Operating Account in an amount no less than the amount
then due. Subject to the previous sentence, all payments by the Borrower
hereunder to the Bank shall be made in lawful currency of the United States and
in immediately available funds to the main office of the Bank at 66 South Pearl
Street, Albany, New York 12207-1501, Attention: International Department.
Section 2.5. Letter of Credit Extension. The Bank may in writing,
--------------------------
effective on each anniversary of the Date of Issuance, commencing with such
anniversary in 2001, extend the Expiration Date of the Letter of Credit for an
additional one-year period; provided, however, that such extension shall be, in
--------
each instance, made in the sole discretion of the Bank and the Bank may at any
time, upon written notice delivered to Borrower and Trustee, elect not to extend
the
9
<PAGE>
Expiration Date. The Bank shall notify Borrower and Trustee of its decision of
whether the Expiration Date shall be extended no later than thirty (30) days
prior to the anniversary of the Date of Issuance in each year, provided that the
failure of the Bank to deliver such notice, or to deliver any notice, shall not
mean that the Bank has elected to extend the Expiration Date. If the Bank
extends the Expiration Date, it shall do so in the form of an amendment to the
Letter of Credit, which it shall promptly deliver to Trustee.
SECTION THREE
-------------
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower expressly represents and warrants that:
Section 3.1. Organization and Legal Authority. The Borrower is a
--------------------------------
corporation duly organized and validly existing and in full force and effect
under the laws of the State of Delaware and has all requisite power and
authority to own its property and to carry on its business as now being
conducted, to enter into the Credit Documents and the other agreements referred
to herein and transactions contemplated thereby, and to carry out the provisions
and conditions of the Credit Documents. The Borrower is duly qualified to do
business and is in good standing in every jurisdiction where the failure to so
qualify would have a material adverse effect on the business of the Borrower.
Section 3.2. Due Execution and Delivery. The Borrower has full power,
--------------------------
authority and legal right to incur the obligations provided for in, and to
execute and deliver and to perform and observe the terms and provisions of, the
Credit Documents, and each of them has been duly executed and delivered by the
Borrower and authorized, by all required organizational action, and the Borrower
has obtained all requisite consents to the transactions contemplated thereby
under any instrument to which it is a party, and the Credit Documents constitute
the legal, valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with their respective terms, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency or other similar
laws affecting creditors' rights generally.
Section 3.3. No Breach of Other Instruments. Neither the execution and
------------------------------
delivery of the Credit Documents, nor the compliance by the Borrower with the
terms and conditions of the Credit Documents, nor the consummation of the
transactions contemplated thereby, will conflict with or result in a breach of
any of the Organizational Documents of the Borrower, or any of the terms,
conditions or provisions of any agreement or instrument or any charter or other
organizational restriction or law, regulation, rule or order of any governmental
body or agency to which the Borrower is now a party or is subject, or imposition
of a lien, charge or encumbrance of any nature whatsoever upon any of the
property or assets of the Borrower pursuant to the terms of any such agreement
or instrument.
Section 3.4. Government Authorization. Except for any consent,
------------------------
approval, authorization or filing which may be required under any federal or
state securities laws, no consent, approval, authorization or order of any court
or governmental agency or body is
10
<PAGE>
required for the consummation by the Borrower of the transactions contemplated
by the Credit Documents.
Section 3.5. Pledged Collateral. (a) As of the date hereof, the
------------------
Borrower holds a valid leasehold interest in the Premises, free and clear of all
liens, pledges, mortgage, security interests, charges, claims and other
encumbrances, except the Permitted Encumbrances. Each of the Mortgage, the
Assignments and the Note Pledge Agreement create a valid and prior perfected
security interest and lien in favor of the Bank, subject to no other liens or
encumbrances arising by, through or under the Borrower or any other Person,
except for Permitted Encumbrances or as otherwise provided in the Note
Documents.
Section 3.6. Absence of Defaults, etc. The Borrower is not (i) in
------------------------
material default under any indenture or contract or agreement to which it is a
party or by which it is bound, (ii) in violation of any of its Organizational
Documents, (iii) in default with respect to any order, writ, injunction or
decree of any court, or (iv) in default under any order or license of any
federal or state governmental department, which default or violation in any of
the aforesaid cases materially and adversely affects its business or property.
There exists no condition, event or act which constitutes, or after notice or
lapse of time or both would constitute, an Event of Default.
Section 3.7. Indebtedness of Borrower. The Borrower does not have
------------------------
outstanding, on the date hereof, any Indebtedness, except for such Indebtedness
reflected on the financial statements referred to in Section 3.8 hereof and
except for any Indebtedness owed to the Bank.
Section 3.8. Financial Condition. The Borrower has furnished to the
-------------------
Bank true and correct copies of its financial statements accompanied by an
unqualified opinion of a certified public accountant as of December 31, 1999,
which financial statements present fairly the Borrower's financial condition as
of such date, and there has been no material adverse change in the Borrower's
financial condition since such date.
Section 3.9. No Adverse Change. Subsequent to the date of the financial
-----------------
statements referred to in Section 3.8 hereof, the Borrower has not incurred any
liabilities or obligations, direct or contingent, not in the ordinary course of
business, nor has there been any change in the business, properties or
condition, financial or otherwise, of the Borrower, except for changes arising
in the ordinary course of business or in connection with the issuance and sale
of the Notes or as may be otherwise disclosed in writing to the Bank prior to
the date hereof.
Section 3.10. Taxes. The Borrower has filed all tax returns which are
-----
to be filed and has paid, or has made adequate provision for the payment of, all
taxes which have or may become due pursuant to said returns or to assessments
received by it. The provisions for taxes reflected in the most recent balance
sheet referred to in Section 3.8 are believed adequate to cover any and all
accrued and unpaid taxes for which the Borrower is liable for the period ended
on the date of such balance sheet and all prior periods. The Borrower knows of
no deficiency assessment or proposed deficiency assessment of taxes against the
Borrower, except as may be otherwise disclosed in writing to the Bank prior to
the date hereof.
Section 3.11. Litigation. Except as set forth on Exhibit D attached
----------
hereto, prior to the date hereof, there are no actions, suits or proceedings
pending, or to the knowledge of the
11
<PAGE>
Borrower, threatened against or affecting the Borrower or its property in any
court, or before or by any federal, state or municipal or other governmental
department, commission, board, bureau, agency or other instrumentality, domestic
or foreign, which could result in any adverse change in the business, property
or assets, or in the condition, financial or otherwise, of the Borrower, except
for actions, suits or proceedings of a character normally incident to the kind
of business conducted by the Borrower, none of which, either individually or in
the aggregate, if adversely determined, would materially impair the Borrower's
right or ability to carry on its business substantially as now conducted or
materially adversely affect the financial position or operations of the
Borrower.
Section 3.12. Ownership of Property. Except for Permitted Encumbrances
---------------------
or as otherwise permitted in the Mortgage or this Agreement, the Borrower has
good and marketable fee title to, or valid leasehold interests in, its real
properties in accordance with the laws of the jurisdiction where located, and
good and marketable title to substantially all its other property and assets.
Except for Permitted Encumbrances, the real property and all other property and
assets of the Borrower are free from any liens or encumbrance securing
Indebtedness and from any other liens, encumbrances, charges or security
interests of any kind. Each lease, if any, to which the Borrower is a party is
in full force and effect, and no material default on the part of the Borrower
or, to its knowledge, any other party thereto exists.
Section 3.13. Environmental Matters. The Borrower is in compliance with
---------------------
all Environmental Laws and all applicable federal, state and local health and
safety laws, regulations, ordinances or rules, except to the extent that any
non-compliance will not, in the aggregate, have a materially adverse effect on
the Borrower or the ability of the Borrower to fulfill its obligations under
this Agreement, the Mortgage or the Assignments.
SECTION FOUR
------------
CLOSING CONDITIONS
------------------
The obligations of the Bank to issue the Letter of Credit on the
Closing Date shall be subject to the following conditions precedent:
Section 4.1. Execution and Delivery of the Credit Documents and the
------------------------------------------------------
Note Documents. With respect to issuance of the Letter of Credit, the Borrower
- --------------
shall have delivered to the Bank fully executed copies of each of the Credit
Documents, and the Trustee and the Borrower shall have duly executed and
delivered the Note Documents.
Section 4.2. Issuance and Sale of the Notes. The Notes shall have been
------------------------------
duly issued and sold to the Purchaser pursuant to the Note Documents.
Section 4.3. Representations and Warranties True as of Closing and No
--------------------------------------------------------
Event of Default. The representations and warranties contained in this Agreement
- ----------------
and the other Credit Documents shall be true in all material respects on the
Closing Date with the same effect as though made on and as of that date and no
condition, event or act shall have occurred which constitutes an Event of
Default or, with notice or lapse of time, or both, would constitute an Event of
Default.
12
<PAGE>
Section 4.4. Opinion of Borrower's Counsel. The Bank shall have
-----------------------------
received from counsel to the Borrower an opinion with respect to (i) the matters
described in Sections 3.1, 3.2, and 3.4 of this Agreement, (ii) the matters
described in Sections 3.3, 3.6 and 3.11 of this Agreement, to such counsel's
knowledge and belief after inquiry and (iii) such other matters incident to the
transactions contemplated hereby as the Bank may reasonably request.
Section 4.5. Proceedings Satisfactory. All proceedings taken in
------------------------
connection with the execution and delivery of this Reimbursement Agreement and
the other Credit Documents shall be satisfactory to the Bank and the Bank shall
have received copies of such certificates, documents and papers as reasonably
requested in connection therewith, all in form and substance satisfactory to the
Bank.
Section 4.6. Additional Deliveries. Except as provided below, Borrower
---------------------
shall furnish the following documentation to the Bank at least three (3)
Business Days prior to the Closing Date, all in form, substance and execution
satisfactory to Bank:
(a) A current environmental site assessment report with respect to
the Premises prepared by an environmental engineer acceptable to
the Bank disclosing that the Premises are free from petroleum
products or byproducts, hazardous substances, wastes and
materials and underground storage tanks;
(b) Evidence satisfactory to the Bank that the Borrower's remediation
reserve for cleaning up a former manufacturing facility pursuant
to an EPA Consent Order is sufficient; and
(c) Evidence satisfactory to the Bank that all written consents to
the Borrower's signing and performing the Credit Documents,
determined by the Bank in its sole discretion to be necessary,
have been obtained and that the collateral status of an
outstanding industrial revenue bond has not been altered.
SECTION FIVE
------------
DISBURSEMENTS FROM PROJECT FUND
The Borrower shall not request or receive any disbursement of funds
from the Project Fund unless and until the Bank shall have approved such
disbursement in writing and all of the following conditions shall be true with
respect to each such disbursement:
Section 5.1. Execution and Delivery of Miscellaneous Documents. The
-------------------------------------------------
Borrower shall have delivered to the Bank:
(a) Evidence that no portion of the Premises is located in a special
flood hazard area as identified by HUD;
(b) Certificates of insurance and evidence of payment of premiums
therefor with respect to the insurance required by the Bank with respect to each
portion of the Premises as set forth in
13
<PAGE>
Section 6.2 below, including, but not limited to, general liability insurance
and hazard insurance, and flood insurance if applicable;
(c) A current certified survey of the Premises prepared by a registered
surveyor satisfactory to the Bank, and containing on the face thereof the
completed certificate of the surveyor in the form of the surveyor's certificate
required by the Bank, dated not more than ninety (90) days prior to the Date of
Issuance, and in compliance with the Minimum Standard Detail Requirements for
ALTA/ASCM Class A land title surveys, as adopted by the American Land Title
Association and American Congress on Surveying and Mapping in 1992 (the "Initial
Survey"). As construction progresses, Borrower shall furnish evidence
satisfactory to Bank that the Project is located and built within the boundaries
of the Premises. Within thirty (30) days after completion of the Project, the
Borrower shall provide the Bank with an as-built survey of the Premises which
survey shall comply with the standards set forth above for the Initial Survey;
(d) A current Phase I environmental audit of each portion of the
Premises satisfactory to the Bank in its sole discretion prepared by an
environmental consultant satisfactory to the Bank;
(e) A Commitment to issue an ALTA Loan Policy of Title Insurance issued
by the Title Company in the amount of the Letter of Credit (i) insuring that the
Mortgage, as of the time of its filing for record, is a first and best lien upon
the Premises, and that the title to the Premises is free, clear and
unencumbered, subject only to Permitted Encumbrances; (ii) insuring the priority
of the Mortgage over mechanics or materialmen's liens; (iii) obligating the
Title Company to affirmatively insure that access to the applicable portion of
the Premises is by a dedicated and accepted public right-of-way; and (iv)
including such endorsements and affirmative insurance as may be required by the
Bank, including, but not limited to, the so-called "Pending Disbursement
Endorsement" and "Revolving Credit Endorsement";
(f) Evidence satisfactory to the Bank that the Project, when completed,
and the Premises, and the proposed and actual use thereof, will comply with all
applicable laws, statutes, codes, ordinances, rules and regulations, including,
but not limited to, zoning and Environmental Laws, of all governmental
authorities having jurisdiction over the same, and that there is no action or
proceeding pending (or any time for an appeal of any decision rendered) before
any court, quasi-judicial body or administrative agency at the Date of Issuance
relating to the validity of this Reimbursement Agreement or the transactions
contemplated hereby or the proposed or actual use or operation of each portion
of the Premises.
(g) A written appraisal (the "Appraisal") of the Premises satisfactory
to the Bank in all respects, prepared by an appraiser selected and
directly engaged by the Bank pursuant to an engagement letter
issued by the Bank, the cost of which Appraisal will be charged to
the Borrower at Closing Date, and which Appraisal shall be prepared
in accordance with the Uniform Standards of Professional Appraisal
Practice applicable to Federally Related Transactions as set out in
Appendix A to the real estate appraisal regulations adopted by the
Office of the Comptroller of the Currency pursuant to the Financial
Institutions Reform, Recovery and Enforcement Act of 1989
("FIRREA") (Sub-part C of 12 C.F.R. 34) and which Appraisal shall
be updated, at the Borrower's cost, upon the occurrence of an event
of default under any of the Credit Documents;
14
<PAGE>
provided that the sum of (i) the appraised value of the Building
multiplied by 85% and (ii) the appraised value of the Equipment
multiplied by 100% shall be an amount equal to or greater than the
Letter of Credit Commitment.
(h) Copies of all documentation relating to the Borrower's credit
facilities with lenders who will or may have liens and security
interests superior to the Bank's liens, a review of which by the
Bank shall establish, in the Bank's sole judgment, that the Bank is
sufficiently collateralized and otherwise protected in issuing the
Letter of Credit.
Section 5.2. Bank's Inspector's Certificate. As directed by the Bank
------------------------------
from time to time, the Bank's inspector shall inspect the Premises to verify
that the request for disbursement accurately indicates the amount of
construction completed. The Bank shall have received a certificate from the
Bank's inspector certifying (i) that the construction of the Project theretofore
completed, if any, has been performed substantially in accordance with the Plans
and Specifications; (ii) that the quality of construction of the Project
theretofore completed is in accordance with generally accepted standards in the
construction industry for the cost of the construction of the Project; (iii)
that the undisbursed portion of the Project Fund together with other monies to
be provided by Borrower are adequate to complete the construction and equipping
of the Project pursuant to the Plans and Specifications by the Completion Date;
and (iv) that it is reasonable to expect that the completion of the Project will
occur on or before the Completion Date. It is understood and agreed that the
Bank shall not be liable for any reason as a result of such inspections, the
parties hereby agreeing that the inspections are solely for the benefit of the
Bank.
Section 5.3. No Liens. The Bank shall have received evidence
--------
satisfactory to the Bank that since the last preceding disbursement from the
Project Fund there has been no change in the state of title to the Premises. The
Borrower shall pay the cost of the title update required by the Bank from the
Title Company in connection with each request for approval of disbursement
relating to the Project and each endorsement to the Title Policy insuring the
Premises.
Section 5.4. Request for Approval of Disbursement. Not later than ten
------------------------------------
(10) business days before the date on which the Borrower desires a disbursement
from the Project Fund, the Borrower shall submit to the Bank (i) a written
request for approval of the disbursement from the Project Fund; (ii) a
certification of the Borrower that, among other things, the Borrower has paid or
actually incurred the costs for which the request is being made; (iii) a revised
Project Budget showing the balance of each category of Project costs; and (iv) a
requisition using AIA Form G702 and/or G703 if the draw is used for construction
or such other form as the Bank may request, accompanied by a cost breakdown, the
accuracy of which shall be verified by the Bank's Inspector.
Section 5.5. Timing. The Borrower will submit draw requests not more
------
often than once every month. Each disbursement shall not be more than 95% of the
value of work-in-place and the balance will be paid upon completion based on
requirements set forth below. Retainage will be held on a subcontract by
subcontract basis, and released in connection with a particular subcontract upon
the expiration of the time for filing of any mechanic's lien with respect to
such subcontract provided all work thereunder has been completed to the
satisfaction of the Bank and
15
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its inspector and a mechanic's lien waiver has been received from the
subcontractor for all their work done on the Premises.
Section 5.6. Supporting Documentation. The Borrower shall furnish the
------------------------
Bank with an affidavit of the Borrower identifying all subcontractors and
materialmen who have performed work or furnished materials in connection with
the portion of the Project for which disbursement is being sought, together with
lien waivers from the General Contractor for the Project and from all
subcontractors and materialmen who have provided notices of furnishing or who
have performed work or furnished materials in connection with such portion of
the Project, current through the end of the period covered by the Borrower's
most recent request, and such other evidence or affidavits required by the Bank
at the time of each request to ensure that all bills then due and payable for
labor and materials used in constructing such portion of the Project and all
bills due and payable to the General Contractor, subcontractors, materialmen and
their respective subcontractors, laborers, and material suppliers have been paid
in full, except those bills to be paid with the proceeds of such disbursement,
and except for retainages.
Section 5.7. Material Damage. Notwithstanding any provision of this
---------------
Reimbursement Agreement to the contrary, if any portion of the Premises shall
have suffered any material damage or destruction prior to any disbursement from
the Project Fund, such damaged or destroyed portion shall be restored or
replaced in a manner acceptable to the Bank without cost to the Bank prior to
the approval by the Bank of any further disbursement from the Project Fund.
Section 5.8. Other Disbursement Approval Conditions. The Bank shall not
--------------------------------------
be obligated to approve any disbursement from the Project Fund if, at the time
of a proposed disbursement, (i) an Event of Default or an event which, with the
passage of time or service of notice, or both, would be an Event of Default
under any of the Credit Documents has occurred, or (ii) any representation or
warranty made by the Borrower in any of the Credit Documents proves to be untrue
in any material respect, or (iii) the Bank determines, at any time, that the
Project or a portion thereof will not be approved by the appropriate
governmental regulatory authorities.
Section 5.9. Permits. The Borrower shall have delivered to the Bank
-------
building, zoning, and other required permits covering construction of any
portion of the Project together with evidence satisfactory to the Bank that all
approvals required with respect to the Premises from third parties or any
governmental or quasi-governmental authorities have been obtained or, in the
case of approvals relating to the operation of any portion of the Project which
cannot be obtained until completion of construction, evidence satisfactory to
the Bank that such approvals are obtainable. Such evidence shall include copies
of all letters of grant or approval of all zoning changes and other site plan
approvals and subdivision approvals, all variances of zoning regulations
affecting the height, bulk, location or configuration of any portion of the
Project and the Premises (or satisfactory opinion of counsel that the same are
not required), and all approvals or variances relating to parking or loading
areas (both on-street and off-street) and all appurtenant easements required by
governmental authorities with respect to the Premises.
Section 5.10. Utilities. The Borrower shall have delivered to the Bank
---------
evidence satisfactory to the Bank that (i) the Premises have available to it
adequate water, gas and electrical supply, storm and sanitary sewage facilities,
other required public utilities, and means
16
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of access between the Premises and public highways; and (ii) that all such
facilities comply with all applicable laws, rules and regulations, and all
necessary easements to provide such utility service to the Premises have been
obtained.
Section 5.11. Borrower's Affidavit. The Borrower shall have delivered
--------------------
to the Bank the affidavit of the Borrower affirming (among other things) as of
the date of each disbursement, (i) that all costs for labor and material for the
construction and equipping of all improvements comprising any part of the
Project furnished to the date of Borrower's affidavit have been paid in full (in
accordance with Section 5.6 above), and (ii) that no bankruptcy or other
insolvency proceedings have been instituted by or against the Borrower.
Section 5.12. Subordination of Leases. Prior to each disbursement
-----------------------
following the initial disbursement, the Borrower shall have furnished to the
Bank (i) a subordination agreement from each tenant possessing any portion of
the Premises wherein such tenant subordinates its leasehold interest to the lien
of the Mortgage or (ii) an endorsement to the Title Policy affirmatively
insuring the superiority of the lien of the Mortgage against any such tenant's
leasehold interest.
Section 5.13. Construction Loan Agreement. Prior to each disbursement
---------------------------
following the initial disbursement, the Borrower shall have furnished to the
Bank all materials required pursuant to the Construction Loan Agreement not
otherwise required hereunder prior to any disbursement.
SECTION SIX
-----------
COVENANTS
---------
The Borrower covenants and agrees that, from the date of this Agreement
and until the obligations of the Borrower to the Bank hereunder are satisfied in
full, it will comply with the following provisions:
Section 6.1. Accounting; Financial Statements and Other Information.
------------------------------------------------------
The Borrower will maintain a standard system of accounting, established and
administered in accordance with GAAP consistently followed throughout the
periods involved, and will set aside on its books, for each fiscal year, the
proper amounts for depreciation, obsolescence, amortization, bad debts, current
and deferred taxes, and other purposes as shall be required by GAAP. The
Borrower will deliver to the Bank or cause to be delivered to the Bank:
(a) Within thirty (30) days after the close of each fiscal quarter,
the Borrower's internally prepared financial statements
including: balance sheet, profit and loss statement, comparison
of actual results to budget, explanation from significant
variances, with such additional information and in such form as
the Bank may require, signed by a representative of the Borrower
who has principal responsibility for financial matters;
(b) Within ninety (90) days after the close of the Borrower's fiscal
year, audited financial statements accompanied by an unqualified
opinion prepared by an independent certified
17
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public accountant satisfactory to the Bank and such certified
public accountant's management letter with respect to the
Borrower;
(c) No less than thirty (30) days prior to the commencement of each
fiscal year of the Borrower, a budget for the Borrower for such
fiscal year, in form and substance satisfactory to the Bank;
(d) Promptly upon receipt thereof, copies of all other written
reports submitted to the Borrower by independent accountants in
connection with any annual or interim audit of the corporate
books of the Borrower; and
(e) With reasonable promptness, such other data and information as
from time to time may be reasonably requested by the Bank,
including Borrower's annual tax return.
Section 6.2. Insurance and Maintenance of Properties and Business. The
----------------------------------------------------
Borrower shall maintain insurance in responsible companies in such amounts and
against such risks as is satisfactory to the Bank, and all such policies shall
provide that the proceeds thereof shall be payable to it and Bank, as their
respective interests may appear. All said policies or certificates thereof,
including the endorsements, shall be deposited with the Bank; and such policies
shall contain provisions that no such insurance may be canceled or decreased
without thirty (30) days prior written notice to the Bank. In the event of
acquisition by the Borrower of additional insurable Pledged Collateral, it shall
cause such insurance coverage to be increased or amended in such manner and to
such extent as prudent business judgment would dictate. If the Borrower shall at
any time or times hereafter fail to obtain and/or maintain any of the policies
of insurance required herein, or fail to pay any premium in whole or in part
relating to such policies, Bank may, but shall not be obligated to, obtain
and/or cause to be maintained insurance coverage with respect to the Pledged
Collateral, including, at Bank's option, the coverage provided by all or any of
the policies of the Borrower, and pay all or any part of the premium therefor,
without waiving any default by Borrower; any sums disbursed by Bank shall be
additional loans to Borrower by Bank payable on demand. Bank shall have the
right to settle and compromise any and all claims under any of the policies
required to be maintained by Borrower hereunder and the Borrower hereby appoints
Bank as its attorney-in-fact, with power to demand, receive, and receipt for all
monies payable thereunder, to execute in its name or the name of the Bank or
both any proof of loss, notice, draft, or other instruments in connection with
such policies or any loss thereunder and generally to do and perform any and all
acts as Borrower, but for this appointment, might or could perform. The Borrower
will, upon request, furnish to the Bank a schedule of all insurance carried by
it, setting forth in detail the amount and type of such insurance. The Borrower
will maintain, in good repair, working order and condition, all properties used
or useful in its the business.
Section 6.3. Payment of Indebtedness and Taxes. The Borrower will pay
---------------------------------
(a) all of its Indebtedness (not required to be subordinated hereunder) and
other obligations in accordance with normal terms or any applicable grace
periods and (b) all taxes, assessments, and other governmental charges levied
upon any of its respective properties or assets or in respect of its respective
franchises, business, income, or profits before the same become delinquent,
except that no such Indebtedness, obligations, taxes, assessments, or other
charges need be paid if contested by the Borrower in good faith and by
appropriate proceedings promptly initiated and
18
<PAGE>
diligently conducted and if appropriate provision, if any, as shall be required
by GAAP, shall have been made therefor.
Section 6.4. Litigation; Adverse Changes. The Borrower will promptly
---------------------------
notify the Bank in writing of (a) any event which, if existing at the date
hereof, would require a material qualification of the representations and
warranties set forth in Section 3.6 and (b) any material adverse change in the
condition, business, or prospects, financial or otherwise, of the Borrower.
Section 6.5. Notice of Default. The Borrower will promptly notify the
-----------------
Bank of (a) any Event of Default or event which with the passage of time or
service of notice or both would constitute an Event of Default hereunder and (b)
any demands made upon the Borrower by any Person for the acceleration and
immediate payment of any material Indebtedness owed to such Person.
Section 6.6. Inspection. The Borrower will make available for
----------
inspection by duly authorized representatives of the Bank, its books, records,
and properties, and will furnish the Bank such information regarding its
respective business affairs and financial condition within a reasonable time
after written request therefor.
Section 6.7. Environmental Matters. The Borrower:
---------------------
(a) Shall comply in all material respects with all Environmental
Laws;
(b) Shall deliver promptly to the Bank (i) copies of any documents
received from the United States Environmental Protection Agency
or any state, county or municipal environmental or health agency,
and (ii) copies of any documents submitted by the Borrower to the
United States Environmental Protection Agency or any state,
county or municipal environmental or health agency concerning its
operations; and
(c) Hereby indemnifies and holds the Bank harmless from all liability
or loss arising out of the application of any Environmental Law
to the Bank or to any collateral (including without limitation
the Premises) for any loan to the Borrower, including, without
limitation, any Environmental Law creating a lien upon property
or imposing any liability upon the Bank for any clean up costs;
provided, however, that this indemnity shall not apply to
liability arising out of willful violation of Environmental laws
by the Bank.
Section 6.8. Payment Schedule of Notes. The Borrower shall cause the
-------------------------
principal amount of the Notes to be repaid not later than the scheduled payments
as indicated on Exhibit C attached hereto and made a part hereof. On the Date of
Issuance, the Borrower shall direct the Trustee to redeem Notes on the dates and
in the amounts set forth on Exhibit C pursuant to the Borrower's right to
optionally redeem Notes pursuant to the Indenture.
Section 6.9. Existence; Business. The Borrower will cause to be done
-------------------
all things reasonably necessary to preserve and keep in full force and effect
its existence and rights, to conduct its business in a prudent manner, to
maintain in full force and effect, and renew from time to time, its franchises,
permits, licenses, patents, and trademarks that are necessary to
19
<PAGE>
operate its business. The Borrower will comply in all material respects with all
valid laws and regulations now in effect or hereafter promulgated by any
properly constituted governmental authority having jurisdiction, and the
Borrower will act to eliminate any nuisance or nuisances which it creates on any
portion of the Premises; provided, however, the Borrower shall not be required
to comply with any law or regulation which it is contesting in good faith by
appropriate proceedings as long as either the effect of such law or regulation
is stayed pending the resolution of such proceedings or the effect of not
complying with such law or regulation is not to jeopardize any franchise,
license, permit, patent, or trademark necessary to conduct the Borrower's
business.
Section 6.10. Total Funded Debt to EBITDA. The Borrower shall maintain
---------------------------
a ratio of Total Funded Debt to EBITDA of 4.0 to 1.0 as of December 31, 2000;
3.5 to 1.0 as of December 31, 2001; and 3.0 to 1.0 as of December 31, 2002 and
December 31 of each fiscal year thereafter. The Borrower will provide the Bank
with a certificate of an authorized officer of the Borrower demonstrating
compliance with this section 6.10 within the period required for the delivery of
financial statements pursuant to subsection 6.1(b) of this Agreement.
Section 6.11. Minimum Debt Service Coverage Ratio. The Borrower shall
-----------------------------------
maintain a minimum Debt Service Coverage Ratio of 1.25 to 1.0 as of the end of
each fiscal quarter, calculated using information for the previous twelve (12)
months, beginning with the fiscal quarter ending June 30, 2000 and continuing
quarterly thereafter. The Borrower will provide the Bank with a certificate of
an authorized officer of the Borrower demonstrating compliance with this section
6.11 within each applicable period required for the delivery of financial
statements pursuant to subsections 6.1(a) and (b) of this Agreement.
Section 6.12. Changes to Plans and Specifications, General Contract.
-----------------------------------------------------
The Borrower will not make or permit to be made (a) any material change in the
Plans and Specifications; (b) any changes in excess of 10% in any line item of
the Project budget, (c) any material change in the terms and conditions of the
construction contract with the General Contractor or (d) any change in the
identity of the General Contractor.
Section 6.13. Construction of Project. The Borrower will cause the
-----------------------
construction of the Project to be carried forward with diligence and continuity
and to be completed by the Completion Date, and in accordance with the Plans and
Specifications and all applicable zoning, building and other laws, statutes,
codes, ordinances, rules and regulations. The Borrower will comply with its
obligations under its construction contract with the General Contractor.
Section 6.14. Additional Funds. The Borrower will, at any time or times
----------------
upon request of the Bank, deposit with the Bank such additional funds as are
determined by the Bank or the Bank's Inspector to be necessary (in excess of the
proceeds of the Bonds) to pay for completion of the Project and all costs and
expenses related thereto.
Section 6.15. Evidence of Payment of Costs. The Borrower will furnish
----------------------------
to the Bank copies of all affidavits, lien waivers, releases or other evidence
requested by the Bank from time to time to establish that all bills for labor
and materials performed or furnished in connection with the Project and all
bills of the General Contractor and its subcontractors and material suppliers,
have been paid in full, except for retainages.
20
<PAGE>
Section 6.16. Entry; Correction of Defective Work. The Borrower will
-----------------------------------
allow the Bank, through the Bank's Inspector, and the Bank's officers, agents or
employees, at all reasonable times, (a) the right of entry and free access to
the Premises to inspect all work done, labor performed and materials furnished
in furtherance of the Project and (b) to require to be replaced or otherwise
corrected any materials or work which fails to comply with the Plans and
Specifications.
Section 6.17. Title. The Borrower will keep the title to the Premises
-----
free and clear of all liens, encumbrances, easements, restrictions and claims,
except for (a) the Permitted Encumbrances, (b) any lien, restriction or
encumbrance created in connection with this Agreement or otherwise approved by
the Bank, and (c) real estate taxes and installments of special assessments, if
any, which are a lien but not yet due and payable.
SECTION SEVEN
-------------
NEGATIVE COVENANTS
The Borrower further covenants and agrees that, from the date of this
Agreement and until the obligations of the Borrower to the Bank hereunder are
satisfied in full, the Borrower will, unless the Bank shall otherwise consent or
agree, comply with the following provisions:
Section 7.1. Sale, Purchase of Assets. The Borrower will not, directly
------------------------
or indirectly, (a) purchase, lease, or otherwise acquire any assets, including
without limitation shares of corporate stock or other equity interests in
entities (other than Borrower and its Subsidiaries), except in connection with
the Project or in the ordinary course of business or as otherwise permitted
under this Agreement, or (b) sell, lease, transfer, or otherwise dispose of any
building or real property or other assets except for (i) tangible assets sold
for full and adequate consideration which the Borrower has determined to be worn
out or obsolete or not useful in the ordinary course of its business or (ii)
tangible assets sold in the ordinary course of business provided that the
Borrower receives full and adequate consideration in exchange for such assets
sold.
