UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (Fee required)
For the fiscal year ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 (No fee required)
(NO FEE REQUIRED)
For the transition period from _____ to _____
Commission file Number 0-19824
NUTRITION MANAGEMENT SERVICES COMPANY
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2095332
------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
725 Kimberton Road, Kimberton, Pennsylvania 19442
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 610-935-2050
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
None
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class
-------------------
Shares of Class A Common Stock (no par value)
(Cover page 1 of 2 pages)
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Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchanges 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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not ontained herein, and will not be contained to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /X/
The aggregate market value of voting stock (Class A Common Stock, no
par value) held by non-affiliates of the Registrant as of September 24, 1997 was
approximately $1,563,081.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: At September 24,
1997, there was outstanding 2,772,665 shares of the Registrant's Class A Common
Stock, no par value, and 100,000 shares of the Registrant's Class B Common
Stock, no par value.
DOCUMENTS INCORPORATED BY REFERENCE
The information required by Part III for Form 10-K will be incorporated
by reference to certain portions of a definitive proxy statement which is
expected to be filed by the Registrant pursuant to Regulation 14A within 120
days after the close of its fiscal year.
This report consists of consecutively numbered pages (inclusive of all
exhibits and including this cover page). The Exhibit Index appears on pages
17-19.
(Cover page 2 of 2 pages)
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PART I
ITEM 1 - BUSINESS
GENERAL
Nutrition Management Services Company (the "Company" or the
"Registrant") provides food management services to continuing care facilities,
hospitals and retirement communities.
The Company was incorporated under the laws of the
Commonwealth of Pennsylvania on March 28, 1979, and focuses on the continuing
care and health-care segments of the food service market. Its customers include
continuing care facilities, hospitals, and retirement communities.
On May 31, 1994, the Company purchased twenty-two (22) acres
of land containing a 40,000 square foot building formerly used as a restaurant
and banquet facility. The Company is currently renovating the property to serve
as a comprehensive training facility for Company employees. In addition, the
facility will serve as a showroom for prospective customers who will be able to
observe the Company's programs for nursing and retirement home dining and
hospital cafeteria operations. In September of 1997, the Company opened the
retail restaurant portion of the Collegeville Inn Conference & Training Center.
The revenue from the restaurant operation will be used to defray the costs and
expenses of the training facility. The restaurant is managed by experienced
professionals employed by and recruited by the Company. The remaining three
divisions of the project are expected to open by the third quarter of fiscal
1998. See "Management's Discussion of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- Investing Activities" for a
description of the costs relating to the renovation work.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Not applicable.
DESCRIPTION OF SERVICES
The Company provides contract food service to continuing care
facilities, hospitals, and retirement communities. The Company provides complete
management and supervision of the dietary operations in its customers'
facilities through the use of on-site management staff, quality and cost-control
programs, and training and education of dietary staff. The Company's operational
districts are supported by District Managers, registered dietitians and quality
assurance staff.
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The Company seeks to provide food service at a lower cost than
self-managed facilities, while maintaining or improving existing service,
nutritional care standards and regulatory compliance.
MARKETING AND SALES
The Company's customers include continuing care facilities,
hospitals and retirement communities, which range in size from small individual
facilities to large multi-facility operations. Although many facilities perform
their own food service functions without relying upon outside management firms
such as the Company, the Company expects the market for its services to grow as
facilities increasingly seek to contain costs and are required to comply with
increased governmental regulations.
The Company's services are marketed at the corporate level by
its Chief Executive Officer, its President, and its Marketing Representatives.
The Company's services are marketed primarily through in-person solicitation of
facilities. The Company also utilizes direct mail and participates in industry
trade shows.
MARKET FOR SERVICES
The market for the Company's services consists of a large
number of facilities involved in various aspects of the continuing care and
health care fields, including nursing homes, retirement communities, hospitals
and rehabilitation centers. Such facilities may be specialized or general,
privately owned or public, profit or not-for-profit and may serve residents and
patients on a continuing or short-term basis.
SERVICE AGREEMENTS
The Company provides its services under several different
financial arrangements including a fee basis and profit and loss basis. As of
June 30, 1997 the Company provided services under various service agreements at
102 facilities. At certain of these facilities, the Company has contracts to
provide vending services in addition to the contract to provide food services.
Most of these contracts have one year terms and are automatically renewable at
the end of each service year. The agreements generally provide that either party
may cancel the agreement upon ninety (90) days written notice.
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The following table shows the number of customer
accounts maintained by the Company during each of the last three fiscal years:
1997 1996 1995
---- ---- ----
Agreements in effect at
beginning of fiscal year 92 95 92
New agreements during
the fiscal year 24 10 16
Purchased contracts -- -- --
Contracts canceled during
the fiscal year 14 13 13
--- --- ---
Agreements in effect at the
end of the fiscal year 102 92 95
--- --- ---
In consideration for providing its services, the Company
expects to be paid by its clients in accordance with the credit terms agreed
upon. Historically, the Company has not incurred any significant losses related
to amounts not collected for services rendered.
MAJOR CUSTOMER
In fiscal 1997, 13% of the Company's revenues were derived
from sales to one customer. The loss of such customer could have a material
adverse affect on the Company's results of operations in fiscal 1998.
COMPETITION
The Company competes mainly with regional and national food
service management companies operating in the continuing care and health care
industries, as well as with the self managed departments of its potential
clients.
Although the competition to service these facilities is
intense, the Company believes that it competes effectively for new agreements as
well as for renewals of existing agreements based upon the quality and
dependability of its services. The Company's ability to compete successfully
depends upon its ability to maintain and improve quality, service and
reliability, to attract and retain qualified employees and to continue to expand
its marketing and service activities.
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EMPLOYEES
At June 30, 1997, the Company employed a total of
approximately 885 employees. Approximately 309 of those employees serve in
various executive, management, administrative, quality assurance and sales
capacities. The remaining 576 employees are primarily dietary workers. A small
percentage of the Company's dietary workers were covered by collective
bargaining agreements. The Company considers relationships with its employees to
be satisfactory.
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND
EXPORT SALES
Not applicable.
ITEM 2 - PROPERTIES
The Company leases its corporate offices, located at 725
Kimberton Road, Kimberton, PA 19442, which consists of approximately 8,500
square feet from a corporation controlled by a related party. The initial term
of the lease expires on June 30, 2002.
The Company leases an apartment from a corporation controlled
by a related party to accommodate visiting clients and employees. In addition,
the Company is provided with office space at each of its client facilities.
The Company owns approximately twenty-two acres of land in
Collegeville, Pennsylvania, upon which construction is currently in progress.
The Company is renovating an existing 40,000 square foot building to serve as a
training facility and restaurant.
The Company presently owns food service equipment, computers,
office furniture, and equipment, automobiles and trucks. Management believes
that all properties and equipment are sufficient for the conduct of the
Company's current operations.
ITEM 3 - LEGAL PROCEEDINGS
There are no material legal proceedings pending against the
Company.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The Company's Class A Common Stock No Par Value, (the "Class A
Common Stock") is traded on the NASDAQ Small Cap Market ("NASDAQ").
The following table shows the range of high and low bid
quotations as reported by NASDAQ for the quarters ending during the last two
fiscal years for the Class A Common Stock:
FISCAL 1997 HIGH LOW
-----------------------------------------------
First Quarter 2 1 7/16
Second Quarter 1 9/16 1 1/4
Third Quarter 1 7/8 1 3/8
Fourth Quarter 2 1/8 1 7/16
FISCAL 1996 HIGH LOW
-----------------------------------------------
First Quarter 2 5/8 1 11/16
Second Quarter 2 3/16 1 5/8
Third Quarter 1 13/16 1 1/8
Fourth Quarter 2 5/16 1 3/16
The prices presented are bid prices, which represent prices
between broker-dealers and do not include retail mark-ups and mark-downs or any
commission to the broker-dealer. The above prices do not reflect prices in
actual transactions.
HOLDERS
As of September 19, 1997, there were approximately eighty
holders of record of the Class A Common Stock. It is estimated that there are in
excess of 500 beneficial holders of record.
DIVIDENDS
The Company has not paid any dividends on its Class A or Class
B Common Stock. It is not expected that the Company will pay any dividends in
the foreseeable future.
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ITEM 6 - SELECTED FINANCIAL DATA
The selected historical financial data presented below should
be read in conjunction with, and is qualified in its entirety by reference to,
the Consolidated Financial Statements and the notes thereto.
<TABLE>
<CAPTION>
Years ended June 30
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(as restated)
<S> <C> <C> <C> <C> <C>
Revenue $ 35,293,962 $ 35,138,432 $ 33,352,992 $ 31,464,440 $ 10,152,594
Gross profit 6,782,040 6,801,924 6,337,036 5,711,775 4,023,750
Income from
Operations 1,020,689 418,991 553,050 1,160,541 498,924
Other income
(Expense) 242,383 128,563 (41,187) (306,521) 498,282
Income before effect
of accounting
change 752,276 301,954 265,461 401,151 552,825
============ ============ ============ ============ ============
Net Income $ 752,276 $ 301,954 $ 265,461 $ 656,838 $ 552,825
============ ============ ============ ============ ============
Per share of common stock:
Income before effect of
accounting change $ 0.26 $ 0.10 $ 0.09 $ 0.13 $ 0.18
Net Income $ 0.26 $ 0.10 $ 0.09 $ 0.22 $ 0.18
============ ============ ============ ============ ============
Weighted average
common shares
outstanding 2,921,549 2,956,504 2,975,000 2,989,589 3.088,356
========= ========= ========= ========= =========
As of June, 30
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(as restated)
Working capital $ 2,800,374 $ 3,921,140 $ 6,131,681 $ 6,518,916 $ 5,370,610
Total Assets 20,381,557 16,962,352 16,366,159 15,556,388 7,645,020
Long-term debt 6,083,851 3,267,808 4,039,474 3,739,150 338,249
Shareholders'
equity 6,972,153 6,309,595 6,037,329 5,771,868 5,341,655
</TABLE>
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ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
YEAR ENDED JUNE 30, 1997 COMPARED TO YEAR ENDED JUNE 30, 1996
Revenues for the year ended June 30, 1997 ("fiscal 1997")
increased by 0.4% to $35,293,962 over revenues for the year ended June 30, 1996
("fiscal 1996"). The increase results from growth within existing accounts as
well as new accounts opened during the intervening period, offset by contracts
canceled during the period. It is anticipated that revenues will increase in
fiscal year 1998 over 1997 with the opening of the Collegeville Inn Conference &
Training Center in the Fall of 1997.
Direct cost of operations for fiscal 1997 was $28,511,922,
compared to $28,336,508 for similar expenses in fiscal 1996, an increase of
$175,414 or 0.6%. This increase in direct costs is consistent with revenue
growth.
Gross Profit for fiscal 1997 was $6,782,040, compared to
$6,801,924, a decrease of $19,884 or 0.3%. This decrease is due to revenues
decreasing at a greater percentage than direct expenses.
General and administrative expenses for fiscal 1997 were
$4,929,812 or 13.9% of revenue, compared to $5,608,365 or 15.9% of revenue for
fiscal 1996. The expense reductions are the result of lower start-up costs,
increased operating efficiencies and reduced travel expenses.
Depreciation and amortization for fiscal 1997 was $651,539,
compared to $621,285 for fiscal 1996. The increase of $30,254 or 4.8%, was
attributable to additional depreciation related to capital expenditures.
Depreciation and amortization expenses will increase by approximately $250,000
in fiscal 1998 over 1997 with the opening of the Collegeville Inn Conference &
Training Center.
Provisions for doutful accounts for fiscal 1997 was $180,000,
compared to $153,283 for fiscal 1996. The increase of $26,717 or 17.4% was
attributable to the increase in accounts receivable over 90 days for
approximately six (6) accounts.
Income from operations for fiscal 1997 was $1,020,689 or 2.9%
of revenue compared to $418,991 or 1.2% of revenue for fiscal 1996, an increase
of $601,698 or 144%. This increase in operating income is primarily the result
of the decrease in general and administrative expenses of approximately
$600,000.
Interest expense for fiscal 1997 was $95,157 compared to
$234,280 for fiscal 1996. This decrease of approximately $140,000 is a result of
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the increase in the amount of interest expense capitalized due to an increase in
the weighted average investment in Collegeville Inn Conference & Training
Center. Interest expense will increase in fiscal year 1998 over 1997 with the
opening of the Collegeville Inn Conference and Training Center.
Interest and other non-operating income for fiscal 1997 was
$337,540 as compared to $362,843 for fiscal 1996. This decrease is due to a
reduction of gains resulting from dispositions of fixed assets.
For the foregoing reasons, net income before taxes for fiscal
1997 was $1,263,072 or 3.6% of revenue compared to $547,554 or 1.6% of revenue
for fiscal 1996, an increase of $715,518, or 130.7% from fiscal 1996.
Net income for fiscal 1997 was $752,276 or $0.26 per share as
compared to $301,954 and $0.10 per share for fiscal 1996. This increase of
approximately $450,000 is primarily from operations.
YEAR ENDED JUNE 30, 1996 COMPARED TO YEAR ENDED JUNE 30, 1995
Revenues for the year ended June 30, 1996 ("fiscal 1996")
increased by 5.4% to $35,138,432 over revenues for the year ended June 30, 1995
("fiscal 1995"). The increase results from growth within existing accounts as
well as new accounts opened during the intervening period, offset by contracts
canceled during the period.
Direct cost of operations for fiscal 1996 was $28,336,508,
compared to $27,015,956 for similar expenses in fiscal 1995, an increase of
$1,320,552 or 4.9%. This increase in direct costs is consistent with revenue
growth.
Gross Profit for fiscal 1996 was $6,801,924, compared to
$6,337,036, an increase of $464,888 or 7.3%. This increase is due to revenues
increasing at a greater percentage than direct expenses.
General and administrative expenses for fiscal 1996 were
$5,608,365 or 15.9% of revenue, compared to $5,067,038 or 15.1% of revenue for
fiscal 1995. These increases are due to additional administrative personnel
being employed during the current year and additional expenses incurred for the
installation of a company-wide computer network, as well as operating losses
associated with the start-up costs of two major customers, of which one
relationship has been terminated.
Depreciation and amortization for fiscal 1996 was $621,285,
compared to $530,596 for fiscal 1995. The increase of $90,689 or 17.1%, was
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attributable to the charge-off of deferred costs associated with contracts
canceled during fiscal 1996. (See "Service Contracts").
Provision for doubtful accounts for fiscal 1996 was $153,283
as compared to $186,352 for fiscal 1995. The decrease of $33,069 or 17.7% was
attributable to the Company's increased efforts to collect past due accounts
receivable.
Income from operations for fiscal 1996 was $418,991 or 1.2% of
revenue compared to $553,050 or 1.7% of revenue for fiscal 1995, a decrease of
$134,059. This decrease in operating income is the result of the increase in
expenses.
Interest expense for fiscal 1996 was $234,280 or 0.7% of
revenue, compared to $360,886 or 1.1% of revenue for fiscal 1995. This decrease
is attributable to a decline in the average debt outstanding due to the
Company's compliance with scheduled repayments.
Interest and other non-operating income for fiscal 1996 was
$362,843 as compared to $319,699 for fiscal 1995. This increase is due to "Other
Income" consisting of discounts from making timely payments and gains resulting
from dispositions of fixed assets.
For the foregoing reasons, net income before taxes for fiscal
1996 was $547,554 or 1.6% of revenue compared to $511,863 or 1.5% of revenue for
fiscal 1995, an increase of $35,691, an increase of 7.0% from fiscal 1995.
Net income for fiscal 1996 was $301,954 or $0.10 per share as
compared to $265,461 and $0.09 per share for fiscal 1995.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, the Company had working capital of
$2,800,374 as compared to $3,921,140 at June 30, 1996. This decrease in working
capital is primarily attributable to expenses relating to $4,000,000 of
renovation work at the Collegeville Inn Conference & Training Center. The
Company's holdings in cash, cash equivalents and marketable securities decreased
by $758,794 during fiscal 1997 to $2,267,723. The Company believes that its
existing cash and cash equivalents, investments, and anticipated revenues will
be sufficient to meet its liquidity and cash requirements for the next twelve
months.
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OPERATING ACTIVITIES
Cash provided by operations for fiscal 1997 and 1996 was
$1,776,147 and $1,629,000 respectively. This is primarily attributable to the
decrease in accounts payable.
INVESTING ACTIVITIES
Investing activities consumed $5,109,103 in cash during fiscal
1997 compared to $754,404 provided by investing activities for fiscal 1996.
Investing activities for fiscal 1997 includes capital
expenditure in the amount of $4,002,864, of which approximately $3,848,361
related to the renovation work at the Collegeville Inn Conference & Training
Center. The Company intends to incur costs between $1,000,000 and $1,250,000 for
the remainder of the renovation. (See "Business - General Description of
Business" for more discussion on the Collegeville Inn project). Additionally,
the Company recorded proceeds of $1,000,000 from a bond issue to restricted
cash. (See "Financing Activities"). For fiscal 1996, investing activities
included capital expenditure in the amount of $2,672,801, of which $2,484,000
related to the renovation work at the Collegeville Inn Conference & Training
Center.
FINANCING ACTIVITIES
During fiscal 1997, financing activities provided a net
$2,574,162 in cash compared to $801,335 in cash consumed from financing
activities in 1996. This is primarily due from the proceeds of two bond
issuance's by the Montgomery County Industrial Development Authority.
The total amount raised was $3,500,000, of which $2,500,000 is
to be used by the Company for the rehabilitation, reconstruction, installation,
furnishing and equipping of a building to be used as a conference center,
training center, a food manufacturing/processing and distribution center and a
retail restaurant. The remaining $1,000,000 is restricted as to use for the
acquisition, construction, installation and renovation of certain equipment to
be used in connection with a cook-chill system of batch food processing.
In addition, during fiscal 1997, the Company restructured its
debt with its primary lender to increase its revolving credit facility to
$4,000,000. Borrowings under the Revolving Credit facility were $2,529,553 at
June 30, 1997.
CAPITAL RESOURCES
The Company has certain credit facilities with its bank
including a line of credit and three term loans. As of June 30, 1997, the
Company had approximately $1,470,447 of unused credit available on its line of
credit. The
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Company is current with all its obligations to its bank and has met all
financial covenants in its loan documents.
A substantial portion of the Company's revenue are dependent
upon the payment of its fees by customer health care facilities, which, in turn,
are dependent upon third-party payers such as state governments, Medicare and
Medicaid. Delays in payment by third-party payers, particularly state and local
governments, may lead to delays in collection of accounts receivable.
The Company has no other material commitments for capital
expenditures (aside from the Collegeville Inn) and believes that its cash from
operations, existing balances and available credit line will be sufficient to
satisfy the needs of its operations and its capital commitments for the
foreseeable future. However, if the need arose, the Company would seek to obtain
capital from such sources as continuing debt financing or equity financing.
EFFECTS OF INFLATION
All of the Company's agreements with its customers allow the
Company to pass through to its customers its increases in the cost of labor. The
Company believes that it will be able to recover increased costs attributable to
inflation by continuing to pass through cost increases to its customers.
FORWARD-LOOKING STATEMENTS
This Form 10-K contains certain forward looking statements
within the meaning of Section 27A of the Securities Act of 1993, as amended, and
Section 21E of the Securities Exchange Act of 1934 as amended, which are
intended to be covered by the safe harbors created thereby. Although the Company
believes that the assumptions underlying the forward-looking statements
contained herein are reasonable, any of the assumptions could be inaccurate, and
therefore, there can be no assurance that the forward-looking statements
included in this Form 10-K will provide to be accurate. Factors that could cause
actual results to differ from the results discussed in the forward-looking
statements include, but are not limited to, expenditures relating to the
renovation work at the Collegeville Inn Conference & Training Center. In light
of the significant uncertainties inherent in the forward-looking statements
included herein, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives and plans
of the Company will be achieved.
NEW AUTHORITATIVE PRONOUNCEMENTS
The Financial Accounting Standards Board ("FASB") has issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
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Share", and SFAS No. 129, "Disclosure of Information about Capital Structure,"
in February 1997.
SFAS No. 128 simplifies the earnings per share ("EPS")
calculations required by Accounting Principles Board ("APB") Opinion No. 15, and
related interpretations, by replacing the presentation of primary EPS with a
presentation of basic EPS. SFAS No. 128 requires dual presentation of basic and
diluted EPS by entities with complex capital structures. Basic EPS includes no
dilution and is computed by dividing income available to common stockholders by
the weighted-average number of common shares outstanding for the period. Diluted
EPS reflects the potential dilution of securities that could share in the
earnings of an entity, similar to the fully diluted EPS of APB Opinion No. 15.
SFAS No. 128 is effective for financial statements issued for periods ending
after December 15, 1997, including interim periods; earlier application is not
permitted. When adopted, SFAS No. 128 will require restatement of all
prior-period EPS data presented; however, the Company has not sufficiently
analyzed SFAS No. 128 to determine that effect SFAS No. 128 will have on its
historically reported EPS amounts.
SFAS No. 129 does not change any previous disclosure
requirements, but rather consolidates existing disclosure requirements for ease
of retrieval.
The FASB has issued SFAS No. 130, "Reporting Comprehensive
Income." SFAS No. 130 is effective for fiscal years beginning after December 15,
1997. Earlier application is permitted. Reclassification of financial statements
for earlier periods provided for comparative purposes is required. SFAS No. 130
is not expected to have a material impact on the Company.
The FASB has issued SFAS No. 131, "Disclosures About Segments
of an Enterprise and Related Information." SFAS No. 131 changes how operating
segments are reported in annual financial statements and requires the reporting
of selected information about operating segments in interim fnancial reports
issued to shareholders. SFAS No. 131 is effective for periods beginning after
December 15, 1997, and comparative information for earlier years is to be
restated. SFAS No. 131 need not be applied to interim financial statements in
the initial year of its application. SFAS No. 131 is not expected to have a
material impact on the Company.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements and Supplementary Data to be provided
pursuant to this Item 8 are included under Part IV, Item 14, of this Form 10-K.
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ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
In its filing on Form 8-K dated August 11, 1995, the Company
reported that it had dismissed Mortenson & Associates, P. C. of Cranford, New
Jersey (Mortenson) as its independent accountants. Mortenson had served as the
Company's independent accountants as of and for the years ended June 30, 1994,
1993, 1992 and 1991. None of Mortenson's reports on these years contained any
adverse opinions or disclaimers of opinion, nor were they qualified or modified
as to uncertainty, audit scope, or accounting principles.
In its filing on Form 8-K dated August 29, 1995, the Company
reported that it had engaged Deloitte & Touche, LLP (Deloitte & Touche) of
Philadelphia, Pennsylvania to serve as its new independent accountants.
On October 12, 1995, the Company dismissed Deloitte & Touche,
LLP, 1700 Market Street, Philadelphia, PA 19103 as its independent accountants.
The Company and Deloitte & Touche had a disagreement regarding the accounting
for a loss on a sale of investments. Both members of management and of the board
of directors have discussed the subject matter of the disagreement with Deloitte
& Touche. (See below for further description of the matter of disagreement.)
Deloitte & Touche has never issued any report on the Company's
financial statements.
Also effective October 12, 1995, the Company re-engaged
Mortenson to serve as its principal independent accountants to audit the
Company's financial statements as of and for the year ended June 30, 1995.
On September 27, 1994, the Company liquidated its holdings in
certain GNMA funds and realized a loss of $316,000 which represented the
difference between the funds' carrying value (cost) of $4,139,000 and the sale
proceeds of $3,823,000. The loss was recognized as a charge to earnings for the
quarter ended September 30, 1994 and was reported in the Company's Form 10-QSB
for that quarter. At June 30, 1994, the Company's holdings in the GNMA funds
were carried at cost which exceeded the market value of at that time by
approximately $281,000. In connection with its audit, which it did not complete,
of the Company's financial statements for the year ended June 30, 1995, Deloitte
& Touche advised the Company that the GNMA funds should have, in its opinion,
been reported at the lower of cost or market at June 30, 1994 and an unrealized
loss should have been recorded as a charge against earnings in the Company's
financial statements for the year ended June 30, 1994. Deloitte & Touche advised
the Company that the fiscal 1994 financial statements and the interim fiscal
1995 financial statements should, in its opinion, be restated to reflect the
loss in the fiscal
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year ended June 30, 1994. Deloitte & Touche also advised the Company that it
reports on the Company's fiscal 1995 financial statements would be qualified if
the fiscal 1994 financial statements were not restated to report the loss in
that year.
Mortenson did not believe that restatement of the financial
statements as of and for the year ended June 30, 1994 was required believing
that the transaction in question had been accounted for in accordance with
generally accepted accounting principles. Mortenson concurred with the Company's
accounting for the holdings in the GNMA funds and that the unrealized loss of
$281,000 as of June 30, 1994 was a temporary market decline. Mortenson's
position was also based on the Company's belief that, as of June 30, 1994, it
had both the intent and ability to hold these GNMA funds until the temporary
decline reversed. The Company changed its intent due to events occurring in the
first quarter of 1995 and, in turn, sold the GNMA fund holdings and realized the
loss at that time. Mortenson believed that the accounting of the full loss in
the first quarter of 1995 was appropriate. At the time of the change in
independent accountants, the Company's management also believed that restatement
of 1994's financial statements was not necessary. In July of 1996, the firm of
Mortenson & Associates, P.C. changed its name to Moore Stephens, P.C.
There have been no other transactions similar to the one
described herein that resulted in the disagreement.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
This information will be contained in the Proxy Statement of
the Company for the 1997 Annual Meeting of Shareholders under the caption
"Directors and Executive Officers of the Registrant", and is incorporated herein
by reference.
ITEM 11 - EXECUTIVE COMPENSATION
This information will be contained in the Proxy Statement of
the Company for the 1997 Annual Meeting of Shareholders under the caption
"Executive Compensation and Compensation of Directors" and is incorporated
herein by reference.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
This information will be contained in the Proxy Statement of
the Company for the 1997 Annual Meeting of Shareholders under the caption
14
<PAGE>
"Security Ownership" and "Election of Directors" and is incorporated herein by
reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
This information will be contained in the Proxy Statements of
the Company for the 1997 Annual Meeting of Shareholders under the caption
"Certain Relationships and Related Transactions" and is incorporated herein by
reference.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND
REPORTS ON FORM 8-K
(A) 1. Consolidated Financial Statements
Independent Auditor's Report F-1
Consolidated Balance Sheets as of
June 30, 1997 and 1996 F-2, 3
Consolidated Statements of Operations for
the Years Ended June 30, 1997, 1996, 1995
and 1994 F-4
Consolidated Statements of Stockholders'
Equity for the Years Ended June 30, 1997
1996 and 1995 F-5
Consolidated Statements of Cash Flows for
the Years Ended June 30, 1997, 1996 and
1995 F-6, 7
Notes to Consolidated Financial Statements F-8 to F-20
Independent Auditor's Report Related
Financial Statement Schedule F-21
Schedule of Valuation Accounts F-22
(B) REPORTS ON FORM 8-K
None
15
<PAGE>
(C) EXHIBITS
The following Exhibits are filed as part of this report
(references are to Reg. S-K Exhibit Numbers):
3.1 Amended and Restated Certificate of Incorporation of Company
(Incorporated by reference to Exhibit 3-1 of the Company's
Registration Statement on Form S-1 (File No. 33-4281).
3.2 By-laws of the Company (Incorporated by reference to Exhibit
3.2 of the S-1).
4.1 Specimen Stock Certificate of the Company (Incorporated by
reference to Exhibit 4.1 of the S-1).
4.5 Registration Rights Agreement between the Company and Kathleen
Hill (Incorporated by reference to Exhibit 4.5 of the S-1).
10.1 Employment Agreement between the Company and Joseph Roberts
(Incorporated by reference to Exhibit 10.1 of the S-1).
10.3 Employment Agreement between the Company and Kathleen Hill
(Incorporated by reference 10.3 of the S-1).
10.4 Company's 1991 Stock Option Plan (Incorporated by reference to
Exhibit 10.4 of the S-1).
10.8 Guaranty Agreement between the Company and Joseph Roberts
(Incorporated by reference to Exhibit 10.9 Annual Report on
Form 10-K filed September 27, 1992).
10.9 Lease Agreement Between the Company and Ocean 7, Inc.
(Incorporated by reference to Exhibit 10.11 Annual Report of
Form 10-K filed September 27, 1992).
10.11 Escrow Agreement among the Company, Service America
Corporation and Meridian Bank (Incorporated by reference to
Exhibit 2, Current Report on Form 8-K filed July 29, 1993).
10.13 Agreement of Purchase and Sale between the Company and REVEST
II Corporation, with Amendments. (Incorporated by reference to
Exhibit 10.13, Annual Report on Form 10-KSB filed September
27, 1994).
16
<PAGE>
10.14 Loan Agreement between the Montgomery County Industrial
Development Authority and Collegeville Inn Conference &
Training Center, Inc. (a wholly-owned subsidiary of the
Company).
10.15 Trust Indenture between Montgomery County Industrial
Development Authority and Dauphin Deposit Bank and Trust
Company, as Trustee.
10.16 Loan Agreement between Montgomery County Industrial
Development Authority and Apple Fresh Foods Limited (a wholly-
owned subsidiary of the Company).
10.17 Trust Indenture between the Montgomery County Development
Authority and Dauphin Deposit Bank and Trust Company, as
Trustee.
10.18 Loan Agreement between the Company and Corestates Bank, N.A.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Nutrition Management Services Company
(Registrant)
/s/ Joseph V. Roberts
----------------------------------
Joseph V. Roberts, Chief Executive Officer
and Director
/s/ James J. Swiniuch
---------------------------------
James J. Swiniuch, Chief Financial Officer
and Principal Accounting Officer
Date: September 22, 1997
Pursuant to the requirements of the Securities and Exchange
Act of 1934, this report has been signed by the following persons on behalf of
the registrant and in the capacities indicated as of September 22, 1996.
/s/ Joseph V. Roberts /s/ Kathleen A. Hill
- ------------------------------- ------------------------------
Joseph V. Roberts, Chief Kathleen A. Hill, President and
Executive Officer and Director Director
/s/ Janet Purro /s/ Samuel R. Shipley
- ------------------------------- ------------------------------
Janet Purro, Director Samuel R. Shipley, Director
/s/ Michael M. Gosman /s/ Jane Scaccetti Fumo
- ------------------------------- ------------------------------
Michael M. Gosman, Director Jane Scaccetti Fumo, Director
18
<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Page
Independent Auditor's Report........................................ F-1
Consolidated Balance Sheets as of June 30, 1997 and 1996............ F-2 - F-3
Consolidated Statements of Operations for the years ended
June 30, 1997, 1996 and 1995........................................ F-4
Consolidated Statements of Stockholders' Equity for
the years ended June 30, 1997, 1996 and 1995........................ F-5
Consolidated Statements of Cash Flows for the years
ended June 30, 1997, 1996 and 1995.................................. F-6 - F-7
Notes to Consolidated Financial Statements.......................... F-8 - 20
. . . . . . . . .
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
Nutrition Management Services Company
Kimberton, Pennsylvania
We have audited the accompanying consolidated balance sheets
of Nutrition Management Services Company and its subsidiaries as of June 30,
1997 and 1996, and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the three years in the period
ended June 30, 1997. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall consolidated financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the consolidated financial
position of Nutrition Management Services Company and its subsidiaries as of
June 30, 1997 and 1996, and the consolidated results of their operations and
their cash flows for each of the three years in the period ended June 30, 1997,
in conformity with generally accepted accounting principles.
MOORE STEPHENS, P. C.
Certified Public Accountants.
Cranford, New Jersey
September 10, 1997
F-1
<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30,
--------
1 9 9 7 1 9 9 6
------- -------
<S> <C> <C>
Assets:
Current Assets:
Cash and Cash Equivalents $ 2,267,813 $ 3,026,607
Accounts Receivable [Net of Allowance for Doubtful Accounts
of $531,428 and $362,065 in 1997 and 1996, Respectively] 5,900,572 5,863,105
Unbilled Revenue 244,107 273,132
Notes and Leases Receivable [Net of Allowance for Doubtful
Accounts of $-0- and $-0- in 1997 and 1996, Respectively] 202,124 823,602
Advances to Employees 281,026 262,415
Deferred Income Taxes 599,000 387,183
Inventory and Other 409,068 407,221
--------------- ---------------
Total Current Assets 9,903,710 11,043,265
--------------- ---------------
Property and Equipment - Net 1,203,429 1,358,968
--------------- ---------------
Construction in Progress 6,939,702 3,091,341
--------------- ---------------
Other Assets:
Restricted Cash 1,096,076 146,827
Long-Term Accounts Receivable [Net of Allowance for
Doubtful Accounts of $57,509 in 1997 and 1996] 50,815 50,815
Investment in Contracts [Net of Accumulated Amortization
of $1,278,561 and $937,263 in 1997 and 1996, Respectively] 427,928 769,226
Lease Receivable 157,952 289,882
Deferred Income Taxes 233,000 112,000
Deferred Costs and Other Assets 368,945 100,028
--------------- ---------------
Total Other Assets 2,334,716 1,468,778
--------------- ---------------
Total Assets $ 20,381,557 $ 16,962,352
=============== ===============
</TABLE>
See Notes to Consolidated Financial Statements.
F-2
<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30,
--------
1 9 9 7 1 9 9 6
------- -------
<S> <C> <C>
Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts Payable $ 4,322,662 $ 5,042,025
Accrued Expenses 757,286 273,054
Accrued Payroll 460,898 471,806
Accrued Professional 392,012 124,000
Current Portion of Long-Term Debt 744,504 896,667
Accrued Income Taxes 232,521 45,063
Other 193,453 269,510
--------------- ---------------
Total Current Liabilities 7,103,336 7,122,125
--------------- ---------------
Long-Term Liabilities:
Long-Term Debt - Net of Current Portion 6,083,851 3,267,808
Other 222,217 262,824
--------------- ---------------
Total Long-Term Liabilities 6,306,068 3,530,632
--------------- ---------------
Commitments and Contingencies -- --
--------------- ---------------
Stockholders' Equity:
Undesignated Preferred Stock - No Par,
2,000,000 Shares Authorized, None Outstanding -- --
Common Stock:
Class A - No Par, 10,000,000 Shares Authorized; 3,000,000 and 3,000,000
Issued, 2,797,665 and 2,850,000
Outstanding in 1997 and 1996, Respectively 3,801,926 3,801,926
Class B - No Par, 100,000 Shares Authorized;
100,000 Shares Issued and Outstanding 48 48
Retained Earnings 3,591,210 2,838,934
--------------- ---------------
Totals 7,393,184 6,640,908
Less: Treasury Stock - [Common - Class A: 202,335 and 150,000
Shares in 1997 and 1996, Respectively] - At Cost (421,031) (331,313)
--------------- ---------------
Total Stockholders' Equity 6,972,153 6,309,595
--------------- ---------------
Total Liabilities and Stockholders' Equity $ 20,381,557 $ 16,962,352
=============== ===============
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Y e a r s e n d e d
J u n e 3 0,
1 9 9 7 1 9 9 6 1 9 9 5
------- ------- -------
<S> <C> <C> <C>
Food Service Revenue $ 35,293,962 $ 35,138,432 $ 33,352,992
---------------- --------------- ---------------
Cost of Operations:
Payroll and Related Expenses 13,918,106 13,128,099 13,204,316
Other Costs of Operations 14,593,816 15,208,409 13,811,640
---------------- --------------- ---------------
Total Cost of Operations 28,511,922 28,336,508 27,015,956
---------------- --------------- ---------------
Gross Profit 6,782,040 6,801,924 6,337,036
---------------- --------------- ---------------
Expenses:
General and Administrative Expenses 4,929,812 5,608,365 5,067,038
Depreciation and Amortization 651,539 621,285 530,596
Provision for Doubtful Accounts 180,000 153,283 186,352
---------------- --------------- ---------------
Total Expenses 5,761,351 6,382,933 5,783,986
---------------- --------------- ---------------
Income from Operations 1,020,689 418,991 553,050
---------------- --------------- ---------------
Other Income [Expenses]:
Interest Expense (95,157) (234,280) (360,886)
Interest Income 309,158 292,819 307,912
Other 28,382 70,024 11,787
---------------- --------------- ---------------
Other Income [Expenses] - Net 242,383 128,563 (41,187)
---------------- --------------- ---------------
Income Before Income Taxes 1,263,072 547,554 511,863
Income Tax Expense 510,796 245,600 246,402
---------------- --------------- ---------------
Net Income $ 752,276 $ 301,954 $ 265,461
================ =============== ===============
Net Income Per Share $ .26 $ .10 $ .09
================ =============== ===============
Weighted Average Number of Shares 2,921,549 2,956,504 2,975,000
================ =============== ===============
See Notes to Consolidated Financial Statements.
</TABLE>
F-4
<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Class B
Common Stock Common Stock Treasury Stock Total
Number Number Retained Number Stockholders'
of Shares Amount of Shares Amount Earnings of Shares Amount Equity
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance - June 30,
1994 [Restated] 2,875,000 $ 3,801,926 100,000 $ 48 $ 2,271,519 (125,000) $ (301,625) $ 5,771,868
Net Income -- -- -- -- 265,461 -- -- 265,461
------------ ------------ ---------- -------- ------------ ----------- ------------ -------------
Balance - June 30,
1995 2,875,000 3,801,926 100,000 48 2,536,980 (125,000) (301,625) 6,037,329
Sale of 12,500
Treasury Shares
of Class A Stock 12,500 -- -- -- -- 12,500 25,000 25,000
Repurchase of
Company Stock (37,500) -- -- -- -- (37,500) (54,688) (54,688)
Net Income -- -- -- -- 301,954 -- -- 301,954
------------ ------------ ---------- -------- ------------ ----------- ------------ -------------
Balance - June 30,
1996 2,850,000 3,801,926 100,000 48 2,838,934 (150,000) (331,313) 6,309,595
Repurchase of
Company Stock (52,335) -- -- -- -- (52,335) (89,718) (89,718)
Net Income -- -- -- -- 752,276 -- 752,276
------------ ------------ ---------- -------- ------------ ----------- ------------ -------------
Balance - June 30,
1997 2,797,665 $ 3,801,926 100,000 $ 48 $ 3,591,210 (202,335) $ (421,031) $ 6,972,153
============ ============ ========== ======== ============ =========== ============ =============
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Y e a r s e n d e d
J u n e 3 0,
1 9 9 7 1 9 9 6 1 9 9 5
------- ------- -------
<S> <C> <C> <C>
Operating Activities:
Net Income $ 752,276 $ 301,954 $ 265,461
Adjustments to Reconcile Net Income to Net
Cash Provided by [Used for] Operating Activities:
Depreciation and Amortization 651,539 621,285 530,596
Provision for Bad Debts 180,000 153,283 186,352
Amortization of Deferred Gain (26,372) (26,372) (26,372)
Provision for Deferred Taxes (333,000) (156,000) 62,615
Amortization of Lease Receivable (28,438) (44,460) (54,584)
Gain on Sale of Fixed Assets -- (43,472) --
Changes in Assets and Liabilities:
Accounts Receivable (217,467) (618,087) (1,474,826)
Notes Receivable 637,057 199,129 202,762
Unbilled Revenue 29,025 64,544 (5,190)
Accounts Payable (719,363) 1,084,369 975,882
Accrued Legal and Expenses 752,244 42,820 149,938
Accrued Payroll (10,908) 57,844 55,369
Accrued Income Taxes 187,458 (34,863) (753,849)
Other (77,904) 27,026 (150,418)
--------------- ---------------- ---------------
Net Cash - Operating Activities 1,776,147 1,629,000 (36,264)
--------------- ---------------- ---------------
Investing Activities:
Payment of Mortgage Receivable from Related Party -- 55,577 23,715
Proceeds from Sale of Marketable Securities -- 2,970,099 6,690,667
Investment in Marketable Securities -- -- (5,848,266)
Purchase of Property and Equipment (154,503) (188,780) (702,891)
Construction in Progress Expenditures (3,848,361) (2,484,021) (597,386)
Proceeds from Sale of Fixed Assets -- 71,645 --
Investment in Contracts -- -- (232,053)
Transfers From [To] Restricted Cash (949,249) -- 452,017
Other (296,079) 53,517 57,007
Payment of Lease Receivable 144,790 157,953 157,953
Advances to Employees and Officers (18,611) (133,305) (92,526)
Deferred Costs 12,910 251,719 (93,971)
--------------- ---------------- ---------------
Net Cash - Investing Activities (5,109,103) 754,404 (185,734)
--------------- ---------------- ---------------
Financing Activities:
Proceeds from Long-Term Borrowings 3,560,547 125,000 1,645,000
Repayment of Long-Term Borrowings (896,667) (896,667) (1,493,950)
Purchase of Treasury Stock (89,718) (54,688) --
Sale of Treasury Stock -- 25,000 --
--------------- ---------------- ---------------
Net Cash - Financing Activities 2,574,162 (801,355) 151,050
--------------- ---------------- ---------------
Net [Decrease] Increase in Cash and
Cash Equivalents - Forward $ (758,794) $ 1,582,049 $ (70,948)
</TABLE>
See Notes to Consolidated Financial Statements.
F-6
<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Y e a r s e n d e d
J u n e 3 0,
1 9 9 7 1 9 9 6 1 9 9 5
------- ------- -------
<S> <C> <C> <C>
Net [Decrease] Increase in Cash and
Cash Equivalents - Forwarded $ (758,794) $ 1,582,049 $ (70,948)
Cash and Cash Equivalents - Beginning of Years 3,026,607 1,444,558 1,515,506
--------------- ---------------- ---------------
Cash and Cash Equivalents - End of Years $ 2,267,813 $ 3,026,607 $ 1,444,558
=============== ================ ===============
Supplemental Disclosures of Cash Flow Information:
Cash paid during the years for:
Interest [Net of Amounts Capitalized] $ 100,987 $ 234,280 $ 356,596
Income Taxes $ 674,903 $ 250,000 $ 870,138
</TABLE>
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
During the year ended June 30, 1997 and 1996, the Company exchanged accounts
receivable and property and equipment of approximately $500,873 and $62,085,
respectively, for a note receivable.
See Notes to Consolidated Financial Statements.
F-7
<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
[1] Organization and Business
Nutrition Management Services Company [the "Company"] was organized on March 28,
1979 to provide professional management expertise and food services to
continuing care and health care facilities in the domestic United States. The
Company competes mainly with regional and national food service management
companies as well as self managed departments. Apple Management Services ["Apple
Management"], a wholly-owned subsidiary, was organized on November 25, 1991 to
provide management service expertise. The Collegeville Inn Conference and
Training Center, Inc. ["Collegeville Inn"], a wholly-owned subsidiary, was
organized on April 29, 1994 to acquire the land and a building located in Lower
Providence Township, Pennsylvania. This facility will be utilized to operate a
training center which will be open to the public. Apple Fresh Foods, Ltd.
["Apple Fresh Foods"] was organized on November 14, 1996, to develop a
"cook/chill" food preparation technology for use in the Company's food service
business. Apple Fresh Food's operation is located in the Collegeville Inn.
[2] Summary of Significant Accounting Policies
Principles of Consolidation - The accompanying consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries.
Intercompany transactions and balances have been eliminated in consolidation.
Cash and Cash Equivalents - Cash equivalents are comprised of certain highly
liquid investments with a maturity of three months or less when purchased.
Unbilled Revenue - Unbilled revenue represents amounts for services provided,
but not billed as of the balance sheet date.
Inventory - Inventory, which consists primarily of food, is stated at the lower
of cost [first-in, first-out method] or market. Inventory of $304,579 and
$374,850 has been included in inventory and other as of June 30, 1997 and 1996,
respectively.
Property and Equipment and Depreciation - Property and equipment are stated at
cost. Depreciation is provided using the straight-line method over the estimated
useful lives of the related assets or the remaining lease term. Estimated useful
lives of the principal items of property and equipment range from 2 to 7 years.
Investment in Contracts - During 1993, the Company entered into an agreement for
the acquisition of various service facility contracts. The costs associated with
this acquisition were capitalized and are being amortized over a period of five
years using the straight-line method.
Deferred Costs - Costs for contracts which are incurred in connection with the
commencement of providing services to a new customer are capitalized. These
costs are amortized over a period of twelve months. Unamortized deferred costs
of $10,557 have been included in deferred costs and other as of June 30, 1996.
During the years ended June 30, 1997, 1996 and 1995, amortization expense was
$341,298, $341,298 and $329,695, respectively.
Deferred Financing Costs - Debt financing costs incurred in connection with the
bonds payable are deferred and amortized, using the interest method, over the
term of the related debt and are classified as other assets on the balance
sheet.
F-8
<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #2
- --------------------------------------------------------------------------------
[2] Summary of Significant Accounting Policies [Continued]
Accounting for Stock-Based Compensation - Effective July 1, 1996, the Company
adopted the disclosure provisions of Financial Accounting Standards ["SFAS"] No.
123, "Accounting for Stock- Based Compensation." The Company applies Accounting
Principles Board Opinion No. 25 and related interpretations in accounting for
its employee stock option plans. Note 11 to the Consolidated Financial
Statements contains a summary of the pro forma effects on reported net income
and earnings per share for fiscal 1997 and 1996 based on the fair value of
options and shares granted as prescribed by SFAS No. 123.
Income Taxes - Income taxes consist of taxes currently due plus deferred taxes
related primarily to temporary differences between the basis of assets and
liabilities for financial and income tax reporting. Deferred tax assets and
liabilities represent the future tax return consequences of those differences,
which will either be taxable or deductible when the assets and liabilities are
recovered or settled.
Impairment - Certain long-term assets of the Company including goodwill are
reviewed at least annually as to whether their carrying value has become
impaired, pursuant to guidance established in Statement of Financial Accounting
Standards ["SFAS"] No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of." Management considers assets to be
impaired if the carrying value exceeds the future projected cash flows from
related operations [undiscounted and without interest charges]. If impairment is
deemed to exist, the assets will be written down to fair value or projected
discounted cash flows from related operations. Management also re-evaluates the
periods of amortization to determine whether subsequent events and circumstances
warrant revised estimates of useful lives. As of June 30, 1997, management
expects these assets to be fully recoverable.
Earnings Per Share - Earnings per share amounts are based on the weighted
average number of shares of common stock outstanding during the years ended June
30, 1997, 1996 and 1995. Stock options and warrants did not impact earnings per
share each year as they were anti-dilutive.
Reclassification - Certain 1996 items have been reclassified to conform to the
current year presentation.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
[3] Property and Equipment and Construction in Progress
The following details the composition of property and equipment:
June 30,
--------
1 9 9 7 1 9 9 6
------- -------
Property and Equipment:
Land $ 497,967 $ 497,967
Machinery and Equipment 1,481,032 1,409,270
Other, Principally Autos and Trucks 193,605 110,864
-------------- ---------------
Totals 2,172,604 2,018,101
Less: Accumulated Depreciation 969,175 659,133
-------------- ---------------
Totals $ 1,203,429 $ 1,358,968
------ ============== ===============
F-9
<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #3
- --------------------------------------------------------------------------------
[3] Property and Equipment and Construction in Progress [Continued]
Depreciation expense amounted to $310,241, $299,978 and $206,984 for the years
ended June 30, 1997, 1996 and 1995, respectively.
The Company capitalized interest costs of $366,492, $164,702 and $-0- in 1997,
1996 and 1995, respectively, for qualifying construction projects. Total
interest costs incurred before recognition of the capitalized amounts were
$461,649, $398,982 and $360,886 for the years ended June 30, 1997, 1996 and
1995, respectively.
The Company has capitalized salary of $90,000 paid to the Chairman of the Board
for his additional supervisory services for the Collegeville Inn project. These
services commenced January 1997 for a monthly fee of $15,000.
[4] Restricted Cash
At June 30, 1997 and 1996, the Company had $1,096,076 and $146,827 of restricted
cash, respectively of which $154,782 and $145,627, respectively, is held in
escrow in connection with the acquisition of various service facility contracts
[See Note 2]. The remaining balance is attributable to the Industrial Revenue
Bond proceeds of $1,000,000 to finance the acquisition, construction,
installation and renovation of certain equipment to be used in connection with a
cook-chill system of batch food processing; and the payment of a portion of the
costs and expenses of issuing the Bonds [See Note 6].
[5] Lease Receivable
The Company leases equipment to a service facility under a direct financing type
lease as defined in Statement of Financial Accounting Standards No. 13.
Future minimum gross lease payments to be received for the following years
consist of:
June 30,
1998 $ 157,953
1999 157,953
---------------
Total 315,906
Less: Amount Representing Unearned Interest Income (28,882)
---------------
Minimum Lease Payments Receivable $ 287,024
--------------------------------- ===============
These amounts are classified
in the balance sheet as follows:
Current Assets $ 129,072
Noncurrent Assets 157,952
---------------
Total $ 287,024
----- ===============
F-10
<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #4
- --------------------------------------------------------------------------------
[6] Long-Term Debt
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
June 30,
1 9 9 7 1 9 9 6
------- -------
<S> <C> <C>
Bank revolving credit, interest due monthly at the bank's prime rate plus 0.5%,
secured by all corporate assets as well as a negative pledge
on all assets. Converts to a 5 year term loan in December 1998. $ 2,529,553 $ 2,529,553
Note payable, term loan incurred in connection with acquisition of various
service facility contracts, payable in equal monthly installments of $53,334
plus interest of 7.5%, note is unsecured, matures on March 5, 1998. 453,671 1,093,672
Note payable, term loan incurred in connection with purchased equipment, payable
in equal monthly installments of $10,417 bearing interest at 9.5%,
matures in fiscal 1999. The acquired equipment is pledged as collateral. 218,750 343,750
Note payable, term loan incurred in connection with the purchase of equipment
payable in monthly installments of $10,972 bearing interest at 8.5%, matures
in fiscal 1998. The acquired equipment is pledged as
collateral. 65,833 197,500
Industrial Revenue Bonds [Collegeville Inn Projects][See Bonds Payable]. 2,560,548 --
Industrial Revenue Bonds [Apple Fresh Foods Projects][See Bonds Payable]. 1,000,000 --
------------- -------------
Totals 6,828,355 4,164,475
Less: Current Maturities 744,504 896,667
------------- -------------
Totals $ 6,083,851 $ 3,267,808
------ ============= =============
</TABLE>
In December 1996, the Company executed a loan agreement with a bank for a
revolving credit and two irrevocable letters of credit, totaling approximately
$7,500,000. The revolving credit is available for two years, at which time, it
converts to a term loan, and the letters of credit are available for four years,
with annual renewals. At June 30, 1997, the Company has approximately $1,500,000
available under the revolving credit. Advances under the revolving credit are
used for working capital purposes and the acquisition and renovation of the
Collegeville Inn.
These credit agreements contain covenants that include the submission of
specified financial information and the maintenance of insurance coverage for
the pledged assets during the term of the loans. The covenants also include the
maintenance of a certain current ratio, minimum net worth, minimum cash and cash
equivalents balance and other ratios. As of June 30, 1997, the Company was in
compliance with the covenant provisions of these agreements.
The bank's prime rate at June 30, 1997 was 8.25%. All borrowing is from a single
lender.
F-11
<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #5
- --------------------------------------------------------------------------------
[6] Long-Term Debt [Continued]
Maturities of principal due in the following years are set forth below:
Year ending
June 30,
1998 $ 744,504
1999 198,750
2000 110,000
2001 120,000
2002 125,000
Thereafter 5,530,101
---------------
Total $ 6,828,355
----- ===============
Bonds Payable - In December 1996, the Company, through its subsidiaries,
authorized two industrial revenue bond issues.
Issue #1
Title - Montgomery County Industrial Development Authority, $2,500,000 aggregate
principal amount, federally taxable variable rate demand/fixed rate revenue
bonds [Collegeville Inn Project] Series of 1996.
Rate - Variable, to a maximum of 17%
Term - 20 years [2016]
Purpose - Rehabilitate, furnish and equip the Collegeville Inn facility.
Issue #2
Title - Montgomery County Industrial Development Authority, $1,000,000 aggregate
principal amount, federally taxable variable rate demand/fixed rate revenue
bonds [Apple Fresh Foods Ltd. Project] Series of 1996.
Rate - Variable, to a maximum of 15%
Term - 20 years [2016]
Purpose - Develop a "cook/chill" food preparation technology at the Collegeville
Inn side for the Company.
Note: This issue is tax-exempt.
Each series of bonds is guaranteed by the parent company and the other
subsidiaries. The assets of Collegeville Inn and Apple Fresh Foods are pledged
as collateral for both series of bonds.
The Company's bank has issued irrevocable letters of credit in favor of the bond
trustee for the full amount of both bond issues. The letters of credit have a
term of four years and can be renewed on an annual basis by the bank. The bank
holds the mortgage on the Collegeville Inn building and property. The letters of
credit are guaranteed by the parent company.
F-12
<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #6
- --------------------------------------------------------------------------------
[6] Long-Term Debt [Continued]
The sinking fund requirements are as follows:
Collegeville Apple Fresh
Inn Foods Total
1998 $ 70,000 $ 30,000 $ 100,000
1999 $ 70,000 $ 35,000 $ 105,000
2000 $ 75,000 $ 35,000 $ 110,000
2001 $ 80,000 $ 40,000 $ 120,000
2002 $ 85,000 $ 40,000 $ 125,000
[7] Income Taxes
The components of income tax expense are:
<TABLE>
<CAPTION>
J u n e 3 0,
--------------------------------
1 9 9 7 1 9 9 6 1 9 9 5
------- ------- -------
<S> <C> <C> <C>
Current:
Federal $ 618,839 $ 267,900 $ 115,656
State 224,957 133,700 68,131
---------------- --------------- ----------------
Total Current 843,796 401,600 183,787
---------------- --------------- ----------------
Deferred:
Federal (266,000) (121,000) 44,590
State (67,000) (35,000) 18,025
---------------- --------------- ----------------
Total Deferred [Benefit] Expense (333,000) (156,000) 62,615
---------------- --------------- ----------------
Totals $ 510,796 $ 245,600 $ 246,402
------ ================ =============== ================
</TABLE>
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities are presented below:
June 30,
--------
1 9 9 7 1 9 9 6
------- -------
Deferred Tax Assets:
Provision for Doubtful Accounts $ 265,000 $ 191,000
Excess of Tax Over Financial Statement
Basis of Investments in Contracts 228,000 108,000
Deferred Gains 47,000 62,000
Vacation Accrual 205,000 169,000
Other Compensation Accrual 80,000 28,183
Federal Capital Loss Carryforwards 51,680 51,680
Other 109,000 --
------------- --------------
Gross Deferred Tax Assets 985,680 609,863
Deferred Tax Asset Valuation Allowance (51,680) (51,680)
------------- --------------
Total Deferred Tax Assets - Forward $ 934,000 $ 558,183
F-13
<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #7
- --------------------------------------------------------------------------------
[7] Income Taxes [Continued]
<TABLE>
<CAPTION>
June 30,
--------
1 9 9 7 1 9 9 6
------- -------
<S> <C> <C>
Total Deferred Tax Assets - Forwarded $ 934,000 $ 558,183
--------------- ----------------
Deferred Tax Liabilities:
Deferred Costs Capitalized for Financial Statement Purposes 17,000 5,000
Depreciation 85,000 54,000
--------------- ----------------
Total Deferred Tax Liabilities 102,000 59,000
--------------- ----------------
$ 832,000 $ 499,183
=============== ================
These amounts are classified in the balance sheet as follows:
Current Asset $ 599,000 $ 387,183
Non-Current Asset 233,000 112,000
--------------- ----------------
Totals $ 832,000 $ 499,183
------ =============== ================
</TABLE>
The following reconciles the tax provision with the U.S. statutory tax rates:
J u n e 3 0,
--------------------------------
1 9 9 7 1 9 9 6 1 9 9 5
------- ------- -------
Income Taxes at U.S. Statutory Rates 34.0% 34.0% 34.0%
States Taxes, Net of Federal Tax Benefit 7.3 9.5 11.3
Other, Principally Nondeductible Expenses 0.6 1.4 2.8
-------- -------- --------
Totals 41.9% 44.9% 48.1%
------ ======== ======== ========
The Company has available federal capital loss carryforwards in the amount of
$152,000, which expire in the year 2000.
[8] Related Party
During 1992, the Company sold its building for a purchase price of $610,000, to
a related party [a corporation wholly-owned by the principal stockholder of the
Company]. At the time of the sale a lease was entered into for ten years,
whereby the Company will lease back the building from the purchaser. The sale
resulted in a gain of $263,717, which has been deferred and will be amortized
over the life of the lease. During each of the three years in the period ended
June 30, 1997, the Company recognized a gain of $26,372. As of June 30, 1997 and
1996, the balance of the unamortized gain on the sale was $131,882 and $158,246,
respectively.
The Company leases its corporate office building from the above-mentioned
related party [See Note 9]. During the years ended June 30, 1997, 1996 and 1995,
rent expense was $195,178, $178,651 and $169,347, respectively.
F-14
<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #8
- --------------------------------------------------------------------------------
[9] Commitments and Contingencies
Operating Leases - The Company leases real estate facilities from a corporation
owned by a principal stockholder under operating leases. In addition to the
minimum annual rentals, the lease requires additional rentals based upon
increases in the consumer price index. These leases range from one to five years
[See Note 8].
The Company is also obligated under various operating leases for operating
equipment for periods expiring through 1997. During the years ended June 30,
1997, 1996 and 1995, rent expense was $216,778, $228,211 and $203,873,
respectively.
Minimum annual rentals under non-cancelable operating leases subsequent to June
30, 1997 are as follows:
Year Ending Operating Real Estate
June 30, Equipment Facilities
1998 $ 34,322 $ 163,862
1999 9,178 163,862
2000 2,811 163,862
2001 2,811 163,862
2002 -- 163,862
Thereafter -- --
------------- -------------
Totals $ 49,122 $ 819,310
------ ============= =============
Purchase Commitment - The Company has entered into a commitment to purchase a
minimum of $5,000,000 in supplies between February 1995 and January 2000 from
one of its vendors. If the Company does not meet this commitment during the term
of the agreement, the agreement automatically extends until the minimum
commitment is met. There is no penalty to the Company for its failure to meet
the minimum purchase requirement during the agreement period. In exchange for
this commitment, the vendor made a donation to the Company to be used to acquire
equipment for the Collegeville Inn. The amount of the donation is being
amortized over five-years. In the event the agreement is terminated prior to
January 2000, the Company is required to repay to the vendor a proportionate
amount of the donation received.
Litigation - In the normal course of its business, the Company is exposed to
asserted and unasserted claims. In the opinion of management, the resolution of
these matters will not have a material adverse affect on the Company's financial
position, results of operations or cash flows.
[10] Stockholders' Equity
Class A Common Stock - The Company is authorized to issue 10,000,000 shares of
Class A Common Stock, no par value, of which holders of Class A Common Stock
have the right to cast one vote for each share held of record in all matters
submitted to a vote of holders of Class A Common Stock. The Class A Common Stock
and Class B Common Stock vote together as a single class on all matters on which
shareholders may vote, except when class voting is required by applicable law.
Holders of Class A Common Stock are entitled to dividends, together with the
holders of Class B Common Stock, pro rata based on the number of shares held. In
the event of the liquidation, dissolution or winding up of the affairs of the
Company, all assets and funds of the Company remaining after the payment to
creditors and to holders of Preferred Stock, if any, shall be distributed, pro
rata, among the holders of the Class A Common Stock and Class B Common Stock.
F-15
<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #9
- --------------------------------------------------------------------------------
[10] Stockholders' Equity [Continued]
Class A Common Stock [Continued] - During the fiscal years ended June 30, 1997
and 1996, the Company repurchased 52,335 and 37,500 shares of common stock,
respectively, for an aggregate price of $89,718 and $54,688, respectively. The
repurchase price is recorded as a reduction of stockholders' equity.
During 1996, the Company sold from treasury 12,500 shares of Class A common
stock for $25,000.
Class B Common Stock - The Company has authorized 100,000 shares of Class B
Common Stock, all of which were issued to the Chief Executive Officer and
majority shareholder of the Company, in exchange for 100,000 shares of Class A
Common Stock. Each share of Class B Common Stock is entitled to seven votes on
all matters on which shareholders may vote, including the election of directors.
The Class A Common Stock and Class B Common Stock vote together as a single
class on all matters on which shareholders may vote, except when class voting is
required by applicable law.
Each share of Class B Common Stock also is convertible at any time upon the
option of the holder into one share of Class A Common Stock. There are no
preemptive, redemption, conversion or cumulative voting rights applicable to the
Class B Common Stock.
Preferred Stock - The Company is authorized to issue 2,000,000 shares of
Preferred Stock, no par value, of which no shares have been issued. The
Preferred Stock may be issued by the Company's Board of Directors from time to
time in one or more series.
[11] Stock Options and Employee Stock Purchase Plan
[A] Stock Options - In September 1991, the Company adopted the 1991 Stock Option
Plan for officers, directors and key employees to receive incentive stock
options. The options are exercisable for a period up to 10 years from date of
grant at an exercise price not less than fair market value of the common stock
at date of grant. The Plan expires in September 2001. There have been 500,000
shares of common stock reserved for the Plan.
The following is a summary of transactions:
<TABLE>
<CAPTION>
Number of Options
Outstanding
Incentive Non-Qualified Weighted
Stock Stock Average
Underwriters Options Option Total Exercise Price
<S> <C> <C> <C> <C> <C>
Outstanding at June 30, 1994 100,000 221,000 30,000 351,000 $ 4.85
Granted -- 225,000 30,000 255,000 $ 4.00
Forfeited/Exercised -- (122,000) -- (122,000) $ 4.00
------------ ------------ ----------- -----------
Outstanding at June 30, 1995 100,000 324,000 60,000 484,000 $ 4.62
Exercisable at June 30, 1995 100,000 -- -- 100,000 $ 7.00
Granted -- 7,000 -- 7,000 $ 4.00
Forfeited/Exercised -- (139,750) (15,000) (154,750) $ 4.00
------------ ------------ ----------- -----------
Outstanding at June 30, 1996 100,000 191,250 45,000 336,250 $ 4.89
Exercisable at June 30, 1996 100,000 184,250 45,000 329,250 $ 4.91
Granted -- 80,000 -- 80,000 $ 4.00
Forfeited/Exercised (100,000) -- -- (100,000) $ 7.00
------------ ------------ ----------- -----------
Outstanding at June 30, 1997 -- 271,250 45,000 316,250 $ 4.00
============
Exercisable at June 30, 1997 -- 185,650 45,000 230,650 $ 4.00
</TABLE>
F-16
<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #10
- --------------------------------------------------------------------------------
[11] Stock Options and Employee Stock Purchase Plan [Continued]
[A] Stock Options [Continued] - All options were granted at exercise prices
above market price. The exercise price was $4.00 per share at June 30, 1997 for
both the incentive and non-qualified stock options.
The remaining contractual life of outstanding and exercisable options is
approximately six years and five years, respectively.
The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," and related interpretations for stock options issued
to employees in accounting for its stock option plan. No compensation expense
has been recognized for the Company's stock-based compensation plan because no
stock options were issued below the stock price at the date of grant.
Had compensation cost for the Company's stock options issued to employees been
determined based upon the fair value at the grant date for stock options issued
under these plans pursuant to the fair value methodology prescribed under
Statement of Financial Accounting Standards ["SFAS"] No. 123, "Accounting for
Stock-Based Compensation," the Company's net income and earnings per share would
have been reduced, on a pro forma basis, by approximately $71,314 or $.02 per
share for the year ended June 30, 1997, and $23,930 or $.01 per share for the
year ended June 30, 1996. The weighted average fair value of the stock options
granted to employees used in determining the pro forma amounts is estimated at
$.89 and $3.42 during the years ended June 30, 1997 and 1996, respectively,
using the Black-Sholes option-pricing model with the following weighted average
assumptions used for grants in fiscal year 1997 and 1996: dividend yields of 0%
and 0%, respectively; expected volatility of 84% and 84%, respectively;
risk-free interest rate of 6.7% and 5.8%, respectively; and an expected life of
5 years for both periods.
Net income [loss] and net income [loss] per share as reported, and on a pro
forma basis as if compensation cost had been determined on the basis of fair
value pursuant to SFAS No. 123 is as follows:
Years ended
June 30,
1 9 9 7 1 9 9 6
------- -------
Net Income:
As Reported $ 752,276 $ 301,954
Pro Forma $ 709,488 $ 278,024
Per Share:
As Reported $ .26 $ .10
Pro Forma $ .24 $ .09
The Company has been advised that a consultant believes that he and an entity
controlled by him were granted options in November 1995 to purchase an aggregate
112,500 shares of Common Stock of the Company at an exercise price of $2.125 per
share. The Company is not aware of any documentation supporting the grant of
these stock options and is currently in the process of determining whether in
fact such stock options were granted. If the Company determines that such stock
options were granted, the grant of such options would not have a financial
statement impact under APB 25 because the options would have been granted at a
price at least equal to or above the fair value of the underlying stock.
However, under the guidelines of FAS 123 the Company estimates that on a pro
forma basis the Company's net income would have been reduced by $92,000 or $.03
per share for the fiscal year ended June 30, 1996.
[B] Employee Stock Purchase Plan - The Company has a stock purchase plan that
allows participating employees to purchase, through payroll deductions, shares
of the Company's common stock at 85 percent of the fair market value at
specified dates. At June 30, 1996, all employees were eligible to participate in
the plan. A summary of stock purchased under the plan is shown below:
1 9 9 7 1 9 9 6 1 9 9 5
------- ------- -------
Aggregate Purchase Price $ 30,871 $ 55,611 $ 22,815
Shares Purchased 21,388 37,126 12,238
Employee Participants 40 34 35
F-17
<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #11
- --------------------------------------------------------------------------------
[12] Defined Contribution Pension Plan
The Company sponsors a 401[k] plan for all employees who have attained the age
of twenty-one and have completed one year of service. Eligible employees may
contribute up to 15% of their annual compensation to the plan. The Company can
match 100% up to the first 6% of employee plan contributions. Participants are
vested 20% for each year of service beginning after year 3 and are fully vested
after seven service years. During the years ended June 30, 1997, 1996 and 1995,
company contributions to the plan, which were charged to expense, amounted to
$25,976, $25,398 and $20,085, respectively.
[13] Concentrations of Credit Risk
Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of cash and cash equivalents, accounts
receivable, and notes receivable. A substantial portion of the Company's
revenues are dependent upon the payment by customers who are dependent upon
third-party payors such as state governments, medicare and medicaid. Generally,
the Company does not require collateral or other security to support customer
receivables. The Company routinely assesses the financial strength of its
customers and, based upon factors surrounding the credit risk of its customers,
establishes an allowance for uncollectible accounts and, as a consequence,
believes that its accounts receivable credit risk exposure beyond such
allowances is limited.
As of June 30, 1997, the Company has cash accounts with various financial
institutions having high credit standings and periodically has cash balances
subject to credit risk beyond insured amounts. As a consequence, it believes
that its exposure to credit risk loss is limited. At June 30, 1997,
approximately $500,000 of cash exceeds insured amounts. The Company does not
require collateral and other security to support financial instruments subject
to credit risk.
[14] Acquisition
During 1993, the Company acquired from Service America Corporation ["SAC"]
certain food service management contracts to provide services to health care and
retirement facilities. The aggregate purchase price for the contracts was
$2,099,258, of which $1,099,258 was paid in July 1993 and $1,000,000 was placed
in escrow. The purchase price was subject to adjustment in the event the
contracts did not remain in effect or were not assigned within a period of 120
days following the closing and, accordingly, adjustments to reduce the purchase
price in the amount of $365,601 were made during the year ended June 30, 1995.
With respect to the $1,000,000 placed in escrow, at June 30, 1997, $154,782
remains in escrow. In addition, the Company agreed to pay SAC an amount of up to
$750,000 for SAC's inventory and equipment at such facilities.
The acquisition has been accounted for as a purchase and, accordingly, the
purchase price has been allocated to the assets acquired based on fair market
value.
[15] Major Customers
The Company had sales to one customer representing approximately 13%, 12%, and
14% of total revenues for the years ending June 30, 1997, 1996 and 1995,
respectively. The loss of such customer could have a material adverse effect on
the Company's future results of operations.
F-18
<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #12
- --------------------------------------------------------------------------------
[16] Fair Value of Financial Instruments
Effective June 30, 1996, the Company adopted Statement of Financial Accounting
Standard ["SFAS"] No. 107, "Disclosure about Fair Value of Financial
Instruments," which requires the disclosure of the fair value of off- and
on-balance sheet financial instruments.
For certain financial instruments, including cash and cash equivalents, accounts
and notes receivables, advances to employees and accounts payables, the carrying
amount approximated fair value for the majority of these instruments because of
their short maturities. It was estimated that the carrying amount of the
Company's long-term debt approximates its fair value based on the Company's cost
of capital.
[17] New Authoritative Pronouncements
The Financial Accounting Standards Board ["FASB"] has issued Statement of
Financial Accounting Standards ["SFAS"] No. 128, "Earnings per Share," and SFAS
No. 129, "Disclosure of Information about Capital Structure," in February 1997.
SFAS No. 128 simplifies the earnings per share ["EPS"] calculations required by
Accounting Principles Board ["APB"] Opinion No. 15, and related interpretations,
by replacing the presentation of primary EPS with a presentation of basic EPS.
SFAS No. 128 requires dual presentation of basic and diluted EPS by entities
with complex capital structures. Basic EPS includes no dilution and is computed
by dividing income available to common stockholders by the weighted-average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution of securities that could share in the earnings of an entity,
similar to the fully diluted EPS of APB Opinion No. 15. SFAS No. 128 is
effective for financial statements issued for periods ending after December 15,
1997, including interim periods; earlier application is not permitted. When
adopted, SFAS No. 128 will require restatement of all prior-period EPS data
presented; however, the Company has not sufficiently analyzed SFAS No. 128 to
determine what effect SFAS No. 128 will have on its historically reported EPS
amounts.
SFAS No. 129 does not change any previous disclosure requirements, but rather
consolidates existing disclosure requirements for ease of retrieval.
The FASB has issued SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130
is effective for fiscal years beginning after December 15, 1997. Earlier
application is permitted. Reclassification of financial statements for earlier
periods provided for comparative purposes is required. SFAS No. 130 is not
expected to have a material impact on the Company.
The FASB has issued SFAS No. 131, "Disclosures About Segments of an Enterprise
and Related Information." SFAS No. 131 changes how operating segments are
reported in annual financial statements and requires the reporting of selected
information about operating segments in interim financial reports issued to
shareholders. SFAS No. 131 is effective for periods beginning after December 15,
1997, and comparative information for earlier years is to be restated. SFAS No.
131 need not be applied to interim financial statements in the initial year of
its application. SFAS No. 131 is not expected to have a material impact on the
Company.
F-19
<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #13
- --------------------------------------------------------------------------------
[18] Quarterly Financial Data [Unaudited]
The following quarterly financial data is unaudited, but in the opinion of
management includes all necessary adjustments for a fair presentation of the
interim results:
<TABLE>
<CAPTION>
F i s c a l 1 9 9 7
---------------------------------------------
September 30, December 31, March 31, June 30,
<S> <C> <C> <C> <C>
Revenues $ 8,552,087 $ 8,428,595 $ 8,947,786 $ 9,365,494
============== ============== ============== ==============
Gross Profit $ 1,488,330 $ 1,681,297 $ 1,778,730 $ 1,833,683
============== ============== ============== ==============
Net Income $ 124,493 $ 174,425 $ 170,574 $ 282,784
============== ============== ============== ==============
Net Income Per Share $ .04 $ .06 $ .06 $ .10
============== ============== ============== ==============
F i s c a l 1 9 9 6
---------------------------------------------
September 30, December 31, March 31, June 30,
Revenues $ 9,246,352 $ 8,850,795 $ 8,728,220 $ 8,313,065
============== ============== ============== ==============
Gross Profit $ 1,709,805 $ 1,637,621 $ 1,659,287 $ 1,795,211
============== ============== ============== ==============
Net Income $ 40,572 $ 17,742 $ 85,984 $ 157,656
============== ============== ============== ==============
Net Income Per Share $ .01 $ .01 $ .03 $ .05
============== ============== ============== ==============
F i s c a l 1 9 9 5
---------------------------------------------
September 30, December 31, March 31, June 30,
[Restated]
Revenues $ 7,548,714 $ 8,091,258 $ 8,583,376 $ 9,129,644
============== ============== ============== ==============
Gross Profit $ 1,399,099 $ 1,709,343 $ 1,513,326 $ 1,715,268
============== ============== ============== ==============
Net Income $ 60,074 $ 115,036 $ 71,671 $ 18,680
============== ============== ============== ==============
Net Income Per Share $ .02 $ .04 $ .03 $ --
============== ============== ============== ==============
</TABLE>
[19] Subsequent Events [Unaudited]
In September of 1997, the Company opened the retail restaurant portion of the
Collegeville Inn Training and Conference Center. The remaining three divisions
of the project are anticipated to open in the third quarter of fiscal 1998.
. . . . . . . . . . . . . . .
F-20
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
Nutrition Management Services Company
Kimberton, Pennsylvania
Our report on the consolidated financial statements of
Nutrition Management Services Company is referenced on page F-1 and included in
this Form 10-K. In connection with our audits of such financial statements, we
have also audited the related financial statement schedule listed on page F-22
of this Form 10-K.
In our opinion, the financial statement schedule referred to
above, when considered in relation to the basic financial statements taken as a
whole, present fairly, in all material respects, the information required to be
included therein.
MOORE STEPHENS, P. C.
Certified Public Accountants.
Cranford, New Jersey
September 10, 1997
F-21
<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
SCHEDULE II - SCHEDULE OF VALUATION ACCOUNTS
- --------------------------------------------------------------------------------
The following sets forth the activity in the Company's valuation accounts:
Notes and Long-Term
Accounts Lease Accounts
Receivable Receivable Receivable
Balance At June 30, 1994 $ 288,831 $ -- $ 165,730
Provision for Bad Debts 186,352 -- --
Writeoffs (52,066) -- (28,221)
Other - Reclasses (41,448) 121,448 (80,000)
------------ ---------- ----------
Balance At June 30, 1995 381,669 121,448 57,509
Provision for Bad Debts 153,283 -- --
Writeoffs (172,887) (121,448) --
------------ ---------- ----------
Balance At June 30, 1996 362,065 -- 57,509
Provision for Bad Debts 180,000 -- --
Writeoffs (10,637) -- --
------------ ---------- ----------
Balance At June 30, 1997 $ 531,428 $ -- $ 57,509
============ ========== ==========
F-22
LOAN AGREEMENT
Dated December 26, 1996
Between
MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
and
APPLE FRESH FOODS LIMITED
Bond Counsel Authority Counsel
Kassab Archbold & O'Brien, L.L.P. McGrory, Wentz, Fernandez & O'Hara
214 North Jackson Street 115 West Germantown Pike, Suite 100
Media, PA 19023 Swede Square
Norristown, PA 19401
<PAGE>
TABLE OF CONTENTS*
Page
RECITALS.....................................................................1
ARTICLE I
DEFINITIONS
Section 1.01. Definitions...............................................2
Section 1.02. Content of Certificates and Opinions......................2
Section 1.03. Interpretation ...........................................3
ARTICLE II
THE LOAN: USE OF PROCEEDS
Section 2.01. Loan of Funds to the Company..............................3
Section 2.02. Use of Proceeds...........................................4
Section 2.03. Establishment of Completion Date..........................4
Section 2.04. Covenants for Benefit of Bondholders and Bank.............4
ARTICLE III
PAYMENT PROVISIONS
Section 3.01. Loan Payments.............................................4
Section 3.02. Letter of Credit..........................................5
Section 3.03. Time of Loan Payments.....................................5
Section 3.04. Additional Payments; Taxes; Utility Charges...............6
Section 3.05. Acceleration of Payment to Redeem Bonds...................7
Section 3.06. No Defense or Set-Off.....................................7
Section 3.07. Termination Upon Payment or Defeasance of Bonds...........8
Section 3.08. Assignment of Authority's Rights..........................8
Section 3.09. Assignment by Company.................................... 8
Section 3.10. Indemnity Against Claims................................. 9
Section 3.11. Authority is Conduit Issuer; Company is
Real Party in Interest; Covenant Not to Sue ............ 10
ARTICLE IV
COMPANY OBLIGATIONS; ASSIGNMENT TO TRUSTEE
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*This Table of Contents is for convenience only, does not constitute a part
of this Loan Agreement and shall not be considered as having any bearing upon
any interpretation of this Loan Agreement.
(i)
<PAGE>
Section 4.01. General Obligation of the Company......................... 11
Section 4.02. Assignment to Trustee..................................... 11
Section 4.03. Maintenance and Operation of the Project Facilities....... 11
Section 4.04. Maintenance of Existence...................................11
Section 4.05. Compliance with Laws..................................... 12
Section 4.06. Notice of Bankruptcy Case Commencement................... 12
Section 4.07. Substitute Letter of Credit............................... 12
ARTICLE V
THE PROJECT FACILITIES
Section 5.01. Prohibited Uses........................................... 13
Section 5.02. Liens..................................................... 13
ARTICLE VI
INSURANCE; DESTRUCTION; DAMAGE; EMINENT DOMAIN
Section 6.01. Insurance to be Maintained................................ 14
Section 6.02. Destruction. Damage and Eminent Domain.................... 14
Section 6.03. Notice of Property Loss................................... 15
Section 6.04. Disposition of Casualty Insurance and
Condemnation Award Proceeds............................... 15
ARTICLE VII
ADDITIONAL COVENANTS OF THE COMPANY
Section 7.01. Compliance with Laws...................................... 15
Section 7.02. Power to Perform Obligations.............................. 16
Section 7.03. Inspection................................................ 16
Section 7.04. Additional Information.................................... 16
Section 7.05. Nondiscrimination......................................... 16
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.01. Events of Default......................................... 17
Section 8.02. Acceleration.............................................. 18
Section 8.03. Payment of Loan Payments on Default; Suit Therefor........ 19
Section 8.04. Waiver.................................................... 19
Section 8.05. Cumulative Rights......................................... 20
Section 8.06. No Exercise of Remedies Without Consent of Bank........... 20
(ii)
<PAGE>
ARTICLE IX
OPTIONS TO TERMINATE AGREEMENT
Section 9.01. Option to Terminate Upon Defeasance....................... 20
Section 9.02. Option to Terminate Upon the Occurrence of Certain Events. 20
ARTICLE X
MISCELLANEOUS
Section 10.01. Approval of Indenture..................................... 22
Section 10.02. Taxes and Insurance-Rights of Authority to Pay............ 22
Section 10.03. Illegal Provisions Disregarded............................ 22
Section 10.04. Limitation of Liability of the Authority.................. 22
Section 10.05. No Recourse as to the Authority........................... 23
Section 10.06. Reference to Statute or Regulation........................ 23
Section 10.07. Notices................................................... 23
Section 10.08. Applicable Law............................................ 24
Section 10.09. Amendments................................................ 24
Section 10.10. Term of Agreement......................................... 24
Section 10.11. Amounts Remaining in Bond Fund............................ 25
Section 10.12. Survival of Covenants, Conditions and Representations..... 25
Section 10.13. Multiple Counterparts..................................... 25
Section 10.14. Consent................................................... 25
(iii)
<PAGE>
THIS LOAN AGREEMENT dated December 26, 1996 (the "Agreement"), is by
and between MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY (the
"Authority"), and APPLE FRESH FOODS LIMITED, a Pennsylvania corporation (the
"Company").
W I T N E S S E T H :
WHEREAS, the Authority is a body politic and a public instrumentality
of the Commonwealth, organized and existing under the Pennsylvania Economic
development Financing Law, Act of August 23, 1967, P.L. 251, as amended (the
"Act"), and is authorized under the Act to acquire, hold, construct, improve,
maintain, own, finance, lease, in the capacity of lessor or lessee, and/or sell
industrial, commercial and specialized development projects for the public
purpose of alleviating unemployment, maintaining employment at a high level and
creating and developing business opportunities, by the construction,
improvement, rehabilitation, revitalization and financing of industrial,
commercial and specialized enterprises; and
WHEREAS, the Company has requested the Authority to undertake a project
(the "Project") that consists of, among other things: (i) the acquisition,
construction, installation and renovation of certain equipment to be used in
connection with a cook-chill system of batch food processing; and (ii) the
payment of a portion of the costs and expenses of issuing the Bonds; and
WHEREAS, in order to provide funds for and toward the payment of a
portion of the costs of the Project, the Authority has authorized the issuance
and sale of its Bonds; and
WHEREAS, the Bonds are to be issued under and secured by a Trust
Indenture dated December 26, 1996 (the "Indenture"), between the Authority and
Dauphin Deposit Bank and Trust Company (the "Trustee"); and
WHEREAS, this Agreement provides that the Authority will loan the
proceeds of the Bonds to the Company to finance the Project and the Company will
agree, among other things, to repay the loan in installments equal to payments
of debt service on the Bonds when due; and
WHEREAS, the Trustee has agreed under the Indenture to draw on the
Letter of Credit (as such phrase is defined in the Indenture) at such times and
in such amounts as shall be sufficient to pay when due the principal, interest
and Purchase Price (as such phrase is defined in the Indenture) on the Bonds and
to credit all amounts paid under the Letter of Credit against the Company's
obligation to make installment payments under this Agreement for such items; and
WHEREAS, execution and delivery of this Agreement and the issuance
hereunder and under the Act of the Bonds have been in all respects duly and
validly authorized by resolution of the Board of the Authority duly adopted
prior to such execution and delivery; and
WHEREAS, as security for the full and prompt payment and performance of
all its obligations under the Indenture, including, specifically, without
limiting the generality of the
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foregoing, its obligation to make payment of principal of, premium, if any, and
interest on the Bonds, when due, the Authority has, pursuant to the provisions
of the Indenture, assigned to the Trustee all of its right, title and interest
in, to and under this Agreement (except its right to indemnification and to
receive its fees and expenses hereunder), including without limitation, the
right to receive loan payments payable by the Company hereunder; and
WHEREAS, in order to assure full and prompt payment of the Bonds, the
Company, among other things, has caused the Bank to issue the Letter of Credit
to assure payment of principal of, and interest on the Bonds when due (subject
to reduction and reinstatement as provided therein) pursuant to the
Reimbursement Agreement (as defined in the Indenture).
NOW, THEREFORE, THIS LOAN AGREEMENT WITNESSETH:
That the parties hereto, intending to be legally bound hereby and in
consideration of the mutual covenants hereinafter contained, DO HEREBY AGREE to
all the terms and conditions set forth in this Agreement.
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Capitalized terms and phrases used as
defined terms in the recitals shall have the same meanings throughout this
Agreement, and, in addition thereto, capitalized terms and phrases used and not
defined herein shall have the meanings assigned to such terms in the Indenture,
unless the context clearly indicates otherwise.
Section 1.02. Content of Certificates and Opinions. The Trustee may,
but shall not be obligated to, require that every certificate or opinion
provided for in this Agreement with respect to compliance with any provision
hereof shall include: (1) a statement to the effect that the Person making or
giving such certificate or opinion has read such provision and the definitions
herein relating thereto; (2) a brief statement as to the nature and scope of the
examination or investigation upon which the certificate or opinion is based; (3)
a statement to the effect that in the opinion of such Person, he has made or
caused to be made such examination or investigation as is necessary to enable
him to express an informed opinion with respect to the subject matter referred
to in the instrument to which his signature is affixed; (4) a statement of the
assumptions upon which such certificate or opinion is based, and that such
assumptions are reasonable; and (5) a statement as to whether, in the opinion of
such Person, such provision has been complied with.
Any such certificate or opinion made or given by an officer of the
Authority or the Company may be based, insofar as it relates to legal or
accounting matters, upon a certificate or opinion of or representation by
counsel or an accountant, unless such officer knows, or in the exercise of
reasonable care should have known, that the certificate, opinion or
representation with respect to the matters upon which such certificate or
statement may be based, as aforesaid, is erroneous. Any such
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<PAGE>
certificate or opinion made or given by counsel or an accountant may be based,
insofar as it relates to factual matters (with respect to which information is
in the possession of the Authority or the Company, as the case may be) upon a
certificate or opinion of or representation by an officer of the Authority or
the Company, unless such counsel or accountant knows, or in the exercise of
reasonable care should have known, that the certificate or opinion or
representation with respect to the matters upon which such certificate or
opinion or representation may be based, as aforesaid, is erroneous. The same
officer of the Authority or the Company, or the same counsel or accountant, as
the case may be, need not certify to all of the matters required to be certified
under any provision of this Agreement, but different officers, counsel or
accountants may certify to different matters, respectively.
Section 1.03. Interpretation.
(a) Unless the context otherwise indicates, words expressed in
the singular shall include the plural and vice versa and the use of the neuter,
masculine, or feminine gender is for convenience only and shall be deemed to
mean and include the neuter, masculine or feminine gender, as appropriate.
(b) Headings of articles and sections herein and the table of
contents hereof are solely for convenience of reference, do not constitute a
part hereof and shall not affect the meaning, construction or effect hereof.
(c) All references herein to "Articles," "Sections" and other
subdivisions are to the corresponding Articles, Sections or subdivisions of this
Agreement; the words "herein," "hereof," "hereby," "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
Article, Section or subdivision hereof.
(d) Whenever in this Agreement it is required that notice be
provided to the Bank or that consent of the Bank be obtained, such provisions
shall be effective only when: (i) the Letter of Credit is in effect; (ii) the
Bank, in its capacity as provider of the Letter of Credit, is the Holder of any
Bonds; or (iii) any amounts are due and owing to the Bank under the
Reimbursement Agreement.
ARTICLE II
THE LOAN; USE OF PROCEEDS
Section 2.01. Loan of Funds to the Company. The Authority hereby agrees
that simultaneously with the execution and delivery of this Agreement, it will
loan to the Company, upon the terms and conditions specified herein and in the
Indenture, the proceeds of the sale of the Bonds, and the Company agrees to
receive such loan from the Authority, for the purposes provided herein and in
the Indenture.
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<PAGE>
Section 2.02. Use of Proceeds. The proceeds of the Bonds shall be
deposited with the Trustee and applied as provided in the Indenture and in this
Agreement to finance the Project.
Section 2.03. Establishment of Completion Date. The Completion Date
shall mean the date of delivery to the Authority and the Trustee of a
certificate executed by an Authorized Representative of the Company stating in
effect that: (i) all equipment for the Project has been acquired and installed
and all costs and expenses incurred in connection therewith have been paid,
including all costs of labor, services, materials and supplies used in
connection with such acquisition and installation have been paid; and (ii) all
other facilities necessary in connection with the Project have been acquired,
constructed, improved and equipped and all costs and expenses incurred in
connection therewith have been paid. Notwithstanding the foregoing, such
certificate shall state that it is given without prejudice to any rights against
third parties which exist at the date of such certificate or which may
subsequently come into being. Upon completion of the Project, the Company agrees
to cause such certificate to be promptly furnished to the Authority and the
Trustee. Upon receipt of such certificate, the Trustee shall give notice to the
Company of the amount of funds remaining unspent in the Construction Fund. Any
remaining moneys on deposit in the Construction Fund shall be forthwith applied
to the payment of the Costs of the Project, or if not so applied shall be
promptly transferred by the Trustee into the Bond Fund and used by the Trustee
in accordance with the terms of Section 6.08 of the Indenture.
Section 2.04. Covenants for Benefit of Bondholders and Bank. This
Agreement is executed in part to induce: (a) the purchase by others of the
Bonds; and (b) the issuance by the Bank of the Letter of Credit, and the
participation by the Bank in the funding of advances under the Letter of Credit.
Accordingly, all covenants and agreements on the part of the Company and the
Authority, as set forth in this Agreement, are hereby declared to be for the
benefit of the Owners from time to time of the Bonds and for the benefit of the
Bank.
ARTICLE III
PAYMENT PROVISIONS
Section 3.01. Loan Payments.
(a) The Company hereby agrees to pay duly and punctually: (i)
the principal, premium, if any, and interest due and payable on the Bonds; (ii)
the Purchase Price of the Bonds, and (iii) any other amounts due and payable by
the Company under this Agreement. The Company shall be given an immediate credit
in the amount of all draws paid to the Trustee under the Letter of Credit
against the loan payments due hereunder. Any portion of the loan payments due
under this Agreement which is not timely paid (upon proper demand under the
Letter of Credit by the Trustee) from draws under the Letter of Credit shall be
paid to the Trustee directly by the Company as provided in Section 3.03 hereof.
Any other amounts required to be paid under this Agreement shall be paid by the
Company to the party entitled to receive such amounts hereunder and in the
manner provided for herein. Loan payments shall be made by the Company with the
Company's funds, except to the extent
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<PAGE>
a credit in respect thereof has been granted pursuant to the terms of this
Agreement. It is the intention of the Authority and the Company that,
notwithstanding any other provision of this Agreement, the Authority shall
receive funds from the Company under this Agreement at such times and in such
amounts as will enable the Authority to meet all of its obligations under the
Bonds and the Indenture, including any such obligations surviving the payment of
the Bonds and the defeasance of the Indenture.