Section 7.2. Mortgage, Security Interests, and Liens. The Borrower will
---------------------------------------
not, directly or indirectly, create, incur, assume, or permit to exist any
mortgage, security interest, lien, charge, encumbrance on, or pledge,
conditional sale or other title retention agreement with respect to, the Pledged
Collateral now owned or hereafter acquired (herein called "Liens") other than:
(a) Liens for taxes, assessments, or governmental charges or levies
the payment of which is not at the time required by Section 6.3
hereof;
(b) Liens imposed by law, such as Liens of landlords, carriers,
warehousemen, mechanics, and materialmen arising in the ordinary
course of business for sums not yet due or being contested by
appropriate proceedings promptly initiated and diligently
conducted, provided other appropriate provision, if any, as shall
be required by GAAP shall have been made therefor;
21
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(c) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance, and other types of social security, or to secure the
performance of tenders, statutory obligations, and surety and
appeal bonds, or to secure the performance and return of money
bonds and other similar obligations, excluding obligations for
the payment of borrowed money;
(d) Any judgment Lien, unless the judgment it secures shall not,
within thirty (30) days after the entry thereof, have been
discharged or execution therefor stayed pending appeal, or shall
not have been discharged within thirty (30) days after the
expiration of any such stay;
(e) Other Liens incidental to the conduct of the business or
ownership of properties and assets of the Borrower, which are not
incurred or granted in connection with the borrowing of money or
the obtaining of advances or credits, and which do not in the
aggregate materially detract from the value of its or their
respective property or assets or materially impair the use
thereof in the ordinary course of business; and
(f) Liens evidenced by or permitted under the terms of the Mortgage,
as well as any other Permitted Encumbrances.
Section 7.3. Assumptions; Guaranties. The Borrower will not assume,
-----------------------
guarantee, endorse, or otherwise become directly or contingently liable for
(including, without limitation, liable by way of agreement, contingent or
otherwise, to purchase, to provide funds for payment, to supply funds to, or
otherwise invest in any debtor, other than to a Subsidiary, or otherwise to
assure the creditor against loss) any obligation or Indebtedness of any other
Person, other than a Subsidiary, except guaranties by endorsement of negotiable
instruments for deposit, collection, or similar transactions in the ordinary
course of business.
Section 7.4. Mergers; Consolidation. The Borrower will not merge or
----------------------
consolidate with any Person, dissolve, wind up its affairs, or sell, assign,
lease, or otherwise dispose of (whether in one transaction or in a series of
transactions), all or substantially all of its assets (whether now owned or
hereafter acquired) to any Person.
Section 7.5. Investments and Loans. The Borrower will not, directly or
---------------------
indirectly, (a) purchase or otherwise acquire or own any stock or other
securities of any Person, other than a Subsidiary, including without limitation,
the Borrower's own securities or stock, except pursuant to agreements to which
the Borrower is a party as of the date of this Agreement, or pursuant to the
provisions of any current or future awards under Borrower's employee stock
incentive plans, or (b) make or permit to be outstanding any loan or advance or
enter into any arrangements to provide funds or credit, to any other Person,
except that it may purchase or otherwise acquire and own marketable U.S.
Treasury and Agency obligations, and certificates of deposit and bankers'
acceptances issued or created by any domestic commercial bank.
Section 7.6. Subordinated Debt. The Borrower will not make any payment
-----------------
upon its outstanding Subordinated Debt, except in such manner and amounts as may
be expressly
22
<PAGE>
authorized in any subordination agreement presently or hereafter held by the
Bank.
Section 7.7. Note Documents. The Borrower will not enter into an
--------------
amendment of the Note Documents, without the prior written consent of the Bank.
Section 7.8. Indebtedness. The Borrower will not, and the Borrower will
------------
not permit any Subsidiary to, directly or indirectly, create, incur or assume
Indebtedness, or otherwise become, be, or remain liable with respect to, any
Indebtedness, provided that the foregoing restrictions shall not apply to:
(a) The Indebtedness evidenced by the Credit Documents, Indebtedness
evidenced by the Note Documents, and any other Indebtedness now
or hereafter payable by it to the Bank;
(b) current accounts, payable or accrued, incurred by it or any of
its Subsidiaries in the ordinary course of its business, provided
that the same shall be paid when due in accordance with customary
trade terms unless contested by appropriate proceedings; and
(c) Existing Indebtedness which is reflected on its financial
statements referred to in Section 3.8 hereof.
SECTION EIGHT
-------------
EVENTS OF DEFAULT
-----------------
Section 8.1. Events of Default. The occurrence of any one or more of
-----------------
the following events shall constitute an Event of Default under this Agreement:
(a) If Borrower fails to make or cause to be made any payment to the
Bank required to be made pursuant to the terms of this Agreement
or any of the other Credit Documents, or
(b) If any representation or warranty made by the Borrower herein, in
any of the other Credit Documents or in any other written
statement, certificate, report, or financial statement at any
time furnished by or for the Borrower in connection herewith,
proves to be incorrect in any material respect when made, or
(c) If the Borrower fails to perform or observe any other provision,
covenant, or agreement contained in this Agreement or in any of
the other Credit Documents, and such failure remains unremedied
for thirty (30) calendar days after the Bank shall have given
written notice thereof to the Borrower, or
(d) If the Borrower (i) fails to pay any Indebtedness (other than as
arising under this Agreement) owing by the Borrower when due,
whether at maturity, by acceleration, or otherwise or (ii) fails
to perform any term, covenant, or agreement
23
<PAGE>
on its part to be performed under any agreement or instrument
(other than this Agreement) evidencing, securing or relating to
such Indebtedness when required to be performed, or is otherwise
in default thereunder, if the effect of such failure is to
accelerate, or to permit the holder(s) of such Indebtedness or
the trustee(s) under any such agreement or instrument to
accelerate, the maturity of such Indebtedness, whether or not
such failure shall be waived by such holder(s) or trustee(s), or
(e) An Indenture Default shall have occurred, or
(f) If the Borrower discontinues business, or if there occurs a
material adverse change in the business, property, or the
condition or operations, financial or otherwise, of the Borrower,
or
(g) If any of the following events occur: (i) any Reportable Event,
which the Bank determines in good faith might constitute grounds
for the termination of any Plan or for the appointment by the
appropriate United States district court of a trustee to
administer any Plan, continues for thirty (30) days after the
Bank has given written notice thereof to the Borrower, (ii) any
Plan incurs any "accumulated funding deficiency" (as such term is
defined in ERISA) whether waived or not, (iii) the Borrower
engages in any Prohibited Transaction, (iv) a trustee is
appointed by an appropriate United States district court to
administer any Plan, or (v) the PBGC institutes proceedings to
terminate any Plan or to appoint a trustee to administer any
Plan, or
(h) If the Borrower is adjudicated a debtor or insolvent, or ceases,
is unable, or admits in writing its inability to pay its debts as
they mature, or makes an assignment for the benefit of creditors,
(ii) applies for, or consents to, the appointment of any
receiver, trustee, or similar officer for it or for all or any
substantial part of its property, or any such receiver, trustee,
or similar officer is appointed without the application or
consent of the Borrower, (iii) institutes, or consents to the
institution of, by petition, application, or otherwise, any
bankruptcy reorganization, arrangement, readjustment of debt,
dissolution, liquidation, or similar proceeding relating to it
under the laws of any jurisdiction, (iv) has any such proceeding
described in clause (iii) instituted against it which remains
thereafter undismissed for a period of sixty (60) days, or (v)
has any judgment, writ, warrant of attachment or execution or
similar process issued or levied against a substantial part of
its property and such judgment, writ, or similar process is not
released, vacated, or fully bonded within sixty (60) days after
its issue or levy; or
(i) If an event of default occurs under any of the Credit Documents;
or
(j) Except as otherwise permitted in this Agreement, if at any time,
(i) the sum of the undisbursed portion of the Project Fund is
less than the amount determined by the Bank to be necessary for
the timely and full payment of (a) all work done and not
theretofore paid for or to be done in connection with the
completion of the Project
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in accordance with the Plans and Specifications, including
installation of all fixtures, furniture and equipment
contemplated by the Plans and Specifications, and (b) all other
costs incurred and not theretofore paid for, or to be incurred in
connection with the Project, and (ii) the Borrower fails, within
fifteen (15) Business Days after written request by the Bank, to
deposit the deficiency with the Bank.
Section 8.2. No Waiver; Remedies. If an Event of Default occurs, the
-------------------
Bank may exercise any and all remedies, legal or equitable on behalf of the
Bank, to collect the amounts due from the Borrower pursuant to this Agreement,
and, in its sole discretion, may instruct the Trustee to accelerate the maturity
of the Notes or redeem the Notes. Upon receipt by the Trustee of such
instructions from the Bank, the Notes shall be accelerated or redeemed pursuant
to the Indenture. No failure on the part of the Bank to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right or remedy. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law or equity.
SECTION NINE
------------
TRANSFER, REDUCTION OR TERMINATION OF LETTER OF CREDIT
------------------------------------------------------
Section 9.1. Transfer of Letter of Credit; Reduction of Letter of
----------------------------------------------------
Credit Commitment and Termination of Letter of Credit and Related Matters.
- -------------------------------------------------------------------------
(a) The Letter of Credit may be transferred in accordance with the
provisions set forth therein.
(b) The Borrower shall be entitled to a credit against the principal
amount of the Notes prior to maturity (the "Credit") pursuant to
an optional redemption of a portion of the Notes or to the
purchase of Notes in the open market and cancellation of such
Notes in accordance with the provisions of the Indenture, if such
amounts have been paid by or on behalf of the Borrower other than
by the Bank. If the Borrower is entitled to a Credit, the
Borrower shall have the right at any time thereafter to reduce
permanently, without penalty or premium, the Letter of Credit
Commitment in the manner set forth below. The Letter of Credit
Commitment will be reduced by an amount equal to the sum of the
following corresponding reductions in the Principal Commitment
and the Interest Commitment: (a) the Principal Commitment will be
reduced by an amount equal to the amount of such Credit; and (b)
the Interest Commitment will be reduced by an amount equal to
ninety-eight (98) days' interest on the amount of such Credit at
the rate of ten percent (10%) per annum (calculated on the basis
of a 365-day year; 366 days in a leap year). The aforementioned
reduction will occur not less than three (3) Business Days' after
written notice to the Bank, accompanied by the original Letter of
Credit and the written certificate of the Trustee and the
Borrower stating that the Borrower is entitled to such Credit and
designating the amount of such Credit and the date upon which
such Credit and the corresponding
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<PAGE>
reduction in the Letter of Credit Commitment shall become
effective (which shall be a Business Day).
(c) If the Letter of Credit Commitment shall be reduced pursuant to
paragraph (b) hereof, and the Bank shall have received the
certificate required by paragraph (b) hereof, then the Bank shall
deliver to the Trustee an amendment to the Letter of Credit,
dated as of the effective date of the reduction as indicated,
which amendment shall reduce the Letter of Credit Commitment
accordingly, but otherwise does not change the terms of the
Letter of Credit.
(d) The obligation of the Bank to honor Interest Drawings, under the
Letter of Credit, up to the amount of the Interest Commitment,
(as same may have been reduced pursuant to subsection (b) of this
Section 9.1), will be automatically reinstated after each
Interest Drawing to an amount equal to the Interest Commitment.
(e) The Bank shall reinstate amounts drawn under the Letter of Credit
pursuant to a Remarketing Drawing, as to the Interest Commitment,
immediately and, as to the Principal Commitment, to the extent
money is received by the Bank (other than from drawings under the
Letter of Credit) from the tender agent described in the
Indenture, which money was held by such tender agent for the sole
purpose of reimbursing the Bank for all or a portion of amounts
drawn under the Letter of Credit pertaining to such Remarketing
Drawing for Notes tendered for purchase to and remarketed by the
Remarketing Agent, or upon the Trustee's certification that the
Trustee or the tender agent is holding for the Bank's benefit
Notes together with an amount of money, the aggregate amount of
which Notes and money is equal to or greater than the principal
portion of the Remarketing Drawing.
The Letter of Credit shall terminate automatically on the earliest of
(i) the payment by the Bank to the Trustee of the final drawing available to be
made under the Letter of Credit; (ii) receipt by the Bank of the Letter of
Credit and a certificate signed by an officer of the Trustee and an authorized
representative of Borrower stating that no Notes remain outstanding; (iii)
receipt by the Bank of the Letter of Credit and a certificate signed by an
officer of the Trustee and an authorized representative of Borrower stating that
an "Alternate Credit Facility" in substitution for the Letter of Credit has been
accepted by the Trustee and is in effect"; or (iv) the stated Expiration Date.
This Reimbursement Agreement will terminate on the later of the
Expiration Date or Borrower's satisfaction in full of all of the Borrower's
obligations pursuant to this Reimbursement Agreement, subject to any provision
of this Reimbursement Agreement for survival of any provision of this
Reimbursement Agreement.
SECTION TEN
-----------
MISCELLANEOUS
-------------
Section 10.1. Liability of the Bank. Between the Borrower and the Bank,
---------------------
the Borrower assumes all risks of the acts or omissions of the Trustee and any
transferee of the Letter of Credit
26
<PAGE>
with respect to its use of the Letter of Credit or its proceeds. Neither the
Bank nor any of its officers or directors shall be liable or responsible for:
(a) the use which may be made of the Letter of Credit or any of the proceeds
thereof, or for any acts or omissions of the Trustee and any transferee in
connection therewith; (b) the validity, sufficiency or genuineness of documents,
inaccuracy of any of the statements or representations contained therein or of
any endorsement(s) thereon, even if such documents should in fact prove to be in
any or all respects invalid, insufficient, fraudulent or forged; (c) payment by
the Bank against presentation of documents which do not strictly comply with the
terms of the Letter of Credit, including any failure of any documents to bear
any reference or adequate reference to the Letter of Credit; or (d) any other
circumstances whatsoever in making or failing to make payment under the Letter
of Credit, except the Borrower shall have a claim against the Bank, and the Bank
shall be liable to the Borrower, to the extent, but only to the extent of any
direct, as opposed to consequential, damages suffered by the Borrower which the
Borrower proves were caused by (i) the Bank's willful misconduct or gross
negligence in honoring a draft under the Letter of Credit, or (ii) the Bank's
willful failure to pay under the Letter of Credit after presentation to it by
the Trustee (or a successor trustee under the Indenture to whom the Letter of
Credit has been transferred in accordance with its terms) of a sight draft and
certificate strictly complying with the terms and conditions of the Letter of
Credit. In furtherance and not in limitation of the foregoing, the Bank may
accept documents that appear on their face to be in order, and may assume the
genuineness and rightfulness of any signature thereon, without responsibility
for further investigation, regardless of any notice or information to the
contrary unless actually received by the Bank; provided, that if the Bank shall
receive written notification from both the Trustee and the Borrower that
documents conforming to the terms of the Letter of Credit to be presented to the
Bank are not to be honored, the Bank agrees that it will not honor such
documents and the Borrower shall indemnify and hold the Bank harmless from such
failure to honor.
In the event any claim, demand, action or suit, loss, or liability is
asserted against Bank arising in any manner from the issuance, presentation or
acceptance of drafts under the Letter of Credit or the interpretation of or
actions under the Letter of Credit, the Borrower agrees to indemnify, hold
harmless and defend Bank, its agents, officers and directors from any loss or
damage, including without limitation, reasonable attorneys' fees and costs,
except for Bank's obligations stated in the Letter of Credit and for loss or
liability incurred by Bank's willful misconduct or gross negligence as
referenced above. The agreements in this paragraph will survive any payment
under or termination of this Reimbursement Agreement.
Section 10.2. Right to Set-Off. Upon the occurrence of any Event of
----------------
Default hereunder the Bank is hereby irrevocably authorized at any time and from
time to time without notice to the Borrower, any such notice being expressly
waived by the Borrower, to set-off and appropriate and apply any and all
deposits (general or special, time or demand, provisional or final), in any
currency, any other credits, indebtedness or claims, in any currency, in each
case whether direct or indirect or contingent or matured or unmatured, at any
time held or owing by the Bank to or for the credit or the account of the
Borrower, or any part thereof in such amounts as such Bank may elect, against
and on account of the obligations and liabilities of the Borrower to the Bank
hereunder and claims of every nature and description of the Bank against the
Borrower, whether arising hereunder or otherwise, as the Bank may elect, whether
or not the Bank has made any demand for payment and although such obligations,
liabilities and claims may be contingent or unmatured. The Bank agrees to notify
the Borrower promptly of any such set-off and the
27
<PAGE>
application made by the Bank, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of the
Bank under this subsection are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Bank may
have.
Section 10.3. Additional Collateral. As additional security for this
---------------------
Agreement, the Borrower agrees that in the event that Trustee shall, at any time
or from time to time, draw upon the Letter of Credit, the Bank shall be and
become the assignee of all rights and interests of the Borrower and the Trustee.
The Borrower does hereby consent to such assignment, and does agree to execute
any and all such documents, instruments and certificates in connection therewith
as the Bank shall deem appropriate.
Section 10.4. Notices. All notices, requests, consents and other
-------
communications hereunder shall be in writing and shall be deemed to have been
made when delivered, or mailed first-class postage prepaid, or sent by wire,
telex, telecopier or similar electronic means of communication or delivered to a
telegraph office for transmission, addressed to the appropriate address set
forth below,
if to the Bank, at:
KeyBank National Association
66 South Pearl Street
Albany, New York 12207-1501
Attention: International Department
Fax Number: (518) 487-4998
with a copy to:
Stephen P. Lubelczyk, Senior Vice President
KeyBank National Association
Commercial Banking Division
One Canal Plaza
Portland, Maine 04101-4035
Fax Number: (207) 874-7070
or at such other address as may have been furnished for such purpose to the
Borrower by the Bank in writing; or
if to the Borrower, at:
Robert D. Elliott, President and Chief Executive Officer
Aerovox Incorporated
740 Belleville Avenue
New Bedford, MA 02745
Fax Number: (508) 910-3123
with a copy to:
28
<PAGE>
Stanley B. Kay, Esq.
85 Wells Avenue, Suite 200
Newton, MA 02459-3215
Fax Number: (617) 558-8029
or at such other address as may have been furnished for such purpose to the Bank
by the Borrower in writing.
Section 10.5. Survival of Representations and Warranties. All
------------------------------------------
agreements, representations and warranties contained in the Credit Documents
shall survive the execution and delivery of this Agreement, any investigation at
any time made by or on behalf of the Bank and the issuance and acceptance of the
Letter of Credit. All statements contained in any certificates or other
instruments delivered by the Borrower pursuant hereto shall constitute
representations and warranties by the Borrower under this Agreement.
Section 10.6. Payments on Holidays. Whenever any payment to be made
--------------------
pursuant to this Agreement shall be stated to be due on a public holiday in the
State of Maine, Saturday or Sunday, such payment may be made on the next
succeeding business day and such extension of time shall in such case be
included in computing interest, if any, in connection with such payment.
Section 10.7. Computation of Interest. Except as otherwise provided,
-----------------------
all computations of interest with respect to the Letter of Credit hereunder
shall be made on the basis of a three hundred sixty-five (365) day year.
Section 10.8. Entire Agreement. The Credit Documents and the Letter of
----------------
Credit embody the entire agreement and understanding among the parties hereto
and supersede all prior agreements and understandings relating to the subject
matter hereof.
Section 10.9. Parties in Interest. All the terms and provisions of this
-------------------
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto.
Section 10.10. Expenses. Regardless of whether or not the Notes are
--------
eventually issued and sold and regardless of whether or not the transactions
contemplated hereby shall be consummated, Borrower will pay or reimburse Bank,
on demand, for all expenses incurred or paid by Bank in connection with (i) the
preparation, interpretation or amendment of this Agreement, the Letter of Credit
or the Credit Documents, (ii) the administration, supervision, protection or
realization of any Pledged Collateral, (iii) any action or participation by Bank
in connection with any bankruptcy case or proceeding involving Borrower or any
of the Pledged Collateral, and (iv) the defense, settlement or satisfaction of
any action, claim or demand asserted against Bank with respect to Bank's rights
or liabilities under the Credit Documents (exclusive of any final judgment
rendered by a court of competent jurisdiction pursuant to which the Bank has
been found expressly liable for willful misconduct or gross negligence in
honoring, or failing to honor, a draft under the Letter of Credit), including,
but not limited to, with respect to all of the foregoing, all reasonable
out-of-pocket expenses incurred by the Bank for the Bank's
29
<PAGE>
attorneys (whether special outside counsel or attorneys in its Law Group) and
paralegal fees, disbursements, and costs, all at such reasonable rates and with
respect to such services as the Bank in its discretion may elect to pay (as such
rates may vary from time to time during the course of the performance of such
services) including the costs of appraisers, engineers, investment bankers,
environmental consultants and other experts that may be retained by the Bank in
connection with such efforts. At its option, and without limiting any other
rights or remedies, the Bank may pay or discharge taxes, liens, security
interests or other encumbrances at any time levied against or placed on any of
the Pledged Collateral, and may procure and pay any premiums on any insurance to
be carried by Borrower, or provide for the maintenance and preservation of any
of the Pledged Collateral, and add the expense thereof to the amount due from
the Borrower pursuant to subsection 2.2(a).
Section 10.11. Payments. Borrower irrevocably waives the right to
--------
direct the application of any and all payments at any time or times hereafter
received by Bank from Borrower, and Borrower does hereby irrevocably agree that
Bank shall have the continuing exclusive right to apply and reapply any and all
payments received at any time or times hereafter against the Borrower's
obligations hereunder or under Bank's other loans with Borrower in such manner
as Bank may deem advisable.
Borrower agrees that to the extent that Borrower makes a payment or
payments to Bank, which payment or payments, or any part thereof, are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to Borrower, its estate, trustee, receiver or any
other party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such payment or repayment, the liability
or part thereof which has been paid, reduced or satisfied by the amount so
repaid shall be reinstated and included within the Credit Documents as of the
date such initial payment, reduction or satisfaction occurred.
Section 10.12. Counterparts. This Agreement may be executed in any
------------
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 10.13. Maine Contract. This Agreement shall be construed and
--------------
enforced in accordance with and be governed by the laws of the State of Maine.
Section 10.14. Waiver of Jury Trial. THE BORROWER HEREBY KNOWINGLY,
--------------------
VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT TO A JURY TRIAL, WHETHER ARISING
UNDER THE MAINE CONSTITUTION, THE UNITED STATES CONSTITUTION, OR ANY STATE OR
FEDERAL STATUTE, REGULATION, COMMON LAW, OR RULE OF CIVIL PROCEDURE, WITH
RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH ANY
OF THE CREDIT DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR
THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. THE BORROWER (A) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE BANK HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE BANK WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT THE BANK HAS BEEN INDUCED TO
ENTER INTO THE
30
<PAGE>
CREDIT DOCUMENTS BY, AMONG OTHER THINGS, THE WAIVER AND CERTIFICATION CONTAINED
HEREIN.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date first above written.
AEROVOX INCORPORATED
By: ROBERT D. ELLIOTT
Robert D. Elliott, President and
Chief Executive Officer
KEYBANK NATIONAL ASSOCIATION
By: STEPHEN P. LUBELCZYK
Stephen P. Lubelczyk, Senior Vice
President
31
<PAGE>
EXHIBIT A
KEYBANK NATIONAL ASSOCIATION
International Department
66 South Pearl Street
Albany, New York 12207-1501
Date of Issuance: March 22, 2000
Irrevocable Transferable Direct Pay Letter of Credit No. NSL093053
Beneficiary: Applicant:
The Huntington National Bank, Trustee Aerovox Incorporated
41 South High Street 740 Belleville Avenue
HC1112 New Bedford, MA 02745
Columbus, Ohio 43215
Attention: Corporate Trust Department
Amount: USD $10,443,058.00
Expiration Date: March 22, 2005
Dear Sirs:
You, as Trustee under the Trust Indenture dated as of March 1, 2000
(the "Indenture") between you and Aerovox Incorporated, a Delaware corporation
(the "Borrower"), pursuant to which Ten Million, One Hundred Seventy Thousand
Dollars ($10,170,000.00) in aggregate principal amount of Taxable Adjustable
Rate Notes, Series 2000 (such Notes, together with beneficial Ownership
Interests (as defined in the Indenture) in such Notes, are hereinafter referred
to as the "Notes") are being issued by the Borrower, are hereby irrevocably
authorized to draw on KeyBank National Association pursuant to our Irrevocable
Transferable Direct Pay Letter of Credit, for the account of the Borrower,
available by one or more of your drafts at sight, upon the terms and conditions
hereinafter set forth, an amount (subject to reinstatement as hereinafter set
forth) not exceeding Ten Million, Four Hundred Forty-Three Thousand, Fifty-Eight
Dollars ($10,443,058.00) (the "Letter of Credit Commitment") of which (a) an
amount not exceeding Ten Million, One Hundred Seventy Thousand Dollars
($10,170,000.00) may be drawn with respect to the payment of (i) the unpaid
principal amount of the Notes as and when the same become due at maturity or by
acceleration or by redemption, or pursuant to any mandatory sinking fund
requirements, (the "Principal Commitment") or (ii) that portion of the purchase
price of the Notes corresponding to the principal thereof when delivered to the
Remarketing Agent for remarketing and not remarketed and an amount not exceeding
Two Hundred Seventy Three Thousand, Fifty-Eight Dollars ($273,058.00) may be
drawn with respect to the payment of up to ninety-eight (98) days' interest at a
maximum rate of ten percent (10%) per annum (calculated on the basis of a year
of 365 days; 366 days in a leap year) (the "Maximum Rate") accrued on the Notes
on or prior to their stated maturity dates or (ii) the portion of the purchase
32
<PAGE>
price of Notes corresponding to up to 98 days' interest accrued on such Notes at
the Maximum Rate when delivered to the Remarketing Agent for remarketing and not
remarketed (the "Interest Commitment"), effective immediately and expiring at
the close of business on March 22, 2005 (the "Expiration Date").
Funds under this Letter of Credit are available to you against your
executed sight draft(s) drawn on us, stating on their face: "Drawn under KeyBank
National Association Irrevocable Transferable Direct Pay Letter of Credit No.
NSL093053" and accompanied by: (A) if the drawing is being made with respect to
the payment of principal on the Notes, whether due at maturity, upon call for
redemption, upon acceleration or pursuant to any mandatory sinking fund
requirements (a "Principal Drawing"), a certificate signed by you in the form of
Schedule 1 attached hereto appropriately completed; (B) if the drawing is being
made with respect to a payment of purchase price corresponding to the unpaid
principal amount of, and the interest accrued on, the Notes when delivered to
the Remarketing Agent for remarketing and not remarketed (a "Remarketing
Drawing"), a certificate signed by you in the form of Schedule 2 attached hereto
appropriately completed; and (C) if the drawing is being made with respect to a
payment of interest on the Notes (an "Interest Drawing"), a certificate signed
by you in the form of Schedule 3 hereto appropriately completed. Presentation of
such draft(s) and certificate(s) shall be made by telephone facsimile confirmed
in writing at our Main Office, 66 South Pearl Street, Albany, New York
12207-1501, Attention: International Department, or at any other office of ours
which may be designated by us by written notice delivered to you.
We hereby agree that all drafts drawn under and in compliance with the
terms of this Letter of Credit will be duly honored by us by 12:00 noon (Albany,
New York time) of the Business Day following the transmission of the telephone
facsimile of the draft(s) and certificate(s) (originals thereof to be presented
before 10:00 a.m. (Albany, New York time) within one (1) Business Day following
a telephone facsimile transmission) as specified at such office on or before the
Expiration Date; provided, however, if a drawing is presented to pay the
purchase price of Notes which have not been remarketed by the Remarketing Agent
and if conforming drawing documentation is presented at or prior to 11:00 a.m.
(Albany, New York time) on a Business Day, payments shall be made to you on such
Business Day. If requested by you, payment under this Letter of Credit may be
made by wire transfer of federal funds to your account at the Federal Reserve
Bank of New York, or by deposit of immediately available funds into a designated
account that you maintain with us. All payments under this Letter of Credit
shall be made from our own funds. As used herein, "Business Day" shall mean any
day of the year other than (i) a Saturday or Sunday, (ii) any day on which banks
located in either Albany, New York, or the city in which the principal corporate
trust office of the Trustee pursuant to the Indenture is located are required or
authorized by law to remain closed, or (iii) any day on which the New York Stock
Exchange is closed.
Drawings hereunder shall not exceed the Letter of Credit Commitment, as
the Letter of Credit Commitment may be reduced or reinstated pursuant hereto,
and, except as hereinafter modified, each drawing honored by us shall pro tanto
--- -----
reduce the amount available under this
___________________________________ ___________________________________
Authorized Signature Authorized Signature
33
<PAGE>
Letter of Credit.
In connection with any Interest Drawing, the Interest Commitment will
be automatically decreased by the amount of such Interest Drawing and will be
automatically reinstated by the amount of such Interest Drawing on the date of
such Interest Drawing
We will reinstate amounts drawn pursuant to a Remarketing Drawing
hereunder, as to the Interest Commitment, immediately and, as to the Principal
Commitment, to the extent that money is received by us (other than from drawings
under this Letter of Credit) from the Tender Agent described in the Indenture,
which money was held by the Tender Agent for the sole purpose of reimbursing us
for all or a portion of amounts drawn hereunder pertaining to such Remarketing
Drawing, or upon your certification that you or the Tender Agent is holding for
our benefit Notes together with an amount of money, the aggregate amount of
which Notes and money is equal to or greater than the principal portion of the
Remarketing Drawing.
Upon presentation by you of any Principal Drawing, the amount of this
Letter of Credit and the amounts available to be drawn by you by any subsequent
Principal Drawing shall be automatically and permanently decreased by an amount
equal to the amount of such Principal Drawing plus the amount of corresponding
interest allocable to such Principal Drawing in the Interest Commitment.
If the Borrower shall be entitled to a credit against the principal
amount of the Notes prior to maturity (the "Credit") pursuant to an optional
redemption of a portion of the Notes or to the purchase of Notes in the open
market and cancellation thereof in accordance with the provisions of the
Indenture, and such amounts have been paid by or on behalf of the Borrower other
than by us, the Borrower shall have the right at any time thereafter to reduce
permanently, without penalty or premium, the Letter of Credit Commitment in the
manner set forth below. The Letter of Credit Commitment will be reduced by an
amount equal to the sum of the following corresponding reductions in the
Principal Commitment and the Interest Commitment: (i) the Principal Commitment
will be reduced by an amount equal to the amount of such Credit and (ii) the
Interest Commitment will be reduced by an amount equal to ninety-eight (98)
days' interest on the amount of such Credit at the Maximum Rate.
The reduction in the Letter of Credit Commitment pursuant to such
Credit will occur not less than three (3) Business Days after written notice to
us, accompanied by this Letter of Credit and the written certificate of you and
the Borrower in the form of Schedule 4 attached hereto stating that the Borrower
is entitled to such reduction and designating the amount of such Credit and the
date of the Business Day upon which such reduction shall become effective. Upon
such presentation we will either reissue this Letter of Credit in the maximum
amount available hereunder or otherwise amend this Letter of Credit to reflect
such maximum amount then available.
Only you, as Trustee, may make a drawing under this Letter of Credit.
Upon the payment
___________________________________ ___________________________________
Authorized Signature Authorized Signature
34
<PAGE>
to you or your account of the amount specified in a sight draft drawn hereunder,
we shall be fully discharged on our obligation under this Letter of Credit with
respect to such sight draft, and we shall not thereafter be obligated to make
any further payments under this Letter of Credit in respect of such sight draft
to you or to any other person who may have made to you or who makes to you a
demand for payment of principal of or interest on any of the Notes.
Except as otherwise provided herein, this Letter of Credit shall be
governed by and construed in accordance with the Uniform Customs and Practice
for Documentary Credits (1993 Revision), Publication No. 500 of the
International Chamber of Commerce (the "UCP"); provided, however, that Article
41, paragraphs d, e, f, g, h, i and j of Article 48 and the second sentence of
Article 17 shall not apply to this Letter of Credit. Furthermore, as provided in
the first sentence of Article 17 of the UCP, we assume no liability or
responsibility for consequences arising out of the interruption of our business
by Acts of God, riots, civil commotions, insurrections, wars or any other causes
beyond our control, or strikes or lockouts. As to matters not covered by the UCP
and to the extent not inconsistent with the UCP or made inapplicable by this
Letter of Credit, this Letter of Credit shall be governed by the laws of the
State of Ohio, including the Uniform Commercial Code as in effect in the State
of Ohio.
Communications with respect to this Letter of Credit shall be in
writing and shall be addressed to KeyBank National Association, 66 South Pearl
Street, Albany, New York 12207-1501, Attention: International Department
specifically referring thereon to KeyBank National Association Irrevocable
Transferable Direct Pay Letter of Credit No. NSL093053.
This Letter of Credit is transferable in its entirety (but not in part)
to any transferee who has succeeded you as Trustee under the Indenture and such
transferred Letter of Credit may be successively transferred to any Successor
Trustee or Co-Trustee thereunder, but may not be assigned, transferred or
conveyed under any other circumstance. Transfer of the amount available under
this Letter of Credit to such transferee shall be effected by the presentation
to us of this Letter of Credit accompanied by a transfer fee of $500.00 and the
transfer form in the form attached hereto as Schedule 5 and, unless this Letter
of Credit is so presented to us, we shall have no obligation hereunder to any
transferee. Upon such transfer, we will either reissue this Letter of Credit in
the maximum amount then available hereunder or otherwise amend this Letter of
Credit to reflect such maximum amount then available.