(b) All loan payments and other sums due and payable to the
Authority or the Trustee under this Agreement shall be absolutely net to the
Authority or the Trustee, as applicable, free of any taxes, costs, liabilities
or other deductions whatsoever with respect to the Project Facilities and the
maintenance, repair, rebuilding, use or occupation thereof or any portion
thereof, so that this Agreement shall yield all amounts due hereunder net to the
Authority or the Trustee throughout the term hereof.
Section 3.02. Letter of Credit. Concurrently with the issuance by the
Authority of the Bonds, the Company shall cause to be delivered to the Trustee
the Letter of Credit issued by the Bank, authorizing the Trustee to make draws
on the Bank, up to an aggregate stated amount of ONE MILLION TWENTY ONE THOUSAND
THREE HUNDRED SEVENTY DOLLARS ($1,021,370), of which ONE MILLION DOLLARS
($1,000,000) shall be in respect of principal on the Bonds and TWENTY ONE
THOUSAND THREE HUNDRED SEVENTY DOLLARS ($21,370) shall be in respect of up to 52
days' interest accrued on the Bonds on or prior to the maturity thereof.
Section 3.03. Time of Loan Payments.
(a) The Company shall pay to the Trustee, as assignee of the
Authority (but only to the extent such amounts have not been advanced to the
Trustee under the Letter of Credit), on the dates and times hereinafter set
forth, for deposit in the Bond Fund, the following sums:
(i) Not later than 12 noon on any Interest Payment Date or
any other date that any payment of interest, premium, if any, or principal is
required to be made in respect of the Bonds pursuant to the Indenture, until the
principal of, premium, if any, and interest on the Bonds shall have been fully
paid or provision for the payment thereof shall have been made in accordance
with the Indenture, in immediately available funds, a sum which, together with
any moneys available for such payment in the Bond Fund, will enable the Trustee
to pay the amount payable on such date as principal of (whether at maturity or
upon redemption or acceleration or otherwise), premium, if any, and interest on
the Bonds as provided in the Indenture; provided, however, that the obligation
of the Company to make any payment hereunder shall be deemed satisfied and
discharged to the extent of the corresponding payment made by the Bank to the
Trustee under the Letter of Credit.
All payments payable by the Company under subsection (a)(i)
of this Section 3.03 are assigned by the Authority to the Trustee for the
benefit of the Owners of the Bonds. The Company hereby acknowledges and consents
to such assignment. The Authority hereby directs the
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<PAGE>
Company and the Company hereby agrees to pay to the Trustee at the Principal
Corporate Trust Office of the Trustee all payments payable by the Company
pursuant to this subsection.
(ii) The Company covenants, for the benefit of the Owners
of the Bonds, to pay or cause to be paid, to the Tender Agent, such amounts as
shall be necessary to enable the Tender Agent to pay the Purchase Price of Bonds
delivered to it for purchase, all as more particularly described in Sections
5.01, 5.03 and 5.04 of the Indenture; provided, however, that the obligation of
the Company to make any such payment under this subsection (a)(ii) shall be
reduced by the amount of moneys available for such payment described in
subsection (i) or (ii) of Section 5.05(a) of the Indenture; and provided,
further, that the obligation of the Company to make any payment under this
subsection (ii) shall be deemed to be satisfied and discharged to the extent of
the corresponding payment made by the Bank under the Letter of Credit.
(iii) Additionally, from time to time, the Company shall
make such payments as shall be necessary to make up any deficiency in or to fund
fully any of the funds established under the Indenture.
Section 3.04. Additional Payments; Taxes; Utility Charges. As
Additional Payments, the Company, during the term of this Agreement, shall pay
or cause to be paid the following:
(a) To the public officers charged with the collection thereof,
promptly as the same become due, all taxes (or contributions or payments in lieu
thereof), including but not limited to income, profits or property taxes, which
may now or hereafter be imposed by the United States of America, any state or
municipality or any political subdivision or subdivisions thereof, and all
assessments for public improvements or other assessments, levies, license fees,
charges for publicly supplied water or sewer services, excises, franchises,
imposts and charges, general and special, ordinary and extraordinary (including
interest, penalties and all costs resulting from delayed payment of any of the
foregoing) of whatever name, nature and kind and whether or not now within the
contemplation of the parties hereto and which are now or may hereafter be
levied, assessed, charged or imposed or which are or may become a lien upon the
payments due under this Agreement, the Project Facilities or the use or
occupation thereof, or upon the Company or the Authority, or upon any
franchises, businesses, transactions, income, earnings and receipts (gross, net
or otherwise) of the Company in connection with the Project Facilities, or its
earnings, profits or receipts from, or its subleasing of, the Project
Facilities; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any tax, assessment, lien or other
matter hereunder so long as the validity thereof is being contested in good
faith and by appropriate legal proceedings diligently pursued, so long as the
operation of the Project Facilities or the receipt of income therefrom is not
adversely affected by reason thereof;
(b) All reasonable fees, charges and expenses of the Trustee,
the Remarketing Agent, the Placement Agent, the Tender Agent and the Bank, as
and when the same become due and payable;
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<PAGE>
(c) The reasonable fees and expenses of such accountants,
consultants, attorneys and other experts as may be engaged by the Authority, the
Trustee or the Tender Agent to prepare audits, financial statements, reports,
opinions or provide such other services required under this Agreement or the
Indenture; and
(d) The reasonable fees and expenses of the Authority in
connection with this Agreement, the Bonds, the Indenture, the Tender Agent
Agreement or the Remarketing Agreement and any and all other expenses incurred
in connection with the authorization, issuance, sale and delivery of any such
Bonds or incurred by the Authority in connection with any litigation which may
at any time be instituted involving this Agreement, the Bonds, the Indenture or
any of the other documents contemplated thereby, or incurred in connection with
the administration of this Agreement, or otherwise in connection with this
Agreement, the Indenture, the Bonds, the Tender Agent Agreement, the Remarketing
Agreement or any of the other documents, instruments or agreements in connection
therewith.
Such Additional Payments shall be billed to the Company, from time to
time, by the Authority, the Trustee, the Remarketing Agent, the Tender Agent or
the Bank, as the case may be, together with a statement certifying that the
amount billed has been paid or incurred and attaching reasonable supporting
documentation indicating that the amount billed has been paid or incurred for
one or more of the above items. After such a demand, amounts so billed shall be
paid by the Company within thirty (30) days after receipt of the bill by the
Company.
Section 3.05. Acceleration of Payment to Redeem Bonds. Whenever the
Bonds are subject to optional redemption or extraordinary redemption pursuant to
the Indenture and the provisions hereof, the Authority will, upon request of the
Company, direct the Trustee to call the same for redemption as provided in the
Indenture. Whenever any Bond is subject to mandatory redemption pursuant to the
Indenture, the Company will cooperate with the Authority and the Trustee in
effecting such redemption. In the event of any mandatory, optional or
extraordinary redemption of the Bonds, the Company will pay or cause to be paid
to the Trustee an amount equal to the applicable redemption price as a
prepayment of that portion of the loan payment corresponding to the Bonds to be
redeemed together with interest accrued to the date of redemption and will also
pay all fees and expenses of the Authority and the Trustee arising with respect
to such redemption or otherwise due and owing hereunder or under the Indenture
at such times and in such amounts as are required to effect the mandatory,
optional or extraordinary redemption of the Bonds under the terms of the
Indenture.
Section 3.06. No Defense or Set-Off. The obligations of the Company to
make loan payments shall be absolute and unconditional without any defense or
set-off for any reason, including, without limitation, any acts or circumstances
that may constitute failure of consideration, destruction of or damage to the
Project Facilities, invalidity or unenforceability of the Bonds, commercial
frustration of purpose or failure of the Authority to perform and observe any
agreement, whether express or implied, or any duty, liability or obligation
arising out of or connected with this Agreement, it being the intention of the
parties that the payments required of the Company hereunder
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<PAGE>
will be paid in full when due without any delay or diminution whatsoever.
Section 3.07. Termination Upon Payment or Defeasance of Bonds. When:
(a) interest on, and principal or the redemption price (as the case may be) of,
all Bonds issued under the Indenture, together with all other amounts due and
payable by the Company hereunder, shall have been paid; or (b) there shall have
been deposited with the Trustee an amount evidenced by moneys or Government
Obligations, the principal of and interest on which, when due, without
reinvestment, will provide sufficient moneys to fully pay the principal or
redemption price (as the case may be) of, and all accrued interest on, all Bonds
then Outstanding, as well as all other sums payable or to become payable by the
Company under this Agreement, as evidenced by a verification report from an
independent certified public accountant, delivered to the Trustee, no further
loan payments shall be payable hereunder and, with the consent of the Bank (if
the Letter of Credit remains outstanding or if any amounts are due and owing to
the Bank under the Reimbursement Agreement or any of the other Reimbursement
Documents (as such term is defined in the Reimbursement Agreement)), this
Agreement shall thereupon be terminated, and the Authority: (i) shall cause the
Trustee to pay over to the Company any additional moneys then remaining in any
Funds under the Indenture (and which will not be required to pay any amounts as
set forth immediately above in this Section 3.07); and (ii) shall pay over to
the Company any additional moneys which may be paid to the Authority by the
Trustee; provided, however, that in each such case moneys remaining in any Fund
under the Indenture or any additional moneys shall be first paid to the Bank to
the extent of any moneys then due and owing from the Company to the Bank under
the Reimbursement Agreement or any of the other Reimbursement Documents (as such
term is defined in the Reimbursement Agreement).
Section 3.08. Assignment of Authority's Rights. As security for the
payment of the Bonds, the Authority will assign to the Trustee all the
Authority's rights under this Agreement. Subject to the prior assignment made to
the Trustee to secure the Bonds, the Authority will also assign all the
Authority's rights under this Agreement to the Bank to secure all of the
Obligations (as defined in the Reimbursement Agreement). The Company consents to
such assignments and agrees to make the loan payments under Section 3.01 and
Section 3.05 hereof directly to the Trustee without defense or set-off by reason
of any dispute between the Company and the Trustee or the Authority. Whenever
the Company is required to obtain the consent of the Authority hereunder, the
Company shall also obtain the consent of the Bank.
Section 3.09. Assignment by Company. This Agreement may be assigned in
whole or in part by the Company without the necessity of obtaining the consent
of the Trustee or the Owners of the Bonds; provided, however, any such
assignment shall require the prior written consent of the Bank (as long as the
Bank is not in default under the Letter of Credit) and the Authority; and
further provided that no assignment pursuant to this Section shall be made
otherwise than in accordance with the Act and the Code, as from time to time
amended. The Company shall, within thirty (30) days after execution thereof,
furnish or cause to be furnished to the Authority, the Trustee and the Bank a
true and complete copy of each such assignment together with any instrument of
assumption.
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Section 3.10. Indemnity Against Claims.
(a) The Company agrees that at all times it will protect and
hold the Authority, its officers, members, employees and agents harmless and
indemnified from and against all claims for losses, damages or injuries to
others, including death, personal injury and property damage or loss, arising
during the term hereof or during any other period arising out of the
acquisition, installation and equipping of the Project Facilities; and the
Authority shall not be liable for any loss, damage or injury to the Person or
property of the Company or its agents, servants or employees or any other Person
who or which may be upon the Project Facilities or damaged or injured as a
result of any condition existing or activity occurring upon the Project
Facilities or any other matter connected directly or indirectly therewith due to
any act or negligence of any Person, excepting only willful misconduct of the
Authority, its officers, agents, members or employees. The indemnity provided
for in this Section 3.10(a) shall be effective only to the extent that any loss
sustained by the Authority, its officers, members, employees and agents shall be
in excess of the net proceeds actually recovered and received by the Authority
from, or paid on behalf of the Authority by, any insurance carried with respect
to the loss sustained.
(b) The Company hereby covenants and agrees that it will
indemnify and hold harmless the Trustee against any and all losses, damages or
claims arising out of the Trustee's exercise and performance of powers and
duties granted unto it by the Indenture and hereunder, and not resulting from
the Trustee's willful misconduct or negligence.
(c) The Company will indemnify, hold harmless and defend the
Authority and the Trustee and the respective officers, members, directors,
officials and employees of each of them against all losses, costs, damages,
expenses, suits, judgments, actions and liabilities of whatever nature
including, specifically, any liability under any state or federal securities
laws (including but not limited to reasonable attorneys' fees, litigation and
court costs, amounts paid in settlement and amounts paid to discharge judgments)
directly or indirectly resulting from or arising out of or related to: (i) the
design, construction, installation, operation, use, occupancy, maintenance or
ownership of the Project Facilities (including compliance with laws, ordinances
and rules and regulations of public authorities relating thereto); or (ii) any
statements or representations with respect to the Company, the Project
Facilities, this Agreement, the Bonds, the Indenture, the Letter of Credit, the
Reimbursement Agreement or any other documents or instruments delivered at or in
connection with the closing held on the Closing Date (including any statements
or representations made in connection with the offer or sale thereof) made or
given to the Authority, the Trustee or any placement advisors or underwriters or
purchasers of any of the Bonds, by the Company or any of its officers, agents or
employees, including, but not limited to, statements or representations of
facts, financial information or Company affairs. The Company also will pay and
discharge and indemnify and hold harmless the Authority and the Trustee from:
(x) any lien or charge upon payments by the Company to the Authority and the
Trustee under this Agreement; and (y) any taxes (including, without limitation,
any ad valorem taxes and sales taxes, assessments, impositions and other charges
in respect of any portion of the Project Facilities). If any such claim is
asserted, or any such lien or charge upon payments, or any such taxes,
assessments, impositions or other charges are sought to be imposed, the
Authority or the Trustee will give prompt notice to the Company, and the Company
will have the sole right and duty to assume, and will assume, the defense
thereof, with full power to litigate, compromise or settle
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the same in its sole discretion. The Company's obligations, liabilities and
duties hereunder shall not be diminished or altered by: (i) reason of the
assumption of any defense required hereby; or (ii) the outcome of any
proceeding, investigation or litigation with respect to the validity or
enforceability of the matters described in this Section 3.10(c).
(d) If the indemnification provided heretofore is for any
reason determined to be unavailable to the Authority or the Trustee, then, with
respect to any such loss, claim, demand or liability, including expenses in
connection therewith, the Authority and the Trustee, as appropriate, shall be
entitled as a matter of right to contribution by the Company. The amount of such
contribution shall be in such proportion as is appropriate to reflect relative
culpability of the parties.
Section 3.11. Authority is Conduit Issuer; Company is Real Party in
Interest; Covenant Not to Sue.
(a) The Company hereby expressly acknowledges that the
Authority is a conduit issuer and that all of the right, title and interest of
the Authority in and to this Agreement, but not the obligations of the
Authority, are to be assigned first to the Trustee and then to the Bank (except
for the right of the Authority to receive its reasonable fees and expenses and
to indemnification), naming the Trustee and the Bank, as applicable, its true
and lawful attorney for and in its name to enforce the terms and conditions of
this Agreement. Notwithstanding any other provision contained herein, the
Company hereby expressly agrees, acknowledges and covenants that it shall duly
and punctually perform or cause to be performed each and every duty and
obligation of the Authority under and pursuant to the Indenture, which the
Company is reasonably able to perform.
(b) The Company covenants and agrees that it shall neither sue
the Authority, or any of its board members, officers, agents or employees, past,
present or future, for any claim, loss, demand, action or nonaction based upon
this financing nor ever raise as a defense in any proceedings whatsoever that
the Authority is the true party in interest. Notwithstanding the provisions of
the foregoing sentence, the Company shall be entitled to: (i) bring an action of
specific performance against the Authority to compel any action required to be
taken by the Authority hereunder or an action to enjoin the Authority from
performing any action prohibited hereunder or under any other documents, by this
instrument or any other agreement executed and delivered in connection with the
issuance of the Bonds, but no such action shall in any way impose pecuniary
liability upon the Authority or any of its board members, officers, agents or
employees; and (ii) join the Authority in any litigation if such joinder is
necessary to pursue any of the Company's rights, provided that prior to such
joinder, the Company shall post such security as the Authority may reasonably
require to protect the Authority from further loss.
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ARTICLE IV
COMPANY OBLIGATIONS; ASSIGNMENT TO TRUSTEE
Section 4.01. General Obligation of the Company. This Agreement
constitutes a general obligation of the Company and the full faith and credit of
the Company is pledged to the payment of all amounts due hereunder.
Section 4.02. Assignment to Trustee. The Authority immediately
following execution and delivery hereof, shall assign this Agreement and all
loan payments payable hereunder (except its right to receive its fees and
expenses and indemnification) to the Trustee pursuant to the Indenture, IN
TRUST, to be held and applied pursuant to the provisions of the Indenture, and
to the Bank. The Company: (1) consents to such assignments and accepts notice
thereof with the same legal effect as though such acceptances were embodied in
separate instruments, separately executed after execution of such assignments;
(2) agrees to pay directly to the Trustee or the Bank, as applicable, all
payments payable hereunder for application to amounts then due and payable or to
become due and payable under the Indenture, such payments to be paid by the
Company to the Trustee without any defense, set-off or counterclaim arising out
of any default on the part of the Authority under the Agreement or any
transaction between the Company and the Authority or the Company and the
Trustee; and (3) agrees that the Trustee and the Bank, as applicable, may
exercise any and all rights and pursue any and all remedies granted the
Authority hereunder.
Section 4.03. Maintenance and Operation of the Project Facilities. (a)
During the term of this Agreement, the Company will at its own cost and expense
keep and maintain, or cause to be kept and maintained, in good repair and
condition (excepting reasonable wear and tear) the Project Facilities and all
additions and improvements thereto, and pay, or cause to be paid, any utility
charges and other costs and expenses arising out of its use or occupancy of the
Project Facilities; and (b) the Company agrees to timely pay for any
improvements to the Project Facilities lawfully done or lawfully ordered to be
done by any municipal, state or federal authority and to comply in all material
respects at its own cost and expense with all lawful and enforceable notices
received (whether by the Authority or the Company) from public authorities from
and after the date hereof that affect the Project Facilities and the use and
operation thereof, other than those improvements, orders and notices, the
amount, validity or application of which is at the time being contested, in
whole or in part, in good faith by appropriate proceedings promptly initiated
and diligently conducted.
Section 4.04. Maintenance of Existence. Except as otherwise permitted
in the Reimbursement Agreement, the Company agrees that it will maintain its
existence as a Pennsylvania corporation, will maintain its status as an entity
authorized to conduct business in the Commonwealth, will not dissolve or
otherwise dispose of all or substantially all of its assets and will not
consolidate with or merge into another entity.
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Section 4.05. Compliance with Laws. With respect to the Project
Facilities and any additions, alterations or improvements thereto, the Company
will at all times comply with all applicable requirements of federal, state and
local laws and with all applicable lawful requirements of any agency, board, or
commission created under laws of the Commonwealth or of any other duly
constituted public authority, and will use, and permit the use of, the Project
Facilities only for such purposes as are lawful under the Act; provided,
however, that the Company shall be deemed in compliance with this Section 4.05
so long as it is contesting in good faith any such requirement by appropriate
legal proceedings.
Section 4.06. Notice of Bankruptcy Case Commencement. The Company
covenants and agrees that it shall immediately notify the Authority, the Bank
and the Trustee of the commencement of any case by or against it under the
Bankruptcy Code. In addition, within fifteen days of receipt of a written
request from the Trustee, the Company shall deliver a certificate to the Trustee
certifying as to whether a petition in bankruptcy has been filed by or against
the Company under the Bankruptcy Code or any applicable state bankruptcy or
insolvency law.
Section 4.07. Substitute Letter of Credit. The Company may provide for
the delivery to the Trustee of a Substitute Letter of Credit upon thirty (30)
days prior written notice to the Trustee, the Tender Agent, the Remarketing
Agent and the Authority. Any Substitute Letter of Credit shall be delivered to
the Trustee on an Interest Payment Date and not later than the thirtieth (30th)
Business Day prior to the expiration of the Letter of Credit it is being issued
to replace. On or before the date of the delivery of any Substitute Letter of
Credit to the Trustee, as a condition to the acceptance of any Substitute Letter
of Credit by the Trustee, the Company shall furnish to the Authority, the
Trustee and the Remarketing Agent: (i) written evidence that the issuer of such
Substitute Letter of Credit is a commercial bank organized and doing business in
the United States or a branch or agency of a foreign commercial bank located and
doing business in the United States and subject to regulation by state or
federal banking regulatory authorities and that it has been assigned the same or
better rating as the Letter of Credit in effect immediately prior to the
substitution of the Substitute Letter of Credit; (ii) an opinion of nationally
recognized bond counsel to the effect that the delivery of such Substitute
Letter of Credit is authorized under this Agreement and the Indenture and the
Act and complies with the terms hereof, and, that the delivery of such
Substitute Letter of Credit does not adversely affect the exclusion from gross
income of the interest on the Bonds for federal income tax purposes; and (iii)
an opinion of Counsel satisfactory to the Trustee, the Authority, the Company
and the Remarketing Agent to the effect that the Substitute Letter of Credit is
a legal, valid and binding obligation of the issuer (or, in the case of a branch
or agency of a foreign commercial bank, the branch or agency) issuing the same,
enforceable in accordance with its terms, that payments of principal, premium,
if any (if such Substitute Letter of Credit secures the payment of premium), or
Purchase Price of or interest on the Bonds from the proceeds of a drawing on the
Substitute Letter of Credit will not constitute voidable preferences under the
Bankruptcy Code or other applicable laws and regulations and that it is not
necessary to register the Substitute Letter of Credit under the Securities Act
of 1933, as amended, or to qualify an indenture with respect thereto under the
Trust Indenture Act of 1939, as amended. On or before the delivery of any
Substitute Letter of Credit to the Trustee, as an additional condition to the
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acceptance of any Substitute Letter of Credit by the Trustee, the Company shall
furnish to the Authority, the Trustee and the Remarketing Agent written evidence
from each Rating Agency that the rating on the Bonds will not be reduced or
withdrawn as a result of the acceptance of the Substitute Letter of Credit and
that the short term unsecured debt of the Bank or Substitute Bank, as
applicable, shall then have been assigned a rating by Moody's of "P-1" or the
equivalent rating assigned by S&P. In the case of a Substitute Letter of Credit
issued by a branch or agency of a foreign commercial bank there shall also be
delivered an opinion of Counsel, satisfactory to the Trustee, the Authority, the
Company and the Remarketing Agent and licensed to practice law in the
jurisdiction in which the head office of such bank is located, to the effect
that the Substitute Letter of Credit is the legal, valid and binding obligation
of such bank enforceable in accordance with its terms. The Trustee shall accept
any such Substitute Letter of Credit only in accordance with the terms, and upon
the satisfaction of the conditions, contained in this Section 4.07 and any other
provisions applicable to acceptance of a Substitute Letter of Credit under this
Agreement and the Indenture.
ARTICLE V
THE PROJECT FACILITIES
Section 5.01. Prohibited Uses. The Company covenants and agrees that it
will not use or permit the use by any Person of any of the funds provided by the
Authority hereunder or any other of its funds, directly or indirectly, or direct
the Trustee to invest any funds held by it under the Indenture or this
Agreement, in such manner as would, or enter into, any arrangement, formal or
informal, that would, or take or omit to take any other action that would, cause
any Bond to be an "arbitrage bond" within the meaning of Section 148(a) of the
Code. The Company acknowledges having read Sections 6.13 and 7.06 of the
Indenture and the Rebate Certificate and agrees to perform all duties imposed
upon it by such Sections and by the Rebate Certificate. Insofar as said Sections
and the Rebate Certificate impose duties and responsibilities on the Company,
they are specifically incorporated herein by reference.
Section 5.02. Liens. The Company will not create, assume, or suffer to
exist, any mortgage, lien, pledge, charge, security interest or encumbrance of
any kind upon the Premises except:
(a) the liens and security interests created by the Collateral
Documents, or otherwise existing on and disclosed to the Authority and the Bank
on the date hereof;
(b) purchase money liens on and security interests in equipment
hereafter acquired which constitutes the deferred portion of the purchase price
thereof;
(c) liens for taxes not yet payable or being contested in good
faith by appropriate proceedings and for which adequate reserves have been
provided on the books of the Company;
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(d) mechanics', materialmen's, warehousemen's, carriers' or
other like liens arising in the ordinary course of business of the Company,
arising with respect to obligations which are not overdue for a period longer
than thirty (30) days or which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been provided on the books of
the Company;
(e) other encumbrances consisting of zoning restrictions,
easements, restrictions on the use of real property or minor irregularities in
the title thereto, which do not arise in connection with the borrowing of, or
any obligation for the payment of, money and which, in the aggregate, do not
materially detract from the value of the Premises; or
(f) any liens authorized or permitted under the Reimbursement
Agreement.
ARTICLE VI
INSURANCE; DESTRUCTION, DAMAGE, EMINENT DOMAIN
Section 6.01. Insurance to be Maintained. The Company covenants to
provide and maintain continuously unless otherwise herein provided, adequate
insurance on the Project Facilities as shall be mutually agreed upon by the Bank
and the Company. Each insurance policy with respect to the Project Facilities
shall name the Bank as an additional insured.
Section 6.02. Destruction, Damage and Eminent Domain. If the Project
Facilities shall be wholly or partially destroyed or damaged by fire or other
casualty covered by insurance, or shall be wholly or partially condemned, taken
or injured by any Person, including any Person possessing the right to exercise
the power of or a power in the nature of eminent domain or shall be transferred
to such a Person by way of a conveyance in lieu of the exercise of such a power
by such a Person, the Company covenants that it will take all actions and will
do all things which may be necessary to enable recovery to be made upon such
policies of insurance or on account of such taking, condemnation, conveyance,
damage or injury. The Company is authorized, in its own name, as trustee of an
express trust, to demand, collect, sue, settle claims, receipt and release
monies which may be due and payable under policies of insurance covering such
damage or destruction or on account of such condemnations, damage or injury. Any
moneys recovered: (i) on policies of insurance required to be maintained
hereunder; or (ii) as a result of any taking, condemnation, conveyance, damage
or injury shall be deposited in the Construction Fund held by the Trustee under
the Indenture and shall be applied in accordance with the provisions of Section
6.04 hereof; provided, however, that as long as the Bank is not in default under
the terms of the Letter of Credit, the applicable provisions of the
Reimbursement Agreement shall control the disposition of casualty insurance and
condemnation award proceeds.
Any appraisement or adjustment of loss or damage and any settlement or
payment therefor, shall be agreed upon by the Company, the Bank (as long as the
Bank is not in default under the Letter of Credit) and the appropriate insurer
or condemnor or Person, and shall be evidenced to the Bank
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by the certificate and approvals set forth in the Indenture. The Bank may rely
conclusively upon such certificates.
Section 6.03. Notice of Property Loss. After the occurrence of loss or
damage to, or after receipt of notice of condemnation of, the Project
Facilities, if such loss or damage to the Project Facilities exceeds $50,000,
the Company shall within five (5) Business Days thereof notify the Authority,
the Trustee and the Bank, in writing, of such damage.
Section 6.04. Disposition of Casualty Insurance and Condemnation Award
Proceeds. Subject to the provisions of Section 6.02 hereof, if the Bank is in
default under the terms of the Letter of Credit, and as long as the Company is
not in default under the terms of this Agreement, the Company may elect, in its
discretion, whether to apply the proceeds of any casualty insurance coverage
and/or condemnation awards to: (i) the repair, reconstruction or replacement of
damaged, destroyed or injured property comprising the Project Facilities; or
(ii) the redemption of Bonds pursuant to the applicable provisions of the
Indenture. Absent timely direction from the Company as to the application of any
casualty insurance coverage and/or condemnation awards or if the Company shall
be in default under the terms of this Agreement, the proceeds thereof shall be
applied to the extraordinary redemption of the Bonds at par plus accrued
interest through the date of redemption. For purposes of the preceding sentence,
"timely direction" shall mean 30 days after the Company has agreed, in
connection with any damage to or condemnation of the Project Facilities, upon
the settlement or payment with respect to any appraisement or adjustment of loss
or damage, as appropriate.
ARTICLE VII
ADDITIONAL COVENANTS OF THE COMPANY
Section 7.01. Compliance with Laws. The Company covenants that all
actions heretofore and hereafter taken by the Company or by the Authority upon
the recommendation or request of any officer of the Company to acquire and carry
out the Project have been and will be, to the best knowledge of the Company, in
full compliance with all pertinent laws, ordinances, rules, regulations and
orders applicable to the Company. In connection with the operation, maintenance,
repair and replacement of the Project Facilities, the Company covenants that it
shall comply with all applicable ordinances, laws, rules, regulations and orders
of the government of the United States of America, the Commonwealth, the County,
and any other applicable government unit having jurisdiction over it, and any
requirement of any board of fire underwriters having jurisdiction or of any
insurance company writing insurance on the Project Facilities; provided,
however, that nothing herein shall prevent or prohibit the Company from
contesting in good faith and by appropriate proceedings the legality or
reasonableness of any such standards, or the imposition of any such standards
upon it with respect to the Project Facilities so long as the operation of the
Project Facilities or the receipt of income therefrom would not be adversely
affected by reason thereof. The Company further covenants and represents that
the Project Facilities are in compliance with all applicable zoning,
subdivision, building, land use and similar laws and ordinances. The Company
covenants that it shall not take any
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action or request the Authority to execute any release which would cause the
Project Facilities to be in violation of such laws or ordinances or such that a
conveyance of the Project Facilities or of any portion of the Project Facilities
would create a violation of such laws and ordinances. The Company acknowledges
that any review by the Authority or Counsel to the Authority of any action
heretofore or hereafter taken by the Company has been or will be solely for the
protection of the Authority. Such reviews shall not prevent the Authority from
enforcing any of the covenants made by the Company.
Section 7.02. Power to Perform Obligations. The Company covenants and
represents that it has full power and legal right to enter into this Agreement
and perform its obligations hereunder. The making and performance of the
Agreement by the Company has been duly authorized by all necessary action and
will not conflict with or constitute a breach of or default under any bond,
contract, indenture, agreement or any other instrument by which the Company or
any of its properties is or may be bound.
Section 7.03. Inspection. The Company covenants that the Authority, by
its duly authorized representatives, at reasonable times and with reasonable
notice, for purposes of determining compliance with the Agreement, may inspect
any part of the Project Facilities.
Section 7.04. Additional Information. The Company agrees, whenever
requested by the Authority, to provide and certify or cause to be provided and
certified such information concerning the Project Facilities, to enable the
Authority to make any reports or supply any information required by the
Indenture, law, governmental regulation or otherwise.
Section 7.05. Nondiscrimination. During the term of this Agreement, the
Company agrees, as to itself and as to each occupant of the Project Facilities
controlling, controlled by or under common control with the Company (each, a
"Contractor") as follows:
(a) Contractors shall not discriminate against any employee,
applicant for employment, independent contractor or any other Person because of
race, color, religious creed, handicap, ancestry, national origin, age or sex.
Contractors shall take affirmative action to insure that applicants are
employed, and that employees or agents are treated during employment, without
regard to their race, color, religious creed, handicap, ancestry, national
origin, age or sex. Such affirmative action shall include, but is not limited
to: employment, upgrading, demotion or transfer, recruitment or recruitment
advertising; layoff or termination; rates of pay or other forms of compensation;
and selection for training. Contractors shall post in conspicuous places,
available to employees, agents, applicants for employment and other persons, a
notice to be provided by the contracting agency setting forth the provisions of
this Section 7.05.
(b) Contractors shall, in advertisements or requests for
employment placed by it or on its behalf, state that all qualified applicants
will receive consideration for employment without regard to race, color,
religious creed, handicap, ancestry, national origin, age, or sex.
(c) Contractors shall send each labor union or workers'
representative with which
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it has a collective bargaining agreement or other contract or understanding, a
notice advising said labor union or workers' representative of its commitment to
this nondiscrimination clause. Similar notices shall be sent to every other
source of recruitment regularly utilized by Contractors.
(d) It shall be no defense to a finding of noncompliance with
this Section 7.05 that a Contractor had delegated some of its employment
practices to any union, training program or other source of recruitment which
prevents it from meeting its obligations. However, if the evidence indicates
that such a Contractor was not on notice of the third-party discrimination or
made a good faith effort to correct it, such factor shall be considered in
mitigation in determining appropriate sanctions.
(e) Where the practices of a union or of any training program
or other source of recruitment will result in the exclusion of minority group
persons, so that a Contractor will be unable to meet its obligations under this
Section 7.05, such a Contractor shall then employ and fill vacancies through
other nondiscriminatory employment procedures.
(f) Contractors shall comply with all state and federal laws
prohibiting discrimination in hiring or employment opportunities. Noncompliance
with this Section 7.05 will constitute an Event of Default under this Agreement.
(g) Contractors shall furnish all necessary employment
documents and records to, and permit access to its books, records and accounts
by, the Authority for purposes of investigation to ascertain compliance with the
provisions of this Section 7.05. If Contractor does not possess documents or
records reflecting the necessary information requested, it shall furnish such
information on reporting forms supplied by the Authority.
(h) Contractors shall actively recruit minority subcontractors
and women subcontractors or subcontractors with substantial minority or women
representation among their employees.
(i) Contractors shall include the provisions of this Section
7.05 in every subcontract, so that such provisions will be binding upon each
subcontractor.
(j) Contractors' obligations under this Section 7.05 are
limited to Contractors' facilities within the Commonwealth or, where the
contract is for purchase of goods manufactured outside of the Commonwealth, the
facilities at which such goods are actually produced.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.01. Events of Default. The following events shall constitute
"Events of Default~ under this Agreement:
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(a) if the Company falls to make any payment required by
Sections 3.01, 3.03, 3.04 or 3.05 hereof when due; or
(b) if the Company fails to make any other payment required
hereby and such failure continues for 30 days after the Authority or the Trustee
gives notice to the Company that such payment is due and unpaid; or
(c) if the Company fails to perform any of its other covenants
or conditions or fails to perform any of its obligations hereunder and such
failure continues for 30 days after the Authority or the Trustee gives the
Company notice thereof; provided, however, that if such performance requires
work to be done, actions to be taken, or conditions to be remedied, which by
their nature cannot reasonably be done, taken or remedied, as the case may be,
within such 30 day period, no Event of Default shall be deemed to have occurred
or to exist if, and so long as, the Company shall commence such performance
within such 30-day period and shall diligently and continuously proceed to
completion; or
(d) if the Company commits any act of bankruptcy under the
Bankruptcy Code or any state bankruptcy law or any law providing for
reorganization or relief for debtors or files or has filed against it a petition
in bankruptcy or for arrangement or reorganization pursuant to the Bankruptcy
Code or other similar law, federal or state, or if, by the decree of a court of
competent jurisdiction, is adjudicated a bankrupt or declared insolvent, or
makes an assignment for the benefit of creditors, or admits in writing its
inability to pay its debts generally when or as they become due, or consents to
the appointment of a trustee, receiver or to the liquidation of all or any part
of the Project Facilities, provided that, if any such proceeding is commenced by
a Person other than the Company, there shall be no Event of Default if such
proceedings are dismissed within 60 days of the filing of initial pleadings
therein; or
(e) the written declaration by the Bank of an Event of Default
under and as defined in the Reimbursement Agreement;
Section 8.02. Acceleration. Upon the occurrence of any "Event of
Default" by the Authority under the Indenture caused or resulting directly or
indirectly by the occurrence of an Event of Default by the Company hereunder,
the Trustee (with the prior written consent of the Bank as long as the Bank is
not in default under the Letter of Credit), may, and upon request of the Owners
of 25% in principal amount of the Bonds then Outstanding shall, pursuant to
Section 8.02 of the Indenture, declare the principal of the then-Outstanding
Bonds and accrued interest immediately due and payable, but such Trustee shall
not declare the principal due and payable if such acceleration is annulled as
provided in Section 8.02 thereof. Upon such declaration by the Trustee, the
Authority shall have the right to terminate this Agreement and, upon such
termination, there shall become immediately due and payable hereunder as then
current damages of the Authority under this Agreement, an amount equal: (i) to
all amounts then due and payable by the Authority to the Trustee under this
Section 8.02; and (ii) all other amounts due and owing as loan payments
hereunder. Until such amount is paid by the Company, at the time or times and in
the manner required to permit the
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Authority to meet its obligations under the Indenture, the Authority shall
continue to have all of the rights, powers and remedies herein (notwithstanding
the termination hereof), and, for such time as may be necessary to enable the
Authority to satisfy in full its obligations under the Indenture, the term of
this Agreement shall, at the election of the Authority, be extended at the will
of the Authority, and the Company's obligations hereunder shall continue in full
force and effect.
Section 8.03. Payment of Loan Payments on Default; Suit Therefor.
(a) Upon the occurrence of an Event of Default under this
Agreement, then, upon demand of the Authority or its assignee, the Company will
pay to the Authority or its assignee the whole amount of the loan payments that
then shall have become due and payable hereunder and to the extent such loan
payments represent payments due on the Bonds, such payments shall be applied to
the payment of the Bonds in accordance with the terms of the Indenture; and, in
addition thereto, such further amount as shall be sufficient to pay the costs
and expenses of collection, including reasonable compensation based upon actual
time expended by the Authority and its assignee and their respective agents and
attorneys, and any expenses or liabilities incurred by the Authority or its
assignee (other than through the Authority's or its assignee's own gross
negligence or bad faith). In case the Company shall fail forthwith to pay such
amounts upon such demand, the Authority or its assignee shall be entitled and
empowered to institute any actions or proceedings at law or in equity for the
collection of the sums so due and unpaid, and may prosecute any such action or
proceeding to judgment or final decree, and may enforce any such judgment or
final decree against the Company and collect in the manner provided by law out
of the property of the Company the money adjudged or decreed to be payable.
(b) In case there shall be pending proceedings in bankruptcy or
for the reorganization of the Company under the Bankruptcy Code or any other
applicable law, or in case a receiver or trustee shall have been appointed for
the benefit of the creditors or the property of the Company, or in the case of
any other similar judicial proceedings relative to the Company, the Authority or
its assignee shall be entitled and empowered, by intervention in such
proceedings or otherwise, to file and prove a claim or claims for the whole
amount of the loan payments, including interest owing and unpaid in respect
thereof, and, in case of any judicial proceedings, to file such proofs of claim
and other papers or documents as may be necessary or advisable in order to have
the claims of the Authority or its assignee allowed, and to collect and receive
any moneys or other property payable or deliverable on any such claims, and to
distribute the same after the deduction of its charges and expenses; and any
receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized to make such payments to the Authority or its assignee, and to pay to
the Authority or its assignee any amount due it for compensation based upon
actual time expended and expenses, including counsel fees incurred by it up to
the date of such distribution.
Section 8.04. Waiver. The Company hereby waives and relinquishes the
benefits of any present or future law exempting the Project Facilities from
attachment, levy or sale on execution, or any part of the proceeds arising from
the sale thereof, and all benefit of stay of execution or other process.
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Section 8.05. Cumulative Rights. No remedy conferred upon or reserved
to the Authority or its assignee by this Agreement is intended to be exclusive
of any other available remedy or remedies, but each and every such remedy shall
be cumulative and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity or by statute. No
waiver by the Authority or its assignee of any breach by the Company of any of
its obligations, agreements or covenants hereunder shall be a waiver of any
subsequent breach, and no delay or omission to exercise any right or power shall
impair any such right or power or shall be construed to be a waiver thereof, but
any such right and power may be exercised from time to time and as often as may
be deemed expedient.
Section 8.06. No Exercise of Remedies Without Consent of Bank.
Notwithstanding anything to the contrary contained in this Agreement, neither
the Authority nor any assignee of the Authority under this Agreement shall
exercise or pursue remedies or declare an Event of Default or cause an
acceleration of the obligations contained in this Agreement without the prior
written consent of the Bank as long as the Bank shall not be in default of its
obligations under the Letter of Credit or a voluntary or involuntary case has
not been commenced by the filing of a petition under the Bankruptcy Code or any
other law relating to insolvency, bankruptcy, reorganization, winding-up or
composition or adjustment of debts by or against the Bank.
ARTICLE IX
OPTIONS TO TERMINATE AGREEMENT
Section 9.01. Option to Terminate Upon Defeasance. The Company shall
have, and is hereby granted, the option to terminate its obligations under this
Agreement prior to full payment of the Bonds by providing for the payment of all
of the Outstanding Bonds in accordance with Article XI of the Indenture.
Section 9.02. Option to Terminate Upon the Occurrence of Certain
Events. The Company shall have, and is hereby granted, the option to terminate
its obligations under this Agreement if any of the events set forth below shall
occur:
(A) The Project Facilities or any portion thereof shall have
been damaged or destroyed: (1) to such extent that it cannot, in the
Company's judgment, be reasonably restored within a period of six (6)
months to the condition thereof immediately preceding such damage or
destruction; or (2) to such extent that the Company is thereby
prevented, in the Company's reasonable judgment, from carrying on its
normal operations at the Project Facilities for a period of six (6)
months or more;
(B) Title to, or the temporary use for a period of six (6)
months or more of, all or substantially all of the Project Facilities,
or such part thereof as shall materially interfere, in the Company's
reasonable judgment, with the operation of the Project Facilities for
the purpose for which the Project Facilities are designed, shall have
been taken under the exercise
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<PAGE>
of the power of eminent domain by any governmental body or by any
Person, firm or corporation acting under governmental authority
(including such a taking or takings as results in the Company's being
thereby prevented from carrying on its normal operations at the Project
Facilities for a period of six (6) months or more);
(C) Changes which the Company cannot reasonably control or
overcome in the economic availability of materials, supplies, labor,
equipment and other properties and things necessary for the efficient
operation of the Project Facilities for the purposes contemplated by
this Agreement, shall have occurred, or technological or other changes
shall have occurred which in the judgment of the Company render the
continued operation of the Project Facilities uneconomical for such
purpose; or
(D) As a result of any changes in the Constitution of the
Commonwealth or the Constitution of the United States of America or of
legislative or administrative action (whether state or federal) or by
final decree, judgment or order of any court or administrative body
(whether state or federal) entered after the contest thereof by the
Company in good faith, this Agreement shall have become void and
unenforceable or impossible of performance in accordance with the
intent and purposes of the parties as expressed in this Agreement, or
unreasonable burdens or excessive liabilities shall have been imposed
on the Company in respect to the Project Facilities, including, without
limitation, federal, state or other ad valorem, property, income, or
other taxes not being imposed on the date of this Agreement.
To exercise such option, the Company shall within ninety (90) days
following the event authorizing such termination, give written notice
to the Authority and the Trustee and shall specify therein the date of
redemption of Bonds pursuant to Section 4.01 of the Indenture, which
date shall be the next interest payment date in respect of the Bonds
for which the required notice of redemption can practicably be given.
In accordance with the terms of the Indenture, the Company shall make
arrangements for the Trustee to give the required notice of redemption.
Payment of the redemption price of Bonds redeemed pursuant to this
Section 9.02 will be made in accordance with the terms of the
Indenture.
Anything contained in this Agreement to the contrary notwithstanding,
the Bank shall have the right (as long as the Bank shall not be in default under
the terms of the Letter of Credit) to cause the Company to terminate its
obligations under this Agreement, in accordance with the provisions of this
Section 9.02 by so notifying the Company in writing, if as a result of any
changes in the Constitution of the Commonwealth or the Constitution of the
United States of America or as a result of a legislative or administrative
action (whether state or federal) or final decree, judgment or order of any
court or administrative body (whether state or federal) entered after the
contest thereof by the Company in good faith, this Agreement shall have become
void and unenforceable or impossible of performance, in accordance with the
intent and purposes of the parties as expressed in this Agreement.
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<PAGE>
ARTICLE X
MISCELLANEOUS
Section 10.01. Approval of Indenture. The Company acknowledges that it
has received executed copies of the Indenture and a copy the Letter of Credit
and that it is familiar with their provisions, and agrees that it will take all
such actions as are required or contemplated of it under the Indenture to
preserve and protect the rights of the Trustee thereunder and that it will not
take any action which would cause a default or an Event of Default thereunder.
It is agreed by the Company and the Authority that any redemption of the Bonds
prior to maturity shall be effected as provided in the Indenture.
Section 10.02. Taxes and Insurance-Rights of Authority to Pay. If the
Company, at any time, fails to pay any taxes or other impositions payable by it
in accordance with Section 3.04 hereof, or to take out, pay for, maintain or
deliver any of the insurance policies provided for in Article VI, or shall fail,
within the time provided for in Article VIII after the notice therein specified
of any Event of Default, as therein defined, has been given thereunder, to make
any other payment or perform any other act on its part to be made or performed,
then the Authority may, but shall not be obligated so to do, and without further
notice to or demand upon the Company and without waiving or releasing the
Company from any of its obligations under the Agreement: (a) pay any taxes or
other impositions payable by the Company in accordance with Section 3.04 hereof;
(b) take out, pay for and maintain any of the insurance policies provided for in
Article VI hereof; or (c) make any other payment or perform any other act on the
Company's part to be made or performed as provided in this Agreement. All sums
so paid by the Authority and all necessary incidental costs and expenses in
connection with the performance of any such act by the Authority shall, together
with interest thereon at the rate at which interest is charged on defaulted
payments under the Reimbursement Agreement, be payable to the Authority, on
demand, or, at the option of the Authority, may be added to any installment of
the loan payments then due or thereafter becoming due under this Agreement, and
the Company covenants to pay any such sums.
Section 10.03. Illegal Provisions Disregarded. If any term or provision
hereof or the application thereof for any reason or circumstance shall to any
extent be held to be invalid or unenforceable, this Agreement shall be invalid
or unenforceable only to the extent of such invalidity or unenforceability and
such invalidity or unenforceability shall not invalidate the balance of such
provision or the remaining terms or provisions of this Agreement or the
application of such terms or provisions to Persons other than those as to which
it has been held invalid or unenforceable; each term and provision hereof shall
be valid and enforceable to the fullest extent permitted by law, and shall be
liberally construed in favor of the Authority or its assignee in order to effect
the intent of this Agreement.
Section 10.04. Limitation of Liability of the Authority. In the event
of any default by the Authority hereunder, and notwithstanding any provision or
obligation to the contrary hereinbefore or hereinafter set forth, the liability
of the Authority shall be limited to its interest in the Project
-22-
<PAGE>
Facilities, the improvements thereon, the rents, issues and profits therefrom,
and the lien of any judgment shall be restricted thereto. The Authority does not
assume general liability nor specific liability for the repayment of any
mortgage or other loan, or for the costs, fees, penalties, taxes, interest,
commissions, charges, insurance or any other payments therein recited or therein
set forth, or incurred in any way in connection therewith. Other than as set
forth hereinabove in this Section 10.04, there shall be no other recourse for
damages of any kind or nature by the Company or any other Person against the
Authority, its incorporator, officers, members, agents and employees, past,
present or future, or any of the property or other assets now or hereafter owned
by it or them, either directly or indirectly; and all such recourse or liability
is hereby expressly waived and released as a condition of and in consideration
for execution and delivery of this Agreement by the Authority. In the event of
entry of judgment against the Authority by virtue of the power herein contained,
the Authority shall mark the judgment index to the effect that the judgment is
limited as aforesaid.
Section 10.05. No Recourse as to the Authority. Except as expressly
provided in Section 10.04 above, no recourse under or upon any obligation,
covenant or agreement contained herein or in any Bond shall be had against the
Authority or any member, officer, employee or agent, past, present or future, of
the Authority or of any successor of the Authority under this Agreement, any
other agreement, any rule of law, statute or constitutional provision, or by
enforcement of any assessment or by any legal or equitable proceeding or
otherwise, it expressly being agreed and understood that the obligations of the
Authority hereunder, and under the Bonds and elsewhere, are solely corporate
obligations of the Authority to the extent specifically limited in the Act and
that no personal liability whatsoever shall attach to or shall be incurred by
the Authority or such members, officers, employees or agents, past, present or
future, of the Authority or of any successor of the Authority, or any of them,
because of such indebtedness or by reason of any obligation, covenant or
agreement contained herein, in the Bonds or implied therefrom.
Section 10.06. Reference to Statute or Regulation. A reference herein
to a statute or to a regulation issued by a governmental agency includes the
statute or regulation in force as of the date hereof, together with all
amendments and supplements thereto and any statute or regulation substituted for
such statute or regulation, unless the specific language or the context of the
reference herein clearly includes only the statute or regulation in force as of
the date hereof.
A reference herein to a governmental agency, department, board,
commission or other public body or to a public officer includes an entity or
officer which or who succeeds to substantially the same functions as those
performed by such public body or officer as of the date hereof, unless the
specific language or the context of the reference herein clearly includes only
such public body or public officer as of the date hereof.
Section 10.07. Notices. All notices required or authorized to be given
by the Company, the Authority or the Trustee under the Indenture or pursuant to
this Agreement shall be in writing and shall be sent by registered or certified
mail, postage prepaid, to the following addresses:
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<PAGE>
to the Authority to:
Montgomery County Industrial Development
Authority
3 Stony Creek Office Center
151 West Marshall Street
Norristown, Pennsylvania 19401
to the Company to:
Apple Fresh Foods Limited
Box 725, Kimberton Road
Kimberton, PA 19442
Attention: Controller
to the Trustee to:
Dauphin Deposit Bank and Trust Company
213 Market Street
Harrisburg, PA 17101
Attention: Corporate Trust Services
or to such other addresses as may from time to time be furnished to the parties,
effective upon the receipt of notice thereof given as set forth above. Each of
the above agrees that it shall send a duplicate copy or executed copy of all
certificates, notices, correspondence or other data and materials required to be
sent to one of the above to all other parties and in addition, to the Bank at
Great Valley Corporate Center, 55 Valley Stream Parkway, Suite 200, Malvern,
Pennsylvania 19355, Attention: Mr. Michael Bailey.
Section 10.08. Applicable Law. This Agreement shall be deemed to be a
contract made in the Commonwealth and governed by the law of the Commonwealth.
Section 10.09. Amendments. This Agreement may not be amended except by
an instrument in writing signed by the parties and, if such amendment occurs
after the issuance of any of the Bonds, consented to by the Trustee and the
Bank, so long as the Bank is not in default under the Letter of Credit.
Section 10.10. Term of Agreement. This Agreement and the respective
obligations of the parties hereto shall be in full force and effect from the
date hereof until all principal of, premium, if any, and interest on the Bonds
shall have been paid or provision for such payment shall have been made pursuant
to the terms and provisions of the Indenture.
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<PAGE>
Section 10.11. Amounts Remaining in Bond Fund. It is agreed by the
parties hereto that any amounts remaining in the Bond Fund established under the
Indenture upon expiration or sooner termination of this Agreement after payment
in full of the Bonds (or provision for payment thereof having been made in
accordance with the provisions of the Indenture) and of the fees charges and
expenses of the Trustee and the Authority in accordance with the Indenture,
shall, to the extent of any unreimbursed draws under the Letter of Credit, or
any other Obligations owing by the Company to the Bank under the Reimbursement
Agreement or any of the other Reimbursement Documents (as defined in the
Reimbursement Agreement) be paid to the Bank. Any remaining moneys shall belong
to and be paid to the Company by the Trustee.
Section 10.12. Survival of Covenants, Conditions and Representations.
All covenants, duties, obligations, conditions and representations of the
Company contained herein that, by nature, implied or expressly involve
performance in any particular manner after the termination of this Agreement or
that cannot be ascertained to have been performed until after termination of
this Agreement, shall survive said termination. Without intending to limit the
generality of the foregoing, the Company's covenant to indemnify the Authority
and the Trustee, as set forth in Section 3.10 hereof shall survive any
termination of this Agreement.
Section 10.13. Multiple Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be regarded for all purposes as an
original and such counterparts shall constitute but one and the same instrument.
Section 10.14. Consent. Whenever the consent of the Authority or its
assignee is given pursuant to the terms of this Agreement, such consent shall
create no liability or responsibility upon the Authority or its assignee, and
whenever required, shall not be unreasonably withheld.
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<PAGE>
IN WITNESS WHEREOF, the MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT
AUTHORITY has caused this Agreement to be executed in its name and on its behalf
by its Chairperson or Vice Chairman and attested by its Secretary or Assistant
Secretary, and APPLE FRESH FOODS LIMITED has caused this Agreement to be
executed in its name and on its behalf by its President or Vice President and
attested by its Secretary or Assistant Secretary, all as of the day and year
first above written.
MONTGOMERY COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
By: __________________________________
Chairperson or Vice Chairman
Attest:_______________________________
(Assistant) Secretary
APPLE FRESH FOODS LIMITED
By:___________________________________
(Vice) President
Attest:_______________________________
Authorized Officer
-26-
LOAN AGREEMENT
between
CORESTATES BANK, N.A.
and
NUTRITION MANAGEMENT SERVICES COMPANY,
THE COLLEGEVILLE INN
CONFERENCE & TRAINING CENTER, INC.
and
APPLE FRESH FOODS LIMITED
Dated as of December 26, 1996
<PAGE>
TABLE OF CONTENTS
Article Page
I. Definitions....................................................... 1
II. Credit Accommodations............................................. 7
2.1 The Revolving Credit.................................... 7
2.2 Term Loans.............................................. 9
2.3 First Term Loan......................................... 10
2.4 Second Term Loan........................................ 10
2.5 Third Term Loan......................................... 11
2.6 Prepayment and Repayment................................ 11
2.7 Loan Account............................................ 12
2.8 Payments and Computations............................... 12
2.9 Existing Documents Superseded........................... 12
2.10 Requirements of Law..................................... 12
III. Representations and Warranties of the Borrowers...................... 13
3.1 Corporate Existence; Authorization...................... 13
3.2 Compliance with Laws and Other Agreements............... 14
3.3 No Conflict; Governmental Approvals..................... 14
3.4 Financial and Other Information Regarding
Borrowers.............................................. 14
3.5 Taxes................................................... 15
3.6 Encumbrances and Guaranties............................. 15
3.7 Material Adverse Changes................................ 15
3.8 Margin Securities....................................... 15
3.9 ERISA................................................... 15
3.10 Pending Litigation...................................... 16
3.11 Valid, Binding and Enforceable.......................... 16
3.12 Environmental Matters................................... 16
3.13 No Untrue Statements.................................... 17
3.14 Subsidiaries............................................ 17
3.15 Priority of Security Interests.......................... 17
IV. Conditions Precedent to the Bank's Obligations.................... 18
4.1 Documents to be Delivered by the Borrowers
at Closing............................................. 18
4.2 Conditions Precedent to Making Loans.................... 19
V. Affirmative Covenants of the Borrowers............................ 19
5.1 Use of Proceeds......................................... 19
5.2 Financial Statements.................................... 19
5.3 Ordinary Course of Business; Records.................... 20
5.4 Information for the Bank................................ 20
5.5 Insurance............................................... 21
5.6 Maintenance............................................. 21
5.7 Taxes................................................... 21
5.8 Leases.................................................. 22
5.9 Corporate Existence; Certain Rights; Laws............... 22
5.10 Notice of Litigation or Other Proceedings............... 22
5.11 Indebtedness............................................ 22
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<PAGE>
5.12 Notice of Events of Default............................. 22
5.13 ERISA................................................... 22
5.14 Deposit Accounts........................................ 23
5.15 Management.............................................. 23
5.16 Financial Covenants..................................... 23
5.17 Compliance with Environmental Laws...................... 23
5.18 Asset Purchase.......................................... 23
5.19 Further Actions......................................... 24
5.20 Release of Liens........................................ 24
VI. Negative Covenants................................................ 25
6.1 Fundamental Corporate Changes........................... 25
6.2 Indebtedness............................................ 25
6.3 Encumbrances............................................ 25
6.4 Guaranties.............................................. 26
6.5 Sales and Lease-Backs................................... 26
6.6 Loans, Investments...................................... 26
6.7 Change in Business...................................... 27
6.8 Sale or Discount of Receivables......................... 27
6.9 ERISA................................................... 27
6.10 Restricted Payments..................................... 27
6.11 Compliance with Federal Reserve Board
Regulations............................................ 27
VII. Events of Default.................................................... 28
7.1 Borrowers' Failure to Pay............................... 28
7.2 Breach of Covenants or Conditions....................... 28
7.3 Defaults in Other Agreements............................ 28
7.4 Agreements Invalid...................................... 28
7.5 False Warranties; Breach of Representations............. 29
7.6 Judgments............................................... 29
7.7 Bankruptcy or Insolvency of the Borrowers............... 29
7.8 Change in Control....................................... 30
VIII. Remedies.......................................................... 30
8.1 Further Advances; Acceleration; Setoff.................. 30
8.2 Further Remedies; Confession of Judgment................ 30
IX. Miscellaneous..................................................... 31
9.1 Remedies Cumulative; No Waiver.......................... 31
9.2 Notices................................................. 31
9.3 Costs, Expenses and Attorneys' Fees..................... 33
9.4 Survival of Covenants................................... 33
9.5 Counterparts; Effectiveness............................. 33
9.6 Headings................................................ 33
9.7 Payment Due On A Day Other Than a Business Day.......... 33
9.8 Judicial Proceedings.................................... 33
9.9 Governing Law........................................... 34
9.10 Integration............................................. 34
9.11 Amendment and Waiver.................................... 34
9.12 Successors and Assigns.................................. 34
9.13 Severability of Provisions.............................. 35
9.14 Consent to Jurisdiction and Service of Process.......... 35
9.15 Indemnification......................................... 35
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<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement"), dated as of December 26, 1996,
is between CORESTATES BANK, N.A., a national banking association (the "Bank"),
and NUTRITION MANAGEMENT SERVICES COMPANY, a Pennsylvania corporation
("Nutrition Management"), THE COLLEGEVILLE INN CONFERENCE & TRAINING CENTER,
INC. a Pennsylvania corporation ("Collegeville"), and APPLE FRESH FOODS LIMITED,
a Pennsylvania corporation ("Apple Fresh"; together with Collegeville and
Nutrition Management, the "Borrowers" and individually, a "Borrower").
BACKGROUND
Nutrition Management and the Bank are parties to a Loan Agreement
dated July 13, 1993, as amended on March 10, 1995 (the "Existing Loan
Agreement") pursuant to which the Bank extended a revolving credit to Nutrition
Management in the amount of $2,900,000, a term loan in the amount of $3,200,000
and a term loan in the amount of $500,000, and a promissory note dated November
16, 1994 in the amount of $395,000, (the "Existing Loans"), as evidenced by
promissory notes of Nutrition Management to the Bank in the aggregate amount of
$6,995,000 (the "Existing Notes"; together with the Existing Loan Agreement, and
all other documents and instruments executed in connection therewith, the
"Existing Loan Documents").
Pursuant to the terms hereof, the Borrowers under this Agreement
have requested the Bank to provide the Borrowers with a new revolving credit
facility in the amount of $4,000,000 and to refinance the other Existing Loans
in replacement of the Existing Loan Documents, and the Bank is willing to do so
on the terms and subject to the conditions set forth herein.
ARTICLE I
DEFINITIONS
Terms used herein without definition that are defined in the
Uniform Commercial Code shall have the meanings ascribed to them therein, unless
the context requires otherwise. The following terms shall have the following
meanings in this Agreement:
"Account" shall have the meaning given to that term in the Uniform
Commercial Code and, in addition, shall include any right to payment for goods
sold or leased or services rendered which is evidenced by an instrument or
chattel paper.
"Adjusted Prime Rate" shall mean (i) the Prime Rate plus one-half
of one percent (0.50%) until the Bank receives the Borrowers' financial
statements for the fiscal year ending June 30, 1997 and (ii) for the twelve
months commencing on the first day of the month after the Bank's receipt of such
statements and
<PAGE>
for every twelve month period thereafter, the interest rate for the ensuing
fiscal year shall be based on the Borrowers' Consolidated Debt Service Coverage
Ratio (as defined in Schedule 5.16 hereto) as follows:
Consolidated
Debt Service Coverage Ratio Adjusted Prime Rate
(1.00:1.00 Prime + .75%
less than 1.00:1.00 through 1.15:1.00 Prime + .375%
more than 1.15:1.00 Prime
"Affiliate" shall mean any Subsidiary of any Borrower and any Person or
entity that, now or hereafter, directly or indirectly through one or more
intermediaries, controls, is controlled by or is under common ownership or
control with any Borrower. For purposes of this definition, the terms "control,"
"controls" and "controlled" shall refer to the power to determine the management
or policies of a Person, whether resulting from an official position or capacity
with such Person, direct or indirect beneficial ownership of at least twenty
percent (20%) of the voting securities or other equity interests of such Person,
or otherwise.
"Agreement" shall mean this agreement, together with all exhibits,
amendments, modifications and supplements hereto.
"Apple Fresh" shall have the meaning given such term in the initial
paragraph of this Agreement.
"Asset Purchases" shall have the meaning set forth in Section 2.1(a) of
this Agreement.
"Assignment of Agreement" shall mean that agreement dated March 10,
1995, as amended on the date hereof, together with all amendments,
modifications, exhibits, and schedules thereto as may be in effect from time to
time.
"Bank" shall have the meaning specified in the initial paragraph of
this Agreement, together with its successors and assigns.
"Borrowers" shall have the meaning set forth in the initial paragraph
of this Agreement, together with their successors and assigns, and "Borrower"
shall mean any one of such Borrowers.
"Business Day" shall mean any day upon which the Bank is open for
business at its main office in Philadelphia, Pennsylvania.
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<PAGE>
"Capital Lease" shall mean any lease of property which, in accordance
with GAAP, should be capitalized on the lessee's balance sheet.
"Capital Lease Obligation" shall mean the amount of the liability
which, according to GAAP, should be capitalized or disclosed with respect to a
Capital Lease.
"Closing" shall mean the execution and delivery to the Bank of all of
the documents and instruments required by the terms of Section 4.1 of this
Agreement.
"Closing Date" shall mean the date on which the Closing takes place.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall mean any property in which the Bank is granted a
security interest or mortgage.
"Collegeville" shall have the meaning set forth in the initial
paragraph of this Agreement.
"Default" shall mean any fact, condition or event which with the giving
of notice or lapse of time, or both, would be an Event of Default.
"Default Rate" shall mean the Adjusted Prime Rate plus two percent
(2%).
"Encumbrance" shall mean, as to any Person, any mortgage, lien, pledge,
charge, security interest or other similar encumbrance in or on, or any interest
or title of any vendor, lessor, lender to, or other secured party of the Person
under any conditional sale or other title retention agreement or Capital Lease
with respect to, any property or asset of the Person.
"Environmental Laws" shall mean the Federal Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. {{ 9601, et. seq., the
Federal Resource Conservation and Recovery Act, 42 U.S.C. {{ 6901 et. seq., the
Hazardous Materials Transportation Act, 49 U.S.C. {{ 1801, et. seq., all other
federal, state and local environmental or health laws applicable to each
Borrower or its business, operations or assets now or hereafter enacted, and all
rules, regulations, orders and publications adopted or promulgated pursuant
thereto from time to time.
"ERISA" shall mean the Federal Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
- 3 -
<PAGE>
"Escrow Security Agreement" shall mean the agreement between Nutrition
Management as debtor and the Bank as secured party, dated the same date as this
Agreement, by which Nutrition Management shall, subject to the terms thereof,
grant security interests in certain of its assets to the Bank, together with all
amendments, modifications, exhibits, and schedules thereto as may be in effect
from time to time.
"Event of Default" shall have the meaning set forth in Article VII of
this Agreement.
"Existing Loan Documents" shall have the meaning set forth in the
preamble of this Agreement.
"Financial Statements" shall have the meaning set forth in Section
3.4(a) of this Agreement.
"First Term Loan" shall have the meaning given such term in Section 2.3
of this Agreement.
"First Term Note" shall have the meanings given such term in Section
2.3 of this Agreement.
"GAAP" shall mean generally accepted accounting principles, as in
effect at the time of application to the provisions hereof.
"Guaranty" shall mean any guaranty or agreement to be a surety or other
contingent liability (other than any endorsement for collection or deposit in
the ordinary course of business), with respect to any obligation of another
Person.
"Hazardous Materials" shall mean all materials of any kind which are
flammable, explosive, toxic, radioactive or otherwise hazardous to animal or
plant life or the environment, including, without limitation, "hazardous
wastes," "hazardous substances" and "contaminants," as such terms are defined by
Environmental Laws.
"Indebtedness" shall mean any obligation for borrowed money, including,
without limitation: (a) any obligation owed for all or any part of the purchase
price of property or other assets or for the cost of property or other assets
constructed or of improvements thereto, other than accounts payable included in
current liabilities and incurred in respect of property purchased or assets
constructed in the ordinary course of business; and (b) any Capital Lease
Obligation.
"Judgment" shall have the meaning set forth in Section 7.6 of this
Agreement.
"Loan Account" shall have the meaning given such term in Section 2.4 of
this Agreement.
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<PAGE>
"Loan Documents" shall mean this Agreement, the Notes, the Security
Agreement, the Mortgage, the Escrow Security Agreement, the Assignment of
Agreement and all agreements, amendments, certificates, financing statements,
schedules, reports, notices, and exhibits now or hereafter executed or delivered
in connection with any of the foregoing, as may be in effect from time to time,
including, without limitation, any documents delivered to the Bank pursuant to
Section 5.18 of this Agreement in connection with Collateral.
"Loans" shall mean the Revolving Credit Loans and the Term Loans, the
First Term Loan, the Second Term Loan and the Third Term Loan.
"Mortgage" shall mean that Mortgage, Assignment of Leases and Security
Agreement from Collegeville to the Bank, dated the same date of this Agreement,
together with all amendments, modifications, exhibits and schedules thereto as
may be in effect from time to time.
"Non-Approval Loan" shall have the meaning given such term in Section
2.1(a) of this Agreement.
"Notes" shall mean the Revolving Credit Note and Term Loan Notes, if
any, the First Term Note, the Second Term Note, the Third Term Note, and all
replacements, amendments, extensions and renewals thereof.
"Nutrition Management" shall have the meaning given such term in the
initial paragraph of this Agreement.
"Obligations" shall mean the obligations of the Borrowers:(a) to pay
the principal, interest, commitment fees and any other liabilities of the
Borrowers to the Bank under this Agreement and the other Loan Documents in
accordance with the terms thereof;(b) to satisfy all of the other liabilities of
any of Borrowers to the Bank under any agreement in existence between the Bank
and any Borrower on the date hereof, whether now existing or hereafter incurred,
whether or not evidenced by any note or other instrument, matured or unmatured,
direct, absolute or contingent, joint or several, including any extensions,
modifications, renewals thereof and substitutions therefor;(c) to repay the Bank
all amounts advanced by the Bank hereunder on behalf of the Borrowers,
including, but without limitation, advances for principal or interest payments
to prior secured parties, mortgagors or lienors, or for taxes, levies,
insurance, rent, wages, repairs to or maintenance or storage of any Collateral;
and (d) to reimburse the Bank, upon request, for all of the Bank's expenses and
costs payable under Section 9.3 hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
- 5 -
<PAGE>
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, joint
venture, court or governmental or political subdivision or agency thereof.
"Prime Rate" shall mean the floating annual rate of interest that is
publicly announced from time to time by the Bank as the "Prime Rate" and is used
by the Bank as a reference base with respect to interest rates charged to
borrowers. The determination and statement of the Prime Rate shall not in any
way preclude the Bank from making loans to other borrowers at rates which are
higher or lower than the Prime Rate.
"Revolving Credit" shall mean the revolving credit from the Bank to the
Borrowers established pursuant to Section 2.1 of this Agreement.
"Revolving Credit Commitment" shall have the meaning set forth in
Section 2.1 of this Agreement.
"Revolving Credit Loans" shall mean the loans made by the Bank to the
Borrowers pursuant to the Revolving Credit.
"Revolving Credit Note" shall have the meaning set forth in Section 2.1
of this Agreement, together with all replacements, amendments and renewals
thereof.
"Second Term Loan" shall have the meaning given such term in Section
2.4 of this Agreement.
"Second Term Note" shall have the meaning given such term in Section
2.4 of this Agreement.
"Security Agreement" shall mean the agreement between Collegeville and
Apple Fresh as debtor and the Bank as secured party, dated the same date as this
Agreement, by which each of Collegeville and Apple Fresh shall, subject to the
terms thereof, grant security interests in certain of its assets to the Bank,
together with all amendments, modifications, exhibits, and schedules thereto as
may be in effect from time to time.
"Subsidiary" shall mean, as to any designated corporation, any
corporation, the outstanding shares of which having sufficient voting power (not
depending on the happening of a contingency) to elect at least a majority of the
members of its board of directors, are at the time owned by the designated
corporation.
"Term Loans" and "Term Loan" shall have the meaning given such term in
Section 2.2(a) of this Agreement.
"Term Loan Note" shall have the meaning set forth in Section 2.2(c) of
this Agreement.
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"Termination Date" shall have the meaning set forth in Section 2.1 of
this Agreement.
"Third Term Loan" shall have the meaning given such term in Section 2.5
of this Agreement.
"Third Term Note" shall have the meaning given such term in Section 2.5
of this Agreement.
"Uniform Commercial Code" shall mean the Uniform Commercial Code of
Pennsylvania as codified at 13 Pa. C.S.A. {101 et seq., as in effect on the date
of this Agreement.
ARTICLE II
CREDIT ACCOMMODATIONS
2.1 The Revolving Credit. The Bank shall make available to the
Borrowers, commencing on the Closing Date, a Revolving Credit in the maximum
principal amount of $4,000,000 (the "Revolving Credit Commitment"), upon the
terms and conditions set forth herein.
(a) Advances. At any time and from time to time during the period
commencing on the Closing Date and ending on December 31, 1998 (the "Termination
Date"), upon the request of the Borrowers, the Bank shall provide to the
Borrowers a loan or loans to be used by the Borrowers for (i) working capital
and/or (ii) the acquisition of existing contracts or lines of business directly
related to the food service operations of the Borrowers whether by the purchase
of assets or stock or by merger, consolidation or a similar transaction (the
"Asset Purchases", each an "Asset Purchase"). As a condition to making any
Revolving Credit Loan for an Asset Purchase, the Borrowers shall deliver to the
Bank at least thirty (30) Business Days prior to the proposed requested funding
date all documentation required by the Bank for its review and written approval
with respect to any Asset Purchase as set forth in Section 5.18 of this
Agreement, provided however, the Borrowers shall be permitted to borrow two
advances up to $1,500,000 each for Asset Purchases without the prior written
approval of the Bank (each, a "Non-Approval Loan"). At any time cumulative
advances under the Revolving Credit for Asset Purchases exceed $1,000,000, the
Borrowers shall be required to convert such advances to a Term Loan in
accordance with Section 2.2 of this Agreement. The Bank shall not be required to
make a Non-Approval Loan under the Revolving Credit for the purpose of financing
an Asset Purchase more than thirty (30) days after payment has been made by the
Borrowers for such Asset Purchase.
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The Borrowers may use the Revolving Credit during the period referred
to in the preceding sentence by borrowing, repaying and reborrowing in
accordance with the terms of this Agreement. The aggregate outstanding principal
under the Revolving Credit at any time shall not exceed the Revolving Credit
Commitment. If, at any time, the aggregate outstanding principal under the
Revolving Credit exceeds the Revolving Credit Commitment, then, without any
requirement of demand or notice from the Bank, the Borrowers shall immediately
pay to the Bank the amount of such excess.
On or before December 31, 1997, and on or before each successive
December 31, thereafter, if applicable, the Bank shall notify the Borrowers of
the Bank's decision, in its sole discretion, to extend the Termination Date of
the Revolving Credit for one year or to terminate the Revolving Credit on the
then existing Termination Date. Upon notice to the Borrowers by the Bank of its
decision to extend the Termination Date for one year and the written acceptance
by the Borrowers, the Borrowers shall execute, upon request of the Bank, all
such documents required by the Bank for the extension of such Termination Date.
Upon the Termination Date, unless the same has been extended by written
agreement between the Bank and the Borrowers, the Bank's commitment to make
Revolving Credit Loans shall terminate, all Revolving Credit Loans shall
immediately mature, and all Obligations under the Revolving Credit shall be
immediately due and payable in full, except to the extent that the Borrowers
shall have exercised the right under this Agreement to convert such Loans to one
or more Term Loans pursuant to Section 2.2 hereof. The aggregate outstanding
principal of all Revolving Credit Loans and Term Loans extended by the Bank in
accordance with Section 2.2 hereof at any time shall not exceed Four Million
Dollars ($4,000,000). The Revolving Credit shall be subject to review and, at
the sole discretion of the Bank, renewal by the Bank on or before the
Termination Date.
(b) Interest. Subject to Section 2.2(b) hereof, interest shall
accrue on the aggregate outstanding principal under the Revolving Credit at an
annual rate equal at all times to the Adjusted Prime Rate and shall be payable
monthly on the first day of each month, commencing February 1, 1997, and shall
change simultaneously and automatically upon any change in the Prime Rate.
(c) Revolving Credit Note. The obligations of the Borrowers to
repay the aggregate outstanding principal under the Revolving Credit and to pay
accrued interest thereon to the Bank shall be evidenced by a promissory note, in
form and substance satisfactory to the Bank, to be executed and delivered to the
Bank concurrently with the execution and delivery of this Agreement (the
"Revolving Credit Note").
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(d) Unused Commitment Fee. In addition to the interest payable by
the Borrowers to the Bank in respect of the Revolving Credit, the Borrowers
shall pay to the Bank on a quarterly basis beginning April 1, 1997, a fee equal
to one-half of one percent (.50%) per annum on the amount, if any, by which the
average Revolving Credit Loans during a calendar quarter, including any Term
Loans, are less than $4,000,000. Such fee shall be computed for the actual
number of days elapsed and on the basis of a year of 360 days, and shall be
payable quarterly in arrears as billed by the Bank.
2.2 Term Loans.
(a) Generally. Subject to the terms and conditions of this
Agreement, at any time or times on or before notification to the Borrowers by
the Bank of the Bank's election to not extend the Termination Date, and provided
no Default or Event of Default shall exist under this Agreement, the Borrowers
shall have the right to request a loan for a term of years for an Asset Purchase
or to convert all or a part of the outstanding principal balance of any
Revolving Credit Loan made in connection with an Asset Purchase under the
Revolving Credit into a loan for a term of years ("Term Loan"). The Borrowers
shall not be permitted to request a Term Loan hereunder that would be a
Non-Approval Loan more than thirty (30) days after payment has been made by the
Borrowers for such Asset Purchase. The Borrowers may exercise their right of
conversion by giving the Bank notice thereof not less than ten Business Days
prior to the date on which such conversion is requested to take effect. The
maximum term which the Borrowers may elect pursuant to such right of conversion
shall be the lesser of (i) five years, or (ii) the weighted average number of
years over which GAAP permits the purchased contracts to be amortized. The
Borrowers shall repay the outstanding principal balance of each Term Loan in
approximately equal consecutive monthly installments of principal commencing on
the first day of the first calendar month of the term thereof and continuing
throughout the entire term thereof in accordance with the provisions of each
respective Term Loan Note.
(b) Interest. Interest shall accrue on the outstanding principal
of each Term Loan at the Adjusted Prime Rate. Interest shall be payable monthly
on the first day of each month together with each payment of principal, in
accordance with the terms of each Term Loan Note, and shall change
simultaneously and automatically upon any change in the Prime Rate. Upon request
of the Borrowers, made concurrently with any request for a Term Loan, the Bank
shall quote a fixed rate of interest, if available, for any Term Loan which the
Borrowers may elect in lieu of the Adjusted Prime Rate.
(c) Term Loan Notes. The obligations of the Borrowers to repay the
aggregate outstanding principal of each Term Loan and to pay accrued interest
thereon to the Bank shall
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be evidenced by a separate promissory note, substantially in the form of Exhibit
2.2(c) hereto, to be executed and delivered to the Bank on the Conversion Date
with respect to such Term Loan (each such note, a "Term Loan Note" and
collectively, the "Term Notes").
2.3 First Term Loan.
(i) Generally. The Bank shall make available to the Borrowers on
the Closing Date a term loan (the "First Term Loan") in the amount of
$773,671.47, for the purpose replacing the existing note under the Existing Loan
Documents dated July 13, 1993. The Borrowers shall repay the outstanding
principal of the First Term Loan in fourteen (14) equal, consecutive, monthly
installments of $53,333.33 each on the fifth day of each month beginning January
5, 1997, and a final installment of all remaining principal on March 5, 1998.
(ii) Interest. Interest shall accrue on the outstanding principal
of the First Term Loan at an annual rate equal to seven and one-half percent
(7.5%) and shall be payable monthly on the first day of each month beginning
January 5, 1997.
(iii) First Term Note. The obligations of the Borrowers to repay
the aggregate outstanding principal under the First Term Loan and to pay accrued
interest thereon shall be evidenced by a promissory note, in form and substance
satisfactory to the Bank, to be executed and delivered to the Bank concurrently
with the execution and delivery of this Agreement (the "First Term Note").
2.4 Second Term Loan.
(i) Generally. The Bank shall make available to the Borrowers on
the Closing Date a term loan (the "Second Term Loan") in the amount of
$281,249.93 for the purpose of replacing the existing note under the Existing
Loan Documents dated March 10, 1995. The Borrowers shall repay the outstanding
principal of the Second Term Loan in twenty-six (26) equal, consecutive, monthly
installments of $10,416.67 each, on the tenth day of each month beginning
January 10, 1997, and a final installment of all remaining principal on March
10, 1999.
(ii) Interest. Interest shall accrue on the outstanding principal
of the Second Term Loan at an annual rate equal to nine and one-half percent
(9.50%) and shall be payable monthly on the first day of each month beginning
January 10, 1997.
(iii) Second Term Note. The obligations of the Borrowers to repay
the aggregate outstanding principal under the First Term Loan and to pay accrued
interest
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thereon shall be evidenced by a promissory note, in form and substance
satisfactory to the Bank, to be executed and delivered to the Bank concurrently
with the execution and delivery of this Agreement (the "Second Term Note").
2.5 Third Term Loan.
(i) Generally. The Bank shall make available to the Borrowers on
the Closing Date a term loan,(the "Third Term Loan") in the amount of
$131,666.72, for the purpose of replacing the existing note under the Existing
Loan Documents dated November 16, 1994. The Borrowers shall repay the
outstanding principal of the Third Term Loan in eleven (11) equal, consecutive,
monthly installments of $10,972.22 each, on the first day of each month
beginning January 1, 1997, and a final installment of all remaining principal on
December 1, 1997.
(ii) Interest. Interest shall accrue on the outstanding principal
of the Third Term Loan at an annual rate equal to eight and one-half percent
(8.50%) and shall be payable monthly on the first day of each month beginning
January 1, 1997.
(iii) Third Term Note. The obligations of the Borrowers to repay
the aggregate outstanding principal under the Term Loan and to pay accrued
interest thereon shall be evidenced by a promissory note, in form and substance
satisfactory to the Bank, to be executed and delivered to the Bank concurrently
with the execution and delivery of this Agreement (the "Third Term Note").
2.6 Prepayment and Repayment. The Borrowers may make a prepayment of
principal of any Loan accruing interest at the Adjusted Prime Rate at any time
without penalty. Prepayment of any amounts of principal of any Loan bearing
interest at a fixed rate shall not be permitted unless accompanied by the
following prepayment premium equal to the amount, if any, by which the aggregate
present value of scheduled principal and interest payments eliminated by the
prepayment exceeds the principal amount being prepaid. Said present value shall
be calculated by application of a discount rate determined by Bank in its
reasonable judgment to be the yield-to-maturity at the time of prepayment on
U.S. Treasury securities having a maturity which most closely approximates the
final maturity date of the principal balance then outstanding. The determination
of the foregoing prepayment premium by the Bank shall be final, binding and
conclusive upon the Borrower, except to the extent of any manifest error in
computation or transmission. All prepayments of the Loans shall be accompanied
by the payment of accrued interest on the amount of such prepayment to the date
thereof. Subject to the above prepayment premium, the Borrowers may make
payments and prepayments of the Loans in whole or in part at any time and from
time to time upon notification to the Bank not
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later than 10:00 a.m. Philadelphia time one Business Day prior to the date of
the proposed prepayment. Each such notice shall set forth (i) the date, which
shall be a Business Day, on which the proposed prepayment is to be made; (ii) to
which Loan such prepayment is to be applied; and (iii) the total amount of such
prepayment which shall be in the amount equal to the lesser of the entire
remaining principal balance of the Loan, or $500,000 or a multiple thereof. Such
notice, once given to the Bank, shall be irrevocable.
2.7 Loan Account. The Bank shall maintain on its books the account or
accounts previously established by the Borrowers with the Bank (collectively,
the "Loan Account") to which it shall charge all Loans to or for the benefit of
the Borrowers pursuant to the terms of this Agreement, including, without
limitation, all advances to the Borrowers under the Revolving Credit and the
proceeds of all Term Loans, and to which it shall credit, in accordance with the
terms hereof, each payment made by the Borrowers. The records of the Bank with
respect to the Loan Account shall be presumed to correctly evidence the
outstanding principal balance of all Loans under this Agreement, except to the
extent that the Borrowers prove any error in such records.
2.8 Payments and Computations. All amounts payable by the Borrowers to
the Bank under this Agreement or the Notes shall be paid directly to the Bank in
immediately available funds at the address of the Bank set forth in Section 9.2
hereof or at such other address of which the Bank shall give notice to the
Borrowers pursuant to Section 9.2 hereof. All computations of interest hereunder
shall be made by the Bank on the basis of a year of 360 days for the actual
number of days elapsed. All payments under each of the Notes shall be applied
first to the payment of interest due and payable thereunder and then to the
reduction of the outstanding principal balance thereof.
2.9 Existing Documents Superseded. On the Closing Date, the Existing
Loan Documents shall be superseded by this Agreement, the Notes and the other
instruments evidencing or securing the Loans as provided for in this Agreement,
except that the security interests granted thereunder shall be continued by the
Loan Documents executed on the date hereof and that Nutrition Management hereby
agrees that the Assignment of Agreement dated March 10, 1995 shall be hereby
deemed amended to provide security for the obligations under the Loan Documents
executed on the date hereof.
2.10 Requirements of Law. In the event that after the date hereof, any
change in any law, regulation or treaty or in the interpretation or application
thereof or compliance by the Bank with any request or directive (whether or not
having the force of law) from any central bank or other governmental authority,
agency or instrumentality:
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(a) subjects or shall subject the Bank to any tax of any
kind whatsoever with respect to this Agreement, the Loans made hereunder or
changes the basis of taxation of payments to the Bank of principal, commitment
fee, interest or any other amount payable hereunder (except for changes in taxes
on or measured by the overall net income of the Bank);
(b) imposes, modifies or holds or shall impose, modify or
hold applicable any reserve, special deposit, compulsory loan or similar
requirement in respect of this Agreement or the Loans (or any category of assets
or extensions of credit in which this Agreement and the Loans are included)
against assets held by, or deposits or other liabilities in or for the account
of, advances or loans by, or other credit extended by, or any other acquisition
of funds by, any office of the Bank, which reserve, special deposit, compulsory
loan or similar requirement is not otherwise included in determination of the
interest rate hereunder;
(c) imposes or shall impose on the Bank any other
condition;
and the result of any of the foregoing is to, directly or indirectly, increase
the cost to the Bank of making renewing or maintaining advances or extensions of
credit or to reduce any amount receivable thereunder for the category of Loans
made under this Agreement then, in any such case, the Borrowers shall promptly
pay the Bank, upon its request, any additional amounts necessary to compensate
the Bank for such additional cost or reduced amount receivable. If the Bank
becomes entitled to claim any additional amounts pursuant to this subsection, it
shall promptly notify the Borrowers of the event by reason of which it has
become so entitled. The good faith determination as to any additional amounts
payable pursuant to the foregoing sentence by the Bank shall be conclusive in
the absence of manifest error.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BORROWERS
In order to induce the Bank to execute and deliver this Agreement
and to make the Loans available to the Borrowers, each Borrower represents and
warrants to the Bank that, as of the date hereof:
3.1 Corporate Existence; Authorization. Each Borrower is duly
incorporated, organized and existing and in good standing in the state of its
incorporation set forth on Schedule 3.1 of this Agreement, and is duly qualified
as a foreign corporation and authorized to do business in all other
jurisdictions wherein the nature of its business or property makes such
qualification necessary, and has the corporate power to own its properties and
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to carry on its business as now conducted. The execution, delivery and
performance of this Agreement and the Loan Documents have been duly authorized
by all necessary corporate proceedings on the part of each Borrower.
3.2 Compliance with Laws and Other Agreements. Each Borrower is in
compliance in all material respects with all laws, rules, regulations,
judgments, decrees, orders, agreements and requirements which affect in any
material way the Borrower, its assets or the operation of its business and no
Borrower has received, and has no knowledge of, any order or notice of any
governmental investigation or of any violation or claim of violation in any
material respect of any law, regulation, judgment, decree, order, agreement, or
other governmental requirement.
3.3 No Conflict; Governmental Approvals. The execution, delivery,
and performance of this Agreement and each of the Loan Documents will not (i)
conflict with, violate, constitute a default under, or result in a breach of any
provision of any applicable law, rule, regulation, judgment, decree, order,
instrument or other agreement, or (ii) conflict with or result in a breach of
any provision of the certificate or articles of incorporation or by-laws of any
Borrower. No authorization, permit, consent or approval of or other action by,
and no filing, registration or declaration with, any governmental authority or
regulatory body is required to be obtained or made by any Borrower for the due
execution, delivery and performance of this Agreement or any of the Loan
Documents, except such as have been duly obtained or made prior to the Closing
Date and are in full force and effect as of the Closing Date (copies of which
have been delivered to the Bank on or before the Closing Date).
3.4 Financial and Other Information Regarding Borrowers.
(a) The Borrowers have delivered to the Bank true, correct and
complete copies of the consolidated balance sheet of Nutrition Management and
its subsidiaries as of September 30, 1996, and related statements of income and
cash flows for the period then ended. Those financial statements ("Financial
Statements") present fairly the consolidated financial position of Nutrition
Management and its subsidiaries as of September 30, 1996 and the consolidated
results of the operations of the Borrower and its subsidiaries for the period
then ended in conformity with GAAP.
(b) The Borrowers have no Indebtedness other than as shown in
the most recent Financial Statements.
(c) No Borrower has any "investment" (as such term is defined
under GAAP), whether by stock purchase, capital contribution, loan, advance,
purchase of property or otherwise, in any Person, other than as shown in the
Financial Statements.
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3.5 Taxes. To the best knowledge of the Borrowers, none of the
Borrowers is delinquent in payment of any income, property or other tax paid on
a normal and customary on-going basis, except for any delinquency in the payment
of a tax which is contested in good faith by the Borrowers and for which
appropriate reserves have been established in accordance with GAAP.
3.6 Encumbrances and Guaranties.
(a) All properties and assets of each Borrower are owned by
such Borrower free and clear of all Encumbrances except (i) those for taxes or
other government charges either not yet delinquent or the nonpayment of which is
permitted by Section 3.5 of this Agreement; (ii) those not arising in connection
with Indebtedness that do not materially impair the use or value of the
properties or assets of the Borrower in the conduct of its businesses; (iii)
Encumbrances whose release and termination is evidenced by the Borrowers
delivery to the Bank of appropriate documents on the Closing Date; (iv)
Encumbrances permitted by the Loan Documents; and (v) Encumbrances set forth on
Schedule 6.3 of this Agreement.
(b) None of the Borrowers is obligated under any Guaranty,
except in favor of the Bank.
3.7 Material Adverse Changes. Since September 30, 1996, there has
not been any material adverse change in the business, operations, properties or
financial position of any Borrower. None of the Borrowers knows of any fact
(other than matters of a general economic or political nature) which materially
adversely affects, or, so far as any Borrower can now reasonably foresee, will
materially adversely affect, the business, operations, properties or financial
position of any Borrower or the performance by any Borrower of its obligations
under this Agreement and the other Loan Documents.
3.8 Margin Securities. None of the assets of the Borrowers include
any "margin securities" within the meaning of Regulations G or U of the Board of
Governors of the Federal Reserve System (12 C.F.R. 207, 221), and none of the
Borrowers have any present intention of acquiring any margin security.
3.9 ERISA. The provisions of each employee benefit plan as defined
in Section 3(3) of ERISA ("Plan") maintained by each Borrower complies in all
material respects with all applicable requirements of ERISA and of the Code, and
with all applicable rulings and regulations issued under the provisions of ERISA
and the Code setting forth those requirements. No reportable event, as defined
in Section 4043 of ERISA, has occurred with respect to any Plan; no Plan to
which Section 4021 of ERISA applies has been terminated; no Plan has incurred
any liability to PBGC as provided in Section 4062, 4063 and 4064 of ERISA; no
Plan has
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been involved in any prohibited transaction within the meaning of Section 406 of
ERISA or Section 4975 of the Code; and there are no unfunded liabilities with
respect to any Plan which are not disclosed in the Financial Statements. None of
the Borrowers has any Plan subject to ERISA.