Upon the earliest of (i) the payment by us to the Trustee of the final
drawing available to be made under the Letter of Credit, (ii) our receipt of
this outstanding Letter of Credit and a written certificate signed by your
officer and an authorized representative of the Borrower in the form of Schedule
6 hereto appropriately completed, stating that: (a) no Notes remain outstanding
within the meaning of the Indenture; and (b) such officer and representative are
duly authorized to sign such certificate on behalf of you and the Borrower,
(iii) the twentieth (20th) Business Day after our receipt of this Letter of
Credit and a written certificate signed by your officer and an authorized
representative of the Borrower in the form of Schedule 7 hereto appropriately
completed, stating that: (a) an Alternate Credit Facility in substitution of
this Letter of Credit has
___________________________________ ___________________________________
Authorized Signature Authorized Signature
35
<PAGE>
been accepted by you and is in effect; and (b) such officer and representative
are duly authorized to sign such certificate on behalf of you and the Borrower,
or (iv) the stated Expiration Date, this Letter of Credit shall automatically
terminate and be delivered to us for cancellation.
This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein
(including, without limitation, the Notes or the Reimbursement Agreement),
except only the certificate(s) and the sight draft(s) referred to herein; and
any such reference shall not be deemed to incorporate herein by reference any
document, instrument or agreement except for such certificate(s) and such sight
draft(s).
___________________________________ ___________________________________
Authorized Signature Authorized Signature
36
<PAGE>
Exhibit 4.16
SCHEDULE 1
----------
CERTIFICATE FOR THE PAYMENT OF PRINCIPAL
OF AEROVOX INCORPORATED
TAXABLE ADJUSTABLE RATE NOTES, SERIES 2000
(THE "NOTES")
-------------
The undersigned, a duly authorized officer of The Huntington National Bank
(the "Trustee"), hereby certifies to KeyBank National Association (the "Bank"),
with reference to Irrevocable Transferable Direct Pay Letter of Credit No.
NSL093053 (the term "Letter of Credit" and other capitalized terms used herein
and not defined shall have its respective meaning as set forth in the Letter of
Credit) issued by the Bank in favor of the Trustee, that:
The Trustee is the Trustee under the Indenture for the holders of the
Notes.
The Trustee is making a drawing under the Letter of Credit with respect to
the payment of the principal of the Notes.
The amount of principal of the Notes which will be due and payable on ______,
______________ is $____________________.
The amount of the sight draft accompanying this Certificate ($ ), together
with the aggregate of all prior payments made pursuant to Principal Drawings
under this Letter of Credit for the payment of the Notes, does not exceed
$______________.
The amount of the sight draft accompanying this Certificate was computed in
accordance with the terms and conditions of the Letter of Credit, Reimbursement
Agreement, the Notes, and the Indenture.
IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as
of the _____ day of _________, _____.
THE HUNTINGTON NATIONAL BANK,
as Trustee
By:___________________________________
Its:__________________________________
___________________________ ________________________________
Authorized Signature Authorized Signature
37
<PAGE>
Exhibit 4.16
SCHEDULE 2
----------
CERTIFICATE FOR THE PAYMENT OF REMARKETING DRAWING
OF AEROVOX INCORPORATED
TAXABLE ADJUSTABLE RATE NOTES, SERIES 2000
(THE "NOTES")
The undersigned, a duly authorized officer of The Huntington National Bank,
as Trustee (the "Trustee"), hereby certifies to KeyBank National Association
(the "Bank") with reference to KeyBank National Association Irrevocable
Transferable Direct Pay Letter of Credit No. NSL093053 (the "Letter of Credit",
the capitalized terms defined therein and not defined herein being used as
therein defined) issued by the Bank in favor of the Trustee that:
1. The Trustee is the Trustee under the Indenture for the holders of the
Notes. The total amount of Notes outstanding (as defined in the Indenture) is
$_________________.
2. The Trustee is making a drawing under the Letter of Credit at the
written request of the Remarketing Agent (as defined in the Indenture), to pay,
pursuant to the terms of the Remarketing Agreement (as defined in the
Indenture), the purchase price equal to the principal amount of those Notes
which the Remarketing Agent has been unable to remarket and the interest accrued
on such Notes but not paid.
3. The Trustee: (a) is delivering or causing to be delivered to the Bank,
or its designated agent, a principal amount of the Notes, registered in the
names of the Borrower as pledgor and the Bank as pledgee, equal to the amount of
the draft accompanying this Certificate; (b) acknowledges the pledge by the
Borrower to the Bank of the Notes delivered pursuant to subparagraph (a) and (c)
agrees that all payments of principal, premium, if any, and interest made on
such Notes shall be made to the Bank, so long as the Bank is the pledgee of such
Notes.
4. The principal amount of the Notes delivered to the Remarketing Agent
which the Remarketing Agent has been unable to remarket is $____________. The
amount of interest upon such Notes which has accrued but is unpaid is
$_________________. The amount of the draft accompanying this Certificate does
not exceed such amount due as the purchase price of such Notes corresponding to
such principal amount of, and interest on, such Notes.
5. The amount of the draft accompanying this Certificate, together with
the aggregate of all prior payments pursuant to Remarketing Drawings which have
not been reinstated under the Letter of Credit for the payment of purchase price
of the Notes, does not exceed the Letter of Credit Commitment.
Upon receipt by the Trustee of the amount demanded hereby, (a) the Trustee
will deliver it to Note holders only for the purpose of payment of the principal
amount of the Notes referenced in the second paragraph hereof, (b) no portion of
it shall be applied by the Trustee for any other purpose, and (c) no portion of
it shall be commingled with other funds held by the Trustee. This drawing is
made in accordance with the provisions of the Indenture and the Letter of
Credit.
The amount of the draw accompanying this Certificate was computed in
accordance with the
__________________________ _____________________________
Authorized Signature Authorized Signature
38
<PAGE>
Exhibit 4.16
terms and conditions of the Notes and the Indenture.
IN WITNESS WHEREOF, the Trustee has executed and delivered this certificate
as of the _____ day of ________, ______.
THE HUNTINGTON NATIONAL BANK,
as Trustee
By:___________________________________
Its:__________________________________
__________________________ ______________________________________
Authorized Signature Authorized Signature
39
<PAGE>
Exhibit 4.16
SCHEDULE 3
----------
CERTIFICATE FOR THE PAYMENT OF INTEREST
OF AEROVOX INCORPORATED
TAXABLE ADJUSTABLE RATE NOTES, SERIES 2000
(THE "NOTES")
-------------
The undersigned, a duly authorized officer of The Huntington National Bank
(the "Trustee"), hereby certifies to KeyBank National Association (the "Bank"),
with reference to Irrevocable Transferable Direct Pay Letter of Credit No.
NSL093053 (the term "Letter of Credit" and other capitalized term used herein
and not defined shall have its respective meaning as set forth in the Letter of
Credit) issued by the Bank in favor of the Trustee, that:
The Trustee is the Trustee under the Indenture for the holders of the
Notes.
The Trustee is making a drawing under the Letter of Credit with respect to
a payment of interest accrued on the Notes on or prior to their stated maturity
date.
The amount of interest on the Notes which will be due and payable on _____,
_________, is $_________________.
The amount of the sight draft accompanying this Certificate
($______________) does not exceed the amount available on the date hereof to be
drawn under the Letter of Credit in respect of the payment of interest accrued
on the Notes on or prior to their stated maturity date.
The amount of the sight draft accompanying this Certificate was computed in
accordance with the terms and conditions of the Letter of Credit, the
Reimbursement Agreement, the Notes and the Indenture.
IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate
as of the day of _______________, ___________.
THE HUNTINGTON NATIONAL BANK,
as Trustee
By:___________________________________
Its:__________________________________
__________________________ ______________________________________
Authorized Signature Authorized Signature
40
<PAGE>
Exhibit 4.16
SCHEDULE 4
----------
CERTIFICATE AS TO REDUCTION
OF LETTER OF CREDIT COMMITMENT
KeyBank National Association
66 South Pearl Street
Albany, New York 12207-1501
Attention: International Department
RE: KeyBank National Association Irrevocable Transferable
Direct Pay Letter of Credit No. NSL093053
Gentlemen:
The undersigned, a duly authorized officer of The Huntington National Bank,
as Trustee (the "Trustee"), and a duly authorized representative of Aerovox
Incorporated ("Borrower"), respectively, hereby certify to KeyBank National
Association with reference to KeyBank National Association Irrevocable
Transferable Direct Pay Letter of Credit No. NSL093053 (the "Letter of Credit"),
the capitalized terms defined therein and not defined herein being used as
therein defined, issued by KeyBank National Association in favor of the Trustee
that:
The Trustee is the Trustee under the Indenture for the holders of the
Notes.
The Borrower is entitled to a reduction in the Letter of Credit Commitment.
The Letter of Credit Commitment shall be reduced, effective as of , as follows:
(i) The Principal Commitment shall be reduced to $ __________________.
(ii) The Interest Commitment shall be reduced to $ ___________________.
__________________________ _____________________________
Authorized Signature Authorized Signature
41
<PAGE>
Exhibit 4.16
The undersigned officer and representative are duly authorized to sign this
certificate on behalf of the Trustee, and on behalf of the Borrower,
respectively.
IN WITNESS WHEREOF, the Trustee and the Borrower have executed and delivered
this Certificate as of the ______ day of _______________, ___.
TRUSTEE: THE HUNTINGTON NATIONAL BANK,
as Trustee
By:____________________________________
Title:_________________________________
BORROWER: AEROVOX INCORPORATED
By:____________________________________
Title:_________________________________
__________________________ _______________________________________
Authorized Signature Authorized Signature
42
<PAGE>
Exhibit 4.16
SCHEDULE 5
----------
KeyBank National Association
66 South Pearl Street
Albany, New York 12207-1501
Attention: International Department
Date:_______________, _____
RE: KeyBank National Association Irrevocable Transferable Direct Pay
Letter of Credit No. NSL093053
Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to the following (the "Transferee"):
(Name of Transferee)
(Address)
all rights of the undersigned beneficiary to draw under the above Letter of
Credit in its entirety.
By this transfer, all rights of the undersigned beneficiary in the Letter
of Credit are transferred to the Transferee and the Transferee shall have the
sole rights as beneficiary thereof, including sole rights relating to any
amendments of the Letter of Credit, whether increases in the amount to be drawn
thereunder, extensions of the Expiration Date thereof, or other amendments, and
whether such amendments now exist or are made after the date hereof. All
amendments of the Letter of Credit are to be advised direct to the Transferee
without necessity of any consent of or notice to the undersigned beneficiary.
The undersigned hereby certifies that the Transferee has become successor
Trustee under the Trust Indenture dated as of ______________ ______, between the
undersigned and Aerovox Incorporated (the "Borrower") relating to the Borrower's
$10,170,000 Taxable Adjustable Rate Notes, Series 2000, and has accepted such
appointment in writing.
We enclose our check in the amount of $500.00 representing your transfer
fee.
The original of such Letter of Credit is returned herewith, and in
accordance therewith we ask you to endorse the within transfer on the reverse
thereof, and forward it directly to the Transferee with your customary notice of
transfer, or issue a replacement Letter of Credit to the Transferee as provided
therein.
__________________________ _____________________________
Authorized Signature Authorized Signature
43
<PAGE>
Exhibit 4.16
Very truly yours,
SIGNATURE AUTHENTICATED THE HUNTINGTON NATIONAL BANK,
as Trustee
By:________________________ By:___________________________
(Bank) (Authorized Officer)
__________________________ ______________________________
Authorized Signature Authorized Signature
44
<PAGE>
Exhibit 4.16
SCHEDULE 6
----------
CERTIFICATE THAT NO NOTES ARE OUTSTANDING
-----------------------------------------
KeyBank National Association
66 South Pearl Street
Albany, New York 12207-1501
Attention: International Department
RE: KeyBank National Association Irrevocable Transferable Direct Pay
Letter of Credit No. NSL093053
Gentlemen:
The undersigned, a duly authorized officer of The Huntington National Bank,
as Trustee (the "Trustee"), and a duly authorized representative of Aerovox
Incorporated ("Borrower"), hereby certify to KeyBank National Association with
reference to KeyBank National Association Irrevocable Transferable Direct Pay
Letter of Credit No. NSL093053 (the "Letter of Credit," the capitalized terms
defined therein and not defined herein being used as therein defined) issued by
KeyBank National Association in favor of the Trustee that:
(i) The Trustee is the Trustee under the Indenture for the holders of
the Notes.
(ii) No Notes are Outstanding within the meaning of the Indenture.
(iii) The undersigned officer and representative are duly authorized to
sign this certificate on behalf of the Trustee and on behalf of the
Borrower, respectively.
IN WITNESS WHEREOF, the Trustee and the Borrower have executed and
delivered this certificate as of the ____ day of _______, ______.
THE HUNTINGTON NATIONAL BANK,
as Trustee
By:______________________________
Its:_____________________________
AEROVOX INCORPORATED
By:______________________________
Its:_____________________________
__________________________ _________________________________
Authorized Signature Authorized Signature
45
<PAGE>
Exhibit 4.16
SCHEDULE 7
----------
CERTIFICATE OF ACCEPTANCE OF ALTERNATE SECURITY
-----------------------------------------------
KeyBank National Association
66 South Pearl Street
Albany, New York 12207-1501
Attention: International Department
RE: KeyBank National Association Irrevocable Transferable Direct Pay
Letter of Credit No. NSL093053
Gentlemen:.
The undersigned, a duly authorized officer of The Huntington National Bank,
as Trustee (the "Trustee"), and a duly authorized representative of Aerovox
Incorporated ("Borrower"), respectively, hereby certify to KeyBank National
Association with reference to KeyBank National Association Irrevocable
Transferable Direct Pay Letter of Credit No. NSL093053 (the "Letter of Credit",
and other capitalized terms used herein and not defined shall have their
respective meanings as set forth in the Letter of Credit) issued by KeyBank
National Association in favor of the Trustee that:
(i) The Trustee is the Trustee under the Indenture for the holders of
the Notes.
(ii) An Alternate Credit Facility in substitution for the Letter of
Credit has been accepted by the Trustee.
(iii) The undersigned officer of the Trustee and representative of the
Borrower are duly authorized to sign this certificate on behalf of
the Trustee and the Borrower, respectively.
IN WITNESS WHEREOF, the Trustee and the Borrower have executed and
delivered this certificate as of the _____ day of ________, _____.
THE HUNTINGTON NATIONAL BANK,
as Trustee
By:____________________________________
Its:___________________________________
AEROVOX INCORPORATED
By:____________________________________
Its:___________________________________
__________________________ _______________________________________
Authorized Signature Authorized Signature
46
<PAGE>
Exhibit 4.16
EXHIBIT B
PERMITTED ENCUMBRANCES
----------------------
All items set forth in Schedule B, Section 2 of
the Title Policy
__________________________ _____________________________
Authorized Signature Authorized Signature
47
<PAGE>
EXHIBIT C
PAYMENT SCHEDULE OF NOTES
-------------------------
- --------------------------------------------------------------------------------
Payment Due Date Principal Amount Payment Due Date Principal Amount
================================================================================
March 1, 2001 $95,000.00 June 1, 2008 $175,000.00
- --------------------------------------------------------------------------------
June 1, 2001 $100,000.00 September 1, 2008 $175,000.00
- --------------------------------------------------------------------------------
September 1, 2001 $100,000.00 December 1, 2008 $180,000.00
- --------------------------------------------------------------------------------
December 1, 2001 $105,000.00 March 1, 2009 $185,000.00
- --------------------------------------------------------------------------------
March 1, 2002 $105,000.00 June 1, 2009 $185,000.00
- --------------------------------------------------------------------------------
June 1, 2002 $105,000.00 September 1, 2009 $190,000.00
- --------------------------------------------------------------------------------
September 1, 2002 $110,000.00 December 1, 2009 $195,000.00
- --------------------------------------------------------------------------------
December 1, 2002 $110,000.00 March 1, 2010 $200,000.00
- --------------------------------------------------------------------------------
March 1, 2003 $115,000.00 June 1, 2010 $200,000.00
- --------------------------------------------------------------------------------
June 1, 2003 $115,000.00 September 1, 2010 $205,000.00
- --------------------------------------------------------------------------------
September 1, 2003 $120,000.00 December 1, 2010 $210,000.00
- --------------------------------------------------------------------------------
December 1, 2003 $120,000.00 March 1, 2011 $215,000.00
- --------------------------------------------------------------------------------
March 1, 2004 $125,000.00 June 1, 2011 $220,000.00
- --------------------------------------------------------------------------------
June 1, 2004 $125,000.00 September 1, 2011 $225,000.00
- --------------------------------------------------------------------------------
September 1, 2004 $130,000.00 December 1, 2011 $230,000.00
- --------------------------------------------------------------------------------
December 1, 2004 $130,000.00 March 1, 2012 $235,000.00
- --------------------------------------------------------------------------------
March 1, 2005 $135,000.00 June 1, 2012 $235,000.00
- --------------------------------------------------------------------------------
June 1, 2005 $135,000.00 September 1, 2012 $240,000.00
- --------------------------------------------------------------------------------
September 1, 2005 $140,000.00 December 1, 2012 $245,000.00
- --------------------------------------------------------------------------------
December 1, 2005 $140,000.00 March 1, 2013 $250,000.00
- --------------------------------------------------------------------------------
March 1, 2006 $145,000.00 June 1, 2013 $255,000.00
- --------------------------------------------------------------------------------
June 1, 2006 $150,000.00 September 1, 2013 $260,000.00
- --------------------------------------------------------------------------------
September 1, 2006 $150,000.00 December 1, 2013 $265,000.00
- --------------------------------------------------------------------------------
December 1, 2006 $155,000.00 March 1, 2014 $270,000.00
- --------------------------------------------------------------------------------
March 1, 2007 $155,000.00 June 1, 2014 $280,000.00
- --------------------------------------------------------------------------------
June 1, 2007 $160,000.00 September 1, 2014 $285,000.00
- --------------------------------------------------------------------------------
September 1, 2007 $165,000.00 December 1, 2014 $290,000.00
- --------------------------------------------------------------------------------
December, 2007 $165,000.00 March 1, 2015 $295,000.00
- --------------------------------------------------------------------------------
March 1, 2008 $170,000.00
- --------------------------------------------------------------------------------
48
<PAGE>
EXHIBIT D
LITIGATION
----------
None
49
<PAGE>
Exhibit 4.17
REMARKETING AGREEMENT
between
Aerovox Incorporated
and
McDonald Investments Inc.
__________________________________
Dated as of March 1, 2000
__________________________________
$10,170,000
Aerovox Incorporated
Taxable Adjustable Rate Notes, Series 2000
<PAGE>
Exhibit 4.17
REMARKETING AGREEMENT
---------------------
This REMARKETING AGREEMENT, dated as of March 1, 2000 (the
"Remarketing Agreement"), is made by and between Aerovox Incorporated (the
"Issuer") and McDonald Investments Inc., as placement agent and remarketing
agent (the "Remarketing Agent"), and is entered in connection with the issuance
of Aerovox Incorporated Taxable Adjustable Rate Notes, Series 2000 in the total
aggregate principal amount not to exceed $10,170,000 (the "Notes").
ARTICLE I
---------
Definitions
-----------
Section 1.01. Capitalized Terms.
-----------------
Capitalized terms used in this Remarketing Agreement, unless otherwise
defined herein, shall have the meanings assigned to them in the Trust Indenture,
dated as of March 1, 2000 (the "Indenture"), between the Issuer and The
Huntington National Bank, Columbus, Ohio, as Trustee, with respect to the Notes.
Section 1.02. Rules of Interpretation.
-----------------------
(a) This Remarketing Agreement shall be interpreted in accordance
with and governed by the laws of the State of Maine.
(b) The words "herein" and "hereof" and words of similar import,
without reference to any particular Article, Section or
subsection, refer to this Remarketing Agreement as a whole rather
than to any particular Article, Section or subsection hereof.
(c) The headings of Articles and Sections herein are for convenience
only and shall not affect the construction hereof.
ARTICLE II
----------
Remarketing of Notes
--------------------
Section 2.01. Representations and Warranties of the Issuer.
--------------------------------------------
The Issuer hereby represents and warrants, for the benefit of the
Remarketing Agent, as remarketing agent and as placement agent in connection
with the initial placement of the Notes on the delivery date, that:
(a) The Issuer is a corporation, duly formed and existing under the
laws of the State of Delaware, and has full power and authority
to enter into the
-1-
<PAGE>
Indenture, this Remarketing Agreement and the Reimbursement
Agreement and to issue the Notes and to carry out the provisions
hereof and thereof.
(b) The Indenture, the Reimbursement Agreement, this Remarketing
Agreement and the Notes have been duly authorized, executed and
delivered by the Issuer and, assuming the due execution and
delivery of such agreements by the other parties thereto, are
valid obligations legally binding upon the Issuer and enforceable
in accordance with their respective terms, except as
enforceability may be limited by bankruptcy or other laws
affecting the enforcement of creditors' rights generally or by
general principles of equity and public policy. The Notes have
been duly authorized by the Issuer. The Issuer has approved the
use and distribution of the Limited Offering Memorandum dated as
of March 22, 2000 (the "Limited Offering Memorandum") in
connection with the initial placement of the Notes.
(c) Except for all consents, approvals or authorizations of, or
declaration or filing under any federal or state securities or
"blue sky" laws, to Issuer's actual knowledge, no consent,
approval or authorization of, or declaration or filing with, any
governmental authority or any other third party is a condition to
the execution and delivery by the Issuer of the Indenture, this
Remarketing Agreement or the Reimbursement Agreement, or is
required in connection with the offer, issuance and delivery by
the Issuer of the instruments contemplated hereby. Neither the
execution and delivery of the Indenture, the Reimbursement
Agreement, this Remarketing Agreement or the Notes nor
consummation of the transaction contemplated hereby or thereby or
by the Limited Offering Memorandum, will, to Issuer's actual
knowledge, violate any provision of applicable law or any
applicable regulation, order, writ or decree of any court or
governmental authority affecting the Issuer as of the date
hereof, or will conflict or will be inconsistent with, or will
result in any breach of any of the terms of, or will constitute a
default under, any indenture, mortgage, deed of trust, agreement
or other instrument to which the Issuer is a party or by which it
is bound, or will violate any provision of the Issuer's Articles
of Incorporation or By-laws.
(d) To Issuer's actual knowledge, there is no action, suit,
proceeding, inquiry or investigation, at law or in equity, or
before or by any court, public board or body, pending or, to the
actual knowledge of the Issuer, threatened which challenges the
validity of or seeks to enjoin the execution and delivery by the
Issuer of, or the performance by the Issuer of its obligations
with respect to, the Indenture, this Remarketing Agreement, the
Reimbursement Agreement or the Notes, and, to Issuer's actual
knowledge, there is no action, suit, proceeding, inquiry or
investigation, at
-2-
<PAGE>
law or in equity, or before or by any court, public board or
body, pending or, to the actual knowledge of the Issuer,
threatened against or affecting the Issuer (and to the actual
knowledge of the Issuer there is no basis therefor) wherein there
is a reasonable possibility of an unfavorable decision, ruling or
finding which would materially adversely affect any of the
transactions contemplated by the Limited Offering Memorandum, or
which might result in any material adverse change in the
properties, condition (financial or otherwise) or operations of
the Issuer.
(e) Subject to the proviso that the Limited Offering Memorandum is a
summary and does not contain detailed information about the
Issuer or its intended use of proceeds from the sale of the
Notes, and that the Issuer makes no representation as to the
financial condition of the Bank, the Limited Offering Memorandum
does not contain an untrue or misleading statement of a material
fact relating to the Issuer or the use of proceeds or omit to
state any material fact relating to the Issuer or the use of
proceeds necessary in order to make the statements contained
therein relating to the Issuer or the use of proceeds, in light
of the circumstances under which they were made, not misleading.
Section 2.02. Remarketing Agent's Acceptance.
------------------------------
McDonald Investments Inc. hereby accepts the appointment made by the
Issuer pursuant to the Indenture to serve as Remarketing Agent for the Notes.
Acceptance of that appointment as Remarketing Agent under the Indenture is
expressly subject to the condition that the Remarketing Agent shall not
undertake to perform any duties or assume any obligations to the Trustee, the
Holders or the Issuer other than those expressly set forth herein and in the
Indenture.
Section 2.03. Remarketing Agent's Obligations.
-------------------------------
McDonald Investments Inc. agrees to accept the duties and obligations
imposed upon it as Remarketing Agent under the Indenture, which duties and
obligations are incorporated into and made a part of this Remarketing Agreement,
and in particular agrees:
(a) to determine the interest rates on the Notes in accordance with
Section 2.02 of the Indenture;
(b) to give notice, by wire, telex, telegraph or telecopier or other
similar means of communication, of each interest rate on the
Notes on the date of determination of said interest rates as
provided in Section 2.02 of the Indenture to the Trustee;
(c) to keep such books and records as shall be consistent with
prudent industry practice and to make such books and records
available for inspection by the Issuer and the Trustee at all
reasonable times;
-3-
<PAGE>
(d) to use its best efforts to remarket the Notes in accordance with
Section 3.02 of the Indenture; and
(e) to comply with all applicable laws in connection with its efforts
to remarket the Notes.
The Remarketing Agent hereby represents that it has the necessary
authority to enter into this Remarketing Agreement and to perform its duties and
obligations set forth in this Remarketing Agreement and the Indenture and that
it has made all required registrations with federal and state securities
regulation agencies for those purposes.
ARTICLE III
-----------
Disclosure
----------
Section 3.01. Provision of Disclosure Materials.
---------------------------------
In connection with the Remarketing Agent's placement efforts with
respect to the initial placement of the Notes, the Issuer agrees to provide for
the use of the Remarketing Agent a Limited Offering Memorandum (the "Limited
Offering Memorandum") satisfactory to the Remarketing Agent. In addition, if the
Remarketing Agent determines that it is necessary or desirable to use an amended
or supplemented Limited Offering Memorandum in connection with any remarketing
of Notes, the Remarketing Agent will so notify the Issuer and the Issuer agrees
that the Issuer shall provide an amended or supplemented Limited Offering
Memorandum reasonably satisfactory to the Remarketing Agent for use in
connection with the marketing of the Notes. The Issuer agrees to supply to the
Remarketing Agent such number of copies of any Limited Offering Memorandum and
documents related thereto as are reasonably requested from time to time by the
Remarketing Agent and further agrees to amend or supplement such Limited
Offering Memorandum (and/or any documents incorporated by reference therein), in
connection with any future remarketing, so that at all times the Limited
Offering Memorandum and documents related thereto are reasonable satisfactory to
the Remarketing Agent.
ARTICLE IV
----------
General
-------
Section 4.01. Indemnification.
---------------
The Issuer agrees to indemnify the Remarketing Agent for and to hold
it harmless against all liabilities, claims, costs and expenses incurred without
gross negligence or bad faith on the part of the Remarketing Agent on account of
any action taken or omitted to be taken by the Remarketing Agent in accordance
with the terms of the Notes, the Reimbursement Agreement, the Letter of Credit
or the Indenture, or in connection with the placement or remarketing of the
Notes, including the use of the Limited Offering Memorandum, or any action taken
at the request of or with the consent of the Issuer, including the reasonable
costs and expenses of the Remarketing Agent in defending itself against any such
claim, action or proceeding brought in
-4-
<PAGE>
connection with the exercise or performance of any of its powers or duties under
the Notes, the Indenture, the Reimbursement Agreement or the Letter of Credit;
except to the extent that any such claim, liability, cost or expense arises in
connection with (i) the failure by the Remarketing Agent to deliver the Limited
Offering Memorandum, or any amended or supplemented Limited Offering Memorandum
or amendment or supplement to the Limited Offering Memorandum, to any purchaser
of the Notes if the Issuer has provided the Limited Offering Memorandum, or any
amended or supplemented Limited Offering Memorandum or amendment or supplement
to the Limited Offering Memorandum (in accordance with Section 3.01 hereof), as
the case may be, to the Remarketing Agent for use in connection with the
placement or remarketing of the Notes, or (ii) any untrue or misleading
statement, or alleged untrue or misleading statement, or omission or alleged
omission in information relating to the Remarketing Agent provided by the
Remarketing Agent for inclusion in the Limited Offering Memorandum or any
amended or supplemented Limited Offering Memorandum or any amendment or
supplement to the Limited Offering Memorandum.
In case any claim, action or proceeding is brought against the
Remarketing Agent in respect of which indemnity may be sought hereunder, the
Remarketing Agent promptly shall give notice of that claim, action or proceeding
to the Issuer, and the Issuer, upon receipt of that notice, shall have the
obligation and the right to assume the defense of the claim, action or
proceeding at the Issuer's expense; provided, that failure of the Remarketing
Agent to give that notice shall not relieve the Issuer from any of its
obligations under this Section unless that failure prejudices the defense of the
claim, action or proceeding by the Issuer. At its own expense, the Remarketing
Agent may employ separate counsel and participate in the defense. The Issuer
shall not be liable for any settlement made without its consent, which consent
shall not be unreasonably withheld.
The indemnification set forth above is intended to and shall include
the indemnification of all affected officials, directors, officers and employees
of the Remarketing Agent. Such indemnification is intended to and shall be
enforceable by the Remarketing Agent to the full extent permitted by law.
Section 4.02. Placement and Remarketing Fees.
------------------------------
The Issuer shall pay the Remarketing Agent, for its services as
remarketing agent, an annual fee equal to 12.5 basis points (1/8th of 1%) per
annum of the amount of the Notes outstanding, payable semi-annually in arrears,
and a fee with respect to the initial placement of the Notes equal to seventy-
five one hundredths percent (0.75%) of the aggregate principal amount of the
Notes, payable from the proceeds of the sale of the Notes on March 22, 2000.
The Issuer also shall pay (i) all expenses in connection with the
provision of information required for the preparation of the Limited Offering
Memorandum or supplement thereto provided pursuant to Section 3.01 of this
Remarketing Agreement, (ii) all fees and expenses incurred in connection with
the registration of the Notes under any state securities laws, (iii) all
expenses and costs to effect the authorization, preparation, issuance,
registration under any federal securities laws or the procurement of an
exemption therefrom, delivery and sale of
-5-
<PAGE>
the Notes, including, without limitation, the reasonable fees and disbursements
of counsel to the Letter of Credit Bank, counsel to McDonald Investments Inc. as
placement agent and remarketing agent and counsel to the Issuer, and the
expenses and costs for the preparation, printing, photocopying, execution and
delivery of the Notes, the Indenture, the Reimbursement Agreement, this
Remarketing Agreement, the Limited Offering Memorandum and all other agreements
and documents contemplated by such documents, and (iv) the cost of obtaining any
rating on the Notes.
Section 4.03. Term.
----
This Remarketing Agreement will terminate upon the effective date of
the resignation or removal of McDonald Investments Inc. as Remarketing Agent in
accordance with the provisions of this Remarketing Agreement and Section 12.01
of the Indenture.
Upon the termination of this Remarketing Agreement, the provisions of
Section 4.01 hereof will continue to remain in effect and any Notes or moneys
then held by McDonald Investments Inc. as Remarketing Agent will be delivered to
the successor remarketing agent or, if there is no successor, to the Trustee.
Section 4.04. Remarketing Agent's Performance.
-------------------------------
The duties and obligations of the Remarketing Agent shall be
determined solely by the express provisions of this Remarketing Agreement and
the Indenture, and the Remarketing Agent shall not be responsible for the
performance of any duties and obligations other than as are specifically set
forth in this Remarketing Agreement and the Indenture, and no implied covenants
or obligations shall be read into this Remarketing Agreement or the Indenture
against the Remarketing Agent. The Remarketing Agent may conclusively rely upon
any notice or document given or furnished to it, and conforming to the
requirements of this Remarketing Agreement or the Indenture, and the Remarketing
Agent may rely and shall be protected in acting upon such notice or any document
reasonably believed by it to be genuine and to have been given, signed or
presented by the proper party or parties. The Remarketing Agent will use its
best efforts to comply with all applicable laws and regulations in the
performance of its duties and obligations hereunder and under the Indenture and
use its best efforts to perform such duties and obligations.
Section 4.05. Notices.
-------
Unless otherwise specified, any notices, requests or other
communications given or made hereunder or pursuant hereto shall be made in
writing and shall be deemed to have been validly given or made if either duly
mailed by certified or registered mail, return receipt requested, or hand
delivered, or overnight mail, or facsimile, addressed as follows: if to the
Issuer, Aerovox Incorporated, 740 Belleville Avenue, New Bedford, Massachusetts
02745, Attention: President, with a copy to Stanley B. Kay, Esq., 85 Wells
Avenue, Suite 200, Newton, Massachusetts 02459-3215, and if to the Remarketing
Agent, McDonald Investments Inc., 800 Superior Avenue, 17th Floor, Fixed Income
Department, Cleveland, Ohio 44114. The Notice Address shall constitute, for the
purposes set forth in the Indenture, the principal office of McDonald
Investments Inc. as Remarketing Agent.
-6-
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Remarketing Agent have caused
this Remarketing Agreement to be duly executed by their duly authorized
representatives, respectively, as of the date first above written.
AEROVOX INCORPORATED
By: ROBERT D. ELLIOTT
Robert D. Elliott
President and Chief Executive Officer
MCDONALD INVESTMENTS INC.
By: JEFFREY S. FREESE
Jeffrey S. Freese, Managing Director
-7-
<PAGE>
Exhibit 4.18
================================================================================
TRUST INDENTURE
between
AEROVOX INCORPORATED
and
THE HUNTINGTON NATIONAL BANK, AS TRUSTEE
$10,170,000
AEROVOX INCORPORATED
TAXABLE ADJUSTABLE RATE NOTES
SERIES 2000
Dated as of March 1, 2000
================================================================================
<PAGE>
Exhibit 4.18
TABLE OF CONTENTS
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Page
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ARTICLE I
DEFINITIONS
Section 1.01 Definitions.............................................................................. 11
ARTICLE II
THE NOTES
Section 2.01. Amount, Terms and Issuance of Notes...................................................... 19
Section 2.02. Designation, Denominations and Maturity.................................................. 19
Section 2.03. Registered Notes Required; Note Registrar and Note Register.............................. 22
Section 2.04. Transfer and Exchange.................................................................... 23
Section 2.05. Delivery of Notes........................................................................ 24
Section 2.06. Restrictions on Transfer................................................................. 24
Section 2.07. Execution................................................................................ 25
Section 2.08. Authentication; Authenticating Agent..................................................... 25
Section 2.09. Payment of Principal and Interest Rights Preserved....................................... 26
Section 2.10. Persons Deemed Owners.................................................................... 27
Section 2.11. Mutilated, Destroyed, Lost or Stolen Note................................................ 27
Section 2.12. Temporary Notes.......................................................................... 28
Section 2.13. Cancellation of Surrendered Notes........................................................ 28
ARTICLE III
PURCHASE AND REMARKETING OF NOTES
Section 3.01. Purchase of Notes on Demand; Mandatory Purchase.......................................... 29
Section 3.02. Remarketing of Notes..................................................................... 31
Section 3.03. Purchase of Notes - Undelivered Notes.................................................... 32
Section 3.04. Delivery of Remarketed or Purchased Notes................................................ 32
Section 3.05. Notes Pledged to the Credit Facility Issuer.............................................. 33
Section 3.06. Drawings on Credit Facility.............................................................. 34
Section 3.07. Delivery of Proceeds of Sale............................................................. 34
Section 3.08. Limitation on Remarketing................................................................ 34
ARTICLE IV
PROJECT FUND; PROCEEDS OF NOTES
Section 4.01. Project Fund............................................................................. 35
Section 4.02. Proceeds of Notes........................................................................ 35
</TABLE>
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ARTICLE V
REVENUES AND APPLICATION THEREOF; FUNDS
Section 5.01. Revenues to Be Paid to the Trustee; Payments by Issuer................................... 37
Section 5.02. Note Fund................................................................................ 37
Section 5.03. Revenues to Be Held for All Noteholders; Certain Exceptions.............................. 39
ARTICLE VI
CREDIT FACILITIES
Section 6.01. Initial Letter of Credit................................................................. 40
Section 6.02. Expiration............................................................................... 41
Section 6.03. Alternate Credit Facilities.............................................................. 41
Section 6.04. Notices of Expiration and/or Replacement of Credit Facility.............................. 42
ARTICLE VII
INVESTMENT OR DEPOSIT OF MONEYS
Section 7.01. Deposits................................................................................. 43
Section 7.02. Investment or Deposit of Note Fund and Project Fund...................................... 43
ARTICLE VIII
REDEMPTION OF NOTES
Section 8.01. Redemption Dates and Prices.............................................................. 44
Section 8.02. Issuer Direction of Optional Redemption.................................................. 44
Section 8.03. Selection of Notes to be Called for Redemption........................................... 44
Section 8.04. Notice of Redemption..................................................................... 44
Section 8.05. Notes Redeemed in Part................................................................... 45
Section 8.06. No Mandatory Sinking Fund Requirements................................................... 45
ARTICLE IX
COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE ISSUER
Section 9.01. Appointment of Paying Agent.............................................................. 46
Section 9.02. Existence; Compliance with Laws.......................................................... 46
Section 9.03. Further Assurances....................................................................... 47
Section 9.04. Observance and Performance of Representations, Covenants, Agreements, Authority and
Actions.................................................................................. 47
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.01. Events of Default Defined................................................................ 48
Section 10.02. Acceleration and Annulment Thereof....................................................... 49
Section 10.03. Other Remedies........................................................................... 50
Section 10.04. Legal Proceedings by Trustee............................................................. 50
</TABLE>
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Section 10.05. Discontinuance of Proceedings by Trustee................................................. 50
Section 10.06. Noteholders May Direct Proceedings....................................................... 50
Section 10.07. Limitations on Actions by Noteholders.................................................... 51
Section 10.08. Trustee May Enforce Rights Without Possession of Notes................................... 51
Section 10.09. Remedies Not Exclusive................................................................... 51
Section 10.10. Delays and Omissions Not to Impair Rights................................................ 51
Section 10.11. Application of Moneys in Event of Default................................................ 51
ARTICLE XI
THE TRUSTEE
Section 11.01. Acceptance of Trust...................................................................... 53
Section 11.02. No Responsibility for Recitals, etc...................................................... 53
Section 11.03. Trustee May Act Through Agents; Answerable Only for Willful Misconduct or Negligence..... 54
Section 11.04. Compensation and Indemnity............................................................... 54
Section 11.05. Notice of Default; Right to Investigate.................................................. 54
Section 11.06. Obligation to Act........................................................................ 55
Section 11.07. Reliance................................................................................. 55
Section 11.08. Trustee May Deal in Notes................................................................ 56
Section 11.09. Construction of Ambiguous Provisions..................................................... 56
Section 11.10. Resignation of Trustee................................................................... 56
Section 11.11. Removal of Trustee....................................................................... 56
Section 11.12. Appointment of Successor Trustee......................................................... 56
Section 11.13. Qualification of Successor............................................................... 57
Section 11.14. Instruments of Succession................................................................ 57
Section 11.15. Merger of Trustee........................................................................ 57
Section 11.16. Trustee Not Required to Expend or Risk Own Funds......................................... 57
ARTICLE XII
THE REMARKETING AGENT AND THE TENDER AGENT
Section 12.01. The Remarketing Agent.................................................................... 59
Section 12.02. The Tender Agent......................................................................... 50
Section 12.03. Notices.................................................................................. 61
ARTICLE XIII
ACTS OF NOTEHOLDERS; EVIDENCE OF OWNERSHIP
Section 13.01. Acts of Noteholders; Evidence of Ownership............................................... 62
ARTICLE XIV
AMENDMENTS AND SUPPLEMENTS
Section 14.01. Amendments and Supplements Without Noteholders' Consent.................................. 63
Section 14.02. Amendments with Noteholders' and Credit Facility Issuer's Consent........................ 64
Section 14.03. Amendment of Credit Facility............................................................. 64
</TABLE>
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Section 14.04. Trustee Authorized to Join in Amendments and Supplements; Reliance on Counsel............ 64
ARTICLE XV
DEFEASANCE
Section 15.01. Defeasance............................................................................... 65
ARTICLE XVI
MISCELLANEOUS PROVISIONS
Section 16.01. Deposit of Funds for Payment of Notes.................................................... 67
Section 16.02. Effect of Purchase of Notes.............................................................. 67
Section 16.03. No Rights Conferred on Others............................................................ 67
Section 16.04. Illegal, etc. Provisions Disregarded.................................................... 67
Section 16.05. Substitute Notice........................................................................ 68
Section 16.06. Notices.................................................................................. 68
Section 16.07. Successors and Assigns................................................................... 69
Section 16.08. Headings for Convenience Only............................................................ 69
Section 16.09. Counterparts............................................................................. 69
Section 16.10. Credits Under Agreement.................................................................. 69
Section 16.11. Applicable Law........................................................................... 69
</TABLE>
EXHIBIT A FORM OF DISBURSEMENT REQUEST
iv
<PAGE>
EXHIBIT 4.18
TRUST INDENTURE
THIS TRUST INDENTURE dated as of March 1, 2000 is made by and between
Aerovox Incorporated, a Delaware corporation (the "Issuer"), and THE HUNTINGTON
NATIONAL BANK, as Trustee (the "Trustee"), a national banking association
authorized to exercise corporate trust powers in the United States of America,
under the following circumstances:
A. The Issuer has determined to issue and sell its Taxable Adjustable
Rate Notes, Series 2000 (the "Notes") in the maximum aggregate principal amount
of $10,170,000 to provide financing for the construction of a facility, purchase
of related equipment and for the related costs and expenses associated therewith
(the "Project").
B. The Notes will be secured by this Indenture, and the Issuer is
authorized to execute and deliver this Indenture and to do or cause to be done
all acts provided or required herein to be performed on its part.
C. The Issuer has elected to cause, and is causing to be delivered to the
Trustee, an irrevocable direct pay letter of credit dated the date of the Notes
(the "Letter of Credit") issued by KeyBank National Association (the "Bank") in
an amount which shall at all times include the principal amount of the Notes,
plus an amount equal to 98 days' interest on the Notes at ten percent (10%) per
annum. The term of the Letter of Credit is until March 22, 2005. The Bank will
be entitled to reimbursement by the Issuer and certain of its affiliates for all
amounts drawn under the Letter of Credit pursuant to a Reimbursement Agreement
dated as of March 1, 2000 between the Issuer and the Bank, a copy of which has
been delivered to the Trustee.
D. The Notes shall be in substantially the following form:
1
<PAGE>
FORM OF NOTE
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to Issuer or its agent for registration
of transfer, exchange, or payment, and any certificate issued
is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WORNGFUL inasmuch as the registered owner hereof,
Cede & Co., has an interest herein.
$10,170,000.00 No. R-1
AEROVOX INCORPORATED
TAXABLE ADJUSTABLE RATE NOTES
SERIES 2000
MATURITY DATE ORIGINAL ISSUANCE CUSIP
-------------
DATE NUMBER
------------------ ------
March 1, 2015 March 22, 2000 00808M AA 3
CEDE & CO.
TEN MILLION ONE HUNDRED SEVENTY THOUSAND DOLLARS
Aerovox Incorporated, a Delaware corporation (the "Issuer"), for value
received, hereby promises to pay (but only out of the sources hereinafter
mentioned) to the registered owner hereof, or registered assigns, on the
Maturity Date set forth above, unless this Note shall have been called for
redemption in whole or in part and payment of the redemption price shall have
been duly made or provided for, upon surrender hereof, the principal sum set
forth above and to pay (but only out of the sources hereinafter mentioned) to
the registered owner hereof, interest thereon from the date to which interest
has accrued and been paid or duly provided for, or, if prior to the first
Interest Payment Date, from the Original Issuance Date set forth above of this
Note, until payment of said principal sum has been made or provided for,
initially at the Weekly Rate described determined from time to time and payable
on the dates set forth herein and in the Indenture referred to below, commencing
on the Interest Payment Date in June, 2000, and interest on overdue principal,
and to the extent permitted by law, on overdue interest, as provided in the
Indenture. Principal and interest shall be paid in coin or currency of the
United States of America which, at the time of payment, is legal tender for the
payment of public and private debts. Interest so payable, and punctually paid or
duly provided for, on any Interest Payment
2
<PAGE>
Date will, except as provided in the Indenture, be paid to the person in whose
name this Note is registered at the close of business on the Regular Record Date
for such interest. Any such interest not so punctually paid or duly provided for
shall forthwith cease to be payable to the registered owner on such Regular
Record Date, and may be paid to the person in whose name this Note is registered
at the close of business on a Special Record Date for the payment of such
defaulted interest to be fixed by the Trustee, or may be paid, at any time in
any other lawful manner, all as more fully provided in the Indenture. The
principal or redemption price of this Note shall be paid at the principal
corporate trust office of The Huntington National Bank, Columbus, Ohio or at the
duly designated office of any duly appointed alternate or successor Paying
Agent. The interest on this Note shall be payable by check mailed to the
registered holder of this Note at such owner's address as it appears on the Note
Register of the Issuer; provided that at the request of the registered holder of
at least $1,000,000 aggregate principal of Notes, interest on such Notes shall
be payable by wire transfer in immediately available funds to the bank account
number of such holder within the United States appearing on the Note Register;
and provided further that interest payable at maturity shall be paid only upon
presentation and surrender of this Note.
This Note is one of a duly authorized series designated Taxable Adjustable
Rate Notes, Series 2000 (the "Notes") limited in a maximum aggregate principal
amount of $10,170,000 issued under a Trust Indenture dated as of March 1, 2000
(the "Indenture"), between the Issuer and The Huntington National Bank,
Columbus, Ohio, as trustee (the "Trustee").
Notwithstanding anything herein to the contrary, when this Note is
registered in the name of a Depository (as hereinafter defined in the Indenture)
or its nominee, the principal and redemption price and tender purchase price of
and interest on this Note shall be payable in federal funds delivered or
transmitted to the Depository or its nominee.
If an Event of Default as defined in the Indenture occurs, the principal of
all Notes issued under the Indenture may become due and payable upon the
conditions and in the manner and with the effect provided in the Indenture.
This Note is not valid unless the Certificate of Authentication endorsed
hereon is duly executed.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS NOTE HEREINAFTER SET
FORTH, WHICH PROVISIONS SHALL HAVE THE SAME EFFECT FOR ALL PURPOSES AS IF SET
FORTH IN FULL HEREIN.
It is certified and recited that there have been performed and have
happened in regular and due form, as required by law, all acts and conditions
necessary to be done or performed by the Issuer or to have happened (i)
precedent to and in the issuing of the Notes in order to make them legal, valid
and binding obligations of the Issuer, and (ii) precedent to and in the
execution and delivery of the Indenture; that payment in full for the Notes has
been received.
3
<PAGE>
IN WITNESS WHEREOF, Aerovox Incorporated has caused this Note to be
executed on its behalf by the manual or facsimile signature of a duly authorized
officer, as of the date shown above.
Aerovox Incorporated
By:_______________________________
Title:____________________________
[Form of Certificate of Authentication]
This Note is one of the Notes described in the within mentioned Indenture.
Date of Authentication: The Huntington National Bank, as Trustee
- ----------------------
________________________________ By:_______________________________
Authorized Signer
The Notes are payable solely from moneys held by the Trustee under the
Indenture for such purpose, including moneys drawn by the Trustee under the
Letter of Credit referred to below or such other credit facility as may then be
held by the Trustee under the Indenture for the benefit of the Noteholder (the
Letter of Credit or any such other credit facility is hereinafter referred to as
the "Credit Facility"). Except as otherwise specified in the Indenture, this
Note is entitled to the benefits of the Indenture equally and ratably both as to
principal (and redemption price) and interest with all other Notes issued under
the Indenture, to which reference is made for a description of the rights of the
owners of the Notes, the rights and obligations of the Issuer, the rights,
duties and obligations of the Trustee, and the provisions relating to amendments
to and modifications of the Indenture.
This Note initially shall bear interest at the Weekly Rate (hereinafter
described), which rate shall continue in effect until converted to a different
interest rate or rates determined for the "Interest Rate Mode" (as described
more fully in Section 2.02 of the Indenture) selected by the Issuer. The
"Interest Rate Modes" which may be selected are as follows: (i) a Weekly Rate in
which the interest rate is determined on the seventh day preceding conversion to
a Weekly Rate and on each Wednesday thereafter or, if not a Business Day, on the
next succeeding Business Day and (ii) a Semi-Annual Rate in which the interest
rate is determined on the tenth Business Day preceding each Semi-Annual Rate
Period. The Issuer may from time to time convert the Interest Rate Mode for the
Notes to the other Interest Rate Mode in accordance with the terms of the
Indenture.
4
<PAGE>
Interest on this Note, at the interest rate or rates for each Interest Rate
Mode, is payable (a) while the Notes bear interest at the Weekly Rate, on the
first Thursday of each March, June, September, and December and at maturity, and
(b) while the Notes bear interest at the Semi-Annual Rate, on March 1 and
September 1 of each year and at maturity (each date on which interest shall be
paid being an "Interest Payment Date"). Interest on this Note shall be computed
on the basis of a year of 365 or 366 days, as appropriate, for the actual number
of days elapsed, while the Interest Rate Mode is the Weekly Rate, and on the
basis of a 360-day year consisting of twelve 30-day months, while the Interest
Rate Mode is the Semi-Annual Rate. The interest rate or rates for each Interest
Rate Mode for the Notes shall be determined by the Remarketing Agent on the
dates and at such times as specified in Section 2.02 of the Indenture. If the
Remarketing Agent fails to determine the interest rate in accordance with
Section 2.02 of the Indenture, the interest rate on this Note shall be the
interest rate in effect for the previous interest rate period. Each interest
rate determined by the Remarketing Agent shall be the minimum rate of interest
necessary, in the judgment of the Remarketing Agent, to enable the Remarketing
Agent to sell the Notes at a price equal to the principal amount thereof, plus
accrued interest, if any. Notwithstanding the foregoing, the interest rate borne
by this Note shall not exceed the lesser of (i) fifteen percent (15%) per annum
and (ii) so long as any Notes are entitled to the benefit of a Credit Facility,
the maximum interest rate specified in the Credit Facility.
The Issuer has caused a Letter of Credit issued by KeyBank National
Association (the "Bank") to be delivered to the Trustee (the "Letter of
Credit"). The Trustee shall be entitled under the Letter of Credit to draw up to
an amount equal to the principal of the outstanding Notes plus an amount equal
to 98 days' accrued interest on the outstanding Notes at a rate of ten percent
(10%) per annum to pay principal or purchase price (but not the redemption
premium) of and interest on the Notes (other than Notes held pursuant to Section
3.05 of the Indenture or owned by the Issuer) on or prior to March 22, 2005 or,
under certain circumstances, such earlier or later date as may be permitted by
the Letter of Credit. Subject to the provisions of the Indenture, the Issuer
may, but is not required to, provide another Credit Facility to replace the
Letter of Credit or the then current Credit Facility. This Note will become
subject to mandatory purchase upon the expiration (if earlier than the maturity
of the Notes) or replacement of the current Credit Facility.
REDEMPTION OF NOTES
-------------------
This Note shall be subject to optional redemption, in whole on any date or
in part on any Interest Payment Date, at a redemption price of 100% of the
principal amount redeemed.
Any notice of redemption, identifying the Notes or portions thereof to be
redeemed, shall be given by first class mail to the registered owner of each
Note to be redeemed in whole or in part at the address shown on the Note
Register of the Issuer not more than 60 days and not fewer than 30 days prior to
the redemption date. All Notes so called for redemption will cease to bear
interest on the specified redemption date, provided funds for their redemption
and any accrued interest payable on the redemption date are on deposit at the
principal place of payment at that time.
Notice of any redemption hereunder with respect to Notes held under a book-
entry system shall be given by the Registrar or the Trustee only to the
Depository, or its nominee, as the
5
<PAGE>
holder of such Notes. Selection of book-entry interests in the Notes called for
redemption is the responsibility of the Depository and any failure of any Direct
Participant, Indirect Participant or Beneficial Owner to receive such notice and
its contents or effect will not affect the validity of such notice or any
proceedings for the redemption of such Notes.
PURCHASE OF NOTES
-----------------
This Note shall be subject to mandatory purchase in whole (i) on the
effective date of the Conversion of the Interest Rate Mode for the Notes, (ii)
on the Interest Payment Date that is to be the effective date of an Alternate
Credit Facility, (iii) on the Interest Payment Date immediately preceding (by at
least 15 days) the date of the expiration of the current Credit Facility, and
(iv) on a date determined by the Trustee (which date must be within the period
for which principal and interest on the Notes are covered by the amounts
available under the current Credit Facility), upon an Event of Bankruptcy (as
defined in the Indenture) of the Issuer, at a purchase price equal to 100% of
the outstanding principal amount hereof plus accrued interest, if any.
If the Interest Rate Mode is the Weekly Rate, this Note shall be purchased
at the option of the registered owner hereof upon demand by such registered
owner, on any Business Day at a purchase price equal to the principal amount
hereof, plus accrued interest, if any, to the Purchase Date, upon written notice
to the Tender Agent on or before 4:00 p.m. (Columbus, Ohio time) on a Business
Day not later than the seventh calendar day prior to the Purchase Date. If the
Interest Rate Mode is the Semi-Annual Rate, this Note shall be purchased on the
demand of the registered owner hereof on any Interest Payment Date at a purchase
price equal to the principal amount hereof, upon written notice to the Tender
Agent on a Business Day not later than the eighth Business Day prior to such
Purchase Date.
Any notice in connection with a demand for purchase of this Note as set
forth in the preceding paragraphs hereof shall be given at the address of the
Tender Agent designated to the Trustee and shall (A) state the number and
principal amount (or portion thereof in an authorized denomination) of this Note
to be purchased; (B) state the Purchase Date on which this Note shall be
purchased and (C) irrevocably request such purchase and agree to deliver this
Note to the Tender Agent on the Purchase Date. ANY SUCH NOTICE SHALL BE
IRREVOCABLE WITH RESPECT TO THE PURCHASE FOR WHICH SUCH DIRECTION WAS DELIVERED
AND, UNTIL SURRENDERED TO THE TENDER AGENT, THIS NOTE OR ANY PORTION HEREOF WITH
RESPECT TO WHICH SUCH DIRECTION WAS DELIVERED SHALL NOT BE TRANSFERABLE. This
Note must be delivered (together with an appropriate instrument of transfer
executed in blank in form satisfactory to the Tender Agent) at the principal
office of the Tender Agent at or prior to 12:00 noon (Columbus, Ohio time) on
the date specified in the aforesaid notice in order for the owner hereof to
receive payment in same-day funds of the purchase price due on such Purchase
Date. NO REGISTERED OWNER SHALL BE ENTITLED TO PAYMENT OF THE PURCHASE PRICE DUE
ON SUCH PURCHASE DATE EXCEPT UPON SURRENDER OF THIS NOTE AS SET FORTH HEREIN. No
purchase of Notes pursuant to Section 3.01 of the Indenture shall be deemed to
be a payment or redemption of such Notes or any portion thereof within the
meaning of the Indenture.
6
<PAGE>
Except as otherwise provided herein, if less than all the Notes are to be
redeemed, the particular Notes to be called for redemption shall be selected by
any method determined by the Trustee to be fair and reasonable; provided,
however, that in connection with any redemption of Notes the Trustee shall first
select for redemption any Notes held by the Issuer or held by or pledged to the
Bank pursuant to Section 3.05 of the Indenture.
BY ACCEPTANCE OF THIS NOTE, THE REGISTERED OWNER HEREOF AGREES THAT THIS
NOTE WILL BE PURCHASED, WHETHER OR NOT SURRENDERED, (A) ON THE APPLICABLE
PURCHASE DATE IN CONNECTION WITH ANY MANDATORY PURCHASE AS DESCRIBED ABOVE, OR
(B) ON ANY PURCHASE DATE SPECIFIED BY THE REGISTERED OWNER HEREOF IN THE
EXERCISE OF THE RIGHT TO DEMAND PURCHASE OF THIS NOTE AS DESCRIBED ABOVE. IN
SUCH EVENT, THE REGISTERED OWNER OF THIS NOTE SHALL NOT BE ENTITLED TO RECEIVE
ANY FURTHER INTEREST HEREON, SHALL HAVE NO FURTHER RIGHTS UNDER THIS NOTE OR THE
INDENTURE EXCEPT TO PAYMENT OF THE PURCHASE PRICE HELD THEREFOR, AND SHALL
THEREAFTER HOLD THIS NOTE AS AGENT FOR THE TENDER AGENT.
The initial Remarketing Agent under the Indenture is McDonald Investments
Inc. and the initial Tender Agent under the Indenture is The Huntington National
Bank The Remarketing Agent and the Tender Agent may be changed at any time in
accordance with the Indenture.
The Notes are issuable only as fully registered notes in the denominations
of $100,000 and in any integral multiple of $5,000 in excess thereof and shall
be originally issued only to a Depository to be held in a book-entry system and:
(i) the Notes shall be registered in the name of the Depository or its nominee,
as Noteholder, and immobilized in the custody of the Depository; (ii) unless
otherwise requested by the Depository, there shall be a single Note certificate
for each Note maturity; and (iii) the Notes shall not be transferable or
exchangeable, except for transfer to another Depository or another nominee of a
Depository, without further action by the Issuer. While the Notes are in book-
entry only form, Notes in the form of physical certificates shall only be
delivered to the Depository. If any Depository determines not to continue to act
as a Depository for the Notes for use in a book-entry system, the Issuer may
attempt to have established a securities depository/book-entry system
relationship with another qualified Depository under the Indenture. If the
Issuer does not or is unable to do so, the Issuer and the Trustee, after the
Trustee has made provision for notification to the Beneficial Owners of book-
entry interests by the then Depository, shall permit withdrawal of the Notes
from the Depository, and authenticate and deliver Note certificates in fully
registered form (in denominations of $100,000 and in any integral multiple of
$5,000 in excess thereof) to the assignees of the Depository or its nominee.
While a Depository is the sole holder of the Notes, delivery or notation of
partial redemption or tender for purchase of Notes shall be effected in
accordance with the provisions of the Letter of Representations, as defined in
the Indenture.
In addition to the words and terms defined elsewhere in this Note, the
following terms shall have the following meanings:
7
<PAGE>
"Beneficial Owner" means with respect to the Notes, a Person owning a
Beneficial Ownership Interest therein, as evidenced to the satisfaction of the
Trustee.
"Beneficial Ownership Interest" means the beneficial right to receive
payments and notices with respect to the Notes which are held by the Depository
under a book-entry system.
"book-entry form" or "book-entry system" means, with respect to the Notes,
a form or system, as applicable, under which (i) the Beneficial Ownership
Interests may be transferred only through a book-entry and (ii) physical Note
certificates in fully registered form are registered only in the name of a
Depository or its nominee as Noteholder, with the physical Note certificates
"immobilized" in the custody of the Depository. The book-entry system maintained
by and the responsibility of the Depository and not maintained by or the
responsibility of the Issuer or the Trustee is the record that identifies, and
records the transfer of the interests of, the owners of book-entry interests in
the Notes.
"Depository" means any securities depository that is a clearing agency
under federal law operating and maintaining, with its participants or otherwise,
a book-entry system to record ownership of book-entry interests in Notes, and to
effect transfers of book-entry interests in Notes, and includes and means
initially The Depository Trust Company (a limited purpose trust company), New
York, New York.
Subject to the Indenture, the Notes are issuable as registered Notes in the
denominations of $100,000 and any larger denomination constituting an integral
multiple of $5,000. Subject to the limitations provided in the Indenture and
upon payment of any tax or governmental charge, if any, Notes may be exchanged
for a like aggregate principal amount of Notes of other authorized
denominations.
This Note is transferable by the registered owner hereof or his duly
authorized attorney at the principal corporate trust office of The Huntington
National Bank, as Note Registrar, in the City of Columbus, Ohio, upon surrender
of this Note, accompanied by a duly executed instrument of transfer in form and
with guaranty of signature satisfactory to the Note Registrar, subject to the
restrictions on transfer imposed by Section 2.06 of the Indenture and such
reasonable regulations as the Issuer or the Note Registrar may prescribe, and
upon payment of any tax or other governmental charge incident to such transfer,
PROVIDED, THAT, IF MONEYS FOR THE MANDATORY PURCHASE OF THIS NOTE HAVE BEEN
DEPOSITED WITH THE TRUSTEE UNDER THE INDENTURE, THIS NOTE SHALL NOT BE
TRANSFERABLE TO ANYONE UNTIL DELIVERED TO THE TENDER AGENT. Upon any such
transfer, a new Note or Notes in the same aggregate principal amount will be
issued to the transferee. Except as set forth in this Note and as otherwise
provided in the Indenture, the person in whose name this Note is registered
shall be deemed the owner hereof for all purposes, and the Issuer, any Paying
Agents, the Note Registrar, the Tender Agent, the Remarketing Agent and the
Trustee shall not be affected by any notice to the contrary.
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<PAGE>
[Form of Abbreviations]
The following abbreviations, when used in the inscription on the face of
the within Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with the right of
survivorship and not as tenants in
common
UNIFORM GIFT MIN ACT - _____________ Custodian_________________
(Cust) (Minor)
under Uniform Gifts to Minors
Act _________________________
(State)
Additional abbreviations may also be used though
not in the above list.
[Form of Assignment]
For value received, the undersigned hereby sells, assigns and transfers
unto ______________________________________ the within Note and all rights
thereunder, and hereby irrevocably constitutes and appoints
_______________________________________, attorney to transfer the said Note on
the Note Register, with full power of substitution in the premises.
Dated: ____________________________________ ________________________________
Social Security Number or
Employer Identification
Number of
Transferee:________________________________
Signature Guaranteed:______________________
NOTICE: The assignor's signature to this Assignment must correspond with the
name as it appears on the face of the within Note in every particular
without alteration, enlargement or any change whatsoever.
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<PAGE>
E. Pursuant to the Reimbursement Agreement, the Issuer has caused the
Letter of Credit to be delivered to the Trustee.
F. The execution and delivery of the Notes and of this Indenture have
been duly authorized and all things necessary to make the Notes, when executed
by the Issuer and authenticated by the Trustee, valid and binding legal
obligations of the Issuer and to make this Indenture a valid and binding
agreement, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that to provide for first, the
payment of principal, purchase price or redemption price (as the case may be) in
respect of all Notes issued and outstanding under this Indenture, together with
interest thereon, the rights of the Noteholders and the performance of the
covenants contained in the Notes and herein, and second, the payment to the
Credit Facility Issuer and performance by the Issuer of the Issuer's
reimbursement and other obligations under the Reimbursement Agreement, the
Issuer has delivered the Letter of Credit to the Trustee and the Issuer does
hereby sell, assign, transfer, set over and pledge unto The Huntington National
Bank, Columbus, Ohio, Trustee, its successors in trust and its assigns forever,
all of the right, title and interest of the Issuer in and to the Letter of
Credit or any other Credit Facility held by the Trustee under this Indenture and
all amounts on deposit from time to time in the Note Fund and the Project Fund,
subject to the provisions of this Indenture permitting the application thereof
for the purposes and on the terms and conditions set forth herein.
TO HAVE AND TO HOLD in trust, nevertheless, first, for the equal and
-----
ratable benefit and security of all present and future owners of the Notes
issued and to be issued under this Indenture, without preference, priority or
distinction as to lien or otherwise (except as herein expressly provided), of
any one Note over any other Note upon the terms and subject to the conditions
hereinafter set forth and, second, to the extent provided herein, for the
------
benefit and security of the Credit Facility Issuer.
[Balance of Page Intentionally Left Blank]
10
<PAGE>
ARTICLE I
Definitions
-----------
Section 1.01 Definitions.
-----------
In this Indenture and any indenture supplemental hereto (except as
otherwise expressly provided for or unless the context otherwise requires) the
singular includes the plural and the masculine includes the feminine.
In addition, each of the following terms shall have the meaning specified
in this Article, unless the context otherwise requires:
"Affiliate" of any specified entity means any other entity directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified entity and "control", when used with respect to any
specified entity, means the power to direct the management and policies of such
entity, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Alternate Credit Facility" means any direct pay letter of credit or other
credit enhancement or support facility that has terms which are the same in all
material respects (except for the term and maximum interest rate but including
coverage of accrued interest on the Notes for 98 days if the Notes bear interest
at the Weekly Rate or for 183 days if the Notes bear interest at the Semi-Annual
Rate) as the then current Credit Facility and (i) shall have a term of not less
than one year, (ii) shall be issued by a bank, a trust company or other
financial institution or credit provider, and (iii) the Trustee shall have
received the opinions required by Section 6.03.
"Authenticating Agent" means the Trustee and any agent so designated in and
appointed pursuant to Section 2.08.
"Authorized Newspaper" means a newspaper in English customarily published
each Business Day and generally circulated in the Borough of Manhattan, City and
State of New York.