3.10 Pending Litigation. There are no actions, suits, proceedings
or investigations pending, or, to the knowledge of any Borrower, threatened
against or affecting any Borrower, before any court, arbitrator or
administrative or governmental body which, in the aggregate, might adversely
affect any action taken or to be taken by any Borrower under this Agreement and
the other Loan Documents or which, in the aggregate, might materially adversely
affect the business, operations, properties or financial position of any
Borrower, or the ability of any Borrower to perform its obligations under this
Agreement and the other Loan Documents.
3.11 Valid, Binding and Enforceable. This Agreement and the Loan
Documents have been duly and validly executed and delivered by the parties
thereto (other than the Bank) and constitute the valid and legally binding
obligations of such parties enforceable in accordance with their respective
terms, except as enforcement of this Agreement and the other Loan Documents may
be limited by bankruptcy, insolvency, fraudulent conveyance or other laws of
general application relating to or affecting the enforcement of creditors'
rights and except as enforcement is subject to general equitable principles.
3.12 Environmental Matters.
(a) To the best of each Borrower's knowledge, each Borrower has
performed all of its obligations under, has obtained all necessary approvals,
permits, authorizations and other consents required by, and is not in material
violation of, any Environmental Laws.
(b) No Borrower has received any notice, citation, summons,
directive, order or other communication, written or oral, from, and no Borrower
has knowledge of the filing or giving of any such notice, citation, summons,
directive, order or other communication by, any governmental or
quasi-governmental authority or agency or any other Person concerning the
presence, generation, treatment, storage, transportation, transfer, disposal,
release or other handling of any Hazardous Materials within, on, from, related
to, or affecting any real property owned or occupied by any Borrower.
(c) To the best of each Borrower's knowledge, after reasonable
inquiry, no real property owned or occupied by any Borrower has ever been used,
either by any Borrower or any of its predecessors in interest, to generate,
treat, store, transport,
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transfer, dispose of, release or otherwise handle any Hazardous Material, in
violation of any applicable Environmental Laws.
(d) To the best of each Borrower's knowledge, after due
inspection, there are no Hazardous Materials within, on or under any real
property owned or occupied by any Borrower in violation of any applicable
Environmental Laws.
3.13 No Untrue Statements. Neither this Agreement, the Loan
Documents nor any other document, certificate or statement furnished or to be
furnished by any Borrower or by any other party to the Bank in connection
herewith, to the best knowledge of any Borrower, contains, or at the time of
delivery will contain, any untrue statement of a material fact or omits or will
omit to state a material fact necessary in order to make the statements
contained herein and therein not misleading.
3.14 Subsidiaries. Nutrition Management owns no shares of stock or
other equity interest, directly or indirectly, in any Person, other than
Collegeville and Apple Fresh, and up to $100,000 of equity interests in any
other Person. The Subsidiaries own no shares of stock or other equity interest,
directly or indirectly, in any Person. After the Closing, the Borrowers shall
own no stock or other equity interest in any Person, other than as provided
above in this paragraph and as otherwise permitted to be acquired under the
terms of this Agreement.
3.15 Priority of Security Interests. Collegeville and Apple Fresh
represent and warrant that the Security Agreement, upon the filing of financing
statements in the appropriate governmental offices, will create valid first
perfected security interests in the personal property of Collegeville and Apple
Fresh described therein as collateral for all the Obligations subject to no
prior Encumbrances. Nutrition Management represents and warrants that the Escrow
Security Agreement, upon the filing of financing statements in the appropriate
governmental offices, will create valid first perfected security interests in
the personal property of Nutrition Management described therein as collateral
for all the Obligations subject to no prior Encumbrances. The Bank hereby agrees
that the Escrow Security Agreement and the financing statements delivered to the
Bank on the Closing Date pursuant to Section 4.1(c) of this Agreement shall be
held in escrow by the Bank and shall not be filed or acted upon until an Event
of Default exists under this Agreement, in which case the Bank may enforce such
Escrow Security Agreement and perfect its interest therein to the fullest extent
permissible under the law.
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ARTICLE IV
CONDITIONS PRECEDENT TO THE BANK'S OBLIGATIONS
The Bank's obligations hereunder are conditioned upon the
satisfaction by the Borrowers of the following conditions precedent:
4.1 Documents to be Delivered by the Borrowers at Closing. The
Borrowers shall deliver or cause to be delivered to the Bank at the Closing the
following:
(i) This Agreement duly executed by each Borrower;
(ii) The Revolving Credit Note duly executed by each Borrower;
(iii) The First Term Note, the Second Term Note and the Third
Term Note duly executed by each Borrower;
(iv) The Escrow Security Agreement duly executed by the
Borrowers, together with such Uniform Commercial Code financing statements and
other documents as the Bank may reasonably require to be executed by the
Borrowers;
(v) The Security Agreement duly executed by each of
Collegeville and Apple Fresh, together with such Uniform Commercial Code
financing statements and other documents as the Bank may reasonably require to
be executed by the Borrowers;
(vi) The Mortgage duly executed by Collegeville;
(vii) A certificate of the Secretary or an Assistant Secretary
of each Borrower dated the Closing Date including (i) copy of each Borrower's
Articles and Certificate of Incorporation, together with a certificate (dated as
of the Closing Date), of the secretary of each Borrower to the effect that such
Articles and Certificate of Incorporation are true and correct copies thereof
and have not been amended since the date thereof; (ii) copy of the by-laws of
each Borrower and copies of resolutions duly adopted by each Borrower
authorizing the transactions contemplated by this Agreement, duly certified by
the secretary of each Borrower; (iii) certificate, dated as of the Closing Date,
of each Borrower's corporate secretary or assistant secretary as to the
incumbency and signatures of the officers executing the Loan Documents and each
other document to be delivered pursuant hereto; and (iv) certificates of
authority or good standing for the Borrower from it jurisdiction of
incorporation and any other jurisdiction where the Borrower is qualified to do
business;
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(viii) A copy of each and every authorization, permit, consent,
and approval of and other action by, and notice to and filing with, every
governmental authority and regulatory body which is required to be obtained or
made by each Borrower for the due execution, delivery and performance of this
Agreement and the other Loan Documents; and
(ix) The opinion of Stradley, Ronon, Stevens & Young, LLP dated
as of Closing Date, in form and substance reasonably satisfactory to the Bank
and its counsel.
4.2 Conditions Precedent to Making Loans. The Bank shall not be
obligated to make any Loan hereunder unless:
(i) As of the date of the proposed advance, no Event of Default
or Default has occurred;
(ii) The representations and warranties contained in Article IV
are true and correct on the date of the proposed advance, except that the
representations and warranties in Section 3.4 shall refer to the financial
statements most recently supplied to the Bank pursuant to Section 5.2 of this
Agreement;
(iii) No material adverse change has occurred in the financial
condition of any Borrower since the date hereof; and
(iv) The Borrowers have delivered to the Bank, upon the Bank's
request, a certificate executed by the chief executive officer of the Borrowers
confirming the statements made in paragraphs (a), (b) and (c) above.
ARTICLE V
AFFIRMATIVE COVENANTS OF THE BORROWERS
Each Borrower hereby covenants and agrees that from the date hereof
and until satisfaction in full of the Obligations, unless the Bank shall
otherwise consent in writing, each Borrower shall do the following:
5.1 Use of Proceeds. Use the proceeds of the borrowings hereunder
only for the purposes specified in Sections 2.1 and 2.2 of this Agreement,
unless otherwise agreed in writing by the Bank and the Borrowers.
5.2 Financial Statements. Furnish to the Bank:
(a) within ninety (90) days after the end of each fiscal year,
the consolidated financial statements of the Borrowers, including a balance
sheet, statement of income, and statement of cash flows. Such financial
statements shall present fairly the financial condition of the Borrowers as of
the close
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of such year and the results of their operations and their cash flows during
such year on a consolidated basis, in accordance with GAAP, and shall be audited
and accompanied by an unqualified opinion, satisfactory in form and substance to
the Bank, of an independent public accountant acceptable to the Bank, together
with the accountant prepared consolidating financial statements, and the 10K of
the Borrowers for such fiscal year;
(b) within ninety (90) after each fiscal year end of the
Borrowers, a financial forecast for the following fiscal year of the Borrowers
on a monthly basis;
(c) promptly upon receipt thereof, a copy of each other report
submitted to the Borrowers by their independent public accountants, in
connection with any annual, interim or special audit report made by them of the
financial condition of the Borrowers;
(d) within forty-five (45) days after the end of each fiscal
quarter (i) a management prepared consolidated and consolidating balance sheet,
statement of income and statement of cash flows for Nutrition Management, Apple
Fresh and Collegeville, which shall present fairly the financial position of the
Borrowers as of the end of such quarter and the results of their operations
during such quarter on a consolidated and consolidating basis, in accordance
with GAAP, (ii) the 10Q of the Borrowers for such quarter; and (iii) a
compliance letter with respect to the absence of any Default or Event of Default
and with respect to the financial covenants set forth in Schedule 5.16 of this
Agreement, to be certified by the chief financial officer of the Borrowers;
(e) within fifteen (15) days after the end of each quarter, the
accounts receivable aging reports of the Borrowers as of the last day of such
quarter, certified by the chief financial officer of the Borrowers;
(f) with reasonable promptness, all such other data and
information in respect of the condition, operations and affairs of the Borrowers
as the Bank may reasonably request from time to time.
5.3 Ordinary Course of Business; Records. Except as permitted by
this Agreement, conduct its business only in the ordinary course and keep
accurate and complete books and records of its assets, liabilities and
operations consistent with sound business practices and in accordance with GAAP.
5.4 Information for the Bank. Make available during normal business
hours for inspection by the Bank or its designated representatives any of its
books and records when reasonably requested by the Bank to do so, and furnish
the Bank any information reasonably requested regarding its operations,
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business affairs and financial condition within a reasonable time after the Bank
gives notice of its request therefor. In particular, and without limiting the
foregoing, each Borrower shall permit, during normal business hours,
representatives of the Bank's Audit Department to make such periodic inspections
of the Borrower's books, records and assets as such representatives deem
necessary and proper.
5.5 Insurance. Carry insurance at all times in financially sound
and reputable insurers, against such liabilities and hazards as are usually
insured against by business entities of established reputation engaged in like
businesses and similarly situated, including, without limitation, fire (flood,
if applicable) and extended coverage, and such other insurance as the Bank may
from time to time reasonably require, and pay all premiums on the policies for
all such insurance when and as they become due and take all other actions
necessary to maintain such policies in full force and effect at all times. The
Borrowers shall from time to time, upon request by the Bank, promptly furnish or
cause to be furnished to the Bank evidence, in form and substance satisfactory
to the Bank, of the maintenance of all insurance required to be maintained
hereby, including, without limitation, such originals or copies as the Bank may
request of policies, certificates of insurance, riders and endorsements relating
to such insurance and proof of premium payments. The Borrowers shall cause each
hazard insurance policy to provide, and the insurer issuing each such policy to
certify to the Bank, that (a) if such insurance be proposed to be canceled or
materially changed for any reason whatsoever, such insurer will promptly notify
the Bank and such cancellation or change shall not be effective for 30 days
after receipt by the Bank of such notice, unless the effect of such change is to
extend or increase coverage under the policy; (b) the Bank shall be named as
lender loss payee with respect to personal property and mortgagee with respect
to real property; and (c) the Bank will have the right, at its election, to
remedy any default in the payment of premiums within 30 days of notice from the
insurer of such default. The foregoing covenants regarding insurance are in
addition to, and not intended to supersede, those covenants regarding insurance
set forth in the Security Agreement. In the event and to the extent of any
conflict between the provisions of this Agreement and the provisions of the
Security Agreement regarding the insuring of Collateral, the provisions of the
Security Agreement with respect thereto shall govern.
5.6 Maintenance. Maintain its equipment, real property and other
properties in good condition and repair (normal wear and tear excepted) and pay
and discharge the cost of repairs thereto or maintenance thereof.
5.7 Taxes. Pay all taxes, assessments, charges and levies imposed
upon it or on any of its property, or which it is required to withhold and pay
over, and provide evidence of
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payment thereto to the Bank if the Bank so requests, except where contested in
good faith by lawful and appropriate proceedings and where adequate reserves
therefor have been set aside on its books; provided, however, that the Borrowers
shall pay all such taxes, assessments, charges and levies forthwith whenever
foreclosure on any lien which attaches to any security for the obligations of
any Borrower appears imminent.
5.8 Leases. Pay all rent or other sums required by every lease to
which the Borrower is a party as the same becomes due and payable, perform all
its obligations as tenant or lessee thereunder except where contested in good
faith by lawful and appropriate proceedings and where adequate reserves therefor
have been set aside; and keep all such leases at all times in full force and
effect during the terms thereof.
5.9 Corporate Existence; Certain Rights; Laws. Do all things
necessary to preserve and keep in full force and effect in each jurisdiction in
which it conducts business the business existence, licenses, permits, rights,
patents, trademarks, trade names and franchises of the Borrower and comply with
all present and future laws, ordinances, rules, regulations, judgments, orders
and decrees which affect in any material way the Borrower, its assets or the
operation of its business.
5.10 Notice of Litigation or Other Proceedings. Give prompt notice
to the Bank of the existence of(i) any dispute, (ii) the institution of any
litigation, administrative proceeding or governmental investigation involving
the Borrower, or (iii) the entry of any judgment, decree or order against or
involving the Borrower, any of the foregoing (i), (ii) or (iii) in an amount in
excess of $250,000, or (iv) any event which might affect the enforceability of
this Agreement or any of the other Loan Documents.
5.11 Indebtedness. Pay or cause to be paid when due (or within
applicable grace periods) all Indebtedness of the Borrower.
5.12 Notice of Events of Default. Give prompt notice to the Bank if
the Borrower becomes aware of the occurrence of any Event of Default or Default,
or of the failure of the Borrower to observe or perform any of the conditions or
covenants to be observed or performed by it under this Agreement or any of the
other Loan Documents.
5.13 ERISA. Maintain each Plan in compliance in all material
respects with all applicable requirements of ERISA and of the Code and with all
applicable rulings and regulations issued under the provisions of ERISA and of
the Code. As promptly as practicable (but in any event not later than ten days)
after the Borrower receives from the PBGC a notice of intent to terminate any
Plan or to appoint a trustee to
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administer any Plan, after the Borrower has notified the PBGC that any
reportable event, as defined in Section 4043 of ERISA, with respect to any Plan
has occurred, or after the Borrower has provided a notice of intent to terminate
to each affected party, as defined for purposes of Section 4041(a)(2) of ERISA,
with respect to any Plan, a certificate of the chief executive officer of the
Borrower shall be furnished to the Bank setting forth the details with respect
to the events resulting in such reportable event, as the case may be, and the
action which the Borrower proposes to take with respect thereto, together with a
copy of the notice of intent to terminate or to appoint a trustee from the PBGC,
of the notice of such reportable event or of the Borrower's notice of intent to
terminate, as the case may be.
5.14 Deposit Accounts. Use the Bank as its primary depository
institution to the extent reasonably feasible unless otherwise agreed in writing
by the Bank; and notify the Bank, in writing and on a continuing basis, of all
deposit accounts and certificates of deposit (including the numbers thereof)
maintained with or purchased from other banks and other financial institutions.
The Borrowers hereby agree to consider using the Bank's asset management
affiliates as investment managers for all short term investments, provided such
affiliates deliver proposals competitive with those of non-affiliated asset
managers, provided any cash or investments at the Bank's asset management
affiliates shall not be considered collateral for the Borrowers' Obligations to
any extent greater than if there were being managed by entities not affiliated
with the Bank.
5.15 Management. Furnish to Bank within five (5) days of any
election or appointment of officers or directors, written notice of any change
in the persons who from time to time become officers and directors of the
Borrower and retain executive management personnel at all times satisfactory to
the Bank, it being understood that present management is satisfactory and that
Joseph Roberts must be Chairman and Chief Executive Officer of Nutrition
Management.
5.16 Financial Covenants. Maintain the financial covenants set
forth on Schedule 5.16 attached hereto and made a part hereof.
5.17 Compliance with Environmental Laws. Comply fully with all
Environmental Laws and not use any property which it owns or occupies to
generate, treat, store, transport, transfer, dispose of, release or otherwise
handle any Hazardous Material, except in compliance with all Environmental Laws.
5.18 Asset Purchases. Except as permitted by Section 2.1(a) of this
Agreement, deliver to the Bank concurrently with any request for a Revolving
Credit Loan or Term Loan to finance the cost of an Asset Purchase:
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(a) copies of all due diligence performed by the Borrowers with
respect to such purchase, if requested by the Bank, provided however that the
Borrowers shall in all cases provide the Bank with an environmental assessment
with respect to any real property purchases;
(b) financial information on the impact of the acquisition on
the financial condition of the Borrowers including, without limitation, a twelve
month management prepared pro forma financial statement and statement of cash
flows for the Borrowers reflecting the acquisition, and such other financial
information as the Bank may reasonably request;
(c) all documents required, to the satisfaction of the Bank and
its counsel, to grant the Bank a first priority security interest under the
Uniform Commercial Code as security for such Loan in the fixed assets acquired
(and in the fixed assets of any corporation the stock of which is acquired)
including, without limitation, machinery and equipment (including, without
limitation, fixtures, office equipment and furniture), accessions and proceeds
of any of the foregoing;
(d) all documents required, to the satisfaction of the Bank and
its counsel, to grant the Bank a first lien in any real property acquired,
including, without limitation, title insurance; and
(e) evidence of insurance on all assets required in accordance
with the provisions of Section 5.5 of this Agreement;
provided however, that the Bank may request the Borrowers to deliver to the Bank
any of the above after the funding of any Non-Approval Loan and that if
collateral is delivered by Nutrition Management to the Bank under subsection (c)
or (d) above, such collateral shall be held in escrow in accordance with Section
3.15 of this Agreement.
5.19 Further Actions. Cooperate and join with the Bank, at its own
expense, in taking all such further actions as the Bank, in its sole judgment,
shall deem necessary to effectuate the provisions of the Loan Documents and to
perfect or continue the perfected status of all Encumbrances granted to the Bank
pursuant to the Loan Documents, including, without limitation, the execution,
delivery and filing of financing statements, amendments thereto and continuation
statements.
5.20 Release of Liens. Within thirty (30) days from the date
hereof, deliver to the Bank uniform commercial code searches of record
evidencing the termination of those uniform commercial code financing statements
and judgments of record set forth on Schedule 5.20 of this Agreement.
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ARTICLE VI
NEGATIVE COVENANTS
Each Borrower hereby covenants and agrees that from the Closing
Date until satisfaction in full of the Obligations, it will not do any one or
more of the following without first obtaining the written consent of the Bank,
which consent shall not be unreasonably withheld:
6.1 Fundamental Corporate Changes.
(a) Enter into or effect any merger, consolidation, share
exchange, division, conversion, reclassification, recapitalization,
reorganization or other transaction of like effect, or dissolve, or permit any
change in the ownership of the capital stock of Collegeville or Apple Fresh;
(b) Sell, transfer, lease or otherwise dispose of all or any
part of its assets or any significant product line or process (except for
inventory in the ordinary course of business) in excess of $250,000, in any one
fiscal year in the aggregate for the Borrowers, except that no such disposition
may be made with respect to the equipment of Apple Fresh permanently fixed on
the property of Collegeville;
(c) Have any Subsidiary, except that Nutrition Management may
have Collegeville and Apple Fresh, and any other Subsidiary provided such
Subsidiary joins in this Agreement and agrees to be bound by the terms hereof.
6.2 Indebtedness. Incur, create, assume or have any Indebtedness
except:
(a) The Loans;
(b) Not more than $250,000 of Indebtedness in the aggregate for
the Borrowers in any one fiscal year constituting either Capital Lease
Obligations or Indebtedness under agreements for the installment purchase of
equipment (excluding leases with customers), provided that such Indebtedness
does not exceed 100% of the net purchase price of such equipment; and
(c) Indebtedness set forth on Schedule 6.2 of this Agreement.
6.3 Encumbrances. Create or allow any Encumbrances to be on or
otherwise affect any of its property or assets except:
(a) Encumbrances in favor of the Bank;
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(b) Encumbrances for taxes, assessments and other governmental
charges incurred in the ordinary course of business which are not yet due and
payable;
(c) Pledges or deposits made in the ordinary course of business
to secure payment of workmen's compensation or to participate in any fund in
connection with workmen's compensation, unemployment insurance or other social
security obligations;
(d) Good faith pledges or deposits made in the ordinary course
of business to secure performance of tenders, contracts (other than for the
repayment of Indebtedness) or leases or to secure statutory obligations or
surety, appeal, indemnity, performance or other similar bonds required in the
ordinary course of business;
(e) Liens of mechanics, materialmen, warehousemen, carriers or
other similar liens, securing obligations incurred in the ordinary course of
business that are not yet due and payable;
(f) Encumbrances securing Indebtedness permitted under Section
6.2(b), provided that (i) no other covenants of this Agreement are thereby
violated and (ii) no equipment other than the equipment so acquired secures such
Indebtedness;
(g) Encumbrances disclosed on Schedule 6.3 and Schedule 5.20 of
this Agreement.
In addition to the foregoing, no Borrower shall execute a negative
pledge agreement or otherwise enter into an agreement with any Person which
prohibits or otherwise restricts the Borrower's ability to create or allow any
Encumbrance to be on or otherwise affect any of its properties, other than
pursuant to this Agreement.
6.4 Guaranties. Make any Guaranty, except in favor of the Bank.
6.5 Sales and Lease-Backs. Sell, transfer or otherwise dispose of
any property, real or personal, now owned or hereafter acquired, with the
intention of directly or indirectly taking back a lease on such property.
6.6 Loans, Investments. Purchase, invest in, or make any loan in
the nature of an investment in the stocks, bonds, notes or other securities or
evidence of Indebtedness of any Person, except as permitted in Section 3.14 of
this Agreement, or make any loan or advance to or for the benefit of any Person
except for short term investments that have been approved by the Board of
Directors pursuant to such investment policy attached hereto
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as Schedule 6.6 to this Agreement, which policy shall not be modified in any way
without the prior written consent of the Bank.
6.7 Change in Business. Discontinue any substantial part, or change
the nature of, its business or enter into any new business unrelated to the
present businesses conducted by it.
6.8 Sale or Discount of Receivables. Sell any notes receivable or
accounts receivable, with or without recourse, except in the normal course of
business.
6.9 ERISA.
(a) Terminate any Plan maintained by the Borrower to which
Section 4021 of ERISA applies;
(b) Allow the value of the benefits guaranteed under Title IV
of ERISA to exceed the value of assets allocable to such benefits;
(c) Incur a withdrawal liability within the meaning of Section
4201 of ERISA.
6.10 Restricted Payments. Declare or pay any dividend, or make any
distributions of cash or property, to holders of any shares of its capital
stock, or, directly or indirectly, redeem or otherwise acquire any such shares,
except for repurchases as treasury stock or redemptions of stock held by
employees, or any option, warrant or right to acquire any such shares; provided
that Nutrition Management may declare and may pay dividends and Collegeville and
Apple Fresh may pay dividends to Nutrition Management during any fiscal year,
provided no Event of Default or Default has occurred and is continuing at the
time of such declaration or payment and provided further that the payment of
such dividend will not cause the occurrence of an Event of Default or Default.
6.11 Compliance with Federal Reserve Board Regulations. (i) Use any
of the proceeds of the Loans, directly or indirectly, for the purposes of
purchasing or carrying any "margin security" within the meaning of Regulations G
or U of the Board of Governors of the Federal Reserve System (12 C.F.R. 207,
221), (ii) use any of the proceeds of the Loans, directly or indirectly, for the
purpose of purchasing, carrying or trading in any securities under such
circumstances as to involve the Borrowers in a violation of Regulation X of such
Board (12 C.F.R. 224), or (iii) take or permit to be taken any other action
which would result in the Loans or the consummation of any of the other
transactions contemplated hereby being violative of such regulations or any
other regulation of such Board.
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ARTICLE VII
EVENTS OF DEFAULT
An event of default ("Event of Default") under this Agreement shall
be deemed to exist if any one or more of the following events occurs and is
continuing, whatever the reason therefor:
7.1 Borrowers' Failure to Pay. The Borrowers fail to pay any amount
of principal, interest, fees or other sums as and when due under this Agreement
or any of the Loan Documents, whether upon stated maturity, acceleration, or
otherwise and have not remedied and fully cured such failure to pay within ten
(10) Business Days after the date such payment is so due.
7.2 Breach of Covenants or Conditions. The Borrowers fail to
perform or observe any other term, covenant, agreement or condition contained in
this Agreement or any of the other Loan Documents or is in violation of or
non-compliance with any provision of this Agreement or any of the Loan
Documents, and have not remedied and fully cured such non-performance, non-
observance, violation of or non-compliance within thirty (30) days after the
Bank has given written notice thereof to the Borrowers; provided, however, that
if such default is not fully cured after fifteen (15) Business Days from the
Bank's written notice, at the option of the Bank, the Bank's obligations to make
further Loans to the Borrowers shall be suspended.
7.3 Defaults in Other Agreements. Any Borrower fails to perform or
observe any term, covenant, agreement or condition contained in, or there shall
occur any default under or as defined in any agreement of such Borrower (i) with
the Bank which shall not be remedied within the period of time (if any) within
which the applicable agreement permits such default to be remedied unless such
default is waived by the Bank or exercised as a matter of law, or (ii) in any
other agreement applicable to any Borrower or by which it is bound, involving a
liability of such Borrower to a Person other than the Bank in the amount of
$500,000 or more which shall not be remedied within the period of time (if any)
within which such other agreement permits such default to be remedied, unless
such default is waived by the other party thereto or excused as a matter of law,
and the potential payment of which under this subparagraph (ii) would cause a
breach of a financial covenant contained in Section 5.16 of this Agreement and
such breach is not cured within thirty (30) days.
7.4 Agreements Invalid. The validity, binding nature of, or
enforceability of any material term or provision of any of the Loan Documents is
disputed by, on behalf of, or in the right or name of any Borrower or any
material term or provision of any
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such Loan Document is found or declared to be invalid, avoidable, or
non-enforceable by any court of competent jurisdiction.
7.5 False Warranties; Breach of Representations. Any warranty or
representation made by any Borrower in this Agreement or any other Loan Document
or in any certificate or other writing delivered under or pursuant to this
Agreement or any other Loan Document, or in connection with any provision of
this Agreement or related to the transactions contemplated hereby shall prove to
have been false or incorrect or breached in any material respect on the date as
of which made.
7.6 Judgments. A final judgment or judgments is entered, or an
order or orders of any judicial authority or governmental entity is issued
against any Borrower (such judgment(s) and order(s) hereinafter collectively
referred to as "Judgment") (i) for payment of money, which Judgment, in the
aggregate, exceeds Five Hundred Thousand Dollars ($500,000) at any one time and
the potential payment of which would cause a breach of a financial covenant
contained in Section 5.16 of this Agreement and such breach is not cured within
thirty (30) days; or (ii) for injunctive or declaratory relief which would have
a material adverse effect on the ability of any Borrower to conduct its
business, and such Judgment is not discharged or execution thereon or
enforcement thereof stayed pending appeal, within thirty days after entry or
issuance thereof, or, in the event of such a stay, such Judgment is not
discharged within thirty days after such stay expires.
7.7 Bankruptcy or Insolvency of the Borrowers.
(a) Any Borrower becomes insolvent, or generally fails to pay,
or is generally unable to pay, or admits in writing its inability to pay, its
debts as they become due or applies for, consents to, or acquiesces in, any
appointment of a trustee, receiver or other custodian for such Borrower, or a
substantial part of its property, or makes a general assignment for the benefit
of creditors.
(b) Any Borrower commences any bankruptcy, reorganization, debt
arrangement, or other case or proceeding under any state or federal bankruptcy
or insolvency law, or any dissolution or liquidation proceeding.
(c) Any bankruptcy, reorganization, debt arrangement, or other
case or proceeding under any state or federal bankruptcy or insolvency law, or
any dissolution or liquidation proceeding, is involuntarily commenced against or
in respect of any Borrower or an order for relief is entered in any such
proceeding, and such proceeding is not dismissed within forty-five (45) days
after the commencement thereof.
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(d) A trustee, receiver, or other custodian is appointed for
any Borrower or a substantial part of such Borrower's property.
7.8 Change in Control. The occurrence of an event such that, or
entering into an agreement whereby, Joseph Roberts shall fail to own and control
the voting of more than 50% of the shares of capital stock of Nutrition
Management which are entitled to vote for the election of directors.
ARTICLE VIII
REMEDIES
8.1 Further Advances; Acceleration; Setoff.
(a) Upon the occurrence of any one or more Events of Default,
the Bank may, in its sole discretion, refuse to make any further advances or
Loans to the Borrowers;
(b) Automatically upon the occurrence of any Event of Default
described in Section 7.7 of this Agreement, and in the sole discretion of the
Bank upon the occurrence of any other Event of Default, the unpaid principal
balance of all Loans, all interest and fees accrued and unpaid thereon, and all
other amounts and Obligations payable by the Borrowers under this Agreement and
the other Loan Documents shall immediately become due and payable in full, all
without protest, presentment, demand, or further notice of any kind to the
Borrowers, all of which are expressly waived by the Borrowers.
8.2 Further Remedies; Confession of Judgment.
(a) Upon the occurrence of any one or more Events of Default,
the Bank may proceed to protect and enforce its rights under this Agreement and
the other Loan Documents by exercising such remedies as are available to the
Bank in respect thereof under applicable law, either by suit in equity or by
action at law, or both, whether for specific performance of any provision
contained in this Agreement or any of the other Loan Documents or in aid of the
exercise of any power granted in this Agreement or any of the other Loan
Documents, including without limitation, enforcement of the Escrow Security
Agreement and all rights granted in connection therewith in accordance with
Section 3.15 of this Agreement.
(b) EACH BORROWER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS
THE BANK, BY ITS ATTORNEY, OR BY THE PROTHONOTARY OR CLERK OF ANY COURT OF
RECORD IN THE COMMONWEALTH OF PENNSYLVANIA OR IN ANY JURISDICTION WHERE
PERMITTED BY LAW, UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, OR AT ANY TIME
THEREAFTER, TO APPEAR FOR IT AND CONFESS AND ENTER JUDGMENT AGAINST IT IN FAVOR
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OF THE BANK IN ANY JURISDICTION IN WHICH THE BORROWER OR ANY OF ITS PROPERTY IS
LOCATED FOR THE AMOUNT OF ALL OBLIGATIONS, TOGETHER WITH COSTS OF SUIT AND WITH
ACTUAL COLLECTION COSTS (INCLUDING REASONABLE ATTORNEYS' FEES NOT TO EXCEED
$25,000), WITH OR WITHOUT DECLARATION, WITHOUT STAY OF EXECUTION AND WITH
RELEASE OF ALL ERRORS AND THE RIGHT TO ISSUE EXECUTION FORTHWITH, AND FOR DOING
SO THIS AGREEMENT OR A COPY VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT.
EACH BORROWER HEREBY WAIVES AND RELEASES ALL RELIEF FROM ANY AND ALL
APPRAISEMENT, STAY OR EXEMPTION LAW OF ANY STATE NOW IN FORCE OR HEREAFTER
ENACTED. THIS AUTHORITY AND POWER SHALL NOT BE EXHAUSTED BY THE EXERCISE
THEREOF, AND SHALL CONTINUE UNTIL THE OBLIGATIONS ARE FULLY PAID, PERFORMED,
DISCHARGED AND SATISFIED.
BEING FULLY AWARE OF ITS RIGHTS TO PRIOR NOTICE AND HEARING ON THE
VALIDITY OF ANY CLAIMS THAT MAY BE ASSERTED AGAINST IT BY THE BANK UNDER THIS
AGREEMENT BEFORE JUDGMENT CAN BE ENTERED AND BEFORE ASSETS OF THE BORROWER CAN
BE GARNISHED AND ATTACHED, EACH BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES THESE RIGHTS AND EXPRESSLY AGREES AND CONSENTS TO THE BANK,
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, OR AT ANY TIME THEREAFTER, ENTERING
JUDGMENT AGAINST THE BORROWER BY CONFESSION AND ATTACHING AND GARNISHING THE
BANK ACCOUNTS AND OTHER ASSETS OF THE BORROWER, WITHOUT PRIOR NOTICE OR
OPPORTUNITY FOR A HEARING. EACH BORROWER ACKNOWLEDGES THAT IT HAS HAD THE
ASSISTANCE OF LEGAL COUNSEL IN THE REVIEW AND EXECUTION OF THIS AGREEMENT AND
FURTHER ACKNOWLEDGES THAT THE MEANING AND EFFECT OF THE FOREGOING PROVISIONS
CONCERNING CONFESSION OF JUDGMENT HAVE BEEN FULLY EXPLAINED TO THE BORROWER BY
SUCH COUNSEL.
ARTICLE IX
MISCELLANEOUS
9.1 Remedies Cumulative; No Waiver. The rights, powers and remedies
of the Bank provided in this Agreement and the other Loan Documents are
cumulative and not exclusive of any right, power or remedy provided by law or
equity, and no failure or delay on the part of the Bank in the exercise of any
right, power, or remedy shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power, or remedy preclude other or further
exercise thereof, or the exercise of any other right, power or remedy.
9.2 Notices. Every notice and communication under this Agreement or
any of the other Loan Documents shall be in writing and shall be given by either
(i) hand-delivery, (ii) first class mail (postage prepaid), (iii) reliable
overnight commercial courier (charges prepaid), or (iv) telecopy or other means
of electronic transmission, if confirmed promptly by any of the
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methods specified in clauses (i), (ii) and (iii) of this sentence, to the
following addresses:
If to any Borrower:
Nutrition Management Services Company
P.O. Box 725
Kimberton Road
Kimberton, PA 19442
Attn: Joseph Roberts, Chief Financial Officer
Frank Ford
Kathleen Hill
Fax: (610) 935-8287
With a copy to:
Stradley, Ronon, Stevens & Young, LLP
30 Valley Stream Parkway
Great Valley Corporate Center
Malvern, PA 19355
Attn: Ann Cuddy Roda, Esquire
Fax: (610) 640-1965
If to the Bank:
CoreStates Bank, N.A.
Great Valley Corporate Center
55 Valley Stream Parkway
Suite 200
Malvern, PA 19355
Attn: Michael R. Bailey, Vice President
Fax: (610) 251-5929
With a copy to:
Duane, Morris & Heckscher
One Liberty Place
Philadelphia, PA 19103
Attn: Dianne A. Meyer, Esquire
Fax: (215) 979-1020
Notice given by telecopy or other means of electronic transmission
shall be deemed to have been given and received when sent. Notice by overnight
courier shall be deemed to have been given and received on the date scheduled
for delivery. Notice by mail shall be deemed to have been given and received
three (3) calendar days after the date first deposited in the United States
Mail. Notice by hand delivery shall be deemed to have been given and received
upon delivery. A party may change its address by giving written notice to the
other party as specified herein.
- 32 -
<PAGE>
9.3 Costs, Expenses and Attorneys' Fees. Whether or not the
transactions contemplated by this Agreement and the other Loan Documents are
fully consummated, each Borrower shall promptly pay (or reimburse, as the Bank
may elect) all out-of-pocket costs and expenses which the Bank has incurred or
may hereafter reasonably incur in connection with the negotiation, preparation,
reproduction, interpretation and enforcement of this Agreement and the other
Loan Documents, the collection of all amounts due hereunder and thereunder, and
any amendment, modification, consent or waiver which may be hereafter requested
by the Borrower or otherwise required. Such costs and expenses shall include,
without limitation, the fees and disbursements of counsel to the Bank, the costs
of searches of public records, costs of filing and recording documents with
public offices, and similar costs and expenses incurred by the Bank. Upon the
occurrence of an Event of Default, such costs shall also include the reasonable
fees of any accountants, consultants or other professionals retained by the
Bank. Each Borrower's reimbursement obligations under this Section shall survive
any termination of this Agreement.
9.4 Survival of Covenants. This Agreement and all covenants,
agreements, representations and warranties made herein and in any certificates
delivered pursuant hereto shall survive the making of the Loans and the
execution and delivery of the Notes and, subject to the provisions of 9.15
hereof, shall continue in full force and effect until all of the Obligations
have been fully paid, performed, satisfied and discharged.
9.5 Counterparts; Effectiveness. This Agreement may be executed in
any number of counterparts and by the different parties on separate
counterparts. Each such counterpart shall be deemed to be an original, but all
such counterparts shall together constitute one and the same Agreement. This
Agreement shall be deemed to have been executed and delivered when the Bank has
received counterparts hereof executed by all parties listed on the signature
page(s) hereto.
9.6 Headings. The headings of sections have been included herein
for convenience only and shall not be considered in interpreting this Agreement.
9.7 Payment Due On A Day Other Than A Business Day. If any payment
due or action to be taken under this Agreement or any Loan Document falls due or
is required to be taken on a day which is not a Business Day, such payment or
action shall be made or taken on the next succeeding Business Day and such
extended time shall be included in the computation of interest.
9.8 Judicial Proceedings. Each party to this Agreement agrees that
any suit, action or proceeding, whether claim or counterclaim, brought or
instituted by any party hereto or any successor or assign of any party, on or
with respect to this
- 33 -
<PAGE>
Agreement or the dealings of the parties with respect hereto, shall be tried
only by a court and not by a jury. EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR
PROCEEDING. Further, each party waives any right it may have to claim or
recover, in any such suit, action or proceeding, any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. EACH BORROWER ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A
SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND THAT THE BANK WOULD NOT
EXTEND CREDIT TO THE BORROWERS IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT
A PART OF THIS AGREEMENT.
9.9 Governing Law. This Agreement shall be construed in accordance
with and governed by the internal laws of the Commonwealth of Pennsylvania.
9.10 Integration. This Agreement and the other Loan Documents
constitute the sole agreement of the parties with respect to the subject matter
hereof and thereof and supersede all oral negotiations and prior writings with
respect to the subject matter hereof and thereof.
9.11 Amendment and Waiver. No amendment of this Agreement, and no
waiver of any one or more of the provisions hereof shall be effective unless set
forth in writing and signed by the parties hereto.
9.12 Successors and Assigns.
(a) Generally. This Agreement (i) shall be binding upon each
Borrower and the Bank and their respective successors and assigns, and (ii)
shall inure to the benefit of each Borrower and the Bank and its respective
successors and assigns, provided, however, that no Borrower may assign its
rights hereunder or any interest herein without the prior written consent of the
Bank, and any such assignment or attempted assignment by such Borrower shall be
void and of no effect with respect to the Bank. The Bank shall give the
Borrowers prior written notice of any assignment by the Bank and such assignment
shall not result in any charges or expenses to the Borrowers not already
contained in the Loan Documents.
(b) Participations. The Bank may from time to time sell or
otherwise grant participations in the Loans and the Notes, and the holder of any
such participation, if the participation agreement so provides, (i) shall, with
respect to its participation, be entitled to all of the rights of the Bank and
(ii) may exercise any and all rights of setoff or banker's lien with respect
thereto, in each case as fully as though the Borrowers were directly indebted to
the holder of such participation in the amount of such participation. The Bank
may disclose to prospective participants such information regarding
- 34 -
<PAGE>
the affairs of the borrowers as the Bank possesses. The Bank shall give notice
to the Borrowers of the grant of such participations; however, the failure to
give such notice shall not affect any of the Bank's rights hereunder. In
connection with any participation, the Bank agrees that it shall continue to
deal with the Borrower as if no participation has occurred and such
participation shall not result in any charges or expenses to the Borrowers not
already contained in the Loan Documents.
9.13 Severability of Provisions. Any provision in this Agreement
that is held to be inoperative, unenforceable, voidable, or invalid in any
jurisdiction shall, as to that jurisdiction, be ineffective, unenforceable, void
or invalid without affecting the remaining provisions in any other jurisdiction,
and to this end the provisions of this Agreement are declared to be severable.
9.14 Consent to Jurisdiction and Service of Process. Each Borrower
irrevocably appoints each of its executive officers as its attorneys upon whom
may be served any notice, process or pleading in any action or proceeding
against it arising out of or in connection with any of the Loan Documents; and
each Borrower hereby (i) consents that any action or proceeding against it be
commenced and maintained in any court within the County of Montgomery, County of
Philadelphia, County of Chester or in the United States District Court for the
Eastern District of Pennsylvania by service of process on any such officer; (ii)
agrees that the courts of the County of Montgomery, County of Philadelphia,
County of Chester and the United States District Court for the Eastern District
of Pennsylvania shall have jurisdiction with respect to the subject matter
hereof and the person of the Borrower and the Collateral; and (iii) waives any
objection that such Borrower may now or hereafter have as to the venue of any
such suit, action or proceeding brought in such a court or that such court is an
inconvenient forum. Notwithstanding the foregoing, the Bank, in its absolute
discretion may also initiate proceedings in the courts of any other jurisdiction
in which any Borrower may be found or in which any of its properties or
Collateral may be located.
9.15 Indemnification
(a) If, after receipt of any payment of all or any part of the
Obligations, the Bank is compelled to surrender such payment to any Person or
entity for any reason (including, without limitation, a determination that such
payment is void or voidable as a preference or fraudulent conveyance, an
impermissible setoff, or a diversion of trust funds), then this Agreement and
the other Loan Documents shall continue in full force and effect, and the
Borrowers shall be liable for, and shall indemnify, defend and hold harmless the
Bank with respect to the full amount so surrendered.
(b) Each Borrower shall indemnify, defend and hold harmless the
Bank with respect to any and all claims, expenses,
- 35 -
<PAGE>
demands, losses, costs, fines or liabilities of any kind, including reasonable
attorneys' fees and costs, arising from or in any way related to (i) acts or
conduct of the Borrower or any under, pursuant to or related to this Agreement
and the other Loan Documents, (ii) Borrower's breach or violation of any
representation, warranty, covenant or undertaking contained in this Agreement or
the other Loan Documents, and (iii) Borrower's failure to comply with any or all
laws, statutes, ordinances, governmental rules, regulations or standards,
whether federal, state, or local, or court or administrative orders or decrees,
including without limitation those resulting from any Hazardous Materials or
dangerous environmental condition within, on, from, related to or affecting any
real property owned or occupied by the Borrower, unless resulting from the acts
or conduct of the Bank constituting gross negligence or willful misconduct.
(c) The provisions of this section shall survive the
termination of this Agreement and the other Loan Documents and shall be and
remain effective notwithstanding the payment of the Obligations, the
cancellation of any of the Notes, the release of any Encumbrance securing the
Obligations or any other action which the Bank may have taken in reliance upon
its receipt of such payment. Any cancellation of any of the Notes, release of
any Encumbrance or other such action shall be deemed to have been conditioned
upon any payment of the Obligations having become final and irrevocable.
- 36 -
<PAGE>
IN WITNESS WHEREOF, each of the undersigned have caused this
Agreement to be executed by its duly authorized officer on the date first above
written.
Attest: NUTRITION MANAGEMENT SERVICES
COMPANY
________________________ By:____________________________
Title:__________________ Title:_________________________
THE COLLEGEVILLE INN CONFERENCE
Attest: & TRAINING CENTER, INC.
________________________ By:____________________________
Title:__________________ Title:_________________________
Attest: APPLE FRESH FOODS LIMITED
________________________ By:____________________________
Title:__________________ Title:_________________________
CORESTATES BANK, N.A.
By:____________________________
Title:_________________________
- 37 -
<PAGE>
SCHEDULE 5.16
FINANCIAL COVENANTS
This Schedule is a part of the Loan Agreement dated December 26,
1996 between CoreStates Bank, N.A. and the Borrowers.
A. Consolidated Quick Ratio -- Borrowers shall have a Consolidated
Quick Ratio at all times of not less than 1.00:1.00, measured at the end of each
fiscal quarter.
B. Consolidated Debt Service Coverage Ratio-- The Borrowers shall
have a Consolidated Debt Service Coverage Ratio at all times measured at the end
of each fiscal quarter on a rolling four quarters basis of not less than:
(1) 1.00:1.00 for the Fiscal Year 1997;
(2) 1.125:1.00 for the Fiscal Year 1998; and
(3) 1.15:1.00 for the Fiscal Year 1999, and thereafter.
If the Consolidated Debt Service Coverage Ratio is less than 1.00:1.00 during
Fiscal Year 1997, the Borrowers must have cash and marketable securities as of
the date of such Consolidated Debt Service Coverage Ratio in an amount equal to
the amount by which the denominator exceeds the numerator in the calculation
thereof.
C. Consolidated Tangible Net Worth--The Borrowers shall have a
Consolidated Tangible Net Worth measured at the end of each fiscal quarter of
not less than:
(1) $5,250,000 for the Fiscal Year 1997;
(2) $5,600,000 for the Fiscal Year 1998; and
(3) $6,000,000 for the Fiscal Year 1999, and thereafter.
D. Ratio of Consolidated Total Liabilities to Consolidated Tangible
Net Worth. The Borrowers shall have a ratio of Consolidated Total Liabilities to
Consolidated Tangible Net Worth measured at the end of each fiscal quarter of
not more than:
(1) 3.00:1.00 for the Fiscal Year 1997;
(2) 2.75:1.00 for the Fiscal Year 1998; and
(3) 2.50:1.00 for the Fiscal Year 1999, and thereafter.
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<PAGE>
E. Debt Service Coverage Ratio. Collegeville and Apple Fresh shall
have a Debt Service Coverage Ratio at the end of each fiscal quarter on a
rolling four quarters basis of not less than:
(i) 1.125:1.00 for Fiscal Year 1998;
(ii) 1.15:1.00 for Fiscal Year 1999, and thereafter.
For purposes hereof, Debt Service Coverage Ratio shall mean the
following ratio with respect to Collegeville and Apple Fresh on a combined
basis:
EBIT(1-tax rate) + depreciation + amortization
-------------------------------------------------------------------
interest expense(1-tax rate) + Current Maturities of Long Term Debt
For purposes of this Schedule, all capitalized terms used herein
and not otherwise defined shall have the meanings given to them, respectively,
in the Loan Agreement, and the following terms shall have the following
meanings:
"Consolidated Current Liabilities" shall mean, at any time, all
liabilities which, in accordance with GAAP, should be classified as current
liabilities of the Borrowers on a consolidated basis.
"Consolidated Debt Service Coverage Ratio" shall mean the following
ratio with respect to the Borrowers on a consolidated basis:
EBIT, plus interest income (1-tax rate) + depreciation + amortization
---------------------------------------------------------------------
interest expense(1-tax rate) + Current Maturities of Long Term Debt
"Consolidated Net Income" shall mean, for any period, the net
income (after the deduction of federal and state income taxes) of the Borrowers
on a consolidated basis, determined in accordance with GAAP.
"Consolidated Quick Ratio" shall mean, at any time, the ratio of
cash, cash equivalents, and accounts receivable of the Borrowers on a
consolidated basis to Consolidated Current Liabilities.
"Consolidated Tangible Net Worth" shall mean, at any time,
aggregate Stockholders' Equity plus aggregate Subordinated Indebtedness, less
all intangible assets of the Borrowers (other than investments in contracts and
other intangible assets resulting from an Asset Purchase) including, without
limitation, organization costs, securities issuance costs, unamortized debt
discount and expense, goodwill, excess of purchase costs over net assets
acquired, patents, trademarks, trade names, copyrights, trade secrets, knowhow,
licenses, franchises, research and development expenses, amounts owing from
officers and/or Affiliates and any amount reflected as treasury stock.
"Current Maturities of Long Term Debt" shall mean at the time of
measurement, all Indebtedness coming due during the next twelve months.
- 39 -
<PAGE>
"Consolidated Total Liabilities" shall mean, at any time, all
liabilities which, in accordance with GAAP, should be classified as liabilities
of the Borrowers on a consolidated basis.
"Fiscal Year" shall mean with respect to any period of measure the
period beginning July 1 of any year and ending June 30 of the following year.
"Subordinated Indebtedness" shall mean, at any time, all
Indebtedness of the Borrowers subordinated to the Obligations on terms
satisfactory to the Bank.
"Stockholders' Equity" shall mean, at any time, stockholders'
equity of the Borrowers on a consolidated basis as determined in accordance with
GAAP.
- 40 -
<PAGE>
Schedule 5.20
Uniform Commercial Code Financing Statement and Judgments of Record
- 41 -
<PAGE>
Schedule 6.2
Indebtedness
None
- 42 -
<PAGE>
Schedule 6.3
Encumbrances
None
- 43 -
<PAGE>
Schedule 6.6
Investment Policy
- 44 -
LOAN AGREEMENT
Dated December 26, 1996
Between
MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
and
COLLEGEVILLE INN CONFERENCE & TRAINING CENTER, INC.
Bond Counsel Authority Counsel
Kassab Archbold & O'Brien, L.L.P. McGrory, Wentz, Fernandez & O'Hara
214 North Jackson Street 115 West Germantown Pike, Suite 100
Media, PA 19023 Swede Square
Norristown, PA 19401
<PAGE>
TABLE OF CONTENTS*
Page
RECITALS.......................................................................1
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.................................................2
Section 1.02. Content of Certificates and Opinions........................2
Section 1.03. Interpretation .............................................3
ARTICLE II
THE LOAN: USE OF PROCEEDS
Section 2.01. Loan of Funds to the Company................................3
Section 2.02. Use of Proceeds.............................................4
Section 2.03. Establishment of Completion Date............................4
Section 2.04. Covenants for Benefit of Bondholders and Bank...............4
ARTICLE III
PAYMENT PROVISIONS
Section 3.01. Loan Payments...............................................4
Section 3.02. Letter of Credit............................................5
Section 3.03. Time of Loan Payments.......................................5
Section 3.04. Additional Payments; Taxes; Utility Charges.................6
Section 3.05. Acceleration of Payment to Redeem Bonds.....................7
Section 3.06. No Defense or Set-Off.......................................7
Section 3.07. Termination Upon Payment or Defeasance of Bonds.............8
Section 3.08. Assignment of Authority's Rights............................8
Section 3.09. Assignment by Company...................................... 8
Section 3.10. Indemnity Against Claims................................... 9
Section 3.11. Authority is Conduit Issuer; Company is
Real Party in Interest; Covenant Not to Sue .............. 10
ARTICLE IV
COMPANY OBLIGATIONS; ASSIGNMENT TO TRUSTEE
- --------
*This Table of Contents is for convenience only, does not constitute a part
of this Loan Agreement and shall not be considered as having any bearing upon
any interpretation of this Loan Agreement.
(i)
<PAGE>
Section 4.01. General Obligation of the Company......................... 11
Section 4.02. Assignment to Trustee..................................... 11
Section 4.03. Maintenance and Operation of the Project Facilities....... 11
Section 4.04. Maintenance of Existence.................................. 11
Section 4.05. Compliance with Laws...................................... 11
Section 4.06. Notice of Bankruptcy Case Commencement.................... 12
Section 4.07. Substitute Letter of Credit............................... 12
ARTICLE V
THE PROJECT FACILITIES
Section 5.01. Intentionally Omitted..................................... 13
Section 5.02. Liens......................................................13
ARTICLE VI
INSURANCE; DESTRUCTION; DAMAGE; EMINENT DOMAIN
Section 6.01. Insurance to be Maintained................................ 14
Section 6.02. Destruction. Damage and Eminent Domain.................... 14
Section 6.03. Notice of Property Loss................................... 14
Section 6.04. Disposition of Casualty Insurance and
Condemnation Award Proceeds............................... 14
ARTICLE VII
ADDITIONAL COVENANTS OF THE COMPANY
Section 7.01. Compliance with Laws...................................... 15
Section 7.02. Power to Perform Obligations.............................. 15
Section 7.03. Inspection................................................ 16
Section 7.04. Additional Information.................................... 16
Section 7.05. Nondiscrimination......................................... 16
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.01. Events of Default......................................... 17
Section 8.02. Acceleration.............................................. 18
Section 8.03. Payment of Loan Payments on Default; Suit Therefor........ 19
Section 8.04. Waiver.................................................... 19
Section 8.05. Cumulative Rights......................................... 19
Section 8.06. No Exercise of Remedies Without Consent of Bank........... 20
ARTICLE IX
OPTIONS TO TERMINATE AGREEMENT
Section 9.01. Option to Terminate Upon Defeasance....................... 20
Section 9.02. Option to Terminate Upon the Occurrence of Certain Events. 20
ARTICLE X
MISCELLANEOUS
Section 10.01. Approval of Indenture..................................... 22
Section 10.02. Taxes and Insurance-Rights of Authority to Pay............ 22
Section 10.03. Illegal Provisions Disregarded............................ 22
Section 10.04. Limitation of Liability of the Authority.................. 22
Section 10.05. No Recourse as to the Authority........................... 23
Section 10.06. Reference to Statute or Regulation........................ 23
Section 10.07. Notices................................................... 23
Section 10.08. Applicable Law............................................ 24
Section 10.09. Amendments................................................ 24
Section 10.10. Term of Agreement..........................................24
Section 10.11. Amounts Remaining in Bond Fund............................ 25
Section 10.12. Survival of Covenants, Conditions and Representations..... 25
Section 10.13. Multiple Counterparts..................................... 25
Section 10.14. Consent................................................... 25
(ii)
<PAGE>
THIS LOAN AGREEMENT dated December 26, 1996 (the "Agreement"), is by
and between MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY (the
"Authority"), and COLLEGEVILLE INN CONFERENCE & TRAINING CENTER, INC., a
Pennsylvania corporation (the "Company").
W I T N E S S E T H :
WHEREAS, the Authority is a body politic and a public instrumentality
of the Commonwealth, organized and existing under the Pennsylvania Economic
development Financing Law, Act of August 23, 1967, P.L. 251, as amended (the
"Act"), and is authorized under the Act to acquire, hold, construct, improve,
maintain, own, finance, lease, in the capacity of lessor or lessee, and/or sell
industrial, commercial and specialized development projects for the public
purpose of alleviating unemployment, maintaining employment at a high level and
creating and developing business opportunities, by the construction,
improvement, rehabilitation, revitalization and financing of industrial,
commercial and specialized enterprises; and
WHEREAS, the Company has requested the Authority to undertake a project
(the "Project") that consists of, among other things: (i) the rehabilitation,
reconstruction, installation, furnishing and equipping of a building to be used
as a conference center, a training center, a food manufacturing/processing and
distribution center and a retail restaurant located at 4000 Ridge Pike
Collegeville, Pennsylvania, which is in the Township of Lower Providence,
Montgomery County, Pennsylvania; and (ii) the payment of a portion of the costs
and expenses of issuing the Bonds; and
WHEREAS, in order to provide funds for and toward the payment of a
portion of the costs of the Project, the Authority has authorized the issuance
and sale of its Bonds; and
WHEREAS, the Bonds are to be issued under and secured by a Trust
Indenture dated December 26, 1996 (the "Indenture"), between the Authority and
Dauphin Deposit Bank and Trust Company (the "Trustee"); and
WHEREAS, this Agreement provides that the Authority will loan the
proceeds of the Bonds to the Company to finance the Project and the Company will
agree, among other things, to repay the loan in installments equal to payments
of debt service on the Bonds when due; and
WHEREAS, the Trustee has agreed under the Indenture to draw on the
Letter of Credit (as such phrase is defined in the Indenture) at such times and
in such amounts as shall be sufficient to pay when due the principal, interest
and Purchase Price (as such phrase is defined in the Indenture) on the Bonds and
to credit all amounts paid under the Letter of Credit against the Company's
obligation to make installment payments under this Agreement for such items; and
WHEREAS, execution and delivery of this Agreement and the issuance
hereunder and under the Act of the Bonds have been in all respects duly and
validly authorized by resolution of the Board of the Authority duly adopted
prior to such execution and delivery; and
-1-
<PAGE>
WHEREAS, as security for the full and prompt payment and performance of
all its obligations under the Indenture, including, specifically, without
limiting the generality of the foregoing, its obligation to make payment of
principal of, premium, if any, and interest on the Bonds, when due, the
Authority has, pursuant to the provisions of the Indenture, assigned to the
Trustee all of its right, title and interest in, to and under this Agreement
(except its right to indemnification and to receive its fees and expenses
hereunder), including without limitation, the right to receive loan payments
payable by the Company hereunder; and
WHEREAS, in order to assure full and prompt payment of the Bonds, the
Company, among other things, has caused the Bank to issue the Letter of Credit
to assure payment of principal of, and interest on the Bonds when due (subject
to reduction and reinstatement as provided therein) pursuant to the
Reimbursement Agreement (as defined in the Indenture).
NOW, THEREFORE, THIS LOAN AGREEMENT WITNESSETH:
That the parties hereto, intending to be legally bound hereby and in
consideration of the mutual covenants hereinafter contained, DO HEREBY AGREE to
all the terms and conditions set forth in this Agreement.
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Capitalized terms and phrases used as
defined terms in the recitals shall have the same meanings throughout this
Agreement, and, in addition thereto, capitalized terms and phrases used and not
defined herein shall have the meanings assigned to such terms in the Indenture,
unless the context clearly indicates otherwise.
Section 1.02. Content of Certificates and Opinions. The Trustee may,
but shall not be obligated to, require that every certificate or opinion
provided for in this Agreement with respect to compliance with any provision
hereof shall include: (1) a statement to the effect that the Person making or
giving such certificate or opinion has read such provision and the definitions
herein relating thereto; (2) a brief statement as to the nature and scope of the
examination or investigation upon which the certificate or opinion is based; (3)
a statement to the effect that in the opinion of such Person, he has made or
caused to be made such examination or investigation as is necessary to enable
him to express an informed opinion with respect to the subject matter referred
to in the instrument to which his signature is affixed; (4) a statement of the
assumptions upon which such certificate or opinion is based, and that such
assumptions are reasonable; and (5) a statement as to whether, in the opinion of
such Person, such provision has been complied with.
-2-
<PAGE>
Any such certificate or opinion made or given by an officer of the
Authority or the Company may be based, insofar as it relates to legal or
accounting matters, upon a certificate or opinion of or representation by
counsel or an accountant, unless such officer knows, or in the exercise of
reasonable care should have known, that the certificate, opinion or
representation with respect to the matters upon which such certificate or
statement may be based, as aforesaid, is erroneous. Any such certificate or
opinion made or given by counsel or an accountant may be based, insofar as it
relates to factual matters (with respect to which information is in the
possession of the Authority or the Company, as the case may be) upon a
certificate or opinion of or representation by an officer of the Authority or
the Company, unless such counsel or accountant knows, or in the exercise of
reasonable care should have known, that the certificate or opinion or
representation with respect to the matters upon which such certificate or
opinion or representation may be based, as aforesaid, is erroneous. The same
officer of the Authority or the Company, or the same counsel or accountant, as
the case may be, need not certify to all of the matters required to be certified
under any provision of this Agreement, but different officers, counsel or
accountants may certify to different matters, respectively.
Section 1.03. Interpretation.
(a) Unless the context otherwise indicates, words expressed in
the singular shall include the plural and vice versa and the use of the neuter,
masculine, or feminine gender is for convenience only and shall be deemed to
mean and include the neuter, masculine or feminine gender, as appropriate.
(b) Headings of articles and sections herein and the table of
contents hereof are solely for convenience of reference, do not constitute a
part hereof and shall not affect the meaning, construction or effect hereof.
(c) All references herein to "Articles," "Sections" and other
subdivisions are to the corresponding Articles, Sections or subdivisions of this
Agreement; the words "herein," "hereof," "hereby," "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
Article, Section or subdivision hereof.
(d) Whenever in this Agreement it is required that notice be
provided to the Bank or that consent of the Bank be obtained, such provisions
shall be effective only when: (i) the Letter of Credit is in effect; (ii) the
Bank, in its capacity as provider of the Letter of Credit, is the Holder of any
Bonds; or (iii) any amounts are due and owing to the Bank under the
Reimbursement Agreement.
ARTICLE II
THE LOAN; USE OF PROCEEDS
Section 2.01. Loan of Funds to the Company. The Authority
hereby agrees that simultaneously with the execution and delivery of this
Agreement, it will loan to the Company, upon
-3-
<PAGE>
the terms and conditions specified herein and in the Indenture, the proceeds of
the sale of the Bonds, and the Company agrees to receive such loan from the
Authority, for the purposes provided herein and in the Indenture.
Section 2.02. Use of Proceeds. The proceeds of the Bonds shall be
deposited with the Trustee and applied as provided in the Indenture and in this
Agreement to finance the Project.
Section 2.03. Establishment of Completion Date. The Completion Date
shall mean the date of delivery to the Authority and the Trustee of a
certificate executed by an Authorized Representative of the Company stating in
effect that: (i) all equipment for the Project has been acquired and installed
and all costs and expenses incurred in connection therewith have been paid,
including all costs of labor, services, materials and supplies used in
connection with such acquisition and installation have been paid; and (ii) all
other facilities necessary in connection with the Project have been acquired,
constructed, improved and equipped and all costs and expenses incurred in
connection therewith have been paid. Notwithstanding the foregoing, such
certificate shall state that it is given without prejudice to any rights against
third parties which exist at the date of such certificate or which may
subsequently come into being. Upon completion of the Project, the Company agrees
to cause such certificate to be promptly furnished to the Authority and the
Trustee. Upon receipt of such certificate, the Trustee shall give notice to the
Company of the amount of funds remaining unspent in the Construction Fund. Any
remaining moneys on deposit in the Construction Fund shall be forthwith applied
to the payment of the Costs of the Project, or if not so applied shall be
promptly transferred by the Trustee into the Bond Fund and used by the Trustee
in accordance with the terms of Section 6.08 of the Indenture.
Section 2.04. Covenants for Benefit of Bondholders and Bank. This
Agreement is executed in part to induce: (a) the purchase by others of the
Bonds; and (b) the issuance by the Bank of the Letter of Credit, and the
participation by the Bank in the funding of advances under the Letter of Credit.
Accordingly, all covenants and agreements on the part of the Company and the
Authority, as set forth in this Agreement, are hereby declared to be for the
benefit of the Owners from time to time of the Bonds and for the benefit of the
Bank.
ARTICLE III
PAYMENT PROVISIONS
Section 3.01. Loan Payments.
(a) The Company hereby agrees to pay duly and punctually: (i)
the principal, premium, if any, and interest due and payable on the Bonds; (ii)
the Purchase Price of the Bonds, and (iii) any other amounts due and payable by
the Company under this Agreement. The Company shall be given an immediate credit
in the amount of all draws paid to the Trustee under the Letter of Credit
against the loan payments due hereunder. Any portion of the loan payments due
under this Agreement which is not timely paid (upon proper demand under the
Letter of Credit by the Trustee) from draws
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under the Letter of Credit shall be paid to the Trustee directly by the Company
as provided in Section 3.03 hereof. Any other amounts required to be paid under
this Agreement shall be paid by the Company to the party entitled to receive
such amounts hereunder and in the manner provided for herein. Loan payments
shall be made by the Company with the Company's funds, except to the extent a
credit in respect thereof has been granted pursuant to the terms of this
Agreement. It is the intention of the Authority and the Company that,
notwithstanding any other provision of this Agreement, the Authority shall
receive funds from the Company under this Agreement at such times and in such
amounts as will enable the Authority to meet all of its obligations under the
Bonds and the Indenture, including any such obligations surviving the payment of
the Bonds and the defeasance of the Indenture.
(b) All loan payments and other sums due and payable to the
Authority or the Trustee under this Agreement shall be absolutely net to the
Authority or the Trustee, as applicable, free of any taxes, costs, liabilities
or other deductions whatsoever with respect to the Project Facilities and the
maintenance, repair, rebuilding, use or occupation thereof or any portion
thereof, so that this Agreement shall yield all amounts due hereunder net to the
Authority or the Trustee throughout the term hereof.
Section 3.02. Letter of Credit. Concurrently with the issuance by the
Authority of the Bonds, the Company shall cause to be delivered to the Trustee
the Letter of Credit issued by the Bank, authorizing the Trustee to make draws
on the Bank, up to an aggregate stated amount of TWO MILLION FIVE HUNDRED SIXTY
THOUSAND FIVE HUNDRED FORTY-EIGHT DOLLARS ($2,560,548), of which TWO MILLION
FIVE HUNDRED THOUSAND DOLLARS ($2,500,000) shall be in respect of principal on
the Bonds and SIXTY THOUSAND FIVE HUNDRED FORTY-EIGHT DOLLARS ($60,548) shall be
in respect of up to 52 days' interest accrued on the Bonds on or prior to the
maturity thereof.
Section 3.03. Time of Loan Payments.
(a) The Company shall pay to the Trustee, as assignee of the
Authority (but only to the extent such amounts have not been advanced to the
Trustee under the Letter of Credit), on the dates and times hereinafter set
forth, for deposit in the Bond Fund, the following sums:
(i) Not later than 12 noon on any Interest Payment Date or
any other date that any payment of interest, premium, if any, or principal is
required to be made in respect of the Bonds pursuant to the Indenture, until the
principal of, premium, if any, and interest on the Bonds shall have been fully
paid or provision for the payment thereof shall have been made in accordance
with the Indenture, in immediately available funds, a sum which, together with
any moneys available for such payment in the Bond Fund, will enable the Trustee
to pay the amount payable on such date as principal of (whether at maturity or
upon redemption or acceleration or otherwise), premium, if any, and interest on
the Bonds as provided in the Indenture; provided, however, that the obligation
of the Company to make any payment hereunder shall be deemed satisfied and
discharged to the extent of the corresponding payment made by the Bank to the
Trustee under the Letter of Credit.
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All payments payable by the Company under subsection (a)(i)
of this Section 3.03 are assigned by the Authority to the Trustee for the
benefit of the Owners of the Bonds. The Company hereby acknowledges and consents
to such assignment. The Authority hereby directs the Company and the Company
hereby agrees to pay to the Trustee at the Principal Corporate Trust Office of
the Trustee all payments payable by the Company pursuant to this subsection.
(ii) The Company covenants, for the benefit of the Owners
of the Bonds, to pay or cause to be paid, to the Tender Agent, such amounts as
shall be necessary to enable the Tender Agent to pay the Purchase Price of Bonds
delivered to it for purchase, all as more particularly described in Sections
5.01, 5.03 and 5.04 of the Indenture; provided, however, that the obligation of
the Company to make any such payment under this subsection (a)(ii) shall be
reduced by the amount of moneys available for such payment described in
subsection (i) or (ii) of Section 5.05(a) of the Indenture; and provided,
further, that the obligation of the Company to make any payment under this
subsection (ii) shall be deemed to be satisfied and discharged to the extent of
the corresponding payment made by the Bank under the Letter of Credit.
(iii) Additionally, from time to time, the Company shall
make such payments as shall be necessary to make up any deficiency in or to fund
fully any of the funds established under the Indenture.
Section 3.04. Additional Payments; Taxes; Utility Charges. As
Additional Payments, the Company, during the term of this Agreement, shall pay
or cause to be paid the following:
(a) To the public officers charged with the collection thereof,
promptly as the same become due, all taxes (or contributions or payments in lieu
thereof), including but not limited to income, profits or property taxes, which
may now or hereafter be imposed by the United States of America, any state or
municipality or any political subdivision or subdivisions thereof, and all
assessments for public improvements or other assessments, levies, license fees,
charges for publicly supplied water or sewer services, excises, franchises,
imposts and charges, general and special, ordinary and extraordinary (including
interest, penalties and all costs resulting from delayed payment of any of the
foregoing) of whatever name, nature and kind and whether or not now within the
contemplation of the parties hereto and which are now or may hereafter be
levied, assessed, charged or imposed or which are or may become a lien upon the
payments due under this Agreement, the Project Facilities or the use or
occupation thereof, or upon the Company or the Authority, or upon any
franchises, businesses, transactions, income, earnings and receipts (gross, net
or otherwise) of the Company in connection with the Project Facilities, or its
earnings, profits or receipts from, or its subleasing of, the Project
Facilities; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any tax, assessment, lien or other
matter hereunder so long as the validity thereof is being contested in good
faith and by appropriate legal proceedings diligently pursued, so long as the
operation of the Project Facilities or the receipt of income therefrom is not
adversely affected by reason thereof;
(b) All reasonable fees, charges and expenses of the Trustee,
the Remarketing
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Agent, the Placement Agent, the Tender Agent and the Bank, as and when the same
become due and payable;
(c) The reasonable fees and expenses of such accountants,
consultants, attorneys and other experts as may be engaged by the Authority, the
Trustee or the Tender Agent to prepare audits, financial statements, reports,
opinions or provide such other services required under this Agreement or the
Indenture; and
(d) The reasonable fees and expenses of the Authority in
connection with this Agreement, the Bonds, the Indenture, the Tender Agent
Agreement or the Remarketing Agreement and any and all other expenses incurred
in connection with the authorization, issuance, sale and delivery of any such
Bonds or incurred by the Authority in connection with any litigation which may
at any time be instituted involving this Agreement, the Bonds, the Indenture or
any of the other documents contemplated thereby, or incurred in connection with
the administration of this Agreement, or otherwise in connection with this
Agreement, the Indenture, the Bonds, the Tender Agent Agreement, the Remarketing
Agreement or any of the other documents, instruments or agreements in connection
therewith.
Such Additional Payments shall be billed to the Company, from time to
time, by the Authority, the Trustee, the Remarketing Agent, the Tender Agent or
the Bank, as the case may be, together with a statement certifying that the
amount billed has been paid or incurred and attaching reasonable supporting
documentation indicating that the amount billed has been paid or incurred for
one or more of the above items. After such a demand, amounts so billed shall be
paid by the Company within thirty (30) days after receipt of the bill by the
Company.
Section 3.05. Acceleration of Payment to Redeem Bonds. Whenever the
Bonds are subject to optional redemption or extraordinary redemption pursuant to
the Indenture and the provisions hereof, the Authority will, upon request of the
Company, direct the Trustee to call the same for redemption as provided in the
Indenture. Whenever any Bond is subject to mandatory redemption pursuant to the
Indenture, the Company will cooperate with the Authority and the Trustee in
effecting such redemption. In the event of any mandatory, optional or
extraordinary redemption of the Bonds, the Company will pay or cause to be paid
to the Trustee an amount equal to the applicable redemption price as a
prepayment of that portion of the loan payment corresponding to the Bonds to be
redeemed together with interest accrued to the date of redemption and will also
pay all fees and expenses of the Authority and the Trustee arising with respect
to such redemption or otherwise due and owing hereunder or under the Indenture
at such times and in such amounts as are required to effect the mandatory,
optional or extraordinary redemption of the Bonds under the terms of the
Indenture.
Section 3.06. No Defense or Set-Off. The obligations of the Company to
make loan payments shall be absolute and unconditional without any defense or
set-off for any reason, including, without limitation, any acts or circumstances
that may constitute failure of consideration, destruction of or damage to the
Project Facilities, invalidity or unenforceability of the Bonds, commercial
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frustration of purpose or failure of the Authority to perform and observe any
agreement, whether express or implied, or any duty, liability or obligation
arising out of or connected with this Agreement, it being the intention of the
parties that the payments required of the Company hereunder will be paid in full
when due without any delay or diminution whatsoever.
Section 3.07. Termination Upon Payment or Defeasance of Bonds. When:
(a) interest on, and principal or the redemption price (as the case may be) of,
all Bonds issued under the Indenture, together with all other amounts due and
payable by the Company hereunder, shall have been paid; or (b) there shall have
been deposited with the Trustee an amount evidenced by moneys or Government
Obligations, the principal of and interest on which, when due, without
reinvestment, will provide sufficient moneys to fully pay the principal or
redemption price (as the case may be) of, and all accrued interest on, all Bonds
then Outstanding, as well as all other sums payable or to become payable by the
Company under this Agreement, as evidenced by a verification report from an
independent certified public accountant, delivered to the Trustee, no further
loan payments shall be payable hereunder and, with the consent of the Bank (if
the Letter of Credit remains outstanding or if any amounts are due and owing to
the Bank under the Reimbursement Agreement or any of the other Reimbursement
Documents (as such term is defined in the Reimbursement Agreement)), this
Agreement shall thereupon be terminated, and the Authority: (i) shall cause the
Trustee to pay over to the Company any additional moneys then remaining in any
Funds under the Indenture (and which will not be required to pay any amounts as
set forth immediately above in this Section 3.07); and (ii) shall pay over to
the Company any additional moneys which may be paid to the Authority by the
Trustee; provided, however, that in each such case moneys remaining in any Fund
under the Indenture or any additional moneys shall be first paid to the Bank to
the extent of any moneys then due and owing from the Company to the Bank under
the Reimbursement Agreement or any of the other Reimbursement Documents (as such
term is defined in the Reimbursement Agreement).
Section 3.08. Assignment of Authority's Rights. As security for the
payment of the Bonds, the Authority will assign to the Trustee all the
Authority's rights under this Agreement. Subject to the prior assignment made to
the Trustee to secure the Bonds, the Authority will also assign all the
Authority's rights under this Agreement to the Bank to secure all of the
Obligations (as defined in the Reimbursement Agreement). The Company consents to
such assignments and agrees to make the loan payments under Section 3.01 and
Section 3.05 hereof directly to the Trustee without defense or set-off by reason
of any dispute between the Company and the Trustee or the Authority. Whenever
the Company is required to obtain the consent of the Authority hereunder, the
Company shall also obtain the consent of the Bank.
Section 3.09. Assignment by Company. This Agreement may be assigned in
whole or in part by the Company without the necessity of obtaining the consent
of the Trustee or the Owners of the Bonds; provided, however, any such
assignment shall require the prior written consent of the Bank (as long as the
Bank is not in default under the Letter of Credit) and the Authority; and
further provided that no assignment pursuant to this Section shall be made
otherwise than in accordance with the Act, as from time to time amended. The
Company shall, within thirty (30) days after execution thereof, furnish or cause
to be furnished to the Authority, the Trustee and the Bank a true and
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complete copy of each such assignment together with any instrument of
assumption.
Section 3.10. Indemnity Against Claims.
(a) The Company agrees that at all times it will protect and
hold the Authority, its officers, members, employees and agents harmless and
indemnified from and against all claims for losses, damages or injuries to
others, including death, personal injury and property damage or loss, arising
during the term hereof or during any other period arising out of the
acquisition, installation and equipping of the Project Facilities; and the
Authority shall not be liable for any loss, damage or injury to the Person or
property of the Company or its agents, servants or employees or any other Person
who or which may be upon the Project Facilities or damaged or injured as a
result of any condition existing or activity occurring upon the Project
Facilities or any other matter connected directly or indirectly therewith due to
any act or negligence of any Person, excepting only willful misconduct of the
Authority, its officers, agents, members or employees. The indemnity provided
for in this Section 3.10(a) shall be effective only to the extent that any loss
sustained by the Authority, its officers, members, employees and agents shall be
in excess of the net proceeds actually recovered and received by the Authority
from, or paid on behalf of the Authority by, any insurance carried with respect
to the loss sustained.
(b) The Company hereby covenants and agrees that it will
indemnify and hold harmless the Trustee against any and all losses, damages or
claims arising out of the Trustee's exercise and performance of powers and
duties granted unto it by the Indenture and hereunder, and not resulting from
the Trustee's willful misconduct or negligence.
(c) The Company will indemnify, hold harmless and defend the
Authority and the Trustee and the respective officers, members, directors,
officials and employees of each of them against all losses, costs, damages,
expenses, suits, judgments, actions and liabilities of whatever nature
including, specifically, any liability under any state or federal securities
laws (including but not limited to reasonable attorneys' fees, litigation and
court costs, amounts paid in settlement and amounts paid to discharge judgments)
directly or indirectly resulting from or arising out of or related to: (i) the
design, construction, installation, operation, use, occupancy, maintenance or
ownership of the Project Facilities (including compliance with laws, ordinances
and rules and regulations of public authorities relating thereto); or (ii) any
statements or representations with respect to the Company, the Project
Facilities, this Agreement, the Bonds, the Indenture, the Letter of Credit, the
Reimbursement Agreement or any other documents or instruments delivered at or in
connection with the closing held on the Closing Date (including any statements
or representations made in connection with the offer or sale thereof) made or
given to the Authority, the Trustee or any placement advisors or underwriters or
purchasers of any of the Bonds, by the Company or any of its officers, agents or
employees, including, but not limited to, statements or representations of
facts, financial information or Company affairs. The Company also will pay and
discharge and indemnify and hold harmless the Authority and the Trustee from:
(x) any lien or charge upon payments by the Company to the Authority and the
Trustee under this Agreement; and (y) any taxes (including, without limitation,
any ad valorem taxes and sales taxes, assessments, impositions and other charges
in respect of any portion
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of the Project Facilities). If any such claim is asserted, or any such lien or
charge upon payments, or any such taxes, assessments, impositions or other
charges are sought to be imposed, the Authority or the Trustee will give prompt
notice to the Company, and the Company will have the sole right and duty to
assume, and will assume, the defense thereof, with full power to litigate,
compromise or settle the same in its sole discretion. The Company's obligations,
liabilities and duties hereunder shall not be diminished or altered by: (i)
reason of the assumption of any defense required hereby; or (ii) the outcome of
any proceeding, investigation or litigation with respect to the validity or
enforceability of the matters described in this Section 3.10(c).
(d) If the indemnification provided heretofore is for any
reason determined to be unavailable to the Authority or the Trustee, then, with
respect to any such loss, claim, demand or liability, including expenses in
connection therewith, the Authority and the Trustee, as appropriate, shall be
entitled as a matter of right to contribution by the Company. The amount of such
contribution shall be in such proportion as is appropriate to reflect relative
culpability of the parties.
Section 3.11. Authority is Conduit Issuer; Company is Real Party in
Interest; Covenant Not to Sue.
(a) The Company hereby expressly acknowledges that the
Authority is a conduit issuer and that all of the right, title and interest of
the Authority in and to this Agreement, but not the obligations of the
Authority, are to be assigned first to the Trustee and then to the Bank (except
for the right of the Authority to receive its reasonable fees and expenses and
to indemnification), naming the Trustee and the Bank, as applicable, its true
and lawful attorney for and in its name to enforce the terms and conditions of
this Agreement. Notwithstanding any other provision contained herein, the
Company hereby expressly agrees, acknowledges and covenants that it shall duly
and punctually perform or cause to be performed each and every duty and
obligation of the Authority under and pursuant to the Indenture, which the
Company is reasonably able to perform.
(b) The Company covenants and agrees that it shall neither sue
the Authority, or any of its board members, officers, agents or employees, past,
present or future, for any claim, loss, demand, action or nonaction based upon
this financing nor ever raise as a defense in any proceedings whatsoever that
the Authority is the true party in interest. Notwithstanding the provisions of
the foregoing sentence, the Company shall be entitled to: (i) bring an action of
specific performance against the Authority to compel any action required to be
taken by the Authority hereunder or an action to enjoin the Authority from
performing any action prohibited hereunder or under any other documents, by this
instrument or any other agreement executed and delivered in connection with the
issuance of the Bonds, but no such action shall in any way impose pecuniary
liability upon the Authority or any of its board members, officers, agents or
employees; and (ii) join the Authority in any litigation if such joinder is
necessary to pursue any of the Company's rights, provided that prior to such
joinder, the Company shall post such security as the Authority may reasonably
require to protect the Authority from further loss.
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ARTICLE IV
COMPANY OBLIGATIONS; ASSIGNMENT TO TRUSTEE
Section 4.01. General Obligation of the Company. This Agreement
constitutes a general obligation of the Company and the full faith and credit of
the Company is pledged to the payment of all amounts due hereunder.
Section 4.02. Assignment to Trustee. The Authority immediately
following execution and delivery hereof, shall assign this Agreement and all
loan payments payable hereunder (except its right to receive its fees and
expenses and indemnification) to the Trustee pursuant to the Indenture, IN
TRUST, to be held and applied pursuant to the provisions of the Indenture, and
to the Bank. The Company: (1) consents to such assignments and accepts notice
thereof with the same legal effect as though such acceptances were embodied in
separate instruments, separately executed after execution of such assignments;
(2) agrees to pay directly to the Trustee or the Bank, as applicable, all
payments payable hereunder for application to amounts then due and payable or to
become due and payable under the Indenture, such payments to be paid by the
Company to the Trustee without any defense, set-off or counterclaim arising out
of any default on the part of the Authority under the Agreement or any
transaction between the Company and the Authority or the Company and the
Trustee; and (3) agrees that the Trustee and the Bank, as applicable, may
exercise any and all rights and pursue any and all remedies granted the
Authority hereunder.
Section 4.03. Maintenance and Operation of the Project Facilities. (a)
During the term of this Agreement, the Company will at its own cost and expense
keep and maintain, or cause to be kept and maintained, in good repair and
condition (excepting reasonable wear and tear) the Project Facilities and all
additions and improvements thereto, and pay, or cause to be paid, any utility
charges and other costs and expenses arising out of its use or occupancy of the
Project Facilities; and (b) the Company agrees to timely pay for any
improvements to the Project Facilities lawfully done or lawfully ordered to be
done by any municipal, state or federal authority and to comply in all material
respects at its own cost and expense with all lawful and enforceable notices
received (whether by the Authority or the Company) from public authorities from
and after the date hereof that affect the Project Facilities and the use and
operation thereof, other than those improvements, orders and notices, the
amount, validity or application of which is at the time being contested, in
whole or in part, in good faith by appropriate proceedings promptly initiated
and diligently conducted.
Section 4.04. Maintenance of Existence. Except as otherwise permitted
in the Reimbursement Agreement, the Company agrees that it will maintain its
existence as a Pennsylvania corporation, will maintain its status as an entity
authorized to conduct business in the Commonwealth, will not dissolve or
otherwise dispose of all or substantially all of its assets and will not
consolidate with or merge into another entity.
Section 4.05. Compliance with Laws. With respect to the Project
Facilities and any additions, alterations or improvements thereto, the Company
will at all times comply with all
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applicable requirements of federal, state and local laws and with all applicable
lawful requirements of any agency, board, or commission created under laws of
the Commonwealth or of any other duly constituted public authority, and will
use, and permit the use of, the Project Facilities only for such purposes as are
lawful under the Act; provided, however, that the Company shall be deemed in
compliance with this Section 4.05 so long as it is contesting in good faith any
such requirement by appropriate legal proceedings.
Section 4.06. Notice of Bankruptcy Case Commencement. The Company
covenants and agrees that it shall immediately notify the Authority, the Bank
and the Trustee of the commencement of any case by or against it under the
Bankruptcy Code. In addition, within fifteen days of receipt of a written
request from the Trustee, the Company shall deliver a certificate to the Trustee
certifying as to whether a petition in bankruptcy has been filed by or against
the Company under the Bankruptcy Code or any applicable state bankruptcy or
insolvency law.
Section 4.07. Substitute Letter of Credit. The Company may provide for
the delivery to the Trustee of a Substitute Letter of Credit upon thirty (30)
days prior written notice to the Trustee, the Tender Agent, the Remarketing
Agent and the Authority. Any Substitute Letter of Credit shall be delivered to
the Trustee on an Interest Payment Date and not later than the thirtieth (30th)
Business Day prior to the expiration of the Letter of Credit it is being issued
to replace. On or before the date of the delivery of any Substitute Letter of
Credit to the Trustee, as a condition to the acceptance of any Substitute Letter
of Credit by the Trustee, the Company shall furnish to the Authority, the
Trustee and the Remarketing Agent: (i) written evidence that the issuer of such
Substitute Letter of Credit is a commercial bank organized and doing business in
the United States or a branch or agency of a foreign commercial bank located and
doing business in the United States and subject to regulation by state or
federal banking regulatory authorities and that it has been assigned the same or
better rating as the Letter of Credit in effect immediately prior to the
substitution of the Substitute Letter of Credit; (ii) an opinion of nationally
recognized bond counsel to the effect that the delivery of such Substitute
Letter of Credit is authorized under this Agreement and the Indenture and the
Act and complies with the terms hereof, and, that the delivery of such
Substitute Letter of Credit does not adversely affect the exclusion from gross
income of the interest on the Bonds for federal income tax purposes; and (iii)
an opinion of Counsel satisfactory to the Trustee, the Authority, the Company
and the Remarketing Agent to the effect that the Substitute Letter of Credit is
a legal, valid and binding obligation of the issuer (or, in the case of a branch
or agency of a foreign commercial bank, the branch or agency) issuing the same,
enforceable in accordance with its terms, that payments of principal, premium,
if any (if such Substitute Letter of Credit secures the payment of premium), or
Purchase Price of or interest on the Bonds from the proceeds of a drawing on the
Substitute Letter of Credit will not constitute voidable preferences under the
Bankruptcy Code or other applicable laws and regulations and that it is not
necessary to register the Substitute Letter of Credit under the Securities Act
of 1933, as amended, or to qualify an indenture with respect thereto under the
Trust Indenture Act of 1939, as amended. On or before the delivery of any
Substitute Letter of Credit to the Trustee, as an additional condition to the
acceptance of any Substitute Letter of Credit by the Trustee, the Company shall
furnish to the Authority, the Trustee and the Remarketing Agent written evidence
from each Rating Agency that
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the rating on the Bonds will not be reduced or withdrawn as a result of the
acceptance of the Substitute Letter of Credit and that the short term unsecured
debt of the Bank or Substitute Bank, as applicable, shall then have been
assigned a rating by Moody's of "P-1" or the equivalent rating assigned by S&P.
In the case of a Substitute Letter of Credit issued by a branch or agency of a
foreign commercial bank there shall also be delivered an opinion of Counsel,
satisfactory to the Trustee, the Authority, the Company and the Remarketing
Agent and licensed to practice law in the jurisdiction in which the head office
of such bank is located, to the effect that the Substitute Letter of Credit is
the legal, valid and binding obligation of such bank enforceable in accordance
with its terms. The Trustee shall accept any such Substitute Letter of Credit
only in accordance with the terms, and upon the satisfaction of the conditions,
contained in this Section 4.07 and any other provisions applicable to acceptance
of a Substitute Letter of Credit under this Agreement and the Indenture.
ARTICLE V
THE PROJECT FACILITIES
Section 5.01. Intentionally Omitted.
Section 5.02. Liens. The Company will not create, assume, or suffer to
exist, any mortgage, lien, pledge, charge, security interest or encumbrance of
any kind upon the Premises except:
(a) the liens and security interests created by the Collateral
Documents, or otherwise existing on and disclosed to the Authority and the Bank
on the date hereof;
(b) purchase money liens on and security interests in equipment
hereafter acquired which constitutes the deferred portion of the purchase price
thereof;
(c) liens for taxes not yet payable or being contested in good
faith by appropriate proceedings and for which adequate reserves have been
provided on the books of the Company;
(d) mechanics', materialmen's, warehousemen's, carriers' or
other like liens arising in the ordinary course of business of the Company,
arising with respect to obligations which are not overdue for a period longer
than thirty (30) days or which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been provided on the books of
the Company;
(e) other encumbrances consisting of zoning restrictions,
easements, restrictions on the use of real property or minor irregularities in
the title thereto, which do not arise in connection with the borrowing of, or
any obligation for the payment of, money and which, in the aggregate, do not
materially detract from the value of the Premises; or
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(f) any liens authorized or permitted under the Reimbursement
Agreement.
ARTICLE VI
INSURANCE; DESTRUCTION, DAMAGE, EMINENT DOMAIN
Section 6.01. Insurance to be Maintained. The Company covenants to
provide and maintain continuously unless otherwise herein provided, adequate
insurance on the Project Facilities as shall be mutually agreed upon by the Bank
and the Company. Each insurance policy with respect to the Project Facilities
shall name the Bank as an additional insured.
Section 6.02. Destruction, Damage and Eminent Domain. If the Project
Facilities shall be wholly or partially destroyed or damaged by fire or other
casualty covered by insurance, or shall be wholly or partially condemned, taken
or injured by any Person, including any Person possessing the right to exercise
the power of or a power in the nature of eminent domain or shall be transferred
to such a Person by way of a conveyance in lieu of the exercise of such a power
by such a Person, the Company covenants that it will take all actions and will
do all things which may be necessary to enable recovery to be made upon such
policies of insurance or on account of such taking, condemnation, conveyance,
damage or injury. The Company is authorized, in its own name, as trustee of an
express trust, to demand, collect, sue, settle claims, receipt and release
monies which may be due and payable under policies of insurance covering such
damage or destruction or on account of such condemnations, damage or injury. Any
moneys recovered: (i) on policies of insurance required to be maintained
hereunder; or (ii) as a result of any taking, condemnation, conveyance, damage
or injury shall be deposited in the Construction Fund held by the Trustee under
the Indenture and shall be applied in accordance with the provisions of Section
6.04 hereof; provided, however, that as long as the Bank is not in default under
the terms of the Letter of Credit, the applicable provisions of the
Reimbursement Agreement shall control the disposition of casualty insurance and
condemnation award proceeds.
Any appraisement or adjustment of loss or damage and any settlement or
payment therefor, shall be agreed upon by the Company, the Bank (as long as the
Bank is not in default under the Letter of Credit) and the appropriate insurer
or condemnor or Person, and shall be evidenced to the Bank by the certificate
and approvals set forth in the Indenture. The Bank may rely conclusively upon
such certificates.
Section 6.03. Notice of Property Loss. After the occurrence of loss or
damage to, or after receipt of notice of condemnation of, the Project
Facilities, if such loss or damage to the Project Facilities exceeds $50,000,
the Company shall within five (5) Business Days thereof notify the Authority,
the Trustee and the Bank, in writing, of such damage.
Section 6.04. Disposition of Casualty Insurance and Condemnation Award
Proceeds. Subject to the provisions of Section 6.02 hereof, if the Bank is in
default under the terms of the Letter of Credit, and as long as the Company is
not in default under the terms of this Agreement,
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<PAGE>
the Company may elect, in its discretion, whether to apply the proceeds of any
casualty insurance coverage and/or condemnation awards to: (i) the repair,
reconstruction or replacement of damaged, destroyed or injured property
comprising the Project Facilities; or (ii) the redemption of Bonds pursuant to
the applicable provisions of the Indenture. Absent timely direction from the
Company as to the application of any casualty insurance coverage and/or
condemnation awards or if the Company shall be in default under the terms of
this Agreement, the proceeds thereof shall be applied to the extraordinary
redemption of the Bonds at par plus accrued interest through the date of
redemption. For purposes of the preceding sentence, "timely direction" shall
mean 30 days after the Company has agreed, in connection with any damage to or
condemnation of the Project Facilities, upon the settlement or payment with
respect to any appraisement or adjustment of loss or damage, as appropriate.
ARTICLE VII
ADDITIONAL COVENANTS OF THE COMPANY
Section 7.01. Compliance with Laws. The Company covenants that all
actions heretofore and hereafter taken by the Company or by the Authority upon
the recommendation or request of any officer of the Company to acquire and carry
out the Project have been and will be, to the best of the knowledge of the
Company, in full compliance with all pertinent laws, ordinances, rules,
regulations and orders applicable to the Company. In connection with the
operation, maintenance, repair and replacement of the Project Facilities, the
Company covenants that it shall comply with all applicable ordinances, laws,
rules, regulations and orders of the government of the United States of America,
the Commonwealth, the County, and any other applicable government unit having
jurisdiction over it, and any requirement of any board of fire underwriters
having jurisdiction or of any insurance company writing insurance on the Project
Facilities; provided, however, that nothing herein shall prevent or prohibit the
Company from contesting in good faith and by appropriate proceedings the
legality or reasonableness of any such standards, or the imposition of any such
standards upon it with respect to the Project Facilities so long as the
operation of the Project Facilities or the receipt of income therefrom would not
be adversely affected by reason thereof. The Company further covenants and
represents that the Project Facilities are in compliance with all applicable
zoning, subdivision, building, land use and similar laws and ordinances. The
Company covenants that it shall not take any action or request the Authority to
execute any release which would cause the Project Facilities to be in violation
of such laws or ordinances or such that a conveyance of the Project Facilities
or of any portion of the Project Facilities would create a violation of such
laws and ordinances. The Company acknowledges that any review by the Authority
or Counsel to the Authority of any action heretofore or hereafter taken by the
Company has been or will be solely for the protection of the Authority. Such
reviews shall not prevent the Authority from enforcing any of the covenants made
by the Company.
Section 7.02. Power to Perform Obligations. The Company covenants and
represents that it has full power and legal right to enter into this Agreement
and perform its obligations hereunder. The making and performance of the
Agreement by the Company has been duly authorized by all necessary action and
will not conflict with or constitute a breach of or default under any bond,
6 -15-
<PAGE>
contract, indenture, agreement or any other instrument by which the Company or
any of its properties is or may be bound.
Section 7.03. Inspection. The Company covenants that the Authority, by
its duly authorized representatives, at reasonable times and with reasonable
notice, for purposes of determining compliance with the Agreement, may inspect
any part of the Project Facilities.
Section 7.04. Additional Information. The Company agrees, whenever
requested by the Authority, to provide and certify or cause to be provided and
certified such information concerning the Project Facilities, to enable the
Authority to make any reports or supply any information required by the
Indenture, law, governmental regulation or otherwise.
Section 7.05. Nondiscrimination. During the term of this Agreement, the
Company agrees, as to itself and as to each occupant of the Project Facilities
controlling, controlled by or under common control with the Company (each, a
"Contractor") as follows:
(a) Contractors shall not discriminate against any employee,
applicant for employment, independent contractor or any other Person because of
race, color, religious creed, handicap, ancestry, national origin, age or sex.
Contractors shall take affirmative action to insure that applicants are
employed, and that employees or agents are treated during employment, without
regard to their race, color, religious creed, handicap, ancestry, national
origin, age or sex. Such affirmative action shall include, but is not limited
to: employment, upgrading, demotion or transfer, recruitment or recruitment
advertising; layoff or termination; rates of pay or other forms of compensation;
and selection for training. Contractors shall post in conspicuous places,
available to employees, agents, applicants for employment and other persons, a
notice to be provided by the contracting agency setting forth the provisions of
this Section 7.05.
(b) Contractors shall, in advertisements or requests for
employment placed by it or on its behalf, state that all qualified applicants
will receive consideration for employment without regard to race, color,
religious creed, handicap, ancestry, national origin, age, or sex.
(c) Contractors shall send each labor union or workers'
representative with which it has a collective bargaining agreement or other
contract or understanding, a notice advising said labor union or workers'
representative of its commitment to this nondiscrimination clause. Similar
notices shall be sent to every other source of recruitment regularly utilized by
Contractors.
(d) It shall be no defense to a finding of noncompliance with
this Section 7.05 that a Contractor had delegated some of its employment
practices to any union, training program or other source of recruitment which
prevents it from meeting its obligations. However, if the evidence indicates
that such a Contractor was not on notice of the third-party discrimination or
made a good faith effort to correct it, such factor shall be considered in
mitigation in determining appropriate sanctions.
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(e) Where the practices of a union or of any training program
or other source of recruitment will result in the exclusion of minority group
persons, so that a Contractor will be unable to meet its obligations under this
Section 7.05, such a Contractor shall then employ and fill vacancies through
other nondiscriminatory employment procedures.
(f) Contractors shall comply with all state and federal laws
prohibiting discrimination in hiring or employment opportunities. Noncompliance
with this Section 7.05 will constitute an Event of Default under this Agreement.
(g) Contractors shall furnish all necessary employment
documents and records to, and permit access to its books, records and accounts
by, the Authority for purposes of investigation to ascertain compliance with the
provisions of this Section 7.05. If Contractor does not possess documents or
records reflecting the necessary information requested, it shall furnish such
information on reporting forms supplied by the Authority.
(h) Contractors shall actively recruit minority subcontractors
and women subcontractors or subcontractors with substantial minority or women
representation among their employees.
(i) Contractors shall include the provisions of this Section
7.05 in every subcontract, so that such provisions will be binding upon each
subcontractor.
(j) Contractors' obligations under this Section 7.05 are
limited to Contractors' facilities within the Commonwealth or, where the
contract is for purchase of goods manufactured outside of the Commonwealth, the
facilities at which such goods are actually produced.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.01. Events of Default. The following events shall constitute
"Events of Default" under this Agreement:
(a) if the Company falls to make any payment required by
Sections 3.01, 3.03, 3.04 or 3.05 hereof when due; or
(b) if the Company fails to make any other payment required
hereby and such failure continues for 30 days after the Authority or the Trustee
gives notice to the Company that such payment is due and unpaid; or
(c) if the Company fails to perform any of its other covenants
or conditions or fails to perform any of its obligations hereunder and such
failure continues for 30 days after the Authority or the Trustee gives the
Company notice thereof; provided, however, that if such
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performance requires work to be done, actions to be taken, or conditions to be
remedied, which by their nature cannot reasonably be done, taken or remedied, as
the case may be, within such 30 day period, no Event of Default shall be deemed
to have occurred or to exist if, and so long as, the Company shall commence such
performance within such 30-day period and shall diligently and continuously
proceed to completion; or
(d) if the Company commits any act of bankruptcy under the
Bankruptcy Code or any state bankruptcy law or any law providing for
reorganization or relief for debtors or files or has filed against it a petition
in bankruptcy or for arrangement or reorganization pursuant to the Bankruptcy
Code or other similar law, federal or state, or if, by the decree of a court of
competent jurisdiction, is adjudicated a bankrupt or declared insolvent, or
makes an assignment for the benefit of creditors, or admits in writing its
inability to pay its debts generally when or as they become due, or consents to
the appointment of a trustee, receiver or to the liquidation of all or any part
of the Project Facilities, provided that, if any such proceeding is commenced by
a Person other than the Company, there shall be no Event of Default if such
proceedings are dismissed within 60 days of the filing of initial pleadings
therein; or
(e) the written declaration by the Bank of an Event of Default
under and as defined in the Reimbursement Agreement;
Section 8.02. Acceleration. Upon the occurrence of any "Event of
Default" by the Authority under the Indenture caused or resulting directly or
indirectly by the occurrence of an Event of Default by the Company hereunder,
the Trustee (with the prior written consent of the Bank as long as the Bank is
not in default under the Letter of Credit), may, and upon request of the Owners
of 25% in principal amount of the Bonds then Outstanding shall, pursuant to
Section 8.02 of the Indenture, declare the principal of the then-Outstanding
Bonds and accrued interest immediately due and payable, but such Trustee shall
not declare the principal due and payable if such acceleration is annulled as
provided in Section 8.02 thereof. Upon such declaration by the Trustee, the
Authority shall have the right to terminate this Agreement and, upon such
termination, there shall become immediately due and payable hereunder as then
current damages of the Authority under this Agreement, an amount equal: (i) to
all amounts then due and payable by the Authority to the Trustee under this
Section 8.02; and (ii) all other amounts due and owing as loan payments
hereunder. Until such amount is paid by the Company, at the time or times and in
the manner required to permit the Authority to meet its obligations under the
Indenture, the Authority shall continue to have all of the rights, powers and
remedies herein (notwithstanding the termination hereof), and, for such time as
may be necessary to enable the Authority to satisfy in full its obligations
under the Indenture, the term of this Agreement shall, at the election of the
Authority, be extended at the will of the Authority, and the Company's
obligations hereunder shall continue in full force and effect.
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<PAGE>
Section 8.03. Payment of Loan Payments on Default; Suit Therefor.
(a) Upon the occurrence of an Event of Default under this
Agreement, then, upon demand of the Authority or its assignee, the Company will
pay to the Authority or its assignee the whole amount of the loan payments that
then shall have become due and payable hereunder and to the extent such loan
payments represent payments due on the Bonds, such payments shall be applied to
the payment of the Bonds in accordance with the terms of the Indenture; and, in
addition thereto, such further amount as shall be sufficient to pay the costs
and expenses of collection, including reasonable compensation based upon actual
time expended by the Authority and its assignee and their respective agents and
attorneys, and any expenses or liabilities incurred by the Authority or its
assignee (other than through the Authority's or its assignee's own gross
negligence or bad faith). In case the Company shall fail forthwith to pay such
amounts upon such demand, the Authority or its assignee shall be entitled and
empowered to institute any actions or proceedings at law or in equity for the
collection of the sums so due and unpaid, and may prosecute any such action or
proceeding to judgment or final decree, and may enforce any such judgment or
final decree against the Company and collect in the manner provided by law out
of the property of the Company the money adjudged or decreed to be payable.
(b) In case there shall be pending proceedings in bankruptcy or
for the reorganization of the Company under the Bankruptcy Code or any other
applicable law, or in case a receiver or trustee shall have been appointed for
the benefit of the creditors or the property of the Company, or in the case of
any other similar judicial proceedings relative to the Company, the Authority or
its assignee shall be entitled and empowered, by intervention in such
proceedings or otherwise, to file and prove a claim or claims for the whole
amount of the loan payments, including interest owing and unpaid in respect
thereof, and, in case of any judicial proceedings, to file such proofs of claim
and other papers or documents as may be necessary or advisable in order to have
the claims of the Authority or its assignee allowed, and to collect and receive
any moneys or other property payable or deliverable on any such claims, and to
distribute the same after the deduction of its charges and expenses; and any
receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized to make such payments to the Authority or its assignee, and to pay to
the Authority or its assignee any amount due it for compensation based upon
actual time expended and expenses, including counsel fees incurred by it up to
the date of such distribution.
Section 8.04. Waiver. The Company hereby waives and relinquishes the
benefits of any present or future law exempting the Project Facilities from
attachment, levy or sale on execution, or any part of the proceeds arising from
the sale thereof, and all benefit of stay of execution or other process.
Section 8.05. Cumulative Rights. No remedy conferred upon or reserved
to the Authority or its assignee by this Agreement is intended to be exclusive
of any other available remedy or remedies, but each and every such remedy shall
be cumulative and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity or by statute. No
waiver by the Authority or its assignee of any breach by the Company of any of
its obligations,
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<PAGE>
agreements or covenants hereunder shall be a waiver of any subsequent breach,
and no delay or omission to exercise any right or power shall impair any such
right or power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time and as often as may be deemed
expedient.
Section 8.06. No Exercise of Remedies Without Consent of Bank.
Notwithstanding anything to the contrary contained in this Agreement, neither
the Authority nor any assignee of the Authority under this Agreement shall
exercise or pursue remedies or declare an Event of Default or cause an
acceleration of the obligations contained in this Agreement without the prior
written consent of the Bank as long as the Bank shall not be in default of its
obligations under the Letter of Credit or a voluntary or involuntary case has
not been commenced by the filing of a petition under the Bankruptcy Code or any
other law relating to insolvency, bankruptcy, reorganization, winding-up or
composition or adjustment of debts by or against the Bank.
ARTICLE IX
OPTIONS TO TERMINATE AGREEMENT
Section 9.01. Option to Terminate Upon Defeasance. The Company shall
have, and is hereby granted, the option to terminate its obligations under this
Agreement prior to full payment of the Bonds by providing for the payment of all
of the Outstanding Bonds in accordance with Article XI of the Indenture.
Section 9.02. Option to Terminate Upon the Occurrence of Certain
Events. The Company shall have, and is hereby granted, the option to terminate
its obligations under this Agreement if any of the events set forth below shall
occur:
(A) The Project Facilities or any portion thereof shall have
been damaged or destroyed: (1) to such extent that it cannot, in the
Company's judgment, be reasonably restored within a period of six (6)
months to the condition thereof immediately preceding such damage or
destruction; or (2) to such extent that the Company is thereby
prevented, in the Company's reasonable judgment, from carrying on its
normal operations at the Project Facilities for a period of six (6)
months or more;
(B) Title to, or the temporary use for a period of six (6)
months or more of, all or substantially all of the Project Facilities,
or such part thereof as shall materially interfere, in the Company's
reasonable judgment, with the operation of the Project Facilities for
the purpose for which the Project Facilities are designed, shall have
been taken under the exercise of the power of eminent domain by any
governmental body or by any Person, firm or corporation acting under
governmental authority (including such a taking or takings as results
in the Company's being thereby prevented from carrying on its normal
operations at the Project Facilities for a period of six (6) months or
more);
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(C) Changes which the Company cannot reasonably control or
overcome in the economic availability of materials, supplies, labor,
equipment and other properties and things necessary for the efficient
operation of the Project Facilities for the purposes contemplated by
this Agreement, shall have occurred, or technological or other changes
shall have occurred which in the judgment of the Company render the
continued operation of the Project Facilities uneconomical for such
purpose; or
(D) As a result of any changes in the Constitution of the
Commonwealth or the Constitution of the United States of America or of
legislative or administrative action (whether state or federal) or by
final decree, judgment or order of any court or administrative body
(whether state or federal) entered after the contest thereof by the
Company in good faith, this Agreement shall have become void and
unenforceable or impossible of performance in accordance with the
intent and purposes of the parties as expressed in this Agreement, or
unreasonable burdens or excessive liabilities shall have been imposed
on the Company in respect to the Project Facilities, including, without
limitation, federal, state or other ad valorem, property, income, or
other taxes not being imposed on the date of this Agreement.
To exercise such option, the Company shall within ninety (90) days
following the event authorizing such termination, give written notice
to the Authority and the Trustee and shall specify therein the date of
redemption of Bonds pursuant to Section 4.01 of the Indenture, which
date shall be the next interest payment date in respect of the Bonds
for which the required notice of redemption can practicably be given.
In accordance with the terms of the Indenture, the Company shall make
arrangements for the Trustee to give the required notice of redemption.
Payment of the redemption price of Bonds redeemed pursuant to this
Section 9.02 will be made in accordance with the terms of the
Indenture.
Anything contained in this Agreement to the contrary notwithstanding,
the Bank shall have the right (as long as the Bank shall not be in default under
the terms of the Letter of Credit) to cause the Company to terminate its
obligations under this Agreement, in accordance with the provisions of this
Section 9.02 by so notifying the Company in writing, if as a result of any
changes in the Constitution of the Commonwealth or the Constitution of the
United States of America or as a result of a legislative or administrative
action (whether state or federal) or final decree, judgment or order of any
court or administrative body (whether state or federal) entered after the
contest thereof by the Company in good faith, this Agreement shall have become
void and unenforceable or impossible of performance, in accordance with the
intent and purposes of the parties as expressed in this Agreement.
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ARTICLE X
MISCELLANEOUS
Section 10.01. Approval of Indenture. The Company acknowledges that it
has received executed copies of the Indenture and a copy the Letter of Credit
and that it is familiar with their provisions, and agrees that it will take all
such actions as are required or contemplated of it under the Indenture to
preserve and protect the rights of the Trustee thereunder and that it will not
take any action which would cause a default or an Event of Default thereunder.
It is agreed by the Company and the Authority that any redemption of the Bonds
prior to maturity shall be effected as provided in the Indenture.
Section 10.02. Taxes and Insurance-Rights of Authority to Pay. If the
Company, at any time, fails to pay any taxes or other impositions payable by it
in accordance with Section 3.04 hereof, or to take out, pay for, maintain or
deliver any of the insurance policies provided for in Article VI, or shall fail,
within the time provided for in Article VIII after the notice therein specified
of any Event of Default, as therein defined, has been given thereunder, to make
any other payment or perform any other act on its part to be made or performed,
then the Authority may, but shall not be obligated so to do, and without further
notice to or demand upon the Company and without waiving or releasing the
Company from any of its obligations under the Agreement: (a) pay any taxes or
other impositions payable by the Company in accordance with Section 3.04 hereof;
(b) take out, pay for and maintain any of the insurance policies provided for in
Article VI hereof; or (c) make any other payment or perform any other act on the
Company's part to be made or performed as provided in this Agreement. All sums
so paid by the Authority and all necessary incidental costs and expenses in
connection with the performance of any such act by the Authority shall, together
with interest thereon at the rate at which interest is charged on defaulted
payments under the Reimbursement Agreement, be payable to the Authority, on
demand, or, at the option of the Authority, may be added to any installment of
the loan payments then due or thereafter becoming due under this Agreement, and
the Company covenants to pay any such sums.
Section 10.03. Illegal Provisions Disregarded. If any term or provision
hereof or the application thereof for any reason or circumstance shall to any
extent be held to be invalid or unenforceable, this Agreement shall be invalid
or unenforceable only to the extent of such invalidity or unenforceability and
such invalidity or unenforceability shall not invalidate the balance of such
provision or the remaining terms or provisions of this Agreement or the
application of such terms or provisions to Persons other than those as to which
it has been held invalid or unenforceable; each term and provision hereof shall
be valid and enforceable to the fullest extent permitted by law, and shall be
liberally construed in favor of the Authority or its assignee in order to effect
the intent of this Agreement.
Section 10.04. Limitation of Liability of the Authority. In the event
of any default by the Authority hereunder, and notwithstanding any provision or
obligation to the contrary hereinbefore or hereinafter set forth, the liability
of the Authority shall be limited to its interest in the Project
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Facilities, the improvements thereon, the rents, issues and profits therefrom,
and the lien of any judgment shall be restricted thereto. The Authority does not
assume general liability nor specific liability for the repayment of any
mortgage or other loan, or for the costs, fees, penalties, taxes, interest,
commissions, charges, insurance or any other payments therein recited or therein
set forth, or incurred in any way in connection therewith. Other than as set
forth hereinabove in this Section 10.04, there shall be no other recourse for
damages of any kind or nature by the Company or any other Person against the
Authority, its incorporator, officers, members, agents and employees, past,
present or future, or any of the property or other assets now or hereafter owned
by it or them, either directly or indirectly; and all such recourse or liability
is hereby expressly waived and released as a condition of and in consideration
for execution and delivery of this Agreement by the Authority. In the event of
entry of judgment against the Authority by virtue of the power herein contained,
the Authority shall mark the judgment index to the effect that the judgment is
limited as aforesaid.
Section 10.05. No Recourse as to the Authority. Except as expressly
provided in Section 10.04 above, no recourse under or upon any obligation,
covenant or agreement contained herein or in any Bond shall be had against the
Authority or any member, officer, employee or agent, past, present or future, of
the Authority or of any successor of the Authority under this Agreement, any
other agreement, any rule of law, statute or constitutional provision, or by
enforcement of any assessment or by any legal or equitable proceeding or
otherwise, it expressly being agreed and understood that the obligations of the
Authority hereunder, and under the Bonds and elsewhere, are solely corporate
obligations of the Authority to the extent specifically limited in the Act and
that no personal liability whatsoever shall attach to or shall be incurred by
the Authority or such members, officers, employees or agents, past, present or
future, of the Authority or of any successor of the Authority, or any of them,
because of such indebtedness or by reason of any obligation, covenant or
agreement contained herein, in the Bonds or implied therefrom.
Section 10.06. Reference to Statute or Regulation. A reference herein
to a statute or to a regulation issued by a governmental agency includes the
statute or regulation in force as of the date hereof, together with all
amendments and supplements thereto and any statute or regulation substituted for
such statute or regulation, unless the specific language or the context of the
reference herein clearly includes only the statute or regulation in force as of
the date hereof.
A reference herein to a governmental agency, department, board,
commission or other public body or to a public officer includes an entity or
officer which or who succeeds to substantially the same functions as those
performed by such public body or officer as of the date hereof, unless the
specific language or the context of the reference herein clearly includes only
such public body or public officer as of the date hereof.
Section 10.07. Notices. All notices required or authorized to be given
by the Company, the Authority or the Trustee under the Indenture or pursuant to
this Agreement shall be in writing and shall be sent by registered or certified
mail, postage prepaid, to the following addresses:
to the Authority to:
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Montgomery County Industrial Development
Authority
3 Stony Creek Office Center
151 West Marshall Street
Norristown, Pennsylvania 19401
to the Company to:
Collegeville Inn Conference & Training Center, Inc.
Box 725, Kimberton Road
Kimberton, PA 19442
Attention: Controller
to the Trustee to:
Dauphin Deposit Bank and Trust Company
213 Market Street
Harrisburg, PA 17101
Attention: Corporate Trust Services
or to such other addresses as may from time to time be furnished to the parties,
effective upon the receipt of notice thereof given as set forth above. Each of
the above agrees that it shall send a duplicate copy or executed copy of all
certificates, notices, correspondence or other data and materials required to be
sent to one of the above to all other parties and in addition, to the Bank at
Great Valley Corporate Center, 55 Valley Stream Parkway, Suite 200, Malvern, PA
19355, Attention: Mr. Michael Bailey.
Section 10.08. Applicable Law. This Agreement shall be deemed to be a
contract made in the Commonwealth and governed by the law of the Commonwealth.
Section 10.09. Amendments. This Agreement may not be amended except by
an instrument in writing signed by the parties and, if such amendment occurs
after the issuance of any of the Bonds, consented to by the Trustee and the
Bank, so long as the Bank is not in default under the Letter of Credit.
Section 10.10. Term of Agreement. This Agreement and the respective
obligations of the parties hereto shall be in full force and effect from the
date hereof until all principal of, premium, if any, and interest on the Bonds
shall have been paid or provision for such payment shall have been made pursuant
to the terms and provisions of the Indenture.
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Section 10.11. Amounts Remaining in Bond Fund. It is agreed by the
parties hereto that any amounts remaining in the Bond Fund established under the
Indenture upon expiration or sooner termination of this Agreement after payment
in full of the Bonds (or provision for payment thereof having been made in
accordance with the provisions of the Indenture) and of the fees charges and
expenses of the Trustee and the Authority in accordance with the Indenture,
shall, to the extent of any unreimbursed draws under the Letter of Credit, or
any other Obligations owing by the Company to the Bank under the Reimbursement
Agreement or any of the other Reimbursement Documents (as defined in the
Reimbursement Agreement) be paid to the Bank. Any remaining moneys shall belong
to and be paid to the Company by the Trustee.
Section 10.12. Survival of Covenants, Conditions and Representations.
All covenants, duties, obligations, conditions and representations of the
Company contained herein that, by nature, implied or expressly involve
performance in any particular manner after the termination of this Agreement or
that cannot be ascertained to have been performed until after termination of
this Agreement, shall survive said termination. Without intending to limit the
generality of the foregoing, the Company's covenant to indemnify the Authority
and the Trustee, as set forth in Section 3.10 hereof shall survive any
termination of this Agreement.
Section 10.13. Multiple Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be regarded for all purposes as an
original and such counterparts shall constitute but one and the same instrument.
Section 10.14. Consent. Whenever the consent of the Authority or its
assignee is given pursuant to the terms of this Agreement, such consent shall
create no liability or responsibility upon the Authority or its assignee, and
whenever required, shall not be unreasonably withheld.
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IN WITNESS WHEREOF, the MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT
AUTHORITY has caused this Agreement to be executed in its name and on its behalf
by its Chairperson or Vice Chairman and attested by its Secretary or Assistant
Secretary, and COLLEGEVILLE INN CONFERENCE & TRAINING CENTER, INC. has caused
this Agreement to be executed in its name and on its behalf by its President or
Vice President and attested by its Secretary or Assistant Secretary, all as of
the day and year first above written.
MONTGOMERY COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
By:________________________________
Chairperson or Vice Chairman
Attest:____________________________
(Assistant) Secretary
COLLEGEVILLE INN CONFERENCE &
TRAINING CENTER, INC.
By:_________________________________
Authorized Officer
Attest:_____________________________
Authorized Officer
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MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
and
DAUPHIN DEPOSIT BANK AND TRUST COMPANY,
as Trustee
TRUST INDENTURE
Dated December 26, 1996
MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
VARIABLE RATE DEMAND/FIXED RATE
REVENUE BONDS
(APPLE FRESH FOODS LTD PROJECT)
SERIES OF 1996
BOND COUNSEL AUTHORITY SOLICITOR
KASSAB ARCHBOLD & O'BRIEN, L.L.P. McGRORY, WENTZ, FERNANDEZ &
214 North Jackson Street O'HARA
Media, PA 19063 115 West Germantown Pike, Suite 100
Swede Square
Norristown, PA 19401
<PAGE>
TABLE OF CONTENTS*
Page
ARTICLE I
DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS
Section 1.01. Definitions.............................................4
Section 1.02. Content of Certificates and Opinions...................18
Section 1.03. Interpretation.........................................18
ARTICLE II
THE BONDS
Section 2.01. Authorization of Bonds.................................19
Section 2.02. Terms of Bonds: Interest on the Bonds..................19
Section 2.03. Execution of Bonds.....................................21
Section 2.04. Authentication.........................................22
Section 2.05. Form of Bonds..........................................22
Section 2.06. Transfer of Bonds .....................................22
Section 2.07. Exchange of Bonds......................................23
Section 2.08. Bond Register..........................................23
Section 2.09. Temporary Bonds........................................23
Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen.............23
Section 2.11. Cancellation and Destruction of Surrendered Bonds......24
Section 2.12. Acts of Bondholders; Evidence of Ownership.............24
Section 2.13. Book-Entry Bonds; Securities Depository................24
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS
Section 3.01. Issuance of the Bonds........................................26
Section 3.02. Validity of Bonds............................................26
Section 3.03. Disposition of Proceeds of the Bonds and Other Amounts.......26
*This Table of Contents is for convenience only, does not constitute a part of
this Indenture and shall not be considered as having any bearing upon any
interpretation of this Indenture.
(i)
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ARTICLE IV
REDEMPTION OF BONDS BEFORE MATURITY
Section 4.01. Extraordinary and Mandatory Redemption.................27
Section 4.02. Optional Redemption....................................28
Section 4.03. Notice of Redemption...................................29
Section 4.04. Interest on Bonds Called for Redemption................29
Section 4.05. Cancellation...........................................29
Section 4.06. Partial Redemption of Bonds............................29
Section 4.07. Payment of Redemption Price with
Available Moneys; Consent of Letter of Credit Bank
to Optional Redemption.................................30
ARTICLE V
CONVERSION OF INTEREST RATE; DEMAND PURCHASE OPTION
Section 5.01. Conversion of Interest Rate on Conversion Date.........30
Section 5.02. Delivery of Bonds After Conversion Date ...............32
Section 5.03 Mandatory Tender Upon Substitution of Letter of Credit.32
Section 5.04. Demand Purchase Option.................................33
Section 5.05. Funds for Purchase of Bonds............................34
Section 5.06. Delivery of Purchased Bonds............................36
Section 5.07. Sale of Bonds by Remarketing Agent.....................36
Section 5.08. Delivery of Proceeds of Sale of
Purchased Bonds........................................37
Section 5.09. Duties of Trustee and Tender Agent with
Respect to Purchase of Bonds...........................37
Section 5.10. No Purchases or Sales After Certain Defaults...........38
ARTICLE VI
REVENUES AND FUNDS
Section 6.01. Creation of the Bond Fund..............................38
Section 6.02. Payments into the Bond Fund............................38
Section 6.03. Use of Moneys in the Bond Fund.........................39
Section 6.04. Custody of Separate Trust Fund.........................39
(ii)
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Section 6.05. Construction Fund......................................39
Section 6.06. Payments into the Construction Fund; Disbursements.....39
Section 6.07. Use of Money in the Construction Fund Upon Default ....40
Section 6.08. Use of Money in the Construction Fund
Upon Completion of the Project ........................40
Section 6.09. Nonpresentment of Bonds................................40
Section 6.10. Moneys to be Held in Trust.............................40
Section 6.11. Repayment to the Bank and the Company
from the Bond Fund or the Rebate Fund..................41
Section 6.12. Letter of Credit.......................................41
Section 6.13. Rebate Fund............................................41
Section 6.14. Investment of Moneys in Funds..........................43
ARTICLE VII
PARTICULAR COVENANTS
Section 7.01. Punctual Payment.......................................44
Section 7.02. Extension of Payment of Bonds..........................44
Section 7.03. Against Encumbrances...................................44
Section 7.04. Power to Issue Bonds and Make Pledge and Assignment....44
Section 7.05. Accounting Records and Financial Statements............44
Section 7.06. Tax Covenants..........................................45
Section 7.07. Other Covenants........................................45
Section 7.08. Waiver of Laws.........................................46
Section 7.09. Further Assurances.....................................46
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS
Section 8.01. Events of Default......................................46
Section 8.02. Acceleration...........................................47
Section 8.03. Other Remedies.........................................49
Section 8.04. Legal Proceedings by Trustee...........................49
Section 8.05. Discontinuance of Proceedings by Trustee...............50
Section 8.06. Bondholders May Direct Proceedings.....................50
Section 8.07. Limitations on Actions by Bondholders..................50
Section 8.08. Trustee May Enforce Rights Without
Possession of Bonds....................................51
Section 8.09. Delays and Omissions Not to Impair Rights..............51
Section 8.10. Application of Moneys in Event of Default..............51
Section 8.11. Trustee and Bondholders Entitled to All
(iii)
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Remedies Under Act: Remedies Not Exclusive.............51
Section 8.12. Trustee's Right to Receiver............................52
Section 8.13. Subrogation Rights of Bank.............................52
Section 8.14. Waiver of Default......................................52
ARTICLE IX
THE TRUSTEE; THE TENDER AGENT
AND THE REMARKETING AGENT
Section 9.01. Duties, Immunities and Liabilities of Trustee..........52
Section 9.02. Merger or Consolidation................................54
Section 9.03. Liability of Trustee...................................54
Section 9.04. Right of Trustee to Rely on Documents..................55
Section 9.05. Preservation and Inspection of Documents...............55
Section 9.06. Compensation...........................................55
Section 9.07. The Tender Agent.......................................56
Section 9.08. Qualifications of Tender Agent.........................56
Section 9.09. Qualifications of Remarketing Agent;
Resignation; Removal...................................57
Section 9.10. Construction of Ambiguous Provisions...................57
ARTICLE X
MODIFICATION OR AMENDMENT OF THE INDENTURE
Section 10.01. Amendments Permitted...................................57
Section 10.02. Effect of Supplemental Indenture.......................58
Section 10.03. Trustee Authorized to Join in Amendments
and Supplements; Reliance on Counsel...................58
ARTICLE XI
DEFEASANCE
Section 11.01. Discharge of Indenture.................................58
Section 11.02. Discharge of Liability on Bonds........................59
Section 11.03. Deposit of Money or Securities with Trustee............59
Section 11.04. Payment of Bonds After Discharge of Indenture..........60
(iv)
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ARTICLE XII
MISCELLANEOUS
Section 12.01. Liability of Authority Limited to Revenues.............60
Section 12.02. Limitation of Liability of Directors,
Etc.of Authority.......................................61
Section 12.03. Covenant Not to Sue....................................61
Section 12.04. Successor Is Deemed Included in All
References to Predecessor..............................61
Section 12.05. Limitation of Rights to Parties, Bank,
Company and Bondholders................................62
Section 12.06. Waiver of Notice.......................................62
Section 12.07. Severability of Invalid Provisions.....................62
Section 12.08. Notices................................................62
Section 12.09. Evidence of Rights of Bondholders......................64
Section 12.10. Disqualified Bonds.....................................64
Section 12.11. Money Held for Particular Bonds........................64
Section 12.12. Funds..................................................65
Section 12.13. Payments Due on Days other than Business Days..........65
Section 12.14. Execution in Several Counterparts......................65
Section 12.15. Notices to Rating Agency...............................65
Exhibit "A" - Floating Rate Form of Bond..................................A-1
Exhibit "B" - Fixed Rate Form of Bond.....................................B-1
Exhibit "C" - Form of Construction Fund Requisition.......................C-1
Exhibit "D" - Bank Approval...............................................D-1
(v)
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This TRUST INDENTURE, made and entered into December 26, 1996, by and
between the MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY, a body public
and corporate and a public instrumentality of the Commonwealth (the "Authority")
and DAUPHIN DEPOSIT BANK AND TRUST COMPANY, a banking corporation organized and
existing under the laws of the Commonwealth, as trustee (the "Trustee") and
tender agent (the "Tender Agent");
W I T N E S S E T H:
(Capitalized terms and phrases used in these Recitals, and in the
following Granting Clauses, and not otherwise defined shall have the meanings
ascribed to them in Section 1.01 of this Indenture.)
WHEREAS, the Authority is a body politic and corporate and a public
instrumentality of the Commonwealth, organized and existing under the Act, and
is authorized under the Act to acquire, hold, construct, improve, maintain, own,
finance, lease, in the capacity of lessor or lessee, and/or sell industrial,
commercial and specialized development projects for the public purpose of
alleviating unemployment, maintaining employment at a high level and creating
and developing business opportunities, by the construction, improvement,
rehabilitation, revitalization and financing of industrial, commercial and
specialized enterprises; and
WHEREAS, the Authority has determined to undertake the financing
required to provide the funds to the Authority necessary in connection with the
Project pursuant to the provisions and requirements of the Act; and
WHEREAS, the Authority has entered into the Agreement with the Company
wherein the Authority will, among other things, loan the proceeds of the Bonds
to the Company, and wherein the Company agrees to, among other things, make
certain loan payments to the Authority, all as set forth in the Agreement; and
WHEREAS, the Authority has determined to assign, transfer and pledge
unto the Trustee; as trustee under this Indenture, all right, title and interest
of the Authority (except for certain rights of the Authority to indemnification
and the payment of its costs, fees and expenses as more particularly described
in the Agreement) in and to the Agreement and sums payable thereunder; and
WHEREAS, the Authority is authorized by the Act to borrow money, and
the Authority deems it necessary to borrow money under and pursuant to
provisions hereof for the purposes of, among other things, financing the costs
and expenses of the Project (all in accordance with applicable law) and of
carrying out its obligations under the terms of the Agreement, and, to that end,
the Authority has duly authorized and directed the issuance, sale and delivery
of the Bonds to be issued as fully registered bonds; and to secure payment of
the principal thereof and of the interest and premium, if any, thereon and the
performance and observance of the covenants and conditions herein contained, the
Authority has authorized the execution and delivery of this Indenture; and
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WHEREAS, the Agreement provides that the Company will cause the Letter
of Credit to be delivered by the Bank to the Trustee at the time of delivery of
the Bonds for the further security and benefit of Owners of the Bonds; and
WHEREAS, the Company and the Bank have entered into the Reimbursement
Agreement whereunder the Bank has agreed to issue and maintain the Letter of
Credit as provided for therein and herein, and the Company has agreed to, among
other things, reimburse the Bank for any draws made by the Trustee on the Letter
of Credit and for other costs, expenses and charges, as specified in the
Reimbursement Agreement; and
WHEREAS, execution and delivery of this Indenture and the issuance of
the Bonds hereunder and under the Act have been duly and validly authorized by
resolution of the Board of the Authority duly adopted prior to such execution
and delivery.
GRANTING CLAUSES AND AGREEMENTS
NOW, THEREFORE, in consideration of the premises and the acceptance by
the Trustee of the trusts hereby created and of the purchase and acceptance of
the Bonds issued and sold by the Authority under this Indenture by those who
shall own the same from time to time, and of the sum of one dollar, lawful money
of the United States, duly paid to the Authority by the Trustee at or before the
execution and delivery of this Indenture, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
for the purpose of fixing and declaring the terms and conditions upon which the
Bonds are to be executed, authenticated, issued, delivered and accepted by all
persons who shall from time to time be or become owners thereof; and in order to
secure the payment of the principal of and premium (if any) and interest on, and
purchase price of, the Bonds according to their tenor and effect and the
performance and observance by the Authority of all the covenants expressed or
implied herein and in the Bonds and the payment and performance of all other of
the Authority's obligations, the Authority does hereby grant, bargain, sell,
convey, pledge and assign, without recourse, unto the Trustee and unto its
successors in the trust forever, and grants to the Trustee and to its successors
in the trust, a security interest in all of the following:
GRANTING CLAUSE FIRST
All right, title and interest of the Authority in and to the Agreement
and the security granted thereunder and under the Collateral Documents and the
other Bond Documents, including, but not limited to: (i) the obligation of the
Company under Section 3.03 of the Agreement to make payments at such times and
in such amounts as are necessary to pay the principal of, interest and
redemption premium, if any, on the Bonds; (ii) the present and continuing right
to make claim for, collect, receive and receipt for any of the sums, amounts,
income, revenues, issues and profits and any other sums of money payable or
receivable under the Agreement, the Collateral Documents and the other Bond
Documents (except for the right to receive any Administrative Fees or Expenses
and any Additional Payments to the extent payable to the Authority and any
rights of the Authority to
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indemnification); (iii) the right to bring actions and proceedings thereunder or
for the enforcement thereof; and (iv) the right to do any and all things which
the Authority is or may become entitled to do under the Agreement, the
Collateral Documents and the other Bond Documents.
GRANTING CLAUSE SECOND
All right, title and interest of the Authority in and to all moneys and
securities from time to time held by the Trustee under the terms of this
Indenture; provided, however, that in consideration of the issuance by the
Letter of Credit Bank of the Letter of Credit, the Authority hereby grants a
security interest in the Construction Fund to the Letter of Credit Bank in order
to secure payment of the obligations of the Company under the Reimbursement
Agreement, the rights of the Letter of Credit Bank therein being subject and
subordinate to the rights of the Trustee so long as any amount due in respect of
the Bonds remains unpaid.
GRANTING CLAUSE THIRD
Any and all other property rights and interests of every kind and
nature from time to time hereafter by delivery or by writing of any kind
granted, bargained, sold, alienated, demised, released, conveyed, assigned,
transferred, mortgaged, pledged, hypothecated or otherwise subjected hereto, as
and for additional security herewith, by the Company or any other person on its
behalf or with its written consent or by the Authority or any other person on
its behalf or with its written consent, and the Trustee is hereby authorized to
receive any and all such property at any and all times and to hold and apply the
same subject to the terms hereof.
TO HAVE AND TO HOLD all and singular the Trust Estate with all
privileges and appurtenances hereby conveyed and assigned, or agreed or intended
so to be to the Trustee and its successors in trust forever.
IN TRUST NEVERTHELESS, under and subject to the terms and conditions
hereinafter set forth: (a) for the equal benefit, protection and security of the
Owners of any and all of the Bonds, all of which regardless of the time or times
of their issuance or maturity shall be of equal rank, without preference,
priority or distinction of any of the Bonds over any other thereof, except as
otherwise provided in or pursuant to this Indenture; (b) for securing the
observance and performance of the Authority's obligations and of all others of
the conditions, promises, stipulations, agreements and terms and provisions of
this Indenture and the uses and purposes herein expressed and declared; and (c)
for the benefit of the Letter of Credit Bank.
PROVIDED, HOWEVER, that if the Authority, its successors or assigns,
well and truly pays, or causes to be paid, the principal of the Bonds issued
hereunder and the premium (if any) and interest due or to become due thereon,
and the purchase price thereof, at the times and in the manner mentioned in the
Bonds and as provided herein, according to the true intent and meaning thereof,
and shall cause the payments to be made into the Bond Fund as required under
Article VI hereof, or shall provide, as permitted hereby, for payment thereof in
accordance with Article XI hereof, and
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shall well and truly keep, perform and observe all of the covenants and
conditions pursuant to the terms of this Indenture and all other of the
Authority's obligations to be kept, performed and observed by it, and shall pay
or cause to be paid to the Trustee all sums of money due or to become due in
accordance with the terms and provisions hereof, then upon such final payments
or deposits as provided in Article XI hereof, and upon the termination of the
Agreement, the right, title and interest of the Trustee in and to the Trust
Estate shall cease, terminate and be void, and the Trustee shall thereupon
assign, transfer, and turn over the Trust Estate to the Letter of Credit Bank;
provided, that if the Trustee shall have received written evidence from the
Letter of Credit Bank that all obligations of the Company under the
Reimbursement Agreement have been satisfied and that the Reimbursement Agreement
has been terminated, or if no Letter of Credit Bank shall then exist, the Trust
Estate shall be assigned, transferred and turned over to the Company; and the
Trustee shall execute and deliver to the Authority, the Letter of Credit Bank
and the Company; as appropriate, such instruments in writing as shall be
requisite to evidence such transfer of the Trust Estate. Upon the Trustee's
assignment, transfer and turning over to the Letter of Credit Bank or the
Company, as appropriate, of the Trust Estate pursuant to the provisions of
Section XI hereof, the Trustee shall have no further duties, responsibilities or
obligations under and pursuant to this Indenture.
AND IT IS EXPRESSLY DECLARED that all Bonds issued and secured
hereunder are to be issued, authenticated and delivered and all of the Trust
Estate hereby pledged is to be dealt with and disposed of under, upon and
subject to the terms, conditions, stipulations, covenants, agreements, trusts,
uses and purposes hereinafter expressed, and the Authority has agreed and
covenanted and intending to be legally bound does hereby agree and covenant with
the Trustee and with the respective Owners from time to time of the Bonds, or
any part thereof as follows:
ARTICLE I
DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS
Section 1.01. Definitions. Unless the context otherwise requires, the
terms and phrases defined in this Section shall, for all purposes of the
recitals hereto, this Indenture and of any indenture supplemental hereto and of
any certificate, opinion or other document herein mentioned, have the meanings
herein specified, to be equally applicable to both the singular and plural forms
of any of the terms herein defined. Unless otherwise defined in this Indenture,
all terms used herein shall have the meanings assigned to such terms in the Act.
"Accountant" means any firm of independent certified public accountants
(not an individual) selected by the Company and acceptable to the Bank.
"Act" means the Pennsylvania Economic Development Financing Law, Act of
August 23, 1967, P.L. 251, as amended and supplemented and as it may, from time
to time, hereafter be amended or supplemented.
"Additional Payments" means any payments required to be made by the
Company pursuant
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to the Agreement which are not required to be: (i) applied to the payment of
scheduled debt service on the Bonds; or (ii) reimbursed to the Letter of Credit
Bank for monies drawn on the Letter of Credit to pay debt service on the Bonds.
"Administrative Expenses" means those expenses of the Authority and the
Bank which are properly chargeable to the Company on account of the Bonds and
the Bond Documents as administrative expenses under Generally Accepted
Accounting Principles and include, without limiting the generality of the
foregoing, the following: (a) fees and expenses of the Trustee, the Tender
Agent, the Authority, the Bank and the Placement Agent; and (b) fees and
expenses of the Authority's, the Bank's, the Trustee's, the Tender Agent's and
the Placement Agent's professional advisors reasonably necessary and fairly
attributable to the Project Facilities, including without limiting the
generality of the foregoing, fees and reasonable expenses of the Authority's,
the Trustee's, the Bank's and the Placement Agent's counsel.
"Agreement" means the Loan Agreement, dated December 26, 1996, between
the Authority and the Company, together with all supplements thereto.
"Authority" means the Montgomery County Industrial Development
Authority created pursuant to, and as defined in, the Act, and its successors.
"Authority Board" shall mean, at any given time, the governing body of
the Authority.
"Authorized Representative" means with respect to the Company, the
Chairman, the President, Vice President, Secretary, Assistant Secretary or
Treasurer thereof, or any other person designated as an Authorized
Representative of the Company by a Certificate of the Company executed by the
President, Vice President, Secretary, Assistant Secretary or Treasurer of the
Company and filed with the Trustee.
"Available Moneys" means: (i) moneys derived from drawings under the
Letter of Credit; (ii) moneys held by the Trustee in funds and accounts
established under this Indenture for a period of at least one hundred
twenty-four (124) days and not commingled with any moneys so held for less than
said one hundred twenty-four (124) day period and during and prior to which
period, no petition in bankruptcy was filed by or against the Company or the
Authority under the Bankruptcy Code or any applicable state bankruptcy or
insolvency law, unless such petition was dismissed and all applicable appeal
periods have expired without an appeal having been filed; (iii) investment
income derived from the investment of moneys described in clauses (i) or (ii)
above; or (iv) any other moneys, if the Trustee and the Letter of Credit Bank
have received an opinion of nationally recognized counsel acceptable to Moody's
experienced in bankruptcy matters to the effect that payment of the principal or
purchase price of or interest on the Bonds with such moneys would not, in the
event of bankruptcy of the Company, the Authority, any affiliate of the Company
or other payor, constitute a voidable preference under the Bankruptcy Code or
any applicable state bankruptcy or insolvency law.
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"Bank" means CoreStates Bank, N.A., a national banking association
organized and existing under the laws of the United States, whose principal
office is located in the City of Philadelphia, Philadelphia County,
Pennsylvania, its lawful successors and assigns and, if applicable, the issuer
of any Substitute Letter of Credit hereunder.
"Bankruptcy Code" means the federal Bankruptcy Code, 11 U.S.C. ss.101
et seq., as amended and supplemented from time to time.
"Bond Documents" means any or all of the Agreement, this Indenture, the
Tender Agent Agreement, the Remarketing Agreement and all documents,
certificates and instruments executed in connection therewith.
"Bond Fund" means the fund created in Section 6.01 hereof.
"Bond Registrar" means any bank, national banking association or trust
company designated as registrar for the Bonds, and its successor appointed under
the Indenture.
"Bonds" means the $1,000,000 original aggregate principal amount of the
Authority's Variable Rate Demand/Fixed Rate Revenue Bonds (Apple Fresh Foods Ltd
Project) Series of 1996 authorized to be issued under this Indenture.
"Bond Year" shall have the meaning ascribed to such term in the Rebate
Certificate.
"Business Day" means any day other than: (i) a Saturday or Sunday; (ii)
a legal holiday or any day on which banking institutions in the State of New
York, the Commonwealth, the City of New York, or the city in which the principal
office of the Trustee, the Tender Agent or the Bank are authorized to remain
closed; or (iii) a day on which the New York Stock Exchange is closed.
"Cede & Co." means Cede & Co., as nominee of The Depository Trust
Company, New York, New York.
"Certificate," "Statement," "Request," "Requisition" and "Order" means:
(a) with respect to the Authority, a written certificate, statement, request,
requisition or order executed in the name of the Authority by its Chairman, Vice
Chairman, Executive Director or such other person as may be designated and
authorized to sign for the Authority; or (b) with respect to the Company a
written certificate, statement, request, requisition or order executed by an
Authorized Representative of the Company. Any such instrument and supporting
opinions or representations, if any, may, but need not, be combined in a single
instrument with any other instrument, opinion or representation, and the two or
more so combined shall be read and construed as a single instrument. If and to
the extent required by Section 1.02 hereof, each such instrument shall include
the statements provided for in such Section 1.02.
"Certified Resolution of the Authority" means a copy of a resolution of
the Authority
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Board certified by the Secretary or an Assistant Secretary of the Authority, or
other officer serving in a similar capacity, under its corporate seal, to have
been duly adopted by the Authority Board and to be in full force and effect on
the date of such certification.
"Certified Resolution of the Company" means a copy of a resolution of
the Company duly adopted and in full force and effect as of the date of the
execution and delivery of the Bonds and the Letter of Credit.
"Clearing Fund" means the fund created pursuant to Section 3.03 hereof.
"Closing Date" means December 26, 1996 or such other date which shall
be the date of the execution and delivery of the Agreement and the other Bond
Documents and the issuance and delivery of the Bonds.
"Code" means the Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder.
"Collateral" means all of the rights and assets of the Company or any
other Person in which the Authority or the Trustee is now or hereafter granted a
lien or security interest in order to secure the performance of (i) the
Company's obligations under the Agreement or any of the Collateral Documents or
(ii) the obligations of the Authority hereunder or under the Bonds.
"Collateral Documents" means all documents executed and delivered or to
be executed and delivered and under which the Authority or the Trustee is
granted a lien or security interest in any of the rights and assets of the
Company or any other Person in order to secure the performance of the Company's
obligations under the Agreement or any other Bond Documents or the obligations
of the Authority hereunder or under the Bonds.
"Commonwealth" means the Commonwealth of Pennsylvania.
"Company" means Apple Fresh Foods Limited, a Pennsylvania corporation.
"Completion Date" means the date of completion of the Project, as that
date shall be certified as provided in Section 2.03 of the Agreement.
"Construction Fund" means the fund created pursuant to Section 6.05
hereof.
"Conversion Date" means the Optional Conversion Date.
"Conversion Option" means the option granted to the Company in Section
5.01 hereof pursuant to which the interest rate on the Bonds is converted from
the Floating Rate to the Fixed Rate as of the Optional Conversion Date.
"Cost" or "Costs," means any cost in respect of the Project Facilities
permitted under the Act and the Code.
"Counsel" means an attorney-at-law or law firm (who may be counsel for
the Company or for the Authority) satisfactory to the Trustee.
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"County" means the County of Montgomery, Pennsylvania.
"Debt Service Requirements," with reference to a specified period
means, with respect to Bonds:
(a) amounts required to be paid into any mandatory sinking fund
account during the period; and
(b) amounts needed to pay the principal of such indebtedness
maturing during the period and not to be redeemed prior to maturity from amounts
on deposit in any sinking fund or redemption, retirement or similar fund or
account; and
(c) interest payable on the subject indebtedness during the
period, excluding capitalized interest and amounts on deposit with the Trustee
which are available under the Indenture to pay interest with respect to such
indebtedness.
"Demand Purchase Notice" means a notice delivered pursuant to
paragraph (i) of Section 5.04 hereof.
"Demand Purchase Option" means the option granted to Owners of Bonds
to require that Bonds be purchased prior to the Conversion Date pursuant to
Section 5.04 hereof.
"Determination Date" means with respect to any Floating Rate Bonds,
each Wednesday or if such Wednesday is not a Business Day, on the next
succeeding Business Day.
"Determination of Taxability" means, with respect to any Bond, the
first to occur of the following events: (i) the date on which the Company
determines that an Event of Taxability has occurred by filing with the Trustee a
statement to that effect supported by one or more tax schedules, returns or
documents that disclose that such an Event of Taxability has occurred; (ii) the
date on which the Company or the Trustee is advised by private ruling, technical
advice or any other written communication from any authorized official of the
Internal Revenue Service that, based upon any filings of the Company or any
other person or entity, or upon any review or audit of the Company or any other
person or entity, or upon any other grounds whatsoever, an Event of Taxability
has occurred; (iii) the date on which the Trustee or the Company is advised that
a court of competent jurisdiction has issued an order, declaration, ruling or
judgment to the effect that an Event of Taxability has occurred; (iv) the date
the Trustee shall have received written notice from any owner of the Bonds that
such owner has received a written assertion or claim by any authorized official
of
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the Internal Revenue Service that an Event of Taxability has occurred; or (v)
the date the Trustee is notified that the Internal Revenue Service has issued
any private ruling, technical advice or any other written communication, with or
to the effect that an Event of Taxability has occurred; provided, however, that
(x) no Determination of Taxability described above shall be deemed to have
occurred unless the Trustee shall have received a written opinion of nationally
recognized bond counsel satisfactory to the Bank and the Company and not
unsatisfactory to the Trustee, and in form and substance satisfactory to the
Bank and the Company and not unsatisfactory to the Trustee, to the effect that
an Event of Taxability has occurred; and (y) no Determination of Taxability
described above shall be deemed to have occurred until 180 days shall have
elapsed from the dates described in clauses (i), (ii), (iii), (iv) or (v) above
without such Determination of Taxability having been rescinded or canceled.
"Event of Default" means any of the events specified in Section 8.01 of
this Indenture.
"Event of Taxability" means, with respect to any Bond, a change of law
or regulations, or the interpretation thereof, or the occurrence of any other
event or the existence of any other circumstances (including without limitation
the fact that any representations or warranties of the Company or the Authority
made in connection with the issuance of any Bond is or was untrue or that a
covenant of the Company has been breached) that has the effect of causing
interest payable on any Bond to be includable in gross income for federal income
tax purposes under Section 103 of the Code other than by reason that such
interest: (i) is includable in the gross income of an owner or former owner of
any Bond while such owner or former owner is or was a "substantial user" or a
"related person" to a "substantial user" of the Project Facilities (as such
terms are used in Section 147(a)(1) of the Code); or (ii) is deemed an item of
tax preference, including without limitation an item subject to any alternative
minimum tax
"Fiscal Year" means the period of twelve (12) consecutive months
beginning July 1 of each year, or such other period of twelve consecutive months
established by the Company as its new Fiscal Year.
"Fixed Rate" means the interest rate in effect on any Bonds from and
after the Conversion Date, as said rate is determined in accordance with Section
2.02(D) hereof.
"Fixed Rate Bonds" means any Bonds which are converted to a Fixed Rate
in accordance with the provisions of this Indenture.
"Fixed Rate Period" means, with respect to any Bonds, a Period during
which interest on such Bonds accrues at a Fixed Rate.
"Floating Rate" means a variable rate of interest equal to the minimum
rate of interest necessary, in the sole judgment of the Remarketing Agent, to
sell the Bonds at a price equal to the principal amount thereof, exclusive of
accrued interest, if any, thereon; said interest rate to be in effect on the
Bonds from the date of issuance of the Bonds until (but not including) the
Conversion
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Date, as said rate is determined in accordance with Section 2.02(C) hereof.
"Floating Rate Bonds" means any Bonds which bear interest at the
Floating Rate.
"Generally Accepted Accounting Principles" means those accounting
principles applicable in the preparation of financial statements of business
institutions or industrial development authorities, as appropriate, as
promulgated by the Financial Accounting Standards Board or such other body
recognized as authoritative by the American Institute of Certified Public
Accountants or any successor body.
"Government Obligations" means direct obligations of (including
obligations issued or held in book entry form) or obligations the principal of
and interest on which are unconditionally guaranteed as to full and timely
payment by the United States.
"Holder," "Owner", "Registered Owner" or "Bondholders" whenever used
herein with respect to a Bond, means the person in whose name such Bond is
registered on the registration books maintained by the Trustee.
"Indenture" means this Trust Indenture, dated December 26, 1996,
between the Authority and the Trustee, as originally executed or as it may, from
time to time, be supplemented, modified or amended by any Supplemental
Indenture.
"Interest Payment Date" means prior to the Conversion Date, the first
Wednesday of each calendar month, or if such date is not a Business Day, the
next succeeding Business Day, commencing February 5, 1997 and from and after the
Conversion Date, June 1 and December 1 of each year, commencing on the June 1 or
December 1 next following the Conversion Date.
"Investment Securities" means any of the following which at the time
are legal investments under the laws of the Commonwealth for moneys held
hereunder:
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(i) Government Obligations;
(ii) bonds, debentures, notes or other evidences of
indebtedness issued by any agency or other governmental or government-sponsored
agencies which may be hereafter created by the United States, provided, however,
that the full and timely payment of the securities issued by each such agency or
government-sponsored agency is secured by the full faith and credit of the
United States;
(iii) certificates of deposit of, or time deposits in, any
bank (including the Trustee) or savings and loan association having securities
rated, at the time of purchase or acquisition, in one of the three highest
Rating Categories (without regard to modifiers) of Moody's or S&P;
(iv) certificates which evidence ownership of the right to
the payment of the principal of and interest on obligations described in clauses
(i) and (ii) of this definition, provided that such obligations are held in the
custody of a bank or trust company in a special account separate from the
general assets of such custodian;
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(v) obligations which, at the time of purchase or
acquisition, are rated in one of the two highest Rating Categories (without
regard to modifiers) of Moody's and the interest on which is not includable in
gross income for federal income tax purposes and the timely payment of the
principal of and interest on which is fully provided for by the deposit in trust
or escrow of cash or obligations described in clauses (i) or (ii) of this
definition;
(vi) guaranteed investment contracts or other similar
financial instruments with a commercial bank, insurance company or other
financial institution whose long term debt obligations are rated, at the time of
purchase or acquisition, in one of the two highest Rating Categories (without
regard to modifiers) by Moody's;
(vii) mutual funds invested primarily in obligations
described in clauses (i) and (ii) of this definition, and rated, at the time of
purchase, in one of the two highest rating categories (without regard to
modifiers) by Moody's, including, if such fund meets the criteria described in
this clause (vii), mutual funds managed by the Trustee or an affiliate thereof;
(viii) any investment approved in writing by the Bank and
Moody's;
(ix) repurchase agreements issued by financial institutions:
(i) insured by the Federal Deposit Insurance Corporation; or (ii) whose senior
debt obligations at the time of purchase are rated, at the time of purchase or
acquisition, in any of the three highest Rating Categories (without regard to
modifiers) by Moody's; provided, such repurchase agreements are subject to
perfected security interests in the Investment Securities of the kind specified
in paragraphs (i) or (ii) above, which have a fair market value, exclusive of
accrued interest, at least equal to the amount invested in the repurchase
agreement; and provided further: (1) the Trustee has possession of the
securities; (2) the Trustee has a perfected first security interest in the
securities; (3) the securities are free and clear of any third-party liens; and
(4) failure to maintain the requisite securities percentage will require the
Trustee to liquidate the securities in accordance with the terms of the
repurchase agreement; and
(x) any other security or obligation constituting a
permitted investment under the Act, provided that the Bank and Moody's consent
to the investment of funds in such security or obligation.
"Issue Date" means the date on which the Trustee authenticates the
Bonds and on which the Bonds are delivered to the purchasers thereof upon
original issuance.
"Letter of Credit" means the Irrevocable Direct Pay Letter of Credit
issued by the Letter of Credit Bank pursuant to the provisions of the
Reimbursement Agreement, or, in the event of delivery of a Substitute Letter of
Credit, such Substitute Letter of Credit.
"Letter of Credit Bank" means the Bank, as issuer of the Letter of
Credit, and its lawful successors and assigns, and to the extent applicable, the
issuer of any Substitute Letter of Credit.
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"Letter of Credit Termination Date" means the later of: (i) that date
upon which the Letter of Credit shall expire or terminate pursuant to its terms;
or (ii) that date to which the expiration or termination of the Letter of Credit
may be extended, from time to time, either by extension or renewal of the
existing Letter of Credit or the issuance of a Substitute Letter of Credit.
"Moody's" means Moody's Investors Service, a corporation organized and
existing under the laws of the State of Delaware, its successors and their
assigns, or, if such corporation shall be dissolved or liquidated or shall no
longer perform the functions of a securities rating agency, any other nationally
recognized securities rating agency designated by the Authority, with the
approval of the Company.
"Net Proceeds," when used with respect to any insurance proceeds or any
condemnation award, means the amount remaining after deducting all expenses
(including attorneys' fees and disbursements) incurred in the collection of such
proceeds or award from the gross proceeds thereof.
"Obligation Termination Date" means the date on which the Bank delivers
to the Trustee a certificate to the effect that all obligations owing to the
Bank under the Reimbursement Agreement have been paid in full.
"Officers' Certificate" means with respect to the Authority, a
certificate, duly executed by the Chairman or Vice Chairman, Secretary or
Assistant Secretary, Treasurer or Assistant Treasurer of the Authority, under
the corporate seal of the Authority; or with respect to the Company, a
certificate duly executed by an Authorized Representative, under the corporate
seal of the Company.
"Opinion of Counsel" means a written opinion of counsel (who may be
counsel for the Authority) selected by the Authority and acceptable to the
Trustee. If and to the extent required by the provisions of Section 1.02 hereof,
each Opinion of Counsel shall include in substance the statements provided for
in such Section 1.02.
"Optional Conversion Date" means that date on or after February 5,
1997, which shall be a Business Day, from and after which the interest rate on
the Bonds is converted from the Floating Rate to the Fixed Rate as a result of
the exercise by the Company of the Conversion Option in accordance with the
terms of this Indenture.
"Outstanding," when used as of any particular time with reference to
Bonds, means (subject to the provisions of Section 12.10) all Bonds theretofore,
or thereupon being, authenticated and delivered by the Trustee under this
Indenture, except: (1) Bonds theretofore canceled by the Trustee or surrendered
to the Trustee for cancellation; (2) Bonds with respect to which all liability
of the Authority shall have been discharged in accordance with Section 11.02,
including Bonds (or portions of Bonds) referred to in Section 12.10; and (3)
Bonds for the transfer or exchange of or in lieu of or in substitution for which
other Bonds shall have been authenticated and delivered by the Trustee pursuant
to this Indenture.
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"Participants" means those financial institutions for whom the
Securities Depository effects book-entry transfers and pledges of securities
deposited with the Securities Depository, as such listing of Participants exists
at the time of such reference.
"Permitted Encumbrances" means any liens or encumbrances permitted
under the Reimbursement Agreement or otherwise permitted by the Bank.
"Person" means an individual, corporation, firm, association,
partnership, trust, or other legal entity or group of entities, including a
governmental entity or any agency or political subdivision thereof.
"Placement Agent" means CoreStates Capital Markets, a division of
CoreStates Bank, N.A.
"Pledge Agreement" means: (i) the Pledge and Security Agreement, dated
December 26, 1996, between the Company and the Bank, and any amendments or
supplements thereto; and (ii) any pledge and security agreement made by the
Company and the Substitute Bank for the benefit of any Substitute Bank, and any
amendments or supplements thereto.
"Pledged Bonds" means any Bonds which shall, at the time of
determination thereof, be held in pledge for the benefit of the Bank by the
Pledged Bonds Custodian pursuant to the Pledge Agreement.
"Pledged Bonds Custodian" means that banking entity which serves as the
custodian for the Pledged Bonds under the terms and conditions of the Pledge
Agreement. The initial Pledged Bonds Custodian shall be the Tender Agent.
"Premises" shall mean that certain parcel of real property located at
4000 Ridge Avenue, Collegeville, Pennsylvania, located in the Township of Lower
Providence, Montgomery County, Pennsylvania.
"Principal Corporate Trust Office" means the principal corporate trust
office of the Trustee, which at the date of the execution of the Indenture is
located at 213 Market Street, Harrisburg, Pennsylvania 17101, Attention
Corporation Trust Services.
"Project" means, among other things: (i) the acquisition, construction,
installation and renovation of certain equipment to be used in connection with a
cook-chill system of batch food processing; and (ii) the payment of a portion of
the costs of issuance of the Bonds.
"Project Facilities" shall mean all of the Company's right, title and
interest in and to the Premises, together with all the right, title and interest
of the Company in and to all buildings, improvements, and appurtenant facilities
located on the Premises.
"Purchase Price" means an amount equal to 100% of the principal amount
of any Bond
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tendered or deemed tendered pursuant to Sections 5.01, 5.03 or 5.04 hereof, plus
accrued and unpaid interest thereon to the date of purchase.
"Rating Agency" means Moody's when the Bonds are rated by Moody's and
S&P when the Bonds are rated by S&P.
"Rating Category" means one of the general rating categories of Moody's
or S&P, without regard to any refinement or gradation of such rating category by
a numerical modifier or otherwise.
"Rebate Certificate" means the requirements relating to rebate within
the meaning of Section 148 of the Code included in the Authority's Non-Arbitrage
Certificate and Compliance Agreement, delivered by the Authority at the time of
the issuance and delivery of the Bonds, as such requirements may be amended or
supplemented from time to time in accordance with its terms.
"Rebate Fund" means the fund by that name established pursuant to the
provisions of Section 6.13 hereof.
"Record Date" means, prior to the Conversion Date, that day which is
the seventh calendar day next preceding any Interest Payment Date and
thereafter, that date which is the fifteenth calendar day next preceding any
Interest Payment Date.
"Reimbursement Agreement" means the Reimbursement Agreement, dated
December 26, 1996 by and among the Bank and the Company, and any other similar
agreement entered into in connection with the issuance of any Substitute Letter
of Credit and any and all modifications, alterations, amendments and supplements
thereto.
"Remarketing Agent" means (singly or collectively, as the case may be)
the remarketing agent(s) appointed by the Company and accepted and consented to
in writing by the Authority and the Trustee and at the time serving as such
under the Remarketing Agreement.
"Remarketing Agreement" means the Remarketing Agreement, dated December
26, 1996, by and between the Company and CoreStates Capital Markets, a division
of CoreStates Bank, N.A., as the remarketing agent, and accepted and consented
in writing to by the Authority and the Trustee.
"Replacement Bonds" means Bonds issued to the beneficial owners of the
Bonds in accordance with Section 2.13 hereof.
"Revenues" means all amounts received by the Authority or the Trustee
for the account of the Authority pursuant or with respect to the Agreement or
the Letter of Credit, including, without limiting the generality of the
foregoing, payments under the Agreement (including both timely and delinquent
payments and any late charges, and whether paid from any source), prepayments,
insurance proceeds, condemnation proceeds, and all interest, profits or other
income derived from the investment of amounts in any fund or account established
pursuant to this Indenture.
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"Securities Depository" means The Depository Trust Company and its
successors and assigns or if: (i) the then-Securities Depository resigns from
its functions as depository of the Bonds; or (ii) the Authority discontinues use
of the then-Securities Depository pursuant to Section 2.13, any other securities
depository which agrees to follow the procedures required to be followed by a
securities depository in connection with the Bonds and which is selected by the
Authority with the consent of the Company.
"Securities Depository Nominee" means, as to any Securities Depository,
such Securities Depository or the nominee of such Securities Depository in whose
name there shall be registered on the registration books maintained by the
Trustee the Bond certificates to be delivered to and immobilized at such
Securities Depository during the continuation with such Securities Depository of
participation in its book-entry system.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"S&P" means Standard & Poor's Rating Services, a division of the
McGraw-Hill Companies, Inc., a corporation organized and existing under the laws
of the State of Delaware, its successors and their assigns, or, if such
corporation shall be dissolved or liquidated or shall no longer perform the
functions of a securities rating agency, any other nationally recognized
securities rating agency designated by the Authority, with the approval of the
Company.
"Substitute Bank" means a commercial bank, savings and loan association
or savings bank which has issued a Substitute Letter of Credit.
"Substitute Letter of Credit" means a letter of credit delivered to the
Trustee in accordance with Section 4.07 of the Agreement: (i) issued by the Bank
or a Substitute Bank, the short term unsecured debt of which shall then have
been assigned a rating by Moody's of "P-1" or the equivalent rating assigned by
S&P, or the long term senior subordinated debt of which shall then have been
assigned a rating of "Aa3" or higher by Moody's or the equivalent rating
assigned by S&P; (ii) replacing any existing Letter of Credit; (iii) dated no
later than the date of the expiration or replacement date of the Letter of
Credit for which the same is to be substituted; (iv) which shall expire on a
date which is 15 days after an Interest Payment Date for the Bonds; (v) having a
term of at least one year; and (vi) issued on substantially identical terms and
conditions as the then existing Letter of Credit, except that the stated amount
of the Substitute Letter of Credit shall equal the sum of: (A) the aggregate
principal amount of Bonds at the time Outstanding, plus (B) an amount equal to
(i) prior to the Conversion Date, forty-six (46) days' interest or such other
number of days as shall be required by the Rating Agency (computed at a rate of
15% per annum) on all Bonds at the time Outstanding and (ii) from and after the
Conversion Date, two hundred (200) days' interest or such other number of days
as shall be required by the Rating Agency (computed at the fixed rate on all
Bonds at the time outstanding).
"Substitution Date" shall mean the date the Company delivers a
Substitute Letter of Credit to the Trustee in accordance with the terms and
conditions of Section 4.07 of the Agreement.
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"Supplemental Indenture" means any indenture hereafter duly authorized
and entered into between the Authority and the Trustee, supplementing, modifying
or amending this Indenture, but only if and to the extent that such Supplemental
Indenture is specifically authorized hereunder.
"Tender Agent" means Dauphin Deposit Bank and Trust Company, a banking
corporation organized and existing under the laws of the Commonwealth and its
successors and any corporation resulting from or surviving any consolidation or
merger to which it or its successors may be a party and any successor Tender
Agent at the time serving as successor Tender Agent hereunder and under the
Tender Agent Agreement. "Delivery Office" and "Principal Office" of the Tender
Agent means 213 Market Street, Harrisburg, Pennsylvania 17101, Attention:
Corporate Trust Services or such other address as may be designated in writing
to the Authority, the Trustee, the Remarketing Agent and the Company.
"Tender Agent Agreement" means the Tender Agent Agreement, dated
December 26, 1996, between the Company, the Trustee and the Tender Agent and any
amendments and supplements thereto.
"Trust Estate" means all property rights and interests transferred,
assigned, or otherwise pledged to the Trustee and the Letter of Credit Bank
pursuant to the Granting Clauses hereof, which does not include the moneys on
deposit from time to time in the Rebate Fund pursuant to Section 6.13 hereof.
"Trustee" means Dauphin Deposit Bank and Trust Company, a banking
corporation organized and existing under the laws of the Commonwealth and its
successor and any entity resulting from or surviving any consolidation or merger
to which it or its successors may be a party and any successor trustee at the
time serving as successor trustee hereunder.
"United States" means the United States of America.
"Unremarketed Bonds" means Bonds which have been purchased pursuant to
Sections 5.01, 5.03 or 5.04 hereof but which have not been remarketed.
"Weekly Period" shall mean, while the Bonds bear interest at the
Floating Rate, the weekly period that begins on and includes Wednesday of each
calendar week and ends at the close of business on Tuesday of the next
succeeding week.
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Section 1.02. Content of Certificates and Opinions. The Trustee may,
but shall not be obligated to, require that every certificate or opinion
provided for in this Indenture with respect to compliance with any provision
hereof shall include: (1) a statement to the effect that the Person making or
giving such certificate or opinion has read such provision and the definitions
herein relating thereto; (2) a brief statement as to the nature and scope of the
examination or investigation upon which the certificate or opinion is based; (3)
a statement to the effect that in the opinion of such person, he has made or
caused to be made such examination or investigation as is necessary to enable
him to express an informed opinion with respect to the subject matter referred
to in the instrument to which his signature is affixed; (4) a statement of the
assumptions upon which such certificate or opinion is based, and that such
assumptions are reasonable; and (5) a statement as to whether, in the opinion of
such person, such provision has been complied with.
Any such certificate or opinion made or given by an officer of the
Authority or the Company may be based, insofar as it relates to legal or
accounting matters, upon a certificate or opinion of or representation by
counsel or an accountant, unless such officer knows, or in the exercise of
reasonable care should have known, that the certificate, opinion or
representation with respect to the matters upon which such certificate or
statement may be based, as aforesaid, is erroneous. Any such certificate or
opinion made or given by counsel or an accountant may be based, insofar as it
relates to factual matters (with respect to which information is in the
possession of the Authority or the Company, as the case may be) upon a
certificate or opinion of or representation by an officer of the Authority or
the Company, unless such counsel or accountant knows, or in the exercise of
reasonable care should have known, that the certificate or opinion or
representation with respect to the matters upon which such person's certificate
or opinion or representation may be based, as aforesaid, is erroneous. The same
officer of the Authority or the Company, or the same counsel or accountant, as
the case may be, need not certify to all of the matters required to be certified
under any provision of this Indenture, but different officers, counsel or
accountants may certify to different matters, respectively.
Section 1.03. Interpretation.
(a) Unless the context otherwise indicates, words expressed in
the singular shall include the plural and vice versa and the use of the neuter,
masculine, or feminine gender is for convenience only and shall be deemed to
mean and include the neuter, masculine or feminine gender, as appropriate.
(b) Headings of articles and sections herein and the table of
contents hereof are solely for convenience of reference, do not constitute a
part hereof and shall not affect the meaning, construction or effect hereof.
(c) All references herein to "Articles," "Sections" and other
subdivisions are to the corresponding Articles, Sections or subdivisions of this
Indenture; the words "herein," "hereof," "hereby," "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any particular
Article, Section or subdivision hereof.
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(d) Whenever in this Indenture it is required that notice be
provided to the Bank or that consent of the Bank be obtained, such provisions
shall be effective only when: (i) the Letter of Credit is in effect; or (ii) the
Bank, in its capacity as provider of the Letter of Credit, is the Holder of any
Bonds.
ARTICLE II
THE BONDS
Section 2.01. Authorization of Bonds. The Bonds shall be issued
hereunder in order to obtain moneys to finance the Project for the benefit of
the Authority and the Company. The Bonds are designated as "Montgomery County
Industrial Development Authority Variable Rate Demand/Fixed Rate Revenue Bonds
(Apple Fresh Foods Ltd Project), Series of 1996." The aggregate principal amount
of Bonds which may be issued and Outstanding under this Indenture shall not
exceed One Million Dollars ($1,000,000). No additional bonds may be issued under
this Indenture. This Indenture constitutes a continuing agreement by the
Authority for the benefit of the Holders from time to time of the Bonds to
secure the full payment of the principal of and interest on all such Bonds
subject to the covenants, provisions and conditions herein contained.
Section 2.02. Terms of Bonds; Interest on the Bonds.
(A) The Bonds shall be issued in fully registered form. Prior
to the Conversion Date: (i) such Bonds shall be Outstanding in denominations of
$100,000 or any integral multiple of $5,000 in excess thereof; and (ii) such
Bonds may not be issued, exchanged or transferred except in the authorized
denominations of $100,000 or any integral multiple of $5,000 in excess thereof.
From and after the Conversion Date: (x) such Bonds shall be Outstanding in
denominations of $5,000 or any integral multiple of $5,000; and (y) such Bonds
may not be issued, exchanged or transferred except in the authorized
denominations of $5,000 or any integral multiple of $5,000 in excess thereof.
The Bonds shall be dated as of the date of delivery and shall mature, subject to
prior redemption, as provided herein. Unless the Authority shall otherwise
direct, prior to the Conversion Date the Bonds shall be lettered "VR" and shall
be numbered consecutively from 1 upward, and after the Conversion Date the Bonds
shall be lettered "FR" and shall be numbered consecutively from 1 upward.
(B) Each Bond shall be dated the Issue Date and shall bear
interest, payable: (i) prior to the Conversion Date, on the first Wednesday of
each calendar month, or if such date is not a Business Day, the next succeeding
Business Day commencing February 5, 1997; (ii) on the Conversion Date; and (iii)
from and after the Conversion Date, on June 1 and December 1 of each year,
commencing on the June 1 or December 1 next following the Conversion Date, in
each case from the Interest Payment Date next preceding the date of
authentication thereof to which interest has been paid or duly provided for,
unless the date of authentication thereof is an Interest Payment Date to which
interest has been paid or duly provided for, in which case from the date of
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authentication thereof, or unless no interest has been paid or duly provided for
on the Bonds, in which case from the Issue Date, until payment of the principal
thereof has been made or duly provided for. Notwithstanding the foregoing, any
Bond authenticated after any Record Date and before the following Interest
Payment Date shall bear interest from such Interest Payment Date, provided,
however, that if the Authority shall default in the payment of interest due on
such Interest Payment Date, then such Bond shall bear interest from the next
preceding Interest Payment Date to which interest has been paid or duly provided
for, or, if no interest has been paid or duly provided for on the Bonds, from
the Issue Date.
The Bonds shall mature on December 1, 2016.
(C) (i) From the Issue Date to the Conversion Date, the
Bonds shall bear interest at the Floating Rate. The Floating Rate shall be
determined by the Remarketing Agent by 9:30 a.m. on each Determination Date and
shall be effective on such Determination Date for the immediately following
Weekly Period.
(ii) The Remarketing Agent shall advise the Company
and the Trustee of the Floating Rate by telephone (confirmed by telecopy to the
Trustee) at or before the close of business on each Determination Date. Upon
request of any Bondholder, the Remarketing Agent shall notify such Bondholder of
the Floating Rate then borne by the Bonds.
(iii) If for any reason the interest rate on a Bond
for any Weekly Period is not determined by the Remarketing Agent pursuant to
(C)(i) above, or a court holds that the Floating Rate set as provided pursuant
to (C)(i) above is invalid or unenforceable, the Floating Rate for such Bonds
shall be for the first such Weekly Period that a Floating Rate is not determined
by the Remarketing Agent or has been determined invalid or unenforceable, a rate
per annum equal to the Floating Rate established by the Remarketing Agent
pursuant to (C)(i) on the immediately preceding Determination Date and on each
Determination Date thereafter, shall be a rate per annum equal to 85% of the
interest rate per annum for 30 day commercial paper having a rating of A-2/P-2
as reported in The Wall Street Journal on each Determination Date.
(iv) The determination of the Floating Rate by the
Remarketing Agent shall be conclusive and binding upon the Authority, the
Trustee, the Bank, the Company, the Remarketing Agent, the Tender Agent and the
Owners of the Bonds.
Anything herein to the contrary notwithstanding, the
Floating Rate shall in no event exceed 15% per annum.
(D) The Bonds shall bear interest at the Fixed Rate from
and after the Conversion Date until the maturity of the Bonds. The Fixed Rate
shall be a fixed annual interest rate on the Bonds established by the
Remarketing Agent as the rate of interest for which the Remarketing Agent has
received commitments from purchasers on or prior to the 5th Business Day
preceding the Conversion Date to purchase all the Outstanding Bonds on the
Conversion Date at a price of par.
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(E) Prior to the Conversion Date, interest on the Bonds
shall be computed on the basis of a 365/366-day year, for the actual number of
days elapsed. On and after the Conversion Date, interest on the Bonds shall be
computed on the basis of a 360-day year of twelve 30-day months. The principal
of and premium, if any, on the Bonds shall be payable in lawful money of the
United States at the Principal Corporate Trust Office of the Trustee, or of its
successor in trust. The Purchase Price of the Bonds shall be payable in lawful
money of the United States by the Tender Agent to the Owner of Bonds entitled to
receive such Purchase Price.
Interest on the Bonds shall be payable on each Interest
Payment Date to the persons in whose name the Bonds are registered at the close
of business on the Record Date for the respective Interest Payment Date.
Interest shall be paid by check mailed to each Owner at the addresses shown on
the registration books maintained by the Trustee, provided that such interest
shall be paid by wire transfer to: (i) the Bank; and (ii) any Holder of at least
$1,000,000 in aggregate principal amount of Bonds, if the Holder makes a written
request of the Trustee at least 15 days before a Record Date specifying the
account address and wiring instructions. Such a request may provide that it will
remain in effect for subsequent interest payments until changed or revoked by
written notice to the Trustee or upon the transfer or re-registration of the
Bond.
The principal of the Bonds shall be payable in lawful
money of the United States at the Principal Corporate Trust Office of the
Trustee; provided, however that payment of Bonds tendered pursuant to Sections
5.01, 5.03 and 5.04 hereof shall be paid at the Delivery Office of the Tender
Agent. Except as provided for in Section 2.13 hereof, no payment of principal
shall be made on any Bond until such Bond is surrendered to the Trustee at its
Principal Corporate Trust Office.
Section 2.03. Execution of Bonds. The Bonds shall be executed in the
name and on behalf of the Authority with the manual or facsimile signature of
its Chairman, under its seal attested by the manual or facsimile signature of
its Secretary. Such seal may be in the form of a facsimile of the Authority's
seal and may be reproduced, imprinted or impressed on the Bonds. The Bonds shall
then be delivered to the Trustee for authentication by it. In case any of the
officers who shall have executed or attested any of the Bonds shall cease to be
such officer or officers of the Authority before the Bonds so executed or
attested shall have been authenticated or delivered by the Trustee or issued by
the Authority, such Bonds may nevertheless be authenticated, delivered and
issued and, upon such authentication, delivery and issue, shall be as binding
upon the Authority as though those who executed and attested the same had
continued to be such officers of the Authority, and also any Bond may be signed
and attested on behalf of the Authority by such persons as at the actual date of
execution of such Bond shall be the proper officers of the Authority although at
the nominal date of such Bond any such person shall not have been such officer
of the Authority.
Only such of the Bonds as shall bear thereon a certificate of
authentication substantially in the form set forth on the form of Bond, manually
executed by the Trustee, shall be valid or obligatory for any purpose or
entitled to the benefits of this Indenture, and such certificate of the Trustee
shall be conclusive evidence that the Bonds so authenticated have been duly
executed, authenticated and delivered hereunder and are entitled to the benefits
of this Indenture.
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Section 2.04. Authentication.
(a) The Authority hereby appoints the Tender Agent as a
co-authenticating agent for the Bonds.
(b) No Bond shall be valid or obligatory for any purpose or
entitled to any security or benefit under this Indenture unless and until a
certificate of authentication on such Bond, substantially in the form set forth
in Exhibit "A" and Exhibit "B" attached hereto, shall have been duly executed by
the Trustee or by the Tender Agent and such executed certificate of
authentication upon any such Bond shall be conclusive evidence that such Bond
has been authenticated and delivered under this Indenture. The certificate of
authentication on any Bond shall be deemed to have been executed by the Trustee
or the Tender Agent if executed by an authorized signatory of the Trustee or the
Tender Agent, as the case may be, but it shall not be necessary that the same
signatory execute the certificate of authentication on all of the Bonds.
(c) In the event any Bond is deemed tendered to the Tender
Agent as provided in Section 5.01 or 5.04 hereof but is not physically delivered
to the Tender Agent, the Authority shall execute and the Trustee or the Tender
Agent shall authenticate a new Bond of like denomination as that deemed
tendered.
Section 2.05. Form of Bonds. The Floating Rate Bonds and the
certificate of authentication to be endorsed thereon prior to the Conversion
Date are to be in substantially the form set forth in Exhibit "A" which is
attached hereto and hereby made a part hereof as though fully set forth herein,
with appropriate variations, omissions and insertions as permitted or required
by this Indenture and applicable law. The Fixed Rate Bonds and the certificate
of authentication to be endorsed thereon are to be in substantially the form set
forth in Exhibit "B" which is attached hereto and hereby made a part hereof as
though fully set forth herein, with appropriate variations, omissions and
insertions as permitted or required by this Indenture.
Section 2.06. Transfer of Bonds. Any Bond may be transferred in
accordance with its terms upon the books required to be kept pursuant to the
provisions of Section 2.08 hereof. Such transfer shall be made, in accordance
with the requirements of Section 2.02 hereof, by the person in whose name it is
registered, in person or by his duly authorized attorney, upon surrender of such
registered Bond for cancellation, accompanied by delivery of a written
instrument of transfer, duly executed in a form approved by the Trustee.
Whenever any Bond or Bonds shall be surrendered for transfer, the
Authority shall execute and the Trustee or the Tender Agent, as the case may be,
shall authenticate and deliver a new Bond or Bonds of the same Series for a like
aggregate principal amount. The Trustee shall require the Bondholder requesting
such transfer to pay any tax or other governmental charge required to be paid
with respect to such transfer, and may in addition require the payment of a
reasonable sum to cover expenses incurred by the Authority or the Trustee in
connection with such transfer.
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During the Fixed Rate Period, the Trustee shall not be required to
transfer any Bond during the period beginning 15 days before the mailing of
notice of redemption calling the Bond or any portion of the Bond for redemption
and ending on the redemption date.
Section 2.07. Exchange of Bonds. Bonds may be exchanged at the
Principal Corporate Trust Office of the Trustee for a like aggregate principal
amount of Bonds of the same Series of other authorized denominations in
accordance with the requirements of Section 2.02 hereof. The Trustee shall
require the Bondholder requesting such exchange to pay any tax or other
governmental charge required to be paid with respect to such exchange, and may
in addition require the payment of a reasonable sum to cover expenses incurred
by the Authority or the Trustee in connection with such exchange.
During the Fixed Rate Period, the Trustee shall not be required to
exchange any Bond during the period beginning 15 days before the mailing of
notice of redemption calling the Bond or any portion of the Bond for redemption
and ending on the redemption date.
Section 2.08. Bond Register. The Trustee is hereby appointed the Bond
Registrar of the Authority and the Tender Agent is hereby appointed the Co-Bond
Registrar of the Authority. The Trustee or the Tender Agent, as the case may be,
will keep or cause to be kept sufficient books for the registration and transfer
of the Bonds, which shall at all times be open to inspection during regular
business hours by any Bondholder or his agent duly authorized in writing, the
Authority, the Company, the Bank and the Remarketing Agent; and upon
presentation for such purpose, the Trustee or the Tender Agent, as the case may
be, shall, under such reasonable regulations as they may prescribe, register or
transfer or cause to be registered or transferred, on such books, Bonds as
hereinbefore provided.
Section 2.09. Temporary Bonds. The Bonds may be issued in temporary
form exchangeable for definitive Bonds when ready for delivery. Any temporary
Bond may be printed, lithographed or typewritten, shall be of such denomination
as may be determined by the Authority, shall be in fully registered form without
coupons and may contain such reference to any of the provisions of this
Indenture as may be appropriate. Every temporary Bond shall be executed by the
Authority and be authenticated by the Trustee or the Tender Agent, as the case
may be, upon the same conditions and in substantially the same manner as the
definitive Bonds. If the Authority issues temporary Bonds it will execute and
deliver definitive Bonds as promptly thereafter as practicable, and thereupon
the temporary Bonds may be surrendered, for cancellation, in exchange therefor
at the Principal Corporate Trust Office of the Trustee and the Trustee or the
Tender Agent, as the case may be, shall authenticate and deliver in exchange for
such temporary Bonds an equal aggregate principal amount of definitive Bonds of
authorized denominations. Until so exchanged, the temporary Bonds shall be
entitled to the same benefits under this Indenture as definitive Bonds
authenticated and delivered hereunder.
Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond
shall become mutilated, the Authority, at the expense of the Holder of said
Bond, shall execute, and the Trustee
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shall thereupon authenticate and deliver, a new Bond of like tenor and number in
exchange and substitution for the Bond so mutilated, but only upon surrender to
the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the
Trustee shall be canceled by it and delivered to, or upon the order of, the
Authority. If any Bond shall be lost, destroyed or stolen, evidence of such
loss, destruction or theft may be submitted to the Authority and the Trustee
and, if such evidence be satisfactory to both and indemnity satisfactory to them
both shall be given, the Authority, at the expense of the Holder, shall execute,
and the Trustee shall thereupon authenticate and deliver, a new Bond of like
tenor and number in lieu of and in substitution for the Bond so lost, destroyed
or stolen (or if any such Bond shall have matured or shall be about to mature,
instead of issuing a substitute Bond, the Trustee may pay the same without
surrender thereof). The Authority may require payment by the Holder of a sum not
exceeding the actual cost of preparing each new Bond issued under this Section
and of the expenses which may be incurred by the Authority and the Trustee in
connection therewith. Any Bond issued under the provisions of this Section in
lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an
original additional contractual obligation on the part of the Authority whether
or not the Bond so alleged to be lost, destroyed or stolen be at any time
enforceable by anyone, and shall be entitled to the benefits of this Indenture
with all other Bonds secured by this Indenture.
Section 2.11. Cancellation and Destruction of Surrendered Bonds. All
Bonds surrendered for payment or redemption and all Bonds purchased with moneys
available for that purpose in any funds established under this Indenture, shall,
at the time of such payment or redemption, be canceled and destroyed by the
Trustee. The Trustee shall deliver to the Authority certificates of destruction
with respect to all Bonds destroyed in accordance with this Section.