"Available Moneys" means with respect to any date, (i) moneys which have
been paid to the Trustee by the Issuer (or any Affiliate of the Issuer), any
Guarantor (or any Affiliate of a Guarantor) or any Insider of any of the
foregoing which, in each case, were at all times since their deposit with the
Trustee held in a separate and segregated subaccount or subaccounts in the
Ineligible Moneys Account in which no moneys not deposited on the same date were
at any time held, and have been on deposit with the Trustee in such subaccount
in the Ineligible Moneys Account for at least 95 days during, at and prior to
which no Event of Bankruptcy shall have occurred, and have thereafter been
transferred to the Eligible Moneys Account; (ii) moneys on deposit with the
Tender Agent representing proceeds from the resale by the Remarketing Agent of
Notes as described in Section 3.02 hereof to persons other than the Issuer, any
Guarantor, or any Affiliate of the Issuer or of any Guarantor or any Insider of
any of them, which, in each case,
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<PAGE>
were transferred directly to the Tender Agent and at all times since their
deposit with the Tender Agent held in a separate and segregated account or
accounts or subaccount or subaccounts in which no moneys which were not
Available Moneys were at any time held; (iii) moneys drawn under a Credit
Facility which in each case were held, at all times since their deposit into the
Credit Facility Account or transfer to the Tender Agent, in a separate and
segregated account in which no moneys (other than those drawn under a Credit
Facility) were at any time held; and (iv) proceeds from investment of the
foregoing, provided such proceeds were retained in the Account in which they
were earned. For purposes of this definition, investments of moneys on deposit
in the Ineligible Moneys Account shall be deemed deposited therein as of the day
of their posting by the Trustee and shall be held in a separate and segregated
subaccount in the Ineligible Moneys Account for the prescribed period until
transfer to the Eligible Moneys Account.
"Bank" means KeyBank National Association, and its successors and assigns.
"Bankruptcy Code" means Title 11 of the United States Code, as it is
amended from time to time.
"Beneficial Owner" means, with respect to the Notes, a Person owning a
Beneficial Ownership Interest therein, as evidenced to the satisfaction of the
Trustee.
"Beneficial Ownership Interest" means the beneficial right to receive
payments and notices with respect to the Notes which are held by the Depository
under a book-entry system.
"book-entry form" or "book-entry system" means, with respect to the Notes,
a form or system, as applicable, under which (i) the Beneficial Ownership
Interests may be transferred only through a book-entry and (ii) physical Note
certificates in fully registered form are registered only in the name of a
Depository or its nominee as Noteholder, with the physical Note certificates
"immobilized" in the custody of the Depository. The book-entry system maintained
by and the responsibility of the Depository and not maintained by or the
responsibility of the Issuer or the Trustee is the record that identifies, and
records the transfer of the interests of, the owners of book-entry interests in
the Notes.
"Business Day" means any day of the year other than (i) a Saturday or
Sunday, (ii) any day on which banks located in either Albany, New York, or the
city in which the Principal Office of the Trustee is located are required or
authorized by law to remain closed, or (iii) any day on which the New York Stock
Exchange is closed.
"Conversion" means any conversion from time to time in accordance with the
terms of this Indenture of the Notes from one Interest Rate Mode to the other
Interest Rate Mode.
"Conversion Date" means the first date any Conversion becomes effective.
"Counsel" means an attorney-at-law or law firm (who may be counsel for the
Issuer), acceptable to the Trustee.
"Credit Facility" means the Letter of Credit or any Alternate Credit
Facility delivered to the Trustee pursuant to Article VI.
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<PAGE>
"Credit Facility Account" means the account of that name established in the
Note Fund pursuant to Section 5.02.
"Credit Facility Issuer" means the Bank with respect to the Letter of
Credit or the institution issuing any Alternate Credit Facility.
"Default Rate" means the Prime Rate plus one percent (1%).
"Depository" means any securities depository that is a clearing agency
under federal law operating and maintaining, with its participants or otherwise,
a book-entry system to record ownership of book-entry interests in Notes, and to
effect transfers of book-entry interests in Notes in book-entry form, and
includes and means initially The Depository Trust Company (a limited purpose
trust company), New York, New York.
"Designated Representative" means the person at the time designated to act
on behalf of the Issuer by written certificate furnished to the Trustee,
containing the specimen signature of that person and signed on behalf of the
Issuer by a duly designated representative thereof. That certificate may
designate an alternate or alternates. In the event that all persons so
designated become unavailable or unable to act and the Issuer fails to designate
a replacement within ten days after such unavailability or inability to act, the
Trustee may appoint an interim Designated Representative.
"Direct Participant" means a Participant as defined in the Letter of
Representations.
"Eligible Investments" means (i) Governmental Obligations; (ii) obligations
issued or guaranteed by any state or political subdivision thereof rated A or
higher by Moody's or by S&P; (iii) open market commercial or finance paper of
any corporation having a net worth in excess of $100,000,000 and which is rated
either P-l or A-l or an equivalent by Moody's or S&P; (iv) bankers' acceptances
drawn on and accepted by commercial banks; (v) investments due within 12 months
in certificates of deposit issued by, or bankers' acceptances of, the Trustee,
or of banks or trust companies organized under the laws of the United States of
America or any state thereof, which must have a reported capital and surplus of
at least $25,000,000 in dollars of the United States of America; (vi) bank
repurchase agreements, including the Trustee's, fully secured by obligations of
the type described in (i) above; (vii) variable rate demand securities
redeemable within seven (7) days or able to be tendered for remarketing or
purchase upon no more than seven (7) days' notice and secured by a credit
facility issued by a financial institution, which financial institution (or its
corporate parent) maintains a long term debt rating assigned by Moody's or S&P
which is not lower than the third highest long term debt category (without
regard to numerical or other modifiers assigned within the category) by either
Rating Service, or by both Rating Services, if rated by both Rating Services;
and (viii) shares of any so-called "money market mutual fund", including any
"money market mutual fund" which the Trustee or any of its affiliates operates
or manages in which it receives a fee, which invests solely in obligations
described in items (i) through (vii) above; and further provided that any such
investment or deposit is not prohibited by law.
"Eligible Moneys Account" means the account of that name established in the
Note Fund pursuant to Section 5.02.
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<PAGE>
"Event of Bankruptcy" means a petition in bankruptcy (or other commencement
of a bankruptcy or similar proceedings) by or against the Issuer, any Guarantor,
any Affiliate of the Issuer or any Guarantor, or any Insider of any of them as
debtor under any bankruptcy, reorganization, insolvency or other similar law as
now or hereafter in effect; provided, however, solely as used in Section
3.01(b)(iv) hereof, Event of Bankruptcy pertains only to the Issuer and not to
any Guarantor, any Affiliate of the Issuer or any Guarantor or any Insider of
the Issuer, of any Guarantor or of any Affiliate of the Issuer or any Guarantor.
"Event of Default" means any of the events specified in Section 10.01
hereof to be an Event of Default. "Default" means any event which with the
giving of notice or the lapse of time or both would constitute an Event of
Default.
"Governmental Obligations" means (a) direct obligations of the United
States of America, (b) obligations unconditionally guaranteed by the United
States of America and (c) securities or receipts evidencing ownership interests
in obligations or specified portions (such as principal or interest) of
obligations described in (a) or (b).
"Guarantor" means any guarantor of the Issuer's obligations under the
Reimbursement Agreement.
"Immediate Notice" means notice transmitted through a time-sharing
terminal, if operative as between any two parties, or if not operative, in
writing or by telephone (promptly confirmed in writing) or facsimile.
"Indenture" means this Trust Indenture as amended or supplemented at the
time in question.
"Indirect Participant" means a Person utilizing the book-entry system of
the Depository by, directly or indirectly, clearing through or maintaining a
custodial relationship with a Direct Participant.
"Ineligible Moneys Account" means the account of that name established in
the Note Fund pursuant to Section 5.02.
"Insider" means an entity referred to or described in Section 101(31) of
the United States Bankruptcy Code, assuming for this purpose that the Issuer,
any Guarantor, or any Affiliate of any of them, as applicable, is a debtor, and
any limited partner of any of the foregoing.
"Interest Payment Date" means (a) while the Notes bear interest at the
Weekly Rate, the first Thursday of each March, June, September, and December and
at maturity, and (b) while the Notes bear interest at the Semi-Annual Rate,
March 1 and September 1 of each year and at maturity. The first Interest Payment
Date for the Notes shall be the first Thursday in June, 2000. The final Interest
Payment Date for all Notes shall be the maturity date.
"Interest Period" means for all Notes the period from and including each
Interest Payment Date to and including the day next preceding the next Interest
Payment Date. The first Interest
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<PAGE>
Period for the Notes shall begin on (and include) the date of the initial
delivery of the Notes. The final Interest Period shall end on the maturity (or
redemption) date for each Note.
"Interest Rate Mode" means the Weekly Rate or the Semi-Annual Rate.
"Issuer" means Aerovox Incorporated, a Delaware corporation.
"Letter of Credit" means the Letter of Credit issued by the Bank and
conforming to the provisions of Section 6.01 hereof.
"Letter of Representations" means the Letter of Representations by and
among the Issuer, the Trustee, the Remarketing Agent, the Tender Agent and the
Depository.
"Moody's" means Moody's Investors Service, Inc., a Delaware corporation,
its successors and assigns, and, if such corporation shall be dissolved or
liquidated or shall no longer perform the functions of a securities rating
agency, "Moody's" shall be deemed to refer to any other nationally recognized
securities rating agency designated by the Trustee, with the consent of the
Issuer.
"Mortgage" means the First Leasehold Mortgage, Security Agreement,
Assignment of Leases and Rents, and Financing Statement, executed and delivered
by the Borrower and dated as of February 29, 2000
"Note" or "Notes" means any note or notes authenticated and delivered under
this Indenture.
"Note Fund" means the trust fund so designated which is established
pursuant to Section 5.02.
"Noteholder" or "holder of Notes" or "owner of Notes" means the registered
owner of any Note other than the registered owner of any Note which has been
purchased pursuant to Section 3.01 and not surrendered for payment of the
purchase price thereof.
"Note Register" and "Note Registrar" shall have the respective meanings
specified in Section 2.03.
"Note Service Charges" means, during any time period, the principal,
interest and redemption premium, if any, and purchase price required to be paid
by the Issuer on the Notes during such time period.
"Outstanding", in connection with Notes means, as of the time in question,
all Notes authenticated and delivered under this Indenture, except:
A. Notes theretofore canceled or required to be canceled under Section
2.11;
B. Notes which are deemed to have been paid in accordance with Article
XV; and
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<PAGE>
C. Notes in substitution for which other Notes have been authenticated
and delivered pursuant to Article II.
In determining whether the owners of a requisite aggregate principal amount of
Notes Outstanding have concurred in any request, demand, authorization,
direction, notice, consent or waiver under the provisions hereof, Notes which
are held by or on behalf of the Issuer (unless all of the outstanding Notes are
then owned by the Issuer) shall be disregarded for the purpose of any such
determination. Notwithstanding the foregoing, Notes so owned which have been
pledged in good faith shall not be disregarded as aforesaid if the pledgee
established to the satisfaction of the Note Registrar the pledgee's right so to
act with respect to such Notes and that the pledgee is not the Issuer.
"Paying Agent" or "Co-Paying Agent" means any national banking association,
bank and trust company or trust company appointed by the Issuer pursuant to
Section 9.01. "Principal Office" of any Paying Agent shall mean the office
thereof designated in writing to the Trustee.
"Prime Rate" means that interest rate established from time to time by the
Bank as the Bank's Prime Rate, whether or not such rate is publicly announced.
The Prime Rate may not be the lowest rate charged by the Bank for commercial or
other extensions of credit.
"Project Costs" means Project Costs as defined in Section 4.02 hereof
"Project Fund" means the trust fund so designated which is established
pursuant to Section 4.01.
"Purchase Date" means (a) if the Interest Rate Mode is the Weekly Rate, any
Business Day as set forth in Section 3.01(a)(i), (b) if the Interest Rate Mode
is the Semi-Annual Rate, any Interest Payment Date, and (c) each day that Notes
are subject to mandatory purchase pursuant to Section 3.01(b).
"Rate Period" means any period during which a single interest rate is in
effect for a Note.
"Rating Service" means Moody's, if the Notes are rated by Moody's at the
time, and S&P, if the Notes are rated by S&P at the time, and their successors
and assigns.
"Record Date" means, as the case may be, the applicable Regular or Special
Record Date.
"Regular Record Date" means, with respect to any Interest Period, the close
of business on the last Business Day of such Interest Period.
"Reimbursement Agreement" means the Reimbursement Agreement dated as of
March 1, 2000 between the Issuer and the Bank, as the same may be amended from
time to time and filed with the Trustee, and any agreement of the Issuer with a
Credit Facility Issuer setting forth the obligations of the Issuer to such
Credit Facility Issuer arising out of any payments under a Credit Facility and
which provides that it shall be deemed to be a Reimbursement Agreement for the
purpose of this Indenture.
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<PAGE>
"Remarketing Agent" means McDonald Investments Inc. and its successors as
provided in Section 12.01. "Principal Office" of the Remarketing Agent means the
office designated as such in writing to the Issuer, the Trustee and the Tender
Agent.
"Remarketing Agreement" means the Remarketing Agreement dated as of March
1, 2000 between the Issuer and the Remarketing Agent, as the same may be amended
from time to time, and any remarketing agreement between the Issuer and a
successor Remarketing Agent.
"Revenues" means (a) all amounts payable to the Trustee with respect to the
principal or redemption price of, or interest on, the Notes (i) by the Issuer as
required hereunder, (ii) upon deposit in the Note Fund from the proceeds of the
Notes; and (iii) by the Credit Facility Issuer under a Credit Facility, and (b)
investment income with respect to any moneys held by the Trustee in the Note
Fund.
"S&P" means Standard & Poor's Ratings Group, a New York corporation, its
successors and assigns, and, if such entity shall be dissolved or liquidated or
shall no longer perform the functions of a securities rating agency, "S&P" shall
be deemed to refer to any other nationally recognized securities rating agency
designated by the Trustee, with the consent of the Issuer.
"Securities Act" means the Securities Act of 1933, as amended.
"Semi-Annual Rate" means the Interest Rate Mode for the Notes in which the
interest rate on the Notes is determined in accordance with Section 2.02(c)(ii).
"Semi-Annual Rate Period" means any period beginning on, and including, the
Conversion Date to the Semi-Annual Rate and ending on, and including, the day
preceding the next Interest Payment Date thereafter and each successive six (6)
month period thereafter until the day preceding Conversion to a different
Interest Rate Mode or the maturity of the Notes.
"Special Record Date" means such date as may be fixed for the payment of
defaulted interest in accordance with Section 2.09.
"State" means the State of Maine.
"Tender Agent" means the initial and any successor tender agent appointed
in accordance with Section 12.02 hereof. "Principal Office of the Tender Agent
means the office thereof designated as such in writing to the Trustee, the
Issuer and the Remarketing Agent.
"Trustee" means The Huntington National Bank and its successor hereunder.
"Principal Office" of the Trustee means the principal corporate trust office of
the Trustee, which office at the date of acceptance by the Trustee of the duties
and obligations imposed on the Trustee by this Indenture is The Huntington
National Bank, Corporate Trust Department, 41 South High Street, HC 1112,
Columbus, Ohio 43215.
"Undelivered Note" has the meaning specified in Section 3.03(b).
"Weekly Rate" means the Interest Rate for the Notes in which the interest
rate on the Notes is determined weekly in accordance with Section 2.02(c)(i).
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<PAGE>
"Weekly Rate Period" means the period beginning on, and including, the date
of issuance of the Notes, and ending on, and including, the next Wednesday and
thereafter the period beginning on, and including, any Thursday and ending on,
and including, the next Wednesday; provided that if the date of issuance is a
Wednesday, such Wednesday shall constitute an initial one-day Weekly Rate
Period.
The words "hereof", "herein", "hereto", "hereby" and "hereunder" (except in
the form of Note) refer to the entire Indenture. Unless otherwise noted, all
Section and Article references are to sections and articles in this Indenture.
[Balance of Page Intentionally Left Blank]
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ARTICLE II
The Notes
---------
Section 2.01. Amount, Terms and Issuance of Notes.
-----------------------------------
The Notes shall, except as provided in Section 2.11, be limited to a
maximum aggregate principal amount of $10,170,000 in aggregate principal amount
and shall contain substantially the terms recited in the form of Note above. No
Notes may be issued under this Indenture except in accordance with this Article
II.
The Notes may bear such endorsement or legend satisfactory to the Trustee
as may be required to conform to usage or law with respect thereto.
Section 2.02. Designation, Denominations and Maturity.
---------------------------------------
(a) The Notes shall be designated "Taxable Adjustable Rate Notes, Series
2000." The Notes shall be issuable only in denominations of $100,000 and any
larger denomination constituting an integral multiple of $5,000.
All Notes shall be dated the date of their original delivery. Each Note
shall bear interest from the Interest Payment Date to which interest has accrued
and has been paid, or if prior to the first Interest Payment Date for such Note,
from the date of the original issuance of such Note until payment of the
principal or redemption price thereof shall have been made or provided for in
accordance with the provisions of this Indenture, whether upon maturity,
redemption or otherwise.
The Notes shall mature on March 1, 2015.
Notes in the amount of $10,170,000 will be delivered under this Indenture.
The Notes shall be originally issued only to a Depository to be held in a
book-entry system and: (i) the Notes shall be registered in the name of the
Depository or its nominee, as Noteholder, and immobilized in the custody of the
Depository; (ii) unless otherwise requested by the Depository, there shall be a
single Note certificate for each Note maturity; and (iii) the Notes shall not be
transferable or exchangeable, except for transfer to another Depository or
another nominee of a Depository, without further action by the Issuer as set
forth in the next succeeding paragraph of this Section. While the Notes are in
book-entry only form, Notes in the form of physical certificates shall only be
delivered to the Depository.
So long as a book-entry system is in effect for the Notes, except as
hereinafter provided with respect to Beneficial Ownership Interests, the Issuer
and Trustee shall recognize and treat the Depository, or its nominee, as the
Noteholder for all purposes, including payment of Note Service Charges, giving
of notices, and enforcement of remedies. The crediting of payments of Note
Service Charges on the Notes and the transmittal of notices and other
communications by the Depository to the Direct Participants in whose Depository
account the Notes are recorded,
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<PAGE>
and such crediting and transmittal by Direct Participants to Indirect
Participants or Beneficial Owners and by Indirect Participants to Beneficial
Owners, are the respective responsibilities of the Depository and the Direct
Participants and Indirect Participants and are not the responsibility of the
Issuer or the Trustee; provided, however, that the Issuer and the Trustee
understand that neither the Depository or its nominee shall provide any consent
requested of holders of Notes pursuant to this Indenture, and that the
Depository will mail an omnibus proxy (including a list identifying the Direct
Participants) to the Issuer which assigns the Depository's, or its nominee's,
voting rights to the Direct Participants to whose accounts at the Depository the
Notes are credited as of the record date for mailing of requests for such
consents. Upon receipt of such omnibus proxy, the Issuer shall promptly provide
such omnibus proxy (including the list identifying the Direct Participants
attached thereto) to the Trustee, who shall then treat such Direct Participants
as Noteholders for purposes of obtaining any consents pursuant to the terms of
this Indenture.
As long as the Notes are registered in the name of a Depository, or its
nominee, the Trustee agrees to comply with the terms and provisions of the
Letter of Representations, including the provisions of the Letter of
Representations with respect to any delivery of the Notes to the Trustee, which
provisions shall supersede the provisions of this Indenture with respect
thereto.
If any Depository determines not to continue to act as a Depository for the
Notes held in a book-entry system, the Issuer may attempt to have established a
securities depository/book-entry system relationship with another Depository
under this Indenture. If the Issuer does not or is unable to do so, the Issuer
and the Trustee, after the Trustee has made provision for notification of the
Beneficial Owners by appropriate notice to the then Depository, shall permit
withdrawal of the Notes from the Depository and shall authenticate and deliver
Note certificates in fully registered form to the assignees of the Depository or
its nominee or to the Beneficial Owners. Such withdrawal, authentication and
delivery shall be at the cost and expense (including costs of printing or
otherwise preparing and delivering such replacement Notes) of the Issuer. Such
replacement Notes shall be in the denominations specified in the first paragraph
of this Section 2.02, with a minimum denomination of $100,000.
(b) Interest Rates on the Notes. The Notes shall bear interest at the
---------------------------
Weekly Rate for the period from their original issuance date until converted to
a different Interest Rate Mode. The first Interest Payment Date for the Notes
shall be the Interest Payment Date in June, 2000. During each Interest Period
for each Interest Rate Mode, the interest rate for the Notes shall be determined
in accordance with Section 2.02(c) and shall be payable on the Interest Payment
Date for such Interest Period; provided that the interest rate borne by the
Notes shall not exceed the lesser of (i) fifteen percent (15%) per annum and
(ii) the maximum interest rate with respect to the Notes specified in the Credit
Facility. Interest on the Notes at the interest rate or rates for the Weekly
Rate shall be computed upon the basis of a 365 or 366-day year, as applicable,
for the actual number of days elapsed. Interest on the Notes at the interest
rate or rates for the Semi-Annual Rate shall be computed upon the basis of a
360-day year, consisting of twelve 30-day months. Each Note shall bear interest
on overdue principal and, to the extent permitted by law, on overdue interest at
the Default Rate computed from the date of the Default or Event of Default.
20
<PAGE>
(c) Interest Rate Modes. Interest Rates on the Notes shall be determined
-------------------
as follows:
(i) If the Interest Rate Mode for the Notes is the Weekly Rate,
the interest rate on the Notes for a particular Weekly Rate Period shall be
the rate established by the Remarketing Agent no later than 2:00 p.m.
(Cleveland, Ohio time) on the Wednesday preceding the Weekly Rate Period
(or the seventh day preceding the Conversion of the Interest Rate Mode to
the Weekly Rate), or, if such day is not a Business Day, on the next
succeeding Business Day, as the minimum rate of interest necessary, in the
judgment of the Remarketing Agent, to enable the Remarketing Agent to sell
the Notes on such Business Day at a price equal to the principal amount
thereof, plus accrued interest, if any, thereon.
(ii) If the Interest Rate Mode for the Notes is the Semi-Annual
Rate, the interest rate on the Notes for a particular Semi-Annual Rate
Period shall be the rate established by the Remarketing Agent no later than
2:00 p.m. (Cleveland, Ohio time) on the tenth Business Day next preceding
the first day of such Semi-Annual Rate Period as the minimum rate of
interest necessary, in the judgment of the Remarketing Agent, to enable the
Remarketing Agent to sell the Notes on such first day at a price equal to
the principal amount thereof.
(iii) The Remarketing Agent shall provide the Trustee, the Issuer
and the Tender Agent with Immediate Notice of all interest rates.
(iv) If for any reason the interest rate on a Note is not
determined by the Remarketing Agent pursuant to (i) or (ii) above, the
interest rate for such Note for the next succeeding Rate Period shall be
the interest rate in effect for such Note for the preceding Rate Period.
(d) Conversion of Interest Rate.
---------------------------
(i) Conversion Directed by the Issuer. The Interest Rate Mode
---------------------------------
for the Notes is subject to Conversion to a different Interest Rate Mode
from time to time in whole (and not in part) by the Issuer, such right to
be exercised by notifying the Trustee, the Credit Facility Issuer, the
Tender Agent and the Remarketing Agent at least thirty-five (35) days prior
to the effective date of such proposed Conversion. Such notice shall
specify (A) the effective date and (B) the proposed Interest Rate Mode. The
notice must be accompanied by (i) an opinion of Counsel stating that the
Conversion is authorized by this Indenture, and (ii) if the stated amount
of the Credit Facility to be held by the Trustee after such Conversion is
increased over that of the then current Credit Facility an opinion of
Counsel stating that payments of principal and interest on the Notes from
funds drawn on such Credit Facility will not constitute avoidable
preferences with respect to the bankruptcy of the Issuer under the United
States Bankruptcy Code.
(ii) Limitations. Any Conversion of the Interest Rate Mode for
-----------
the Notes pursuant to paragraph (i) above must comply with the following:
21
<PAGE>
(A) the Conversion Date must be an Interest Payment Date which
is a date on which the Notes are subject to optional redemption
pursuant to Section 8.01; and
(B) the Credit Facility to be held by the Trustee must cover
accrued interest for the Notes for 98 days, if the Conversion is to
the Weekly Rate, or for 183 days, if the Conversion is to the Semi-
Annual Rate.
(iii) Notice to Noteholders of Conversion of Interest Rate. The
----------------------------------------------------
Trustee shall notify the Noteholders of each Conversion by first class
mail, postage prepaid, at least 30 days but not more than 60 days before
the Conversion Date. The notice will state:
(A) that the Interest Rate Mode will be converted and what the
new Interest Rate Mode will be;
(B) the Conversion Date;
(C) the Interest Payment Dates and Regular Record Dates;
(D) information relating to the Credit Facility;
(E) whether the Noteholders have a right to have their Notes
purchased in accordance with Section 3.01(a) and, if they
do, the procedures to follow; and
(F) that the Notes will be subject to mandatory purchase on the
Conversion Date in accordance with Section 3.01(b).
(iv) Cancellation of Conversion of Interest Rate Mode.
------------------------------------------------
Notwithstanding any provision of this Section 2.02, the Interest Rate Mode
shall not be converted if (A) the Remarketing Agent has not determined the
initial interest rate for the new Interest Rate Mode in accordance with
this Section 2.02 or (B) the Trustee shall receive written notice prior to
such Conversion that either of the opinions required under Section
2.02(d)(i) has been rescinded. If the Trustee shall have sent any notice to
the Noteholders regarding a Conversion of the Interest Rate Mode under
Section 2.02(d)(iii), the Trustee shall promptly notify all Noteholders of
such rescission and the cancellation of any mandatory purchase pursuant to
Section 3.01(b).
(e) Binding Effect of Determination and Computations. The determination of
------------------------------------------------
each interest rate in accordance with the terms of this Indenture shall be
conclusive and binding upon the owners of the Notes, the Issuer, the Trustee,
each Paying Agent, the Tender Agent, the Remarketing Agent and the Credit
Facility Issuer.
Section 2.03. Registered Notes Required; Note Registrar and Note Register.
-----------------------------------------------------------
All Notes shall be issued in fully registered form. The Notes shall be
registered upon original issuance and upon subsequent transfer or exchange as
provided in this Indenture.
22
<PAGE>
The Issuer shall designate one or more persons to act as "Note Registrar"
for the Notes provided that the Note Registrar appointed for the Notes shall be
either the Trustee or a person which would meet the requirements for
qualification as a successor trustee imposed by Section 11.13. The Issuer hereby
appoints The Huntington National Bank, as Note Registrar. Any person other than
the Trustee undertaking to act as Note Registrar shall first execute a written
agreement, in form satisfactory to the Trustee, to perform the duties of a Note
Registrar under this Indenture, which agreement shall be filed with the Trustee.
The Note Registrar shall act as registrar and transfer agent for the Notes.
The Issuer shall cause to be kept at an office of the Note Registrar a register
(herein sometimes referred to as the "Note Register") in which, subject to such
reasonable regulations as it, the Trustee or the Note Registrar may prescribe,
the Issuer shall provide for the registration of the Notes and for the
registration of transfers of the Notes. The Issuer shall cause the Note
Registrar to designate, by a written notification to the Trustee, a specific
office location (which may be changed from time to time, upon similar
notification) at which the Note Register is kept. If the Note Registrar is the
Trustee, such location shall be the principal corporate trust office of the
Trustee.
The Note Registrar shall forthwith following each Regular Record Date and
at any other time as reasonably requested by the Trustee, the Tender Agent or
the Remarketing Agent, certify and furnish to the Trustee, the Tender Agent, the
Remarketing Agent and any Paying Agent as the Trustee shall specify, the names,
addresses, and holdings of Noteholders and any other relevant information
reflected in the Note Register, and the Trustee, the Tender Agent, the
Remarketing Agent and any such Paying Agent shall for all purposes be fully
entitled to rely upon the information so furnished to them and shall have no
liability or responsibility in connection with the preparation thereof.
Section 2.04. Transfer and Exchange.
---------------------
As provided in Section 2.03, the Issuer shall cause a Note Register to be
kept at the designated office of the Note Registrar. Subject to the restrictions
on transfer set forth in Section 2.06 hereof, upon surrender for registration of
transfer of any Note at such office, the Issuer shall execute and the Trustee or
its Authenticating Agent shall authenticate and deliver in the name of the
transferee or transferees, one or more new fully registered Notes of authorized
denomination for the aggregate principal amount which the registered owner is
entitled to receive.
At the option of the owner, Notes may be exchanged for other Notes of any
other authorized denomination, of a like aggregate principal amount, upon
surrender of the Notes to be exchanged at any such office or agency. Whenever
any Notes are so surrendered for exchange, the Issuer shall execute, and the
Trustee or the Authenticating Agent shall authenticate and deliver, the Notes
which the Noteholder making the exchange is entitled to receive.
All Notes presented for registration of transfer, exchange, redemption or
payment (if so required by the Issuer, the Note Registrar or the Trustee) shall
be accompanied by a written instrument or instruments of transfer or
authorization for exchange, in form and with guaranty of signature satisfactory
to the Note Registrar, duly executed by the owner or by his attorney duly
authorized in writing.
23
<PAGE>
No service charge shall be made to a Noteholder for any exchange or
registration of transfer of Notes, but the Issuer or the Note Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto.
Neither the Issuer nor the Note Registrar on behalf of the Issuer shall be
required (i) to register the transfer of or exchange any Note during a period
beginning at the opening of business 15 days before the date of redemption of
Notes selected for redemption and ending at the close of business on the day of
such redemption (ii) to register the transfer of or exchange any Note so
selected for redemption in whole or in part, or (iii) other than pursuant to
Article III, to register any transfer of or exchange any Note with respect to
which the owner has submitted a demand for purchase in accordance with Section
3.01(a) or which has been purchased pursuant to Section 3.01(b).
New Notes delivered upon any registration of transfer or exchange shall be
valid obligations of the Issuer, evidencing the same debt as the Notes
surrendered, shall be secured by this Indenture and shall be entitled to all of
the security and benefits hereof to the same extent as the Notes surrendered.
Section 2.05. Delivery of Notes.
-----------------
Upon the execution and delivery of this Indenture, and satisfaction of any
conditions established by the Issuer and conditions in any purchase agreement
for delivery of the Notes, the Issuer shall execute the Notes and deliver them
to the Trustee. Thereupon, the Trustee shall, at the Issuer's request,
authenticate the Notes and deliver them to the Depository, as specified in the
authentication order of the Issuer.
Section 2.06. Restrictions on Transfer.
------------------------
The Notes are being initially issued without registration under the
provisions of the Securities Act (or under any state securities laws) pursuant
to exemption from such registration under Section 3(a)(2) of the Securities Act
and without registration under any state securities laws. The Notes may only be
sold, transferred, pledged or hypothecated, in whole or in part, if they are
registered under the Securities Act and all applicable state securities laws or
if an exemption from registration is available thereunder. If the Letter of
Credit or an Alternate Credit Facility that was issued by a "bank" as defined in
Section 3(a)(2) of the Securities Act is not then in effect, the Note Registrar
shall not register on the registration books any transfer of Notes by any
Noteholder, including a sale or transfer occurring as a result of a tender for
purchase of a Note by the holder thereof in accordance with Section 3.01 hereof,
unless all of the following conditions are satisfied:
(a) The proposed transferee represents and warrants to the Trustee, the
Issuer, the Remarketing Agent, the Note Registrar and the former Noteholder that
it is acquiring such Notes for investment purposes and not with a view to the
resale or distribution thereof, within the meaning of the Securities Act and any
applicable state securities laws, and the proposed transferee acknowledges that
the Notes have not been registered under the Securities Act or any state
securities laws and therefore may not be resold, transferred, pledged or
hypothecated, in
24
<PAGE>
whole or in part, unless they are registered under the Securities Act and any
applicable state securities laws or unless an exemption from registration is
available; and
(b) (i) If such sale or transfer is to an affiliate (as defined in Rule 501
promulgated by the Securities and Exchange Commission under the Securities Act)
of the former Noteholder, the proposed transferee represents and warrants to the
Trustee, the Remarketing Agent, the Note Registrar and the Issuer that (A) it is
an affiliate of the former Noteholder, (B) it is an investment company
registered under the Investment Company Act of 1940, as amended, (C) it
qualifies as an "accredited investor" within the meaning of said Rule 501, and
(D) such sale or transfer is exempt from registration under the Securities Act
and all applicable state securities laws; or
(ii) An opinion of Counsel, satisfactory to the Issuer, the Remarketing
Agent, the Registrar and the Trustee, is delivered to the Trustee, the
Remarketing Agent, the Registrar and the Issuer to the effect that such sale or
transfer is exempt from registration under the Securities Act and all applicable
state securities laws.
Section 2.07. Execution.
---------
The Notes shall be executed by the manual or facsimile signature of an
officer of the Issuer.
Notes executed as above provided may be issued and shall, upon request of
the Issuer, be authenticated by the Trustee or the Authenticating Agent,
notwithstanding that the officer signing such Notes or whose facsimile signature
appears thereon shall have ceased to hold office at the time of issuance or
authentication or shall not have held office at the date of the Note.
Section 2.08. Authentication; Authenticating Agent.