Section 2.12. Acts of Bondholders; Evidence of Ownership. Any action to
be taken by Bondholders may be evidenced by one or more concurrent written
instruments of similar tenor signed or executed by such Bondholders in person or
by agents 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. Any action by the holder of any Bond shall bind all future
holders of the same Bond in respect of any thing done or suffered by the
Authority or the Trustee in pursuance thereof.
Section 2.13. Book-Entry Bonds; Securities Depository.
(a) The Bonds shall initially be registered to Cede & Co., the
nominee for the Securities Depository, and no beneficial owner will receive
certificates representing their respective interests in the Bonds, except in the
event the Trustee issues Replacement Bonds as provided in subsection (b) hereof.
It is anticipated that during the term of the Bonds, the Securities Depository
will make book-entry transfers among its Participants and receive and transmit
payment of principal of, premium, if any, and interest on, the Bonds to the
Participants until and unless the Trustee authenticates and delivers Replacement
Bonds to the beneficial owners as described in subsection (b).
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(b) If the Company determines: (1) that the Securities
Depository is unable to properly discharge its responsibilities; or (2) that the
Securities Depository is no longer qualified to act as a securities depository
and registered clearing agency under the Securities Exchange Act; or (3) that
the continuation of a book-entry system to the exclusion of any Bonds being
issued to any Bondowner other than Cede & Co. is no longer in the best interests
of the beneficial owners of the Bonds, then the Trustee shall notify the
Bondowners of such determination or such notice and of the availability of
certificates of Owners requesting the same, and the Trustee shall register in
the name of and authenticate and deliver Replacement Bonds to the beneficial
owners or their nominees in principal amounts representing the interest of each,
making such adjustments as it may find necessary or appropriate as to accrued
interest and previous calls for redemption; provided, that in the case of a
determination under (1) or (2) of this subsection (b), the Company, with the
consent of the Trustee, may select a successor Securities Depository in
accordance with subsection (c) hereof to effect book-entry transfers. In such
event, all references to the Securities Depository herein shall relate to the
period of time when the Securities Depository has possession of at least one
Bond. Upon the issuance of Replacement Bonds, all references herein to
obligations imposed upon or to be performed by the Securities Depository shall
be deemed to be imposed upon and performed by the Trustee, to the extent
applicable with respect to such Replacement Bonds. If the Securities Depository
resigns and the Company, the Trustee or Bondowners are unable to locate a
qualified successor of the Securities Depository in accordance with subsection
(c) hereof, then the Trustee shall authenticate and cause delivery of
Replacement Bonds to Bondowners, as provided herein. The Trustee may rely on
information from the Securities Depository and its Participants as to the names
of the beneficial owners of the Bonds. The cost of printing Replacement Bonds
shall be paid for by the Company.
(c) In the event the Securities Depository resigns, is unable
to properly discharge its responsibilities, or is no longer qualified to act as
a securities depository and registered clearing agency under the Securities
Exchange Act, the Company may appoint a successor Securities Depository provided
the Trustee receives written evidence satisfactory to the Trustee with respect
to the ability of the successor Securities Depository to discharge its
responsibilities. Any such successor Securities Depository shall be a securities
depository which is a registered clearing agency under the Securities Exchange
Act, or other applicable statute or regulation that operates a securities
depository upon reasonable and customary terms. The Trustee upon its receipt of
a Bond or Bonds for cancellation shall cause the delivery of Bonds to the
successor Securities Depository in appropriate denominations and form as
provided herein.
(d) Notwithstanding any provision herein to the contrary, so
long as the Bonds are subject to a system of book-entry transfers pursuant to
this Section 2.13, any requirement for the delivery of Bonds to the Tender Agent
or the Trustee in connection with a tender pursuant to Section 5.01, 5.03 or
5.04 or a partial redemption pursuant to Section 4.01 shall be deemed satisfied
upon the transfer, on the registration books of the Securities Depository, of
the beneficial ownership interests in such Bonds tendered for purchase to the
account of the Tender Agent, or a Participant acting on behalf of or at the
discretion of such Tender Agent, or on the books of the Trustee.
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ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS
Section 3.01. Issuance of the Bonds. At any time after the execution of
this Indenture, the Authority may execute and the Trustee or the Tender Agent,
as the case may be, shall authenticate and, upon request of the Authority,
deliver the Bonds in the aggregate principal amount of One Million Dollars
($1,000,000).
Section 3.02. Validity of Bonds. The validity of the authorization and
issuance of the Bonds is not dependent on and shall not be affected in any way
by any proceedings taken by the Authority or the Trustee with respect to or in
connection with the Agreement. The recital contained in the Bonds that the same
are issued pursuant to the Act and the Constitution and laws of the Commonwealth
shall be conclusive evidence of their validity and of compliance with all
provisions of law in their issuance.
Section 3.03. Disposition of Proceeds of the Bonds and Other Amounts.
The Authority shall deposit or cause to be deposited with the Trustee,
immediately upon receipt thereof, all proceeds derived from the sale of the
Bonds, together with any monies deposited by the Company as an equity
contribution. The Trustee shall deposit all such amounts in a special fund,
which the Trustee is hereby directed to establish and create, to be known as the
"Clearing Fund", and in the following order, the Trustee shall:
(a) Transfer to the persons identified on the Closing Statement
executed by the Authority and the Company and delivered to the Trustee on the
Closing Date (the "Closing Statement") to pay or reserve for payment any and all
costs of issuance incurred in connection with the Bonds;
(b) Transfer to the Company the amount set forth on the Closing
Statement to reimburse the Company for any capital expenditures made, if any, in
connection with the Project prior to the issuance of the Bonds; and
(c) Transfer to the credit of the Construction Fund (created
pursuant to Section 6.05 hereof) the balance of the funds held in the Clearing
Fund not otherwise reserved for the payment of the items described in subsection
3.03(a) and (b) above.
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ARTICLE IV
REDEMPTION OF BONDS BEFORE MATURITY
Section 4.01. Extraordinary and Mandatory Redemption.
(a) Extraordinary Redemption. The Bonds are callable for
redemption in the event: (1) the Project Facilities or any portion thereof are
damaged or destroyed or taken in a condemnation proceeding as provided in
Section 6.04 of the Agreement; or (2) the Company shall exercise its option to
cause the Bonds to be redeemed as provided in Section 9.02 of the Agreement. If
called for redemption at any time pursuant to this Section 4.01(a), the Bonds
shall be subject to redemption by the Authority on any Interest Payment Date, in
whole or in part, at a redemption price equal to 100% of the principal amount
thereof being redeemed, plus accrued interest to the redemption date.
(b) Mandatory Redemption. The Bonds are subject to mandatory
redemption:
(1) at any time, in whole, within one hundred eighty (180)
days after the Trustee receives notice of the occurrence of a Determination of
Taxability, at a redemption price equal to one hundred percent (100%) of the
aggregate principal amount of Bonds Outstanding plus accrued interest to the
redemption date; or
(2) five (5) Business Days prior to the Letter of Credit
Termination Date, in whole, at a redemption price equal to one hundred percent
(100%) of the principal amount thereof being redeemed plus accrued interest to
the redemption date if, on the thirtieth (30th) Business Day prior to the Letter
of Credit Termination Date, the Trustee shall not have received a Substitute
Letter of Credit which will be effective on or before the Letter of Credit
Termination Date.
(c) Mandatory Sinking Fund Redemption. The Bonds are subject to
mandatory sinking fund redemption on the Interest Payment Date occurring in the
month of December in each of the years set forth below commencing on the
Interest Payment Date occurring in December of 1997 (each, a "Mandatory Sinking
Account Payment Date"), at a redemption price equal to 100% of the principal
amount thereof plus accrued interest as follows:
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Mandatory Sinking
Year Account Payments
---- ----------------
1997 30,000
1998 35,000
1999 35,000
2000 40,000
2001 40,000
2002 40,000
2003 40,000
2004 45,000
2005 45,000
2006 50,000
2007 50,000
2008 50,000
2009 55,000
2010 55,000
2011 60,000
2012 60,000
2013 65,000
2014 65,000
2015 70,000
2016* 70,000
*Final maturity of the Bonds is December 1, 2016
Section 4.02. Optional Redemption. On or prior to the Conversion Date,
the Bonds are subject to redemption by the Authority, at the option of the
Company, at any time, subject to provisions of Section 4.03 hereof, in whole or
in part, at the redemption price of 100% of the principal amount thereof being
redeemed plus accrued interest to the redemption date.
After the Conversion Date, if the length of time from the Conversion
Date to the final maturity date of the Bonds is seven (7) years or more, the
Bonds are subject to redemption by the Authority, at the option of the Company,
on or after the fifth anniversary of the Conversion Date, in whole at any time
or in part on any Interest Payment Date, at the redemption price of 100% of the
principal amount thereof being redeemed plus accrued interest to the redemption
date.
Notwithstanding the foregoing, no such optional redemption shall occur
after the Conversion Date unless there shall be available in the Bond Fund
sufficient Available Moneys to pay all amounts due with respect to such a
redemption.
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Section 4.03. Notice of Redemption. Notice of the call for redemption,
identifying the Bonds or portions thereof to be redeemed and the redemption
price (including the premium, if any), shall be given by the Trustee by mailing
a copy of the redemption notice by first-class mail, postage prepaid, at least
thirty (30) days but not more than sixty (60) days prior to the date fixed for
redemption to the Owner of each Bond to be redeemed in whole or in part at the
address shown on the registration books. Such notice shall contain such matters
specified in the Bonds for the redemption thereof and shall state that such
redemption is conditional upon the receipt of monies by the Trustee for such
purpose on or prior to the redemption date. Any notice mailed as provided in
this Section shall be conclusively presumed to have been duly given, whether or
not the Owner receives the notice. The Trustee shall deliver a copy of any such
redemption notice to the Tender Agent, the Company and to the Remarketing Agent.
Section 4.04. Interest on Bonds Called for Redemption. Upon the giving
of notice and the deposit of Available Moneys for redemption at the required
times on or prior to the date fixed for redemption, as provided in this Article,
interest on the Bonds or portions thereof thus called shall no longer accrue
after the date fixed for redemption.
Section 4.05. Cancellation. All Bonds which have been redeemed shall
not be reissued but shall be canceled and destroyed by the Trustee in accordance
with Section 2.11 hereof.
Section 4.06. Partial Redemption of Bonds.
(a) If less than all the Bonds are to be redeemed, the
particular Bonds or portions thereof to be redeemed shall be selected by the
Trustee by lot.
(b) Upon surrender of any Bond for redemption in part only, the
Authority shall execute and the Trustee shall authenticate and deliver to the
Owner thereof a new Bond or Bonds of authorized denominations, in an aggregate
principal amount equal to the unredeemed portion of the Bond surrendered. If all
or a portion of Bonds tendered for purchase pursuant to Section 5.04 hereof have
been selected by the Trustee for redemption, the Tender Agent, upon receipt of
such tendered Bonds, shall authenticate and redeliver only such portion of
tendered Bonds not subject to redemption. The Tender Agent shall deliver to the
tendering Bondholder a copy of the notice of redemption, indicating the portion
of the Bonds subject thereto, and upon receipt of funds as provided herein, an
amount representing the principal of and interest on the Bonds not called for
redemption. The principal of and interest accrued on the Bonds called for
redemption shall be paid to such bondholder on the redemption date. The Tender
Agent shall cancel the Bond or such portion thereof tendered for purchase and
subject to redemption, and shall deliver a certificate evidencing such
cancellation and the canceled Bond to the Trustee.
(c) (i) Prior to the Conversion Date, in case a Bond is of a
denomination larger than $100,000, a portion of such Bond ($100,000 or any
integral multiple of $5,000 in excess thereof) may be redeemed, but Bonds shall
be redeemed only if the remaining unredeemed portion of such Bond is in the
principal amount of $100,000 or any integral multiple of $5,000 in excess of
$100,000.
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(ii) After the Conversion Date, in case a Bond is of a
denomination larger than $5,000, a portion of such Bond ($5,000 or any integral
multiple thereof) may be redeemed, but Bonds shall be redeemed only if the
remaining unredeemed portion of such Bond is in the principal amount of $5,000
or any integral multiple of $5,000.
(d) Notwithstanding anything to the contrary contained in this
Indenture, whenever the Bonds are to be redeemed in part, Bonds which are
Pledged Bonds at the time of selection of Bonds for redemption shall be selected
for redemption prior to the selection of any other Bond. If the aggregate
principal amount of Bonds to be redeemed exceeds the aggregate principal amount
of Pledged Bonds at the time of selection, the Trustee may select for redemption
Bonds in an aggregate principal amount equal to such excess in such manner as
the Trustee in its discretion shall deem fair and appropriate.
Section 4.07. Payment of Redemption Price with Available Moneys;
Consent of Letter of Credit Bank to Optional Redemption. Notwithstanding any
provision to the contrary contained in this Indenture, the payment of the
redemption price of Bonds shall be made only from Available Moneys. On each date
that the Bonds are subject to redemption, the Trustee shall draw on the Letter
of Credit in an amount sufficient to pay the full redemption price of the Bonds
then subject to redemption from the sources and in the order provided in Section
6.03 hereof. As long as the Bank is not in default under the Letter of Credit,
the Trustee shall not call Bonds for Optional Redemption unless it has received
the prior written consent to such Optional Redemption from the Letter of Credit
Bank.
ARTICLE V
CONVERSION OF INTEREST RATE; DEMAND PURCHASE OPTION
Section 5.01. Conversion of Interest Rate on Conversion Date. The
interest rate on the Bonds shall be converted from the Floating Rate to the
Fixed Rate upon the exercise by the Company of the Conversion Option, and the
Bonds shall be subject to mandatory tender for purchase by the Owners thereof on
the Conversion Date. To exercise the Conversion Option, the Company shall notify
the Trustee, the Tender Agent, the Bank, the Authority and the Remarketing Agent
at least thirty-five (35) days prior to the Conversion Date of such exercise,
cause the Remarketing Agent to furnish to the Trustee the information set forth
in paragraphs 1 and 4 below and, thereafter cause the Trustee to deliver or mail
by first class mail a notice at least twenty (20) days but not more than thirty
(30) days prior to the Conversion Date to the Owner of each Bond at the address
shown on the registration books of the Bond Registrar. No such notice may be
given unless the Trustee first receives: (i) an opinion of nationally recognized
bond counsel to the effect that the proposed conversion of the interest rate on
the Bonds will not cause the interest on the Bonds to be includable in gross
income of the Bondholders for federal income tax purposes; (ii) a commitment
from the
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Bank or a Substitute Bank to issue a Substitute Letter of Credit to take effect
on the Conversion Date, together with a proposed form of such Substitute Letter
of Credit; and (iii) a Company certificate to the effect that each of the
Company's representations and warranties made in the Agreement and in any other
agreements or certificates given by the Company in connection with the issuance
of the Bonds remain true and correct in all material respects as of the proposed
Conversion Date. Any notice given as provided in this section shall be
conclusively presumed to have been duly given, whether or not the Owner receives
the notice. Said notice shall state in substance the following:
1. the Conversion Date;
2. that the existing Letter of Credit will expire five (5)
Business Days after the Conversion Date;
3. that unless firm commitments for the purchase of all
Outstanding Bonds have been received on or prior to the fifth (5th)
Business Day prior to the proposed Conversion Date, the Company has the
option to rescind an optional conversion of the Bonds; and
4. that in the event the Company elects not to rescind the
optional conversion of the Bonds, all Bonds shall be subject to
mandatory purchase on the Conversion Date pursuant to this Section
5.01.
On or prior to the Conversion Date, Owners of Bonds shall be required to deliver
their Bonds to the Tender Agent for purchase at the Purchase Price, and any such
Bonds not delivered to the Tender Agent on or prior to the Conversion Date
("Undelivered Bonds"), for which there has been irrevocably deposited in trust
with the Trustee or the Tender Agent an amount of money sufficient to pay the
Purchase Price of the Undelivered Bonds, shall be deemed to have been purchased
pursuant to this Section 5.01 and are deemed to be no longer Outstanding with
respect to such prior Owners. IN THE EVENT OF A FAILURE BY AN OWNER OF BONDS TO
DELIVER ITS BONDS ON OR PRIOR TO THE CONVERSION DATE, SAID OWNER SHALL NOT BE
ENTITLED TO ANY PAYMENT (INCLUDING ANY INTEREST TO ACCRUE ON OR SUBSEQUENT TO
THE OPTIONAL CONVERSION DATE) OTHER THAN THE PURCHASE PRICE FOR SUCH UNDELIVERED
BONDS, AND ANY UNDELIVERED BONDS SHALL NO LONGER BE ENTITLED TO THE BENEFIT OF
THIS INDENTURE, EXCEPT FOR THE PURPOSE OF PAYMENT OF THE PURCHASE PRICE
THEREFOR.
Notwithstanding the foregoing provisions, to the extent that at the
close of the fifth Business Day prior to the proposed Conversion Date, the
Remarketing Agent has not presented to the Company firm commitments for the
purchase of all of the Bonds, the Company, at its option, may rescind an
optional conversion of the Bonds. Any such election to rescind must be made by
the close of the fourth Business Day prior to the proposed Conversion Date and
the Company shall give written notice to the Trustee, the Tender Agent and the
Bank of its decision to rescind by such time.
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The Company shall cause the Trustee to immediately notify the Owners of such
rescission and thereafter the Bonds shall bear interest at the Floating Rate in
effect for the current Weekly Period and thereafter the Bonds shall bear
interest at the Floating Rate until any subsequent Conversion Date effected in
accordance with this Indenture.
In the event the Company rescinds the proposed optional conversion in
accordance with the terms of the foregoing paragraph, the Letter of Credit then
in effect will remain in effect in accordance with its terms.
The Bonds are subject to mandatory purchase in whole on the Conversion
Date, at a purchase price equal to 100% of the principal amount thereof being
purchased, plus accrued interest to the purchase date; provided, however, that:
(i) all Pledged Bonds for which a commitment to purchase has not been received
in connection with a conversion of the Bonds to a Fixed Rate, shall be redeemed
or otherwise paid by the Company on or before the Conversion Date; and (ii) no
such mandatory purchase shall take place in the event the Company exercises its
right to rescind the conversion.
Section 5.02. Delivery of Bonds After Conversion Date. At any time
prior to the Record Date preceding the first Interest Payment Date following the
Conversion Date, the Trustee or the Tender Agent, as the case may be, shall
deliver Bonds in the form of Exhibit "B" hereto. Prior to the delivery by the
Trustee of such Bonds, there shall be filed with the Trustee a request and
authorization to the Trustee on behalf of the Authority, which shall be executed
by the Chairman, Vice Chairman, Secretary, Assistant Secretary or any authorized
officer of the Authority to authenticate and deliver the Bonds, as executed by
the Authority, to the purchasers thereof. Such delivery shall be made by the
Trustee or the Tender Agent, as the case may be, without making any charge
therefor to the Owner of such Bonds.
Section 5.03. Mandatory Tender upon Substitution of Letter of Credit.
Prior to the Conversion Date, the Bonds are subject to mandatory purchase in
whole on the Substitution Date, at a purchase price equal to 100% of the
principal amount thereof being purchased, plus accrued interest to the purchase
date. The Trustee shall deliver or mail by first class mail a notice at least
twenty (20) days but not more than thirty (30) days prior to the Substitution
Date to the Owner of each Bond at the address shown on the registration books of
the Bond Registrar notifying such Owner that their Bonds are subject to
mandatory purchase. No such notice may be given unless the Company shall have
satisfied the provisions of Section 4.07 of the Agreement. Any notice given as
provided in this Section 5.03 shall be conclusively presumed to have been given,
whether or not the Owner receives the notice. Said notice shall state in
substance the following:
(1) the Substitution Date;
(2) that the existing Letter of Credit securing such Bonds
will expire five (5) Business Days after the Substitution Date; and
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(3) that if the Company satisfies the conditions precedent
to delivery of the Substitute Letter of Credit, all Bonds shall be subject to
mandatory purchase on the Substitution Date pursuant to this Section 5.03.
On or prior to the Substitution Date, Owners of Bonds shall be required to
deliver their Bonds to the Tender Agent for purchase at the Purchase Price, and
any such Bonds not delivered to the Tender Agent on or prior to the Substitution
Date ("Undelivered Bonds"), for which there has been irrevocably deposited in
trust with the Trustee or the Tender Agent an amount of money sufficient to pay
the Purchase Price of the Undelivered Bonds, shall be deemed to have been
purchased pursuant to this Section 5.03 and are deemed to be no longer
Outstanding with respect to such prior Owners. IN THE EVENT OF A FAILURE BY AN
OWNER OF BONDS TO DELIVER ITS BONDS ON OR PRIOR TO THE SUBSTITUTION DATE, SAID
OWNER SHALL NOT BE ENTITLED TO ANY PAYMENT (INCLUDING ANY INTEREST TO ACCRUE ON
OR SUBSEQUENT TO THE SUBSTITUTION DATE) OTHER THAN THE PURCHASE PRICE FOR SUCH
UNDELIVERED BONDS, AND ANY UNDELIVERED BONDS SHALL NO LONGER BE ENTITLED TO THE
BENEFIT OF THIS INDENTURE, EXCEPT FOR THE PURPOSE OF PAYMENT OF THE PURCHASE
PRICE THEREFOR.
Notwithstanding the foregoing provisions, to the extent that at the
close of the fifth Business Day prior to the proposed Substitution Date, the
Company has not delivered to the Authority, the Trustee and the Remarketing
Agent the items set forth in Section 4.07(i) through (iv) of the Agreement, the
mandatory purchase of Bonds shall be rescinded and the Trustee shall notify the
Owners of such rescission immediately and thereafter the Bonds shall continue to
be secured by the existing Letter of Credit until its termination date.
Section 5.04. Demand Purchase Option. Prior to the Conversion Date, any
Bond shall be purchased at the Purchase Price from the Owner thereof upon:
(i) delivery by such Owner to the Trustee and the Tender
Agent at their Principal Corporate Trust Office and Delivery Office,
respectively, and to the Remarketing Agent at its principal office set forth in
Section 12.08 hereof, of a notice (the "Demand Purchase Notice") (said notice to
be irrevocable and effective upon receipt) which states: (1) the aggregate
principal amount and bond numbers of the Bonds to be purchased; and (2) the date
on which such Bonds are to be purchased, which date shall be a Business Day not
prior to the seventh (7th) day next succeeding the date of delivery of such
notice and which date shall be prior to the Conversion Date;
(ii) if such Bonds are to be purchased prior to an Interest
Payment Date and after the Record Date in respect thereof, delivery to the
Tender Agent together with the Demand Purchase Notice described in (i) above, of
a nonrecourse due-bill, payable to bearer, for interest due on such interest
payment date; and
(iii) delivery to the Tender Agent at its Delivery Office at or prior to 10:00
a.m., New York City time, on the date designated for purchase in the applicable
Demand Purchase Notice of such Bonds to be purchased, with an appropriate
endorsement for transfer or accompanied by a bond power endorsed in blank.
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Any Bond as to which a Demand Purchase Notice has been delivered
pursuant to paragraph (i) above, must be delivered to the Tender Agent, as
provided in (iii) above, and any such Bond not so delivered ("Undelivered
Bonds"), for which there has been irrevocably deposited in trust with the
Trustee or the Tender Agent an amount of money sufficient to pay the Purchase
Price thereof, shall be deemed to have been purchased at the Purchase Price
pursuant to this Section 5.04 and are deemed to be no longer Outstanding with
respect to such tendering Owner. IN THE EVENT OF A FAILURE BY AN OWNER OF BONDS
TO DELIVER ITS BONDS AS SPECIFIED ABOVE, SAID OWNER SHALL NOT BE ENTITLED TO ANY
PAYMENT (INCLUDING ANY INTEREST TO ACCRUE ON OR SUBSEQUENT TO THE DATE
DESIGNATED FOR PURCHASE IN THE APPLICABLE DEMAND PURCHASE NOTICE) OTHER THAN THE
PURCHASE PRICE FOR SUCH UNDELIVERED BONDS, AND ANY UNDELIVERED BONDS SHALL NO
LONGER BE ENTITLED TO THE BENEFIT OF THE INDENTURE, EXCEPT FOR THE PAYMENT OF
THE PURCHASE PRICE THEREFOR.
Notwithstanding the foregoing provisions, in the event any Bond as to
which the Owner thereof has exercised the Demand Purchase Option is remarketed
to such Owner pursuant to the Remarketing Agreement, such Owner need not deliver
such Bond to the Tender Agent as provided in (iii) above, although such Bond
shall be deemed to have been delivered to the Tender Agent, redelivered to such
Owner, and remarketed for purposes of this Indenture, including, without
limitation, for purposes of adjusting the Floating Rate as provided in Section
2.02(C) hereof.
Section 5.05. Funds for Purchase of Bonds.
(a) On the date Bonds are to be purchased pursuant to Section
5.01, Section 5.03 or Section 5.04 hereof, such Bonds shall be purchased at the
Purchase Price only from the funds listed below. Subject to the provisions of
Section 6.12(b), funds for the payment of the Purchase Price shall be derived
from the following sources in the order of priority indicated:
(i) moneys drawn by the Trustee under the Letter of Credit
(in the event of a drawing on the Letter of Credit to fund payment of the
Purchase Price of Bonds tendered pursuant to Section 5.03 hereof, the Trustee
shall draw on the existing Letter of Credit and not the Substitute Letter of
Credit to fund such payment);
(ii) proceeds of the remarketing of the Bonds; and
(iii) any other Available Moneys furnished to the Trustee
or the Tender Agent and available for such purpose.
(b) Payment for the Bonds purchased pursuant to Sections 5.01,
5.03 or 5.04 shall be made as follows:
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(i) On the Business Day immediately preceding the date on
which such Bonds are to be purchased (the "Purchase Date"), the Trustee shall
make a drawing pursuant to the Letter of Credit in respect of the Purchase Price
of such Bonds. In connection therewith, the Trustee shall prepare and present to
the Bank the appropriate certificates required under the Letter of Credit by
12:00 noon, New York City time on the Business Day immediately preceding the
Purchase Date.
(ii) By not later than 10:00 a.m., New York City time, on
the Purchase Date, the Remarketing Agent shall give telephonic notice, promptly
confirmed in writing, to the Bank, the Trustee and the Tender Agent, specifying:
(1) the total principal amount of Bonds, if any,
remarketed by it; and
(2) the names of the persons to whom such Bonds
were sold and are to be registered, each such
person's address and social security number
or taxpayer identification number, the
denominations in which replacement Bonds are
to be prepared, and any other appropriate
registration and transfer instructions.
(iii) There is hereby established with the Tender Agent a
special fund to be designated the "Bond Purchase Fund" and therein two separate
and segregated accounts to be designated the "Remarketing Account" and the "Bank
Account." An amount equal to the proceeds received by the Trustee pursuant to a
draw under the Letter of Credit shall be transferred by the Trustee in
immediately available funds to the Tender Agent for deposit in the Bank Account
no later than 12:30 p.m., New York City time on the applicable Purchase Date.
(iv) No later than 1:00 p.m., New York City time, on each
Purchase Date, the Tender Agent shall give telephonic notice (promptly confirmed
by telecopy) to the Remarketing Agent of the amount deposited in the Bank
Account on such date. No later than 2:00 p.m., New York City time, on each
Purchase Date the Remarketing Agent shall: (x) transfer to the Bank an amount of
the proceeds of the remarketing of the Bonds equal to the amount deposited in
the Bank Account on such Purchase Date; (y) transfer the remainder of the
proceeds of the remarketing of the Bonds to the Tender Agent for deposit in the
Remarketing Account and shall give telephonic notice (promptly confirmed by
telecopy) to the Tender Agent of the amount of such proceeds transferred to the
Bank; and (z) give telephonic notice, promptly confirmed in writing, to the
Company of the total principal amount of Unremarketed Bonds, if any.
(v) The Tender Agent shall pay the Purchase Price to the
tendering Bondholders from the amounts on deposit in the Bank Account to the
extent available. If amounts on deposit in the Bank Account are insufficient to
pay the Purchase Price to the tendering Bondholders, the Tender Agent shall make
up any such deficiency from amounts on deposit in the Remarketing Account.
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(vi) The Bank shall give telephonic confirmation to the
Tender Agent and the Trustee by 4:00 p.m., New York City time on the applicable
Purchase Date of its receipt of the remarketing proceeds described in Section
5.05(b)(iv) hereof.
Section 5.06. Delivery of Purchased Bonds.
(a) Remarketed Bonds shall be delivered by the Tender Agent, at
its Delivery Office, to or upon the order of the purchasers thereof.
(b) Unremarketed Bonds purchased with funds drawn under the
Letter of Credit shall be delivered by the Tender Agent to the Pledged Bonds
Custodian or otherwise upon the order of the Bank pursuant to the Pledge
Agreement.
(c) Unremarketed Bonds purchased with moneys described in
Section 5.05(a)(iii) hereof shall, at the direction of the Company, be: (i)
delivered as instructed by the Company; or (ii) delivered to the Trustee for
cancellation; provided, however, that any Bonds so purchased after the selection
thereof by the Trustee for redemption shall be delivered to the Trustee for
cancellation.
(d) The Tender Agent shall deliver to the person to whom the
Tender Agent is to deliver such Bonds, the nonrecourse due-bills, if any,
delivered to the Tender Agent with respect to such Bonds in accordance with
Section 5.04 hereof.
Bonds delivered as provided in this Section shall be registered in the
manner directed by the recipient thereof.
Section 5.07. Sale of Bonds by Remarketing Agent.
(a) On each Purchase Date, the Remarketing Agent shall offer
for sale and use its best efforts to sell, as agent of the Company, all Bonds
tendered or deemed tendered for purchase on such Purchase Date at the Purchase
Price thereof and, if such Bonds are not sold on such date, the Remarketing
Agent shall continue, for a period not in excess of thirty (30) days thereafter,
to use its best efforts to sell such Bonds.
(b) Notwithstanding anything to the contrary herein: (i) the
Remarketing Agent shall use its best efforts to remarket any Bonds tendered or
deemed tendered for purchase in such a manner that, immediately following the
remarketing of any Bonds, at least one (1) Holder will own at least $200,000 in
aggregate principal amount of Bonds; and (ii) the Remarketing Agent shall not
remarket any Bonds to the Authority, the Company or any affiliate thereof.
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Section 5.08. Delivery of Proceeds of Sale of Purchased Bonds.
(a) Except in the case of the sale of any Pledged Bonds, the
proceeds of the sale of any Bonds delivered or deemed delivered to the Tender
Agent pursuant to Sections 5.01, 5.03 or 5.04 hereof, to the extent not required
to pay the Purchase Price to tendering Bondholders and not required to reimburse
the Bank under the Reimbursement Agreement, shall be paid to or upon the order
of the Company.
(b) In the event the Remarketing Agent shall have remarketed
any Pledged Bonds and the Company or the Remarketing Agent shall have directed
the Bank to cause the Pledged Bonds Custodian to deliver such Pledged Bonds to
the Tender Agent pursuant to the Pledge Agreement, such Bonds shall be delivered
to the Tender Agent and the proceeds of sale of such Bonds shall be delivered to
the Delivery Office of the Tender Agent, and shall be paid to or upon the order
of the Bank; provided that any amounts so paid in excess of amounts then due to
the Bank in respect of drawings under the Letter of Credit shall be delivered by
the Bank to or upon the order of the Company; provided further that Pledged
Bonds shall not be delivered to the Tender Agent until the Letter of Credit has
been reinstated in accordance with the terms of the Pledge Agreement and the
Letter of Credit.
Section 5.09. Duties of Trustee and Tender Agent with Respect to
Purchase of Bonds.
(a) The Tender Agent shall hold all Bonds delivered to it
pursuant to Sections 5.01, 5.03 or 5.04 hereof in trust for the benefit of the
respective Owners of Bonds which shall have so delivered such Bonds until moneys
representing the Purchase Price of such Bonds shall have been delivered to or
for the account of or to the order of such Owners of Bonds. Upon delivery of
monies representing the Purchase Price of such Bonds to or for the account of or
to the order of such Owners of Bonds, the Tender Agent shall deliver all such
Unremarketed Bonds, the funds for which have been obtained by a drawing under
the Letter of Credit, to the Pledged Bonds Custodian pursuant to Section 5.06(b)
hereof for the purpose of perfecting the Bank's security interest therein under
the Pledge Agreement unless the Bank shall direct the Tender Agent to deliver
such Bonds to or upon the order of the Bank in accordance with Section 5.06
hereof.
(b) The Trustee and the Tender Agent shall hold all moneys
delivered to them pursuant to this Indenture for the purchase of Bonds in a
separate account, in trust for the benefit of the Bank or, in the case of
remarketed Bonds, the purchasers of such Bonds, until the Bonds purchased with
such moneys shall have been delivered to or for the account of the Pledged Bonds
Custodian, the Bank or to such other purchaser, as appropriate.
(c) The Trustee shall deliver to the Company and the Bank a
copy of each notice delivered to it in accordance with Section 5.04 within two
(2) days of the receipt thereof.
(d) As soon as possible, but not later than the close of
business on any date designated for purchase of Bonds in accordance with Section
5.04; the Tender Agent shall give
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telephonic or telegraphic notice to the Remarketing Agent and the Trustee
specifying the principal amount of Bonds delivered or deemed delivered for
purchase on such date.
(e) The Trustee shall draw moneys under the Letter of Credit
in accordance with the terms thereof to the extent required by Sections 5.05 and
6.12 hereof to provide for timely payment of the Purchase Price of Bonds.
Section 5.10. No Purchases or Sales After Certain Defaults. Anything in
this Indenture to the contrary notwithstanding, there shall be no purchases or
sales of Bonds pursuant to Section 5.04 if there shall have occurred any Event
of Default in respect of which the principal of all Bonds Outstanding shall have
been declared immediately due and payable pursuant to Section 8.02 and such
declaration shall not have been annulled. If the Trustee shall have given a
notice of a call for redemption pursuant to Section 4.03 hereof and such notice
shall not have been rescinded, the Remarketing Agent shall provide a notice of
such redemption to any prospective purchaser of such Bonds upon the remarketing
of any Bonds tendered pursuant to Section 5.04 hereof. Nothing in this Section
is intended to limit secondary trading or transfer of the Bonds.
ARTICLE VI
REVENUES AND FUNDS
Section 6.01. Creation of the Bond Fund. There is hereby created and
established with the Trustee a trust fund to be designated "Bond Fund" which
shall be used to pay when due the principal and Purchase Price of, premium, if
any, and interest on the Bonds.
Section 6.02. Payments into the Bond Fund. There shall be deposited
into the Bond Fund from time to time the following:
(a) any amount in the Construction Fund directed to be paid
into the Bond Fund in accordance with the provisions of Section 6.07 or Section
6.08 hereof;
(b) any amount deposited into the Bond Fund pursuant to Section
6.04 hereof;
(c) all payments specified in Sections 3.03 and 3.04 of the
Agreement (other than amounts paid for the Trustee's or the Authority's own
account);
(d) any moneys received pursuant to the Collateral Documents;
(e) any moneys drawn under the Letter of Credit which moneys
shall be deposited or credited (in the case of a draw to pay the Purchase Price)
in a separate subaccount of the Bond Fund and shall not be commingled with any
other moneys held by the Trustee;
(f) amounts, if any, held by the Trustee pursuant to Section
5.09 hereof; and
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(g) all other moneys received by the Trustee under and pursuant
to any of the provisions of the Agreement which are required to be or which are
accompanied by directions that such moneys are to be paid into the Bond Fund.
Section 6.03. Use of Moneys in the Bond Fund. Except as provided in
Sections 5.05, 5.09 and 6.11 hereof, moneys in the Bond Fund shall be used
solely for the payment of the principal of, premium, if any, and interest on the
Bonds, for the redemption of the Bonds prior to maturity and for payment of the
Acceleration Price as defined in Section 8.02 hereof. Subject to the provisions
of Section 6.12(b) hereof, funds for such payments of redemption price and
principal of and premium, if any, and interest on the Bonds shall be derived
from the following sources in the order of priority indicated:
(i) moneys drawn by the Trustee under the Letter of
Credit;
(ii) amounts deposited into the Bond Fund which constitute
Available Moneys (other than moneys drawn by the Trustee under the Letter of
Credit); and
(iii) any other moneys furnished to the Trustee and
available for such purpose.
Section 6.04. Custody of Separate Trust Fund. The Trustee is authorized
and directed to hold all Net Proceeds from any insurance proceeds or
condemnation award and disburse such proceeds in accordance with Article VII of
the Agreement. If the Company directs that any portion of such Net Proceeds be
applied to redeem Bonds, the Trustee shall deposit such Net Proceeds in a
separate sub-account of the Bond Fund, and the Authority covenants and agrees to
take and cause to be taken any action requested of the Authority to redeem on
the earliest possible redemption date the amount of Bonds so specified by the
Company.
Section 6.05. Construction Fund. There is hereby created and
established with the Trustee a trust fund to be designated "Construction Fund,"
which shall be expended in accordance with the provisions hereof and of the
Agreement.
Section 6.06. Payments into the Construction Fund; Disbursements. The
Construction Fund shall initially consist of those monies deposited therein
pursuant to Section 3.03(c) hereof. Proceeds of the Bonds deposited in the
Construction Fund shall be applied to pay a portion of the costs of the Project.
The Trustee is hereby authorized and directed to make disbursements from the
Construction Fund upon the receipt of a requisition in the form of Exhibit "C"
which is attached hereto and hereby made a part hereof as though fully set forth
herein, executed by an Authorized Representative of the Company and approved by
the Bank. The Trustee shall keep and maintain adequate records pertaining to the
Construction Fund and all disbursements therefrom, including records of all
Requisitions made pursuant to the Agreement, and the Trustee shall, upon request
of the Company, furnish statements in the form customarily prepared by the
Trustee. The Trustee shall hold all monies and investments from time to time on
deposit in the Construction Fund for the Owners and for the Bank, the rights of
the Bank being subject and subordinate to the rights of the
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Trustee so long as any amount due in respect of the Bonds remains unpaid.
Section 6.07. Use of Money in the Construction Fund Upon Default. If
the principal of the Bonds shall have become due and payable pursuant to Article
VIII hereof, any balance remaining in the Construction Fund shall without
further authorization: (i) prior to the Obligation Termination Date, if any
amounts are due and owing under the Reimbursement Agreement, be transferred
immediately to the Bank, as long as the Bank is not in default of its
obligations under either Letter of Credit; or (ii) after the Obligation
Termination Date, be transferred into the Bond Fund.
Section 6.08. Use of Money in the Construction Fund Upon Completion of
the Project. The completion of the Project and payment or provision for payment
of all Costs of the Project shall be evidenced by the filing with the Trustee of
the certificate required by Section 2.03 of the Agreement. As soon as
practicable and in any event not more than sixty (60) days from the date of
receipt by the Trustee of the certificate referred to in the preceding sentence,
any balance remaining in the Construction Fund (except amounts the Company shall
have directed the Trustee to retain for any Cost of the Project not then due and
payable) shall, without further authorization be transferred into a separate
sub-account within the Bond Fund. Thereafter, such funds shall be transferred by
the Trustee on the next Interest Payment Date to the Letter of Credit Bank to
reimburse the Letter of Credit Bank for a drawing affected pursuant to Section
6.12 hereof.
Section 6.09. Nonpresentment of Bonds. In the event any Bond shall not
be presented for payment when the principal thereof becomes due, either at
maturity, or at the date fixed for redemption thereof, or otherwise, if
Available Moneys sufficient to pay any such Bond shall have been made available
to the Trustee for the benefit of the Owner thereof, all liability of the
Authority to the Owner thereof for the payment of such Bond shall forthwith
cease, determine and be completely discharged, and thereupon it shall be the
duty of the Trustee to hold such funds uninvested, without liability for
interest thereon, for the benefit of the Owner of such Bond who shall thereafter
be restricted exclusively to such funds for any claim of whatever nature on his
part under this Indenture with respect to such Bond.
Any moneys so deposited with and held by the Trustee not so applied to
the payment of Bonds within five (5) years after the date on which the same
shall have become due shall be repaid by the Trustee to the Company upon written
direction of a Company Representative, and thereafter Owners of Bonds shall be
entitled to look only to the Company for payment, and then only to the extent of
the amount so repaid, and all liability of the Trustee with respect to such
money shall thereupon cease, and the Company shall not be liable for any
interest thereon and shall not be regarded as a trustee of such money.
Section 6.10. Moneys to be Held in Trust. All moneys required to be
deposited with or paid to the Trustee for the account of any fund or account
referred to in any provision of this Indenture or the Agreement shall be held by
the Trustee in trust, and (except for the moneys from time to time required to
be deposited and maintained in the Rebate Fund) shall, while held by the
Trustee, constitute part of the Trust Estate and be subject to the lien and
security interest created hereby.
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Section 6.11. Repayment to the Bank and the Company from the Bond Fund
or the Rebate Fund. Any amounts remaining in the Bond Fund, the Rebate Fund, the
Construction Fund, or any other fund or account created hereunder after payment
in full of the principal of, premium, if any, and interest on the Bonds, the
fees, charges and expenses of the Trustee and all other amounts required to be
paid hereunder, including payment to the United States of the final installment
of the Rebate Amount, if any, pursuant to Section 6.13 hereof, shall be paid as
soon as possible to the Bank unless the Bank notifies the Trustee to the
contrary in writing, in which case such amounts shall be paid directly to the
Company.
Section 6.12. Letter of Credit.
(a) During the term of the Letter of Credit, the Trustee shall
draw moneys under the Letter of Credit in accordance with the terms thereof: (i)
in an amount sufficient to pay when due (whether by reason of maturity,
redemption, conversion, acceleration or otherwise) the principal of, and
interest and, to the extent the Letter of Credit covers same, any premium on the
Bonds; and (ii) in an amount sufficient to pay when due the Purchase Price of
Bonds. Within two (2) Business Days after the last Determination Date of each
month, the Trustee shall give written notice (which notice may be transmitted
via facsimile) to the Company of the amount that the Trustee will draw under the
Letter of Credit on the next Interest Payment Date.
(b) Notwithstanding any provision to the contrary which may be
contained in this Indenture, including, without limitation, Section 6.12(a): (i)
in computing the amount to be drawn under the Letter of Credit on account of the
payment of the principal or Purchase Price of, interest or, to the extent the
Letter of Credit covers same, any premium, on the Bonds, the Trustee shall
exclude any such amounts in respect of any Bonds which it is advised by the
Tender Agent (pursuant to Section 5.09(d) hereof) are Pledged Bonds prior to the
date such payment is due; and (ii) amounts drawn by the Trustee under the Letter
of Credit shall not be applied to the payment of the Purchase Price of any Bonds
which are Pledged Bonds prior to the date such payment is due.
(c) The Letter of Credit shall terminate in accordance with its
terms on the Letter of Credit Termination Date. Upon such termination, the
Trustee shall deliver the terminated Letter of Credit to the Bank, together with
such certificates as may be required by the terms of the Letter of Credit.
Section 6.13. Rebate Fund.
(a) The Trustee shall establish and maintain a fund separate
from any other fund established and maintained hereunder designated as the
Rebate Fund. The Rebate Fund shall be held for the benefit of the United States
and not for the benefit of the Holders of the Bonds, which Holders shall have no
rights in or to such fund.
(b) Subject to subsection (c) of this Section 6.13, as of the
last day of every fifth Bond Year (the "Rebate Computation Date"), the Company,
on behalf of the Authority shall
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calculate, or cause to be calculated, the amount required to be paid to the
United States (the "Rebatable Arbitrage") pursuant to Section 148 of the Code.
On or before the sixtieth day after such date, the Trustee at the direction of,
and upon the receipt of funds from, the Company shall deposit in the Rebate Fund
the amount, if any, needed to increase the amount in such Fund to an amount
equal to ninety percent (90%) of the Rebatable Arbitrage for the period from the
date of issuance of the Bonds to the Rebate Computation Date at issue, or shall
transfer from the Rebate Fund to the Bond Fund the amount, if any, needed to
reduce the amount in the Rebate Fund to 90% of the amount of the Rebatable
Arbitrage for such period.
Subject to subsection (c) of this Section 6.13, as of the
last day on which the last Bond remaining outstanding is retired (the "Final
Computation Date"), the Company, on behalf of the Authority shall calculate, or
cause to be calculated, the amount required to be paid to the United States of
America pursuant to Section 148 of the Code. On or before the sixtieth day after
such date, the Trustee, at the direction of, and upon the receipt of funds from,
the Company, shall deposit in the Rebate Fund the amount, if any, needed to
increase the amount in such Fund to an amount equal to the Rebatable Arbitrage
for the period from the date of issuance of the Bonds to the Final Computation
Date, or shall transfer from the Rebate Fund to the Bond Fund the amount, if
any, needed to reduce the amount in the Rebate Fund to the amount of the
Rebatable Arbitrage for such period.
After making any transfer required for a Rebate
Computation Date and the Final Computation date, the Authority shall immediately
pay or cause to be paid to the United States the amount in the Rebate Fund. The
amounts in the Rebate Fund shall not be subject to the claim of any party,
including any Bondholder, and shall not be paid to any party other than the
United States.
All amounts in the Rebate Fund shall be used and withdrawn
by the Authority or the Trustee solely for the purposes set forth in this
Section. In the event the amount in the Rebate Fund is for any reason
insufficient to pay to the United States the amounts due as calculated in this
Section, the Company, or the Trustee at the direction of, and upon the receipt
of funds from, the Company, shall deposit in the Rebate Fund the amount for such
deficiency.
(c) Notwithstanding the provisions of this Section 6.13,
the Company, on behalf of the Authority, hereby agrees to calculate the amount
to be deposited in the Rebate Fund and the amount to be rebated to the United
States pursuant to Section 148(f) of the Code in any manner not inconsistent
with its arbitrage covenants set forth in its Rebate Agreement delivered on the
date of issuance of the Bonds. Such calculation shall give regard to all
regulations applicable to such Section 148(f) including any temporary
regulations heretofore or hereafter released.
(d) The Authority and the Company agree that the Trustee
shall not be liable for any damages, costs or liabilities resulting from the
performance of the Trustee's duties and obligations under Section 6.13 hereof,
except that the Trustee shall be liable for its gross negligence or willful
misconduct. The Company shall indemnify and hold harmless the Trustee from and
against any liabilities which the Trustee may incur in the exercise and
performance of its duties and
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obligations under Section 6.13 hereof, excepting only those damages, costs,
expenses or liabilities caused by the Trustee's gross negligence or willful
misconduct. In making any deposit or transfer to or payment from the Rebate
Fund, the Trustee shall be entitled to rely solely on the written instructions
of the Company and shall have no duty to examine such written instruments to
determine the accuracy of the Company's calculation of the Rebate Amount or the
amounts to be paid to the United States. In the event that the Company or the
Authority shall not comply with their respective obligations under Section 6.13
of this Indenture, the Trustee shall have no obligation to cause compliance on
their respective behalf.
Section 6.14. Investment of Moneys in Funds. All moneys in any of the
funds established pursuant to this Indenture (except moneys obtained from a draw
on the Letter of Credit, which moneys shall be held uninvested) shall be
invested by the Trustee, as directed in writing by the Company, solely in
Investment Securities except with respect to Available Moneys held by the
Trustee for the payment of Undelivered Bonds, which Available Moneys the Trustee
shall not invest. Investment Securities may be purchased at such prices as the
Trustee may in its discretion determine or as may be directed by the Company.
All Investment Securities shall be acquired subject to the limitations set forth
in Section 7.06, the limitations as to maturities hereinafter in this Section
set forth and such additional limitations or requirements consistent with the
foregoing as may be established by request of the Company.
To the extent the Bank has not been reimbursed under the Reimbursement
Agreement and has notified the Trustee of same in writing, all interest, profits
and other income received from the investment of moneys in any fund established
pursuant to this Indenture shall be transferred to the Bank in the amount
specified by the Bank. Otherwise, such amounts shall be deposited to the
appropriate fund or account in which such investments were made. Notwithstanding
anything to the contrary contained in this paragraph, an amount of interest
received with respect to any Investment Security equal to the amount of accrued
interest, or premium paid, if any, paid as part of the purchase price of such
Investment Security shall be credited to the fund from which such accrued
interest was paid.
Investment Securities acquired as an investment of moneys in any fund
established under this Indenture shall be credited to such fund. For the purpose
of determining the amount in any fund, all Investment Securities credited to
such fund shall be valued at the lesser of cost or par value plus, prior to the
first payment of interest following purchase, the amount of accrued interest, if
any, paid as a part of the purchase price.
The Trustee may act as principal or agent in the making or disposing of
any investment. The Trustee may sell or present for redemption, any Investment
Securities so purchased whenever it shall be necessary to provide moneys to meet
any required payment, transfer, withdrawal or disbursement from the fund to
which such Investment Security is credited, and the Trustee shall not be liable
or responsible for any loss resulting from such investment.
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ARTICLE VII
PARTICULAR COVENANTS
Section 7.01. Punctual Payment. The Authority shall punctually pay or
cause to be paid the principal, premium, if any, and interest to become due in
respect of all the Bonds, in strict conformity with the terms of the Bonds and
of this Indenture, according to the true intent and meaning thereof, but only
out of Revenues and other assets pledged for such payment as provided in this
Indenture.
Section 7.02. Extension of Payment of Bonds. The Authority shall not
directly or indirectly extend or assent to the extension of the maturity of any
of the Bonds or the time of payment of any claims for interest by the purchase
or funding of such Bonds or claims for interest or by any other arrangement and
in case the maturity of any of the Bonds or the time of payment of any such
claims for interest shall be extended, such Bonds or claims for interest shall
not be entitled, in case of any default hereunder, to the benefits of this
Indenture, except subject to the prior payment in full of the principal of all
of the Bonds then outstanding and of all claims for interest thereon which shall
not have been so extended. Nothing in this Section shall be deemed to limit the
right of the Authority to issue Bonds for the purpose of refunding any
Outstanding Bonds, and such issuance shall not be deemed to constitute an
extension of maturity of Bonds.
Section 7.03. Against Encumbrances. The Authority shall not create, or
permit the creation of, any pledge, lien, charge or other encumbrance upon the
Revenues and other assets pledged or assigned under this Indenture while any of
the Bonds are Outstanding, except the pledge and assignment created by this
Indenture and will assist the Trustee in contesting any such pledge, lien,
charge or other encumbrance which may be created. Subject to this limitation,
the Authority expressly reserves the right to enter into one or more other
indentures for any of its corporate purposes, including other programs under the
Act, and reserves the right to issue other obligations for such purposes.
Section 7.04. Power to Issue Bonds and Make Pledge and Assignment. The
Authority represents and covenants that it is duly authorized pursuant to law to
issue the Bonds and to enter into this Indenture and to pledge and assign the
Revenues and other assets pledged and assigned, respectively, under this
Indenture in the manner and to the extent provided in this Indenture. The Bonds
and the provisions of this Indenture are and will be the legal, valid and
binding limited obligations of the Authority in accordance with their terms, and
the Authority and Trustee shall at all times, to the extent permitted by law,
defend, preserve and protect said pledge and assignment of Revenues and other
assets and all the rights of the Bondholders under this Indenture against all
claims and demands of all Persons whomsoever.
Section 7.05. Accounting Records and Financial Statements. (A) The
Trustee shall at all times keep, or cause to be kept, proper books of record and
account as shall be consistent with prudent industry practice, in which complete
and accurate entries shall be made of all transactions relating to the proceeds
of Bonds, the Revenues, the Agreement and all funds established pursuant to this
Indenture. Such books of record and account shall be available for inspection by
the
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Authority, the Company, the Bank and any bondholder, or his agent or
representative duly authorized in writing, at reasonable hours and under
reasonable circumstances.
(B) The Trustee shall within 30 days after the end of each
month furnish to the Company a monthly statement (which need not be audited)
covering receipts, disbursements, allocation and application of Revenues and any
other moneys (including proceeds of Bonds) in any of the funds and accounts
established pursuant to this Indenture for such month.
Section 7.06. Tax Covenants. The Authority covenants, and the Company
has covenanted, not to take any action, or fail to take any action, if any such
action or failure to take action would adversely affect the exclusion from gross
income of the interest on the Bonds under Section 103 and Sections 141 through
150, inclusive, of the Code. The Authority and the Company will not directly or
indirectly use or permit the use of any proceeds of the Bonds or any other funds
of the Authority or the Company, or take or omit to take any action that would
cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the
Code. To that end, the Authority and the Company will comply with all
requirements of Section 148 of the Code to the extent applicable to the Bonds.
In the event that at any time the Authority or the Company is of the opinion
that for purposes of this Section 7.06 it is necessary to restrict or limit the
yield on the investment of any moneys held by the Trustee under this Indenture,
the Agreement or otherwise, the Authority or the Company shall so instruct the
Trustee in writing, and the Trustee shall take such action as shall be set forth
in such instructions. The covenants of the Authority contained in the Agreement
are fully incorporated herein by reference and are made a part of this Indenture
as if fully set forth herein.
Without limiting the generality of the foregoing, the Authority and the
Company agree that there shall be paid, from time to time, all amounts required
to be rebated to the United States pursuant to Section 148(f) of the Code and
any temporary, proposed or final Treasury Regulations as may be applicable to
the Bonds from time to time. This covenant shall survive payment in full or
defeasance of the Bonds. The Authority and the Company specifically covenant to
pay or cause to be paid to the United States at the times and in the amounts
determined under Section 6.13 hereof the Rebate Amounts, as described in the
Rebate Certificate.
Notwithstanding any provision of this Section and Section 6.13 hereof,
if the Company shall provide to the Authority and the Trustee an opinion of
nationally recognized bond counsel to the effect that any action required under
this Section and Section 6.13 hereof is no longer required, or to the effect
that some further action is required, to maintain the exclusion from gross
income of interest on the Bonds, the Authority, the Trustee and the Company may
rely conclusively on such opinion.
Section 7.07. Other Covenants. (A) The Trustee shall promptly collect
all amounts due from the Company pursuant to the Agreement, and upon an Event of
Default (as defined in the Agreement) shall perform all duties imposed upon it
pursuant to the Agreement and shall diligently enforce, and take all steps,
actions and proceedings reasonably necessary for the enforcement of all of the
rights of the Authority and all of the obligations of the Company.
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(B) The Authority shall not amend, modify or terminate any
of the terms of the Agreement, or consent to any such amendment, modification or
termination, without the written consent of the Trustee. The Trustee shall give
such written consent only if (1) notification of such amendment, modification or
termination has been given to each rating agency then rating the Bonds and to
the Holders, (2) the Trustee receives the written consent of the Bank, (3)(i)
such amendment, modification or termination will not materially adversely affect
the interests of the Bondholders or result in any material impairment of the
security hereby given for the payment of the Bonds or (ii) the Trustee first
obtains the written consent of the Bank and the Holders of a majority in
principal amount of the Bonds then Outstanding to such amendment, modification
or termination and provides notice of such amendment, modification or
termination and of such written consent to the Holders, provided that no such
amendment, modification or termination shall reduce the amount of installment
sale payments to be made to the Authority or the Trustee by the Company pursuant
to the Agreement, or extend the time for making such payments, without the
written consent of all of the Holders of the Bonds then Outstanding, and (4) the
Authority shall have delivered to the Trustee an opinion of Counsel satisfactory
to the Trustee that all of the provisions and conditions set forth in this
Section 7.07(B) have been satisfied.
Section 7.08. Waiver of Laws. The Authority shall not at any time
insist upon or plead in any manner whatsoever, or claim or take the benefit or
advantage of, any stay or extension provided by law now or at any time hereafter
in force that may affect the covenants and agreements contained in this
Indenture or in the Bonds, and all benefit or advantage of any such law or laws
is hereby expressly waived by the Authority to the extent permitted by law.
Section 7.09. Further Assurances. The Authority will make, execute and
deliver any and all such further indentures, instruments and assurances as may
be reasonably necessary or proper to carry out the intention or to facilitate
the performance of this Indenture and for the better assuring and confirming
unto the Holders of the Bonds of the rights and benefits provided in this
Indenture.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS
Section 8.01. Events of Default. The following events shall be Events
of Default:
(a) default in the due and punctual payment of the principal of
any Bond when and as the same shall become due and payable, whether at maturity
as therein expressed, by proceedings for redemption, by acceleration, or
otherwise; or
(b) default in the due and punctual payment of any installment
of interest on any Bond when and as the same shall become due and payable; or
(c) failure to pay the purchase price on any Bond tendered
pursuant to Article V when such payment is due; or
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(d) default by the Authority in the observance of any of the
other covenants, agreements or conditions on its part in this Indenture or in
the Bonds, if such default shall have continued for a period of sixty (60) days
after written notice thereof, specifying such default and requiring the same to
be remedied, shall have been given to the Authority by the Trustee, or to the
Authority and the Trustee by the Holders of not less than twenty-five per cent
(25%) in aggregate principal amount of the Bonds at the time Outstanding; or
(e) if there occurs an Event of Default as defined in Sections
8.01(a) through (d) of the Agreement; or
(f) the Trustee's receipt of written notice from the Bank that
the Bank has declared an Event of Default under the provisions of the
Reimbursement Agreement and instructing the Trustee to declare the principal
amount of the Outstanding Bonds to be immediately due and payable; or
(g) if, at any time after a draw under the Letter of Credit,
the Trustee shall have received notice from the Bank that the amount of such
draw corresponding to the payment of interest on the Bonds shall not be
reinstated in the amount and in the manner set forth in the Letter of Credit.
Upon actual knowledge of the existence of any Event of Default, the
Trustee shall, as soon as practicable, notify the Bank, the Company, the
Authority, the Tender Agent and the Remarketing Agent. Anything contained in
this Indenture to the contrary notwithstanding: (i) no Event of Default under
subsections (d) or (e) above shall occur without the prior written consent of
the Bank so long as the Bank is not in default under the terms of the Letter of
Credit; and (ii) the Trustee shall not notify bondholders of the existence of
any Event of Default without the prior written consent of the Bank (except upon
the occurrence of an Event of Default under subsections 8.01(f) or (g) hereof),
as long as the Bank is not in default under the terms of the Letter of Credit.
Section 8.02. Acceleration. If any Event of Default under Section 8.01
hereof occurs, the Trustee (with the written consent of the Bank provided the
Bank is not in default of its obligations under the Letter of Credit) may, and
upon request of the Owners of 25% in principal amount of the Bonds then
Outstanding shall, by written notice to the Authority, the Bank and the Company,
declare the principal amount of all Bonds then Outstanding and the interest
accrued thereon to such date (the "Acceleration Date") to be due and the
Acceleration Price (as such phrase is hereinafter defined) shall thereupon
become payable on the first (lst) Business Day following the Acceleration Date
(the "Payment Date"). Thereupon, the Trustee, among other things, shall draw
immediately upon the Letter of Credit as set forth in Section 6.12 hereof.
Interest on the accelerated Bonds shall cease to accrue on the Acceleration
Date. Accelerated Bonds shall be payable at a price equal to 100% of the
aggregate principal amount thereof plus interest accrued to the Acceleration
Date (the "Acceleration Price"). Notwithstanding anything contained herein to
the contrary, upon the occurrence of an Event of Default described in Section
8.01(f) or (g), the Trustee shall, by written notice to the Bank, the Company
and the Authority declare immediately due and payable the principal amount of,
and interest accrued on, the Outstanding Bonds.
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Any such declaration is subject to the condition that if, at any time
after such declaration and before any judgment or decree for the payment of the
moneys due shall have been obtained or entered, the Letter of Credit shall have
been reinstated in full as to principal and interest and the reasonable charges
and expenses of the Trustee, and any and all other defaults known to the Trustee
(other than in the payment of principal of and interest on the Bonds due and
payable solely by reason of such declaration) shall have been made good or cured
to the satisfaction of the Trustee or provision deemed by the Trustee to be
adequate shall have been made therefor, then, and in every such case, the
Holders of not less than 25% in aggregate principal amount of the Bonds then
Outstanding, by written notice to the Authority, the Bank, the Company and the
Trustee, or the Trustee if such declaration was made by the Trustee, may, on
behalf of the Holders of all of the Bonds, rescind and annul such declaration
and its consequences and waive such default; but such rescission and annulment
shall not extend to or affect any subsequent default, and shall not impair or
exhaust any right or power in consequence thereof. The foregoing to the contrary
notwithstanding, Owners of 25% in principal amount of the Bonds then outstanding
shall have no right to request the Trustee to accelerate the Bonds under this
Section 8.02 and the Trustee shall not be obligated to give any Bondholder
notice of a default under the Indenture (except upon the occurrence of an Event
of Default under Section 8.01(f) or (g) hereof), the Agreement or any other
documents executed and delivered in connection with the Bonds without the prior
written consent of the Bank, unless the Bank shall be in default of its
obligations under the Letter of Credit or a voluntary or involuntary case has
been commenced by the filing of a petition under the Bankruptcy Code or any
other law relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts by or against the Bank.
Upon any declaration of acceleration hereunder, the Trustee shall as
soon as possible give written notice of the acceleration to the Bondholders as
set forth below. In addition, notice of such acceleration shall be mailed, by
registered or certified mail or overnight mail, to the rating agency then rating
the Bonds, if any, but failure to mail any such notice or any defect in the
mailing thereof shall not affect the validity of such acceleration. Such notice
of acceleration: (i) shall be given in the name of the Authority; (ii) shall
identify the accelerated Bonds (by name, date of issue, interest rate and
maturity date); (iii) shall specify the Acceleration Date; (iv) shall specify
the Payment Date and the Acceleration Price; (v) shall state that the interest
on the accelerated Bonds ceased to accrue on the Acceleration Date; (vi) shall
state the reason for the acceleration; and (vii) shall state that on the Payment
Date the Acceleration Price will be payable at the principal corporate trust
office of the Trustee. The Trustee shall use "CUSIP" numbers on such notices as
a convenience to Bondholders and such notice shall state that no representation
is made as to the correctness of such "CUSIP" numbers either as printed on the
Bonds or as contained in any notice of acceleration and that reliance may be
placed on the registration and description printed on the Bonds.
Upon acceleration pursuant to this Section 8.02, the Trustee shall
immediately exercise such rights as it may have under the Agreement to declare
all payments thereunder to be immediately due and payable and shall immediately
draw upon the Letter of Credit as provided in Section 6.12 hereof in an amount
that, together with any Available Moneys on deposit in the Bond Fund (excluding
Available Moneys held by the Trustee for the Owner of any Bond not presented for
payment as
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provided in Section 6.09 hereof) and irrevocably committed to the payment of
principal of and interest on the Bonds, is sufficient to pay the Acceleration
Price due on the Outstanding Bonds on the Payment Date.
Upon receipt by the Trustee of any amount from the Bank under the
preceding paragraphs of this Section 8.02 (or after receipt by the Trustee of
any amounts from the Bank under any other provision of this Indenture), the Bank
shall be subrogated to the right, title and interest of the Trustee and the
Bondholders in and to the Agreement, the Project Facilities and any other
security held for the payment of the Bonds (other than said funds), all of
which, upon payment of any fees and expenses due and payable to the Trustee
pursuant to the Agreement or this Indenture, shall be assigned by the Trustee to
the Bank.
Section 8.03. Other Remedies. If any Event of Default occurs and is
continuing, the Trustee, before or after declaring the principal of the Bonds
immediately due and payable, may enforce each and every right granted to the
Authority or the Trustee under the Indenture, the Agreement, the Letter of
Credit or any other security instrument, or under any supplements or amendments
thereto, and shall, at all times complying with the provisions of Section 8.02
hereof, apply any Revenues or Available Moneys in the Bond Fund held by the
Trustee to the payment of principal of or interest on the Bonds. In exercising
such rights and the rights given the Trustee under this Article VIII, the
Trustee shall take such action, as in the judgment of the Trustee, applying the
standards described in Section 9.01 hereof, would best serve the interests of
the Bondholders.
Section 8.04. 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 Bank or the Owners of 25% in principal amount of the
Bonds then Outstanding (subject to the consent of the Bank, as long as the Bank
is not in default of its obligations under the Letter of Credit or a voluntary
or involuntary case has not been commenced by the filing of a petition under the
Bankruptcy Code or any other law relating to bankruptcy, insolvency,
reorganization, winding-up or composition or adjustment of debts by or against
the Bank) and receipt of indemnity to its satisfaction shall, in its own name:
(A) by mandamus, other suit, action or proceeding at law or
in equity, enforce all rights of the Bondholders, including the right to require
the Authority to collect the amounts payable under the Agreement and to require
the Authority to carry out any other provisions of this Indenture for the
benefit of the Bondholders and to perform its duties under the Act;
(B) bring suit upon the Bonds;
(C) by action or suit in equity require the Authority to
account as if it were the trustee of an express trust for the Bondholders; and
(D) by action or suit in equity enjoin any acts or things
that may be unlawful or in violation of the rights of the Bondholders.
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Section 8.05. Discontinuance of Proceedings by Trustee. If any
proceeding taken by the Trustee on account of any Event of Default is
discontinued or is determined adversely to the Trustee, the Authority, the
Trustee, the Bondholders and the Bank shall be restored to their former
positions and rights hereunder as though no such proceeding had been taken, but
subject to the limitations of any such adverse determination.
Section 8.06. Bondholders May Direct Proceedings. The Holders of a
majority in principal amount of the Bonds Outstanding hereunder shall have the
right to direct the method and place of conducting all remedial proceedings by
the Trustee hereunder, provided that such direction shall not be otherwise than
in accordance with law or the provisions of this Indenture, and that the Trustee
shall not be required to comply with any such direction which it deems to be
unlawful or unjustly prejudicial to Bondholders not parties to such direction.
The foregoing provisions of this Section 8.06 to the contrary notwithstanding,
as long as the Bank shall not be in default under the Letter of Credit, the Bank
shall have the right to direct the method and the place of conducting all
remedial proceedings by the Trustee hereunder provided that such direction shall
not be otherwise than in accordance with law or the provisions of this
Indenture.
Section 8.07. Limitations on Actions by Bondholders. Anything in this
Indenture to the contrary notwithstanding, no bondholder shall have any right to
pursue any remedy hereunder or under the Agreement unless:
(a) the Trustee shall have been given written notice of an
Event of Default;
(b) the holders of at least 25% in aggregate principal amount
of the Bonds 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;
(d) the Trustee shall have failed to comply with such request
within a reasonable time; and
(e) the Bank shall be in default of its obligations under the
Letter of Credit or a voluntary or involuntary case has been commenced by the
filing of a petition under the Bankruptcy Code or any other law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or adjustment
of debts by or against the Bank; provided, however, that nothing herein shall
affect or impair the right of any Owner of any Bond to enforce payment of the
principal thereof and interest thereon at and after the maturity thereof, or the
obligation of the Authority to pay such principal and interest to the respective
Owners of the Bonds at the time and place, from the source and in the manner
expressed herein and in the Bonds, provided further that such action shall not
disturb or prejudice the lien of this Indenture.
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Section 8.08. Trustee May Enforce Rights Without Possession of Bonds.
All rights under the Indenture and the Bonds may be enforced by the Trustee
without the possession of any Bonds or the production thereof at the trial or
other proceedings relative thereto, and any proceedings instituted by the
Trustee shall be brought in its name for the ratable benefit of the Owners of
the Bonds.
Section 8.09. Delays and Omissions Not to Impair Rights. No delay or
omission in respect of exercising any right or power accruing upon any Event of
Default shall impair such right or power or be a waiver of such Event of Default
and every remedy given by this Article VIII may be exercised, from time to time,
and as often as may be deemed expedient.
Section 8.10. Application of Moneys in Event of Default. Any money
received by the Trustee under this Article VIII shall be applied in the order
listed below (provided that any money received by the Trustee upon a drawing
under the Letter of Credit together with Available Moneys on deposit in the Bond
Fund and available for payment of principal and interest on all Outstanding
Bonds, any money held by the Trustee upon the nonpresentment of Bonds and any
money held by the Trustee for the defeasance of Bonds pursuant to Article XI
shall be applied only as provided in clause (B) below and only to pay
outstanding principal and accrued interest, as provided in the Letter of Credit,
with respect to the Bonds):
(A) To the payment of the fees and expenses of the Trustee
and the Authority including reasonable counsel fees and expenses, and any
disbursements of the Trustee with interest thereon and its reasonable
compensation;
(B) To the payment of principal and interest then owing on
the Bonds, including any interest on overdue interest, and in case such money
shall be insufficient to pay the same in full, then to the payment of principal
and interest ratably, without preference or priority of one over another or of
any installment of principal or interest over any other installment of principal
or interest; and
The surplus, if any, remaining after the application of the money as
set forth above shall to the extent of any unreimbursed drawing under the Letter
of Credit, or other obligations owing by the Company to the Bank under the
Reimbursement Agreement, be paid to the Bank. Any remaining money shall be paid
to the Company or the person lawfully entitled to receive the same as a court of
competent jurisdiction may direct.
Section 8.11. Trustee and Bondholders Entitled to All Remedies Under
Act; Remedies Not Exclusive. It is the purpose of this Article VIII to provide
to the Trustee and the Bondholders all rights and remedies as may be lawfully
granted under the provisions of the Act; but should any remedy herein granted be
held unlawful, the Trustee and the Bondholders shall nevertheless be entitled to
every remedy permitted by the Act. It is further intended that, insofar as
lawfully possible, the provisions of this Article VIII shall apply to and be
binding upon any trustee or receiver appointed under the Act.
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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 8.12. Trustee's Right to Receiver. As provided by the Act, the
Trustee shall be entitled as of right to the appointment of a receiver; and the
Trustee, the Bondholders and any receiver so appointed shall have such rights
and powers and be subject to such limitations and restrictions as may be
contained in or permitted by the Act.
Section 8.13. Subrogation Rights of Bank. The Trustee agrees that the
Bank or other provider of a Substitute Letter of Credit shall be subrogated to
all rights, remedies and collateral of the Trustee under the Indenture, the
Agreement or any other document or instrument, to the extent the Bank or other
provider of a Substitute Letter of Credit has honored a draw under the Letter of
Credit or Substitute Letter of Credit, as the case may be, and has not been
reimbursed or paid therefor.
Section 8.14. Waiver of Default. As long as the Bank is not in default
of its obligations under the Letter of Credit and the Letter of Credit is in
full force and effect, the Bank may waive an Event of Default and if the Bank
does so, the Trustee must also waive such Event of Default. The Trustee may not
waive an Event of Default under this Indenture if the Letter of Credit has not
been reinstated to cover principal and interest on the Bonds in accordance with
the terms of the Letter of Credit.
ARTICLE IX
THE TRUSTEE, THE TENDER AGENT
AND THE REMARKETING AGENT
Section 9.01. Duties, Immunities and Liabilities of Trustee. (A) The
Trustee shall, prior to an Event of Default, and after the curing of all Events
of Default which may have occurred, perform such duties and only such duties as
are specifically set forth in this Indenture. The Trustee shall, during the
existence of any Event of Default (which has not been cured or waived), exercise
such of the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
(B) At the written direction of the Company, the Authority
shall remove the Trustee if at any time requested to do so by an instrument or
concurrent instruments in writing executed by the Holders of not less than a
majority in aggregate principal amount of the Bonds then Outstanding (or their
attorneys duly authorized in writing) or if at any time the Trustee shall cease
to be eligible to act in such capacity, or shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its
property shall be appointed, or any public officer shall take control or charge
of the Trustee or of its property or affairs for the purpose of
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rehabilitation, conservation or liquidation, in each case by giving written
notice of such removal to the Trustee, and thereupon shall appoint, with the
consent of the Bank and the Company, a successor Trustee by an instrument in
writing.
(C) The Trustee may at any time resign by giving written
notice of such resignation to the Authority, the Company and the Bank and by
giving the Bondholders notice of such resignation by mail at the addresses shown
on the registration books maintained by the Trustee. Upon receiving such notice
of resignation, the Authority shall promptly appoint, with the consent of the
Bank and the Company, a successor Trustee by an instrument in writing.
(D) Any removal or resignation of the Trustee and
appointment of a successor Trustee shall become effective upon acceptance of
appointment by the successor Trustee. If no successor Trustee shall have been
appointed and have accepted appointment within forty-five (45) days of giving
notice of removal or notice of resignation as aforesaid, the resigning Trustee
or any Bondholder (on behalf of himself and all other Bondholders) may petition
any court of competent jurisdiction for the appointment of a successor Trustee,
and such court may thereupon, after such notice (if any) as it may deem proper,
appoint such successor Trustee. Any successor Trustee appointed under this
Indenture, shall signify its acceptance of such appointment by executing and
delivering to the Authority and to its predecessor Trustee a written acceptance
thereof, and thereupon such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the moneys, estates, properties,
rights, powers, trusts, duties and obligations of such predecessor Trustee, with
like effect as if originally named Trustee herein; but, nevertheless at the
request of the Authority or the request of the successor Trustee, such
predecessor Trustee shall execute and deliver any and all instruments of
conveyance or further assurance and do such other things as may reasonably be
required for more fully and certainly vesting in and confirming to such
successor Trustee all the right, title and interest of such predecessor Trustee
in and to any property held by it under this Indenture and shall pay over,
transfer, assign and deliver to the successor Trustee any money or other
property subject to the trusts and conditions herein set forth. Upon request of
the successor Trustee, the Authority shall execute and deliver any and all
instruments as may be reasonably required for more fully and certainly vesting
in and confirming to such successor Trustee all such moneys, estates,
properties, rights, powers, trusts, duties and obligations. Upon the acceptance
of the appointment by a successor Trustee as provided in this subsection, the
Authority shall mail a notice of the succession of such Trustee to the trusts
hereunder to the Rating Agency and to the Bondholders at the addresses shown on
the registration books maintained by the Trustee. If the Authority fails to mail
such notice within fifteen (15) days after acceptance of appointment by the
successor Trustee, the successor Trustee shall cause such notice to be mailed at
the expense of the Authority.
(E) Any Trustee appointed under the provisions of this
Section in succession to the Trustee shall be a trust company or bank having the
powers of a trust company, having a corporate trust office in the Commonwealth,
having a combined capital and surplus of at least One Hundred Million Dollars
($100,000,000), subject to supervision or examination by federal or state
authorities and shall be rated at least Baa3/P-3 by Moody's if the Bonds are
then rated by Moody's
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or has received written evidence from Moody's that the use of such Trustee would
not result in a reduction or withdrawal of the rating on the Bonds. If such bank
or trust company publishes a report of condition at least annually, pursuant to
law or to the requirements of any supervising or examining authority above
referred to, then for the purpose of this subsection the combined capital and
surplus of such bank or trust company shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published.
Section 9.02. Merger or Consolidation. Any company into which the
Trustee may be merged or converted or with which it may be consolidated or any
company resulting from any merger, conversion or consolidation to which it shall
be a party or any company to which the Trustee may sell or transfer all or
substantially all of its corporate trust business, provided such company shall
be eligible under subsection (E) of Section 9.01, shall be the successor to such
Trustee without the execution or filing of any paper or any further act,
anything herein to the contrary notwithstanding.
Section 9.03. Liability of Trustee. (A) The recitals of facts herein
and in the Bonds contained shall be taken as statements of the Authority, and
the Trustee shall assume no responsibility for the correctness of the same, or
make any representations as to the validity or sufficiency of this Indenture or
of the Bonds or shall incur any responsibility in respect thereof, other than in
connection with the duties or obligations herein or in the Bonds assigned to or
imposed upon it. The Trustee shall, however, be responsible for its
representations contained in its certificate of authentication on the Bonds. The
Trustee shall not be liable in connection with the performance of its duties
hereunder, except for its own gross negligence or willful misconduct. The
Trustee may become the owner of Bonds with the same rights it would have if it
were not Trustee and, to the extent permitted by law, may act as depositary for
and permit any of their officers or directors to act as a member of, or in any
other capacity with respect to, any committee formed to protect the rights of
Bondholders, whether or not such committee shall represent the Holders of a
majority in principal amount of the Bonds then Outstanding.
(B) The Trustee shall not be liable for any error of
judgment made in good faith by a responsible officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts.
(C) The Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a majority in aggregate principal
amount of the Bonds at the time Outstanding relating to the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee under this Indenture.
(D) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture (other than the making of
a draw under the Letter of Credit in accordance with its terms and the terms
hereof, declaring the principal of the Bonds to be immediately due and payable
when required hereunder or making payments on the Bonds when due)
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at the request, order or direction of any of the Bondholders pursuant to the
provisions of this Indenture unless such Bondholders shall have offered to the
Trustee indemnification to its satisfaction for indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby.
(E) The Trustee shall not be liable for any action taken by
it in good faith and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Indenture.
Section 9.04. Right of Trustee to Rely on Documents. The Trustee may
conclusively rely, and shall be protected in acting upon any notice, resolution,
request, consent, order, certificate, report, opinion, bond or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties. The Trustee may consult with counsel, who may be
counsel of or to the Authority, with regard to legal questions, and the opinion
of such counsel shall be full and complete authorization and protection in
respect of any action taken or suffered by it hereunder in good faith and in
accordance therewith.
The Trustee shall not be bound to recognize any person as the Holder of
a Bond unless and until such Bond is submitted for inspection, if required, and
his title thereto is satisfactorily established, if disputed.
Whenever in the administration of the trusts imposed upon it by this
Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or suffering any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
Certificate of the Authority, and such Certificate shall be full warrant to the
Trustee for any action taken or suffered in good faith under the provisions of
this Indenture in reliance upon such Certificate, but in its discretion the
Trustee may, in lieu thereof, accept other evidence of such matter or may
require such additional evidence as it may deem reasonable.
Section 9.05. Preservation and Inspection of Documents.
(A) All documents received by the Trustee under the
provisions of this Indenture shall be retained in its possession and shall be
subject during normal business hours of the Trustee to the inspection of the
Authority, the Company and any Bondholder, and their agents and representatives
duly authorized in writing, at reasonable hours and under reasonable conditions.
(B) The Trustee covenants and agrees that it shall maintain
a current list of the names and addresses of all the Bondholders.
Section 9.06. Compensation. The Trustee shall be paid (solely from
Additional Payments) from time to time reasonable compensation for all services
rendered under this Indenture, and also all reasonable expenses, charges, legal
and consulting fees and other disbursements and those of its
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attorneys, agents and employees, incurred in and about the performance of its
powers and duties under this Indenture.
Section 9.07. The Tender Agent. Dauphin Deposit Bank and Trust Company,
the initial Tender Agent appointed by the Company, and each successor tender
agent appointed in accordance herewith, shall designate its office and signify
its acceptance of the duties and obligations imposed upon it as described herein
by a written instrument of acceptance delivered to the Trustee and the Company
under which the Tender Agent shall, among other things:
(a) hold all Bonds delivered to it hereunder in trust for the
benefit of the respective Owners of Bonds which shall have so delivered such
Bonds until moneys representing the Purchase Price of such Bonds shall have been
delivered to or for the account of or to the order of such Owners of Bonds. Upon
delivery of moneys representing the Purchase Price of such Bonds to or for the
account of or to the order of such Owners of Bonds, the Tender Agent shall hold
all such Bonds which are required to be delivered to the Pledged Bonds Custodian
pursuant to Section 5.06(b) hereof, as the agent of the Bank for the purpose of
perfecting the Bank's security interest therein under the Pledge Agreement
(which agency shall terminate upon delivery of such Bonds by the Tender Agent to
or upon the order of the Bank in accordance with such Section 5.06(b); and
(b) hold all moneys delivered to it hereunder and under the
Tender Agent Agreement for the purchase of such Bonds in a separate account in
trust for the benefit of the person or entity which shall have so delivered such
moneys until required to transfer such funds as provided herein.
Section 9.08. Qualifications of Tender Agent.
(a) The Tender Agent shall be a bank or trust company duly
organized under the laws of the United States or any state or territory thereof,
having a combined capital stock, surplus and undivided profits of at least Fifty
Million Dollars ($50,000,000) or that is a wholly-owned subsidiary of such a
bank or trust company, and authorized by law to perform all duties imposed upon
it by this Indenture and shall be rated at least Baa3/P-3 by Moody's if the
Bonds are then rated by Moody's, or has received written evidence from Moody's
that the use of such Tender Agent would not result in a reduction or withdrawal
of the rating on the Bonds. The Tender Agent may at any time resign and be
discharged of its duties and obligations by giving at least sixty (60) days'
written notice to the Authority, the Trustee, the Remarketing Agent, the Bank,
and the Company; provided that such resignation shall not take effect until the
appointment of a successor Tender Agent, and in accordance with the provisions
hereof. Upon the written approval of the Bank, the Tender Agent may be removed
at any time by the Company upon written notice to the Authority, the Trustee and
the Remarketing Agent. Successor Tender Agents may be appointed from time to
time by the Company, with the prior written consent of the Bank.
(b) Upon the resignation or removal of the Tender Agent, the
Tender Agent shall deliver any Bonds and moneys held by it in such capacity to
its successor.
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(c) The Tender Agent shall have the same rights and immunities
granted to the Trustee hereunder.
Section 9.09. Qualifications of Remarketing Agent; Resignation;
Removal. The Remarketing Agent shall be a financial institution or registered
broker/dealer authorized by law to perform all the duties imposed upon it by
this Indenture. The Remarketing Agent may at any time resign and be discharged
of its duties and obligations created by this Indenture giving at least thirty
(30) days' written notice to the Authority, the Company and the Trustee. The
Remarketing Agent may be removed at any time, upon not less than thirty (30)
days' written notice from the Company filed with the Trustee. Upon the
resignation or removal of the Remarketing Agent, the Company shall appoint a
successor Remarketing Agent and shall provide written notice thereof to the
Trustee. The resignation or removal of the Remarketing Agent shall not become
effective until a successor Remarketing Agent is appointed and accepts such
appointment. If the Bonds are rated by a Rating Agency, any successor
Remarketing Agent shall be rated at least Baa3/P-3 or otherwise be acceptable to
such Rating Agency.
Section 9.10. Construction of Ambiguous Provisions. The Trustee may
construe any provision hereof insofar as such may appear to be ambiguous or
inconsistent with any other provision hereof; and any construction of any such
provision by the Trustee, in good faith shall be binding upon the Owners of the
Bonds.
ARTICLE X
MODIFICATION OR AMENDMENT OF THE INDENTURE
Section 10.01. Amendments Permitted. This Indenture and the rights and
obligations of the Authority, of the Trustee and of the Holders of the Bonds may
be modified or amended, from time to time, and at any time, for any lawful
purpose, by an indenture or indentures supplemental hereto, which the Authority
and the Trustee may enter into without the consent of any Bondholders but with
the prior written consent of the Company and the Bank (as long as the Bank is
not in default under the Letter of Credit). The foregoing to the contrary
notwithstanding, no such modification or amendment shall, without the written
consent of the Company and the holders of all Bonds then Outstanding: (i) extend
the maturity date of any Bond; (ii) reduce the amount of principal thereof;
(iii) extend the time of payment or change the method of computing the rate of
interest thereon, without the consent of the Holder of each Bond so affected, or
eliminate the Holders' rights to tender the Bonds; (iv) extend the due date for
the purchase of Bonds tendered by the Holders thereof; or (v) reduce the
purchase price of such Bonds. It shall not be necessary for the consent of the
Bondholders to approve the particular form of any Supplemental Indenture, but it
shall be sufficient if such consent shall approve the substance thereof.
Promptly after the execution by the Authority and the Trustee of any
Supplemental Indenture pursuant to this Section 10.01, the Trustee shall mail a
notice, setting forth in general terms the substance of such Supplemental
Indenture, to each rating agency then rating the Bonds and the Holders of the
Bonds at the address shown on the registration books of the Trustee. Any failure
to give such notice, or any defect therein, shall not, however, in
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any way impair or affect the validity of any such Supplemental Indenture.
Section 10.02. Effect of Supplemental Indenture. Upon the execution of
any Supplemental Indenture pursuant to this Article, this Indenture shall be
deemed to be modified and amended in accordance therewith, and the respective
rights, duties and obligations under this Indenture of the Authority, the
Trustee and all Holders of Bonds Outstanding shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modification
and amendment, and all the terms and conditions of any such Supplemental
Indenture shall be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.
Section 10.03. Trustee Authorized to Join in Amendments and
Supplements; Reliance on Counsel. The Trustee is authorized to join with the
Authority in the execution and delivery of any supplemental indenture or
amendment permitted by this Article X 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 Authority and that all things
necessary to make it a valid and binding agreement have been done.
ARTICLE XI
DEFEASANCE
Section 11.01. Discharge of Indenture. The Bonds may be paid by the
Authority in any of the following ways, provided that the Authority also pays or
causes to be paid any other sums payable hereunder by the Authority:
(a) by paying or causing to be paid the principal of and
interest on the Bonds of such Series, as and when the same become due and
payable;
(b) with respect to Bonds which bear interest at a Fixed Rate,
by depositing with the Trustee, in trust, Available Moneys or securities
purchased with Available Moneys in the necessary amount (as provided in Section
11.03) to pay or redeem all Bonds then Outstanding; or
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(c) by delivering to the Trustee, for cancellation by it, the
Bonds then Outstanding.
If the Authority shall also pay or cause to be paid all Bonds then
Outstanding and shall also pay or cause to be paid all other sums payable
hereunder by the Authority, then and in that case, at the election of the
Authority (evidenced by a Certificate of the Authority filed with the Trustee,
signifying the intention of the Authority to discharge all such indebtedness and
this Indenture), and notwithstanding that any Bonds shall not have been
surrendered for payment, this Indenture, the assignment of the Agreement and the
pledge of Revenues and other assets made under this Indenture and all covenants,
agreements and other obligations of the Authority under this Indenture shall
cease, terminate, become void and be completely discharged and satisfied. In
such event, upon request of the Authority, the Trustee shall cause an accounting
for such period or periods as may be requested by the Authority to be prepared
and filed with the Authority and shall execute and deliver to the Authority all
such instruments, as prepared by or caused to be prepared by the Authority, that
may be necessary or desirable to evidence such discharge and satisfaction, and
the Trustee shall pay over, transfer, assign or deliver all moneys or securities
or other property held by it pursuant to this Indenture, which are not required
for: (i) the payment of all the charges and reasonable expenses of the Trustee
under this Indenture; (ii) the payment or redemption of Bonds not theretofore
surrendered for such payment or redemption; (iii) the payment of amounts owed to
the Bank by the Company under the Reimbursement Agreement, to the Company; or
(iv) the payment of any and all sums due to the United States pursuant to
Section 6.13 hereof.
Section 11.02. Discharge of Liability on Bonds. During the Fixed Rate
Period, upon the deposit with the Trustee, in trust, at or before maturity, of
money or securities in the necessary amount (as provided in Section 11.03) to
pay or redeem any Outstanding Bond (whether upon or prior to the end of the
Fixed Rate Period or the redemption date of such Bond), provided that, if such
Bond is to be redeemed prior to maturity, notice of such redemption shall have
been given as in Article IV provided or provision satisfactory to the Trustee
shall have been made for the giving of such notice, then all liability of the
Authority in respect of such Bond shall cease, terminate and be completely
discharged, and the Holder thereof shall thereafter be entitled only to payment
out of such money or securities deposited with the Trustee as aforesaid for
their payment, subject, however, to the provisions of Section 11.04.
The Authority may at any time surrender to the Trustee for cancellation
by it any Bonds previously issued and delivered, which the Authority may have
acquired in any manner whatsoever, and such Bonds, upon such surrender and
cancellation, shall be deemed to be paid and retired.
Section 11.03. Deposit of Money or Securities with Trustee. During the
Fixed Rate Period, whenever in this Indenture it is provided or permitted that
there be deposited with or held in trust by the Trustee money or securities in
the necessary amount to pay or redeem any Bonds, the money or securities so to
be deposited or held shall be cash or Government Obligations, which Government
Obligations shall be noncallable and not subject to prepayment, the principal of
and interest on which when due will provide money sufficient to pay the
principal of, premium, if any, and all
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unpaid interest to maturity, or to the redemption date, as the case may be, on
the Bonds to be paid or redeemed, as such principal, premium, if any, and
interest become due, provided that, in the case of Bonds which are to be
redeemed prior to the maturity thereof, notice of such redemption shall have
been given as provided in Article IV or provision satisfactory to the Trustee
shall have been made for the giving of such notice; provided, in each case, that
the Trustee shall have been irrevocably instructed (by Request of the Authority)
to apply such money to the payment of such principal and interest with respect
to such Bonds.
Whenever Government Obligations are deposited with the Trustee in
accordance with Section 11.03 hereof, the Company shall provide to the Trustee
and the Rating Agency: (i) a verification report from an independent public
accountant, satisfactory in form and content to the Trustee, demonstrating that
the Government Obligations so deposited and the income therefore shall be
sufficient to pay the principal of, premium, if any, and all unpaid interest to
maturity, or to the redemption date, as the case may be, on the Bonds to be paid
or redeemed, as such principal or premium, if any, and interest become due; and
(ii) an opinion acceptable to the Rating Agency, of nationally recognized
bankruptcy counsel, to the effect that the provision for payment of the Bonds
contemplated to be made pursuant to this Section 11.03 will not constitute or
result in such payments constituting voidable preferences under Section 547 of
the Bankruptcy Code.
Section 11.04. Payment of Bonds After Discharge of Indenture.
Notwithstanding any provisions of this Indenture, any moneys held by the Trustee
in trust for the payment of the principal of, premium, if any, or interest on,
any Bonds and remaining unclaimed for five years after the principal of all of
the Bonds has become due and payable (whether at maturity or upon call for
redemption or by acceleration as provided in this Indenture), if such moneys
were so held at such date, or five years after the date of deposit of such
moneys if deposited after said date when all of the Bonds became due and
payable, shall be repaid to the Company, upon its written request, free from the
trusts created by this Indenture and all liability of the Trustee with respect
to such moneys shall thereupon cease; provided, however, that before the
repayment of such moneys to the Company as aforesaid, the Trustee may (at the
cost and request of the Company) first mail to the Holders of Bonds which have
not been paid, at the addresses last shown on the registration books maintained
by the Trustee, a notice, in such form as may be deemed appropriate by the
Trustee with respect to the Bonds so payable and not presented and with respect
to the provisions relating to the repayment to the Company of the moneys held
for the payment thereof.
ARTICLE XII
MISCELLANEOUS
Section 12.01. Liability of Authority Limited to Revenues.
Notwithstanding anything to the contrary contained in this Indenture or in the
Bonds, the Authority shall not be required to advance any moneys derived from
any source other than the Revenues and other assets pledged under this Indenture
for any of the purposes in this Indenture mentioned, whether for the payment of
the principal of or interest on the Bonds or for any other purpose of this
Indenture.
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Notwithstanding any provisions of this Indenture to the contrary, no recourse
under or upon any obligation, covenant or agreement contained herein or in any
Bond shall be had against the Authority, it being expressly agreed and
understood that the obligations of the Authority hereunder, and under the Bonds
and elsewhere, are solely corporate obligations of the Authority and shall be
enforceable only out of the Authority's interest in this Indenture and the
Agreement (except for the Authority's rights to payment of certain costs, fees
and expenses as set forth in this Indenture, the Agreement and elsewhere) and
there shall be no other recourse against the Authority or any property now or
hereafter owned by it and after entry of judgment against the Authority by
virtue of the power herein contained, the Authority shall mark the judgment
index to the effect that the judgment is limited as aforesaid.
Section 12.02. Limitation of Liability of Directors, Etc., of
Authority. No covenant, agreement, provision or obligation contained herein
shall be deemed to be a covenant, agreement or obligation of any present or
future director, commissioner, officer, employee, member or agent of the
Authority in his individual capacity, and neither the members of the Authority
nor any officer thereof shall be liable personally on this Indenture or any of
the Bonds or be subject to any personal liability or accountability by reason of
the issuance thereof or this Indenture. No director, commissioner, officer,
employee, member or agent of the Authority shall incur any personal liability
with respect to any other action taken by him pursuant to this Indenture or the
Act. Notwithstanding anything contained herein to the contrary, the liability of
the Authority, including its officers, members, and employees, under any and all
of the documentation executed in connection with the issuance of the Bonds shall
not constitute its general obligation and recourse against the Authority on the
documentation executed in connection with the issuance of the Bonds shall be had
only against the property specifically pledged as security therefor and any
rents, issues or profits thereof. It is expressly understood that the Authority
shall not otherwise be obligated and that none of its members, officers, or
employees shall be in any way obligated for any costs, expenses, fees or other
obligations or liabilities incurred or imposed in connection with the issuance
of the Bonds, whether incurred prior to or after closing, and that recourse
against the Authority and its members, officers, or employees, shall be limited
as set forth herein.
Section 12.03. Covenant Not to Sue. The forms of Bonds provide that the
owners of the Bonds agree not to sue the Authority or any of its board members,
officers, agents or employees, past, present or future except as provided herein
and in the Agreement as a condition of, and in consideration for, the issuance
of the Bonds; accordingly, except as provided herein and in the Agreement, the
Trustee shall not be permitted to sue the Authority, on behalf of the owners of
the Bonds.
Section 12.04. Successor Is Deemed Included in All References to
Predecessor. Whenever in this Indenture either the Authority or the Trustee is
named or referred to, such reference shall be deemed to include the successors
or assigns thereof, and all the covenants and agreements in this Indenture
contained by or on behalf of the Authority or the Trustee shall bind and inure
to the benefit of the respective successors and assigns thereof whether so
expressed or not.
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Section 12.05. Limitation of Rights to Parties, Bank, Company and
Bondholders. Nothing in this Indenture or in the Bonds expressed or implied is
intended or shall be construed to give to any person other than the Authority,
the Trustee, the Bank, the Company and the Holders of the Bonds, any legal or
equitable right, remedy or claim under or in respect of this Indenture or any
covenant, condition or provision therein or herein contained; and all such
covenants, conditions and provisions are and shall be held to be for the sole
and exclusive benefit of the Authority, the Trustee, the Bank, the Company and
the Holders of the Bonds.
Section 12.06. Waiver of Notice. Whenever in this Indenture the giving
of notice by mail or otherwise is required, the giving of such notice may be
waived in writing by the person entitled to receive such notice and in any such
case the giving or receipt of such notice shall not be a condition precedent to
the validity of any action taken in reliance upon such waiver.
Section 12.07. Severability of Invalid Provisions. If any one or more
of the provisions contained in this Indenture or in the Bonds shall for any
reason be held to be invalid, illegal or unenforceable in any respect, then such
provision or provisions shall be deemed severable from the remaining provisions
contained in this Indenture and such invalidity, illegality or unenforceability
shall not affect any other provision of this Indenture, and this Indenture shall
be construed as if such invalid or illegal or unenforceable provision had never
been contained herein. The Authority hereby declares that it would have entered
into this Indenture and each and every other Section, paragraph, sentence,
clause or phrase hereof and authorized the issuance of the Bonds pursuant
thereto irrespective of the fact that any one or more Sections, paragraphs,
sentences, clauses or phrases of this Indenture may be held illegal, invalid or
unenforceable.
Section 12.08. Notices. All notices to Bondholders shall be given by
telex, telegram, telecopier or other telecommunication device unless otherwise
provided herein and confirmed in writing as soon as practicable. All such
notices shall also be sent to the Holder and any person designated by any Holder
to receive copies of such notices. Any notice to or demand upon the Trustee may
be served or presented, and such demand may be made, at the Principal Corporate
Trust Office of the Trustee, or at such other address as may have been filed in
writing by the Trustee with the Authority. Any notice to or demand upon the
Trustee, the Authority, the Company, the Remarketing Agent, the Tender Agent or
the Bank shall be deemed to have been sufficiently given or served for all
purposes by being delivered or sent by telex or by being deposited, postage
prepaid, in a post office letter box, addressed, as the case may be,
To the Trustee: Dauphin Deposit Bank and Trust Company
213 Market Street
Harrisburg, PA 17101
Attention: Corporate Trust Services
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To the Authority: Montgomery County Industrial Development Authority
3 Stony Creek Office Center
Norristown, Pennsylvania 19401
Attention: Executive Director
(or such other address as may have been filed in writing by the Authority with
the Trustee),
To the Company: Apple Fresh Foods Limited
Box 725
Kimberton Road
Kimberton, Pennsylvania 19442
Attention: Controller
(or such other address as may have been filed in writing by the Company with the
Trustee),
To the Remarketing Agent: CoreStates Capital Markets
601 Penn Street
Penn Square Center - 4th Floor
Reading, Pennsylvania 19601
Attention: Sales and Underwriting Department
(or such other address as may have been filed in writing by the Remarketing
Agent with the Trustee),
To the Tender Agent: Dauphin Deposit Bank and Trust Company
213 Market Street
Harrisburg, PA 17101
Attention: Corporate Trust Services
(or such other address as may have been filed in writing by the Tender Agent
with the Trustee),
To the Bank: CoreStates Bank, N.A.
Great Valley Corporate Center
55 Valley Stream Parkway
Suite 200
Malvern, Pennsylvania 19355
Attention: Mr. Michael Bailey, Vice President
(or such other address as may have been filed in writing by the Bank with the
Trustee).
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Section 12.09. Evidence of Rights of Bondholders. Any request, consent
or other instrument required or permitted by this Indenture to be executed by
Bondholders may be in any number of concurrent instruments of substantially
similar tenor and shall be signed or executed by such Bondholders in person or
by an agent or agents duly appointed in writing. Proof of the execution of any
such request, consent or other instrument or of a writing appointing any such
agent, or of the holding by any person of Bonds transferable by delivery, shall
be sufficient for any purpose of this Indenture and shall be conclusive in favor
of the Trustee and of the Authority if made in the manner provided in this
Section.
The fact and date of the execution by any person of any such request,
consent or other instrument or writing may be proved by the certificate of any
notary public or other officer of any jurisdiction, authorized by the laws
thereof to take acknowledgments of deeds, certifying that the person signing
such request, consent or other instrument acknowledged to him the execution
thereof, or by an affidavit of a witness of such execution duly sworn to before
such notary public or other officer.
The ownership of Bonds shall be proved by the bond registration books
held by the Trustee.
Any request, consent, or other instrument or writing of the Holder of
any Bond shall bind every future Holder of the same Bond and the Holder of every
Bond issued in exchange therefor or in lieu thereof, in respect of anything done
or suffered to be done by the Trustee or the Authority in accordance therewith
or in reliance thereon.
Section 12.10. Disqualified Bonds. In determining whether the Holders
of the requisite aggregate principal amount of Bonds have concurred in any
demand, request, direction, consent or waiver under this Indenture, Bonds which
are owned or held by or for the account of the Authority or the Company, or by
any other obligor on the Bonds, or by any person directly or indirectly
controlling or controlled by, or under direct or indirect common control with,
the Authority, the Company, or any other obligor on the Bonds, shall be
disregarded and deemed not to be Outstanding for the purpose of any such
determination. Bonds so owned which have been pledged in good faith may be
regarded as Outstanding for the purposes of this Section if the pledgee shall
establish to the satisfaction of the Trustee the pledgee's right to vote such
Bonds and that the pledgee is not a person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, the Authority or
the Company, or any other obligor on the Bonds. In case of a dispute as to such
right, any decision by the Trustee taken upon the advice of counsel shall be
full protection to the Trustee.
Section 12.11. Money Held for Particular Bonds. The money held by the
Trustee for the payment of the interest, principal or premium due on any date
with respect to particular Bonds (or portions of Bonds in the case of registered
Bonds redeemed in part only) shall, on and after such date and pending such
payment, be set aside on its books and held uninvested in trust by it for the
Holders of the Bonds entitled thereto, subject, however, to the provisions of
Section 11.04 hereof.
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Section 12.12. Funds. Any fund required by this Indenture to be
established and maintained by the Trustee may be established and maintained in
the accounting records of the Trustee, either as a fund or an account, and may,
for the purposes of such records, any audits thereof and any reports or
statements with respect thereto, be treated either as a fund or as an account;
but all such records with respect to all such funds shall at all times be
maintained in accordance with current industry standards, to the extent
practicable, and with due regard for the requirements of Section 7.05 hereof and
for the protection of the security of the Bonds and the rights of every holder
thereof.
Section 12.13. Payments Due on Days other than Business Days. If a
payment day is not a Business Day at the place of payment, then payment may be
made at that place on the next Business Day and no interest shall accrue for the
intervening period.
Section 12.14. Execution in Several Counterparts. This Indenture may be
executed in any number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original; and all such counterparts, or as many
of them as the Authority and the Trustee shall preserve undestroyed, shall
together constitute but one and the same instrument.
Section 12.15. Notices to Rating Agency. Written notice shall be
provided by the Trustee to each Rating Agency of: (i) the appointment of any
successor Trustee, Tender Agent, Paying Agent or Remarketing Agent; (ii) any
Supplemental Indenture or any amendment to the Agreement or the Letter of
Credit; (iii) the expiration, termination, extension or substitution of the
Letter of Credit; (iv) the payment of all Outstanding Bonds; (v) the conversion
of the Bonds to the Fixed Rate; (vi) the mandatory tender of Bonds in accordance
with Sections 5.01 or 5.03 hereof; or (vii) the acceleration of the Bonds. Any
notice required to be delivered to Moody's hereunder shall be deemed to have
been sufficiently given or served for all purposes by being delivered or by
being deposited, postage prepaid, in a post office letter box, addressed to
Moody's Investors Service, 99 Church Street, New York, New York 10007,
Attention, Secured Finance Group.
-65-
<PAGE>
IN WITNESS WHEREOF, MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
has caused this Indenture to be executed in its name by its Chairperson or Vice
Chairman and attested by its Secretary, and DAUPHIN DEPOSIT BANK AND TRUST
COMPANY, as evidence of its acceptance of the trusts created hereunder, has
caused this Indenture to be signed in its corporate name by its duly authorized
officer and attested, all as of the day and year first above written.
MONTGOMERY COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
By__________________________________
Chairperson
(Vice) Chairman
[SEAL]
Attest:_______________________________
(Assistant) Secretary
DAUPHIN DEPOSIT BANK AND TRUST
COMPANY, as Trustee and Tender Agent
By_____________________________________
Authorized Officer
[SEAL]
Attest:________________________________
Authorized Officer
-66-
<PAGE>
EXHIBIT "A"
No. VR- (FLOATING RATE FORM OF BOND) $1,000,000
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to the Authority 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 WRONGFUL inasmuch as the registered owner (the
"Registered Owner") hereof, Cede & Co., has an interest herein.
MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
VARIABLE RATE DEMAND/FIXED RATE
REVENUE BOND
(APPLE FRESH FOODS LTD PROJECT)
SERIES OF 1996
MATURITY DATE: December 1, 2016 CUSIP______________
DATE OF ISSUANCE: December 26, 1996
THIS BOND IS SUBJECT TO MANDATORY TENDER FOR PURCHASE AT THE TIME AND
IN THE MANNER HEREINAFTER DESCRIBED, AND MUST BE SO TENDERED OR WILL BE DEEMED
TO HAVE BEEN SO TENDERED UNDER CERTAIN CIRCUMSTANCES DESCRIBED HEREIN.
KNOW ALL MEN BY THESE PRESENTS that the MONTGOMERY COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY (the "Authority"), for value received, promises to pay
from the source and as hereinafter provided, to CEDE & CO. or registered
assigns, on the maturity date hereof (or upon prior redemption as hereinafter
provided), upon surrender hereof, the principal sum of One Million Dollars
($1,000,000), and in like manner to pay interest on said sum at the rate
described below on the first Wednesday of each calendar month, or if such date
is not a Business Day, the next succeeding Business Day and on the Conversion
Date (hereinafter defined), commencing February 5, 1997 (each an "Interest
Payment Date"), from the Interest Payment Date next preceding the date of
authentication hereof to which interest has been paid or duly provided for,
unless the date of authentication hereof is an Interest Payment Date to which
interest has been paid or duly provided for, in which case from the date of
authentication hereof, or unless no interest has been paid or duly provided for
on the Bonds (as hereinafter defined), in which case from the date of issuance
set forth above (the "Date of Issuance"), until payment of the principal hereof
has been
A-1
<PAGE>
made or duly provided for. Notwithstanding the foregoing, if this Bond is
authenticated after any date which is the seventh calendar day next preceding
any Interest Payment Date (a "Record Date") and before the following Interest
Payment Date, this Bond shall bear interest from such Interest Payment Date;
provided, however, that if the Authority shall default in the payment of
interest due on such Interest Payment Date, then this Bond shall bear interest
from the next preceding Interest Payment Date to which interest has been paid or
duly provided for, or, if no interest has been paid or duly provided for on the
Bonds, from the Date of Issuance. The principal of this Bond is payable in
lawful money of the United States of America at the principal corporate trust
office of Dauphin Deposit Bank and Trust Company, as trustee (together with its
successors in trust, the "Trustee") or at the duly designated office of any
successor Trustee under the Trust Indenture, dated December 26, 1996, between
the Authority and the Trustee (which, as from time to time amended and
supplemented, is hereinafter referred to as the "Indenture"). Payment of
interest on this Bond shall be made on each Interest Payment Date to the
registered Owner hereof as of the applicable Record Date and shall be paid by
check mailed by the Trustee to such registered Owner at his address as it
appears on the registration books of the Authority or at such other address as
is furnished to the Trustee in writing by such registered Owner, or in such
other manner as may be permitted by the Indenture. The purchase price (the
amount equal to 100% of the principal amount of any Bond tendered or deemed
tendered pursuant to the terms of the Indenture plus accrued and unpaid interest
thereon to the date of purchase (the "Purchase Price") of this Bond shall be
payable by Dauphin Deposit Bank and Trust Company (together with any successor
Tender Agent, the "Tender Agent") to the registered Owner hereof at the
principal corporate trust office of the Tender Agent. As used herein, the term
"Business Day" means any day other than: (i) a Saturday or Sunday; (ii) a legal
holiday or any day on which banking institutions in the State of New York, the
Commonwealth of Pennsylvania, the City of New York, or the city in which the
principal office of the Trustee, the Tender Agent or the Bank are authorized to
remain closed; or (iii) a day on which the New York Stock Exchange is closed.
This Bond is one of the duly authorized bonds designated as the
Variable Rate Demand/Fixed Rate Revenue Bonds (Apple Fresh Foods Ltd Project)
Series of 1996 of the Authority issued in the aggregate principal amount of
$1,000,000 (herein referred to as the "Bonds") under and by virtue of the
Pennsylvania Economic Development Financing Law, Act of August 23, 1967, P.L.
251, as amended and supplemented (the "Act"), and by virtue of a resolution duly
adopted by the Authority (the "Bond Resolution"), and equally and ratably
secured under the Indenture, for the purpose of raising funds to finance a
portion of the costs of a project consisting of, among other things: (i) the
acquisition, construction, installation and renovation of certain equipment to
be used in connection with a cook-chill system of batch food processing; and
(ii) the payment of a portion of the costs of issuing the Bonds (the "Project").
Pursuant to a Loan Agreement, dated December 26, 1996 (the "Agreement") by and
between the Authority and Apple Fresh Foods Limited, a Pennsylvania corporation
(the "Company"), installment payments sufficient for the prompt payment when due
of the principal and Purchase Price of, premium, if any, and interest on the
Bonds are to be paid to the Trustee for the account of the Authority and
deposited in the Bond Fund established by the Indenture and have been duly
pledged for that purpose, all to the extent and in the manner provided in the
Indenture.
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The Bonds are all issued under and are equally and ratably secured by
and entitled to the protection of the Indenture, pursuant to which all payments
due from the Company to the Authority under the Agreement (other than certain
indemnification payments and the payment of certain expenses of the Authority)
are assigned to the Trustee to secure the payment of the principal and Purchase
Price of, and premium, if any, and interest on the Bonds and certain costs, fees
and expenses of the Trustee. The Company has caused to be delivered to the
Trustee an irrevocable direct pay letter of credit (together with any Substitute
Letter of Credit, the "Letter of Credit") issued by CoreStates Bank, N.A. (in
such capacity, the "Bank") and dated the Date of Issuance of the Bonds, which
will expire, unless earlier terminated or extended, on December 24, 2000.
Subject to certain conditions, the Letter of Credit may be replaced by a
Substitute Letter of Credit of another commercial bank, savings and loan
association or savings bank. Under the Letter of Credit, the Trustee will be
entitled to draw up to an amount sufficient to pay: (a) the principal of the
Bonds or the portion of the Purchase Price corresponding to the principal of the
Bonds; and (b) accrued interest (at the maximum rate of 15% per annum based on
365/366 day year and the actual number of days elapsed) on the Bonds or the
portion of the Purchase Price of the Bonds corresponding to accrued interest
thereon.
Reference is hereby made to the Indenture, the Agreement and the Letter
of Credit for a description of the property pledged and assigned, the
provisions, among others, with respect to the nature and extent of the security,
the rights, duties and obligations of the Authority, the Trustee and the Owners
of the Bonds and the terms upon which the Bonds are issued and secured; and the
Owner of this Bond, by acceptance hereof, hereby consents to the terms and
provisions of all of the foregoing as a material portion of the consideration
for the issuance of this Bond.
This Bond shall bear interest as follows:
(A) From the Date of Issuance of this Bond to the Conversion
Date, this Bond shall bear interest at the "Floating Rate." The "Floating Rate"
shall be a variable rate of interest equal to the minimum rate of interest
necessary, in the sole judgment of the Remarketing Agent (hereinafter defined),
to sell the Bonds on any Business Day at a price equal to the principal amount
thereof, exclusive of accrued interest, if any, thereon. The Floating Rate shall
be determined weekly by CoreStates Capital Markets, a division of CoreStates
Bank, N.A., Reading, Pennsylvania (the "Remarketing Agent") by 9:30 a.m. on each
Wednesday (or if such Wednesday is not a Business Day, on the next succeeding
Business Day) and shall be effective on such Wednesday for the immediately
following Weekly Period (as hereinafter defined), all as more fully set forth in
the Indenture. The determination of the Floating Rate shall be conclusive and
binding upon the Authority, the Trustee, the Bank, the Company, the Remarketing
Agent, the Tender Agent and the Owners of this Bond.
Anything herein to the contrary notwithstanding, the Floating
Rate shall in no event exceed 15% per annum.
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(B) The Bonds shall bear interest at the "Fixed Rate" from and
after the Conversion Date. In such event, the Fixed Rate shall be applicable
until the maturity of the Bonds. The "Fixed Rate" shall be a fixed annual
interest rate on the Bonds established by the Remarketing Agent as the rate of
interest for which the Remarketing Agent has received commitments on or prior to
the 5th Business Day preceding the Conversion Date, at a price of par without
discount or premium.
Prior to the Conversion Date, interest on the Bonds shall be computed
on the basis of a 365/366-day year, actual number of days elapsed. On and after
the Conversion Date, interest on the Bonds shall be computed on the basis of a
360-day year of twelve 30-day months.
As used herein, the term "Conversion Date" means the Optional
Conversion Date; the term "Letter of Credit Termination Date" means the later
of: (i) that date upon which the Letter of Credit shall expire or terminate
pursuant to its terms; or (ii) that date to which the expiration or termination
of the Letter of Credit may be extended, from time to time, either by extension
or renewal of the existing Letter of Credit or the issuance of a Substitute
Letter of Credit (as such phrase is defined in the Indenture); the term
"Optional Conversion Date" means that date on or after February 5, 1997 which
shall be a Business Day, from and after which the interest rate on the Bonds is
converted from the Floating Rate to the Fixed Rate as a result of the exercise
by the Company of the Conversion Option; the term "Conversion Option" means the
option granted to the Company in the Indenture pursuant to which the interest
rate on the Bonds is converted from the Floating Rate to the Fixed Rate as of
the Optional Conversion Date; the term "Purchase Price" means an amount equal to
100% of the principal amount of any Bond tendered or deemed tendered for
purchase pursuant to the Indenture or with respect to which the Demand Purchase
Option has been exercised, plus accrued and unpaid interest thereon to the date
of purchase.
The interest rate on the Bonds may be converted from the Floating Rate
to the Fixed Rate upon satisfaction of certain conditions and notice given by
the Trustee at the direction of the Company to the Owners of the Bonds at least
twenty (20) days but not more than thirty (30) days prior to the Conversion Date
in accordance with the requirements of the Indenture, and the Bonds shall be
subject to mandatory tender by the Owners thereof on the Conversion Date. On and
after the Conversion Date, the Demand Purchase Option will not be available to
the Owners of the Bonds. On or prior to the Conversion Date, an Owner of Bonds,
shall be required to deliver their Bonds to the Tender Agent for purchase at the
Purchase Price. Accrued interest on the Bonds will be payable on the Conversion
Date to the Owners of Bonds as of the Conversion Date. Any Bonds not delivered
to the Tender Agent on or prior to the conversion Date ("Undelivered Bonds"),
for which there has been irrevocably deposited in trust with the Trustee or the
Tender Agent an amount of money sufficient to pay the Purchase Price of the
Undelivered Bonds, shall be deemed to have been purchased at the Purchase Price
and are deemed to be no longer outstanding with respect to such prior Owners. IN
THE EVENT OF A FAILURE BY AN OWNER OF BONDS TO DELIVER ITS BONDS ON OR PRIOR TO
THE CONVERSION DATE, SAID OWNER SHALL NOT BE ENTITLED TO ANY PAYMENT (INCLUDING
ANY INTEREST TO ACCRUE ON OR SUBSEQUENT TO THE CONVERSION DATE) OTHER THAN THE
PURCHASE PRICE FOR
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<PAGE>
SUCH UNDELIVERED BONDS, AND ANY UNDELIVERED BONDS SHALL NO LONGER BE ENTITLED TO
THE BENEFIT OF THE INDENTURE, EXCEPT FOR THE PURPOSE OF PAYMENT OF THE PURCHASE
PRICE THEREFOR.
Notwithstanding the foregoing provisions, to the extent that at the
close of the fifth Business Day prior to the proposed Optional Conversion Date,
the Remarketing Agent has not presented to the Company firm commitments for the
purchase of all of the Bonds, the Company, at its option, may rescind an
optional conversion of the Bonds. Any such election to rescind must be made by
the close of the fourth Business Day prior to the proposed Conversion Date and
the Company shall give written notice to the Trustee, the Tender Agent and the
Bank of its decision to rescind the optional conversion by such time. The
Company shall cause the Trustee to immediately notify the Owners of such
rescission and thereafter the Bonds shall bear interest at the Floating Rate in
effect for the then current Weekly Period and thereafter the Bonds shall bear
interest at the Floating Rate until any subsequent Conversion Date effected in
accordance with the Indenture. As used herein, "Weekly Period" means, while this
Bond bears interest at the Floating Rate, the weekly period that begins on and
includes Wednesday of each calendar week and ends at the close of business on
Tuesday of the next succeeding week.
At any time prior to the Record Date preceding the first Interest
Payment Date following the Conversion Date, the Trustee or the Tender Agent, as
the case may be, shall deliver a replacement Bond evidencing interest payable at
the Fixed Rate.
Prior to the Conversion Date, this Bond shall be purchased, at the
option of the Owner hereof ("Demand Purchase Option") at the Purchase Price,
upon:
(a) delivery by such Owner to the Trustee and the Tender Agent
at their principal corporate trust office and Delivery Office (hereinafter
defined) respectively, and to the Remarketing Agent at its principal office of a
notice (a "Demand Purchase Notice") (said notice to be irrevocable and effective
upon receipt) which states: (i) the aggregate principal amount and the bond
numbers of Bonds to be purchased; and (ii) the date on which such Bonds are to
be purchased, which date shall be a Business Day not prior to the seventh (7th)
day next succeeding the date of delivery of such notice and which date shall be
prior to the Conversion Date;
(b) if such Bonds are to be purchased prior to an Interest
Payment Date and after the Record Date in respect thereof, delivery to the
Tender Agent together with the Demand Purchase Notice described in (a) above, of
a non-recourse due-bill, payable to bearer, for interest due on such Interest
Payment Date; and
(c) delivery to the Tender Agent at its Delivery Office
(hereinafter defined) at or prior to 10:00 a.m., New York City time, on the date
designated for purchase in the applicable Demand Purchase Notice of such Bonds
to be purchased with an appropriate endorsement for transfer or accompanied by a
bond power endorsed in blank.
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<PAGE>
Any Bond as to which a Demand Purchase Notice has been delivered
pursuant to (a) above, must be delivered to the Tender Agent as provided in (c)
above, and any such Bonds not so delivered ("Undelivered Bonds"), for which
there has been irrevocably deposited in trust with the Trustee or the Tender
Agent an amount of money sufficient to pay the Purchase Price thereof, shall be
deemed to have been purchased at the Purchase Price and are deemed to be no
longer outstanding with respect to such tendering Owner. IN THE EVENT OF A
FAILURE BY AN OWNER OF BONDS TO DELIVER ITS BONDS AS SPECIFIED ABOVE, SAID OWNER
SHALL NOT BE ENTITLED TO ANY PAYMENT (INCLUDING ANY INTEREST TO ACCRUE ON OR
SUBSEQUENT TO THE DATE DESIGNATED FOR PURCHASE IN THE APPLICABLE DEMAND PURCHASE
NOTICE) OTHER THAN THE PURCHASE PRICE FOR SUCH UNDELIVERED BONDS, AND ANY
UNDELIVERED BONDS SHALL NO LONGER BE ENTITLED TO THE BENEFIT OF THE INDENTURE,
EXCEPT FOR THE PAYMENT OF THE PURCHASE PRICE THEREFOR.
Notwithstanding the foregoing provisions, in the event any Bond as to
which the Owner thereof has exercised the Demand Purchase Option is remarketed
to such Owner pursuant to the Remarketing Agreement, such Owner need not deliver
such Bond to the Tender Agent as provided in (c) above, although such Bond shall
be deemed to have been delivered to the Tender Agent, redelivered to such Owner,
and remarketed for purposes of the Indenture.
The Agreement provides that the Company, upon satisfaction of certain
conditions precedent, may, at any time, at its option, provide for the delivery
to the Trustee of a Substitute Letter of Credit. The Bonds shall be subject to
mandatory tender by the Owners thereof on the date of delivery of the Substitute
Letter of Credit (the "Substitution Date"). On or prior to the Substitution
Date, Owners of Bonds shall be required to deliver their Bonds to the Tender
Agent for purchase at the Purchase Price. Accrued interest on the Bonds will be
payable on the Substitution Date to the Owners of Bonds as of the Substitution
Date. Any Bonds not delivered to the Tender Agent on or prior to the
Substitution Date ("Undelivered Bonds"), for which there has been irrevocably
deposited in trust with the Trustee or the Tender Agent an amount of money
sufficient to pay the Purchase Price of the Undelivered Bonds, shall be deemed
to have been purchased at the Purchase Price and are deemed to be no longer
outstanding with respect to such Owners. IN THE EVENT OF A FAILURE BY AN OWNER
OF BONDS TO DELIVER ITS BONDS ON OR PRIOR TO THE SUBSTITUTION DATE, SAID OWNER
SHALL NOT BE ENTITLED TO ANY PAYMENT (INCLUDING ANY INTEREST TO ACCRUE ON OR
SUBSEQUENT TO THE SUBSTITUTION DATE) OTHER THAN THE PURCHASE PRICE FOR SUCH
UNDELIVERED BONDS, AND ANY UNDELIVERED BONDS SHALL NO LONGER BE ENTITLED TO THE
BENEFIT OF THE INDENTURE, EXCEPT FOR THE PURPOSE OF PAYMENT OF THE PURCHASE
PRICE THEREFOR.
Any delivery of a notice required to be made to the Trustee at its
principal corporate trust office pursuant to (a) above shall be delivered to the
Trustee at 213 Market Street, Harrisburg, Pennsylvania 17101, Attention
Corporate Trust Services, or to the office designated for such purpose by any
successor Trustee; any delivery of a notice required to be made to the
Remarketing
A-6
<PAGE>
Agent at its principal office pursuant to (a) above shall be delivered to the
Remarketing Agent at 601 Penn Square Center, Fourth Floor, Reading, Pennsylvania
19601, Attention: CoreStates Capital Markets, Sales and Underwriting Department,
or to the office designated for such purpose by any successor Remarketing Agent;
and any delivery of Bonds required to be made to the Tender Agent pursuant to
(b) above shall be delivered to the Tender Agent at 213 Market Street,
Harrisburg, Pennsylvania 17101, Attention: Corporate Trust Services, or to the
office designated for such purpose by any successor Tender Agent (the "Delivery
Office").
Notwithstanding any provision herein to the contrary, so long as this
Bond is subject to a system of book-entry transfers, any requirement for the
delivery of Bonds to the Tender Agent in connection with an optional or
mandatory tender shall be deemed satisfied upon the transfer, on the
registration books of DTC, of the beneficial ownership interests in the Bonds
tendered for purchase to the account of the Tender Agent, or a Participant (as
such term is defined in the Indenture) acting on behalf of or at the discretion
of such Tender Agent.
THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE
SOLELY AND EXCLUSIVELY FROM THE PAYMENTS REQUIRED TO BE MADE BY THE COMPANY
UNDER THE AGREEMENT AND FROM DRAWS ON THE LETTER OF CREDIT. NO RECOURSE SHALL BE
HAD FOR THE PAYMENT OF PRINCIPAL, PURCHASE PRICE OR REDEMPTION PRICE OF, OR
INTEREST ON, THIS BOND, OR ANY CLAIM BASED HEREON OR ON THE INDENTURE OR THE
AGREEMENT, AGAINST THE AUTHORITY OR ANY SUCCESSOR BODY OR AGAINST ANY OFFICER,
MEMBER, EMPLOYEE OR AGENT PAST, PRESENT OR FUTURE OF THE AUTHORITY OR ANY
SUCCESSOR BODY, UNDER ANY CONSTITUTIONAL PROVISION, STATUTE OR RULE OF LAW, OR
BY THE ENFORCEMENT OF ANY ASSESSMENT OR BY ANY LEGAL OR EQUITABLE PROCEEDING OR
OTHERWISE, AND ALL SUCH LIABILITY OF THE AUTHORITY OR ANY SUCCESSOR BODY OR ANY
SUCH OFFICERS, MEMBERS, EMPLOYEES OR AGENTS IS RELEASED AS A CONDITION OF, AND
IN CONSIDERATION FOR, THE ISSUANCE OF THIS BOND. AS A CONDITION OF, AND IN
CONSIDERATION FOR, THE ISSUANCE OF THIS BOND, THE REGISTERED OWNER HEREOF
COVENANTS THAT HE WILL NOT SUE THE AUTHORITY OR ITS MEMBERS, OFFICERS, EMPLOYEES
OR AGENTS, PAST, PRESENT OR FUTURE, EXCEPT AS EXPRESSLY PERMITTED IN THE
INDENTURE AND THE AGREEMENT. THE BONDS AND THE INTEREST THEREON SHALL NOT BE IN
ANY WAY A DEBT OR LIABILITY OF THE COUNTY OF MONTGOMERY, PENNSYLVANIA (THE
"COUNTY"), THE COMMONWEALTH OF PENNSYLVANIA (THE "COMMONWEALTH") OR ANY
POLITICAL SUBDIVISION THEREOF AND SHALL NOT CREATE OR CONSTITUTE ANY
INDEBTEDNESS, LIABILITY OR OBLIGATION OF THE COUNTY, THE COMMONWEALTH OR ANY
POLITICAL SUBDIVISION THEREOF, EITHER LEGAL, MORAL OR OTHERWISE, AND THE
AUTHORITY SHALL NOT INCUR ANY INDEBTEDNESS ON BEHALF OF OR IN ANY WAY TO
OBLIGATE THE COUNTY, THE COMMONWEALTH OR ANY POLITICAL SUBDIVISION THEREOF.
NEITHER THE MEMBERS OF THE AUTHORITY NOR ANY PERSON EXECUTING THE BONDS SHALL BE
LIABLE PERSONALLY ON THE BONDS BY REASON OF THE ISSUANCE THEREOF. THE AUTHORITY
IS A CONDUIT ISSUER AND HAS NO TAXING POWER.
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This Bond is transferable by the Registered Owner hereof in person or
by his attorney duly authorized in writing, at the principal corporate trust
office of the Trustee or at the Delivery Office of the Tender Agent or that of
any successor Tender Agent, but only in the manner, subject to the limitations
and upon payment of the charges provided in the Indenture, and upon surrender
and cancellation of this Bond. Upon such transfer a new registered Bond or Bonds
of authorized denomination or denominations for the same aggregate principal
amount will be issued to the transferee in exchange herefor. The Authority, the
Tender Agent and the Trustee may deem and treat the registered Owner hereof as
the absolute Owner hereof (whether or not this Bond shall be overdue) for all
purposes, and neither the Authority, the Tender Agent nor the Trustee shall be
bound by any notice or knowledge to the contrary.
Prior to the Conversion Date: (i) the Bonds are issuable as fully
registered bonds without coupons in the denominations of $100,000 or any
integral multiple of $5,000 in excess thereof; and (ii) the Bonds may not be
issued, exchanged or transferred except in authorized denominations of $100,000
or any integral multiple of $5,000 in excess thereof. From and after the
Conversion Date, the Bonds shall be issuable as fully registered bonds without
coupons in the denominations of $5,000 or any integral multiple thereof.
Extraordinary Redemption
The Bonds are callable for redemption in the event: (1) the Project
Facilities or any portion thereof is damaged or destroyed or taken in a
condemnation proceeding as provided in Section 6.04 of the Agreement; or (2) the
Company shall exercise its option to cause the Bonds to be redeemed as provided
in Section 9.02 of the Agreement. If called for redemption at any time pursuant
to (1) or (2) above, the Bonds shall be subject to redemption by the Authority
on any Interest Payment Date, in whole or in part, at a redemption price of one
hundred percent (100%) of the principal amount thereof plus accrued interest to
the redemption date.
Mandatory Redemption
The Bonds are subject to mandatory redemption, five (5) Business Days
prior to the Letter of Credit Termination Date, in whole, at a redemption price
equal to one hundred percent (100%) of the principal amount thereof being
redeemed plus accrued interest to the redemption date if, on the thirtieth
(30th) Business Day prior to the Letter of Credit Termination Date, the Trustee
shall not have received a Substitute Letter of Credit which will be effective on
or before the Letter of Credit Termination Date.
The Bonds are also subject to mandatory redemption, in whole, at any
time, within one hundred eighty (180) days after the Trustee receives notice of
the occurrence of a "Determination of Taxability" (as such phrase is hereinafter
defined), at a redemption price equal to one hundred percent (100%) of the
aggregate principal amount of Bonds Outstanding plus accrued interest to the
redemption date.
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"Event of Taxability" with respect to any Bond means a change of law or
regulations, or the interpretation thereof, or the occurrence of any other event
or the existence of any other circumstance (including without limitation the
fact that any representations or warranties of the Company or the Authority made
in connection with the issuance of any Bond is or was untrue or that a covenant
of the Company has been breached) that has the effect of causing interest
payable on any Bond to be includable in gross income for federal income tax
purposes under Section 103 of the Internal Revenue Code of 1986, as amended, and
the applicable regulations thereunder (the "Code") other than by reason that
such interest: (i) is includable in the gross income of an Owner or former Owner
of any Bond while such Owner or former Owner is or was a "substantial user" or a
"related person" to a "substantial user" of the Project Facilities (as such
terms are used in Section 147(a)(1) of the Code); or (ii) is deemed an item of
tax preference including, without limitation, an item subject to any alternative
minimum tax.
"Determination of Taxability" with respect to any Bond shall be deemed
to have been made upon the first to occur of the following events:
(i) the date on which the Company determines that an Event
of Taxability has occurred by filing with the Trustee a statement to that effect
supported by one or more tax schedules, returns or documents which disclose that
such an Event of Taxability has occurred;
(ii) the date on which the Company or the Trustee is
advised by private ruling, technical advice or any other written communication
from any authorized official of the Internal Revenue Service that, based upon
any filings of the Company or any other person or entity, or upon any review or
audit of the Company or any other person or entity, or upon any other grounds
whatsoever, an Event of Taxability has occurred;
(iii) the date on which the Trustee or the Company is
advised that a court of competent jurisdiction has issued an order, declaration,
ruling or judgment to the effect that an Event of Taxability has occurred;
(iv) the date the Trustee shall have received written
notice from any owner of the Bonds that such owner has received a written
assertion or claim by any authorized official of the Internal Revenue Service
that an Event of Taxability has occurred; or
(v) the date the Trustee is notified that the Internal
Revenue Service has issued any private ruling, technical advice or any other
written communication, with or to the effect that an Event of Taxability has
occurred;
provided, however, that (x) no Determination of Taxability described in each of
clause (i), (ii), (iii), (iv) or (v) above shall be deemed to have occurred
unless the Trustee shall have received a written opinion of nationally
recognized bond counsel satisfactory to the Trustee, in form and substance
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satisfactory to the Bank and the Company and not unsatisfactory to the Trustee,
to the effect that an Event of Taxability has occurred; and (y) no Determination
of Taxability described in each of clauses (i), (ii), (iii), (iv) or (v) above
shall be deemed to have occurred until 180 days shall have elapsed from the
dates described in clauses (i), (ii), (iii), (iv) or (v) above without such
Determination of Taxability having been rescinded or canceled.
Mandatory Sinking Fund Redemption
The Bonds are subject to mandatory sinking fund redemption on the
Interest Payment Date occurring in the month of December in each of the years
set forth below commencing on the Interest Payment Date occurring in December of
1997 (each, a "Mandatory Sinking Account Payment Date"), at a redemption price
equal to 100% of the principal amount thereof plus accrued interest as follows:
Mandatory Sinking
Year Account Payments
---- ----------------
1997 30,000
1998 35,000
1999 35,000
2000 40,000
2001 40,000
2002 40,000
2003 40,000
2004 45,000
2005 45,000
2006 50,000
2007 50,000
2008 50,000
2009 55,000
2010 55,000
2011 60,000
2012 60,000
2013 65,000
2014 65,000
2015 70,000
2016* 70,000
*Final maturity of the Bonds is December 1, 2016
Optional Redemption
On or prior to the Conversion Date, the Bonds are subject to redemption
by the Authority,
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<PAGE>
at the option of the Company, at any time, subject to the notice provisions
described below, in whole or in part, at the redemption price of 100% of the
principal amount thereof being redeemed plus accrued interest to the redemption
date.
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<PAGE>
No such optional redemption shall occur unless there shall be available
in the Bond Fund established under the Indenture sufficient Available Moneys (as
defined in the Indenture) to pay all amounts due with respect to such a
redemption.
In the event any of the Bonds or portions thereof are called for
redemption as aforesaid, notice of the call for redemption, identifying the
Bonds or portions thereof to be redeemed and the redemption price (including the
premium, if any), shall be given by the Trustee by mailing a copy of the
redemption notice by first-class mail at least thirty (30) days but not more
than sixty (60) days prior to the date fixed for redemption to the Owner of each
Bond to be redeemed in whole or in part at the address shown on the registration
books. Any notice mailed as provided above shall be conclusively presumed to
have been duly given, whether or not the Owner receives the notice. No further
interest shall accrue on the principal of any Bond called for redemption after
the redemption date if Available Moneys (as defined in the Indenture) sufficient
for such redemption have been deposited with the Trustee. Notwithstanding the
foregoing, the notice requirements contained in the first sentence of this
paragraph may be deemed satisfied with respect to a transferee of a Bond which
has been purchased pursuant to the Demand Purchase Option under certain
circumstances provided in Section 4.06 of the Indenture, after such Bond has
previously been called for redemption, notwithstanding the failure to satisfy
the notice requirements of the first sentence of this paragraph with respect to
such transferee.
If less than all the Bonds are to be redeemed, the particular Bonds or
portions thereof to be redeemed shall be selected by the Trustee by lot. Prior
to the Conversion Date, in case a Bond is of a denomination larger than
$100,000, a portion of such Bond ($100,000 or any integral multiple of $5,000 in
excess thereof) may be redeemed, but Bonds shall be redeemed only if the
remaining unredeemed portion of such Bond is in the principal amount of $100,000
or any integral multiple in excess of $100,000.
The Bonds are issued pursuant to and in full compliance with the
Constitution and laws of the Commonwealth, particularly the Act, and by
appropriate action duly taken by the Authority which authorizes the execution
and delivery of the Agreement and the Indenture. The Bonds have been issued
under the provisions of the Act.
Notwithstanding anything to the contrary contained herein or in the
Indenture, the Agreement, or in any other instrument or document executed by or
on behalf of the Authority in connection herewith, no stipulation, covenant,
agreement or obligation contained herein or therein shall be deemed or construed
to be a stipulation, covenant, agreement or obligation of any present or future
member, commissioner, director, trustee, officer, employee or agent of the
Authority, or of any successor to the Authority, in any such person's individual
capacity, and no such person, in his individual capacity, shall be liable
personally for any breach or nonobservance of or for any failure to perform,
fulfill or comply with any such stipulations, covenants, agreements or the
principal of or premium, if any, or interest on any of the Bonds or for any
claim based thereon or on any such stipulation, covenant, agreement or
obligation, against any such person, in his individual capacity, either directly
or through the Authority or any successor to the Authority, under any rule
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<PAGE>
of law or equity, statute or constitution or by the enforcement of any
assessment or penalty or otherwise, and all such liability of any such person,
in his individual capacity, is hereby expressly waived and released.
The Owner of this Bond shall have no right to enforce the provisions of
the Indenture or to institute action to enforce the covenants therein, or to
take any action with respect to any default under the Indenture, or to
institute, appear in or defend any suit or other proceedings with respect
thereto, unless certain circumstances described in the Indenture shall have
occurred. In certain events, on the conditions, in the manner and with the
effect set forth in the Indenture, the principal of all the Bonds issued under
the Indenture and then outstanding may become or may be declared due and payable
before the stated maturity thereof, together with interest accrued thereon.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Authority and the rights of the Owners of the Bonds at any time by the Authority
with the consent of the Company, the Bank and the holders of all Bonds at the
time outstanding. Any such consent or any waiver by the Company, the Bank and
the holders of all Bonds at the time outstanding shall be conclusive and binding
upon the Owner and upon all future Owners of this Bond and of any Bond issued in
replacement hereof whether or not notation of such consent or waiver is made
upon this Bond. The Indenture also contains provisions which, subject to certain
conditions, permit or require the Trustee to waive certain past defaults under
the Indenture and their consequences.
It is hereby certified, recited and declared that all acts, conditions
and things required to exist, happen and be performed precedent to and in
connection with the execution and delivery of the Indenture and the issuance of
this Bond do exist, have happened and have been performed in due time, form and
manner as required by law; and that the issuance of this Bond and the issue of
which it forms a part, together with all other obligations of the Authority,
does not exceed or violate any constitutional or statutory limitation.
This Bond shall not be valid or become obligatory for any purpose or be
entitled to any security or benefit under the Indenture until the certificate of
authentication hereon shall have been signed by the Trustee or the Tender Agent,
as authenticating agent.
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<PAGE>
IN WITNESS WHEREOF, the Montgomery County Industrial Development
Authority has caused this Bond to be signed in its name and on its behalf by the
manual or facsimile signature of its Chairperson or Vice Chairman and its
corporate seal to be affixed, imprinted or reproduced hereon and attested by the
manual or facsimile signature of its Secretary all as of the Date of Issuance.
MONTGOMERY COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
Attest:____________________________ By________________________________
Secretary Chairperson
(SEAL)
(Form of Certificate of Authentication)
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds of the issue described in the
within-mentioned Trust Indenture.
DAUPHIN DEPOSIT BANK AND TRUST
COMPANY, as Trustee and Tender Agent
By:_________________________________
Authorized Representative
Date of Authentication:____________
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<PAGE>
(Form for Transfer)
FOR VALUE RECEIVED, __________, the undersigned, hereby sells, assigns
and transfers unto (Tax Identification or Social Security No. ___________) the
within Bond and all rights thereunder, and hereby irrevocably constitutes and
appoints _________ attorney to transfer the within Bond on the books kept for
registration thereof, with full power of substitution in the premises.
Dated__________________________________ _______________________________
NOTICE: Signature(s) must be guaranteed NOTICE: The signature to this
by an approved eligible guarantor institution, assignment must correspond with
an institution which is participant in a the name as it appears upon the
Securities Transfer Association recognized face of the within Bond in
signature guarantee program. every particular, without
alteration or enlargement or
any change whatever.
A-15
<PAGE>
EXHIBIT "B"
(FIXED RATE FORM OF BOND)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to the Authority 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 WRONGFUL inasmuch as the registered owner (the
"Registered Owner") hereof, Cede & Co., has an interest herein.
UNITED STATES OF AMERICA
MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
VARIABLE RATE DEMAND/FIXED RATE
REVENUE BOND
(APPLE FRESH FOODS LTD PROJECT)
SERIES OF 1996
No. FR- $
Interest Rate: CUSIP__________
KNOW ALL MEN BY THESE PRESENTS that the MONTGOMERY COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY (the "Authority"), for value received, promises to pay
from the source and as hereinafter provided, to CEDE & CO. or registered
assigns, on __________, upon surrender hereof, the principal sum of __________
Dollars, and in like manner to pay interest (calculated on the basis of a
360-day year of twelve 30 day months) on said sum at the rate per annum set
forth above on June 1 and December 1 of each year, commencing ___________, (each
an "Interest Payment Date") from the Interest Payment Date next preceding the
date of authentication hereof to which interest has been paid or duly provided
for, unless the date of authentication hereof is an Interest Payment Date to
which interest has been paid or duly provided for, in which case from the date
of authentication hereof or unless no interest has been paid or duly provided
for on the Bonds (as hereinafter defined), in which case from the Conversion
Date (as defined in the Indenture, as hereinafter defined), until payment of the
principal hereof has been made or duly provided for. Notwithstanding the
foregoing, if this Bond is authenticated after any date which is the fifteenth
day next preceding any Interest Payment Date (a "Record Date") and before the
following Interest Payment Date, this Bond shall bear interest from such
Interest Payment Date;
B-1
<PAGE>
provided, however, that if the Authority shall default in the payment of
interest due on such Interest Payment Date, then this Bond shall bear interest
from the next preceding interest payment date to which interest has been paid or
duly provided for, or, if no interest has been paid or duly provided for on the
Bonds, from the Date of Issuance. The principal of this Bond is payable in
lawful money of the United States of America at the principal corporate trust
office of Dauphin Deposit Bank and Trust Company, as trustee (together with its
successors in trust, the "Trustee") or at the duly designated office of any
successor Trustee under the Trust Indenture, dated December 26, 1996 between the
Authority and the Trustee (which Indenture, as from time to time amended and
supplemented, is hereinafter referred to as the "Indenture"). Payment of
interest on this Bond shall be made on each Interest Payment Date to the
registered Owner hereof as of the applicable Record Date and shall be paid by
check mailed by the Trustee to such registered Owner at his address as it
appears on the registration books of the Authority or at such other address as
is furnished to the Trustee in writing by such registered Owner, or in such
other manner as may be permitted by the Indenture. As used herein, the term
"Business Day" means a day which is not a Saturday, Sunday or legal holiday on
which banking institutions in the State of New York, Commonwealth of
Pennsylvania, the City of New York, or the city in which the principal office of
the Trustee, the Tender Agent or the Bank are authorized to remain closed or on
which the New York Stock Exchange is closed.
This Bond is one of the duly authorized bonds designated as the
Variable Rate Demand/Fixed Rate Revenue Bonds (Apple Fresh Foods Ltd Project)
Series of 1996 of the Authority issued in the aggregate principal amount of $
(herein referred to as the "Bonds") under and by virtue of the Pennsylvania
Economic Development Financing Law, Act of August 23, 1967, P.L. 251, as amended
and supplemented (the "Act"), and by virtue of a resolution duly adopted by the
Authority (the "Bond Resolution"), and equally and ratably secured under the
Indenture, for the purpose of raising funds to finance a portion of the costs of
a project consisting of, among other things, (i) the acquisition, construction,
installation and renovation of certain equipment to be used in connection with a
cook-chill system of batch food processing; and (ii) payment of a portion of the
costs of issuing the Bonds (the "Project"). Pursuant to a Loan Agreement, dated
December 26, 1996 (the "Agreement") by and between the Authority and Apple Fresh
Foods Limited, a Pennsylvania corporation (the "Company"), installment payments
sufficient for the prompt payment when due of the principal and Purchase Price
of, premium, if any, and interest on the Bonds are to be paid to the Trustee for
the account of the Authority and deposited in the Bond Fund established by the
Indenture and have been duly pledged for that purpose, all to the extent and in
the manner provided in the Indenture.
The Bonds are all issued under and are equally and ratably secured by
and entitled to the protection of the Indenture, pursuant to which all payments
due from the Company to the Authority under the Agreement (other than certain
indemnification payments and the payment of certain expenses of the Authority)
are assigned to the Trustee to secure the payment of the principal of and
premium, if any, and interest on the Bonds.
Reference is hereby made to the Indenture and the Agreement for a
description of the
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<PAGE>
property pledged and assigned, the provisions, among others, with respect to the
nature and extent of the security, the rights, duties and obligations of the
Authority, the Trustee and the Owners of the Bonds, and the terms upon which the
Bonds are issued and secured; and the Owner of this Bond, by acceptance hereof,
hereby consents to the terms and provisions of all of the foregoing as a
material portion of the consideration for the issuance of this Bond.
THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE
SOLELY AND EXCLUSIVELY FROM THE PAYMENTS REQUIRED TO BE MADE BY THE COMPANY
UNDER THE AGREEMENT AND FROM DRAWS ON THE LETTER OF CREDIT. NO RECOURSE SHALL BE
HAD FOR THE PAYMENT OF PRINCIPAL, PURCHASE PRICE OR REDEMPTION PRICE OF, OR
INTEREST ON, THIS BOND, OR ANY CLAIM BASED HEREON OR ON THE INDENTURE OR THE
AGREEMENT, AGAINST THE AUTHORITY OR ANY SUCCESSOR BODY OR AGAINST ANY OFFICER,
MEMBER, EMPLOYEE OR AGENT PAST, PRESENT OR FUTURE OF THE AUTHORITY OR ANY
SUCCESSOR BODY, UNDER ANY CONSTITUTIONAL PROVISION, STATUTE OR RULE OF LAW, OR
BY THE ENFORCEMENT OF ANY ASSESSMENT OR BY ANY LEGAL OR EQUITABLE PROCEEDING OR
OTHERWISE, AND ALL SUCH LIABILITY OF THE AUTHORITY OR ANY SUCCESSOR BODY OR ANY
SUCH OFFICERS, MEMBERS, EMPLOYEES OR AGENTS IS RELEASED AS A CONDITION OF, AND
IN CONSIDERATION FOR, THE ISSUANCE OF THIS BOND. AS A CONDITION OF, AND IN
CONSIDERATION FOR, THE ISSUANCE OF THIS BOND, THE REGISTERED OWNER HEREOF
COVENANTS THAT HE WILL NOT SUE THE AUTHORITY OR ITS MEMBERS, OFFICERS, EMPLOYEES
OR AGENTS, PAST, PRESENT OR FUTURE, EXCEPT AS EXPRESSLY PERMITTED IN THE
INDENTURE AND THE AGREEMENT. THE BONDS AND THE INTEREST THEREON SHALL NOT BE IN
ANY WAY A DEBT OR LIABILITY OF THE COUNTY OF MONTGOMERY, PENNSYLVANIA (THE
"COMMONWEALTH"), THE COMMONWEALTH OF PENNSYLVANIA (THE "COMMONWEALTH") OR ANY
POLITICAL SUBDIVISION THEREOF AND SHALL NOT CREATE OR CONSTITUTE ANY
INDEBTEDNESS, LIABILITY OR OBLIGATION OF THE COUNTY, THE COMMONWEALTH OR ANY
POLITICAL SUBDIVISION THEREOF, EITHER LEGAL, MORAL OR OTHERWISE, AND THE
AUTHORITY SHALL NOT INCUR ANY INDEBTEDNESS ON BEHALF OF OR IN ANY WAY TO
OBLIGATE THE COUNTY, THE COMMONWEALTH OR ANY POLITICAL SUBDIVISION THEREOF.
NEITHER THE MEMBERS OF THE AUTHORITY NOR ANY PERSON EXECUTING THE BONDS SHALL BE
LIABLE PERSONALLY ON THE BONDS BY REASON OF THE ISSUANCE THEREOF. THE AUTHORITY
IS A CONDUIT ISSUER AND HAS NO TAXING POWER.
This Bond is transferable by the Registered Owner hereof in person or
by his attorney duly authorized in writing, at the principal corporate trust
office of the Trustee but only in the manner, subject to the limitations and
upon payment of the charges provided in the Indenture, and upon surrender and
cancellation of this Bond. Upon such transfer a new registered Bond or Bonds of
authorized denomination or denominations for the same aggregate principal amount
will be issued to the transferee in exchange herefor. The Authority and the
Trustee may deem and treat the
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<PAGE>
registered Owner hereof as the absolute Owner hereof (whether or not this Bond
shall be overdue) for all purposes, and neither the Authority nor the Trustee
shall be bound by any notice or knowledge to the contrary.
The Bonds shall be issuable as fully registered Bonds without coupons
in the denomination of $5,000 or any integral multiple thereof.
Extraordinary Redemption
The Bonds are callable for redemption in the event: (1) the Project
Facilities or any portion thereof is damaged or destroyed or taken in a
condemnation proceeding as provided in Section 6.04 of the Agreement; or (2) the
Company shall exercise its option to cause the Bonds to be redeemed as provided
in Section 9.02 of the Agreement. If called for redemption at any time pursuant
to (1) or (2) above, the Bonds shall be subject to redemption by the Authority
on any interest payment date, in whole or in part, at a redemption price of one
hundred percent (100%) of the principal amount thereof plus accrued interest to
the redemption date.
Mandatory Redemption
The Bonds are subject to mandatory redemption, five (5) Business Days
prior to the Letter of Credit Termination Date, in whole, at a redemption price
equal to one hundred percent (100% of the principal amount thereof being
redeemed plus accrued interest to the redemption date if, on the thirtieth
(30th) Business Day prior to the Letter of Credit Termination Date, the Trustee
shall not have received a Substitute Letter of Credit which will be effective on
or before the Letter of Credit Termination Date.
The Bonds are also subject to mandatory redemption, in whole, at any
time, within one hundred eighty (180) days after the Trustee receives notice of
the occurrence of a "Determination of Taxability" (as hereinafter defined), at a
redemption price equal to one hundred percent (100%) of the aggregate principal
amount of Bonds Outstanding plus accrued interest to the redemption date.
"Event of Taxability" with respect to any Bond means a change of law or
regulations, or the interpretation thereof, or the occurrence of any other event
or the existence of any other circumstance (including without limitation the
fact that any representations or warranties of the Company or the Authority made
in connection with the issuance of any Bond is or was untrue or that a covenant
of the Company has been breached) that has the effect of causing interest
payable on any Bond to be includable in gross income for federal income tax
purposes under Section 103 of the Internal Revenue Code of 1986, as amended, and
the applicable regulations thereunder (the "Code") other than by reason that
such interest: (i) is includable in the gross income of an Owner or former Owner
of any Bond while such Owner or former Owner is or was a "substantial user" or a
"related person" to a "substantial user" of the Project Facilities (as such
terms are used in Section 147(a)(1) of the Code); or (ii) is deemed an item of
tax preference including, without limitation, an item subject to any alternative
minimum tax.
B-4
<PAGE>
"Determination of Taxability" with respect to any Bond shall be deemed
to have been made upon the first to occur of the following events:
(i) the date on which the Company determines that an Event
of Taxability has occurred by filing with the Trustee a statement to that effect
supported by one or more tax schedules, returns or documents which disclose that
such an Event of Taxability has occurred;
(ii) the date on which the Company or the Trustee is advised
by private ruling, technical advice or any other written communication from any
authorized official of the Internal Revenue Service that, based upon any filings
of the Company or any other person or entity, or upon any review or audit of the
Company or any other person or entity, or upon any other grounds whatsoever, an
Event of Taxability has occurred;
(iii) the date on which the Trustee or the Company is
advised that a court of competent jurisdiction has issued an order, declaration,
ruling or judgment to the effect that an Event of Taxability has occurred;
(iv) the date the Trustee shall have received written notice
from any owner of the Bonds that such owner has received a written assertion or
claim by any authorized official of the Internal Revenue Service that an Event
of Taxability has occurred; or
(v) the date the Trustee is notified that the Internal
Revenue Service has issued any private ruling, technical advice or any other
written communication, with or to the effect that an Event of Taxability has
occurred;
provided, however, that (x) no Determination of Taxability described in each of
clauses (i), (ii), (iii), (iv) or (v) above shall be deemed to have occurred
unless the Trustee shall have received a written opinion of other nationally
recognized bond counsel satisfactory to the Bank and the Company and not
unsatisfactory to the Trustee, and in form and substance satisfactory to the
Bank and the Company and not unsatisfactory to the Trustee, to the effect that
an Event of Taxability has occurred; and (y) no Determination of Taxability
described in each of clauses (i), (ii), (iii), (iv) or (v) above shall be deemed
to have occurred until 180 days shall have elapsed from the dates described in
clauses (i), (ii), (iii), (iv) or (v) above without such Determination of
Taxability having been rescinded or canceled.
Mandatory Sinking Fund Redemption
The Bonds are subject to mandatory redemption on the Interest Payment
Date occurring in the month of ____________ in each of the years set forth below
(except _______) commencing on the Interest Payment Date occurring in __________
of __________ (each, a "Mandatory Sinking Account Payment Date"), at a
redemption price equal to 100% of the principal amount thereof plus accrued
interest as follows:
B-5
<PAGE>
Mandatory Sinking
Year Account Payments
---- ----------------
*Final maturity
Optional Redemption
If the length of time from the Conversion Date to the final maturity
date of the Bonds is seven (7) years or more, the Bonds are subject to
redemption by the Authority, at the option of the Company, on or after the fifth
(5th) anniversary of the Conversion Date, in whole at any time or in part on any
Interest Payment Date, at the redemption price of 100% of the principal amount
thereof being redeemed plus accrued interest to the redemption date.
In the event any of the Bonds or portions thereof are called for
redemption as aforesaid, notice of the call for redemption, identifying the
Bonds or portions thereof to be redeemed and the redemption price, shall be
given by the Trustee by mailing a copy of the redemption notice by first-class
mail at least thirty (30) days but not more than sixty (60) days prior to the
date fixed for redemption to the Owner of each Bond to be redeemed in whole or
in part at the address shown on the registration books. Any notice mailed as
provided above shall be conclusively presumed to have been duly given, whether
or not the Owner receives the notice. No further interest shall accrue on the
principal of any Bond called for redemption after the redemption date if moneys
sufficient for such redemption have been deposited with the Trustee.
If less than all the Bonds are to be redeemed, the particular Bonds or
portions thereof to be redeemed shall be selected by the Trustee by lot.
The Bonds are issued pursuant to and in full compliance with the
Constitution and laws of the Commonwealth, particularly the Act, and by
appropriate action duly taken by the Authority which authorizes the execution
and delivery of the Agreement and the Indenture. The Bonds have been issued
under the provisions of the Act.
Notwithstanding anything to the contrary contained herein or in the
Indenture, the Agreement, or in any other instrument or document executed by or
on behalf of the Authority in connection herewith, no stipulation, covenant,
agreement or obligation contained herein or therein shall be deemed or construed
to be a stipulation, covenant, agreement or obligation of any present or future
member, commissioner, director, trustee, officer, employee or agent of the
Authority, or of any successor to the Authority, in any such person's individual
capacity, and no such person, in his individual capacity, shall be liable
personally for any breach or nonobservance of or for any failure to perform,
fulfill or comply with any such stipulations, covenants, agreements or
obligations, nor shall any recourse be had for the payment of the principal of
or premium, if any, or interest on
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<PAGE>
any of the Bonds or for any claim based thereon or on any such stipulation,
covenant, agreement or obligation, against any such person, in his individual
capacity, either directly or through the Authority or any successor to the
Authority, under any rule of law or equity, statute or constitution or by the
enforcement of any assessment or penalty or otherwise, and all such liability of
any such person, in his individual capacity, is hereby expressly waived and
released.
The Owner of this Bond shall have no right to enforce the provisions of
the Indenture or to institute action to enforce the covenants therein, or to
take any action with respect to any default under the Indenture, or to
institute, appear in or defend any suit or other proceedings with respect
thereto, unless certain circumstances described in the Indenture shall have
occurred. In certain events, on the conditions, in the manner and with the
effect set forth in the Indenture, the principal of all the Bonds issued under
the Indenture and then outstanding may become or may be declared due and payable
before the stated maturity thereof, together with interest accrued thereon.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Authority and the rights of the Owners of the Bonds at any time by the Authority
with the consent of the Company, the Bank and the holders of all Bonds at the
time outstanding. Any such consent or any waiver by the Company, the Bank and
the holders of all Bonds shall be conclusive and binding upon the Owner and upon
all future Owners of this Bond and of any Bond issued in replacement hereof
whether or not notation of such consent or waiver is made upon this Bond. The
Indenture also contains provisions which, subject to certain conditions, permit
or require the Trustee to waive certain past defaults under the Indenture and
their consequences.
It is hereby certified, recited and declared that all acts, conditions
and things required to exist, happen and be performed precedent to and in
connection with the execution and delivery of the Indenture and the issuance of
this Bond do exist, have happened and have been performed in due time, form and
manner as required by law; and that the issuance of this Bond and the issue of
which it forms a part, together with all other obligations of the Authority does
not exceed or violate any constitutional or statutory limitation.
This Bond shall not be valid or become obligatory for any purpose or be
entitled to any security or benefit under the Indenture until the certificate of
authentication hereon shall have been signed by the Trustee or a duly appointed
authenticating agent pursuant to the Indenture.
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<PAGE>
IN WITNESS WHEREOF, the Montgomery County Industrial Development
Authority has caused this Bond to be signed in its name and on its behalf by the
manual or facsimile signature of its Chairperson or Vice Chairman and its
corporate seal to be affixed, imprinted or reproduced hereon and attested by the
manual or facsimile signature of its Secretary or Assistant Secretary, all as of
the Date of Issuance.
MONTGOMERY COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
Attest:____________________ By:______________________________
Secretary Chairperson
(SEAL)
(Form of Certificate of Authentication)
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds of the issue described in the
within-mentioned Trust Indenture.
DAUPHIN DEPOSIT BANK AND TRUST
COMPANY, as Trustee
By___________________________________
Authorized Representative
Date of Authentication:_________________
B-8
<PAGE>
(Form for Transfer)
FOR VALUE RECEIVED, , the undersigned, hereby sells, assigns and
transfers unto (Tax Identification or Social Security No. ) the within Bond and
all rights thereunder, and hereby irrevocably constitutes and appoints attorney
to transfer the within Bond on the books kept for registration thereof with full
power of substitution in the premises.
Dated:_________________________________ __________________________________
NOTICE: Signature(s) must be guaranteed NOTICE: The signature to this
by an approved eligible guarantor assignment must correspond with the
institution, an institution which is name as it appears upon the face of
participant in a Securities Transfer the within Bond in every particular,
Association recognized signature without alteration or enlargement or
guarantee program. any change whatever.
B-9
<PAGE>
EXHIBIT "C"
CONSTRUCTION FUND REQUISITION
NO._________________
Date:_________________
Dauphin Deposit Bank and Trust Company
213 Market Street
Harrisburg, PA 17101
Attention: Corporate Trust Services
Mail Code 001-01-02
Ladies and Gentlemen:
On behalf of the Montgomery County Industrial Development Authority
(the "Authority"), I hereby requisition pursuant to Section 6.06 of a Trust
Indenture, dated December 26, 1996 (the "Indenture") between the Authority and
Dauphin Deposit Bank and Trust Company, as Trustee, the sum of $ to be paid as
follows:
Name and Address of Payee: Purpose of Obligation:
-------------------------- ----------------------
I hereby certify that: (a) such obligation has been incurred by Apple
Fresh Foods Limited, as applicable, in connection with the acquisition,
construction and equipping of the Project Facilities, as defined in the
Indenture; (b) each item is a proper charge against the Construction Fund; (c)
such obligation has not been the basis for a prior requisition which has been
paid; (d) no written notice of any lien, right to lien or attachment upon, or
claim affecting the right to receive payment of, any of the moneys payable under
the requisition above has been received; (e) the payment of such requisition
will not violate the prohibitions or requirements relating to the use of
proceeds set forth in the Agreement; and (f) no Event of Default, as such phrase
defined in the Indenture and in the Agreement or event which after notice or
lapse of time or both would constitute such an Event of Default has occurred and
not been waived or cured.
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<PAGE>
NOTE: THIS REQUISITION IS NOT COMPLETE AND IS NOT TO BE PAID UNTIL THE
APPROVAL OF THE BANK IS RECEIVED IN THE FORM OF EXHIBIT "D" TO THE INDENTURE.
APPLE FRESH FOODS LIMITED
By_________________________________
Authorized Representative
C-2
<PAGE>
EXHIBIT "D"
BANK APPROVAL
CoreStates Bank, N.A., Reading, Pennsylvania, issuer of the Letter of
Credit hereby approves the Company's Requisition No. ___________.
CORESTATES BANK, N.A.
By______________________________
Dated:__________________________
D-1
MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
and
DAUPHIN DEPOSIT BANK AND TRUST COMPANY,
as Trustee
TRUST INDENTURE
Dated December 26, 1996
MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
FEDERALLY TAXABLE VARIABLE RATE DEMAND/FIXED RATE
REVENUE BONDS
(COLLEGEVILLE INN PROJECT)
SERIES OF 1996
BOND COUNSEL AUTHORITY SOLICITOR
KASSAB ARCHBOLD & O'BRIEN, L.L.P. McGORY, WENTZ, FERNANDEZ &
214 North Jackson Street O'HARA
Media, PA 19063 115 West Germantown Pike, Suite 100
Swede Square
Norristown, PA 19401
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TABLE OF CONTENTS*
Page
ARTICLE I
DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS
Section 1.01. Definitions...............................................4
Section 1.02. Content of Certificates and Opinions.....................15
Section 1.03. Interpretation...........................................16
ARTICLE II
THE BONDS
Section 2.01. Authorization of Bonds...................................17
Section 2.02. Terms of Bonds: Interest on the Bonds....................17
Section 2.03. Execution of Bonds.......................................19
Section 2.04. Authentication...........................................20
Section 2.05. Form of Bonds............................................20
Section 2.06. Transfer of Bonds .......................................20
Section 2.07. Exchange of Bonds........................................21
Section 2.08. Bond Register............................................21
Section 2.09. Temporary Bonds..........................................21
Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen...............21
Section 2.11. Cancellation and Destruction of Surrendered Bonds........22
Section 2.12. Acts of Bondholders; Evidence of Ownership...............22
Section 2.13. Book-Entry Bonds; Securities Depository..................22
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS
Section 3.01. Issuance of the Bonds..........................................23
Section 3.02. Validity of Bonds..............................................24
Section 3.03. Disposition of Proceeds of the Bonds and Other Amounts.........24
*This Table of Contents is for convenience only, does not constitute a part of
this Indenture and shall not be considered as having any bearing upon any
interpretation of this Indenture.
(i)
<PAGE>
ARTICLE IV
REDEMPTION OF BONDS BEFORE MATURITY
Section 4.01. Extraordinary and Mandatory Redemption...................24
Section 4.02. Optional Redemption......................................25
Section 4.03. Notice of Redemption.....................................26
Section 4.04. Interest on Bonds Called for Redemption..................26
Section 4.05. Cancellation.............................................26
Section 4.06. Partial Redemption of Bonds..............................26
Section 4.07. Payment of Redemption Price with
Available Moneys; Consent of Letter of Credit Bank
to Optional Redemption...................................27
ARTICLE V
CONVERSION OF INTEREST RATE; DEMAND PURCHASE OPTION
Section 5.01. Conversion of Interest Rate on Conversion Date...........27
Section 5.02. Delivery of Bonds After Conversion Date .................29
Section 5.03 Mandatory Tender upon Substitution of Letter of Credit...29
Section 5.04. Demand Purchase Option...................................30
Section 5.05. Funds for Purchase of Bonds..............................31
Section 5.06. Delivery of Purchased Bonds..............................33
Section 5.07. Sale of Bonds by Remarketing Agent.......................33
Section 5.08. Delivery of Proceeds of Sale of
Purchased Bonds..........................................34
Section 5.09. Duties of Trustee and Tender Agent with
Respect to Purchase of Bonds.............................34
Section 5.10. No Purchases or Sales After Certain Defaults.............35
ARTICLE VI
REVENUES AND FUNDS
Section 6.01. Creation of the Bond Fund................................35
Section 6.02. Payments into the Bond Fund..............................35
Section 6.03. Use of Moneys in the Bond Fund...........................36
Section 6.04. Custody of Separate Trust Fund...........................36
Section 6.05. Construction Fund........................................36
Section 6.06. Payments into the Construction Fund; Disbursements.......36
Section 6.07. Use of Money in the Construction Fund Upon Default ......37
Section 6.08. Use of Money in the Construction Fund
Upon Completion of the Project ..........................37
Section 6.09. Nonpresentment of Bonds..................................37
Section 6.10. Moneys to be Held in Trust...............................37
Section 6.11. Repayment to the Bank and the Company
from the Bond Fund.......................................38
Section 6.12. Letter of Credit.........................................38
Section 6.13. Intentionally Omitted....................................38
Section 6.14. Investment of Moneys in Funds............................38
ARTICLE VII
PARTICULAR COVENANTS
Section 7.01. Punctual Payment.........................................39
Section 7.02. Extension of Payment of Bonds............................39
Section 7.03. Against Encumbrances.....................................40
Section 7.04. Power to Issue Bonds and Make Pledge and Assignment......40
Section 7.05. Accounting Records and Financial Statements..............40
Section 7.06. Intentionally Omitted....................................40
Section 7.07. Other Covenants..........................................40
Section 7.08. Waiver of Laws...........................................41
Section 7.09. Further Assurances.......................................41
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS
Section 8.01. Events of Default........................................41
Section 8.02. Acceleration.............................................42
Section 8.03. Other Remedies...........................................44
Section 8.04. Legal Proceedings by Trustee.............................44
Section 8.05. Discontinuance of Proceedings by Trustee.................45
Section 8.06. Bondholders May Direct Proceedings.......................45
Section 8.07. Limitations on Actions by Bondholders....................45
Section 8.08. Trustee May Enforce Rights Without
Possession of Bonds......................................46
Section 8.09. Delays and Omissions Not to Impair Rights................46
Section 8.10. Application of Moneys in Event of Default................46
Section 8.11. Trustee and Bondholders Entitled to All
Remedies Under Act: Remedies Not Exclusive...............47
Section 8.12. Trustee's Right to Receiver..............................47
Section 8.13. Subrogation Rights of Bank...............................47
Section 8.14. Waiver of Default........................................47
ARTICLE IX
THE TRUSTEE; THE TENDER AGENT
AND THE REMARKETING AGENT
Section 9.01. Duties, Immunities and Liabilities of Trustee............47
Section 9.02. Merger or Consolidation..................................49
Section 9.03. Liability of Trustee.....................................49
Section 9.04. Right of Trustee to Rely on Documents....................50
Section 9.05. Preservation and Inspection of Documents.................50
Section 9.06. Compensation.............................................51
Section 9.07. The Tender Agent.........................................51
Section 9.08. Qualifications of Tender Agent...........................51
Section 9.09. Qualifications of Remarketing Agent;
Resignation; Removal.....................................52
Section 9.10. Construction of Ambiguous Provisions.....................52
ARTICLE X
MODIFICATION OR AMENDMENT OF THE INDENTURE
Section 10.01. Amendments Permitted.....................................52
Section 10.02. Effect of Supplemental Indenture.........................53
Section 10.03. Trustee Authorized to Join in Amendments
and Supplements; Reliance on Counsel.....................53
ARTICLE XI
DEFEASANCE
Section 11.01. Discharge of Indenture...................................53
Section 11.02. Discharge of Liability on Bonds..........................54
Section 11.03. Deposit of Money or Securities with Trustee..............54
Section 11.04. Payment of Bonds After Discharge of Indenture............55
ARTICLE XII
MISCELLANEOUS
Section 12.01. Liability of Authority Limited to Revenues...............55
Section 12.02. Limitation of Liability of Directors,
Etc. of Authority........................................56
Section 12.03. Covenant Not to Sue......................................56
Section 12.04. Successor Is Deemed Included in All
References to Predecessor................................56
Section 12.05. Limitation of Rights to Parties, Bank,
Company and Bondholders..................................57
Section 12.06. Waiver of Notice.........................................57
Section 12.07. Severability of Invalid Provisions.......................57
Section 12.08. Notices..................................................57
Section 12.09. Evidence of Rights of Bondholders........................59
Section 12.10. Disqualified Bonds.......................................59
Section 12.11. Money Held for Particular Bonds..........................59
Section 12.12. Funds....................................................60
Section 12.13. Payments Due on Days other than Business Days............60
Section 12.14. Execution in Several Counterparts........................60
Section 12.15. Notices to Rating Agency.................................60
Exhibit "A" - Floating Rate Form of Bond....................................A-1
Exhibit "B" - Fixed Rate Form of Bond.......................................B-1
Exhibit "C" - Form of Construction Fund Requisition.........................C-1
Exhibit "D" - Bank Approval.................................................D-1
(ii)
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This TRUST INDENTURE, made and entered into December 26, 1996, by and
between the MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY, a body public
and corporate and a public instrumentality of the Commonwealth (the "Authority")
and DAUPHIN DEPOSIT BANK AND TRUST COMPANY, a banking corporation organized and
existing under the laws of the Commonwealth, as trustee (the "Trustee") and
tender agent (the "Tender Agent");
W I T N E S S E T H:
(Capitalized terms and phrases used in these Recitals, and in the
following Granting Clauses, and not otherwise defined shall have the meanings
ascribed to them in Section 1.01 of this Indenture.)
WHEREAS, the Authority is a body politic and corporate and a public
instrumentality of the Commonwealth, organized and existing under the Act, and
is authorized under the Act to acquire, hold, construct, improve, maintain, own,
finance, lease, in the capacity of lessor or lessee, and/or sell industrial,
commercial and specialized development projects for the public purpose of
alleviating unemployment, maintaining employment at a high level and creating
and developing business opportunities, by the construction, improvement,
rehabilitation, revitalization and financing of industrial, commercial and
specialized enterprises; and
WHEREAS, the Authority has determined to undertake the financing
required to provide the funds to the Authority necessary in connection with the
Project pursuant to the provisions and requirements of the Act; and
WHEREAS, the Authority has entered into the Agreement with the Company
wherein the Authority will, among other things, loan the proceeds of the Bonds
to the Company, and wherein the Company agrees to, among other things, make
certain loan payments to the Authority, all as set forth in the Agreement; and
WHEREAS, the Authority has determined to assign, transfer and pledge
unto the Trustee; as trustee under this Indenture, all right, title and interest
of the Authority (except for certain rights of the Authority to indemnification
and the payment of its costs, fees and expenses as more particularly described
in the Agreement) in and to the Agreement and sums payable thereunder; and
WHEREAS, the Authority is authorized by the Act to borrow money, and
the Authority deems it necessary to borrow money under and pursuant to
provisions hereof for the purposes of, among other things, financing the costs
and expenses of the Project (all in accordance with applicable law) and of
carrying out its obligations under the terms of the Agreement, and, to that end,
the Authority has duly authorized and directed the issuance, sale and delivery
of the Bonds to be issued as fully registered bonds; and to secure payment of
the principal thereof and of the interest and premium, if any, thereon and the
performance and observance of the covenants and conditions herein contained, the
Authority has authorized the execution and delivery of this Indenture; and
WHEREAS, the Agreement provides that the Company will cause the Letter of Credit
to be delivered by the Bank to the Trustee at the time of delivery of the Bonds
for the further security and benefit of Owners of the Bonds; and
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WHEREAS, the Company and the Bank have entered into the Reimbursement
Agreement whereunder the Bank has agreed to issue and maintain the Letter of
Credit as provided for therein and herein, and the Company has agreed to, among
other things, reimburse the Bank for any draws made by the Trustee on the Letter
of Credit and for other costs, expenses and charges, as specified in the
Reimbursement Agreement; and
WHEREAS, execution and delivery of this Indenture and the issuance of
the Bonds hereunder and under the Act have been duly and validly authorized by
resolution of the Board of the Authority duly adopted prior to such execution
and delivery.
GRANTING CLAUSES AND AGREEMENTS
NOW, THEREFORE, in consideration of the premises and the acceptance by
the Trustee of the trusts hereby created and of the purchase and acceptance of
the Bonds issued and sold by the Authority under this Indenture by those who
shall own the same from time to time, and of the sum of one dollar, lawful money
of the United States, duly paid to the Authority by the Trustee at or before the
execution and delivery of this Indenture, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
for the purpose of fixing and declaring the terms and conditions upon which the
Bonds are to be executed, authenticated, issued, delivered and accepted by all
persons who shall from time to time be or become owners thereof; and in order to
secure the payment of the principal of and premium (if any) and interest on, and
purchase price of, the Bonds according to their tenor and effect and the
performance and observance by the Authority of all the covenants expressed or
implied herein and in the Bonds and the payment and performance of all other of
the Authority's obligations, the Authority does hereby grant, bargain, sell,
convey, pledge and assign, without recourse, unto the Trustee and unto its
successors in the trust forever, and grants to the Trustee and to its successors
in the trust, a security interest in all of the following:
GRANTING CLAUSE FIRST
All right, title and interest of the Authority in and to the Agreement
and the security granted thereunder and under the Collateral Documents and the
other Bond Documents, including, but not limited to: (i) the obligation of the
Company under Section 3.03 of the Agreement to make payments at such times and
in such amounts as are necessary to pay the principal of, interest and
redemption premium, if any, on the Bonds; (ii) the present and continuing right
to make claim for, collect, receive and receipt for any of the sums, amounts,
income, revenues, issues and profits and any other sums of money payable or
receivable under the Agreement, the Collateral Documents and the other Bond
Documents (except for the right to receive any Administrative Fees or Expenses
and any Additional Payments to the extent payable to the Authority and any
rights of the Authority to indemnification); (iii) the right to bring actions
and proceedings thereunder or for the enforcement thereof; and (iv) the right to
do any and all things which the Authority is or may become entitled to do under
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the Agreement, the Collateral Documents and the other Bond Documents.
GRANTING CLAUSE SECOND
All right, title and interest of the Authority in and to all moneys and
securities from time to time held by the Trustee under the terms of this
Indenture; provided, however, that in consideration of the issuance by the
Letter of Credit Bank of the Letter of Credit, the Authority hereby grants a
security interest in the Construction Fund to the Letter of Credit Bank in order
to secure payment of the obligations of the Company under the Reimbursement
Agreement, the rights of the Letter of Credit Bank therein being subject and
subordinate to the rights of the Trustee so long as any amount due in respect of
the Bonds remains unpaid.
GRANTING CLAUSE THIRD
Any and all other property rights and interests of every kind and nature from
time to time hereafter by delivery or by writing of any kind granted, bargained,
sold, alienated, demised, released, conveyed, assigned, transferred, mortgaged,
pledged, hypothecated or otherwise subjected hereto, as and for additional
security herewith, by the Company or any other person on its behalf or with its
written consent or by the Authority or any other person on its behalf or with
its written consent, and the Trustee is hereby authorized to receive any and all
such property at any and all times and to hold and apply the same subject to the
terms hereof.
TO HAVE AND TO HOLD all and singular the Trust Estate with all privileges and
appurtenances hereby conveyed and assigned, or agreed or intended so to be to
the Trustee and its successors in trust forever.
IN TRUST NEVERTHELESS, under and subject to the terms and conditions hereinafter
set forth: (a) for the equal benefit, protection and security of the Owners of
any and all of the Bonds, all of which regardless of the time or times of their
issuance or maturity shall be of equal rank, without preference, priority or
distinction of any of the Bonds over any other thereof, except as otherwise
provided in or pursuant to this Indenture; (b) for securing the observance and
performance of the Authority's obligations and of all others of the conditions,
promises, stipulations, agreements and terms and provisions of this Indenture
and the uses and purposes herein expressed and declared; and (c) for the benefit
of the Letter of Credit Bank.
PROVIDED, HOWEVER, that if the Authority, its successors or assigns,
well and truly pays, or causes to be paid, the principal of the Bonds issued
hereunder and the premium (if any) and interest due or to become due thereon,
and the purchase price thereof, at the times and in the manner mentioned in the
Bonds and as provided herein, according to the true intent and meaning thereof,
and shall cause the payments to be made into the Bond Fund as required under
Article VI hereof, or shall provide, as permitted hereby, for payment thereof in
accordance with Article XI hereof, and shall well and truly keep, perform and
observe all of the covenants and conditions pursuant to the terms of this
Indenture and all other of the Authority's obligations to be kept, performed and
observed by it, and
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shall pay or cause to be paid to the Trustee all sums of money due or to become
due in accordance with the terms and provisions hereof, then upon such final
payments or deposits as provided in Article XI hereof, and upon the termination
of the Agreement, the right, title and interest of the Trustee in and to the
Trust Estate shall cease, terminate and be void, and the Trustee shall thereupon
assign, transfer, and turn over the Trust Estate to the Letter of Credit Bank;
provided, that if the Trustee shall have received written evidence from the
Letter of Credit Bank that all obligations of the Company under the
Reimbursement Agreement have been satisfied and that the Reimbursement Agreement
has been terminated, or if no Letter of Credit Bank shall then exist, the Trust
Estate shall be assigned, transferred and turned over to the Company; and the
Trustee shall execute and deliver to the Authority, the Letter of Credit Bank
and the Company; as appropriate, such instruments in writing as shall be
requisite to evidence such transfer of the Trust Estate. Upon the Trustee's
assignment, transfer and turning over to the Letter of Credit Bank or the
Company, as appropriate, of the Trust Estate pursuant to the provisions of
Section XI hereof, the Trustee shall have no further duties, responsibilities or
obligations under and pursuant to this Indenture.
AND IT IS EXPRESSLY DECLARED that all Bonds issued and secured
hereunder are to be issued, authenticated and delivered and all of the Trust
Estate hereby pledged is to be dealt with and disposed of under, upon and
subject to the terms, conditions, stipulations, covenants, agreements, trusts,
uses and purposes hereinafter expressed, and the Authority has agreed and
covenanted and intending to be legally bound does hereby agree and covenant with
the Trustee and with the respective Owners from time to time of the Bonds, or
any part thereof as follows:
ARTICLE I
DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS
Section 1.01. Definitions. Unless the context otherwise requires, the
terms and phrases defined in this Section shall, for all purposes of the
recitals hereto, this Indenture and of any indenture supplemental hereto and of
any certificate, opinion or other document herein mentioned, have the meanings
herein specified, to be equally applicable to both the singular and plural forms
of any of the terms herein defined. Unless otherwise defined in this Indenture,
all terms used herein shall have the meanings assigned to such terms in the Act.
"Accountant" means any firm of independent certified public accountants
(not an individual) selected by the Company and acceptable to the Bank.
"Act" means the Pennsylvania Economic Development Financing Law, Act of
August 23, 1967, P.L. 251, as amended and supplemented and as it may, from time
to time, hereafter be amended or supplemented.
"Additional Payments" means any payments required to be made by the
Company pursuant to the Agreement which are not required to be: (i) applied to
the payment of scheduled debt service on the Bonds; or (ii) reimbursed to the
Letter of
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Credit Bank for monies drawn on the Letter of Credit to pay debt service on the
Bonds.
"Administrative Expenses" means those expenses of the Authority and the
Bank which are properly chargeable to the Company on account of the Bonds and
the Bond Documents as administrative expenses under Generally Accepted
Accounting Principles and include, without limiting the generality of the
foregoing, the following: (a) fees and expenses of the Trustee, the Tender
Agent, the Authority, the Bank and the Placement Agent; and (b) fees and
expenses of the Authority's, the Bank's, the Trustee's, the Tender Agent's and
the Placement Agent's professional advisors reasonably necessary and fairly
attributable to the Project Facilities, including without limiting the
generality of the foregoing, fees and reasonable expenses of the Authority's,
the Trustee's, the Bank's and the Placement Agent's counsel.
"Agreement" means the Loan Agreement, dated December 26, 1996, between
the Authority and the Company, together with all supplements thereto.
"Authority" means the Montgomery County Industrial Development
Authority created pursuant to, and as defined in, the Act, and its successors.
"Authority Board" shall mean, at any given time, the governing body of
the Authority.
"Authorized Representative" means with respect to the Company, the
Chairman, the President, Vice President, Secretary, Assistant Secretary or
Treasurer thereof, or any other person designated as an Authorized
Representative of the Company by a Certificate of the Company executed by the
President, Vice President, Secretary, Assistant Secretary or Treasurer of the
Company and filed with the Trustee.
"Available Moneys" means: (i) moneys derived from drawings under the
Letter of Credit; (ii) moneys held by the Trustee in funds and accounts
established under this Indenture for a period of at least one hundred
twenty-four (124) days and not commingled with any moneys so held for less than
said one hundred twenty-four (124) day period and during and prior to which
period, no petition in bankruptcy was filed by or against the Company or the
Authority under the Bankruptcy Code or any applicable state bankruptcy or
insolvency law, unless such petition was dismissed and all applicable appeal
periods have expired without an appeal having been filed; (iii) investment
income derived from the investment of moneys described in clauses (i) or (ii)
above; or (iv) any other moneys, if the Trustee and the Letter of Credit Bank
have received an opinion of nationally recognized counsel acceptable to Moody's
experienced in bankruptcy matters to the effect that payment of the principal or
purchase price of or interest on the Bonds with such moneys would not, in the
event of bankruptcy of the Company, the Authority, any affiliate of the Company
or other payor, constitute a voidable preference under the Bankruptcy Code or
any applicable state bankruptcy or insolvency law.