------------------------------------
No Note shall be valid for any purpose until the Certificate of
Authentication thereon shall have been duly executed as provided in this
Indenture, and such authentication shall be conclusive proof that such Note has
been duly authenticated and delivered under this Indenture and that the owner
thereof is entitled to the benefit of the trust hereby created.
If the Note Registrar is other than the Trustee, the Trustee may appoint
the Note Registrar as an Authenticating Agent with the power to act on the
Trustee's behalf and subject to its direction in the authentication and delivery
of Notes in connection with the registration of transfers and exchanges under
Section 2.04 hereof, and the authentication and delivery of Notes by an
Authenticating Agent pursuant to this Section shall, for all purposes of this
Indenture, be deemed to be the authentication and delivery "by the Trustee". The
Trustee shall, however, itself authenticate all Notes upon their initial
issuance and any Notes issued in substitution for other Notes pursuant to
Sections 2.11 and 2.12. The Trustee shall be entitled to be reimbursed for
payments made to any Authenticating Agent as reasonable compensation for its
services.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding
25
<PAGE>
to the corporate trust business of any Authenticating Agent, shall be the
successor of the Authenticating Agent hereunder, if such successor corporation
is otherwise eligible as a Note Registrar under Section 2.03, without the
execution or filing or the taking of any further act on the part of the parties
hereto or the Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving written notice of
resignation to the Trustee and the Issuer. The Trustee may at any time terminate
the agency of any Authenticating Agent by giving written notice of termination
to such Authenticating Agent and the Issuer. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section, the Trustee
may appoint a successor Authenticating Agent, shall give written notice of such
appointment to the Issuer and shall mail notice of such appointment to all
owners of Notes as the names and addresses of such owners appear on the Note
Register.
Section 2.09. Payment of Principal and Interest Rights Preserved.
--------------------------------------------------
The principal or redemption price of any Note shall be payable, upon
surrender of such Note, in any coin or currency of the United States of America
which, at the time of payment, is legal tender for the payment of public and
private debts, at the Principal Office of any Paying Agent, including funds
evidenced by wire transfer. Interest on any Note on each Interest Payment Date
in respect thereof shall be payable by check mailed to the address of the person
entitled thereto as such address shall appear in the Note Register; provided
that at the written request of the owner of at least $1,000,000 aggregate
principal amount of Notes received by the Note Registrar at least one Business
Day before the corresponding Record Date, interest accrued on the Notes will be
payable by wire transfer within the United States in immediately available funds
to the bank account number of such owner specified in such request and entered
by the Note Registrar on the Note Register; and provided further that interest
payable at maturity (or redemption) shall be paid only upon presentation and
surrender of such Note.
Interest on any Note which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the person in whose
name that Note is registered at the close of business on the Regular Record Date
for such interest.
Notwithstanding anything herein to the contrary, when any Note is
registered in the name of a Depository or its nominee, the principal, redemption
price and tender purchase price of and interest on such Note shall be payable in
federal funds delivered or transmitted to the Depository or its nominee.
Any interest on any Note which is payable, but is not punctually paid or
provided for, on any Interest Payment Date (herein called "Defaulted Interest")
shall forthwith cease to be payable to the owner of such Note on the relevant
Regular Record Date by virtue of having been such owner, and such Defaulted
Interest shall be paid to the person in whose name the Note is registered at the
close of business on a Special Record Date to be fixed by the Trustee, such date
to be no more than 15 nor fewer than 10 days prior to the date of proposed
payment. The Trustee shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed, first
class postage prepaid, to each Noteholder at his address as it appears in the
Note Register, not fewer than 10 days prior to such Special Record Date.
26
<PAGE>
Subject to the foregoing provisions of this Section 2.09, each Note
delivered under this Indenture upon registration of transfer of or exchange for
or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.
Section 2.10. Persons Deemed Owners.
---------------------
The Issuer, the Trustee, any Paying Agent, the Note Registrar, the Tender
Agent and any Authenticating Agent may deem and treat the person in whose name
any Note is registered as the absolute owner thereof (whether or not such Note
shall be overdue and notwithstanding any notation of ownership or other writing
thereon made by anyone other than the Issuer, the Trustee, any Paying Agent, the
Note Registrar, the Tender Agent or the Authenticating Agent) for the purpose of
receiving payment of or on account of the principal of (and premium, if any,
on), and (subject to Section 2.09) interest on, such Note, and for all other
purposes, and neither the Issuer, the Trustee, the Tender Agent, any Paying
Agent, the Note Registrar nor the Authenticating Agent shall be affected by any
notice to the contrary. All such payments so made to any such registered owner,
or upon his order, shall be valid and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for moneys payable upon any
such Note.
Section 2.11. Mutilated, Destroyed, Lost or Stolen Note.
-----------------------------------------
(a) If any Note shall become mutilated, lost, stolen or destroyed,
the affected Noteholder shall be entitled to the issuance of a substitute Note
only as follows:
(1) in the case of a lost, stolen or destroyed Note, the Noteholder
shall (i) provide notice of the loss, theft or destruction to the
Issuer and the Trustee within a reasonable time after the
Noteholder receives notice of the loss, theft or destruction, (ii)
request the issuance of a substitute Note and (iii) provide
evidence, satisfactory to the Trustee, of the ownership and the
loss, theft or destruction of the affected Note;
(2) in the case of a mutilated Note, the Noteholder shall surrender
the Note to the Trustee for cancellation; and
(3) in all cases, the Noteholder shall provide indemnity against
any and all claims arising out of or otherwise related to the
issuance of substitute Notes pursuant to this Section satisfactory
to the Trustee and any Credit Facility Issuer.
Upon compliance with the foregoing, a new Note of like tenor and
denomination, executed by the Issuer, shall be authenticated by the Trustee and
delivered to the Noteholder, all at the expense of the Noteholder to whom the
substitute Note is delivered. Notwithstanding the foregoing, the Trustee shall
not be required to authenticate and deliver any substitute Note for a Note which
has been called for redemption or which has matured or is about to mature and,
in any such case, the principal or redemption price and interest then due or
becoming due shall be paid by the Trustee or a Paying Agent in accordance with
the terms of the mutilated, lost, stolen or destroyed Note without substitution
therefor.
27
<PAGE>
(b) Every substituted Note issued pursuant to this Section 2.11 shall
constitute an additional contractual obligation of the Issuer and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Notes duly issued hereunder unless the Note alleged to have
been destroyed, lost or stolen shall be at any time enforceable by a bona fide
purchaser for value without notice. In the event the Note alleged to have been
destroyed, lost or stolen shall be enforceable by anyone, the Issuer may recover
the substitute Note from the Noteholder to whom it was issued or from anyone
taking under the Noteholder except a bona fide purchaser for value without
notice.
(c) All Notes shall be held and owned upon the express condition that the
foregoing provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes, and shall preclude any and all other
rights or remedies, notwithstanding any law or statute existing or hereafter
enacted to the contrary with respect to the replacement or payment of negotiable
instrument or investment or other securities without their surrender.
Section 2.12. Temporary Notes.
---------------
Pending preparation of definitive Notes, or by agreement with the
purchasers of all Notes, the Issuer may issue, and, upon its request, the
Trustee shall authenticate, in lieu of definitive Notes one or more temporary
printed or typewritten Notes of substantially the tenor recited above in any
denomination authorized under Section 2.02. Upon request of the Issuer, the
Trustee shall authenticate definitive Notes in exchange for and upon surrender
of an equal principal amount of temporary Notes. Until so exchanged, temporary
Notes shall have the same rights, remedies and security hereunder as definitive
Notes.
Section 2.13. Cancellation of Surrendered Notes.
---------------------------------
Notes surrendered for payment, redemption, transfer or exchange and Notes
surrendered to the Trustee by the Issuer for cancellation shall be canceled by
the Trustee and the Trustee shall provide certification to the Issuer that the
Note has been cancelled and destroyed.
[Balance of Page Intentionally Left Blank]
28
<PAGE>
ARTICLE III
Purchase and Remarketing of Notes
---------------------------------
Section 3.01. Purchase of Notes on Demand; Mandatory Purchase.
-----------------------------------------------
(a) Purchase of Notes on Demand of Owner.
------------------------------------
(i) During Weekly Rate Period. If the Interest Rate Mode for the
-------------------------
Notes is the Weekly Rate, any Note shall be purchased on the demand of the owner
thereof, on any Business Day or on any Interest Payment Date therefor at a
purchase price equal to the principal amount thereof, plus accrued interest, if
any, to the Purchase Date, upon written notice to the Tender Agent, at its
Principal Office on or before 4:00 p.m. (Columbus, Ohio time) on a Business Day
not later than the seventh calendar day prior to the Purchase Date, which notice
(A) states the number and principal amount (or portion thereof in an authorized
denomination) of such Note to be purchased, (B) states the Purchase Date on
which such Note shall be purchased and (C) irrevocably requests such purchase
and agrees to deliver such Note, duly endorsed in blank for transfer, with all
signatures guaranteed, to the Tender Agent at or prior to 12:00 Noon (Columbus,
Ohio time) on such Purchase Date.
The Tender Agent shall promptly, but in no event later than 4:00
p.m. (Columbus, Ohio time) on the next succeeding Business Day, provide the
Remarketing Agent and the Trustee with Immediate Notice of the receipt of the
notice referred to in the preceding paragraph.
(ii) During Semi-Annual Rate Period. If the Interest Rate Mode
------------------------------
for the Notes is the Semi-Annual Rate, any Note shall be purchased, on the
demand of the owner thereof, on any Interest Payment Date for a Semi-Annual Rate
Period at a purchase price equal to the principal amount thereof, upon written
notice to the Tender Agent, at its Principal Office on a Business Day not later
than the eighth Business Day prior to such Purchase Date, which notice (A)
states the number and principal amount (or portion thereof in an authorized
denomination) of such Note to be purchased, (B) states the Purchase Date on
which such Note shall be purchased and (C) irrevocably requests such purchase
and agrees to deliver such Note, duly endorsed in blank for transfer, with all
signatures guaranteed, to the Tender Agent at or prior to 12:00 Noon (Columbus,
Ohio time) on such Purchase Date.
The Tender Agent shall promptly, but in no event later than 4:00
p.m. (Columbus, Ohio time) on the next succeeding Business Day, provide the
Remarketing Agent and Trustee with Immediate Notice of the receipt of the notice
referred to in the preceding paragraph. Upon its receipt of such Immediate
Notice from the Tender Agent, the Remarketing Agent shall promptly provide the
Issuer with Immediate Notice of the receipt of the notice referred to in the
preceding paragraph.
29
<PAGE>
(iii) Purchase of Portions of Notes. Notwithstanding any other
-----------------------------
provision of this Section 3.01(a), the owner of a Note may demand purchase
of a portion of such Note only if the portion to be purchased and the
portion to be retained by the owner will be in authorized denominations.
(b) Mandatory Purchases of Notes.
----------------------------
(i) Mandatory Purchase on Conversion Date. The Notes shall be
-------------------------------------
subject to mandatory purchase, in whole, at a purchase price equal to the
principal amount thereof, plus accrued interest, if any, thereon to the
Purchase Date on each Conversion Date for any Conversion.
(ii) Mandatory Purchase Upon Replacement of Credit Facility. The
------------------------------------------------------
Notes shall be subject to mandatory purchase, in whole, at a purchase price
equal to the principal amount thereof plus accrued interest, if any,
thereon to the Purchase Date, upon replacement of the current Credit
Facility with an Alternate Credit Facility. The Purchase Date shall be the
Interest Payment Date that is the effective date of the Alternate Credit
Facility.
(iii) Mandatory Purchase Upon Expiration of Current Credit Facility.
-------------------------------------------------------------
The Notes shall be subject to mandatory purchase, in whole, at a purchase
price equal to the principal amount thereof plus accrued interest, if any,
thereon to the Purchase Date, upon expiration of the term of the current
Credit Facility. The Purchase Date will be the Interest Payment Date
immediately preceding (by at least 15 days) the date of expiration of the
current Credit Facility.
(iv) Mandatory Purchase Upon Event of Bankruptcy of Issuer. The
-----------------------------------------------------
Notes shall be subject to mandatory purchase, in whole, at a purchase price
equal to the principal amount thereof plus accrued interest, if any,
thereon to the Purchase Date, upon the occurrence of an Event of Bankruptcy
of the Issuer. The Purchase Date will be a date determined by the Trustee
(which date shall be within the period for which principal and interest on
the Notes are covered by the amounts available under the current Credit
Facility).
(v) Notice of Mandatory Purchase. Notice of any mandatory purchase
----------------------------
pursuant to Section 3.01(b)(i), (ii) and (iii) shall be given by the
Trustee at least thirty (30) days prior to the date of purchase and
pursuant to Section 3.01(b)(iv) as set forth therein, in each case in the
same manner as a notice of redemption pursuant to Section 8.04 hereof;
provided that failure to receive notice by mailing or any defect in that
notice, as to any Note shall not affect the validity of the proceedings for
the purchase of any other Note.
(c) Payment of Purchase Price. The purchase price of Notes purchased
-------------------------
pursuant to Section 3.01 shall be payable upon delivery of such Note to the
Tender Agent; provided that such Note must be delivered to the Tender Agent on
or prior to 12:00 Noon (Columbus, Ohio time) for payment by the close of
business on the date of such purchase in immediately available funds;
30
<PAGE>
provided, however, that if the date of such purchase is not a Business Day, the
purchase price shall be payable on the next succeeding Business Day.
Any Note delivered for payment of the purchase price shall be accompanied
by an instrument of transfer thereof in form satisfactory to the Tender Agent
executed in blank by the owner thereof and with all signatures guaranteed by a
bank, trust company or member firm of The New York Stock Exchange, Inc. The
Tender Agent may refuse to accept delivery of any Note for which an instrument
of transfer satisfactory to it has not been provided and shall have no
obligation to pay the purchase price of such Note until a satisfactory
instrument is delivered.
The Tender Agent shall hold all Notes delivered pursuant to this Section
3.01 in trust for the benefit of the owners thereof until moneys representing
the purchase price of such Notes shall have been delivered to or for the account
of or to the order of such Noteholders, and thereafter shall deliver such Notes
to the purchasers thereof. All amounts received by the Trustee from a drawing
under a Credit Facility for purchase of Notes shall be transferred immediately
to the Tender Agent. The Tender Agent shall also hold all such amounts from a
drawing under a Credit Facility that it shall have received from the Trustee in
a separate and segregated account pending payment of the purchase price of Notes
as set forth in Section 3.03, and neither the Issuer, any Guarantor, any
Affiliate of the Issuer or a Guarantor, or any Insider of any of them shall have
any title or other interest, beneficial or otherwise, in the moneys and
investments therein.
Section 3.02. Remarketing of Notes.
--------------------
(a) Upon the receipt by the Remarketing Agent of any notice pursuant to
Section 3.01(a), the Remarketing Agent, subject to the terms of the Remarketing
Agreement, shall offer for sale, and shall use its best efforts to sell (other
than to the Issuer or its affiliates), the Notes in respect of which such notice
has been given, subject to the provisions of Section 2.06 hereof. Unless
otherwise instructed by the Issuer, the Remarketing Agent will offer for sale
and use its best efforts to sell any Notes purchased pursuant to Section
3.01(b). Any such Notes shall be offered: (i) at 100% of the principal amount
thereof, plus interest accrued, if any, to the Purchase Date, and (ii) pursuant
to terms calling for payment of the purchase price on such Purchase Date against
delivery of such Notes; provided that the Remarketing Agent shall not sell any
Note if the amount to be received from the sale of such Note (including accrued
interest, if any) plus the amount available to be drawn by the Trustee under the
Credit Facility with respect to the Available Moneys available to the Trustee
for such purpose is less than the purchase price (including accrued interest, if
any) to be paid for such Note. The Trustee, the Tender Agent or the Credit
Facility Issuer may purchase any Notes offered pursuant to this Section 3.02 for
its own account. The Trustee, the Tender Agent and the Remarketing Agent will
hold any remarketing proceeds which it receives in a segregated account pending
payment to the tendering Noteholder. The Issuer acknowledges that it and its
affiliates shall have no interest in any proceeds of the remarketing of Notes,
all of which shall be held in trust by the Trustee or the Tender Agent for the
sole benefit of the holders of the Notes and, to the extent that the holders
have been paid with draws on the Credit Facility, for the benefit of the Credit
Facility Issuer.
(b) The Remarketing Agent shall, subject to the terms of the Remarketing
Agreement, offer for sale, and use its best efforts to sell, on behalf of the
Issuer, Notes held pursuant to
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Section 3.05. Any such Notes shall be offered at 100% of the principal amount
thereof, plus interest accrued to the sale date.
Section 3.03. Purchase of Notes - Undelivered Notes.
-------------------------------------
(a) On each date Notes are to be purchased pursuant to Section 3.01, the
Tender Agent shall purchase, but only from the funds listed below, such Notes
from the owners thereof. Funds for the payment of such purchase price shall be
derived from the following sources in the order of priority indicated, provided
that funds derived from Section 3.03(a)(i) or (a)(ii) shall not be combined with
funds derived from Section 3.03(a)(iii) to purchase any one Note (or authorized
denomination thereof):
(i) Proceeds of the remarketing of such Notes to persons
other than the Issuer, any Guarantor, any Affiliate of any of them or any
Insider of any of the foregoing (exclusive of any premium) pursuant to
Section 3.02(a);
(ii) Available Moneys furnished by the Trustee to the
Tender Agent representing proceeds of a drawing by the Trustee under the
Credit Facility;
(iii) Moneys paid by the Issuer to pay the purchase price
furnished by the Trustee to the Tender Agent.
(b) In the event that any holder of a Note who shall have given notice
demanding purchase pursuant to Section 3.01(a), or which is subject to mandatory
purchase pursuant to Section 3.01(b), shall fail to deliver such Note to the
Tender Agent at the place and on the applicable date and time specified, or
shall fail to deliver such Note properly endorsed, such Note shall constitute an
Undelivered Note. If funds in the amount of the purchase price of the
Undelivered Note are available for payment to the holder thereof on the date and
at the time specified, from and after the date and time of that required
delivery, (i) the Undelivered Note shall no longer be deemed to be Outstanding
under this Indenture; (ii) interest shall no longer accrue thereon; and (iii)
funds in the amount of the purchase price of the Undelivered Notes shall be held
by the Tender Agent, without liability for interest thereon, for the benefit of
the holder thereof, (and in no event for the benefit of the Issuer, any
Guarantor, any Affiliate of any of them, any Insider of any of the foregoing,
the Remarketing Agent, the Tender Agent or any other party and neither the
Issuer, any Guarantor, any Affiliate of any of them nor any Insider of any of
the foregoing shall have any title or other interest, beneficial or otherwise,
in, nor any right to control, moneys held by the Tender Agent). Any funds held
by the Tender Agent as described in clause (iii) of the preceding sentence shall
be held uninvested. Any monies deposited with and held by the Tender Agent not
so applied to the payment of Notes, if any, within two years after the Purchase
Date of such Notes shall be paid by the Tender Agent to the Issuer and
thereafter the former holders of such Notes shall be entitled to look only to
the Issuer for payment, and then only to the extent of the amount so repaid, and
the Issuer shall not be liable for any interest thereon and shall not be
regarded as a trustee of such money.
Section 3.04. Delivery of Remarketed or Purchased Notes.
-----------------------------------------
32
<PAGE>
(a) Notes and Beneficial Ownership Interests purchased pursuant to Section
3.03 shall be delivered as follows:
(i) Notes sold by the Remarketing Agent to persons or
entities other than the Issuer shall be delivered to the purchasers thereof
or to the Depository on behalf of such purchasers. With respect to
Beneficial Ownership Interests sold by the Remarketing Agent pursuant to
Section 3.02 hereof, the Remarketing Agent and the Trustee shall take such
actions as may be necessary to reflect the transfer of such Beneficial
Ownership Interests to the purchasers thereof in the book-entry system
maintained by the Depository.
(ii) Notes purchased or to be purchased with moneys described
in Section 3.03(a)(ii) shall be delivered to the Tender Agent to be held
pursuant to Section 3.05. With respect to Beneficial Ownership Interests
purchased with moneys described in Section 3.03(a)(ii), the Remarketing
Agent and the Trustee shall take such actions as may be necessary to
reflect the transfer of such Beneficial Ownership Interests to the
purchasers thereof in the book-entry system maintained by the Depository.
(iii) Notes purchased with moneys described in Section
3.03(a)(iii) shall, at the direction of the Issuer, be (A) delivered to or
held by the Tender Agent for the account of the Issuer, (B) delivered to
the Trustee for cancellation or (C) delivered to the Issuer. With respect
to Beneficial Ownership Interests purchased with moneys described in
Section 3.03(a)(iii), the Remarketing Agent and the Trustee shall take such
actions as may be necessary to reflect the transfer of such Beneficial
Ownership Interests to the purchasers thereof in the book-entry system
maintained by the Depository.
(b) If, on any date prior to the release of Notes held by or for the
account of the Issuer pursuant to Section 3.04(a)(iii), all Notes are called for
redemption pursuant to Section 8.01 or an acceleration of the Notes pursuant to
Section 10.02 occurs, such Notes shall be deemed to have been paid and shall
thereupon be canceled by the Trustee.
(c) Notes or Beneficial Ownership Interests (other than Notes pledged to
the Credit Facility Issuer) delivered as provided in this Section shall be
registered (or recorded through the Depository) in the manner directed by the
recipient thereof.
Section 3.05. Notes Pledged to the Credit Facility Issuer.
-------------------------------------------
The Note Registrar shall register in the name of the Issuer any Notes
delivered to the Tender Agent pursuant to Section 3.04(a)(ii). Thereafter, the
Tender Agent shall hold such Notes unless and until the Tender Agent shall have
received from the Credit Facility Issuer written notice or telephonic notice,
promptly confirmed in writing, which specifies that the Tender Agent shall
deliver such Notes to the Issuer or the Remarketing Agent. Upon receipt of such
notice, the Tender Agent shall deliver such Notes to the Issuer or the
Remarketing Agent. With respect to Beneficial Ownership Interests that are
purchased with moneys described in Section 3.03(a)(ii), the Tender Agent and the
Trustee shall take such actions as may be necessary to cause the Depository to
reflect the transfer of such Beneficial Ownership Interests to the Trustee which
will hold such Beneficial Ownership Interests for the benefit of the Issuer as
pledgor and the Credit Facility Issuer as pledgee.
33
<PAGE>
Section 3.06. Drawings on Credit Facility.
---------------------------
Except as provided in Section 3.08 hereof, on each day on which Notes are
to be purchased pursuant to Section 3.01 hereof, except to the extent that the
Trustee shall have received telephonic notification from the Remarketing Agent
on or prior to 10:30 a.m. (Columbus, Ohio time) on the Purchase Date to the
effect that such Notes shall have been remarketed pursuant to Section 3.02
hereof and that the moneys described in Section 3.03(a)(i) hereof will be
sufficient to pay the purchase price of such Notes, the Trustee shall by 11:00
a.m. (Columbus, Ohio time) on the Purchase Date draw under the Credit Facility
an amount equal to the purchase price of such Notes and immediately upon receipt
of such proceeds furnish the proceeds of such drawing to the Tender Agent, and
shall further provide Immediate Notice of such drawing to the Issuer. If the
Trustee is advised by the Remarketing Agent that less than all of such Notes
have been remarketed, the Trustee shall, by 11:00 a.m. (Columbus, Ohio time) on
the Purchase Date, draw under the Credit Facility an amount which, together with
the remarketing proceeds of the Notes sold by the Remarketing Agent, will be
equal to the purchase price of such Notes and immediately upon the receipt of
such proceeds furnish the proceeds of such drawing to the Tender Agent.
Section 3.07. Delivery of Proceeds of Sale.
----------------------------
The proceeds of the sale by the Remarketing Agent of any Notes held by it
for the account of the Issuer, or delivered to it by any Noteholder or the
Tender Agent, shall be turned over to the Issuer, such Noteholder or the Tender
Agent, as the case may be; provided, however, that in the event that any such
Note is sold by the Remarketing Agent at a price in excess of the principal
amount thereof, then such excess shall be remitted to the Issuer.
Section 3.08. Limitation on Remarketing.
-------------------------
Anything in this Indenture to the contrary notwithstanding, there shall be
no remarketing of Notes pursuant to Section 3.02 if there shall have occurred
and be continuing an Event of Default. Any purchase of Notes pursuant to Section
3.01(a) hereof after an Event of Default shall have occurred and be continuing
shall be made only with proceeds of a drawing under the Credit Facility, and any
Notes so purchased shall remain pledged to the Credit Facility Issuer until the
Event of Default shall have been cured or waived or the Notes are accelerated
pursuant to Section 10.02 hereof.
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<PAGE>
ARTICLE IV
Project Fund; Proceeds of Notes
-------------------------------
Section 4.01. Project Fund.
------------
There is hereby created and ordered established with the Trustee a Project
Fund into which the proceeds from the sale of the Notes shall be deposited and
disbursed in accordance with the provisions of Section 4.02 hereof.
Section 4.02. Proceeds of Notes.
-----------------
The provisions of this Section shall apply to the disbursement of the
proceeds of the Notes from the Project Fund. The Issuer will use such proceeds
of the Notes to finance the construction of a commercial facility located in New
Bedford, Massachusetts and the purchase of related equipment and the related
costs and expenses associated therewith (the "Project"). The costs of financing
the Project are hereinafter referred to as the "Project Costs".
Disbursements from the Project Fund shall be made only to reimburse or pay
the Issuer, or any person designated by the Issuer, for the Project Costs. Any
disbursements from the Project Fund for the payment of Project Costs shall be
made by the Trustee only upon the written order signed by the Designated
Representative and approved in writing by the Bank. Each such written order
shall be in substantially the form of the disbursement request attached hereto
as Exhibit A, shall be consecutively numbered and may be accompanied by invoices
or other documentation supporting the payments or reimbursements requested. That
amount shall be released to the Issuer, or the person designated by the Issuer,
upon receipt by the Trustee of a written direction from the Bank to release that
amount.
Any moneys in the Project Fund remaining after the payment in full of the
Project Costs, promptly shall be used as directed by the Designated
Representative, with the approval of the Bank, as described below.
If moneys in the Project Fund are not sufficient to pay all Project Costs,
the Issuer shall not be entitled to any reimbursement for any such additional
Project Costs from the Trustee or any holder of any Note; nor shall it be
entitled to any abatement, diminution or postponement of the Note Payments.
The Trustee shall cause to be kept and maintained adequate records
pertaining to the Project Fund and all disbursements therefrom. If reasonably
requested by the Issuer, the Trustee shall file copies of the records pertaining
to the Project Fund and disbursements therefrom with the Issuer.
The completion of the Project and payment of all Project Costs shall be
evidenced by the filing with the Trustee of a certificate signed by the
Designated Representative and approved by the Bank directing the use of all
remaining moneys in the Project Fund, except any amounts which the Trustee shall
be directed to retain in the Project Fund for the payment of Project Costs not
yet due or for liabilities which the Issuer is contesting or which otherwise
should be retained
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<PAGE>
and the reasons such amounts should be retained. That certificate may state that
it is given without prejudice to any rights against third parties which then
exist or subsequently may come into being. Any balance remaining in the Project
Fund (other than the amounts retained by the Trustee as described in such
certificate) shall be deposited or applied in accordance with that direction.
[Balance of Page Intentionally Left Blank]
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<PAGE>
ARTICLE V
Revenues and Application Thereof; Funds
---------------------------------------
Section 5.01. Revenues to Be Paid to the Trustee; Payments by Issuer.
------------------------------------------------------
The Issuer shall promptly pay or cause to be paid directly to the Credit
Facility Issuer or the Trustee all Revenues for deposit into the Note Fund and
application as set forth in Section 5.02 hereof.
On each Interest Payment Date, the Issuer shall pay to the Trustee an
amount which, when combined with other Revenues on deposit in the Note Fund and
available for such purposes, shall equal the interest due on the Interest
Payment Date coinciding with such date of payment. In addition to the foregoing,
on the Maturity Date for the Notes, the Issuer shall pay to the Trustee an
amount which, when combined with other Revenues on deposit in the Note Fund and
available for such purposes, shall equal the principal on all outstanding Notes.
Notwithstanding the foregoing, while the Credit Facility is in effect the Issuer
shall pay all such Revenues directly to the Credit Facility Issuer and the
Credit Facility Issuer shall apply such amounts to the reimbursement obligation
of the Issuer; provided, however, if there is a default by the Credit Facility
Issuer, the Issuer shall pay such Revenues directly to the Trustee for deposit
into the Note Fund.
The Issuer shall be entitled to a credit against the payments required in
the foregoing paragraph to the extent that the balance of Revenues in the Note
Fund is then in excess of amounts required (a) for the payment of Notes
theretofore matured or theretofore called for redemption, (b) for the payment of
interest for which checks or drafts have been drawn and mailed by the Trustee,
and (c) to be deposited in the Note Fund for use other than for the payment of
Note Service Charges on the Interest Payment Date next following the date of
payment by the Issuer to the Trustee. In any event, however, if on any Interest
Payment Date, the balance in the Note Fund is insufficient to make required
payments of Note Service Charges, the Issuer forthwith will pay to the Trustee,
for deposit into the Note Fund, any deficiency.
Section 5.02. Note Fund.
---------
(a) There is hereby created and ordered established with the Trustee a Note
Fund, the moneys in which, in accordance with Section 5.02(c), the Trustee shall
make available to the Paying Agent or Agents, to pay (i) the principal or
redemption price of Notes as they mature or become due, upon surrender thereof
and (ii) the interest on Notes as it becomes payable. There are hereby
established with the Trustee within the Note Fund three separate and segregated
accounts, to be designated "Eligible Moneys Account", "Ineligible Moneys
Account" and "Credit Facility Account".
(b) There shall be deposited into the various accounts of the Note Fund
from time to time the following:
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<PAGE>
(i) into the Ineligible Moneys Account, (A) all payments by the
Issuer and received by the Trustee in respect to Note Service Charges and
(B) all other moneys received by the Trustee under and pursuant to the
provisions of this Indenture or any of the provisions of the Reimbursement
Agreement, when accompanied by directions from the person depositing such
moneys that such moneys are to be paid into the Note Fund, provided that,
in such case, after such moneys shall become Available Moneys, such moneys
shall be transferred to the Eligible Moneys Account;
(ii) into the Credit Facility Account, all moneys drawn by the
Trustee under the Credit Facility; and
(iii) into the Eligible Moneys Account, (A) all moneys held in the
Ineligible Moneys Account which have become Available Moneys and (B) the
proceeds of obligations issued by the Issuer to refund the Notes.
(c) Except as provided in Section 10.11, moneys in the Note Fund shall be
used solely for the payment of the principal or redemption price of the Notes
and interest on the Notes from the following source or sources but only in the
following order of priority:
(i) Available Moneys held in the Eligible Moneys Account;
(ii) Available Moneys held in the Credit Facility Account, provided
that, in no event, shall moneys held in the Credit Facility Account be used
to pay any amount which may be due on Notes held pursuant to Section 3.05;
and
(iii) moneys held in the Ineligible Moneys Account.
(d) To the extent moneys described under Section 5.02(c)(i) are not
available in the Note Fund to pay principal or redemption price of the Notes and
interest on the Notes when due (other than Notes held pursuant to Section 3.05,
except for interest payments on Notes that were not held pursuant to Section
3.05 on the Record Date for such payment), the Trustee shall, on or before 11:00
a.m., Columbus, Ohio time, on the Business Day prior to such due date draw upon
or demand payment under the Credit Facility, if any, then held by the Trustee in
a manner so as to provide immediately available funds by the close of business
on such due date. Upon receipt of such moneys from the Credit Facility Issuer,
the Trustee shall (i) deposit the amount representing a drawing on the Letter of
Credit for the payment of principal of, premium, if any, and interest on the
Notes in the Note Fund, and apply the same to the payment of such principal and
interest due on the Notes, and (ii) pay, on behalf of the Issuer, but only from
and to the extent of any amounts then on deposit in the Note Fund and not
derived from drawings under the Letter of Credit, to the Credit Facility Issuer
any and all amounts then due and payable under the Reimbursement Agreement. Any
payment made by the Trustee on behalf of the Issuer described in clause (ii) of
the immediately preceding sentence shall be made by wire transfer of immediately
available funds to the account of the Credit Facility Issuer on the date the
Trustee receives moneys pursuant to a drawing upon the Credit Facility.
(e) Any amounts remaining in the Note Fund after payment in full of the
principal or redemption price of and interest on the Notes (or provision for
payment thereof) shall be paid to
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<PAGE>
the Credit Facility Issuer, to the extent of any amounts that the Issuer owes
the Credit Facility Issuer pursuant to the Reimbursement Agreement (as certified
in writing by the Credit Facility Issuer to the Trustee). Any amounts remaining
in the Note Fund after such payment to the Credit Facility Issuer shall be paid
to the Issuer.
Section 5.03. Revenues to Be Held for All Noteholders; Certain Exceptions.