"Bank" means CoreStates Bank, N.A., a national banking association
organized and existing under the laws of the United States, whose principal
office is located in the City of Philadelphia, Philadelphia County,
Pennsylvania, its lawful successors and assigns and, if applicable, the issuer
of any Substitute Letter of Credit hereunder.
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"Bankruptcy Code" means the federal Bankruptcy Code, 11 U.S.C. ss.101
et seq., as amended and supplemented from time to time.
"Bond Documents" means any or all of the Agreement, this Indenture, the
Tender Agent Agreement, the Remarketing Agreement and all documents,
certificates and instruments executed in connection therewith.
"Bond Fund" means the fund created in Section 6.01 hereof.
"Bond Registrar" means any bank, national banking association or trust
company designated as registrar for the Bonds, and its successor appointed under
the Indenture.
"Bonds" means the $2,500,000 original aggregate principal amount of the
Authority's Federally Taxable Variable Rate Demand/Fixed Rate Revenue Bonds
(Collegeville Inn Project) Series of 1996 authorized to be issued under this
Indenture.
"Business Day" means any day other than: (i) a Saturday or Sunday; (ii)
a legal holiday or any day on which banking institutions in the State of New
York, the Commonwealth, the City of New York, or the city in which the principal
office of the Trustee, the Tender Agent or the Bank are authorized to remain
closed; or (iii) a day on which the New York Stock Exchange is closed.
"Cede & Co." means Cede & Co., as nominee of The Depository Trust
Company, New York, New York.
"Certificate," "Statement," "Request," "Requisition" and "Order" means:
(a) with respect to the Authority, a written certificate, statement, request,
requisition or order executed in the name of the Authority by its Chairman, Vice
Chairman, Executive Director or such other person as may be designated and
authorized to sign for the Authority; or (b) with respect to the Company a
written certificate, statement, request, requisition or order executed by an
Authorized Representative of the Company. Any such instrument and supporting
opinions or representations, if any, may, but need not, be combined in a single
instrument with any other instrument, opinion or representation, and the two or
more so combined shall be read and construed as a single instrument. If and to
the extent required by Section 1.02 hereof, each such instrument shall include
the statements provided for in such Section 1.02.
"Certified Resolution of the Authority" means a copy of a resolution of
the Authority Board certified by the Secretary or an Assistant Secretary of the
Authority, or other officer serving in a similar capacity, under its corporate
seal, to have been duly adopted by the Authority Board and to be in full force
and effect on the date of such certification.
"Certified Resolution of the Company" means a copy of a resolution of
the Company duly adopted and in full force and effect as of the date of the
execution and delivery of the Bonds and the Letter of Credit.
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"Clearing Fund" means the fund created pursuant to Section 3.03 hereof.
"Closing Date" means December 26, 1996 or such other date which shall
be the date of the execution and delivery of the Agreement and the other Bond
Documents and the issuance and delivery of the Bonds.
"Collateral" means all of the rights and assets of the Company or any
other Person in which the Authority or the Trustee is now or hereafter granted a
lien or security interest in order to secure the performance of (i) the
Company's obligations under the Agreement or any of the Collateral Documents or
(ii) the obligations of the Authority hereunder or under the Bonds.
"Collateral Documents" means all documents executed and delivered or to
be executed and delivered and under which the Authority or the Trustee is
granted a lien or security interest in any of the rights and assets of the
Company or any other Person in order to secure the performance of the Company's
obligations under the Agreement or any other Bond Documents or the obligations
of the Authority hereunder or under the Bonds.
"Commonwealth" means the Commonwealth of Pennsylvania.
"Company" means Collegeville Inn Conference & Training Center, Inc. a
Pennsylvania corporation.
"Completion Date" means the date of completion of the Project, as that
date shall be certified as provided in Section 2.03 of the Agreement.
"Construction Fund" means the fund created pursuant to Section 6.05
hereof.
"Conversion Date" means the Optional Conversion Date.
"Conversion Option" means the option granted to the Company in Section
5.01 hereof pursuant to which the interest rate on the Bonds is converted from
the Floating Rate to the Fixed Rate as of the Optional Conversion Date.
"Cost" or "Costs," means any cost in respect of the Project Facilities
permitted under the Act.
"Counsel" means an attorney-at-law or law firm (who may be counsel for
the Company or for the Authority) satisfactory to the Trustee.
"County" means the County of Montgomery, Pennsylvania.
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"Debt Service Requirements," with reference to a specified period
means, with respect to Bonds:
(a) amounts required to be paid into any mandatory sinking fund
account during the period; and
(b) amounts needed to pay the principal of such indebtedness
maturing during the period and not to be redeemed prior to maturity from amounts
on deposit in any sinking fund or redemption, retirement or similar fund or
account; and
(c) interest payable on the subject indebtedness during the
period, excluding capitalized interest and amounts on deposit with the Trustee
which are available under the Indenture to pay interest with respect to such
indebtedness.
"Demand Purchase Notice" means a notice delivered pursuant to
paragraph (i) of Section 5.04 hereof.
"Demand Purchase Option" means the option granted to Owners of Bonds
to require that Bonds be purchased prior to the Conversion Date pursuant to
Section 5.04 hereof.
"Determination Date" means with respect to any Floating Rate Bonds,
each Wednesday or if such Wednesday is not a Business Day, on the next
succeeding Business Day.
"Event of Default" means any of the events specified in Section 8.01
of this Indenture.
"Fiscal Year" means the period of twelve (12) consecutive months
beginning July 1 of each year, or such other period of twelve consecutive months
established by the Company as its new Fiscal Year.
"Fixed Rate" means the interest rate in effect on any Bonds from and
after the Conversion Date, as said rate is determined in accordance with Section
2.02(D) hereof.
"Fixed Rate Bonds" means any Bonds which are converted to a Fixed Rate
in accordance with the provisions of this Indenture.
"Fixed Rate Period" means, with respect to any Bonds, a Period during
which interest on such Bonds accrues at a Fixed Rate.
"Floating Rate" means a variable rate of interest equal to the minimum
rate of interest necessary, in the sole judgment of the Remarketing Agent, to
sell the Bonds at a price equal to the principal amount thereof, exclusive of
accrued interest, if any, thereon; said interest rate to be in effect on the
Bonds from the date of issuance of the Bonds until (but not including) the
Conversion Date, as said rate is determined in accordance with Section 2.02(C)
hereof.
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"Floating Rate Bonds" means any Bonds which bear interest at the
Floating Rate.
"Generally Accepted Accounting Principles" means those accounting
principles applicable in the preparation of financial statements of business
institutions or industrial development authorities, as appropriate, as
promulgated by the Financial Accounting Standards Board or such other body
recognized as authoritative by the American Institute of Certified Public
Accountants or any successor body.
"Government Obligations" means direct obligations of (including
obligations issued or held in book entry form) or obligations the principal of
and interest on which are unconditionally guaranteed as to full and timely
payment by the United States.
"Holder," "Owner", "Registered Owner" or "Bondholders" whenever used
herein with respect to a Bond, means the person in whose name such Bond is
registered on the registration books maintained by the Trustee.
"Indenture" means this Trust Indenture, dated December 26, 1996,
between the Authority and the Trustee, as originally executed or as it may, from
time to time, be supplemented, modified or amended by any Supplemental
Indenture.
"Interest Payment Date" means prior to the Conversion Date, the first
Wednesday of each calendar month, or if such date is not a Business Day, the
next succeeding Business Day, commencing February 5, 1997 and from and after the
Conversion Date, June 1 and December 1 of each year, commencing on the June 1 or
December 1 next following the Conversion Date.
"Investment Securities" means any of the following which at the time
are legal investments under the laws of the Commonwealth for moneys held
hereunder:
(i) Government Obligations;
(ii) bonds, debentures, notes or other evidences of
indebtedness issued by any agency or other governmental or government-sponsored
agencies which may be hereafter created by the United States, provided, however,
that the full and timely payment of the securities issued by each such agency or
government-sponsored agency is secured by the full faith and credit of the
United States;
(iii) certificates of deposit of, or time deposits in, any
bank (including the Trustee) or savings and loan association having securities
rated, at the time of purchase or acquisition, in one of the three highest
Rating Categories (without regard to modifiers) of Moody's or S&P;
(iv) certificates which evidence ownership of the right to
the payment of the principal of and interest on obligations described in clauses
(i) and (ii) of this definition, provided that such obligations are held in the
custody of a bank or trust company in a special account separate from the
general assets of such custodian;
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(v) obligations which, at the time of purchase or
acquisition, are rated in one of the two highest Rating Categories (without
regard to modifiers) of Moody's and the interest on which is not includable in
gross income for federal income tax purposes and the timely payment of the
principal of and interest on which is fully provided for by the deposit in trust
or escrow of cash or obligations described in clauses (i) or (ii) of this
definition;
(vi) guaranteed investment contracts or other similar
financial instruments with a commercial bank, insurance company or other
financial institution whose long term debt obligations are rated, at the time of
purchase or acquisition, in one of the two highest Rating Categories (without
regard to modifiers) by Moody's;
(vii) mutual funds invested primarily in obligations
described in clauses (i) and (ii) of this definition, and rated, at the time of
purchase, in one of the two highest rating categories (without regard to
modifiers) by Moody's, including, if such fund meets the criteria described in
this clause (vii), mutual funds managed by the Trustee or an affiliate thereof;
(viii) any investment approved in writing by the Bank and
Moody's;
(ix) repurchase agreements issued by financial institutions:
(i) insured by the Federal Deposit Insurance Corporation; or (ii) whose senior
debt obligations at the time of purchase are rated, at the time of purchase or
acquisition, in any of the three highest Rating Categories (without regard to
modifiers) by Moody's; provided, such repurchase agreements are subject to
perfected security interests in the Investment Securities of the kind specified
in paragraphs (i) or (ii) above, which have a fair market value, exclusive of
accrued interest, at least equal to the amount invested in the repurchase
agreement; and provided further: (1) the Trustee has possession of the
securities; (2) the Trustee has a perfected first security interest in the
securities; (3) the securities are free and clear of any third-party liens; and
(4) failure to maintain the requisite securities percentage will require the
Trustee to liquidate the securities in accordance with the terms of the
repurchase agreement; and
(x) any other security or obligation constituting a
permitted investment under the Act, provided that the Bank and Moody's consent
to the investment of funds in such security or obligation.
"Issue Date" means the date on which the Trustee authenticates the
Bonds and on which the Bonds are delivered to the purchasers thereof upon
original issuance.
"Letter of Credit" means the Irrevocable Direct Pay Letter of Credit
issued by the Letter of Credit Bank pursuant to the provisions of the
Reimbursement Agreement, or, in the event of delivery of a Substitute Letter of
Credit, such Substitute Letter of Credit.
"Letter of Credit Bank" means the Bank, as issuer of the Letter of
Credit, and its lawful successors and assigns, and to the extent applicable, the
issuer of any Substitute Letter of Credit.
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"Letter of Credit Termination Date" means the later of: (i) that date
upon which the Letter of Credit shall expire or terminate pursuant to its terms;
or (ii) that date to which the expiration or termination of the Letter of Credit
may be extended, from time to time, either by extension or renewal of the
existing Letter of Credit or the issuance of a Substitute Letter of Credit.
"Moody's" means Moody's Investors Service, a corporation organized and
existing under the laws of the State of Delaware, its successors and their
assigns, or, if such corporation shall be dissolved or liquidated or shall no
longer perform the functions of a securities rating agency, any other nationally
recognized securities rating agency designated by the Authority, with the
approval of the Company.
"Net Proceeds," when used with respect to any insurance proceeds or any
condemnation award, means the amount remaining after deducting all expenses
(including attorneys' fees and disbursements) incurred in the collection of such
proceeds or award from the gross proceeds thereof.
"Obligation Termination Date" means the date on which the Bank delivers
to the Trustee a certificate to the effect that all obligations owing to the
Bank under the Reimbursement Agreement have been paid in full.
"Officers' Certificate" means with respect to the Authority, a
certificate, duly executed by the Chairman or Vice Chairman, Secretary or
Assistant Secretary, Treasurer or Assistant Treasurer of the Authority, under
the corporate seal of the Authority; or with respect to the Company, a
certificate duly executed by an Authorized Representative, under the corporate
seal of the Company.
"Opinion of Counsel" means a written opinion of counsel (who may be
counsel for the Authority) selected by the Authority and acceptable to the
Trustee. If and to the extent required by the provisions of Section 1.02 hereof,
each Opinion of Counsel shall include in substance the statements provided for
in such Section 1.02.
"Optional Conversion Date" means that date on or after February 5,
1997, which shall be a Business Day, from and after which the interest rate on
the Bonds is converted from the Floating Rate to the Fixed Rate as a result of
the exercise by the Company of the Conversion Option in accordance with the
terms of this Indenture.
"Outstanding," when used as of any particular time with reference to
Bonds, means (subject to the provisions of Section 12.10) all Bonds theretofore,
or thereupon being, authenticated and delivered by the Trustee under this
Indenture, except: (1) Bonds theretofore canceled by the Trustee or surrendered
to the Trustee for cancellation; (2) Bonds with respect to which all liability
of the Authority shall have been discharged in accordance with Section 11.02,
including Bonds (or portions of Bonds) referred to in Section 12.10; and (3)
Bonds for the transfer or exchange of or in lieu of or in substitution for which
other Bonds shall have been authenticated and delivered by the Trustee pursuant
to this Indenture.
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"Participants" means those financial institutions for whom the
Securities Depository effects book-entry transfers and pledges of securities
deposited with the Securities Depository, as such listing of Participants exists
at the time of such reference.
"Permitted Encumbrances" means any liens or encumbrances permitted
under the Reimbursement Agreement or otherwise permitted by the Bank.
"Person" means an individual, corporation, firm, association,
partnership, trust, or other legal entity or group of entities, including a
governmental entity or any agency or political subdivision thereof.
"Placement Agent" means CoreStates Capital Markets, a division of
CoreStates Bank, N.A.
"Pledge Agreement" means: (i) the Pledge and Security Agreement, dated
December 26, 1996, between the the Company and the Bank, and any amendments or
supplements thereto; and (ii) any pledge and security agreement made by the
Company and the Substitute Bank for the benefit of any Substitute Bank, and any
amendments or supplements thereto.
"Pledged Bonds" means any Bonds which shall, at the time of
determination thereof, be held in pledge for the benefit of the Bank by the
Pledged Bonds Custodian pursuant to the Pledge Agreement.
"Pledged Bonds Custodian" means that banking entity which serves as the
custodian for the Pledged Bonds under the terms and conditions of the Pledge
Agreement. The initial Pledged Bonds Custodian shall be the Tender Agent.
"Premises" shall mean that certain parcel of real property located at
4000 Ridge Avenue, Collegeville, Pennsylvania, located in the Township of Lower
Providence, Montgomery County, Pennsylvania.
"Principal Corporate Trust Office" means the principal corporate trust
office of the Trustee, which at the date of the execution of the Indenture is
located at 213 Market Street, Harrisburg, Pennsylvania 17101, Attention
Corporation Trust Services.
"Project" means, among other things: (i) the rehabilitation,
reconstruction, installation, furnishing and equipping of a building to be used
as a conference center, a training center, a food manufacturing/processing and
distribution center and a retail restaurant located at 4000 Ridge Pike,
Collegeville, Pennsylvania, which is in the Township of Lower Providence,
Montgomery County, Pennsylvania; and (ii) the payment of a portion of the costs
of issuance of the Bonds.
"Project Facilities" shall mean all of the Company's right, title and
interest in and to the Premises, together with all the right, title and interest
of the Company in and to all buildings, improvements, and appurtenant facilities
located on the Premises.
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"Purchase Price" means an amount equal to 100% of the principal amount
of any Bond tendered or deemed tendered pursuant to Sections 5.01, 5.03 or 5.04
hereof, plus accrued and unpaid interest thereon to the date of purchase.
"Rating Agency" means Moody's when the Bonds are rated by Moody's and
S&P when the Bonds are rated by S&P.
"Rating Category" means one of the general rating categories of Moody's
or S&P, without regard to any refinement or gradation of such rating category by
a numerical modifier or otherwise.
"Record Date" means, prior to the Conversion Date, that day which is
the seventh calendar day next preceding any Interest Payment Date and
thereafter, that date which is the fifteenth calendar day next preceding any
Interest Payment Date.
"Reimbursement Agreement" means the Reimbursement Agreement, dated
December 26, 1996 by and among the Bank and the Company, and any other similar
agreement entered into in connection with the issuance of any Substitute Letter
of Credit and any and all modifications, alterations, amendments and supplements
thereto.
"Remarketing Agent" means (singly or collectively, as the case may be)
the remarketing agent(s) appointed by the Company and accepted and consented to
in writing by the Authority and the Trustee and at the time serving as such
under the Remarketing Agreement.
"Remarketing Agreement" means the Remarketing Agreement, dated December
26, 1996, by and between the Company and CoreStates Capital Markets, a division
of CoreStates Bank, N.A., as the remarketing agent, and accepted and consented
in writing to by the Authority and the Trustee.
"Replacement Bonds" means Bonds issued to the beneficial owners of the
Bonds in accordance with Section 2.13 hereof.
"Revenues" means all amounts received by the Authority or the Trustee
for the account of the Authority pursuant or with respect to the Agreement or
the Letter of Credit, including, without limiting the generality of the
foregoing, payments under the Agreement (including both timely and delinquent
payments and any late charges, and whether paid from any source), prepayments,
insurance proceeds, condemnation proceeds, and all interest, profits or other
income derived from the investment of amounts in any fund or account established
pursuant to this Indenture.
"Securities Depository" means The Depository Trust Company and its
successors and assigns or if: (i) the then-Securities Depository resigns from
its functions as depository of the Bonds; or (ii) the Authority discontinues use
of the then-Securities Depository pursuant to Section 2.13, any other securities
depository which agrees to follow the procedures required to be followed by a
securities depository in connection with the Bonds and which is selected by the
Authority with the consent of the Company.
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"Securities Depository Nominee" means, as to any Securities Depository,
such Securities Depository or the nominee of such Securities Depository in whose
name there shall be registered on the registration books maintained by the
Trustee the Bond certificates to be delivered to and immobilized at such
Securities Depository during the continuation with such Securities Depository of
participation in its book-entry system.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"S&P" means Standard & Poor's Rating Services, a division of the
McGraw-Hill Companies, Inc., a corporation organized and existing under the laws
of the State of Delaware, its successors and their assigns, or, if such
corporation shall be dissolved or liquidated or shall no longer perform the
functions of a securities rating agency, any other nationally recognized
securities rating agency designated by the Authority, with the approval of the
Company.
"Substitute Bank" means a commercial bank, savings and loan association
or savings bank which has issued a Substitute Letter of Credit.
"Substitute Letter of Credit" means a letter of credit delivered to the
Trustee in accordance with Section 4.07 of the Agreement: (i) issued by the Bank
or a Substitute Bank, the short term unsecured debt of which shall then have
been assigned a rating by Moody's of "P-1" or the equivalent rating assigned by
S&P, or the long term senior subordinated debt of which shall then have been
assigned a rating of "Aa3" or higher by Moody's or the equivalent rating
assigned by S&P; (ii) replacing any existing Letter of Credit; (iii) dated no
later than the date of the expiration or replacement date of the Letter of
Credit for which the same is to be substituted; (iv) which shall expire on a
date which is 15 days after an Interest Payment Date for the Bonds; (v) having a
term of at least one year; and (vi) issued on substantially identical terms and
conditions as the then existing Letter of Credit, except that the stated amount
of the Substitute Letter of Credit shall equal the sum of: (A) the aggregate
principal amount of Bonds at the time Outstanding, plus (B) an amount equal to
(i) prior to the Conversion Date, forty-six (46) days' interest or such other
number of days as shall be required by the Rating Agency (computed at a rate of
17% per annum) on all Bonds at the time Outstanding and (ii) from and after the
Conversion Date, two hundred (200) days' interest or such other number of days
as shall be required by the Rating Agency (computed at the fixed rate on all
Bonds at the time outstanding).
"Substitution Date" shall mean the date the Company delivers a
Substitute Letter of Credit to the Trustee in accordance with the terms and
conditions of Section 4.07 of the Agreement.
"Supplemental Indenture" means any indenture hereafter duly authorized
and entered into between the Authority and the Trustee, supplementing, modifying
or amending this Indenture, but only if and to the extent that such Supplemental
Indenture is specifically authorized hereunder.
"Tender Agent" means Dauphin Deposit Bank and Trust Company, a banking
corporation organized and existing under the laws of the Commonwealth and its
successors and any corporation resulting from or surviving any consolidation or
merger to which it or its successors may be a party and any successor Tender
Agent at the time serving as successor Tender Agent hereunder and under the
Tender Agent Agreement. "Delivery Office" and "Principal Office" of the Tender
Agent means 213 Market Street, Harrisburg, Pennsylvania 17101, Attention:
Corporate Trust Services or such other address as may be designated in writing
to the Authority, the Trustee, the Remarketing Agent and the Company.
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"Tender Agent Agreement" means the Tender Agent Agreement, dated
December 26, 1996, between the Company, the Trustee and the Tender Agent and any
amendments and supplements thereto.
"Trust Estate" means all property rights and interests transferred,
assigned, or otherwise pledged to the Trustee and the Letter of Credit Bank
pursuant to the Granting Clauses hereof.
"Trustee" means Dauphin Deposit Bank and Trust Company, a banking
corporation organized and existing under the laws of the Commonwealth and its
successor and any entity resulting from or surviving any consolidation or merger
to which it or its successors may be a party and any successor trustee at the
time serving as successor trustee hereunder.
"United States" means the United States of America.
"Unremarketed Bonds" means Bonds which have been purchased pursuant to
Sections 5.01, 5.03 or 5.04 hereof but which have not been remarketed.
"Weekly Period" shall mean, while the Bonds bear interest at the
Floating Rate, the weekly period that begins on and includes Wednesday of each
calendar week and ends at the close of business on Tuesday of the next
succeeding week.
Section 1.02. Content of Certificates and Opinions. The Trustee may,
but shall not be obligated to, require that every certificate or opinion
provided for in this Indenture with respect to compliance with any provision
hereof shall include: (1) a statement to the effect that the Person making or
giving such certificate or opinion has read such provision and the definitions
herein relating thereto; (2) a brief statement as to the nature and scope of the
examination or investigation upon which the certificate or opinion is based; (3)
a statement to the effect that in the opinion of such person, he has made or
caused to be made such examination or investigation as is necessary to enable
him to express an informed opinion with respect to the subject matter referred
to in the instrument to which his signature is affixed; (4) a statement of the
assumptions upon which such certificate or opinion is based, and that such
assumptions are reasonable; and (5) a statement as to whether, in the opinion of
such person, such provision has been complied with.
Any such certificate or opinion made or given by an officer of the
Authority or the Company may be based, insofar as it relates to legal or
accounting matters, upon a certificate or opinion of or representation by
counsel or an accountant, unless such officer knows, or in the exercise of
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reasonable care should have known, that the certificate, opinion or
representation with respect to the matters upon which such certificate or
statement may be based, as aforesaid, is erroneous. Any such certificate or
opinion made or given by counsel or an accountant may be based, insofar as it
relates to factual matters (with respect to which information is in the
possession of the Authority or the Company, as the case may be) upon a
certificate or opinion of or representation by an officer of the Authority or
the Company, unless such counsel or accountant knows, or in the exercise of
reasonable care should have known, that the certificate or opinion or
representation with respect to the matters upon which such person's certificate
or opinion or representation may be based, as aforesaid, is erroneous. The same
officer of the Authority or the Company, or the same counsel or accountant, as
the case may be, need not certify to all of the matters required to be certified
under any provision of this Indenture, but different officers, counsel or
accountants may certify to different matters, respectively.
Section 1.03. Interpretation.
(a) Unless the context otherwise indicates, words expressed in
the singular shall include the plural and vice versa and the use of the neuter,
masculine, or feminine gender is for convenience only and shall be deemed to
mean and include the neuter, masculine or feminine gender, as appropriate.
(b) Headings of articles and sections herein and the table of
contents hereof are solely for convenience of reference, do not constitute a
part hereof and shall not affect the meaning, construction or effect hereof.
(c) All references herein to "Articles," "Sections" and other
subdivisions are to the corresponding Articles, Sections or subdivisions of this
Indenture; the words "herein," "hereof," "hereby," "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any particular
Article, Section or subdivision hereof.
(d) Whenever in this Indenture it is required that notice be
provided to the Bank or that consent of the Bank be obtained, such provisions
shall be effective only when: (i) the Letter of Credit is in effect; or (ii) the
Bank, in its capacity as provider of the Letter of Credit, is the Holder of any
Bonds.
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ARTICLE II
THE BONDS
Section 2.01. Authorization of Bonds. The Bonds shall be issued
hereunder in order to obtain moneys to finance the Project for the benefit of
the Authority and the Company. The Bonds are designated as "Montgomery County
Industrial Development Authority Federally Taxable Variable Rate Demand/Fixed
Rate Revenue Bonds (Collegeville Inn Project), Series of 1996." The aggregate
principal amount of Bonds which may be issued and Outstanding under this
Indenture shall not exceed Two Million Five Hundred Thousand Dollars
($2,500,000). No additional bonds may be issued under this Indenture. This
Indenture constitutes a continuing agreement by the Authority for the benefit of
the Holders from time to time of the Bonds to secure the full payment of the
principal of and interest on all such Bonds subject to the covenants, provisions
and conditions herein contained.
Section 2.02. Terms of Bonds; Interest on the Bonds.
(A) The Bonds shall be issued in fully registered form. Prior
to the Conversion Date: (i) such Bonds shall be Outstanding in denominations of
$100,000 or any integral multiple of $5,000 in excess thereof; and (ii) such
Bonds may not be issued, exchanged or transferred except in the authorized
denominations of $100,000 or any integral multiple of $5,000 in excess thereof.
From and after the Conversion Date: (x) such Bonds shall be Outstanding in
denominations of $5,000 or any integral multiple of $5,000; and (y) such Bonds
may not be issued, exchanged or transferred except in the authorized
denominations of $5,000 or any integral multiple of $5,000 in excess thereof.
The Bonds shall be dated as of the date of delivery and shall mature, subject to
prior redemption, as provided herein. Unless the Authority shall otherwise
direct, prior to the Conversion Date the Bonds shall be lettered "VR" and shall
be numbered consecutively from 1 upward, and after the Conversion Date the Bonds
shall be lettered "FR" and shall be numbered consecutively from 1 upward.
(B) Each Bond shall be dated the Issue Date and shall bear
interest, payable: (i) prior to the Conversion Date, on the first Wednesday of
each calendar month, or if such date is not a Business Day, the next succeeding
Business Day commencing February 5, 1997; (ii) on the Conversion Date; and (iii)
from and after the Conversion Date, on June 1 and December 1 of each year,
commencing on the June 1 or December 1 next following the Conversion Date, in
each case from the Interest Payment Date next preceding the date of
authentication thereof to which interest has been paid or duly provided for,
unless the date of authentication thereof is an Interest Payment Date to which
interest has been paid or duly provided for, in which case from the date of
authentication thereof, or unless no interest has been paid or duly provided for
on the Bonds, in which case from the Issue Date, until payment of the principal
thereof has been made or duly provided for. Notwithstanding the foregoing, any
Bond authenticated after any Record Date and before the following Interest
Payment Date shall bear interest from such Interest Payment Date, provided,
however, that if the Authority shall default in the payment of interest due on
such Interest Payment Date, then such Bond shall bear interest from the next
preceding Interest Payment Date to which interest has been paid or duly provided
for, or, if no interest has been paid or duly provided for on the Bonds, from
the Issue Date.
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The Bonds shall mature on December 1, 2016.
(C) (i) From the Issue Date to the Conversion Date, the Bonds
shall bear interest at the Floating Rate. The Floating Rate shall be determined
by the Remarketing Agent by 9:30 a.m. on each Determination Date and shall be
effective on such Determination Date for the immediately following Weekly
Period.
(ii) The Remarketing Agent shall advise the Company and
the Trustee of the Floating Rate by telephone (confirmed by telecopy to the
Trustee) at or before the close of business on each Determination Date. Upon
request of any Bondholder, the Remarketing Agent shall notify such Bondholder of
the Floating Rate then borne by the Bonds.
(iii) If for any reason the interest rate on a Bond for
any Weekly Period is not determined by the Remarketing Agent pursuant to (C)(i)
above, or a court holds that the Floating Rate set as provided pursuant to
(C)(i) above is invalid or unenforceable, the Floating Rate for such Bonds shall
be for the first such Weekly Period that a Floating Rate is not determined by
the Remarketing Agent or has been determined invalid or unenforceable, a rate
per annum equal to the Floating Rate established by the Remarketing Agent
pursuant to (C)(i) on the immediately preceding Determination Date and on each
Determination Date thereafter, shall be a rate per annum equal to 85% of the
interest rate per annum for 30 day commercial paper having a rating of A-2/P-2
as reported in The Wall Street Journal on each Determination Date.
(iv) The determination of the Floating Rate by the
Remarketing Agent shall be conclusive and binding upon the Authority, the
Trustee, the Bank, the Company, the Remarketing Agent, the Tender Agent and the
Owners of the Bonds.
Anything herein to the contrary notwithstanding, the Floating
Rate shall in no event exceed 17% per annum.
(D) The Bonds shall bear interest at the Fixed Rate from and
after the Conversion Date until the maturity of the Bonds. The Fixed Rate shall
be a fixed annual interest rate on the Bonds established by the Remarketing
Agent as the rate of interest for which the Remarketing Agent has received
commitments from purchasers on or prior to the 5th Business Day preceding the
Conversion Date to purchase all the Outstanding Bonds on the Conversion Date at
a price of par.
(E) Prior to the Conversion Date, interest on the Bonds shall
be computed on the basis of a 365/366-day year, for the actual number of days
elapsed. On and after the Conversion Date, interest on the Bonds shall be
computed on the basis of a 360-day year of twelve 30-day months. The principal
of and premium, if any, on the Bonds shall be payable in lawful money of the
United States at the Principal Corporate Trust Office of the Trustee, or of its
successor in trust. The Purchase Price of the Bonds shall be payable in lawful
money of the United States by the Tender Agent to the Owner of Bonds entitled to
receive such Purchase Price.
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Interest on the Bonds shall be payable on each Interest Payment
Date to the persons in whose name the Bonds are registered at the close of
business on the Record Date for the respective Interest Payment Date. Interest
shall be paid by check mailed to each Owner at the addresses shown on the
registration books maintained by the Trustee, provided that such interest shall
be paid by wire transfer to: (i) the Bank; and (ii) any Holder of at least
$1,000,000 in aggregate principal amount of Bonds, if the Holder makes a written
request of the Trustee at least 15 days before a Record Date specifying the
account address and wiring instructions. Such a request may provide that it will
remain in effect for subsequent interest payments until changed or revoked by
written notice to the Trustee or upon the transfer or re-registration of the
Bond.
The principal of the Bonds shall be payable in lawful money of
the United States at the Principal Corporate Trust Office of the Trustee;
provided, however that payment of Bonds tendered pursuant to Sections 5.01, 5.03
and 5.04 hereof shall be paid at the Delivery Office of the Tender Agent. Except
as provided for in Section 2.13 hereof, no payment of principal shall be made on
any Bond until such Bond is surrendered to the Trustee at its Principal
Corporate Trust Office.
Section 2.03. Execution of Bonds. The Bonds shall be executed in the
name and on behalf of the Authority with the manual or facsimile signature of
its Chairman, under its seal attested by the manual or facsimile signature of
its Secretary. Such seal may be in the form of a facsimile of the Authority's
seal and may be reproduced, imprinted or impressed on the Bonds. The Bonds shall
then be delivered to the Trustee for authentication by it. In case any of the
officers who shall have executed or attested any of the Bonds shall cease to be
such officer or officers of the Authority before the Bonds so executed or
attested shall have been authenticated or delivered by the Trustee or issued by
the Authority, such Bonds may nevertheless be authenticated, delivered and
issued and, upon such authentication, delivery and issue, shall be as binding
upon the Authority as though those who executed and attested the same had
continued to be such officers of the Authority, and also any Bond may be signed
and attested on behalf of the Authority by such persons as at the actual date of
execution of such Bond shall be the proper officers of the Authority although at
the nominal date of such Bond any such person shall not have been such officer
of the Authority.
Only such of the Bonds as shall bear thereon a certificate of
authentication substantially in the form set forth on the form of Bond, manually
executed by the Trustee, shall be valid or obligatory for any purpose or
entitled to the benefits of this Indenture, and such certificate of the Trustee
shall be conclusive evidence that the Bonds so authenticated have been duly
executed, authenticated and delivered hereunder and are entitled to the benefits
of this Indenture.
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Section 2.04. Authentication.
(a) The Authority hereby appoints the Tender Agent as a
co-authenticating agent for the Bonds.
(b) No Bond shall be valid or obligatory for any purpose or
entitled to any security or benefit under this Indenture unless and until a
certificate of authentication on such Bond, substantially in the form set forth
in Exhibit "A" and Exhibit "B" attached hereto, shall have been duly executed by
the Trustee or by the Tender Agent and such executed certificate of
authentication upon any such Bond shall be conclusive evidence that such Bond
has been authenticated and delivered under this Indenture. The certificate of
authentication on any Bond shall be deemed to have been executed by the Trustee
or the Tender Agent if executed by an authorized signatory of the Trustee or the
Tender Agent, as the case may be, but it shall not be necessary that the same
signatory execute the certificate of authentication on all of the Bonds.
(c) In the event any Bond is deemed tendered to the Tender
Agent as provided in Section 5.01 or 5.04 hereof but is not physically delivered
to the Tender Agent, the Authority shall execute and the Trustee or the Tender
Agent shall authenticate a new Bond of like denomination as that deemed
tendered.
Section 2.05. Form of Bonds. The Floating Rate Bonds and the
certificate of authentication to be endorsed thereon prior to the Conversion
Date are to be in substantially the form set forth in Exhibit "A" which is
attached hereto and hereby made a part hereof as though fully set forth herein,
with appropriate variations, omissions and insertions as permitted or required
by this Indenture and applicable law. The Fixed Rate Bonds and the certificate
of authentication to be endorsed thereon are to be in substantially the form set
forth in Exhibit "B" which is attached hereto and hereby made a part hereof as
though fully set forth herein, with appropriate variations, omissions and
insertions as permitted or required by this Indenture.
Section 2.06. Transfer of Bonds. Any Bond may be transferred in
accordance with its terms upon the books required to be kept pursuant to the
provisions of Section 2.08 hereof. Such transfer shall be made, in accordance
with the requirements of Section 2.02 hereof, by the person in whose name it is
registered, in person or by his duly authorized attorney, upon surrender of such
registered Bond for cancellation, accompanied by delivery of a written
instrument of transfer, duly executed in a form approved by the Trustee.
Whenever any Bond or Bonds shall be surrendered for transfer, the
Authority shall execute and the Trustee or the Tender Agent, as the case may be,
shall authenticate and deliver a new Bond or Bonds of the same Series for a like
aggregate principal amount. The Trustee shall require the Bondholder requesting
such transfer to pay any tax or other governmental charge required to be paid
with respect to such transfer, and may in addition require the payment of a
reasonable sum to cover expenses incurred by the Authority or the Trustee in
connection with such transfer.
During the Fixed Rate Period, the Trustee shall not be required to
transfer any Bond during the period beginning 15 days before the mailing of
notice of redemption calling the Bond or any portion of the Bond for redemption
and ending on the redemption date.
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Section 2.07. Exchange of Bonds. Bonds may be exchanged at the
Principal Corporate Trust Office of the Trustee for a like aggregate principal
amount of Bonds of the same Series of other authorized denominations in
accordance with the requirements of Section 2.02 hereof. The Trustee shall
require the Bondholder requesting such exchange to pay any tax or other
governmental charge required to be paid with respect to such exchange, and may
in addition require the payment of a reasonable sum to cover expenses incurred
by the Authority or the Trustee in connection with such exchange.
During the Fixed Rate Period, the Trustee shall not be required to
exchange any Bond during the period beginning 15 days before the mailing of
notice of redemption calling the Bond or any portion of the Bond for redemption
and ending on the redemption date.
Section 2.08. Bond Register. The Trustee is hereby appointed the Bond
Registrar of the Authority and the Tender Agent is hereby appointed the Co-Bond
Registrar of the Authority. The Trustee or the Tender Agent, as the case may be,
will keep or cause to be kept sufficient books for the registration and transfer
of the Bonds, which shall at all times be open to inspection during regular
business hours by any Bondholder or his agent duly authorized in writing, the
Authority, the Company, the Bank and the Remarketing Agent; and upon
presentation for such purpose, the Trustee or the Tender Agent, as the case may
be, shall, under such reasonable regulations as they may prescribe, register or
transfer or cause to be registered or transferred, on such books, Bonds as
hereinbefore provided.
Section 2.09. Temporary Bonds. The Bonds may be issued in temporary
form exchangeable for definitive Bonds when ready for delivery. Any temporary
Bond may be printed, lithographed or typewritten, shall be of such denomination
as may be determined by the Authority, shall be in fully registered form without
coupons and may contain such reference to any of the provisions of this
Indenture as may be appropriate. Every temporary Bond shall be executed by the
Authority and be authenticated by the Trustee or the Tender Agent, as the case
may be, upon the same conditions and in substantially the same manner as the
definitive Bonds. If the Authority issues temporary Bonds it will execute and
deliver definitive Bonds as promptly thereafter as practicable, and thereupon
the temporary Bonds may be surrendered, for cancellation, in exchange therefor
at the Principal Corporate Trust Office of the Trustee and the Trustee or the
Tender Agent, as the case may be, shall authenticate and deliver in exchange for
such temporary Bonds an equal aggregate principal amount of definitive Bonds of
authorized denominations. Until so exchanged, the temporary Bonds shall be
entitled to the same benefits under this Indenture as definitive Bonds
authenticated and delivered hereunder.
Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond
shall become mutilated, the Authority, at the expense of the Holder of said
Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a
new Bond of like tenor and number in exchange and substitution for the Bond so
mutilated, but only upon surrender to the Trustee of the Bond so mutilated.
Every mutilated Bond so surrendered to the Trustee shall be canceled by it and
delivered to, or upon the order of, the Authority. If any Bond shall be lost,
destroyed or stolen, evidence of such loss, destruction or theft may be
submitted to the Authority and the Trustee and, if such evidence be satisfactory
to both and indemnity satisfactory to them both shall be given, the Authority,
at the expense of the Holder, shall execute, and the Trustee shall thereupon
authenticate and deliver, a new Bond of like tenor and number in lieu of and in
substitution for the Bond so lost, destroyed or stolen (or if any such Bond
shall have matured or shall be about to mature, instead of issuing a substitute
Bond, the Trustee may pay the same without surrender thereof). The Authority may
require payment by the Holder of a sum not exceeding the actual cost of
preparing each new Bond issued under this Section and of the expenses which may
be incurred by the Authority and the Trustee in connection therewith. Any Bond
issued under the provisions of this Section in lieu of any Bond alleged to be
lost, destroyed or stolen shall constitute an original additional contractual
obligation on the part of the Authority whether or not the Bond so alleged to be
lost, destroyed or stolen be at any time enforceable by anyone, and shall be
entitled to the benefits of this Indenture with all other Bonds secured by this
Indenture.
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Section 2.11. Cancellation and Destruction of Surrendered Bonds. All
Bonds surrendered for payment or redemption and all Bonds purchased with moneys
available for that purpose in any funds established under this Indenture, shall,
at the time of such payment or redemption, be canceled and destroyed by the
Trustee. The Trustee shall deliver to the Authority certificates of destruction
with respect to all Bonds destroyed in accordance with this Section.
Section 2.12. Acts of Bondholders; Evidence of Ownership. Any action to
be taken by Bondholders may be evidenced by one or more concurrent written
instruments of similar tenor signed or executed by such Bondholders in person or
by agents 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. Any action by the holder of any Bond shall bind all future
holders of the same Bond in respect of any thing done or suffered by the
Authority or the Trustee in pursuance thereof.
Section 2.13. Book-Entry Bonds; Securities Depository.
(a) The Bonds shall initially be registered to Cede & Co.,
the nominee for the Securities Depository, and no beneficial owner will receive
certificates representing their respective interests in the Bonds, except in the
event the Trustee issues Replacement Bonds as provided in subsection (b) hereof.
It is anticipated that during the term of the Bonds, the Securities Depository
will make book-entry transfers among its Participants and receive and transmit
payment of principal of, premium, if any, and interest on, the Bonds to the
Participants until and unless the Trustee authenticates and delivers Replacement
Bonds to the beneficial owners as described in subsection (b).
(b) If the Company determines: (1) that the Securities
Depository is unable to properly discharge its responsibilities; or (2) that the
Securities Depository is no longer qualified to act as a securities depository
and registered clearing agency under the Securities Exchange Act; or (3) that
the continuation of a book-entry system to the exclusion of any Bonds being
issued to any Bondowner other than Cede & Co. is no longer in the best interests
of the beneficial owners of the Bonds, then the Trustee shall notify the
Bondowners of such determination or such notice and of the availability of
certificates of Owners requesting the same, and the Trustee shall register in
the name of and authenticate and deliver Replacement Bonds to the beneficial
owners or their nominees in principal amounts representing the interest of each,
making such adjustments as it may find necessary or appropriate as to accrued
interest and previous calls for redemption; provided, that in the case of a
determination under (1) or (2) of this subsection (b), the Company, with the
consent of the Trustee, may select a successor Securities Depository in
accordance with subsection (c) hereof to effect book-entry transfers. In such
event, all references to the Securities Depository herein shall relate to the
period of time when the Securities Depository has possession of at least one
Bond. Upon the issuance of Replacement Bonds, all references herein to
obligations imposed upon or to be performed by the Securities Depository shall
be deemed to be imposed upon and performed by the Trustee, to the extent
applicable with respect to such Replacement Bonds. If the Securities Depository
resigns and the Company, the Trustee or Bondowners are unable to locate a
qualified successor of the Securities Depository in accordance with subsection
(c) hereof, then the Trustee shall authenticate and cause delivery of
Replacement Bonds to Bondowners, as provided herein. The Trustee may rely on
information from the Securities Depository and its Participants as to the names
of the beneficial owners of the Bonds. The cost of printing Replacement Bonds
shall be paid for by the Company.
(c) In the event the Securities Depository resigns, is
unable to properly discharge its responsibilities, or is no longer qualified to
act as a securities depository and registered clearing agency under the
Securities Exchange Act, the Company may appoint a successor Securities
Depository provided the Trustee receives written evidence satisfactory to the
Trustee with respect to the ability of the successor Securities Depository to
discharge its responsibilities. Any such successor Securities Depository shall
be a securities depository which is a registered clearing agency under the
Securities Exchange Act, or other applicable statute or regulation that operates
a securities depository upon reasonable and customary terms. The Trustee upon
its receipt of a Bond or Bonds for cancellation shall cause the delivery of
Bonds to the successor Securities Depository in appropriate denominations and
form as provided herein.
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(d) Notwithstanding any provision herein to the contrary,
so long as the Bonds are subject to a system of bookentry transfers pursuant to
this Section 2.13, any requirement for the delivery of Bonds to the Tender Agent
or the Trustee in connection with a tender pursuant to Section 5.01, 5.03 or
5.04 or a partial redemption pursuant to Section 4.01 shall be deemed satisfied
upon the transfer, on the registration books of the Securities Depository, of
the beneficial ownership interests in such Bonds tendered for purchase to the
account of the Tender Agent, or a Participant acting on behalf of or at the
discretion of such Tender Agent, or on the books of the Trustee.
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS
Section 3.01. Issuance of the Bonds. At any time after the execution of
this Indenture,
the Authority may execute and the Trustee or the Tender Agent, as the case may
be, shall authenticate and, upon request of the Authority, deliver the Bonds in
the aggregate principal amount of Two Million Five Hundred Thousand Dollars
($2,500,000).
Section 3.02. Validity of Bonds. The validity of the authorization and
issuance of the Bonds is not dependent on and shall not be affected in any way
by any proceedings taken by the Authority or the Trustee with respect to or in
connection with the Agreement. The recital contained in the Bonds that the same
are issued pursuant to the Act and the Constitution and laws of the Commonwealth
shall be conclusive evidence of their validity and of compliance with all
provisions of law in their issuance.
Section 3.03. Disposition of Proceeds of the Bonds and Other Amounts.
The Authority shall deposit or cause to be deposited with the Trustee,
immediately upon receipt thereof, all proceeds derived from the sale of the
Bonds, together with any monies deposited by the Company as an equity
contribution. The Trustee shall deposit all such amounts in a special fund,
which the Trustee is hereby directed to establish and create, to be known as the
"Clearing Fund", and in the following order, the Trustee shall:
(a) Transfer to the persons identified on the Closing Statement
executed by the Authority and the Company and delivered to the Trustee on the
Closing Date (the "Closing Statement") to pay or reserve for payment any and all
costs of issuance incurred in connection with the Bonds;
(b) Transfer to the Company the amount set forth on the Closing
Statement to reimburse the Company for any capital expenditures made, if any, in
connection with the Project prior to the issuance of the Bonds; and
(c) Transfer to the credit of the Construction Fund (created
pursuant to Section 6.05 hereof) the balance of the funds held in the Clearing
Fund not otherwise reserved for the payment of the items described in subsection
3.03(a) and (b) above.
ARTICLE IV
REDEMPTION OF BONDS BEFORE MATURITY
Section 4.01. Extraordinary and Mandatory Redemption.
(a) Extraordinary Redemption. The Bonds are callable for
redemption in the event: (1) the Project Facilities or any portion thereof are
damaged or destroyed or taken in a condemnation proceeding as provided in
Section 6.04 of the Agreement; or (2) the Company shall exercise its option to
cause the Bonds to be redeemed as provided in Section 9.02 of the Agreement. If
called for redemption at any time pursuant to this Section 4.01(a), the Bonds
shall be subject to redemption by the Authority on any Interest Payment Date, in
whole or in part, at a redemption price equal to 100% of the principal amount
thereof being redeemed, plus accrued interest to the redemption date.
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(b) Mandatory Redemption. The Bonds are subject to
mandatory redemption five (5) Business Days prior to the Letter of Credit
Termination Date, in whole, at a redemption price equal to one hundred percent
(100%) of the principal amount thereof being redeemed plus accrued interest to
the redemption date if, on the thirtieth (30th) Business Day prior to the Letter
of Credit Termination Date, the Trustee shall not have received a Substitute
Letter of Credit which will be effective on or before the Letter of Credit
Termination Date.
(c) Mandatory Sinking Fund Redemption. The Bonds are
subject to mandatory sinking fund redemption on the Interest Payment Date
occurring in the month of December in each of the years set forth below
commencing on the Interest Payment Date occurring in December of 1997 (each, a
"Mandatory Sinking Account Payment Date"), at a redemption price equal to 100%
of the principal amount thereof plus accrued interest as follows:
Mandatory Sinking
Year Account Payments
---- ----------------
1997 $ 70,000
1998 70,000
1999 75,000
2000 80,000
2001 85,000
2002 90,000
2003 95,000
2004 100,000
2005 105,000
2006 115,000
2007 120,000
2008 130,000
2009 135,000
2010 145,000
2011 155,000
2012 165,000
2013 175,000
2014 185,000
2015 195,000
2016* 210,000
*Final maturity of the Bonds is December 1, 2016
Section 4.02. Optional Redemption. On or prior to the Conversion Date,
the Bonds are subject to redemption by the Authority, at the option of the
Company, at any time, subject to provisions of Section 4.03 hereof, in whole or
in part, at the redemption price of 100% of the principal amount thereof being
redeemed plus accrued interest to the redemption date.
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After the Conversion Date, if the length of time from the Conversion
Date to the final maturity date of the Bonds is seven (7) years or more, the
Bonds are subject to redemption by the Authority, at the option of the Company,
on or after the fifth anniversary of the Conversion Date, in whole at any time
or in part on any Interest Payment Date, at the redemption price of 100% of the
principal amount thereof being redeemed plus accrued interest to the redemption
date.
Notwithstanding the foregoing, no such optional redemption shall occur
after the Conversion Date unless there shall be available in the Bond Fund
sufficient Available Moneys to pay all amounts due with respect to such a
redemption.
Section 4.03. Notice of Redemption. Notice of the call for redemption,
identifying the Bonds or portions thereof to be redeemed and the redemption
price (including the premium, if any), shall be given by the Trustee by mailing
a copy of the redemption notice by first-class mail, postage prepaid, at least
thirty (30) days but not more than sixty (60) days prior to the date fixed for
redemption to the Owner of each Bond to be redeemed in whole or in part at the
address shown on the registration books. Such notice shall contain such matters
specified in the Bonds for the redemption thereof and shall state that such
redemption is conditional upon the receipt of monies by the Trustee for such
purpose on or prior to the redemption date. Any notice mailed as provided in
this Section shall be conclusively presumed to have been duly given, whether or
not the Owner receives the notice. The Trustee shall deliver a copy of any such
redemption notice to the Tender Agent, the Company and to the Remarketing Agent.
Section 4.04. Interest on Bonds Called for Redemption. Upon the giving
of notice and the deposit of Available Moneys for redemption at the required
times on or prior to the date fixed for redemption, as provided in this Article,
interest on the Bonds or portions thereof thus called shall no longer accrue
after the date fixed for redemption.
Section 4.05. Cancellation. All Bonds which have been redeemed shall
not be reissued but shall be canceled and destroyed by the Trustee in accordance
with Section 2.11 hereof.
Section 4.06. Partial Redemption of Bonds.
(a) If less than all the Bonds are to be redeemed, the
particular Bonds or portions thereof to be redeemed shall be selected by the
Trustee by lot.
(b) Upon surrender of any Bond for redemption in part
only, the Authority shall execute and the Trustee shall authenticate and deliver
to the Owner thereof a new Bond or Bonds of authorized denominations, in an
aggregate principal amount equal to the unredeemed portion of the Bond
surrendered. If all or a portion of Bonds tendered for purchase pursuant to
Section 5.04 hereof have been selected by the Trustee for redemption, the Tender
Agent, upon receipt of such tendered Bonds, shall authenticate and redeliver
only such portion of tendered Bonds not subject to redemption. The Tender Agent
shall deliver to the tendering Bondholder a copy of the notice of redemption,
indicating the portion of the Bonds subject thereto, and upon receipt of funds
as provided herein, an amount representing the principal of and interest on the
Bonds not called for redemption. The principal of and interest accrued on the
Bonds called for redemption shall be paid to such bondholder on the redemption
date. The Tender Agent shall cancel the Bond or such portion thereof tendered
for purchase and subject to redemption, and shall deliver a certificate
evidencing such cancellation and the canceled Bond to the Trustee.
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(c) (i) Prior to the Conversion Date, in case a Bond is of
a denomination larger than $100,000, a portion of such Bond ($100,000 or any
integral multiple of $5,000 in excess thereof) may be redeemed, but Bonds shall
be redeemed only if the remaining unredeemed portion of such Bond is in the
principal amount of $100,000 or any integral multiple of $5,000 in excess of
$100,000.
(ii) After the Conversion Date, in case a Bond is of a
denomination larger than $5,000, a portion of such Bond ($5,000 or any integral
multiple thereof) may be redeemed, but Bonds shall be redeemed only if the
remaining unredeemed portion of such Bond is in the principal amount of $5,000
or any integral multiple of $5,000.
(d) Notwithstanding anything to the contrary contained in
this Indenture, whenever the Bonds are to be redeemed in part, Bonds which are
Pledged Bonds at the time of selection of Bonds for redemption shall be selected
for redemption prior to the selection of any other Bond. If the aggregate
principal amount of Bonds to be redeemed exceeds the aggregate principal amount
of Pledged Bonds at the time of selection, the Trustee may select for redemption
Bonds in an aggregate principal amount equal to such excess in such manner as
the Trustee in its discretion shall deem fair and appropriate.
Section 4.07. Payment of Redemption Price with Available Moneys;
Consent of Letter of Credit Bank to Optional Redemption. Notwithstanding any
provision to the contrary contained in this Indenture, the payment of the
redemption price of Bonds shall be made only from Available Moneys. On each date
that the Bonds are subject to redemption, the Trustee shall draw on the Letter
of Credit in an amount sufficient to pay the full redemption price of the Bonds
then subject to redemption from the sources and in the order provided in Section
6.03 hereof. As long as the Bank is not in default under the Letter of Credit,
the Trustee shall not call Bonds for Optional Redemption unless it has received
the prior written consent to such Optional Redemption from the Letter of Credit
Bank.
ARTICLE V
CONVERSION OF INTEREST RATE; DEMAND PURCHASE OPTION
Section 5.01. Conversion of Interest Rate on Conversion Date. The
interest rate on the Bonds shall be converted from the Floating Rate to the
Fixed Rate upon the exercise by the Company of the Conversion Option, and the
Bonds shall be subject to mandatory tender for purchase by the Owners thereof on
the Conversion Date. To exercise the Conversion Option, the Company shall notify
the Trustee, the Tender Agent, the Bank, the Authority and the Remarketing Agent
at least thirty-five (35) days prior to the Conversion Date of such exercise,
cause the Remarketing Agent to furnish to the Trustee the information set forth
in paragraphs 1 and 4 below and, thereafter cause the Trustee to deliver or mail
by first class mail a notice at least twenty (20) days but not more than thirty
(30) days prior to the Conversion Date to the Owner of each Bond at the address
shown on the registration books of the Bond Registrar. No such notice may be
given unless the Trustee first receives: (i) a commitment from the Bank or a
Substitute Bank to issue a Substitute Letter of Credit to take effect on the
Conversion Date, together with a proposed form of such Substitute Letter of
Credit; and (ii) a Company certificate to the effect that each of the Company's
representations and warranties made in the Agreement and in any other agreements
or certificates given by the Company in connection with the issuance of the
Bonds remain true and correct in all material respects as of the proposed
Conversion Date. Any notice given as provided in this section shall be
conclusively presumed to have been duly given, whether or not the Owner receives
the notice. Said notice shall state in substance the following:
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1. the Conversion Date;
2. that the existing Letter of Credit will expire five (5)
Business Days after the Conversion Date;
3. that unless firm commitments for the purchase of all
Outstanding Bonds have been received on or prior to the fifth (5th)
Business Day prior to the proposed Conversion Date, the Company has the
option to rescind an optional conversion of the Bonds; and
4. that in the event the Company elects not to rescind the
optional conversion of the Bonds, all Bonds shall be subject to
mandatory purchase on the Conversion Date pursuant to this Section
5.01.
On or prior to the Conversion Date, Owners of Bonds shall be required to deliver
their Bonds to the Tender Agent for purchase at the Purchase Price, and any such
Bonds not delivered to the Tender Agent on or prior to the Conversion Date
("Undelivered Bonds"), for which there has been irrevocably deposited in trust
with the Trustee or the Tender Agent an amount of money sufficient to pay the
Purchase Price of the Undelivered Bonds, shall be deemed to have been purchased
pursuant to this Section 5.01 and are deemed to be no longer Outstanding with
respect to such prior Owners. IN THE EVENT OF A FAILURE BY AN OWNER OF BONDS TO
DELIVER ITS BONDS ON OR PRIOR TO THE CONVERSION DATE, SAID OWNER SHALL NOT BE
ENTITLED TO ANY PAYMENT (INCLUDING ANY INTEREST TO ACCRUE ON OR SUBSEQUENT TO
THE OPTIONAL CONVERSION DATE) OTHER THAN THE PURCHASE PRICE FOR SUCH UNDELIVERED
BONDS, AND ANY UNDELIVERED BONDS SHALL NO LONGER BE ENTITLED TO THE BENEFIT OF
THIS INDENTURE, EXCEPT FOR THE PURPOSE OF PAYMENT OF THE PURCHASE PRICE
THEREFOR.
Notwithstanding the foregoing provisions, to the extent that at the
close of the fifth Business Day prior to the proposed Conversion Date, the
Remarketing Agent has not presented to the Company firm commitments for the
purchase of all of the Bonds, the Company, at its option, may rescind an
optional conversion of the Bonds. Any such election to rescind must be made by
the close of the fourth Business Day prior to the proposed Conversion Date and
the Company shall give written notice to the Trustee, the Tender Agent and the
Bank of its decision to rescind by such time. The Company shall cause the
Trustee to immediately notify the Owners of such rescission and thereafter the
Bonds shall bear interest at the Floating Rate in effect for the current Weekly
Period and thereafter the Bonds shall bear interest at the Floating Rate until
any subsequent Conversion Date effected in accordance with this Indenture.
In the event the Company rescinds the proposed optional conversion in
accordance with the terms of the foregoing paragraph, the Letter of Credit then
in effect will remain in effect in accordance with its terms.
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The Bonds are subject to mandatory purchase in whole on the Conversion
Date, at a purchase price equal to 100% of the principal amount thereof being
purchased, plus accrued interest to the purchase date; provided, however, that:
(i) all Pledged Bonds for which a commitment to purchase has not been received
in connection with a conversion of the Bonds to a Fixed Rate, shall be redeemed
or otherwise paid by the Company on or before the Conversion Date; and (ii) no
such mandatory purchase shall take place in the event the Company exercises its
right to rescind the conversion.
Section 5.02. Delivery of Bonds After Conversion Date. At any time
prior to the Record Date preceding the first Interest Payment Date following the
Conversion Date, the Trustee or the Tender Agent, as the case may be, shall
deliver Bonds in the form of Exhibit "B" hereto. Prior to the delivery by the
Trustee of such Bonds, there shall be filed with the Trustee a request and
authorization to the Trustee on behalf of the Authority, which shall be executed
by the Chairman, Vice Chairman, Secretary, Assistant Secretary or any authorized
officer of the Authority to authenticate and deliver the Bonds, as executed by
the Authority, to the purchasers thereof. Such delivery shall be made by the
Trustee or the Tender Agent, as the case may be, without making any charge
therefor to the Owner of such Bonds.
Section 5.03. Mandatory Tender upon Substitution of Letter of Credit.
Prior to the Conversion Date, the Bonds are subject to mandatory purchase in
whole on the Substitution Date, at a purchase price equal to 100% of the
principal amount thereof being purchased, plus accrued interest to the purchase
date. The Trustee shall deliver or mail by first class mail a notice at least
twenty (20) days but not more than thirty (30) days prior to the Substitution
Date to the Owner of each Bond at the address shown on the registration books of
the Bond Registrar notifying such Owner that their Bonds are subject to
mandatory purchase. No such notice may be given unless the Company shall have
satisfied the provisions of Section 4.07 of the Agreement. Any notice given as
provided in this Section 5.03 shall be conclusively presumed to have been given,
whether or not the Owner receives the notice. Said notice shall state in
substance the following:
(1) the Substitution Date;
(2) that the existing Letter of Credit securing such Bonds
will expire five (5) Business Days after the Substitution Date; and
(3) that if the Company satisfies the conditions precedent
to delivery of the Substitute Letter of Credit, all Bonds shall be
subject to mandatory purchase on the Substitution Date pursuant to this
Section 5.03.
On or prior to the Substitution Date, Owners of Bonds shall be required to
deliver their Bonds to the Tender Agent for purchase at the Purchase Price, and
any such Bonds not delivered to the Tender Agent on or prior to the Substitution
Date ("Undelivered Bonds"), for which there has been irrevocably deposited in
trust with the Trustee or the Tender Agent an amount of money sufficient to pay
the Purchase Price of the Undelivered Bonds, shall be deemed to have been
purchased pursuant to this Section 5.03 and are deemed to be no longer
Outstanding with respect to such prior Owners. IN THE EVENT OF A FAILURE BY AN
OWNER OF BONDS TO DELIVER ITS BONDS ON OR PRIOR TO THE SUBSTITUTION DATE, SAID
OWNER SHALL NOT BE ENTITLED TO ANY PAYMENT (INCLUDING ANY INTEREST TO ACCRUE ON
OR SUBSEQUENT TO THE SUBSTITUTION DATE) OTHER THAN THE PURCHASE PRICE FOR SUCH
UNDELIVERED BONDS, AND ANY UNDELIVERED BONDS SHALL NO LONGER BE ENTITLED TO THE
BENEFIT OF THIS INDENTURE, EXCEPT FOR THE PURPOSE OF PAYMENT OF THE PURCHASE
PRICE THEREFOR.
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Notwithstanding the foregoing provisions, to the extent that at the
close of the fifth Business Day prior to the proposed Substitution Date, the
Company has not delivered to the Authority, the Trustee and the Remarketing
Agent the items set forth in Section 4.07(i) through (iv) of the Agreement, the
mandatory purchase of Bonds shall be rescinded and the Trustee shall notify the
Owners of such rescission immediately and thereafter the Bonds shall continue to
be secured by the existing Letter of Credit until its termination date.
Section 5.04. Demand Purchase Option. Prior to the Conversion Date, any
Bond shall be purchased at the Purchase Price from the Owner thereof upon:
(i) delivery by such Owner to the Trustee and the Tender
Agent at their Principal Corporate Trust Office and Delivery Office,
respectively, and to the Remarketing Agent at its principal office set forth in
Section 12.08 hereof, of a notice (the "Demand Purchase Notice") (said notice to
be irrevocable and effective upon receipt) which states: (1) the aggregate
principal amount and bond numbers of the Bonds to be purchased; and (2) the date
on which such Bonds are to be purchased, which date shall be a Business Day not
prior to the seventh (7th) day next succeeding the date of delivery of such
notice and which date shall be prior to the Conversion Date;
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(ii) if such Bonds are to be purchased prior to an Interest
Payment Date and after the Record Date in respect thereof, delivery to the
Tender Agent together with the Demand Purchase Notice described in (i) above, of
a nonrecourse due-bill, payable to bearer, for interest due on such interest
payment date; and
(iii) delivery to the Tender Agent at its Delivery Office at
or prior to 10:00 a.m., New York City time, on the date designated for purchase
in the applicable Demand Purchase Notice of such Bonds to be purchased, with an
appropriate endorsement for transfer or accompanied by a bond power endorsed in
blank.
Any Bond as to which a Demand Purchase Notice has been delivered
pursuant to paragraph (i) above, must be delivered to the Tender Agent, as
provided in (iii) above, and any such Bond not so delivered ("Undelivered
Bonds"), for which there has been irrevocably deposited in trust with the
Trustee or the Tender Agent an amount of money sufficient to pay the Purchase
Price thereof, shall be deemed to have been purchased at the Purchase Price
pursuant to this Section 5.04 and are deemed to be no longer Outstanding with
respect to such tendering Owner. IN THE EVENT OF A FAILURE BY AN OWNER OF BONDS
TO DELIVER ITS BONDS AS SPECIFIED ABOVE, SAID OWNER SHALL NOT BE ENTITLED TO ANY
PAYMENT (INCLUDING ANY INTEREST TO ACCRUE ON OR SUBSEQUENT TO THE DATE
DESIGNATED FOR PURCHASE IN THE APPLICABLE DEMAND PURCHASE NOTICE) OTHER THAN THE
PURCHASE PRICE FOR SUCH UNDELIVERED BONDS, AND ANY UNDELIVERED BONDS SHALL NO
LONGER BE ENTITLED TO THE BENEFIT OF THE INDENTURE, EXCEPT FOR THE PAYMENT OF
THE PURCHASE PRICE THEREFOR.
Notwithstanding the foregoing provisions, in the event any Bond as to
which the Owner thereof has exercised the Demand Purchase Option is remarketed
to such Owner pursuant to the Remarketing Agreement, such Owner need not deliver
such Bond to the Tender Agent as provided in (iii) above, although such Bond
shall be deemed to have been delivered to the Tender Agent, redelivered to such
Owner, and remarketed for purposes of this Indenture, including, without
limitation, for purposes of adjusting the Floating Rate as provided in Section
2.02(C) hereof.
Section 5.05. Funds for Purchase of Bonds.
(a) On the date Bonds are to be purchased pursuant to Section
5.01, Section 5.03 or Section 5.04 hereof, such Bonds shall be purchased at the
Purchase Price only from the funds listed below. Subject to the provisions of
Section 6.12(b), funds for the payment of the Purchase Price shall be derived
from the following sources in the order of priority indicated:
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(i) moneys drawn by the Trustee under the Letter of Credit
(in the event of a drawing on the Letter of Credit to fund payment of the
Purchase Price of Bonds tendered pursuant to Section 5.03 hereof, the Trustee
shall draw on the existing Letter of Credit and not the Substitute Letter of
Credit to fund such payment);
(ii) proceeds of the remarketing of the Bonds; and
(iii) any other Available Moneys furnished to the Trustee
or the Tender Agent and available for such purpose.
(b) Payment for the Bonds purchased pursuant to Sections 5.01,
5.03 or 5.04 shall be made as follows:
(i) On the Business Day immediately preceding the date on
which such Bonds are to be purchased (the "Purchase Date"), the Trustee shall
make a drawing pursuant to the Letter of Credit in respect of the Purchase Price
of such Bonds. In connection therewith, the Trustee shall prepare and present to
the Bank the appropriate certificates required under the Letter of Credit by
12:00 noon, New York City time on the Business Day immediately preceding the
Purchase Date.
(ii) By not later than 10:00 a.m., New York City time, on
the Purchase Date, the Remarketing Agent shall give telephonic notice, promptly
confirmed in writing, to the Bank, the Trustee and the Tender Agent, specifying:
(1) the total principal amount of Bonds, if any,
remarketed by it; and
(2) the names of the persons to whom such Bonds
were sold and are to be registered, each such
person's address and social security number
or taxpayer identification number, the
denominations in which replacement Bonds are
to be prepared, and any other appropriate
registration and transfer instructions.
(iii) There is hereby established with the Tender Agent a
special fund to be designated the "Bond Purchase Fund" and therein two separate
and segregated accounts to be designated the "Remarketing Account" and the "Bank
Account." An amount equal to the proceeds received by the Trustee pursuant to a
draw under the Letter of Credit shall be transferred by the Trustee in
immediately available funds to the Tender Agent for deposit in the Bank Account
no later than 12:30 p.m., New York City time on the applicable Purchase Date.
(iv) No later than 1:00 p.m., New York City time, on each
Purchase Date, the Tender Agent shall give telephonic notice (promptly confirmed
by telecopy) to the Remarketing Agent of the amount deposited in the Bank
Account on such date. No later than 2:00 p.m., New York City time, on each
Purchase Date the Remarketing Agent shall: (x) transfer to the Bank an amount of
the proceeds of the remarketing of the Bonds equal to the amount deposited in
the Bank Account on such Purchase Date; (y) transfer the remainder of the
proceeds of the remarketing of the Bonds to the Tender Agent for deposit in the
Remarketing Account and shall give telephonic notice (promptly confirmed by
telecopy) to the Tender Agent of the amount of such proceeds transferred to the
Bank; and (z) give telephonic notice, promptly confirmed in writing, to the
Company of the total principal amount of Unremarketed Bonds, if any. (v) The
Tender Agent shall pay the Purchase Price to the tendering Bondholders from the
amounts on deposit in the Bank Account to the extent available. If amounts on
deposit in the Bank Account are insufficient to pay the Purchase Price to the
tendering Bondholders, the Tender Agent shall make up any such deficiency from
amounts on deposit in the Remarketing Account.
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(vi) The Bank shall give telephonic confirmation to the
Tender Agent and the Trustee by 4:00 p.m., New York City time on the applicable
Purchase Date of its receipt of the remarketing proceeds described in Section
5.05(b)(iv) hereof.
Section 5.06. Delivery of Purchased Bonds.
(a) Remarketed Bonds shall be delivered by the Tender Agent, at
its Delivery Office, to or upon the order of the purchasers thereof.
(b) Unremarketed Bonds purchased with funds drawn under the
Letter of Credit shall be delivered by the Tender Agent to the Pledged Bonds
Custodian or otherwise upon the order of the Bank pursuant to the Pledge
Agreement.
(c) Unremarketed Bonds purchased with moneys described in
Section 5.05(a)(iii) hereof shall, at the direction of the Company, be: (i)
delivered as instructed by the Company; or (ii) delivered to the Trustee for
cancellation; provided, however, that any Bonds so purchased after the selection
thereof by the Trustee for redemption shall be delivered to the Trustee for
cancellation.
(d) The Tender Agent shall deliver to the person to whom the
Tender Agent is to deliver such Bonds, the nonrecourse due-bills, if any,
delivered to the Tender Agent with respect to such Bonds in accordance with
Section 5.04 hereof.
Bonds delivered as provided in this Section shall be registered in the
manner directed by the recipient thereof.
Section 5.07. Sale of Bonds by Remarketing Agent.
(a) On each Purchase Date, the Remarketing Agent shall offer
for sale and use its best efforts to sell, as agent of the Company, all Bonds
tendered or deemed tendered for purchase on such Purchase Date at the Purchase
Price thereof and, if such Bonds are not sold on such date, the Remarketing
Agent shall continue, for a period not in excess of thirty (30) days thereafter,
to use its best efforts to sell such Bonds.
(b) Notwithstanding anything to the contrary herein: (i) the
Remarketing Agent shall use its best efforts to remarket any Bonds tendered or
deemed tendered for purchase in such a manner that, immediately following the
remarketing of any Bonds, at least one (1) Holder will own at least $200,000 in
aggregate principal amount of Bonds; and (ii) the Remarketing Agent shall not
remarket any Bonds to the Authority, the Company or any affiliate thereof.
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Section 5.08. Delivery of Proceeds of Sale of Purchased Bonds.
(a) Except in the case of the sale of any Pledged Bonds, the
proceeds of the sale of any Bonds delivered or deemed delivered to the Tender
Agent pursuant to Sections 5.01, 5.03 or 5.04 hereof, to the extent not required
to pay the Purchase Price to tendering Bondholders and not required to reimburse
the Bank under the Reimbursement Agreement, shall be paid to or upon the order
of the Company.
(b) In the event the Remarketing Agent shall have remarketed
any Pledged Bonds and the Company or the Remarketing Agent shall have directed
the Bank to cause the Pledged Bonds Custodian to deliver such Pledged Bonds to
the Tender Agent pursuant to the Pledge Agreement, such Bonds shall be delivered
to the Tender Agent and the proceeds of sale of such Bonds shall be delivered to
the Delivery Office of the Tender Agent, and shall be paid to or upon the order
of the Bank; provided that any amounts so paid in excess of amounts then due to
the Bank in respect of drawings under the Letter of Credit shall be delivered by
the Bank to or upon the order of the Company; provided further that Pledged
Bonds shall not be delivered to the Tender Agent until the Letter of Credit has
been reinstated in accordance with the terms of the Pledge Agreement and the
Letter of Credit.
Section 5.09. Duties of Trustee and Tender Agent with Respect to Purchase of
Bonds.
(a) The Tender Agent shall hold all Bonds delivered to it
pursuant to Sections 5.01, 5.03 or 5.04 hereof in trust for the benefit of the
respective Owners of Bonds which shall have so delivered such Bonds until moneys
representing the Purchase Price of such Bonds shall have been delivered to or
for the account of or to the order of such Owners of Bonds. Upon delivery of
monies representing the Purchase Price of such Bonds to or for the account of or
to the order of such Owners of Bonds, the Tender Agent shall deliver all such
Unremarketed Bonds, the funds for which have been obtained by a drawing under
the Letter of Credit, to the Pledged Bonds Custodian pursuant to Section 5.06(b)
hereof for the purpose of perfecting the Bank's security interest therein under
the Pledge Agreement unless the Bank shall direct the Tender Agent to deliver
such Bonds to or upon the order of the Bank in accordance with Section 5.06
hereof.
(b) The Trustee and the Tender Agent shall hold all moneys
delivered to them pursuant to this Indenture for the purchase of Bonds in a
separate account, in trust for the benefit of the Bank or, in the case of
remarketed Bonds, the purchasers of such Bonds, until the Bonds purchased with
such moneys shall have been delivered to or for the account of the Pledged Bonds
Custodian, the Bank or to such other purchaser, as appropriate.
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(c) The Trustee shall deliver to the Company and the Bank a
copy of each notice delivered to it in accordance with Section 5.04 within two
(2) days of the receipt thereof.
(d) As soon as possible, but not later than the close of
business on any date designated for purchase of Bonds in accordance with Section
5.04; the Tender Agent shall give telephonic or telegraphic notice to the
Remarketing Agent and the Trustee specifying the principal amount of Bonds
delivered or deemed delivered for purchase on such date.
(e) The Trustee shall draw moneys under the Letter of Credit in
accordance with the terms thereof to the extent required by Sections 5.05 and
6.12 hereof to provide for timely payment of the Purchase Price of Bonds.
Section 5.10. No Purchases or Sales After Certain Defaults. Anything in
this Indenture to the contrary notwithstanding, there shall be no purchases or
sales of Bonds pursuant to Section 5.04 if there shall have occurred any Event
of Default in respect of which the principal of all Bonds Outstanding shall have
been declared immediately due and payable pursuant to Section 8.02 and such
declaration shall not have been annulled. If the Trustee shall have given a
notice of a call for redemption pursuant to Section 4.03 hereof and such notice
shall not have been rescinded, the Remarketing Agent shall provide a notice of
such redemption to any prospective purchaser of such Bonds upon the remarketing
of any Bonds tendered pursuant to Section 5.04 hereof. Nothing in this Section
is intended to limit secondary trading or transfer of the Bonds.
ARTICLE VI
REVENUES AND FUNDS
Section 6.01. Creation of the Bond Fund. There is hereby created and
established with the Trustee a trust fund to be designated "Bond Fund" which
shall be used to pay when due the principal and Purchase Price of, premium, if
any, and interest on the Bonds.
Section 6.02. Payments into the Bond Fund. There shall be deposited
into the Bond Fund from time to time the following:
(a) any amount in the Construction Fund directed to be paid
into the Bond Fund in accordance with the provisions of Section 6.07 or Section
6.08 hereof;
(b) any amount deposited into the Bond Fund pursuant to Section
6.04 hereof;
(c) all payments specified in Sections 3.03 and 3.04 of the
Agreement (other than amounts paid for the Trustee's or the Authority's own
account);
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(d) any moneys received pursuant to the Collateral Documents;
(e) any moneys drawn under the Letter of Credit which moneys
shall be deposited or credited (in the case of a draw to pay the Purchase Price)
in a separate subaccount of the Bond Fund and shall not be commingled with any
other moneys held by the Trustee; (f) amounts, if any, held by the Trustee
pursuant to Section 5.09 hereof; and
(g) all other moneys received by the Trustee under and pursuant
to any of the provisions of the Agreement which are required to be or which are
accompanied by directions that such moneys are to be paid into the Bond Fund.
Section 6.03. Use of Moneys in the Bond Fund. Except as provided in
Sections 5.05, 5.09 and 6.11 hereof, moneys in the Bond Fund shall be used
solely for the payment of the principal of, premium, if any, and interest on the
Bonds, for the redemption of the Bonds prior to maturity and for payment of the
Acceleration Price as defined in Section 8.02 hereof. Subject to the provisions
of Section 6.12(b) hereof, funds for such payments of redemption price and
principal of and premium, if any, and interest on the Bonds shall be derived
from the following sources in the order of priority indicated:
(i) moneys drawn by the Trustee under the Letter of
Credit;
(ii) amounts deposited into the Bond Fund which constitute
Available Moneys (other than moneys drawn by the Trustee under the Letter of
Credit); and
(iii) any other moneys furnished to the Trustee and
available for such purpose.
Section 6.04. Custody of Separate Trust Fund. The Trustee is authorized
and directed to hold all Net Proceeds from any insurance proceeds or
condemnation award and disburse such proceeds in accordance with Article VII of
the Agreement. If the Company directs that any portion of such Net Proceeds be
applied to redeem Bonds, the Trustee shall deposit such Net Proceeds in a
separate sub-account of the Bond Fund, and the Authority covenants and agrees to
take and cause to be taken any action requested of the Authority to redeem on
the earliest possible redemption date the amount of Bonds so specified by the
Company.
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Section 6.05. Construction Fund. There is hereby created and
established with the Trustee a trust fund to be designated "Construction Fund,"
which shall be expended in accordance with the provisions hereof and of the
Agreement.
Section 6.06. Payments into the Construction Fund; Disbursements. The
Construction Fund shall initially consist of those monies deposited therein
pursuant to Section 3.03(c) hereof. Proceeds of the Bonds deposited in the
Construction Fund shall be applied to pay a portion of the costs of the Project.
The Trustee is hereby authorized and directed to make disbursements from the
Construction Fund upon the receipt of a requisition in the form of Exhibit "C"
which is attached hereto and hereby made a part hereof as though fully set forth
herein, executed by an Authorized Representative of the Company and approved by
the Bank. The Trustee shall keep and maintain adequate records pertaining to the
Construction Fund and all disbursements therefrom, including records of all
Requisitions made pursuant to the Agreement, and the Trustee shall, upon request
of the Company, furnish statements in the form customarily prepared by the
Trustee. The Trustee shall hold all monies and investments from time to time on
deposit in the Construction Fund for the Owners and for the Bank, the rights of
the Bank being subject and subordinate to the rights of the Trustee so long as
any amount due in respect of the Bonds remains unpaid.
Section 6.07. Use of Money in the Construction Fund Upon Default. If
the principal of the Bonds shall have become due and payable pursuant to Article
VIII hereof, any balance remaining in the Construction Fund shall without
further authorization: (i) prior to the Obligation Termination Date, if any
amounts are due and owing under the Reimbursement Agreement, be transferred
immediately to the Bank, as long as the Bank is not in default of its
obligations under either Letter of Credit; or (ii) after the Obligation
Termination Date, be transferred into the Bond Fund.
Section 6.08. Use of Money in the Construction Fund Upon Completion of
the Project. The completion of the Project and payment or provision for payment
of all Costs of the Project shall be evidenced by the filing with the Trustee of
the certificate required by Section 2.03 of the Agreement. As soon as
practicable and in any event not more than sixty (60) days from the date of
receipt by the Trustee of the certificate referred to in the preceding sentence,
any balance remaining in the Construction Fund (except amounts the Company shall
have directed the Trustee to retain for any Cost of the Project not then due and
payable) shall, without further authorization be transferred into a separate
sub-account within the Bond Fund. Thereafter, such funds shall be transferred by
the Trustee on the next Interest Payment Date to the Letter of Credit Bank to
reimburse the Letter of Credit Bank for a drawing affected pursuant to Section
6.12 hereof.
Section 6.09. Nonpresentment of Bonds. In the event any Bond shall not
be presented for payment when the principal thereof becomes due, either at
maturity, or at the date fixed for redemption thereof, or otherwise, if
Available Moneys sufficient to pay any such Bond shall have been made available
to the Trustee for the benefit of the Owner thereof, all liability of the
Authority to the Owner thereof for the payment of such Bond shall forthwith
cease, determine and be completely discharged, and thereupon it shall be the
duty of the Trustee to hold such funds uninvested, without liability for
interest thereon, for the benefit of the Owner of such Bond who shall thereafter
be restricted exclusively to such funds for any claim of whatever nature on his
part under this Indenture with respect to such Bond.
Any moneys so deposited with and held by the Trustee not so applied to
the payment of Bonds within five (5) years after the date on which the same
shall have become due shall be repaid by the Trustee to the Company upon written
direction of a Company Representative, and thereafter Owners of Bonds shall be
entitled to look only to the Company for payment, and then only to the extent of
the amount so repaid, and all liability of the Trustee with respect to such
money shall thereupon cease, and the Company shall not be liable for any
interest thereon and shall not be regarded as a trustee of such money.
Section 6.10. Moneys to be Held in Trust. All moneys required to be
deposited with or paid to the Trustee for the account of any fund or account
referred to in any provision of this Indenture or the Agreement shall be held by
the Trustee in trust, and shall, while held by the Trustee, constitute part of
the Trust Estate and be subject to the lien and security interest created
hereby.
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Section 6.11. Repayment to the Bank and the Company from the Bond Fund.
Any amounts remaining in the Bond Fund, the Construction Fund, or any other fund
or account created hereunder after payment in full of the principal of, premium,
if any, and interest on the Bonds, the fees, charges and expenses of the Trustee
and all other amounts required to be paid hereunder, shall be paid as soon as
possible to the Bank unless the Bank notifies the Trustee to the contrary in
writing, in which case such amounts shall be paid directly to the Company.
Section 6.12. Letter of Credit.
(a) During the term of the Letter of Credit, the Trustee shall
draw moneys under the Letter of Credit in accordance with the terms thereof: (i)
in an amount sufficient to pay when due (whether by reason of maturity,
redemption, conversion, acceleration or otherwise) the principal of, and
interest and, to the extent the Letter of Credit covers same, any premium on the
Bonds; and (ii) in an amount sufficient to pay when due the Purchase Price of
Bonds. Within two (2) Business Days after the last Determination Date of each
month, the Trustee shall give written notice (which notice may be transmitted
via facsimile) to the Company of the amount that the Trustee will draw under the
Letter of Credit on the next Interest Payment Date.
(b) Notwithstanding any provision to the contrary which may be
contained in this Indenture, including, without limitation, Section 6.12(a): (i)
in computing the amount to be drawn under the Letter of Credit on account of the
payment of the principal or Purchase Price of, interest or, to the extent the
Letter of Credit covers same, any premium, on the Bonds, the Trustee shall
exclude any such amounts in respect of any Bonds which it is advised by the
Tender Agent (pursuant to Section 5.09(d) hereof) are Pledged Bonds prior to the
date such payment is due; and (ii) amounts drawn by the Trustee under the Letter
of Credit shall not be applied to the payment of the Purchase Price of any Bonds
which are Pledged Bonds prior to the date such payment is due.
(c) The Letter of Credit shall terminate in accordance with its
terms on the Letter of Credit Termination Date. Upon such termination, the
Trustee shall deliver the terminated Letter of Credit to the Bank, together with
such certificates as may be required by the terms of the Letter of Credit.
Section 6.13. Intentionally Omitted.
Section 6.14. Investment of Moneys in Funds. All moneys in any of the
funds established pursuant to this Indenture (except moneys obtained from a draw
on the Letter of Credit, which moneys shall be held uninvested) shall be
invested by the Trustee, as directed in writing by the Company, solely in
Investment Securities except with respect to Available Moneys held by the
Trustee for the payment of Undelivered Bonds, which Available Moneys the Trustee
shall not invest. Investment Securities may be purchased at such prices as the
Trustee may in its discretion determine or as may be directed by the Company.
All Investment Securities shall be acquired subject to the limitations as to
maturities hereinafter in this Section set forth and such additional limitations
or requirements consistent with the foregoing as may be established by request
of the Company.
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To the extent the Bank has not been reimbursed under the Reimbursement
Agreement and has notified the Trustee of same in writing, all interest, profits
and other income received from the investment of moneys in any fund established
pursuant to this Indenture shall be transferred to the Bank in the amount
specified by the Bank. Otherwise, such amounts shall be deposited to the
appropriate fund or account in which such investments were made. Notwithstanding
anything to the contrary contained in this paragraph, an amount of interest
received with respect to any Investment Security equal to the amount of accrued
interest, or premium paid, if any, paid as part of the purchase price of such
Investment Security shall be credited to the fund from which such accrued
interest was paid.
Investment Securities acquired as an investment of moneys in any fund
established under this Indenture shall be credited to such fund. For the purpose
of determining the amount in any fund, all Investment Securities credited to
such fund shall be valued at the lesser of cost or par value plus, prior to the
first payment of interest following purchase, the amount of accrued interest, if
any, paid as a part of the purchase price.
The Trustee may act as principal or agent in the making or disposing of
any investment. The Trustee may sell or present for redemption, any Investment
Securities so purchased whenever it shall be necessary to provide moneys to meet
any required payment, transfer, withdrawal or disbursement from the fund to
which such Investment Security is credited, and the Trustee shall not be liable
or responsible for any loss resulting from such investment.
ARTICLE VII
PARTICULAR COVENANTS
Section 7.01. Punctual Payment. The Authority shall punctually pay or
cause to be paid the principal, premium, if any, and interest to become due in
respect of all the Bonds, in strict conformity with the terms of the Bonds and
of this Indenture, according to the true intent and meaning thereof, but only
out of Revenues and other assets pledged for such payment as provided in this
Indenture.
Section 7.02. Extension of Payment of Bonds. The Authority shall not
directly or indirectly extend or assent to the extension of the maturity of any
of the Bonds or the time of payment of any claims for interest by the purchase
or funding of such Bonds or claims for interest or by any other arrangement and
in case the maturity of any of the Bonds or the time of payment of any such
claims for interest shall be extended, such Bonds or claims for interest shall
not be entitled, in case of any default hereunder, to the benefits of this
Indenture, except subject to the prior payment in full of the principal of all
of the Bonds then outstanding and of all claims for interest thereon which shall
not have been so extended. Nothing in this Section shall be deemed to limit the
right of the Authority to issue Bonds for the purpose of refunding any
Outstanding Bonds, and such issuance shall not be deemed to constitute an
extension of maturity of Bonds.
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Section 7.03. Against Encumbrances. The Authority shall not create, or
permit the creation of, any pledge, lien, charge or other encumbrance upon the
Revenues and other assets pledged or assigned under this Indenture while any of
the Bonds are Outstanding, except the pledge and assignment created by this
Indenture and will assist the Trustee in contesting any such pledge, lien,
charge or other encumbrance which may be created. Subject to this limitation,
the Authority expressly reserves the right to enter into one or more other
indentures for any of its corporate purposes, including other programs under the
Act, and reserves the right to issue other obligations for such purposes.
Section 7.04. Power to Issue Bonds and Make Pledge and Assignment. The
Authority represents and covenants that it is duly authorized pursuant to law to
issue the Bonds and to enter into this Indenture and to pledge and assign the
Revenues and other assets pledged and assigned, respectively, under this
Indenture in the manner and to the extent provided in this Indenture. The Bonds
and the provisions of this Indenture are and will be the legal, valid and
binding limited obligations of the Authority in accordance with their terms, and
the Authority and Trustee shall at all times, to the extent permitted by law,
defend, preserve and protect said pledge and assignment of Revenues and other
assets and all the rights of the Bondholders under this Indenture against all
claims and demands of all Persons whomsoever.
Section 7.05. Accounting Records and Financial Statements. (A) The
Trustee shall at all times keep, or cause to be kept, proper books of record and
account as shall be consistent with prudent industry practice, in which complete
and accurate entries shall be made of all transactions relating to the proceeds
of Bonds, the Revenues, the Agreement and all funds established pursuant to this
Indenture. Such books of record and account shall be available for inspection by
the Authority, the Company, the Bank and any bondholder, or his agent or
representative duly authorized in writing, at reasonable hours and under
reasonable circumstances.
(B) The Trustee shall within 30 days after the end of each
month furnish to the Company a monthly statement (which need not be audited)
covering receipts, disbursements, allocation and application of Revenues and any
other moneys (including proceeds of Bonds) in any of the funds and accounts
established pursuant to this Indenture for such month.
Section 7.06. Intentionally Omitted.
Section 7.07. Other Covenants. (A) The Trustee shall promptly collect
all amounts due from the Company pursuant to the Agreement, and upon an Event of
Default (as defined in the Agreement) shall perform all duties imposed upon it
pursuant to the Agreement and shall diligently enforce, and take all steps,
actions and proceedings reasonably necessary for the enforcement of all of the
rights of the Authority and all of the obligations of the Company.
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(B) The Authority shall not amend, modify or terminate any
of the terms of the Agreement, or consent to any such amendment, modification or
termination, without the written consent of the Trustee. The Trustee shall give
such written consent only if (1) notification of such amendment, modification or
termination has been given to each rating agency then rating the Bonds and to
the Holders, (2) the Trustee receives the written consent of the Bank, (3)(i)
such amendment, modification or termination will not materially adversely affect
the interests of the Bondholders or result in any material impairment of the
security hereby given for the payment of the Bonds or (ii) the Trustee first
obtains the written consent of the Bank and the Holders of a majority in
principal amount of the Bonds then Outstanding to such amendment, modification
or termination and provides notice of such amendment, modification or
termination and of such written consent to the Holders, provided that no such
amendment, modification or termination shall reduce the amount of installment
sale payments to be made to the Authority or the Trustee by the Company pursuant
to the Agreement, or extend the time for making such payments, without the
written consent of all of the Holders of the Bonds then Outstanding, and (4) the
Authority shall have delivered to the Trustee an opinion of Counsel satisfactory
to the Trustee that all of the provisions and conditions set forth in this
Section 7.07(B) have been satisfied.
Section 7.08. Waiver of Laws. The Authority shall not at any time
insist upon or plead in any manner whatsoever, or claim or take the benefit or
advantage of, any stay or extension provided by law now or at any time hereafter
in force that may affect the covenants and agreements contained in this
Indenture or in the Bonds, and all benefit or advantage of any such law or laws
is hereby expressly waived by the Authority to the extent permitted by law.