-----------------------------------------------------------
Until applied as provided in this Indenture to the payment of Notes or
transferred to the Issuer pursuant to Section 16.01 or Section 5.02(e), Revenues
paid to the Trustee shall be held by the Trustee in trust in the Note Fund for
the benefit of the owners of all Outstanding Notes, except that (i) any portion
of the Revenues representing principal or redemption price of any Notes, and
interest on any Notes previously matured or called for redemption in accordance
with Article VIII of this Indenture, shall be held for the benefit of the owners
of such Notes only. Anything in this Indenture to the contrary notwithstanding,
neither the Issuer, any Guarantor, any Affiliate of the Issuer or any Guarantor
nor any Insider of any of the foregoing shall have any title or other interest,
beneficial or otherwise, in, nor any right to control, moneys from the Credit
Facility Account, the Ineligible Moneys Account, the Eligible Moneys Account or
the moneys and Eligible Investments therein, or any remarketing proceeds or
Credit Facility proceeds held by the Trustee, the Tender Agent or the
Remarketing Agent, as applicable, which shall be held in trust by the Trustee,
the Tender Agent or the Remarketing Agent, as applicable, for the sole benefit
of the holders of the Notes and, to the extent that the holders of the Notes are
paid through draws under a Credit Facility, the Credit Facility Issuer, to the
extent of such draws.
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39
<PAGE>
ARTICLE VI
Credit Facilities
-----------------
Section 6.01. Initial Letter of Credit.
------------------------
The Letter of Credit shall provide for direct payments to or upon the order
of the Trustee as hereinafter set forth and shall be the irrevocable obligation
of the Bank to pay to or upon the order of the Trustee, upon request and in
accordance with the terms thereof, up to (a) an amount equal to the principal
amount of the Notes (i) to pay the principal of the Notes when due whether at
stated maturity, upon redemption or acceleration or (ii) to enable the Tender
Agent to pay the purchase price or portion of the purchase price equal to the
principal amount of Notes purchased pursuant to Section 3.01 to the extent
remarketing proceeds are not available for such purpose, plus (b) an amount
equal to 98 days' interest accrued on the Notes at a rate of ten percent (10%)
per annum (i) to pay interest on the Notes when due or (ii) to enable the Tender
Agent to pay the portion of the purchase price of the Notes purchased pursuant
to Section 3.01 equal to the interest accrued, if any, on such Notes to the
extent remarketing proceeds are not available for such purpose.
The Letter of Credit shall terminate automatically on the earliest of (i)
the payment by the Bank to the Trustee of the final drawing available to be made
under the Letter of Credit; (ii) receipt by the Bank of the Letter of Credit and
a certificate signed by an officer of the Trustee and the Designated
Representative of the Issuer stating that no Notes remain Outstanding; (iii)
receipt by the Bank of the Letter of Credit and a certificate signed by an
officer of the Trustee and the Designated Representative stating that an
Alternate Credit Facility in substitution for the Letter of Credit has been
accepted by the Trustee and is in effect; and (iv) the stated expiration date of
the Letter of Credit. Pursuant to the Reimbursement Agreement, on each
anniversary date of the Letter of Credit, at the Bank's option, the expiration
date of the Letter of Credit may be extended for a year beyond the current
expiration date.
The Bank's obligation under the Letter of Credit will be reduced to the
extent of any drawing thereunder. The Letter of Credit shall provide that, with
respect to a drawing by the Trustee to pay interest on the Notes or the portion
of the Purchase price of Notes corresponding to interest on the Notes, the
Letter of Credit shall be automatically reinstated in an amount equal to any
such drawing on the date of such drawing. With respect to any drawing by the
Trustee to pay a portion of the purchase price corresponding to principal of
Notes purchased pursuant to Section 3.01, the amount available under the Letter
of Credit for payment of principal or purchase price of the Notes due shall be
reinstated in an amount equal to any such drawing but only to the extent that
(i) the Bank is reimbursed in accordance with the terms of the Reimbursement
Agreement for the amounts so drawn or (ii) Notes are held by or through the
Trustee or Tender Agent for the benefit of the Bank in an amount, which together
with moneys held by the Trustee or the Tender Agent for the sole purpose of
reimbursing the Bank, are equal to or greater than the amounts so drawn. In no
event will the Trustee be entitled to make drawings under the Letter of Credit
for the payment of any amount due on any Note held
40
<PAGE>
pursuant to Section 3.05, except for interest payments on Notes that were not
held pursuant to Section 3.05 on the Record Date for such payment.
The Letter of Credit shall provide that if, in accordance with the terms of
this Indenture, the Notes shall become immediately due and payable pursuant to
any provision of this Indenture, the Trustee shall be entitled to draw on the
Letter of Credit to the extent of the aggregate principal amount of the Notes
then Outstanding plus, to the extent available under the Letter of Credit, an
amount sufficient to pay interest on all Outstanding Notes, less amounts for
which the Letter of Credit shall not have been reinstated.
Section 6.02. Expiration.
----------
If at any time there shall cease to be any Notes Outstanding hereunder, the
Trustee shall promptly surrender the current Credit Facility to the Credit
Facility Issuer for cancellation. The Trustee shall comply with the procedures
set forth in the Credit Facility relating to the termination thereof.
Section 6.03. Alternate Credit Facilities.
---------------------------
The Issuer may, at its option, as provided in the Reimbursement Agreement,
provide for the delivery to the Trustee of an Alternate Credit Facility. Such
Alternate Credit Facility shall have a term of not less than one year and set
forth a maximum interest rate on the Notes with respect to which drawings may be
made. The Issuer shall give the Trustee an irrevocable written notice of its
intention to replace the current Credit Facility with an Alternate Credit
Facility at least 35 days before the Interest Payment Date that is to be the
Purchase Date on which the Notes are to be purchased pursuant to mandatory
tender and on which the Alternate Credit Facility is to become effective. Such
notice to the Trustee shall be accompanied by (i) a commitment from the issuer
of the Alternate Credit Facility that it will issue the Alternate Credit
Facility to the Trustee not later than the Interest Payment Date that is to be
the Purchase Date or (ii) other evidence satisfactory to the Trustee that the
Alternate Credit Facility will be timely delivered and in effect. Upon receipt
of such notice and accompanying evidence of the delivery of the Alternate Credit
Facility, the Trustee shall call the Notes for purchase pursuant to Section
3.01(b) and Section 6.04. On or before the date of delivery of an Alternate
Credit Facility to the Trustee, the Issuer shall provide the Trustee with (a) an
opinion of Counsel stating that (i) the delivery of such Alternate Credit
Facility to the Trustee is authorized under this Indenture and complies with the
terms hereof, and (ii) so long as such Alternate Credit Facility is issued by a
"bank" as defined in Section 3(a)(2) of the Securities Act and remains in
effect, the Notes may be sold or transferred without registration under the
provisions of the Securities Act, (b) an opinion of counsel to the issuer or
provider of such Credit Facility stating that such Credit Facility is a legal,
valid, binding and enforceable obligation of such issuer or obligor in
accordance with its terms, and (c) an opinion of Counsel stating that payments
of principal and interest on the Notes from funds drawn on such Credit Facility
will not constitute avoidable preferences with respect to the subsequent
bankruptcy of the Issuer under the Bankruptcy Code.
The Trustee shall then accept such Alternate Credit Facility and surrender
the previously held Credit Facility to the previous Credit Facility Issuer for
cancellation promptly on or after the fifth Business Day after the Alternate
Credit Facility becomes effective, but not earlier than the
41
<PAGE>
fifth Business Day following the last Interest Payment Date covered by the
Credit Facility to be canceled.
Section 6.04. Notices of Expiration, Replacement and Extension of Credit
----------------------------------------------------------
Facility.
- --------
(a) The Trustee shall notify the Noteholders of the expiration of the term
of the current Credit Facility or the replacement of the current Credit Facility
with an Alternate Credit Facility which will subject the Notes to mandatory
purchase in accordance with Section 3.01(b) by first class mail delivered to
each Noteholder's registered address at least 30 days but not more than 60 days
before any Purchase Date resulting from such expiration or replacement. The
notice will state (i) that the Credit Facility is expiring according to its
terms or will be replaced upon the effective date of an Alternate Credit
Facility, and (ii) the Purchase Date for the Notes.
(b) The Trustee shall notify the Noteholders of the extension of the
expiration date of the current Credit Facility within five (5) days of its
receipt of an amendment to such Credit Facility or other writing extending the
expiration date. The notice will set forth the new expiration date.
[Balance of Page Intentionally Left Blank]
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<PAGE>
ARTICLE VII
Investment or Deposit of Moneys
-------------------------------
Section 7.01. Deposits.
--------
All moneys received by the Trustee under this Indenture shall be deposited
with the Trustee, until or unless invested or deposited as provided in Section
7.02. All deposits with the Trustee shall be secured as required by applicable
law for such trust deposits. The Trustee may deposit such moneys with any other
depository which is authorized to receive them and is subject to supervision by
public banking authorities.
Section 7.02. Investment or Deposit of Note Fund and Project Fund.
---------------------------------------------------
At the written direction of the Issuer, the Trustee shall invest moneys
held in the Note Fund in Eligible Investments maturing prior to the date or
dates when the payments in respect of principal of or interest on the Notes for
which such moneys are held are to become due; provided that moneys held in the
Note Fund which are proceeds of a drawing under a Credit Facility shall not be
invested and the Trustee shall not be liable for the payment of interest
thereon. At the written direction of the Issuer, the Trustee shall invest moneys
held in the Project Fund in Eligible Investments of such maturities as the
Issuer shall direct. Any such investments shall be held by or under the control
of the Trustee and shall be deemed at all times a part of the applicable Fund.
The interest and income received upon such investments of the Note Fund and
any interest paid by the Trustee or any other depository and any profit or loss
resulting from the sale of any investment shall be added or charged in the case
of any interest income or profit from investments of the Note Fund, and to the
extent received or paid and available for payment of amounts due on the Notes,
to the payment of the next succeeding payment due on account of the Notes and
any realized loss shall be forthwith made up by the Issuer (the direction of the
Issuer to make investments as aforesaid to include an agreement so to do).
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ARTICLE VIII
Redemption of Notes
-------------------
Section 8.01. Redemption Dates and Prices.
---------------------------
The Notes shall be subject to redemption prior to maturity at the option of
the Issuer, upon the direction of the Issuer, in whole on any date or in part on
any Interest Payment Date at a redemption price of 100% of the principal amount
redeemed. Payments of the redemption price of any Note shall be made in
immediately available funds on the redemption date only upon the surrender to
the Paying Agent of any Note so redeemed.
Section 8.02. Issuer Direction of Optional Redemption.
---------------------------------------
The Trustee shall call Notes for optional redemption when and only when it
shall have been notified by the Issuer to do so. The Trustee shall only call
Notes for optional redemption if it has Available Moneys in the Eligible Moneys
Account of the Note Fund or will receive Available Moneys from the proceeds of
refunding notes or from drawings under the Credit Facility, in the aggregate,
sufficient to pay the redemption price of the Notes to be called for redemption,
plus accrued interest thereon. Notice of any optional redemption shall specify
the principal amount of Notes to be redeemed and the redemption date. The Issuer
will give notice to the Trustee at least five days prior to the day on which the
Trustee is required to give notice of such optional redemption to the
Noteholders.
Section 8.03. Selection of Notes to be Called for Redemption.
----------------------------------------------
Except as otherwise provided herein or in the Notes, if less than all the
Notes are to be redeemed, the particular Notes to be called for redemption shall
be selected by any method determined by the Trustee to be fair and reasonable;
provided, however, that in connection with any redemption of Notes the Trustee
shall first select for redemption any Notes held pursuant to Section 3.05 prior
to any selection by lot. The Trustee shall treat any Note of a denomination
greater than $5,000 as representing that number of separate Notes each of the
denomination of $5,000 as can be obtained by dividing the actual principal
amount of such Note by $5,000; provided that at any time, no $5,000 portion of a
Note shall be redeemed if it results in the unredeemed portion of the Note being
less than $100,000.
Section 8.04. Notice of Redemption.
--------------------
(a) When required to redeem Notes under any provision of this Article VIII,
or when directed to do so by the Issuer, the Trustee shall cause notice of the
redemption to be given by first class mail, postage prepaid, to all registered
owners of Notes to be redeemed at their registered addresses not more than 60
and not fewer than 30 days prior to the redemption date. Failure to mail any
such notice or defect in the mailing thereof in respect of any Note shall not
affect the validity of the redemption of any other Note. Notices of such
redemptions shall also be mailed to the Remarketing Agent, the Tender Agent and
the Credit Facility Issuer (and the Rating
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Service, if the Notes are then rated by a Rating Service). Any such notice shall
be given in the name of the Issuer, shall identify the Notes to be redeemed
(and, in the case of partial redemption of any Notes, the respective principal
amounts thereof to be redeemed), shall specify the redemption date and the
redemption price and when any interest accrued to the redemption date will be
payable, and shall state that on the redemption date the redemption price of the
Notes called for redemption will be payable at the principal corporate trust
office of the Trustee and/or of one or more Paying Agents and from that date
interest will cease to accrue. The Trustee shall at all reasonable times make
available to any interested party complete information as to Notes which have
been redeemed or called for redemption.
(b) If at the time of mailing of notice of any optional redemption in
connection with a refunding of the Notes the Issuer shall not have deposited
with the Trustee moneys sufficient to redeem all the Notes called for
redemption, such notice may state that it is conditional in that it is subject
to the deposit of Available Moneys with the Trustee not later than the
redemption date, and such notice and such optional redemption shall be of no
effect unless such moneys are so deposited.
(c) Notice of any redemption hereunder with respect to Notes held under a
book-entry system shall be given by the Registrar or the Trustee only to the
Depository, or its nominee, as the holder of such Notes. Selection of book-entry
interests in the Notes called for redemption is the responsibility of the
Depository and any failure of any Direct Participant, Indirect Participant or
Beneficial Owner to receive such notice and its contents or effect will not
affect the validity of such notice or any proceedings for the redemption of such
Notes.
Section 8.05. Notes Redeemed in Part.
----------------------
Any Note which is to be redeemed only in part shall be surrendered at a
place stated for the surrender of Notes called for redemption in the notice
provided for in Section 8.04 (with due endorsement by, or a written instrument
of transfer in form satisfactory to the Trustee duly executed by, the owner
thereof or his attorney duly authorized in writing) and the Issuer shall execute
and the Trustee shall authenticate and deliver to the owner of such Note without
service charge, a new Note or Notes, of any authorized denomination as requested
by such owner in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Note so surrendered, provided further
that, if less than all of an outstanding Note of one maturity in a book-entry
system is to be called for redemption, the Trustee shall give notice to the
Depository or the nominee of the Depository that is the holder of such Note, and
the selection of the Beneficial Ownership Interests in that Note to be redeemed
shall be at the sole discretion of the Depository and its participants.
Section 8.06. No Mandatory Sinking Fund Requirements.
--------------------------------------
The Notes are not subject to mandatory redemption prior to stated maturity
pursuant to any mandatory sinking fund requirements.
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ARTICLE IX
Covenants, Representations and Warranties of the Issuer
-------------------------------------------------------
Section 9.01. Appointment of Paying Agent.
---------------------------
The Issuer shall appoint one or more paying agents for such purpose, each
such agent to be a national banking association, a bank and trust company or a
trust company. The Issuer hereby appoints the Trustee as Paying Agent and
designates the principal corporate trust office of the Trustee in Columbus, Ohio
as the place of payment, such appointment and designation to remain in effect
until notice of change is filed by the Issuer, at the direction of the Issuer,
with the Trustee. The Issuer hereby reserves the option to have one or more of
the Paying Agents make payment of interest by check mailed to the address of the
person entitled thereto as such address shall appear in the Note Register.
The Issuer shall appoint an additional Paying Agent in each city or
political subdivision specified as a place of payment of the Notes at an office
at which Notes may be presented or surrendered for payment, or for registration,
transfer, or exchange. The Issuer shall give prompt written notice to the
Trustee of the designation of each such Paying Agent and of its designated
office location for purposes of such agency, and of any change in the Paying
Agent or of its designated office location. Any Paying Agent other than the
Trustee shall be a person which would meet the requirements for qualification as
a successor trustee imposed by Section 11.14.
The Issuer shall require any Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee that such Paying Agent will (1) hold all sums held by it for
the payment of the principal or redemption price of, or interest on, Notes in
trust for the benefit of the owners of such Notes until such sums shall be paid
to such owners or otherwise disposed of as herein provided; (2) give the Trustee
notice of any default by the Issuer in the making of any payment of principal or
redemption price or interest on the Notes; and (3) at any time during the
continuance of such default, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by such Paying Agent.
Section 9.02. Existence; Compliance with Laws.
-------------------------------
To the extent permitted by law, the Issuer shall maintain its existence as
herein described and shall use its best efforts to maintain and renew all its
rights, powers, privileges and franchises material to the business operations of
the Issuer; and shall use reasonable efforts to comply with all valid and
applicable laws, acts, rules, regulations, permits, orders, requirements and
directions of any legislative, executive, administrative or judicial body
relating to the Issuer's participation in the Project or the issuance of the
Notes, noncompliance with respect to which would have a material adverse affect.
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Section 9.03. Further Assurances.
------------------
Except to the extent otherwise provided in this Indenture, the Issuer shall
not enter into any contract or take any action by which the rights of the
Trustee or the Noteholders may be impaired and shall, from time to time, execute
and deliver such further instruments and take such further action as may be
required to carry out the purposes of this Indenture.
Section 9.04. Observance and Performance of Representations, Covenants,
---------------------------------------------------------
Agreements, Authority and Actions.
- ---------------------------------
(a) The Issuer will observe and perform faithfully at all times all
representations, covenants, agreements, authority, actions, undertakings,
stipulations and provisions to be observed or performed on its part under this
Indenture and the Notes.
(b) The Issuer represents and warrants that:
(i) It is a corporation duly incorporated and validly existing under
the laws of the State of Delaware.
(ii) The Issuer has full power and authority to execute and deliver
this Indenture, the Reimbursement Agreement, the Remarketing Agreement and
the Notes, and to perform its obligations and to enter into and carry out
the transactions contemplated by this Indenture, the Reimbursement
Agreement, the Remarketing Agreement and the Notes. The execution, delivery
and performance of this Indenture, the Reimbursement Agreement, the
Remarketing Agreement and the Notes do not, and will not, violate any
provision of law applicable to the Issuer or the Issuer's Articles of
Incorporation and By-laws and do not, and will not, conflict with or result
in a default under any agreement or instrument to which the Issuer is a
party or by which it is bound. This Indenture, the Remarketing Agreement,
the Reimbursement Agreement and the Notes have, by proper action been duly
authorized, executed and delivered by the Issuer and all steps necessary
have been taken to make this Indenture, the Remarketing Agreement, the
Reimbursement Agreement and the Notes valid and binding obligations of the
Issuer.
(iii) To Issuer's actual knowledge, no approval, consent or
authorization of, or registration, declaration or filing with, any
governmental or public body or authority is required in connection with the
valid execution, delivery and performance by the Issuer of this Indenture,
the Reimbursement Agreement, the Remarketing Agreement and the Notes,
except such as have been obtained and except such approvals as may be
required to comply with federal or state securities laws.
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ARTICLE X
Events of Default and Remedies
------------------------------
Section 10.01. Events of Default Defined.
-------------------------
Each of the following shall be an "Event of Default" hereunder:
(a) Payment of the principal or redemption price of any Note is not made
when it becomes due and payable at maturity or upon call for redemption; or
(b) Payment of any interest on any Note is not made when it becomes due and
payable; or
(c) Failure by the Issuer to observe and perform any covenant, condition or
agreement on its part to be observed or performed hereunder, other than any such
failure which results in an Event of Default under Section 10.01(a), (b) or (e)
of this Indenture, for a period of thirty (30) days after written notice of such
failure requesting such failure to be remedied, given to the Issuer by the
Trustee, unless the Trustee shall agree in writing to an extension of such time
prior to its expiration; provided, further, that if and so long as the Issuer is
proceeding with due diligence to cure the default, such period shall be extended
to whatever reasonable period is required to permit the Issuer to continue to
proceed with due diligence to cure such default; provided, however, that the
foregoing provision is subject to the following limitations: if by reason of
acts of God; winds; fires; epidemics; landslides; floods; droughts; famines;
strikes; lockouts or other industrial disturbances; acts of public enemies; acts
or orders of any kind of any governmental authorities; insurrection; military
action; war, whether or not declared; sabotage; riots; civil disturbances;
explosions; breakage or accident to machineries, transmission pipes or canals;
partial or entire failure of utilities; or any cause or event not reasonably
within the control of the Issuer, the Issuer is unable in whole or in part to
carry out its agreement on its part herein contained, other than the obligations
on the part of the Issuer to pay Note Service Charges and to carry insurance,
the Issuer shall not be deemed in default for a period of one hundred twenty
(120) days following the inception of such inability provided that it uses its
best efforts to remedy with all reasonable dispatch the cause or causes
preventing the Issuer from carrying out its agreements; provided, further, that
the Issuer shall in no event be required to settle strikes, walkouts or other
industrial disturbances by acceding to the demands of the opposing party or
parties when such course is, in the judgment of the Issuer, not in the best
interest of the Issuer; or
(d) The Trustee receives notice from the Credit Facility Issuer of the
Credit Facility then held by the Trustee that an Event of Default under the
Reimbursement Agreement has occurred and is continuing and the Trustee is to
accelerate the maturity of the Notes; or
(e) If payment of the purchase price of any Note required to be purchased
pursuant to Section 3.01 is not made when such payment becomes due and payable;
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(f) A decree or order of a court or agency or supervisory authority,
having jurisdiction in the premises for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling or
assets and liabilities or similar proceeding, or for the winding-up or
liquidation of its affairs, shall have been entered against the Letter of Credit
Bank or the Letter of Credit Bank shall have consented to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Letter of Credit Bank or of or relating to all or substantially all of its
property.
Section 10.02. Acceleration and Annulment Thereof.
----------------------------------
If any Event of Default under Section 10.01(a), 10.01(b), 10.01(d),
Section 10.01(e), or 10.01(f) occurs, then the principal of all Notes then
Outstanding, together with interest accrued thereon to the date of acceleration
(which date shall be within the period for which an interest drawing sufficient
to pay the interest accrued on the Notes to such date is available under the
Credit Facility), shall become immediately due and payable at the place of
payment provided therein without notice, declaration, or demand, anything in
this Indenture or in the Notes to the contrary notwithstanding. If any other
Event of Default occurs and is continuing, the Trustee may, and upon request of
the owners of 25% in principal amount of all Notes then Outstanding shall, by
notice in writing to the Issuer, declare the principal of all Notes then
Outstanding to be immediately due and payable; and upon such declaration the
said principal, together with interest accrued thereon to the date of
acceleration, shall become due and payable immediately at the place of payment
provided therein, anything in this Indenture or in the Notes to the contrary
notwithstanding. Upon the occurrence of any acceleration hereunder, the Trustee
shall immediately exercise such rights as it may have under this Indenture to
declare all payments hereunder and under the Notes to be due and payable
immediately, and to the extent it has not already done so, shall immediately
draw upon the Credit Facility to the extent permitted by the terms thereof in an
amount equal to the principal of all Notes then outstanding plus interest
accrued thereon to the date established for payment to the Noteholders.
Immediately after any acceleration hereunder, the Trustee, to the extent it
has not already done so, shall notify in writing the Issuer, the Credit Facility
Issuer, the Tender Agent and the Remarketing Agent of the occurrence of such
acceleration. Within five days of the occurrence of any acceleration hereunder,
the Trustee shall notify by first class mail, postage prepaid, the owners of all
Notes Outstanding of the occurrence of such acceleration.
If, after the principal of the Notes has become due and payable, all
arrears of interest upon the Notes are paid by the Issuer, and the Issuer also
performs all other things in respect to which it may have been in default
hereunder and pays the reasonable charges of the Trustee and the Noteholders,
including reasonable attorneys' fees, then, and in every such case, the owners
of a majority in principal amount of the Notes then Outstanding, by notice to
the Issuer and to the Trustee, may annul such acceleration and its consequences,
and such annulment shall be binding upon the Trustee and upon all owners of
Notes issued hereunder; provided, however, that the Trustee shall not annul any
declaration resulting from (i) an Event of Default specified in Section 10.01(d)
without the prior written consent of the Credit Facility Issuer or (ii) any
Event of Default which has resulted in a drawing under the Credit Facility
unless the Trustee has
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received written confirmation from the Credit Facility Issuer that the Credit
Facility has been reinstated to an amount equal to the amount thereof prior to
such drawing. No such annulment shall extend to or affect any subsequent default
or impair any right or remedy consequent thereon. The Trustee shall forward a
copy of any notice from Noteholders received by it pursuant to this paragraph to
the Issuer and to the Credit Facility Issuer. Immediately upon such annulment,
the Trustee shall cancel, by notice to the Issuer and to the Credit Facility
Issuer, any demand for acceleration of payments hereunder and under the Notes
made by the Trustee pursuant to this Section 10.02. The Trustee shall promptly
give written notice of such annulment to the Issuer, the Credit Facility Issuer,
the Tender Agent, the Remarketing Agent, and, if notice of the acceleration of
the Notes shall have been given to the Noteholders, shall give notice thereof to
the Noteholders.
Section 10.03. Other Remedies.
--------------
If any Event of Default occurs and is continuing, the Trustee, before or
after the principal of the Notes becomes immediately due and payable, may
enforce each and every right granted to it hereunder and under any supplements
or amendments hereto. In exercising such rights, the Trustee shall take such
action as, in the judgment of the Trustee applying the standards described in
Section 11.06, would best serve the interests of the Noteholders.
Section 10.04. Legal Proceedings by Trustee.
----------------------------
If any Event of Default has occurred and is continuing, the Trustee in
its discretion may, and upon the written request of the owners of 25% in
principal amount of all Notes then Outstanding and receipt of indemnity to its
satisfaction shall, in its own name:
A. By mandamus, or other suit, action or proceeding at law or in equity,
enforce all rights of the Noteholders;
B. Bring suit upon the Notes or the Credit Facility;
C. By action or suit in equity require the Issuer to account as if it
were the trustee of an express trust for the Noteholders; and
D. By action or suit in equity enjoin any acts or things which may be
unlawful or in violation of the rights of the Noteholders.
Section 10.05. Discontinuance of Proceedings by Trustee.
----------------------------------------
If any proceeding commenced by the Trustee on account of any default is
discontinued or is determined adversely to the Trustee, then the Issuer, the
Credit Facility Issuer, the Trustee and the Noteholders shall be restored to
their former positions and rights hereunder as though no such proceedings had
been commenced.
Section 10.06. Noteholders May Direct Proceedings.
----------------------------------
The owners of a majority in principal amount of the Notes Outstanding
shall have the right, after furnishing indemnity satisfactory to the Trustee, to
direct the method and place of
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conducting all remedial proceedings by the Trustee hereunder, provided that such
direction shall not be in conflict with any rule of law or with this Indenture
or unduly prejudice the rights of minority Noteholders.
Section 10.07. Limitations on Actions by Noteholders.
-------------------------------------
No Noteholder shall have any right to bring suit on the Credit
Facility. No Noteholder shall have any right to pursue any other remedy
hereunder unless:
(a) the Trustee shall have been given written notice of an Event of
Default,
(b) the owners of at least 25% in principal amount of all Notes then
Outstanding shall have requested the Trustee, in writing, to exercise the powers
hereinabove granted or to pursue such remedy in its or their name or names,
(c) the Trustee shall have been offered indemnity satisfactory to it
against costs, expenses and liabilities, except that no offer of indemnification
shall be required for a declaration of acceleration under Section 10.02 or for a
drawing under the Credit Facility, and
(d) the Trustee shall have failed to comply with such request within a
reasonable time.
Section 10.08. Trustee May Enforce Rights Without Possession of Notes.
------------------------------------------------------
All rights under this Indenture and the Notes may be enforced by the
Trustee without the possession of any Notes or the production thereof at the
trial or other proceedings relative thereto, and any proceeding instituted by
the Trustee shall be brought in its name for the ratable benefit of the owners
of the Notes.
Section 10.09. Remedies Not Exclusive.
----------------------
No remedy herein conferred is intended to be exclusive of any other remedy
or remedies, and each remedy is in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute.
Section 10.10. Delays and Omissions Not to Impair Rights.
-----------------------------------------
No delays or omission in respect of exercising any right or power accruing
upon any default shall impair such right or power or be a waiver of such
default, and every remedy given by this Article X may be exercised from time to
time and as often as may as deemed expedient.
Section 10.11. Application of Moneys in Event of Default.
-----------------------------------------
Any moneys received by the Trustee under this Article X shall be applied in
the following order; provided that any moneys received by the Trustee from a
drawing on the Credit Facility shall be applied to the extent permitted by the
terms thereof only as provided in (B) below with respect to the principal of,
and interest accrued on, Notes other than Notes held by the Issuer
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after purchase thereof pursuant to Section 3.04(a)(iii) and other than Notes
held pursuant to Section 3.05:
A. To the payment of the reasonable costs of the Trustee, including
reasonable counsel fees, any disbursements of the Trustee with interest thereon
at the rate of 12% per annum and its reasonable compensation; and
B. To the payment of principal or redemption price (as the case may be) and
interest then owing on the Notes, and in case such moneys shall be insufficient
to pay the same in full, then to the payment of principal or redemption price
and interest ratably, without preference or priority of one over another or of
any installment of interest over any other installment of interest;
C. To the reimbursement of the Credit Facility Issuer for unreimbursed
draws under the Credit Facility; and
D. To the payment of reasonable costs and expenses of the Issuer, including
reasonable counsel fees, incurred in connection with the Event of Default.
The surplus, if any, shall be paid to the Issuer or the person lawfully
entitled to receive the same as a court of competent jurisdiction may direct.
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ARTICLE XI
The Trustee
-----------
Section 11.01. Acceptance of Trust
-------------------
The Trustee accepts and agrees to execute the trusts hereby created, but
only upon the additional terms set forth in this Article, to all of which the
parties hereto and the Noteholders agree.
Section 11.02. No Responsibility for Recitals, etc.
-----------------------------------
The recitals, statements and representations in this Indenture or in the
Notes, save only the Trustee's Certificate of Authentication upon the Notes,
have been made by the Issuer and not by the Trustee; and the Trustee shall be
under no responsibility for the correctness thereof, or for the validity,
priority, recording or re-recording, filing or re-filing of this Indenture or
the Reimbursement Agreement or any financing statements, amendments thereto or
continuation statements, or for insuring the Project or collecting any insurance
moneys, or for the validity of the execution by the Issuer of this Indenture or
of any supplements thereto or instruments of further assurance, or for the
validity or sufficiency of the security afforded by this Indenture or the Notes
issued hereunder or intended to be secured hereby, or as to the maintenance of
the security hereof. The Trustee shall not be bound to ascertain or inquire as
to the performance or observance of any covenants, conditions or agreements on
the part of the Issuer or on the part of the Issuer hereunder or under the
Reimbursement Agreement, except as expressly provided herein or in the
Reimbursement Agreement.
Not more than once every five years the Trustee may reasonably request an
opinion of counsel to the Trustee, addressed to the Issuer and the Trustee,
stating that based upon the law in effect on the date of such opinion no filing,
registration or recording and no refiling, reregistration or rerecording of any
agreement or instrument, including any financing statement or amendments
thereto, or any continuation statements or instruments of a similar character
relating to the pledges and assignments made by the Issuer to secure the Notes,
is required by law, in order fully to preserve and protect the security of the
Trustee and the rights of the Trustee under this Indenture, or if such filing,
registration, recording, refiling, reregistration or rerecording is necessary,
setting forth the requirements in respect thereto. The Issuer, at the Issuer's
expense, shall take or cause to be taken all actions necessary to satisfy any
such requirements. Promptly after any filing, registration, recording, refiling,
reregistration or rerecording of any such agreement or instrument, the Trustee
may request an opinion of counsel to the Trustee on behalf of the Issuer and the
Trustee, which the Issuer shall provide at its expense, to the effect that such
filing, registration, recording, refiling, reregistration or rerecording has
been duly accomplished and setting forth the particulars thereof. The Trustee
shall be reimbursed by the Issuer for the reasonable fees paid in connection
with such opinions of counsel.
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The Trustee shall not be accountable for the application of the proceeds of
any Notes authenticated or delivered hereunder which has been made by or on
behalf of the Issuer or the Issuer.
The permissive right of the Trustee to do things enumerated in this
Indenture shall not be construed as a duty.
Section 11.03. Trustee May Act Through Agents; Answerable Only for Willful
-----------------------------------------------------------
Misconduct or Negligence.
- ------------------------
The Trustee may exercise any powers hereunder and perform any duties
required of it through attorneys, agents, officers or employees, and shall be
entitled to advice of Counsel concerning all questions hereunder. The Trustee
shall not be answerable for the default or misconduct of any attorney or agent
selected by it with reasonable care. Except as otherwise provided herein, the
Trustee shall not be answerable for the exercise of any discretion or power
under this Indenture nor for anything whatsoever in connection with the trust
hereunder, except only its own willful misconduct or negligence.
Section 11.04. Compensation and Indemnity.
--------------------------
(a) The Issuer shall pay the Trustee reasonable compensation for its
services hereunder, and also all its reasonable expenses and disbursements,
including the reasonable fees and out-of-pocket expenses of counsel for the
Trustee, provided, however, that the Issuer previously shall have agreed to all
such compensation and expenses. If the Issuer shall have failed to make any such
payment, the Trustee shall have, in addition to any other rights hereunder, a
claim, prior to the Noteholders, for the payment of its compensation and
indemnification and the reimbursement of its expenses and any advances made by
it upon the moneys and obligations in the Note Fund, except for moneys or
obligations held by the Trustee for the payment of particular Notes or the
proceeds of any drawing under the Credit Facility.
(b) The Issuer agrees to indemnify the Trustee for and to hold the Trustee
harmless against all liabilities, claims, costs, losses and expenses incurred
without negligence or bad faith on the part of the Trustee on account of any
action taken or omitted to be taken by the Trustee in accordance with the terms
of this Indenture or the Notes, or at the request of or with the consent of the
Issuer, including, without limitation, the costs and expenses of the Trustee in
defending itself against any action, claim or proceeding in connection with any
of the foregoing.
(c) The Trustee agrees that under no circumstances will Available Moneys be
applied to payment of compensation, expenses or indemnification to the Trustee
so long as any principal amount of Notes remain outstanding under this
Indenture.
Section 11.05. Notice of Default; Right to Investigate.
---------------------------------------
(d) The Issuer shall pay the Trustee reasonable compensation for its
services hereunder, and also all its reasonable expenses and disbursements,
including the reasonable fees and out-of-pocket expenses of counsel for the
Trustee, provided, however, that the Issuer previously shall have agreed to all
such compensation and expenses. If the Issuer shall have
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failed to make any such payment, the Trustee shall have, in addition to any
other rights hereunder, a claim, prior to the Noteholders, for the payment of
its compensation and indemnification and the reimbursement of its expenses and
any advances made by it upon the moneys and obligations in the Note Fund, except
for moneys or obligations held by the Trustee for the payment of particular
Notes or the proceeds of any drawing under the Credit Facility.
(e) The Issuer agrees to indemnify the Trustee for and to hold the Trustee
harmless against all liabilities, claims, costs, losses and expenses incurred
without negligence or bad faith on the part of the Trustee on account of any
action taken or omitted to be taken by the Trustee in accordance with the terms
of this Indenture or the Notes, or at the request of or with the consent of the
Issuer, including, without limitation, the costs and expenses of the Trustee in
defending itself against any action, claim or proceeding in connection with any
of the foregoing.
(f) The Trustee agrees that under no circumstances will Available Moneys be
applied to payment of compensation, expenses or indemnification to the Trustee
so long as any principal amount of Notes remain outstanding under this
Indenture.
The Trustee shall, within 10 days after it has knowledge of the occurrence
of an Event of Default, give written notice by first class mail to registered
owners of Notes and to the Issuer and the Remarketing Agent of all Defaults
known to the Trustee, unless such Defaults have been remedied; provided that in
the case of a Default under Section 10.01, the Trustee may withhold such notice
so long as it in good faith determines that such withholding is in the interest
of the Noteholders. The Trustee shall not be deemed to have notice of any
Default under Section 10.01 (other than payment Defaults) unless notified in
writing of such Default by the owners of at least 25 percent in principal amount
of all Notes than Outstanding. The Trustee may, however, at any time require of
the Issuer full information as to the performance of any covenant hereunder;
and, if information satisfactory to it is not forthcoming, the Trustee may make
or cause to be made, at the expense of the Issuer, an investigation into the
affairs of the Issuer related to this Indenture.
Section 11.06. Obligation to Act.
-----------------
Except during the continuance of an Event of Default, the Trustee
undertakes to perform such duties and only such duties as are specifically set
forth in this Indenture, and no implied covenants or obligations shall be read
into this Indenture against the Trustee. If any Event of Default shall have
occurred and be continuing, the Trustee shall exercise such of the rights and
remedies vested in it by this Indenture and shall use the same degree of care in
its exercise as a prudent person would exercise or use in the circumstances in
the conduct of his own affairs. The Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Noteholders pursuant to this Indenture (other
than the Trustee's obligation to draw under a Credit Facility, make payments
when due to Noteholders from funds available under this Indenture and accelerate
the Notes when required by Article X of this Indenture) unless such Noteholders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred in compliance with such
request or direction.
Section 11.07. Reliance.
--------
55
<PAGE>
The Trustee may act on any requisition, resolution, notice, telegram,
request, consent, waiver, certificate, statement, affidavit, voucher, note, or
other paper or document which it in good faith believes to be genuine and to
have been passed or signed by the proper persons or to have been prepared and
furnished pursuant to any of the provisions of this Indenture, including without
limitation, any direction of the Tender Agent or the Remarketing Agent to draw
on the Credit Facility; and the Trustee shall be under no duty to make any
investigation as to any statement contained in any such instrument, but may
accept the same as conclusive evidence of the accuracy of such statement.
Section 11.08. Trustee May Deal in Notes.
-------------------------
The Trustee may in good faith buy, sell, own, hold and deal in any of the
Notes and may join in any action which any Noteholders may be entitled to take
with like effect as if the Trustee were not a party to this Indenture. The
Trustee may also engage in or be interested in any financial or other
transaction with the Issuer or the Issuers; provided that if the Trustee
determines that any such relation is in conflict with its duties under this
Indenture, it shall eliminate the conflict or resign as Trustee.
Section 11.09. Construction of Ambiguous Provisions.
------------------------------------
The Trustee may construe any ambiguous or inconsistent provisions of this
Indenture, and any construction by the Trustee shall be binding upon the
Noteholders.
Section 11.10. Resignation of Trustee.
----------------------
The Trustee may resign and be discharged of the trusts created by this
Indenture by written resignation filed with the Issuer not fewer than 30 days
before the date when it is to take effect; provided notice of such resignation
is mailed to the owners of the Notes not fewer than three weeks prior to the
date when the resignation is to take effect. Such resignation shall take effect
only upon the appointment of a successor trustee.
Section 11.11. Removal of Trustee.
------------------
Any Trustee hereunder may be removed at any time by an instrument
appointing a successor to the Trustee so removed, executed by the owners of a
majority in principal amount of the Notes then Outstanding and filed with the
Issuer, the Credit Facility Issuer and any owners of Notes that are not
signatories of such instrument of removal and appointment.
The Trustee may also be removed at any time for any breach of trust or for
acting or proceeding in violation of, or for failing to act or proceed in
accordance with, any provision of this Indenture with respect to the duties and
obligations of the Trustee by any court of competent jurisdiction upon the
application of the Issuer or the owners of not less than 20 percent in aggregate
principal amount of the Notes Outstanding.
No removal shall take effect until a successor Trustee has been appointed
pursuant to Section 11.12 hereof.
Section 11.12. Appointment of Successor Trustee.
--------------------------------
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If the Trustee or any successor trustee resigns or is removed or dissolved,
or if its property or business is taken under the control of any state or
federal court or administrative body, a vacancy shall forthwith exist in the
office of the Trustee, and the Issuer, with the consent of the Credit Facility
Issuer, which consent shall not be unreasonably withheld, shall appoint a
successor and shall mail notice of such appointment to registered owners of the
Notes. If the Issuer fails to make such appointment promptly, the owners of a
majority in principal amount of the Notes then Outstanding may do so.
If no appointment of a successor Trustee shall be made pursuant to the
foregoing provisions of this Section 11.12, the Holder of any Note Outstanding
hereunder or any retiring Trustee may apply to any court of competent
jurisdiction to appoint a successor Trustee. Such court may thereupon, after
such notice, if any as such court may deem proper and prescribe, appoint a
successor Trustee.
Section 11.13. Qualification of Successor.
--------------------------
A successor trustee shall be a national banking association with trust
powers or a bank and trust company or a trust company having capital and surplus
of at least $20,000,000 (or a combined capital and surplus in excess of
$5,000,000 and the obligations of which, whether now in existence or hereafter
incurred, are fully guaranteed by a corporation organized and doing business
under the laws of the United States of America, and state or territory thereof
or of the District of Columbia, that has a combined capital and surplus of at
least $50,000,000), if there be one able and willing to accept the trust on
reasonable and customary terms.
Section 11.14. Instruments of Succession.
------------------------
Any successor trustee shall execute, acknowledge and deliver to the Issuer
an instrument accepting such appointment hereunder; and thereupon such successor
trustee, without any further act, deed or conveyance, shall become fully vested
with all the estates, properties, rights, powers, trusts, duties and obligations
of its predecessor in the trust hereunder, with like effect as if originally
named Trustee herein. The Trustee ceasing to act hereunder shall pay over to the
successor trustee all moneys held by it hereunder; and, upon request of the
successor trustee, the Trustee ceasing to act and the Issuer shall execute and
deliver an instrument transferring to the successor trustee all the estates,
properties, rights, powers and trusts hereunder of the Trustee ceasing to act.
Section 11.15. Merger of Trustee.
-----------------
Any corporation or association into which the Trustee may be converted or
merged, or with which it or any successor to it may be consolidated, or to which
it may sell or transfer its corporate trust assets or corporate trust business
as a whole or substantially as a whole, or any corporation or association
resulting from any such conversion, sale, merger, consolidation or transfer to
which it is a party, ipso facto, shall be the successor trustee under this
Indenture, without the execution or filing of any paper or any further act on
the part of the parties hereto, anything herein to the contrary notwithstanding.
Section 11.16. Trustee Not Required to Expend or Risk Own Funds.
------------------------------------------------
57
<PAGE>
No provision of this Indenture shall require the Trustee to expend or risk
its own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder, or in the exercise of any of its rights or powers.
[Balance of Page Intentionally Left Blank]
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<PAGE>
ARTICLE XII
The Remarketing Agent and the Tender Agent
------------------------------------------
Section 12.01. The Remarketing Agent.
---------------------
(a) The Issuer hereby appoints McDonald Investments Inc. as Remarketing
Agent under this Indenture. The Issuer may appoint a different Remarketing
Agent. Each Remarketing Agent, by written instrument delivered to the Trustee
and the Issuer, shall accept the duties and obligations imposed on it under this
Indenture and shall become a party to the Remarketing Agreement.
(b) In addition to the other obligations imposed on the Remarketing Agent
hereunder, the Remarketing Agent shall agree to keep such books and records as
shall be consistent with prudent industry practice and make such books and
records available for inspection by the Issuer and the Trustee at all reasonable
times.
(c) If at any time a Remarketing Agent is unable or unwilling to act as a
Remarketing Agent, such Remarketing Agent, upon 60 days' prior written notice to
the Issuer, the Trustee, the Tender Agent, and any other Remarketing Agent, may
resign. Any Remarketing Agent may be removed at any time by the Issuer, by
written notice signed by the Issuer and delivered to the Trustee and such
Remarketing Agent. Upon resignation or removal of a Remarketing Agent, the
Issuer shall either appoint a successor Remarketing Agent or authorize the
remaining Remarketing Agent or Agents to act alone in such capacity, in which
case all reference in this Indenture to the Remarketing Agent shall mean the
remaining Remarketing Agent or Agents. If the remaining Remarketing Agent
resigns or is removed, the Issuer shall appoint a substitute Remarketing Agent
or Agents.
(d) In the event that the Issuer shall fail to appoint a successor
Remarketing Agent or Agents, upon the resignation or removal of the remaining
Remarketing Agents or upon their dissolution, insolvency or bankruptcy, the
Trustee may either appoint a Remarketing Agent or Agents or itself act as
Remarketing Agent until the appointment of a successor Remarketing Agent or
Agents in accordance with this Section 12.01; provided, however, that the
Trustee, in its capacity as Remarketing Agent, shall not be required to sell
Notes.
Section 12.02. The Tender Agent.
----------------
(a) The Tender Agent shall be The Huntington National Bank, having its
Principal Office at 41 South High Street, HC 1112, Columbus, Ohio 43215. The
Issuer shall appoint any successor Tender Agent for the Notes, as necessary,
subject to the conditions set forth in Section 12.02(b) hereof. Any successor
Tender Agent shall designate its Principal Office and signify its acceptance of
the duties and obligations imposed upon it hereunder by a written instrument of
acceptance delivered to the Trustee, the Issuer and the Credit Facility Issuer
in which the Tender Agent will agree, particularly:
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(i) to hold all Notes delivered to it pursuant to Section 3.01
hereof, as agent and bailee of, and in escrow for the benefit of, the
respective owners thereof until moneys representing the purchase price of
such Notes shall have been delivered to or for the account of or to the
order of such owners;
(ii) to hold all moneys (without investment thereof) delivered to
it hereunder for the purchase of Notes pursuant to Section 3.01 hereof as
agent and bailee of, and in escrow for the benefit of, the person or entity
which shall have so delivered such moneys until the Notes purchased with
such moneys shall have been delivered to or for the account of such person
or entity;
(iii) to hold Notes for the account of the Issuer as contemplated
by Section 3.04(a)(iii) hereof;
(iv) to hold Notes purchased pursuant to Section 3.01 with moneys
representing the proceeds of a drawing under the Credit Facility to be held
pursuant to Section 3.05 as agent and bailee; and
(v) to keep such books and records as shall be consistent with
prudent industry practice and to make such books and records available for
inspection by the Trustee and the Issuer at all reasonable times.
(b) The Tender Agent shall be a corporation duly organized under the laws
of the United States of America or any state or territory thereof, and, if the
Notes are rated by Moody's and, if not a bank or trust company rated at least
Baa3/P3 or otherwise qualified by Moody's, having a combined capital and surplus
of at least $20,000,000 (or a combined capital and surplus in excess of
$5,000,000 and the obligations of which, whether now in existence or hereafter
incurred, are fully guaranteed by a corporation organized and doing business
under the laws of the United States, and State or Territory thereof or of the
District of Columbia, that has a combined capital and surplus of at least
$50,000,000) and authorized by law to perform all the duties imposed upon it by
this Indenture. The Tender Agent may at any time resign and be discharged of the
duties and obligations created by this Indenture by giving at least 60 days'
notice to the Trustee, the Issuer, the Credit Facility Issuer and the
Remarketing Agent. In the event that the Issuer shall fail to appoint a
successor Tender Agent, upon the resignation or removal of the Tender Agent, the
Trustee shall either appoint a Tender Agent or itself act as Tender Agent until
the appointment of a successor Tender Agent. The Tender Agent may be removed at
any time by an instrument signed by the Issuer, filed with the Trustee, the
Remarketing Agent and the Credit Facility Issuer.
In the event of the resignation or removal of the Tender Agent, the Tender
Agent shall deliver any Notes and moneys held by it in such capacity to its
successor or, if there is no successor, to the Trustee.
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Section 12.03. Notices.
-------
The Trustee shall, within 30 days of the resignation or removal of the
Remarketing Agent or the Tender Agent or the appointment of successor
Remarketing Agent or Tender Agent, give notice thereof by first class mail,
postage prepaid, to the owners of the Notes.
[Balance of Page Intentionally Left Blank]
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ARTICLE XIII
Acts of Noteholders; Evidence of Ownership
------------------------------------------
Section 13.01. Acts of Noteholders; Evidence of Ownership.
------------------------------------------
Any action to be taken by Noteholders may be evidenced by one or more
concurrent written instruments of similar tenor signed or executed by such
Noteholders in person or by agent appointed in writing. The fact and date of the
execution by any person of any such instrument may be proved by acknowledgment
before a notary public or other officer empowered to take acknowledgments or by
an affidavit of a witness to such execution. Where such execution is by an
officer of a corporation or a member of a partnership, on behalf of such
corporation or partnership, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument or writing, or the authority of the person executing the same,
may also be proved in any other manner which the Trustee deems sufficient. The
ownership of the Notes shall be proved by the Note Register. Any action by the
owner of any Note shall bind all future owners of the same Note in respect of
anything done or suffered by the Issuer or the Trustee in pursuance thereof.
[Balance of Page Intentionally Left Blank]
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Exhibit 4.18
ARTICLE XIV
Amendments and Supplements
--------------------------
Section 14.01. Amendments and Supplements Without Noteholders' Consent.
-------------------------------------------------------
This Indenture may be amended or supplemented at any time and from time
to time, without the consent of the Noteholders, but with the consent of the
Credit Facility Issuer, any, which consent shall not be withheld unreasonably,
by a supplemental indenture authorized by a resolution of the Issuer, executed
by the Issuer and the Trustee and filed with the Trustee, for one or more of the
following purposes:
(a) to add additional covenants of the Issuer or to surrender any right or
power herein conferred upon the Issuer;
(b) for any purpose not inconsistent with the terms of this Indenture
or to cure any ambiguity or to correct or supplement any provision contained
herein or in any supplemental indenture which may be defective or inconsistent
with any other provision contained herein or in any supplemental indenture, or
to make such other provisions in regard to matters or questions arising under
this Indenture which shall not adversely affect the interests of the owners of
the Notes;
(c) to permit the Notes to be converted to certificateless securities
or securities represented by a master certificate held in trust, ownership of
which, in either case, is evidenced by book-entries on the books of the Note
Registrar, for any period of time;
(d) to permit the appointment of a co-trustee under this Indenture;
(e) to authorize different authorized denominations of the Notes and to
make correlative amendments and modifications to this Indenture regarding
exchangeability of Notes of different authorized denominations, redemptions of
portions of Notes of particular authorized denominations and similar amendments
and modifications of a technical nature;
(f) to modify, alter, supplement or amend this Indenture in such manner
as shall permit the qualification hereof under the Trust Indenture Act of 1939,
as from time to time amended; or
(g) to modify, alter, amend or supplement this Indenture in any other
respect which is not materially adverse to the Noteholders.
Before the Issuer and the Trustee shall enter into any supplemental
indenture pursuant to this Section 14.01, there shall have been delivered to the
Trustee an opinion of Counsel stating that such supplemental indenture is
authorized under this Indenture, and that such supplemental indenture will, upon
the execution and delivery thereof, be valid and binding upon the Issuer in
accordance with its terms.
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Section 14.02. Amendments with Noteholders' and Credit Facility Issuer's
---------------------------------------------------------
Consent.
- -------
This Indenture may be amended from time to time, except with respect to
(1) the principal, redemption price, purchase price, interest payable upon any
Notes, (2) the Interest Payment Dates, the dates of maturity or the redemption
or purchase provisions of any Notes, (3) this Article XIV, (4) the creation of a
priority of one Note over another, and (5) the imposition of any lien on the
trust estate other than the lien of the Trustee for the benefit of the
Noteholders and the Credit Facility Issuer, by a supplemental indenture
consented to by the Credit Facility Issuer and by the Issuer and approved by the
owners of at least a majority in aggregate principal amount of the Notes then
Outstanding which would be affected by the action proposed to be taken. This
Indenture may be amended with respect to the matters enumerated in clauses (l)
through (5) of the preceding sentence with the unanimous consent of all
Noteholders, the Credit Facility Issuer and the Issuer.
Section 14.03. Amendment of Credit Facility.
----------------------------
The Trustee shall notify Noteholders of any proposed amendment of the
Credit Facility which would materially adversely affect the interests of the
Noteholders and may consent thereto with the unanimous consent of all
Noteholders which would be affected by the action proposed to be taken.
Section 14.04. Trustee Authorized to Join in Amendments and Supplements;
--------------------------------------------------------
Reliance on Counsel.
- -------------------
The Trustee is authorized to join with the Issuer in the execution and
delivery of any supplemental indenture or amendment permitted by this Article
XIV and in so doing shall be fully protected by an opinion of Counsel that such
supplemental indenture or amendment is so permitted and has been duly authorized
by the Issuer and that all things necessary to make it a valid and binding
agreement have been done; provided that certain amendments may, by agreement
between the Trustee and the Credit Facility Issuer, require the prior consent of
the Credit Facility Issuer.
[Balance of Page Intentionally Left Blank]
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ARTICLE XV
Defeasance
----------
Section 15.01. Defeasance.
----------
(a) When the principal or redemption price (as the case may be) of, and
interest on, all Notes issued hereunder have been paid, or provision has been
made for payment of the same, together with the compensation of the Trustee and
all other sums payable hereunder by the Issuer, the right, title and interest of
the Trustee shall thereupon cease and the Trustee, on demand of the Issuer,
shall release this Indenture and shall execute such documents to evidence such
release as may be reasonably required by the Issuer and shall turn over to the
Issuer or to such person, body or authority as may be entitled to receive the
same all balances then held by it hereunder. If payment or provision therefor is
made with respect to less than all of the Notes, the particular Notes (or
portion thereof) for which provision for payment shall have been considered made
shall be selected by lot by the Trustee, and thereupon the Trustee shall take
similar action for the release of this Indenture with respect to such Notes.
(b) Provision for the payment of Notes shall be deemed to have been
made when the Trustee holds in the Note Fund, in trust and irrevocably set aside
exclusively for such payment, (i) moneys sufficient to make such payment and any
payment of the purchase price of Notes pursuant to Section 3.01; provided, that
any such moneys necessary for the payment of Notes not yet due shall constitute
Available Moneys and/or (ii) Governmental Obligations maturing as to principal
and interest in such amounts and at such times as will provide sufficient moneys
(without consideration of any reinvestment thereof) to make such payment and any
payment of the purchase price of Notes pursuant to Section 3.01, and which are
not subject to prepayment, redemption or call prior to their stated maturity;
provided, that such Governmental Obligations shall have been on deposit with the
Trustee in a separate and segregated account for a period of 95 days during
which no Event of Bankruptcy has occurred, or shall have been purchased with
Available Moneys.
No Notes in respect of which a deposit under clause (i) or (ii) above
has been made shall be deemed paid within the meaning of this Article unless the
Trustee is satisfied that the amounts deposited are sufficient to make all
payments that might become due on the Notes; provided that notwithstanding any
other provision of this Indenture, any Notes purchased with such moneys pursuant
to Section 3.01 shall be surrendered to the Trustee for cancellation and shall
not be remarketed. Notwithstanding the foregoing, no delivery to the Trustee
under this subsection (b) shall be deemed a payment of any Notes which are to be
redeemed prior to their stated maturity until such Notes shall have been
irrevocably called or designated for redemption on a date thereafter on which
such Notes may be redeemed in accordance with the provisions of this Indenture
and proper notice of such redemption shall have been given in accordance with
Article VIII or the Issuer shall have given the Trustee, in form satisfactory to
the Trustee, irrevocable instructions to give, in the manner and at the times
prescribed by Article VIII, notice of redemption. Neither the obligations nor
moneys deposited with the Trustee pursuant to this Section shall be withdrawn or
used for any purpose other than, and shall be segregated and held
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in trust for, the payment of the principal of, purchase price of, redemption
price of and interest on the Notes with respect to which such deposit has been
made. In the event that such moneys or obligations are to be applied to the
payment of principal or redemption price of any Notes more than 60 days
following the deposit thereof with the Trustee, the Trustee shall publish once
in an Authorized Newspaper a notice stating that such moneys or obligations have
been deposited and identifying the Notes for the payment of which such moneys or
obligations are being held and shall mail copies of all such notices to all
owners of Notes for the payment of which such moneys or obligations are being
held at their registered addresses and to the Rating Service, if the Notes are
then rated by a Rating Service.
(c) Anything in Article XIV to the contrary notwithstanding, if moneys
or Governmental Obligations have been deposited or set aside with the Trustee
pursuant to this Article for the payment of the principal, purchase price or
redemption price of the Notes and the interest thereon and the principal or
redemption price of such Notes and the interest thereon shall not have in fact
been actually paid in full, no amendment to the provisions of this Article shall
be made without the consent of the owner of each of the Notes affected thereby.
Notwithstanding the foregoing, those provisions relating to the purchase of
Notes, the maturity of Notes, interest payments and dates thereof, and the
Trustee's remedies with respect thereto, and provisions relating to exchange,
transfer and registration of Notes, replacement of mutilated, destroyed, lost or
stolen Notes, the safekeeping and cancellation of Notes, non-presentment of
Notes, the holding of moneys in trust, and repayments to the Issuer from the
Note Fund and the duties of the Trustee in connection with all of the foregoing
and the fees, expenses and indemnities of the Trustee, shall remain in effect
and shall be binding upon the Trustee, the Issuer and the Noteholders
notwithstanding the release and discharge of the lien of this Indenture.
[Balance of Page Intentionally Left Blank]
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ARTICLE XVI
Miscellaneous Provisions
------------------------
Section 16.01. Deposit of Funds for Payment of Notes.
-------------------------------------
If the principal or redemption price of any Notes becoming due, either
at maturity or by call for redemption or otherwise, together with all interest
accruing thereon to the due date, has been paid or provision therefor made in
accordance with Section 15.01, all interest on such Notes shall cease to accrue
on the due date and all liability of the Issuer with respect to such Notes shall
likewise cease, except as hereinafter provided. Thereafter the owners of such
Notes shall be restricted exclusively to the funds so deposited for any claim of
whatsoever nature with respect to such Notes, and the Trustee shall hold such
funds in trust for such owners.
Moneys so deposited with the Trustee which remain unclaimed two years
after the date payment thereof becomes due shall, at the request of the Issuer
and if the Issuer is not at the time to the knowledge of the Trustee in default
with respect to any covenant in this Indenture or the Notes contained, be paid
to the Issuer, and, upon the request of, and provision of adequate
indemnification from the Issuer, the Trustee shall pay such moneys to the
Issuer; and the owners of the Notes for which the deposit was made shall
thereafter be limited to a claim against the Issuer; provided, however, that the
Trustee, before making payment to the Issuer, may, at the expense of the Issuer,
cause a notice to be published once in an Authorized Newspaper, stating that the
moneys remaining unclaimed will be returned to the Issuer after a specified
date.
Section 16.02. Effect of Purchase of Notes.
---------------------------
No purchase of Notes pursuant to Section 3.01 shall be deemed to be a
payment or redemption of such Notes or any portion thereof and such purchase
will not operate to extinguish or discharge the indebtedness evidenced by such
Notes.
Section 16.03. No Rights Conferred on Others.
-----------------------------
Nothing herein contained shall confer any right upon any person other
than the parties hereto, the Issuer, the Credit Facility Issuer and the owners
of the Notes.
Section 16.04. Illegal, etc. Provisions Disregarded.
-------------------------------------
If any term or provision of this Indenture or the Notes or the
application thereof for any reason or circumstance shall to any extent be held
invalid or unenforceable, the remaining provisions or the application of such
term or provision to persons and situations other than those as to which it is
held invalid or unenforceable, shall not be affected thereby, and each term and
provision hereof and thereof shall be valid and enforced to the fullest extent
permitted by law.
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Section 16.05. Substitute Notice.
-----------------
If for any reason it shall be impossible to make publication of any notice
required hereby in a newspaper or newspapers, then such publication or other
notice in lieu thereof as shall be made with the approval of the Trustee shall
constitute a sufficient giving of such notice.
Section 16.06. Notices.
-------
Any notice to the Issuer or the Trustee shall be given in writing,
either by registered mail, to be deemed effective two days after mailing, or by
telegram, or by telephone, confirmed in writing, to:
The Issuer: Aerovox Incorporated
740 Belleville Avenue
New Bedford, Massachusetts 02745
Attention: President
Telephone: (508) 994-9661
Telecopy: (508) 910-3123
With a copy to: Stanley B. Kay, Esq.
85 Wells Avenue, Suite 200
Newton, Massachusetts 02459-3215
Telephone: (617) 928-3677
Telecopy: (617) 558-8029
The Trustee: The Huntington National Bank
41 South High Street
HC 1112
Columbus, Ohio 43215
Attention: Corporate Trust Department
Telephone: (614) 480-4004
Telecopy: (614) 480-5223
The Bank: KeyBank National Association
66 South Pearl Street
Albany, New York 12207-1501
Attention: International Dept.
Telecopy: (518) 487-4998
With a copy to: KeyBank National Association
One Canal Plaza
Portland, Maine 04101-4035
Telephone: (207) 874-7045
Telecopy: (207) 874-7737
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The Remarketing McDonald Investments Inc.
Agent: 800 Superior Avenue, 17th Floor
Cleveland, Ohio 44114-1306
Attention: Fixed Income Department
Telephone: (216) 443-2890
Telecopy: (216) 443-3801
Section 16.07. Successors and Assigns.
----------------------
All the covenants, promises and agreements in this Indenture contained
by or on behalf of the Issuer, or by or on behalf of the Trustee, shall bind and
inure to the benefit of their respective successors and assigns, whether so
expressed or not.
Section 16.08. Headings for Convenience Only.
-----------------------------
The descriptive headings in this Indenture are inserted for convenience
only and shall not control or affect the meaning or construction of any of the
provisions hereof.
Section 16.09. Counterparts.
------------
This Indenture may be executed in any number of counterparts, each of
which when so executed and delivered shall constitute an original, but all of
which, when taken together, shall constitute but one and the same instrument,
and shall become effective when copies hereof shall be delivered to each of the
parties hereto, which copies, when taken together, bear the signatures of each
of the parties hereto.
Section 16.10. Credits Under Agreement.
-----------------------
The Issuer shall be entitled to credits against its obligations under the
Reimbursement Agreement as provided therein.
Section 16.11. Applicable Law.
--------------
This Indenture shall be governed by and construed in accordance with the
laws of the State of Maine.
69
<PAGE>
IN WITNESS WHEREOF, Aerovox Incorporated has caused this Indenture to be
executed in its name by its duly authorized officer, and The Huntington National
Bank has caused this Indenture to be executed in its name by its duly authorized
officer, all as of the day and year first above written.
AEROVOX INCORPORATED
a Delaware corporation
By: ROBERT D. ELLIOTT
Robert D. Elliott
President and Chief Executive Officer
THE HUNTINGTON NATIONAL BANK
By: CANDADA J. MOORE
Candada J. Moore, Vice President
The Huntington National Bank, by one of its duly authorized officers, hereby
accepts appointment as the Tender Agent under the foregoing Indenture, agrees to
be bound by the provisions of this Indenture relating to the Tender Agent, and
hereby designates the Principal Office of the Trustee as Principal Office of the
Tender Agent for purposes of this Indenture, all as of the day and year first
above written.
THE HUNTINGTON NATIONAL BANK
as Tender Agent
By: CANDADA J. MOORE
Candada J. Moore, Vice President
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<PAGE>
EXHIBIT A
FORM OF DISBURSEMENT REQUEST
----------------------------
STATEMENT NO. ____ REQUESTING DISBURSEMENT OF FUNDS FROM PROJECT FUND
PURSUANT TO SECTION 4.02 OF THE TRUST INDENTURE DATED AS OF MARCH 1, 2000
BETWEEN Aerovox Incorporated AND THE HUNTINGTON NATIONAL BANK, AS TRUSTEE
Pursuant to Section 4.02 of the Trust Indenture (the "Indenture") between
Aerovox Incorporated (the "Issuer") and The Huntington National Bank, as Trustee
(the "Trustee") dated as of March 1, 2000 the undersigned Designated
Representative hereby requests and authorizes the Trustee, as depository of the
Project Fund created under this Indenture, to pay to the Issuer or to the
person(s) listed on the Disbursement Schedule hereto attached out of the moneys
deposited in the Project Fund the aggregate sum of $__________________ to pay
such person(s) or to reimburse the Issuer, as indicated in the Disbursement
Schedule, for costs of the Project. The Trustee shall, in accordance with that
Section 4.02, retain the amounts indicated on the Disbursement Schedule pending
direction from the Bank to release those retained funds.
The statement and the Disbursement Schedule shall be conclusive evidence
that the disbursements requested are properly payable out of the Project Fund,
and that any conditions thereto have been satisfied and shall constitute full
warrant, protection and authority to the Trustee for the actions taken pursuant
hereto.
This _________ day of ______________, 20__.
________________________________
Designated Representative
APPROVED FOR PAYMENT
____________________________________
KeyBank National Association,
as Letter of Credit Issuer
A-1
<PAGE>
DISBURSEMENT SCHEDULE
TO STATEMENT NO. _____ REQUESTING AND AUTHORIZING DISBURSEMENT OF FUNDS FROM
PROJECT FUND PURSUANT TO SECTION 4.02 OF THE TRUST INDENTURE DATED AS OF MARCH
1, 2000 BETWEEN Aerovox Incorporated AND THE HUNTINGTON NATIONAL BANK
AMOUNT TO BE
PAYEE DISBURSEMENT AMOUNT RETAINED
----- ------------------- --------
A-2
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<PAGE>
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<S> <C>
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<FISCAL-YEAR-END> DEC-30-2000
<PERIOD-START> JAN-02-2000
<PERIOD-END> APR-01-2000
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0
0
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