Section 7.09. Further Assurances. The Authority will make, execute and
deliver any and all such further indentures, instruments and assurances as may
be reasonably necessary or proper to carry out the intention or to facilitate
the performance of this Indenture and for the better assuring and confirming
unto the Holders of the Bonds of the rights and benefits provided in this
Indenture.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS
Section 8.01. Events of Default. The following events shall be Events
of Default:
(a) default in the due and punctual payment of the principal of
any Bond when and as the same shall become due and payable, whether at maturity
as therein expressed, by proceedings for redemption, by acceleration, or
otherwise; or
(b) default in the due and punctual payment of any installment
of interest on any Bond when and as the same shall become due and payable; or
(c) failure to pay the purchase price on any Bond tendered
pursuant to Article V when such payment is due; or
(d) default by the Authority in the observance of any of the
other covenants, agreements or conditions on its part in this Indenture or in
the Bonds, if such default shall have continued for a period of sixty (60) days
after written notice thereof, specifying such default and requiring the same to
be remedied, shall have been given to the Authority by the Trustee, or to the
Authority and the Trustee by the Holders of not less than twenty-five per cent
(25%) in aggregate principal amount of the Bonds at the time Outstanding; or
(e) if there occurs an Event of Default as defined in Sections
8.01(a) through (d) of the Agreement; or
(f) the Trustee's receipt of written notice from the Bank that
the Bank has declared an Event of Default under the provisions of the
Reimbursement Agreement and instructing the Trustee to declare the principal
amount of the Outstanding Bonds to be immediately due and payable; or
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(g) if, at any time after a draw under the Letter of Credit,
the Trustee shall have received notice from the Bank that the amount of such
draw corresponding to the payment of interest on the Bonds shall not be
reinstated in the amount and in the manner set forth in the Letter of Credit.
Upon actual knowledge of the existence of any Event of Default, the
Trustee shall, as soon as practicable, notify the Bank, the Company, the
Authority, the Tender Agent and the Remarketing Agent. Anything contained in
this Indenture to the contrary notwithstanding: (i) no Event of Default under
subsections (d) or (e) above shall occur without the prior written consent of
the Bank so long as the Bank is not in default under the terms of the Letter of
Credit; and (ii) the Trustee shall not notify bondholders of the existence of
any Event of Default without the prior written consent of the Bank (except upon
the occurrence of an Event of Default under subsections 8.01(f) or (g) hereof),
as long as the Bank is not in default under the terms of the Letter of Credit.
Section 8.02. Acceleration. If any Event of Default under Section 8.01
hereof occurs, the Trustee (with the written consent of the Bank provided the
Bank is not in default of its obligations under the Letter of Credit) may, and
upon request of the Owners of 25% in principal amount of the Bonds then
Outstanding shall, by written notice to the Authority, the Bank and the Company,
declare the principal amount of all Bonds then Outstanding and the interest
accrued thereon to such date (the "Acceleration Date") to be due and the
Acceleration Price (as such phrase is hereinafter defined) shall thereupon
become payable on the first (lst) Business Day following the Acceleration Date
(the "Payment Date"). Thereupon, the Trustee, among other things, shall draw
immediately upon the Letter of Credit as set forth in Section 6.12 hereof.
Interest on the accelerated Bonds shall cease to accrue on the Acceleration
Date. Accelerated Bonds shall be payable at a price equal to 100% of the
aggregate principal amount thereof plus interest accrued to the Acceleration
Date (the "Acceleration Price"). Notwithstanding anything contained herein to
the contrary, upon the occurrence of an Event of Default described in Section
8.01(f) or (g), the Trustee shall, by written notice to the Bank, the Company
and the Authority declare immediately due and payable the principal amount of,
and interest accrued on, the Outstanding Bonds.
Any such declaration is subject to the condition that if, at any time
after such declaration and before any judgment or decree for the payment of the
moneys due shall have been obtained or entered, the Letter of Credit shall have
been reinstated in full as to principal and interest and the reasonable charges
and expenses of the Trustee, and any and all other defaults known to the Trustee
(other than in the payment of principal of and interest on the Bonds due and
payable solely by reason of such declaration) shall have been made good or cured
to the satisfaction of the Trustee or provision deemed by the Trustee to be
adequate shall have been made therefor, then, and in every such case, the
Holders of not less than 25% in aggregate principal amount of the Bonds then
Outstanding, by written notice to the Authority, the Bank, the Company and the
Trustee, or the Trustee if such declaration was made by the Trustee, may, on
behalf of the Holders of all of the Bonds, rescind and annul such declaration
and its consequences and waive such default; but such rescission and annulment
shall not extend to or affect any subsequent default, and shall not impair or
exhaust any right or power in consequence thereof. The foregoing to the contrary
notwithstanding, Owners of 25% in principal amount of the Bonds then outstanding
shall have no right to request the Trustee to accelerate the Bonds under this
Section 8.02 and the Trustee shall not be obligated to give any Bondholder
notice of a default under the Indenture (except upon the occurrence of an Event
of Default under Section 8.01(f) or (g) hereof), the Agreement or any other
documents executed and delivered in connection with the Bonds without the prior
written consent of the Bank, unless the Bank shall be in default of its
obligations under the Letter of Credit or a voluntary or involuntary case has
been commenced by the filing of a petition under the Bankruptcy Code or any
other law relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts by or against the Bank.
Upon any declaration of acceleration hereunder, the Trustee shall as
soon as possible give written notice of the acceleration to the Bondholders as
set forth below. In addition, notice of such acceleration shall be mailed, by
registered or certified mail or overnight mail, to the rating agency then rating
the Bonds, if any, but failure to mail any such notice or any defect in the
mailing thereof shall not affect the validity of such acceleration. Such notice
of acceleration: (i) shall be given in the name of the Authority; (ii) shall
identify the accelerated Bonds (by name, date of issue, interest rate and
maturity date); (iii) shall specify the Acceleration Date; (iv) shall specify
the Payment Date and the Acceleration Price; (v) shall state that the interest
on the accelerated Bonds ceased to accrue on the Acceleration Date; (vi) shall
state the reason for the acceleration; and (vii) shall state that on the Payment
Date the Acceleration Price will be payable at the principal corporate trust
office of the Trustee. The Trustee shall use "CUSIP" numbers on such notices as
a convenience to Bondholders and such notice shall state that no representation
is made as to the correctness of such "CUSIP" numbers either as printed on the
Bonds or as contained in any notice of acceleration and that reliance may be
placed on the registration and description printed on the Bonds.
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Upon acceleration pursuant to this Section 8.02, the Trustee shall
immediately exercise such rights as it may have under the Agreement to declare
all payments thereunder to be immediately due and payable and shall immediately
draw upon the Letter of Credit as provided in Section 6.12 hereof in an amount
that, together with any Available Moneys on deposit in the Bond Fund (excluding
Available Moneys held by the Trustee for the Owner of any Bond not presented for
payment as provided in Section 6.09 hereof) and irrevocably committed to the
payment of principal of and interest on the Bonds, is sufficient to pay the
Acceleration Price due on the Outstanding Bonds on the Payment Date.
Upon receipt by the Trustee of any amount from the Bank under the
preceding paragraphs of this Section 8.02 (or after receipt by the Trustee of
any amounts from the Bank under any other provision of this Indenture), the Bank
shall be subrogated to the right, title and interest of the Trustee and the
Bondholders in and to the Agreement, the Project Facilities and any other
security held for the payment of the Bonds (other than said funds), all of
which, upon payment of any fees and expenses due and payable to the Trustee
pursuant to the Agreement or this Indenture, shall be assigned by the Trustee to
the Bank.
Section 8.03. Other Remedies. If any Event of Default occurs and is
continuing, the Trustee, before or after declaring the principal of the Bonds
immediately due and payable, may enforce each and every right granted to the
Authority or the Trustee under the Indenture, the Agreement, the Letter of
Credit or any other security instrument, or under any supplements or amendments
thereto, and shall, at all times complying with the provisions of Section 8.02
hereof, apply any Revenues or Available Moneys in the Bond Fund held by the
Trustee to the payment of principal of or interest on the Bonds. In exercising
such rights and the rights given the Trustee under this Article VIII, the
Trustee shall take such action, as in the judgment of the Trustee, applying the
standards described in Section 9.01 hereof, would best serve the interests of
the Bondholders.
Section 8.04. 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 Bank or the Owners of 25% in principal amount of the
Bonds then Outstanding (subject to the consent of the Bank, as long as the Bank
is not in default of its obligations under the Letter of Credit or a voluntary
or involuntary case has not been commenced by the filing of a petition under the
Bankruptcy Code or any other law relating to bankruptcy, insolvency,
reorganization, winding-up or composition or adjustment of debts by or against
the Bank) and receipt of indemnity to its satisfaction shall, in its own name:
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(A) by mandamus, other suit, action or proceeding at law or
in equity, enforce all rights of the Bondholders, including the right to require
the Authority to collect the amounts payable under the Agreement and to require
the Authority to carry out any other provisions of this Indenture for the
benefit of the Bondholders and to perform its duties under the Act;
(B) bring suit upon the Bonds;
(C) by action or suit in equity require the Authority to
account as if it were the trustee of an express trust for the Bondholders; and
(D) by action or suit in equity enjoin any acts or things
that may be unlawful or in violation of the rights of the Bondholders.
Section 8.05. Discontinuance of Proceedings by Trustee. If any
proceeding taken by the Trustee on account of any Event of Default is
discontinued or is determined adversely to the Trustee, the Authority, the
Trustee, the Bondholders and the Bank shall be restored to their former
positions and rights hereunder as though no such proceeding had been taken, but
subject to the limitations of any such adverse determination.
Section 8.06. Bondholders May Direct Proceedings. The Holders of a
majority in principal amount of the Bonds Outstanding hereunder shall have the
right to direct the method and place of conducting all remedial proceedings by
the Trustee hereunder, provided that such direction shall not be otherwise than
in accordance with law or the provisions of this Indenture, and that the Trustee
shall not be required to comply with any such direction which it deems to be
unlawful or unjustly prejudicial to Bondholders not parties to such direction.
The foregoing provisions of this Section 8.06 to the contrary notwithstanding,
as long as the Bank shall not be in default under the Letter of Credit, the Bank
shall have the right to direct the method and the place of conducting all
remedial proceedings by the Trustee hereunder provided that such direction shall
not be otherwise than in accordance with law or the provisions of this
Indenture.
Section 8.07. Limitations on Actions by Bondholders. Anything in this
Indenture to the contrary notwithstanding, no bondholder shall have any right to
pursue any remedy hereunder or under the Agreement unless:
(a) the Trustee shall have been given written notice of an
Event of Default;
(b) the holders of at least 25% in aggregate principal amount
of the Bonds 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;
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(c) the Trustee shall have been offered indemnity satisfactory
to it against costs, expenses and liabilities;
(d) the Trustee shall have failed to comply with such request
within a reasonable time; and
(e) the Bank shall be in default of its obligations under the
Letter of Credit or a voluntary or involuntary case has been commenced by the
filing of a petition under the Bankruptcy Code or any other law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or adjustment
of debts by or against the Bank; provided, however, that nothing herein shall
affect or impair the right of any Owner of any Bond to enforce payment of the
principal thereof and interest thereon at and after the maturity thereof, or the
obligation of the Authority to pay such principal and interest to the respective
Owners of the Bonds at the time and place, from the source and in the manner
expressed herein and in the Bonds, provided further that such action shall not
disturb or prejudice the lien of this Indenture.
Section 8.08. Trustee May Enforce Rights Without Possession of Bonds.
All rights under the Indenture and the Bonds may be enforced by the Trustee
without the possession of any Bonds or the production thereof at the trial or
other proceedings relative thereto, and any proceedings instituted by the
Trustee shall be brought in its name for the ratable benefit of the Owners of
the Bonds.
Section 8.09. Delays and Omissions Not to Impair Rights. No delay or
omission in respect of exercising any right or power accruing upon any Event of
Default shall impair such right or power or be a waiver of such Event of Default
and every remedy given by this Article VIII may be exercised, from time to time,
and as often as may be deemed expedient.
Section 8.10. Application of Moneys in Event of Default. Any money
received by the Trustee under this Article VIII shall be applied in the order
listed below (provided that any money received by the Trustee upon a drawing
under the Letter of Credit together with Available Moneys on deposit in the Bond
Fund and available for payment of principal and interest on all Outstanding
Bonds, any money held by the Trustee upon the nonpresentment of Bonds and any
money held by the Trustee for the defeasance of Bonds pursuant to Article XI
shall be applied only as provided in clause (B) below and only to pay
outstanding principal and accrued interest, as provided in the Letter of Credit,
with respect to the Bonds):
(A) To the payment of the fees and expenses of the Trustee
and the Authority including reasonable counsel fees and expenses, and any
disbursements of the Trustee with interest thereon and its reasonable
compensation;
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(B) To the payment of principal and interest then owing on
the Bonds, including any interest on overdue interest, and in case such money
shall be insufficient to pay the same in full, then to the payment of principal
and interest ratably, without preference or priority of one over another or of
any installment of principal or interest over any other installment of principal
or interest; and
The surplus, if any, remaining after the application of the money as
set forth above shall to the extent of any unreimbursed drawing under the Letter
of Credit, or other obligations owing by the Company to the Bank under the
Reimbursement Agreement, be paid to the Bank. Any remaining money shall be paid
to the Company or the person lawfully entitled to receive the same as a court of
competent jurisdiction may direct.
Section 8.11. Trustee and Bondholders Entitled to All Remedies Under
Act; Remedies Not Exclusive. It is the purpose of this Article VIII to provide
to the Trustee and the Bondholders all rights and remedies as may be lawfully
granted under the provisions of the Act; but should any remedy herein granted be
held unlawful, the Trustee and the Bondholders shall nevertheless be entitled to
every remedy permitted by the Act. It is further intended that, insofar as
lawfully possible, the provisions of this Article VIII shall apply to and be
binding upon any trustee or receiver appointed under the Act.
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 8.12. Trustee's Right to Receiver. As provided by the Act, the
Trustee shall be entitled as of right to the appointment of a receiver; and the
Trustee, the Bondholders and any receiver so appointed shall have such rights
and powers and be subject to such limitations and restrictions as may be
contained in or permitted by the Act.
Section 8.13. Subrogation Rights of Bank. The Trustee agrees that the
Bank or other provider of a Substitute Letter of Credit shall be subrogated to
all rights, remedies and collateral of the Trustee under the Indenture, the
Agreement or any other document or instrument, to the extent the Bank or other
provider of a Substitute Letter of Credit has honored a draw under the Letter of
Credit or Substitute Letter of Credit, as the case may be, and has not been
reimbursed or paid therefor.
Section 8.14. Waiver of Default. As long as the Bank is not in default
of its obligations under the Letter of Credit and the Letter of Credit is in
full force and effect, the Bank may waive an Event of Default and if the Bank
does so, the Trustee must also waive such Event of Default. The Trustee may not
waive an Event of Default under this Indenture if the Letter of Credit has not
been reinstated to cover principal and interest on the Bonds in accordance with
the terms of the Letter of Credit.
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ARTICLE IX
THE TRUSTEE, THE TENDER AGENT
AND THE REMARKETING AGENT
Section 9.01. Duties, Immunities and Liabilities of Trustee. (A) The
Trustee shall, prior to an Event of Default, and after the curing of all Events
of Default which may have occurred, perform such duties and only such duties as
are specifically set forth in this Indenture. The Trustee shall, during the
existence of any Event of Default (which has not been cured or waived), exercise
such of the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
(B) At the written direction of the Company, the Authority
shall remove the Trustee if at any time requested to do so by an instrument or
concurrent instruments in writing executed by the Holders of not less than a
majority in aggregate principal amount of the Bonds then Outstanding (or their
attorneys duly authorized in writing) or if at any time the Trustee shall cease
to be eligible to act in such capacity, or shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its
property shall be appointed, or any public officer shall take control or charge
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, in each case by giving written notice of such
removal to the Trustee, and thereupon shall appoint, with the consent of the
Bank and the Company, a successor Trustee by an instrument in writing.
(C) The Trustee may at any time resign by giving written
notice of such resignation to the Authority, the Company and the Bank and by
giving the Bondholders notice of such resignation by mail at the addresses shown
on the registration books maintained by the Trustee. Upon receiving such notice
of resignation, the Authority shall promptly appoint, with the consent of the
Bank and the Company, a successor Trustee by an instrument in writing.
(D) Any removal or resignation of the Trustee and
appointment of a successor Trustee shall become effective upon acceptance of
appointment by the successor Trustee. If no successor Trustee shall have been
appointed and have accepted appointment within forty-five (45) days of giving
notice of removal or notice of resignation as aforesaid, the resigning Trustee
or any Bondholder (on behalf of himself and all other Bondholders) may petition
any court of competent jurisdiction for the appointment of a successor Trustee,
and such court may thereupon, after such notice (if any) as it may deem proper,
appoint such successor Trustee. Any successor Trustee appointed under this
Indenture, shall signify its acceptance of such appointment by executing and
delivering to the Authority and to its predecessor Trustee a written acceptance
thereof, and thereupon such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the moneys, estates, properties,
rights, powers, trusts, duties and obligations of such predecessor Trustee, with
like effect as if originally named Trustee herein; but, nevertheless at the
request of the Authority or the request of the successor Trustee, such
predecessor Trustee shall execute and deliver any and all instruments of
conveyance or further assurance and do such other things as may reasonably be
required for more fully and certainly vesting in and confirming to such
successor Trustee all the right, title and interest of such predecessor Trustee
in and to any property held by it under this Indenture and shall pay over,
transfer, assign and deliver to the successor Trustee any money or other
property subject to the trusts and conditions herein set forth. Upon request of
the successor Trustee, the Authority shall execute and deliver any and all
instruments as may be reasonably required for more fully and certainly vesting
in and confirming to such successor Trustee all such moneys, estates,
properties, rights, powers, trusts, duties and obligations. Upon the acceptance
of the appointment by a successor Trustee as provided in this subsection, the
Authority shall mail a notice of the succession of such Trustee to the trusts
hereunder to the Rating Agency and to the Bondholders at the addresses shown on
the registration books maintained by the Trustee. If the Authority fails to mail
such notice within fifteen (15) days after acceptance of appointment by the
successor Trustee, the successor Trustee shall cause such notice to be mailed at
the expense of the Authority.
(E) Any Trustee appointed under the provisions of this
Section in succession to the Trustee shall be a trust company or bank having the
powers of a trust company, having a corporate trust office in the Commonwealth,
having a combined capital and surplus of at least One Hundred Million Dollars
($100,000,000), subject to supervision or examination by federal or state
authorities and shall be rated at least Baa3/P-3 by Moody's if the Bonds are
then rated by Moody's or has received written evidence from Moody's that the use
of such Trustee would not result in a reduction or withdrawal of the rating on
the Bonds. If such bank or trust company publishes a report of condition at
least annually, pursuant to law or to the requirements of any supervising or
examining authority above referred to, then for the purpose of this subsection
the combined capital and surplus of such bank or trust company shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
condition so published.
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Section 9.02. Merger or Consolidation. Any company into which the
Trustee may be merged or converted or with which it may be consolidated or any
company resulting from any merger, conversion or consolidation to which it shall
be a party or any company to which the Trustee may sell or transfer all or
substantially all of its corporate trust business, provided such company shall
be eligible under subsection (E) of Section 9.01, shall be the successor to such
Trustee without the execution or filing of any paper or any further act,
anything herein to the contrary notwithstanding.
Section 9.03. Liability of Trustee. (A) The recitals of facts herein
and in the Bonds contained shall be taken as statements of the Authority, and
the Trustee shall assume no responsibility for the correctness of the same, or
make any representations as to the validity or sufficiency of this Indenture or
of the Bonds or shall incur any responsibility in respect thereof, other than in
connection with the duties or obligations herein or in the Bonds assigned to or
imposed upon it. The Trustee shall, however, be responsible for its
representations contained in its certificate of authentication on the Bonds. The
Trustee shall not be liable in connection with the performance of its duties
hereunder, except for its own gross negligence or willful misconduct. The
Trustee may become the owner of Bonds with the same rights it would have if it
were not Trustee and, to the extent permitted by law, may act as depositary for
and permit any of their officers or directors to act as a member of, or in any
other capacity with respect to, any committee formed to protect the rights of
Bondholders, whether or not such committee shall represent the Holders of a
majority in principal amount of the Bonds then Outstanding.
(B) The Trustee shall not be liable for any error of
judgment made in good faith by a responsible officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts.
(C) The Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a majority in aggregate principal
amount of the Bonds at the time Outstanding relating to the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee under this Indenture.
(D) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture (other than the
making of a draw under the Letter of Credit in accordance with its terms and the
terms hereof, declaring the principal of the Bonds to be immediately due and
payable when required hereunder or making payments on the Bonds when due) at the
request, order or direction of any of the Bondholders pursuant to the provisions
of this Indenture unless such Bondholders shall have offered to the Trustee
indemnification to its satisfaction for indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby.
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(E) The Trustee shall not be liable for any action taken
by it in good faith and believed by it to be authorized or within the discretion
or rights or powers conferred upon it by this Indenture.
Section 9.04. Right of Trustee to Rely on Documents. The Trustee may
conclusively rely, and shall be protected in acting upon any notice, resolution,
request, consent, order, certificate, report, opinion, bond or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties. The Trustee may consult with counsel, who may be
counsel of or to the Authority, with regard to legal questions, and the opinion
of such counsel shall be full and complete authorization and protection in
respect of any action taken or suffered by it hereunder in good faith and in
accordance therewith.
The Trustee shall not be bound to recognize any person as the Holder of
a Bond unless and until such Bond is submitted for inspection, if required, and
his title thereto is satisfactorily established, if disputed.
Whenever in the administration of the trusts imposed upon it by this
Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or suffering any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
Certificate of the Authority, and such Certificate shall be full warrant to the
Trustee for any action taken or suffered in good faith under the provisions of
this Indenture in reliance upon such Certificate, but in its discretion the
Trustee may, in lieu thereof, accept other evidence of such matter or may
require such additional evidence as it may deem reasonable.
Section 9.05. Preservation and Inspection of Documents.
(A) All documents received by the Trustee under the
provisions of this Indenture shall be retained in its possession and shall be
subject during normal business hours of the Trustee to the inspection of the
Authority, the Company and any Bondholder, and their agents and representatives
duly authorized in writing, at reasonable hours and under reasonable conditions.
(B) The Trustee covenants and agrees that it shall
maintain a current list of the names and addresses of all the Bondholders.
Section 9.06. Compensation. The Trustee shall be paid (solely from
Additional Payments) from time to time reasonable compensation for all services
rendered under this Indenture, and also all reasonable expenses, charges, legal
and consulting fees and other disbursements and those of its attorneys, agents
and employees, incurred in and about the performance of its powers and duties
under this Indenture.
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Section 9.07. The Tender Agent. Dauphin Deposit Bank and Trust Company,
the initial Tender Agent appointed by the Company, and each successor tender
agent appointed in accordance herewith, shall designate its office and signify
its acceptance of the duties and obligations imposed upon it as described herein
by a written instrument of acceptance delivered to the Trustee and the Company
under which the Tender Agent shall, among other things:
(a) hold all Bonds delivered to it hereunder in trust for the
benefit of the respective Owners of Bonds which shall have so delivered such
Bonds until moneys representing the Purchase Price of such Bonds shall have been
delivered to or for the account of or to the order of such Owners of Bonds. Upon
delivery of moneys representing the Purchase Price of such Bonds to or for the
account of or to the order of such Owners of Bonds, the Tender Agent shall hold
all such Bonds which are required to be delivered to the Pledged Bonds Custodian
pursuant to Section 5.06(b) hereof, as the agent of the Bank for the purpose of
perfecting the Bank's security interest therein under the Pledge Agreement
(which agency shall terminate upon delivery of such Bonds by the Tender Agent to
or upon the order of the Bank in accordance with such Section 5.06(b); and
(b) hold all moneys delivered to it hereunder and under the
Tender Agent Agreement for the purchase of such Bonds in a separate account in
trust for the benefit of the person or entity which shall have so delivered such
moneys until required to transfer such funds as provided herein.
Section 9.08. Qualifications of Tender Agent.
(a) The Tender Agent shall be a bank or trust company duly
organized under the laws of the United States or any state or territory thereof,
having a combined capital stock, surplus and undivided profits of at least Fifty
Million Dollars ($50,000,000) or that is a wholly-owned subsidiary of such a
bank or trust company, and authorized by law to perform all duties imposed upon
it by this Indenture and shall be rated at least Baa3/P-3 by Moody's if the
Bonds are then rated by Moody's, or has received written evidence from Moody's
that the use of such Tender Agent would not result in a reduction or withdrawal
of the rating on the Bonds. The Tender Agent may at any time resign and be
discharged of its duties and obligations by giving at least sixty (60) days'
written notice to the Authority, the Trustee, the Remarketing Agent, the Bank,
and the Company; provided that such resignation shall not take effect until the
appointment of a successor Tender Agent, and in accordance with the provisions
hereof. Upon the written approval of the Bank, the Tender Agent may be removed
at any time by the Company upon written notice to the Authority, the Trustee and
the Remarketing Agent. Successor Tender Agents may be appointed from time to
time by the Company, with the prior written consent of the Bank.
(b) Upon the resignation or removal of the Tender Agent, the
Tender Agent shall deliver any Bonds and moneys held by it in such capacity to
its successor.
(c) The Tender Agent shall have the same rights and immunities
granted to the Trustee hereunder.
Section 9.09. Qualifications of Remarketing Agent; Resignation;
Removal. The Remarketing Agent shall be a financial institution or registered
broker/dealer authorized by law to perform all the duties imposed upon it by
this Indenture. The Remarketing Agent may at any time resign and be discharged
of its duties and obligations created by this Indenture giving at least thirty
(30) days' written notice to the Authority, the Company and the Trustee. The
Remarketing Agent may be removed at any time, upon not less than thirty (30)
days' written notice from the Company filed with the Trustee. Upon the
resignation or removal of the Remarketing Agent, the Company shall appoint a
successor Remarketing Agent and shall provide written notice thereof to the
Trustee. The resignation or removal of the Remarketing Agent shall not become
effective until a successor Remarketing Agent is appointed and accepts such
appointment. If the Bonds are rated by a Rating Agency, any successor
Remarketing Agent shall be rated at least Baa3/P-3 or otherwise be acceptable to
such Rating Agency.
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Section 9.10. Construction of Ambiguous Provisions. The Trustee may
construe any provision hereof insofar as such may appear to be ambiguous or
inconsistent with any other provision hereof; and any construction of any such
provision by the Trustee, in good faith shall be binding upon the Owners of the
Bonds.
ARTICLE X
MODIFICATION OR AMENDMENT OF THE INDENTURE
Section 10.01. Amendments Permitted. This Indenture and the rights and
obligations of the Authority, of the Trustee and of the Holders of the Bonds may
be modified or amended, from time to time, and at any time, for any lawful
purpose, by an indenture or indentures supplemental hereto, which the Authority
and the Trustee may enter into without the consent of any Bondholders but with
the prior written consent of the Company and the Bank (as long as the Bank is
not in default under the Letter of Credit). The foregoing to the contrary
notwithstanding, no such modification or amendment shall, without the written
consent of the Company and the holders of all Bonds then Outstanding: (i) extend
the maturity date of any Bond; (ii) reduce the amount of principal thereof;
(iii) extend the time of payment or change the method of computing the rate of
interest thereon, without the consent of the Holder of each Bond so affected, or
eliminate the Holders' rights to tender the Bonds; (iv) extend the due date for
the purchase of Bonds tendered by the Holders thereof; or (v) reduce the
purchase price of such Bonds. It shall not be necessary for the consent of the
Bondholders to approve the particular form of any Supplemental Indenture, but it
shall be sufficient if such consent shall approve the substance thereof.
Promptly after the execution by the Authority and the Trustee of any
Supplemental Indenture pursuant to this Section 10.01, the Trustee shall mail a
notice, setting forth in general terms the substance of such Supplemental
Indenture, to each rating agency then rating the Bonds and the Holders of the
Bonds at the address shown on the registration books of the Trustee. Any failure
to give such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such Supplemental Indenture.
Section 10.02. Effect of Supplemental Indenture. Upon the execution of
any Supplemental Indenture pursuant to this Article, this Indenture shall be
deemed to be modified and amended in accordance therewith, and the respective
rights, duties and obligations under this Indenture of the Authority, the
Trustee and all Holders of Bonds Outstanding shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modification
and amendment, and all the terms and conditions of any such Supplemental
Indenture shall be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.
Section 10.03. Trustee Authorized to Join in Amendments and
Supplements; Reliance on Counsel. The Trustee is authorized to join with the
Authority in the execution and delivery of any supplemental indenture or
amendment permitted by this Article X 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 Authority and that all things
necessary to make it a valid and binding agreement have been done.
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ARTICLE XI
DEFEASANCE
Section 11.01. Discharge of Indenture. The Bonds may be paid by the
Authority in any of the following ways, provided that the Authority also pays or
causes to be paid any other sums payable hereunder by the Authority:
(a) by paying or causing to be paid the principal of and
interest on the Bonds of such Series, as and when the same become due and
payable;
(b) with respect to Bonds which bear interest at a Fixed Rate,
by depositing with the Trustee, in trust, Available Moneys or securities
purchased with Available Moneys in the necessary amount (as provided in Section
11.03) to pay or redeem all Bonds then Outstanding; or
(c) by delivering to the Trustee, for cancellation by it, the
Bonds then Outstanding.
If the Authority shall also pay or cause to be paid all Bonds then
Outstanding and shall also pay or cause to be paid all other sums payable
hereunder by the Authority, then and in that case, at the election of the
Authority (evidenced by a Certificate of the Authority filed with the Trustee,
signifying the intention of the Authority to discharge all such indebtedness and
this Indenture), and notwithstanding that any Bonds shall not have been
surrendered for payment, this Indenture, the assignment of the Agreement and the
pledge of Revenues and other assets made under this Indenture and all covenants,
agreements and other obligations of the Authority under this Indenture shall
cease, terminate, become void and be completely discharged and satisfied. In
such event, upon request of the Authority, the Trustee shall cause an accounting
for such period or periods as may be requested by the Authority to be prepared
and filed with the Authority and shall execute and deliver to the Authority all
such instruments, as prepared by or caused to be prepared by the Authority, that
may be necessary or desirable to evidence such discharge and satisfaction, and
the Trustee shall pay over, transfer, assign or deliver all moneys or securities
or other property held by it pursuant to this Indenture, which are not required
for: (i) the payment of all the charges and reasonable expenses of the Trustee
under this Indenture; (ii) the payment or redemption of Bonds not theretofore
surrendered for such payment or redemption; or (iii) the payment of amounts owed
to the Bank by the Company under the Reimbursement Agreement, to the Company.
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Section 11.02. Discharge of Liability on Bonds. During the Fixed Rate
Period, upon the deposit with the Trustee, in trust, at or before maturity, of
money or securities in the necessary amount (as provided in Section 11.03) to
pay or redeem any Outstanding Bond (whether upon or prior to the end of the
Fixed Rate Period or the redemption date of such Bond), provided that, if such
Bond is to be redeemed prior to maturity, notice of such redemption shall have
been given as in Article IV provided or provision satisfactory to the Trustee
shall have been made for the giving of such notice, then all liability of the
Authority in respect of such Bond shall cease, terminate and be completely
discharged, and the Holder thereof shall thereafter be entitled only to payment
out of such money or securities deposited with the Trustee as aforesaid for
their payment, subject, however, to the provisions of Section 11.04.
The Authority may at any time surrender to the Trustee for cancellation
by it any Bonds previously issued and delivered, which the Authority may have
acquired in any manner whatsoever, and such Bonds, upon such surrender and
cancellation, shall be deemed to be paid and retired.
Section 11.03. Deposit of Money or Securities with Trustee. During the
Fixed Rate Period, whenever in this Indenture it is provided or permitted that
there be deposited with or held in trust by the Trustee money or securities in
the necessary amount to pay or redeem any Bonds, the money or securities so to
be deposited or held shall be cash or Government Obligations, which Government
Obligations shall be noncallable and not subject to prepayment, the principal of
and interest on which when due will provide money sufficient to pay the
principal of, premium, if any, and all unpaid interest to maturity, or to the
redemption date, as the case may be, on the Bonds to be paid or redeemed, as
such principal, premium, if any, and interest become due, provided that, in the
case of Bonds which are to be redeemed prior to the maturity thereof, notice of
such redemption shall have been given as provided in Article IV or provision
satisfactory to the Trustee shall have been made for the giving of such notice;
provided, in each case, that the Trustee shall have been irrevocably instructed
(by Request of the Authority) to apply such money to the payment of such
principal and interest with respect to such Bonds.
Whenever Government Obligations are deposited with the Trustee in
accordance with Section 11.03 hereof, the Company shall provide to the Trustee
and the Rating Agency: (i) a verification report from an independent public
accountant, satisfactory in form and content to the Trustee, demonstrating that
the Government Obligations so deposited and the income therefore shall be
sufficient to pay the principal of, premium, if any, and all unpaid interest to
maturity, or to the redemption date, as the case may be, on the Bonds to be paid
or redeemed, as such principal or premium, if any, and interest become due; and
(ii) an opinion acceptable to the Rating Agency, of nationally recognized
bankruptcy counsel, to the effect that the provision for payment of the Bonds
contemplated to be made pursuant to this Section 11.03 will not constitute or
result in such payments constituting voidable preferences under Section 547 of
the Bankruptcy Code.
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Section 11.04. Payment of Bonds After Discharge of Indenture.
Notwithstanding any provisions of this Indenture, any moneys held by the Trustee
in trust for the payment of the principal of, premium, if any, or interest on,
any Bonds and remaining unclaimed for five years after the principal of all of
the Bonds has become due and payable (whether at maturity or upon call for
redemption or by acceleration as provided in this Indenture), if such moneys
were so held at such date, or five years after the date of deposit of such
moneys if deposited after said date when all of the Bonds became due and
payable, shall be repaid to the Company, upon its written request, free from the
trusts created by this Indenture and all liability of the Trustee with respect
to such moneys shall thereupon cease; provided, however, that before the
repayment of such moneys to the Company as aforesaid, the Trustee may (at the
cost and request of the Company) first mail to the Holders of Bonds which have
not been paid, at the addresses last shown on the registration books maintained
by the Trustee, a notice, in such form as may be deemed appropriate by the
Trustee with respect to the Bonds so payable and not presented and with respect
to the provisions relating to the repayment to the Company of the moneys held
for the payment thereof.
ARTICLE XII
MISCELLANEOUS
Section 12.01. Liability of Authority Limited to Revenues.
Notwithstanding anything to the contrary contained in this Indenture or in the
Bonds, the Authority shall not be required to advance any moneys derived from
any source other than the Revenues and other assets pledged under this Indenture
for any of the purposes in this Indenture mentioned, whether for the payment of
the principal of or interest on the Bonds or for any other purpose of this
Indenture. Notwithstanding any provisions of this Indenture to the contrary, no
recourse under or upon any obligation, covenant or agreement contained herein or
in any Bond shall be had against the Authority, it being expressly agreed and
understood that the obligations of the Authority hereunder, and under the Bonds
and elsewhere, are solely corporate obligations of the Authority and shall be
enforceable only out of the Authority's interest in this Indenture and the
Agreement (except for the Authority's rights to payment of certain costs, fees
and expenses as set forth in this Indenture, the Agreement and elsewhere) and
there shall be no other recourse against the Authority or any property now or
hereafter owned by it and after entry of judgment against the Authority by
virtue of the power herein contained, the Authority shall mark the judgment
index to the effect that the judgment is limited as aforesaid.
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Section 12.02. Limitation of Liability of Directors, Etc., of
Authority. No covenant, agreement, provision or obligation contained herein
shall be deemed to be a covenant, agreement or obligation of any present or
future director, commissioner, officer, employee, member or agent of the
Authority in his individual capacity, and neither the members of the Authority
nor any officer thereof shall be liable personally on this Indenture or any of
the Bonds or be subject to any personal liability or accountability by reason of
the issuance thereof or this Indenture. No director, commissioner, officer,
employee, member or agent of the Authority shall incur any personal liability
with respect to any other action taken by him pursuant to this Indenture or the
Act. Notwithstanding anything contained herein to the contrary, the liability of
the Authority, including its officers, members, and employees, under any and all
of the documentation executed in connection with the issuance of the Bonds shall
not constitute its general obligation and recourse against the Authority on the
documentation executed in connection with the issuance of the Bonds shall be had
only against the property specifically pledged as security therefor and any
rents, issues or profits thereof. It is expressly understood that the Authority
shall not otherwise be obligated and that none of its members, officers, or
employees shall be in any way obligated for any costs, expenses, fees or other
obligations or liabilities incurred or imposed in connection with the issuance
of the Bonds, whether incurred prior to or after closing, and that recourse
against the Authority and its members, officers, or employees, shall be limited
as set forth herein.
Section 12.03. Covenant Not to Sue. The forms of Bonds provide that the
owners of the Bonds agree not to sue the Authority or any of its board members,
officers, agents or employees, past, present or future except as provided herein
and in the Agreement as a condition of, and in consideration for, the issuance
of the Bonds; accordingly, except as provided herein and in the Agreement, the
Trustee shall not be permitted to sue the Authority, on behalf of the owners of
the Bonds.
Section 12.04. Successor Is Deemed Included in All References to
Predecessor. Whenever in this Indenture either the Authority or the Trustee is
named or referred to, such reference shall be deemed to include the successors
or assigns thereof, and all the covenants and agreements in this Indenture
contained by or on behalf of the Authority or the Trustee shall bind and inure
to the benefit of the respective successors and assigns thereof whether so
expressed or not.
Section 12.05. Limitation of Rights to Parties, Bank, Company and
Bondholders. Nothing in this Indenture or in the Bonds expressed or implied is
intended or shall be construed to give to any person other than the Authority,
the Trustee, the Bank, the Company and the Holders of the Bonds, any legal or
equitable right, remedy or claim under or in respect of this Indenture or any
covenant, condition or provision therein or herein contained; and all such
covenants, conditions and provisions are and shall be held to be for the sole
and exclusive benefit of the Authority, the Trustee, the Bank, the Company and
the Holders of the Bonds.
Section 12.06. Waiver of Notice. Whenever in this Indenture the giving
of notice by mail or otherwise is required, the giving of such notice may be
waived in writing by the person entitled to receive such notice and in any such
case the giving or receipt of such notice shall not be a condition precedent to
the validity of any action taken in reliance upon such waiver.
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Section 12.07. Severability of Invalid Provisions. If any one or more
of the provisions contained in this Indenture or in the Bonds shall for any
reason be held to be invalid, illegal or unenforceable in any respect, then such
provision or provisions shall be deemed severable from the remaining provisions
contained in this Indenture and such invalidity, illegality or unenforceability
shall not affect any other provision of this Indenture, and this Indenture shall
be construed as if such invalid or illegal or unenforceable provision had never
been contained herein. The Authority hereby declares that it would have entered
into this Indenture and each and every other Section, paragraph, sentence,
clause or phrase hereof and authorized the issuance of the Bonds pursuant
thereto irrespective of the fact that any one or more Sections, paragraphs,
sentences, clauses or phrases of this Indenture may be held illegal, invalid or
unenforceable.
Section 12.08. Notices. All notices to Bondholders shall be given by
telex, telegram, telecopier or other telecommunication device unless otherwise
provided herein and confirmed in writing as soon as practicable. All such
notices shall also be sent to the Holder and any person designated by any Holder
to receive copies of such notices. Any notice to or demand upon the Trustee may
be served or presented, and such demand may be made, at the Principal Corporate
Trust Office of the Trustee, or at such other address as may have been filed in
writing by the Trustee with the Authority. Any notice to or demand upon the
Trustee, the Authority, the Company, the Remarketing Agent, the Tender Agent or
the Bank shall be deemed to have been sufficiently given or served for all
purposes by being delivered or sent by telex or by being deposited, postage
prepaid, in a post office letter box, addressed, as the case may be,
To the Trustee: Dauphin Deposit Bank and Trust Company
213 Market Street
Harrisburg, PA 17101
Attention: Corporate Trust Services
To the Authority: Montgomery County Industrial Development Authority
3 Stoney Creek Office Center
Norristown, Pennsylvania 19401
Attention: Executive Director
(or such other address as may have been filed in writing by the Authority with
the Trustee),
To the Company: Collegeville Inn Conference & Training Center, Inc.
Box 725
Kimberton Road
Kimberton, Pennsylvania 19442
Attention: Controller
(or such other address as may have been filed in writing by the Company with the
Trustee),
To the Remarketing Agent: CoreStates Capital Markets
601 Penn Street
Penn Square Center - 4th Floor
Reading, Pennsylvania 19601
Attention: Sales and Underwriting Department
(or such other address as may have been filed in writing by the Remarketing
Agent with the Trustee),
To the Tender Agent: Dauphin Deposit Bank and Trust Company
213 Market Street
Harrisburg, PA 17101
Attention: Corporate Trust Services
(or such other address as may have been filed in writing by the Tender Agent
with the Trustee),
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To the Bank: CoreStates Bank, N.A.
Great Valley Corporate Center
55 Valley Stream Parkway
Suite 200
Malvern, Pennsylvania 19355
Attention: Mr. Michael Bailey, Vice President
(or such other address as may have been filed in writing by the Bank with the
Trustee).
Section 12.09. Evidence of Rights of Bondholders. Any request, consent
or other instrument required or permitted by this Indenture to be executed by
Bondholders may be in any number of concurrent instruments of substantially
similar tenor and shall be signed or executed by such Bondholders in person or
by an agent or agents duly appointed in writing. Proof of the execution of any
such request, consent or other instrument or of a writing appointing any such
agent, or of the holding by any person of Bonds transferable by delivery, shall
be sufficient for any purpose of this Indenture and shall be conclusive in favor
of the Trustee and of the Authority if made in the manner provided in this
Section.
The fact and date of the execution by any person of any such request,
consent or other instrument or writing may be proved by the certificate of any
notary public or other officer of any jurisdiction, authorized by the laws
thereof to take acknowledgments of deeds, certifying that the person signing
such request, consent or other instrument acknowledged to him the execution
thereof, or by an affidavit of a witness of such execution duly sworn to before
such notary public or other officer.
The ownership of Bonds shall be proved by the bond registration books
held by the Trustee.
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Any request, consent, or other instrument or writing of the Holder of
any Bond shall bind every future Holder of the same Bond and the Holder of every
Bond issued in exchange therefor or in lieu thereof, in respect of anything done
or suffered to be done by the Trustee or the Authority in accordance therewith
or in reliance thereon.
Section 12.10. Disqualified Bonds. In determining whether the Holders
of the requisite aggregate principal amount of Bonds have concurred in any
demand, request, direction, consent or waiver under this Indenture, Bonds which
are owned or held by or for the account of the Authority or the Company, or by
any other obligor on the Bonds, or by any person directly or indirectly
controlling or controlled by, or under direct or indirect common control with,
the Authority, the Company, or any other obligor on the Bonds, shall be
disregarded and deemed not to be Outstanding for the purpose of any such
determination. Bonds so owned which have been pledged in good faith may be
regarded as Outstanding for the purposes of this Section if the pledgee shall
establish to the satisfaction of the Trustee the pledgee's right to vote such
Bonds and that the pledgee is not a person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, the Authority or
the Company, or any other obligor on the Bonds. In case of a dispute as to such
right, any decision by the Trustee taken upon the advice of counsel shall be
full protection to the Trustee.
Section 12.11. Money Held for Particular Bonds. The money held by the
Trustee for the payment of the interest, principal or premium due on any date
with respect to particular Bonds (or portions of Bonds in the case of registered
Bonds redeemed in part only) shall, on and after such date and pending such
payment, be set aside on its books and held uninvested in trust by it for the
Holders of the Bonds entitled thereto, subject, however, to the provisions of
Section 11.04 hereof.
Section 12.12. Funds. Any fund required by this Indenture to be
established and maintained by the Trustee may be established and maintained in
the accounting records of the Trustee, either as a fund or an account, and may,
for the purposes of such records, any audits thereof and any reports or
statements with respect thereto, be treated either as a fund or as an account;
but all such records with respect to all such funds shall at all times be
maintained in accordance with current industry standards, to the extent
practicable, and with due regard for the requirements of Section 7.05 hereof and
for the protection of the security of the Bonds and the rights of every holder
thereof.
Section 12.13. Payments Due on Days other than Business Days. If a
payment day is not a Business Day at the place of payment, then payment may be
made at that place on the next Business Day and no interest shall accrue for the
intervening period.
Section 12.14. Execution in Several Counterparts. This Indenture may be
executed in any number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original; and all such counterparts, or as many
of them as the Authority and the Trustee shall preserve undestroyed, shall
together constitute but one and the same instrument.
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Section 12.15. Notices to Rating Agency. Written notice shall be
provided by the Trustee to each Rating Agency of: (i) the appointment of any
successor Trustee, Tender Agent, Paying Agent or Remarketing Agent; (ii) any
Supplemental Indenture or any amendment to the Agreement or the Letter of
Credit; (iii) the expiration, termination, extension or substitution of the
Letter of Credit; (iv) the payment of all Outstanding Bonds; (v) the conversion
of the Bonds to the Fixed Rate; (vi) the mandatory tender of Bonds in accordance
with Sections 5.01 or 5.03 hereof; or (vii) the acceleration of the Bonds. Any
notice required to be delivered to Moody's hereunder shall be deemed to have
been sufficiently given or served for all purposes by being delivered or by
being deposited, postage prepaid, in a post office letter box, addressed to
Moody's Investors Service, 99 Church Street, New York, New York 10007,
Attention, Secured Finance Group.
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IN WITNESS WHEREOF, MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
has caused this Indenture to be executed in its name by its Chairperson or Vice
Chairman and attested by its Secretary, and DAUPHIN DEPOSIT BANK AND TRUST
COMPANY, as evidence of its acceptance of the trusts created hereunder, has
caused this Indenture to be signed in its corporate name by its duly authorized
officer and attested, all as of the day and year first above written.
MONTGOMERY COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
By__________________________________
Chairperson
(Vice) Chairman
[SEAL]
Attest:_____________________________
(Assistant) Secretary
DAUPHIN DEPOSIT BANK AND TRUST
COMPANY, as Trustee and Tender Agent
By__________________________________
Authorized Officer
[SEAL]
Attest:_____________________________
Authorized Officer
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EXHIBIT "A"
No. VR- (FLOATING RATE FORM OF BOND) $2,500,000
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to the Authority 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 WRONGFUL inasmuch as the registered owner (the
"Registered Owner") hereof, Cede & Co., has an interest herein.
MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
FEDERALLY TAXABLE VARIABLE RATE DEMAND/FIXED RATE
REVENUE BOND
(COLLEGEVILLE INN PROJECT)
SERIES OF 1996
MATURITY DATE: December 1, 2016 CUSIP________
DATE OF ISSUANCE: December 26, 1996
THIS BOND IS SUBJECT TO MANDATORY TENDER FOR PURCHASE AT THE TIME AND
IN THE MANNER HEREINAFTER DESCRIBED, AND MUST BE SO TENDERED OR WILL BE DEEMED
TO HAVE BEEN SO TENDERED UNDER CERTAIN CIRCUMSTANCES DESCRIBED HEREIN.
KNOW ALL MEN BY THESE PRESENTS that the MONTGOMERY COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY (the "Authority"), for value received, promises to pay
from the source and as hereinafter provided, to CEDE & CO. or registered
assigns, on the maturity date hereof (or upon prior redemption as hereinafter
provided), upon surrender hereof, the principal sum of Two Million Five Hundred
Thousand Dollars ($2,500,000), and in like manner to pay interest on said sum at
the rate described below on the first Wednesday of each calendar month, or if
such date is not a Business Day, the next succeeding Business Day and on the
Conversion Date (hereinafter defined), commencing February 5, 1997 (each an
"Interest Payment Date"), from the Interest Payment Date next preceding the date
of authentication hereof to which interest has been paid or duly provided for,
unless the date of authentication hereof is an Interest Payment Date to which
interest has been paid or duly provided for, in which case from the date of
authentication hereof, or unless no interest has been paid or duly provided for
on the Bonds (as hereinafter defined),
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in which case from the date of issuance set forth above (the "Date of
Issuance"), until payment of the principal hereof has been made or duly provided
for. Notwithstanding the foregoing, if this Bond is authenticated after any date
which is the seventh calendar day next preceding any Interest Payment Date (a
"Record Date") and before the following Interest Payment Date, this Bond shall
bear interest from such Interest Payment Date; provided, however, that if the
Authority shall default in the payment of interest due on such Interest Payment
Date, then this Bond shall bear interest from the next preceding Interest
Payment Date to which interest has been paid or duly provided for, or, if no
interest has been paid or duly provided for on the Bonds, from the Date of
Issuance. The principal of this Bond is payable in lawful money of the United
States of America at the principal corporate trust office of Dauphin Deposit
Bank and Trust Company, as trustee (together with its successors in trust, the
"Trustee") or at the duly designated office of any successor Trustee under the
Trust Indenture, dated December 26, 1996, between the Authority and the Trustee
(which, as from time to time amended and supplemented, is hereinafter referred
to as the "Indenture"). Payment of interest on this Bond shall be made on each
Interest Payment Date to the registered Owner hereof as of the applicable Record
Date and shall be paid by check mailed by the Trustee to such registered Owner
at his address as it appears on the registration books of the Authority or at
such other address as is furnished to the Trustee in writing by such registered
Owner, or in such other manner as may be permitted by the Indenture. The
purchase price (the amount equal to 100% of the principal amount of any Bond
tendered or deemed tendered pursuant to the terms of the Indenture plus accrued
and unpaid interest thereon to the date of purchase (the "Purchase Price") of
this Bond shall be payable by Dauphin Deposit Bank and Trust Company (together
with any successor Tender Agent, the "Tender Agent") to the registered Owner
hereof at the principal corporate trust office of the Tender Agent. As used
herein, the term "Business Day" means any day other than: (i) a Saturday or
Sunday; (ii) a legal holiday or any day on which banking institutions in the
State of New York, the Commonwealth of Pennsylvania, the City of New York, or
the city in which the principal office of the Trustee, the Tender Agent or the
Bank are authorized to remain closed; or (iii) a day on which the New York Stock
Exchange is closed.
This Bond is one of the duly authorized bonds designated as the
Federally Taxable Variable Rate Demand/Fixed Rate Revenue Bonds (Collegeville
Inn Project) Series of 1996 of the Authority issued in the aggregate principal
amount of $2,500,000 (herein referred to as the "Bonds") under and by virtue of
the Pennsylvania Economic Development Financing Law, Act of August 23, 1967,
P.L. 251, as amended and supplemented (the "Act"), and by virtue of resolutions
duly adopted by the Authority (collectively the "Bond Resolution"), and equally
and ratably secured under the Indenture, for the purpose of raising funds to
finance a portion of the costs of a project consisting of, among other things:
(i) the rehabilitation, reconstruction, installation, furnishing and equipping
of a building to be used as a conference center, a training center, a food
manufacturing/processing and distribution center and a retail restaurant located
at 4000 Ridge Pike, Collegeville, Pennsylvania, which is in the Township of
Lower Providence, Montgomery County, Pennsylvania; and (ii) the payment of a
portion of the costs of issuing the Bonds (the "Project"). Pursuant to a Loan
Agreement, dated December 26, 1996 (the "Agreement") by and between the
Authority and Collegeville Inn Conference & Training Center, Inc., a
Pennsylvania corporation (the "Company"), installment payments sufficient for
the prompt payment when due of the principal and Purchase Price of, premium, if
any, and interest on
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the Bonds are to be paid to the Trustee for the account of the Authority and
deposited in the Bond Fund established by the Indenture and have been duly
pledged for that purpose, all to the extent and in the manner provided in the
Indenture.
The Bonds are all issued under and are equally and ratably secured by
and entitled to the protection of the Indenture, pursuant to which all payments
due from the Company to the Authority under the Agreement (other than certain
indemnification payments and the payment of certain expenses of the Authority)
are assigned to the Trustee to secure the payment of the principal and Purchase
Price of, and premium, if any, and interest on the Bonds and certain costs, fees
and expenses of the Trustee. The Company has caused to be delivered to the
Trustee an irrevocable direct pay letter of credit (together with any Substitute
Letter of Credit, the "Letter of Credit") issued by CoreStates Bank, N.A. (in
such capacity, the "Bank") and dated the Date of Issuance of the Bonds, which
will expire, unless earlier terminated or extended, on December 24, 2000.
Subject to certain conditions, the Letter of Credit may be replaced by a
Substitute Letter of Credit of another commercial bank, savings and loan
association or savings bank. Under the Letter of Credit, the Trustee will be
entitled to draw up to an amount sufficient to pay: (a) the principal of the
Bonds or the portion of the Purchase Price corresponding to the principal of the
Bonds; and (b) accrued interest (at the maximum rate of 17% per annum based on
365/366 day year and the actual number of days elapsed) on the Bonds or the
portion of the Purchase Price of the Bonds corresponding to accrued interest
thereon.
Reference is hereby made to the Indenture, the Agreement and the Letter
of Credit for a description of the property pledged and assigned, the
provisions, among others, with respect to the nature and extent of the security,
the rights, duties and obligations of the Authority, the Trustee and the Owners
of the Bonds and the terms upon which the Bonds are issued and secured; and the
Owner of this Bond, by acceptance hereof, hereby consents to the terms and
provisions of all of the foregoing as a material portion of the consideration
for the issuance of this Bond.
This Bond shall bear interest as follows:
(A) From the Date of Issuance of this Bond to the Conversion
Date, this Bond shall bear interest at the "Floating Rate." The "Floating Rate"
shall be a variable rate of interest equal to the minimum rate of interest
necessary, in the sole judgment of the Remarketing Agent (hereinafter defined),
to sell the Bonds on any Business Day at a price equal to the principal amount
thereof, exclusive of accrued interest, if any, thereon. The Floating Rate shall
be determined weekly by CoreStates Capital Markets, a division of CoreStates
Bank, N.A., Reading, Pennsylvania (the "Remarketing Agent") by 9:30 a.m. on each
Wednesday (or if such Wednesday is not a Business Day, on the next succeeding
Business Day) and shall be effective on such Wednesday for the immediately
following Weekly Period (as hereinafter defined), all as more fully set forth in
the Indenture. The determination of the Floating Rate shall be conclusive and
binding upon the Authority, the Trustee, the Bank, the Company, the Remarketing
Agent, the Tender Agent and the Owners of this Bond.
Anything herein to the contrary notwithstanding, the
Floating Rate shall in no event exceed 17% per annum.
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(B) The Bonds shall bear interest at the "Fixed Rate" from
and after the Conversion Date. In such event, the Fixed Rate shall be applicable
until the maturity of the Bonds. The "Fixed Rate" shall be a fixed annual
interest rate on the Bonds established by the Remarketing Agent as the rate of
interest for which the Remarketing Agent has received commitments on or prior to
the 5th Business Day preceding the Conversion Date, at a price of par without
discount or premium.
Prior to the Conversion Date, interest on the Bonds shall be computed
on the basis of a 365/366-day year, actual number of days elapsed. On and after
the Conversion Date, interest on the Bonds shall be computed on the basis of a
360-day year of twelve 30-day months.
As used herein, the term "Conversion Date" means the Optional
Conversion Date; the term "Letter of Credit Termination Date" means the later
of: (i) that date upon which the Letter of Credit shall expire or terminate
pursuant to its terms; or (ii) that date to which the expiration or termination
of the Letter of Credit may be extended, from time to time, either by extension
or renewal of the existing Letter of Credit or the issuance of a Substitute
Letter of Credit (as such phrase is defined in the Indenture); the term
"Optional Conversion Date" means that date on or after February 5, 1997 which
shall be a Business Day, from and after which the interest rate on the Bonds is
converted from the Floating Rate to the Fixed Rate as a result of the exercise
by the Company of the Conversion Option; the term "Conversion Option" means the
option granted to the Company in the Indenture pursuant to which the interest
rate on the Bonds is converted from the Floating Rate to the Fixed Rate as of
the Optional Conversion Date; the term "Purchase Price" means an amount equal to
100% of the principal amount of any Bond tendered or deemed tendered for
purchase pursuant to the Indenture or with respect to which the Demand Purchase
Option has been exercised, plus accrued and unpaid interest thereon to the date
of purchase.
The interest rate on the Bonds may be converted from the Floating Rate
to the Fixed Rate upon satisfaction of certain conditions and notice given by
the Trustee at the direction of the Company to the Owners of the Bonds at least
twenty (20) days but not more than thirty (30) days prior to the Conversion Date
in accordance with the requirements of the Indenture, and the Bonds shall be
subject to mandatory tender by the Owners thereof on the Conversion Date. On and
after the Conversion Date, the Demand Purchase Option will not be available to
the Owners of the Bonds. On or prior to the Conversion Date, an Owner of Bonds,
shall be required to deliver their Bonds to the Tender Agent for purchase at the
Purchase Price. Accrued interest on the Bonds will be payable on the Conversion
Date to the Owners of Bonds as of the Conversion Date. Any Bonds not delivered
to the Tender Agent on or prior to the conversion Date ("Undelivered Bonds"),
for which there has been irrevocably deposited in trust with the Trustee or the
Tender Agent an amount of money sufficient to pay the Purchase Price of the
Undelivered Bonds, shall be deemed to have been purchased at the Purchase Price
and are deemed to be no longer outstanding with respect to such prior Owners. IN
THE EVENT OF A FAILURE BY AN OWNER OF BONDS TO DELIVER ITS BONDS ON OR PRIOR TO
THE CONVERSION DATE, SAID OWNER SHALL NOT BE
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<PAGE>
ENTITLED TO ANY PAYMENT (INCLUDING ANY INTEREST TO ACCRUE ON OR SUBSEQUENT TO
THE CONVERSION DATE) OTHER THAN THE PURCHASE PRICE FOR SUCH UNDELIVERED BONDS,
AND ANY UNDELIVERED BONDS SHALL NO LONGER BE ENTITLED TO THE BENEFIT OF THE
INDENTURE, EXCEPT FOR THE PURPOSE OF PAYMENT OF THE PURCHASE PRICE THEREFOR.
Notwithstanding the foregoing provisions, to the extent that at the
close of the fifth Business Day prior to the proposed Optional Conversion Date,
the Remarketing Agent has not presented to the Company firm commitments for the
purchase of all of the Bonds, the Company, at its option, may rescind an
optional conversion of the Bonds. Any such election to rescind must be made by
the close of the fourth Business Day prior to the proposed Conversion Date and
the Company shall give written notice to the Trustee, the Tender Agent and the
Bank of its decision to rescind the optional conversion by such time. The
Company shall cause the Trustee to immediately notify the Owners of such
rescission and thereafter the Bonds shall bear interest at the Floating Rate in
effect for the then current Weekly Period and thereafter the Bonds shall bear
interest at the Floating Rate until any subsequent Conversion Date effected in
accordance with the Indenture. As used herein, "Weekly Period" means, while this
Bond bears interest at the Floating Rate, the weekly period that begins on and
includes Wednesday of each calendar week and ends at the close of business on
Tuesday of the next succeeding week.
At any time prior to the Record Date preceding the first Interest
Payment Date following the Conversion Date, the Trustee or the Tender Agent, as
the case may be, shall deliver a replacement Bond evidencing interest payable at
the Fixed Rate.
Prior to the Conversion Date, this Bond shall be purchased, at the
option of the Owner hereof ("Demand Purchase Option") at the Purchase Price,
upon:
(a) delivery by such Owner to the Trustee and the Tender Agent
at their principal corporate trust office and Delivery Office (hereinafter
defined) respectively, and to the Remarketing Agent at its principal office of a
notice (a "Demand Purchase Notice") (said notice to be irrevocable and effective
upon receipt) which states: (i) the aggregate principal amount and the bond
numbers of Bonds to be purchased; and (ii) the date on which such Bonds are to
be purchased, which date shall be a Business Day not prior to the seventh (7th)
day next succeeding the date of delivery of such notice and which date shall be
prior to the Conversion Date;
(b) if such Bonds are to be purchased prior to an Interest
Payment Date and after the Record Date in respect thereof, delivery to the
Tender Agent together with the Demand Purchase Notice described in (a) above, of
a non-recourse due-bill, payable to bearer, for interest due on such Interest
Payment Date; and
(c) delivery to the Tender Agent at its Delivery Office
(hereinafter defined) at or prior to 10:00 a.m., New York City time, on the date
designated for purchase in the applicable Demand Purchase Notice of such Bonds
to be purchased with an appropriate endorsement for transfer or accompanied by a
bond power endorsed in blank.
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Any Bond as to which a Demand Purchase Notice has been delivered
pursuant to (a) above, must be delivered to the Tender Agent as provided in (c)
above, and any such Bonds not so delivered ("Undelivered Bonds"), for which
there has been irrevocably deposited in trust with the Trustee or the Tender
Agent an amount of money sufficient to pay the Purchase Price thereof, shall be
deemed to have been purchased at the Purchase Price and are deemed to be no
longer outstanding with respect to such tendering Owner. IN THE EVENT OF A
FAILURE BY AN OWNER OF BONDS TO DELIVER ITS BONDS AS SPECIFIED ABOVE, SAID OWNER
SHALL NOT BE ENTITLED TO ANY PAYMENT (INCLUDING ANY INTEREST TO ACCRUE ON OR
SUBSEQUENT TO THE DATE DESIGNATED FOR PURCHASE IN THE APPLICABLE DEMAND PURCHASE
NOTICE) OTHER THAN THE PURCHASE PRICE FOR SUCH UNDELIVERED BONDS, AND ANY
UNDELIVERED BONDS SHALL NO LONGER BE ENTITLED TO THE BENEFIT OF THE INDENTURE,
EXCEPT FOR THE PAYMENT OF THE PURCHASE PRICE THEREFOR.
Notwithstanding the foregoing provisions, in the event any Bond as to
which the Owner thereof has exercised the Demand Purchase Option is remarketed
to such Owner pursuant to the Remarketing Agreement, such Owner need not deliver
such Bond to the Tender Agent as provided in (c) above, although such Bond shall
be deemed to have been delivered to the Tender Agent, redelivered to such Owner,
and remarketed for purposes of the Indenture.
The Agreement provides that the Company, upon satisfaction of certain
conditions precedent, may, at any time, at its option, provide for the delivery
to the Trustee of a Substitute Letter of Credit. The Bonds shall be subject to
mandatory tender by the Owners thereof on the date of delivery of the Substitute
Letter of Credit (the "Substitution Date"). On or prior to the Substitution
Date, Owners of Bonds shall be required to deliver their Bonds to the Tender
Agent for purchase at the Purchase Price. Accrued interest on the Bonds will be
payable on the Substitution Date to the Owners of Bonds as of the Substitution
Date. Any Bonds not delivered to the Tender Agent on or prior to the
Substitution Date ("Undelivered Bonds"), for which there has been irrevocably
deposited in trust with the Trustee or the Tender Agent an amount of money
sufficient to pay the Purchase Price of the Undelivered Bonds, shall be deemed
to have been purchased at the Purchase Price and are deemed to be no longer
outstanding with respect to such Owners. IN THE EVENT OF A FAILURE BY AN OWNER
OF BONDS TO DELIVER ITS BONDS ON OR PRIOR TO THE SUBSTITUTION DATE, SAID OWNER
SHALL NOT BE ENTITLED TO ANY PAYMENT (INCLUDING ANY INTEREST TO ACCRUE ON OR
SUBSEQUENT TO THE SUBSTITUTION DATE) OTHER THAN THE PURCHASE PRICE FOR SUCH
UNDELIVERED BONDS, AND ANY UNDELIVERED BONDS SHALL NO LONGER BE ENTITLED TO THE
BENEFIT OF THE INDENTURE, EXCEPT FOR THE PURPOSE OF PAYMENT OF THE PURCHASE
PRICE THEREFOR.
Any delivery of a notice required to be made to the Trustee at its
principal corporate trust office pursuant to (a) above shall be delivered to the
Trustee at 213 Market Street, Harrisburg,
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Pennsylvania 17101, Attention Corporate Trust Services, or to the office
designated for such purpose by any successor Trustee; any delivery of a notice
required to be made to the Remarketing Agent at its principal office pursuant to
(a) above shall be delivered to the Remarketing Agent at 601 Penn Square Center,
Fourth Floor, Reading, Pennsylvania 19601, Attention: CoreStates Capital
Markets, Sales and Underwriting Department, or to the office designated for such
purpose by any successor Remarketing Agent; and any delivery of Bonds required
to be made to the Tender Agent pursuant to (b) above shall be delivered to the
Tender Agent at 213 Market Street, Harrisburg, Pennsylvania 17101, Attention:
Corporate Trust Services or to the office designated for such purpose by any
successor Tender Agent (the "Delivery Office").
Notwithstanding any provision herein to the contrary, so long as this
Bond is subject to a system of book-entry transfers, any requirement for the
delivery of Bonds to the Tender Agent in connection with an optional or
mandatory tender shall be deemed satisfied upon the transfer, on the
registration books of DTC, of the beneficial ownership interests in the Bonds
tendered for purchase to the account of the Tender Agent, or a Participant (as
such term is defined in the Indenture) acting on behalf of or at the discretion
of such Tender Agent.
THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE
SOLELY AND EXCLUSIVELY FROM THE PAYMENTS REQUIRED TO BE MADE BY THE COMPANY
UNDER THE AGREEMENT AND FROM DRAWS ON THE LETTER OF CREDIT. NO RECOURSE SHALL BE
HAD FOR THE PAYMENT OF PRINCIPAL, PURCHASE PRICE OR REDEMPTION PRICE OF, OR
INTEREST ON, THIS BOND, OR ANY CLAIM BASED HEREON OR ON THE INDENTURE OR THE
AGREEMENT, AGAINST THE AUTHORITY OR ANY SUCCESSOR BODY OR AGAINST ANY OFFICER,
MEMBER, EMPLOYEE OR AGENT PAST, PRESENT OR FUTURE OF THE AUTHORITY OR ANY
SUCCESSOR BODY, UNDER ANY CONSTITUTIONAL PROVISION, STATUTE OR RULE OF LAW, OR
BY THE ENFORCEMENT OF ANY ASSESSMENT OR BY ANY LEGAL OR EQUITABLE PROCEEDING OR
OTHERWISE, AND ALL SUCH LIABILITY OF THE AUTHORITY OR ANY SUCCESSOR BODY OR ANY
SUCH OFFICERS, MEMBERS, EMPLOYEES OR AGENTS IS RELEASED AS A CONDITION OF, AND
IN CONSIDERATION FOR, THE ISSUANCE OF THIS BOND. AS A CONDITION OF, AND IN
CONSIDERATION FOR, THE ISSUANCE OF THIS BOND, THE REGISTERED OWNER HEREOF
COVENANTS THAT HE WILL NOT SUE THE AUTHORITY OR ITS MEMBERS, OFFICERS, EMPLOYEES
OR AGENTS, PAST, PRESENT OR FUTURE, EXCEPT AS EXPRESSLY PERMITTED IN THE
INDENTURE AND THE AGREEMENT. THE BONDS AND THE INTEREST THEREON SHALL NOT BE IN
ANY WAY A DEBT OR LIABILITY OF THE COUNTY OF MONTGOMERY, PENNSYLVANIA (THE
"COUNTY"), THE COMMONWEALTH OF PENNSYLVANIA (THE "COMMONWEALTH") OR ANY
POLITICAL SUBDIVISION THEREOF AND SHALL NOT CREATE OR CONSTITUTE ANY
INDEBTEDNESS, LIABILITY OR OBLIGATION OF THE COUNTY, THE COMMONWEALTH OR ANY
POLITICAL SUBDIVISION THEREOF, EITHER LEGAL, MORAL OR OTHERWISE, AND THE
AUTHORITY SHALL NOT INCUR ANY INDEBTEDNESS ON BEHALF OF OR IN ANY WAY TO
OBLIGATE THE COUNTY, THE COMMONWEALTH OR ANY POLITICAL SUBDIVISION THEREOF.
NEITHER THE MEMBERS OF THE AUTHORITY NOR ANY PERSON EXECUTING THE BONDS SHALL BE
LIABLE PERSONALLY ON THE BONDS BY REASON
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<PAGE>
OF THE ISSUANCE THEREOF. THE AUTHORITY IS A CONDUIT ISSUER AND HAS NO TAXING
POWER.
This Bond is transferable by the Registered Owner hereof in person or
by his attorney duly authorized in writing, at the principal corporate trust
office of the Trustee or at the Delivery Office of the Tender Agent or that of
any successor Tender Agent, but only in the manner, subject to the limitations
and upon payment of the charges provided in the Indenture, and upon surrender
and cancellation of this Bond. Upon such transfer a new registered Bond or Bonds
of authorized denomination or denominations for the same aggregate principal
amount will be issued to the transferee in exchange herefor. The Authority, the
Tender Agent and the Trustee may deem and treat the registered Owner hereof as
the absolute Owner hereof (whether or not this Bond shall be overdue) for all
purposes, and neither the Authority, the Tender Agent nor the Trustee shall be
bound by any notice or knowledge to the contrary.
Prior to the Conversion Date: (i) the Bonds are issuable as fully
registered bonds without coupons in the denominations of $100,000 or any
integral multiple of $5,000 in excess thereof; and (ii) the Bonds may not be
issued, exchanged or transferred except in authorized denominations of $100,000
or any integral multiple of $5,000 in excess thereof. From and after the
Conversion Date, the Bonds shall be issuable as fully registered bonds without
coupons in the denominations of $5,000 or any integral multiple thereof.
Extraordinary Redemption
The Bonds are callable for redemption in the event: (1) the Project
Facilities or any portion thereof is damaged or destroyed or taken in a
condemnation proceeding as provided in Section 6.04 of the Agreement; or (2) the
Company shall exercise its option to cause the Bonds to be redeemed as provided
in Section 9.02 of the Agreement. If called for redemption at any time pursuant
to (1) or (2) above, the Bonds shall be subject to redemption by the Authority
on any Interest Payment Date, in whole or in part, at a redemption price of one
hundred percent (100%) of the principal amount thereof plus accrued interest to
the redemption date.
Mandatory Redemption
The Bonds are subject to mandatory redemption, five (5) Business Days
prior to the Letter of Credit Termination Date, in whole, at a redemption price
equal to one hundred percent (100%) of the principal amount thereof being
redeemed plus accrued interest to the redemption date if, on the thirtieth
(30th) Business Day prior to the Letter of Credit Termination Date, the Trustee
shall not have received a Substitute Letter of Credit which will be effective on
or before the Letter of Credit Termination Date.
Mandatory Sinking Fund Redemption
The Bonds are subject to mandatory sinking fund redemption on the
Interest Payment Date
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occurring in the month of December in each of the years set forth below
commencing on the Interest Payment Date occurring in December of 1997 (each, a
"Mandatory Sinking Account Payment Date"), at a redemption price equal to 100"
of the principal amount thereof plus accrued interest as follows:
Mandatory Sinking
Year Account Payments
1997 $ 70,000
1998 70,000
1999 75,000
2000 80,000
2001 85,000
2002 90,000
2003 95,000
2004 100,000
2005 105,000
2006 115,000
2007 120,000
2008 130,000
2009 135,000
2010 145,000
2011 155,000
2012 165,000
2013 175,000
2014 185,000
2015 195,000
2016* 210,000
*Final maturity of the Bonds is December 1, 2016
Optional Redemption
On or prior to the Conversion Date, the Bonds are subject to redemption
by the Authority, at the option of the Company, at any time, subject to the
notice provisions described below, in whole or in part, at the redemption price
of 100% of the principal amount thereof being redeemed plus accrued interest to
the redemption date.
No such optional redemption shall occur unless there shall be available
in the Bond Fund established under the Indenture sufficient Available Moneys (as
defined in the Indenture) to pay all amounts due with respect to such a
redemption.
In the event any of the Bonds or portions thereof are called for
redemption as aforesaid,
A-9
<PAGE>
notice of the call for redemption, identifying the Bonds or portions thereof to
be redeemed and the redemption price (including the premium, if any), shall be
given by the Trustee by mailing a copy of the redemption notice by first-class
mail at least thirty (30) days but not more than sixty (60) days prior to the
date fixed for redemption to the Owner of each Bond to be redeemed in whole or
in part at the address shown on the registration books. Any notice mailed as
provided above shall be conclusively presumed to have been duly given, whether
or not the Owner receives the notice. No further interest shall accrue on the
principal of any Bond called for redemption after the redemption date if
Available Moneys (as defined in the Indenture) sufficient for such redemption
have been deposited with the Trustee. Notwithstanding the foregoing, the notice
requirements contained in the first sentence of this paragraph may be deemed
satisfied with respect to a transferee of a Bond which has been purchased
pursuant to the Demand Purchase Option under certain circumstances provided in
Section 4.06 of the Indenture, after such Bond has previously been called for
redemption, notwithstanding the failure to satisfy the notice requirements of
the first sentence of this paragraph with respect to such transferee.
If less than all the Bonds are to be redeemed, the particular Bonds or
portions thereof to be redeemed shall be selected by the Trustee by lot. Prior
to the Conversion Date, in case a Bond is of a denomination larger than
$100,000, a portion of such Bond ($100,000 or any integral multiple of $5,000 in
excess thereof) may be redeemed, but Bonds shall be redeemed only if the
remaining unredeemed portion of such Bond is in the principal amount of $100,000
or any integral multiple in excess of $100,000.
The Bonds are issued pursuant to and in full compliance with the
Constitution and laws of the Commonwealth, particularly the Act, and by
appropriate action duly taken by the Authority which authorizes the execution
and delivery of the Agreement and the Indenture. The Bonds have been issued
under the provisions of the Act.
Notwithstanding anything to the contrary contained herein or in the
Indenture, the Agreement, or in any other instrument or document executed by or
on behalf of the Authority in connection herewith, no stipulation, covenant,
agreement or obligation contained herein or therein shall be deemed or construed
to be a stipulation, covenant, agreement or obligation of any present or future
member, commissioner, director, trustee, officer, employee or agent of the
Authority, or of any successor to the Authority, in any such person's individual
capacity, and no such person, in his individual capacity, shall be liable
personally for any breach or nonobservance of or for any failure to perform,
fulfill or comply with any such stipulations, covenants, agreements or the
principal of or premium, if any, or interest on any of the Bonds or for any
claim based thereon or on any such stipulation, covenant, agreement or
obligation, against any such person, in his individual capacity, either directly
or through the Authority or any successor to the Authority, under any rule of
law or equity, statute or constitution or by the enforcement of any assessment
or penalty or otherwise, and all such liability of any such person, in his
individual capacity, is hereby expressly waived and released.
The Owner of this Bond shall have no right to enforce the provisions of
the Indenture or to institute action to enforce the covenants therein, or to
take any action with respect to any default
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<PAGE>
under the Indenture, or to institute, appear in or defend any suit or other
proceedings with respect thereto, unless certain circumstances described in the
Indenture shall have occurred. In certain events, on the conditions, in the
manner and with the effect set forth in the Indenture, the principal of all the
Bonds issued under the Indenture and then outstanding may become or may be
declared due and payable before the stated maturity thereof, together with
interest accrued thereon.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Authority and the rights of the Owners of the Bonds at any time by the Authority
with the consent of the Company, the Bank and the holders of all Bonds at the
time outstanding. Any such consent or any waiver by the Company, the Bank and
the holders of all Bonds at the time outstanding shall be conclusive and binding
upon the Owner and upon all future Owners of this Bond and of any Bond issued in
replacement hereof whether or not notation of such consent or waiver is made
upon this Bond. The Indenture also contains provisions which, subject to certain
conditions, permit or require the Trustee to waive certain past defaults under
the Indenture and their consequences.
It is hereby certified, recited and declared that all acts, conditions
and things required to exist, happen and be performed precedent to and in
connection with the execution and delivery of the Indenture and the issuance of
this Bond do exist, have happened and have been performed in due time, form and
manner as required by law; and that the issuance of this Bond and the issue of
which it forms a part, together with all other obligations of the Authority,
does not exceed or violate any constitutional or statutory limitation.
This Bond shall not be valid or become obligatory for any purpose or be
entitled to any security or benefit under the Indenture until the certificate of
authentication hereon shall have been signed by the Trustee or the Tender Agent,
as authenticating agent.
IN WITNESS WHEREOF, the Montgomery County Industrial Development
Authority has caused this Bond to be signed in its name and on its behalf by the
manual or facsimile signature of its Chairperson or Vice Chairman and its
corporate seal to be affixed, imprinted or reproduced hereon and attested by the
manual or facsimile signature of its Secretary all as of the Date of Issuance.
MONTGOMERY COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
Attest:____________________ By______________________________
Secretary Chairperson
(SEAL)
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<PAGE>
(Form of Certificate of Authentication)
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds of the issue described in the
within-mentioned Trust Indenture.
DAUPHIN DEPOSIT BANK AND TRUST
COMPANY, as Trustee and Tender Agent
By:_____________________________
Authorized Representative
Date of Authentication:__________________
(Form for Transfer)
FOR VALUE RECEIVED, , the undersigned, hereby sells, assigns and
transfers unto (Tax Identification or Social Security No. ) the within Bond and
all rights thereunder, and hereby irrevocably constitutes and appoints attorney
to transfer the within Bond on the books kept for registration thereof, with
full power of substitution in the premises.
Dated_____________________________________ ____________________________
NOTICE: Signature(s) must be guaranteed NOTICE: The signature to this
by an approved eligible guarantor institution, assignment must correspond
an institution which is participant in a with the name as it appears
Securities Transfer Association recognized upon the face of the within
signature guarantee program. Bond in every particular,
without alteration or
enlargement or any change
whatever.
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<PAGE>
EXHIBIT "B"
(FIXED RATE FORM OF BOND)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to the Authority 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 WRONGFUL inasmuch as the registered owner (the
"Registered Owner") hereof, Cede & Co., has an interest herein.
UNITED STATES OF AMERICA
MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
FEDERALLY TAXABLE VARIABLE RATE DEMAND/FIXED RATE
REVENUE BOND
(COLLEGEVILLE INN PROJECT)
SERIES OF 1996
No. FR- $
Interest Rate: CUSIP____________
KNOW ALL MEN BY THESE PRESENTS that the MONTGOMERY COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY (the "Authority"), for value received, promises to pay
from the source and as hereinafter provided, to CEDE & CO. or registered
assigns, on ________________, upon surrender hereof, the principal sum of
______________ Dollars, and in like manner to pay interest (calculated on the
basis of a 360-day year of twelve 30 day months) on said sum at the rate per
annum set forth above on June 1 and December 1 of each year, commencing
_________________, (each an "Interest Payment Date") from the Interest Payment
Date next preceding the date of authentication hereof to which interest has been
paid or duly provided for, unless the date of authentication hereof is an
Interest Payment Date to which interest has been paid or duly provided for, in
which case from the date of authentication hereof or unless no interest has been
paid or duly provided for on the Bonds (as hereinafter defined), in which case
from the Conversion Date (as defined in the Indenture, as hereinafter defined),
until payment of the principal hereof has been made or duly provided for.
Notwithstanding the foregoing, if this Bond is authenticated after any date
which is the fifteenth day next preceding any Interest Payment Date (a "Record
Date") and before the following Interest Payment Date, this Bond shall bear
interest from such Interest Payment Date;
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<PAGE>
provided, however, that if the Authority shall default in the payment of
interest due on such Interest Payment Date, then this Bond shall bear interest
from the next preceding interest payment date to which interest has been paid or
duly provided for, or, if no interest has been paid or duly provided for on the
Bonds, from the Date of Issuance. The principal of this Bond is payable in
lawful money of the United States of America at the principal corporate trust
office of Dauphin Deposit Bank and Trust Company, as trustee (together with its
successors in trust, the "Trustee") or at the duly designated office of any
successor Trustee under the Trust Indenture, dated December 26, 1996 between the
Authority and the Trustee (which Indenture, as from time to time amended and
supplemented, is hereinafter referred to as the "Indenture"). Payment of
interest on this Bond shall be made on each Interest Payment Date to the
registered Owner hereof as of the applicable Record Date and shall be paid by
check mailed by the Trustee to such registered Owner at his address as it
appears on the registration books of the Authority or at such other address as
is furnished to the Trustee in writing by such registered Owner, or in such
other manner as may be permitted by the Indenture. As used herein, the term
"Business Day" means a day which is not a Saturday, Sunday or legal holiday on
which banking institutions in the State of New York, Commonwealth of
Pennsylvania, the City of New York, or the city in which the principal office of
the Trustee, the Tender Agent or the Bank are authorized to remain closed or on
which the New York Stock Exchange is closed.
This Bond is one of the duly authorized bonds designated as the
Federally Taxable Variable Rate Demand/Fixed Rate Revenue Bonds (Collegeville
Inn Project) Series of 1996 of the Authority issued in the aggregate principal
amount of $ (herein referred to as the "Bonds") under and by virtue of the
Pennsylvania Economic Development Financing Law, Act of August 23, 1967, P.L.
251, as amended and supplemented (the "Act"), and by virtue of resolutions duly
adopted by the Authority (collectively the "Bond Resolution"), and equally and
ratably secured under the Indenture, for the purpose of raising funds to finance
a portion of the costs of a project consisting of, among other things, (i) the
rehabilitation, reconstruction, installation, furnishing and equipping of a
building to be used as a conference center, a training center, a food
manufacturing/processing and distribution center and a retail restaurant located
at 4000 Ridge Pike, Collegeville, Pennsylvania, which is in the Township of
Lower Providence, Montgomery County, Pennsylvania; and (ii) payment of a portion
of the costs of issuing the Bonds (the "Project"). Pursuant to a Loan Agreement,
dated December 26, 1996 (the "Agreement") by and between the Authority and
Collegeville Inn Conference & Training Center, Inc., a Pennsylvania corporation
(the "Company"), installment payments sufficient for the prompt payment when due
of the principal and Purchase Price of, premium, if any, and interest on the
Bonds are to be paid to the Trustee for the account of the Authority and
deposited in the Bond Fund established by the Indenture and have been duly
pledged for that purpose, all to the extent and in the manner provided in the
Indenture.
The Bonds are all issued under and are equally and ratably secured by
and entitled to the protection of the Indenture, pursuant to which all payments
due from the Company to the Authority under the Agreement (other than certain
indemnification payments and the payment of certain expenses of the Authority)
are assigned to the Trustee to secure the payment of the principal of and
premium, if any, and interest on the Bonds.
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Reference is hereby made to the Indenture and the Agreement for a
description of the property pledged and assigned, the provisions, among others,
with respect to the nature and extent of the security, the rights, duties and
obligations of the Authority, the Trustee and the Owners of the Bonds, and the
terms upon which the Bonds are issued and secured; and the Owner of this Bond,
by acceptance hereof, hereby consents to the terms and provisions of all of the
foregoing as a material portion of the consideration for the issuance of this
Bond.
THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE
SOLELY AND EXCLUSIVELY FROM THE PAYMENTS REQUIRED TO BE MADE BY THE COMPANY
UNDER THE AGREEMENT AND FROM DRAWS ON THE LETTER OF CREDIT. NO RECOURSE SHALL BE
HAD FOR THE PAYMENT OF PRINCIPAL, PURCHASE PRICE OR REDEMPTION PRICE OF, OR
INTEREST ON, THIS BOND, OR ANY CLAIM BASED HEREON OR ON THE INDENTURE OR THE
AGREEMENT, AGAINST THE AUTHORITY OR ANY SUCCESSOR BODY OR AGAINST ANY OFFICER,
MEMBER, EMPLOYEE OR AGENT PAST, PRESENT OR FUTURE OF THE AUTHORITY OR ANY
SUCCESSOR BODY, UNDER ANY CONSTITUTIONAL PROVISION, STATUTE OR RULE OF LAW, OR
BY THE ENFORCEMENT OF ANY ASSESSMENT OR BY ANY LEGAL OR EQUITABLE PROCEEDING OR
OTHERWISE, AND ALL SUCH LIABILITY OF THE AUTHORITY OR ANY SUCCESSOR BODY OR ANY
SUCH OFFICERS, MEMBERS, EMPLOYEES OR AGENTS IS RELEASED AS A CONDITION OF, AND
IN CONSIDERATION FOR, THE ISSUANCE OF THIS BOND. AS A CONDITION OF, AND IN
CONSIDERATION FOR, THE ISSUANCE OF THIS BOND, THE REGISTERED OWNER HEREOF
COVENANTS THAT HE WILL NOT SUE THE AUTHORITY OR ITS MEMBERS, OFFICERS, EMPLOYEES
OR AGENTS, PAST, PRESENT OR FUTURE, EXCEPT AS EXPRESSLY PERMITTED IN THE
INDENTURE AND THE AGREEMENT. THE BONDS AND THE INTEREST THEREON SHALL NOT BE IN
ANY WAY A DEBT OR LIABILITY OF THE COUNTY OF MONTGOMERY, PENNSYLVANIA (THE
"COMMONWEALTH"), THE COMMONWEALTH OF PENNSYLVANIA (THE "COMMONWEALTH") OR ANY
POLITICAL SUBDIVISION THEREOF AND SHALL NOT CREATE OR CONSTITUTE ANY
INDEBTEDNESS, LIABILITY OR OBLIGATION OF THE COUNTY, THE COMMONWEALTH OR ANY
POLITICAL SUBDIVISION THEREOF, EITHER LEGAL, MORAL OR OTHERWISE, AND THE
AUTHORITY SHALL NOT INCUR ANY INDEBTEDNESS ON BEHALF OF OR IN ANY WAY TO
OBLIGATE THE COUNTY, THE COMMONWEALTH OR ANY POLITICAL SUBDIVISION THEREOF.
NEITHER THE MEMBERS OF THE AUTHORITY NOR ANY PERSON EXECUTING THE BONDS SHALL BE
LIABLE PERSONALLY ON THE BONDS BY REASON OF THE ISSUANCE THEREOF. THE AUTHORITY
IS A CONDUIT ISSUER AND HAS NO TAXING POWER.
This Bond is transferable by the Registered Owner hereof in person or
by his attorney duly authorized in writing, at the principal corporate trust
office of the Trustee but only in the manner, subject to the limitations and
upon payment of the charges provided in the Indenture, and upon surrender and
cancellation of this Bond. Upon such transfer a new registered Bond or Bonds of
authorized denomination or denominations for the same aggregate principal amount
will be issued
B-4
<PAGE>
to the transferee in exchange herefor. The Authority and the Trustee may deem
and treat the registered Owner hereof as the absolute Owner hereof (whether or
not this Bond shall be overdue) for all purposes, and neither the Authority nor
the Trustee shall be bound by any notice or knowledge to the contrary.
The Bonds shall be issuable as fully registered Bonds without coupons
in the denomination of $5,000 or any integral multiple thereof.
Extraordinary Redemption
The Bonds are callable for redemption in the event: (1) the Project
Facilities or any portion thereof is damaged or destroyed or taken in a
condemnation proceeding as provided in Section 6.04 of the Agreement; or (2) the
Company shall exercise its option to cause the Bonds to be redeemed as provided
in Section 9.02 of the Agreement. If called for redemption at any time pursuant
to (1) or (2) above, the Bonds shall be subject to redemption by the Authority
on any interest payment date, in whole or in part, at a redemption price of one
hundred percent (100%) of the principal amount thereof plus accrued interest to
the redemption date.
Mandatory Redemption
The Bonds are subject to mandatory redemption, five (5) Business Days
prior to the Letter of Credit Termination Date, in whole, at a redemption price
equal to one hundred percent (100% of the principal amount thereof being
redeemed plus accrued interest to the redemption date if, on the thirtieth
(30th) Business Day prior to the Letter of Credit Termination Date, the Trustee
shall not have received a Substitute Letter of Credit which will be effective on
or before the Letter of Credit Termination Date.
Mandatory Sinking Fund Redemption
The Bonds are subject to mandatory redemption on the Interest Payment
Date occurring in the month of in each of the years set forth below (except )
commencing on the Interest Payment Date occurring in of (each, a "Mandatory
Sinking Account Payment Date"), at a redemption price equal to 100% of the
principal amount thereof plus accrued interest as follows:
Mandatory Sinking
Year Account Payments
---- ----------------
*Final maturity
B-5
<PAGE>
Optional Redemption
If the length of time from the Conversion Date to the final maturity
date of the Bonds is seven (7) years or more, the Bonds are subject to
redemption by the Authority, at the option of the Company, on or after the fifth
(5th) anniversary of the Conversion Date, in whole at any time or in part on any
Interest Payment Date, at the redemption price of 100% of the principal amount
thereof being redeemed plus accrued interest to the redemption date.
In the event any of the Bonds or portions thereof are called for
redemption as aforesaid, notice of the call for redemption, identifying the
Bonds or portions thereof to be redeemed and the redemption price, shall be
given by the Trustee by mailing a copy of the redemption notice by first-class
mail at least thirty (30) days but not more than sixty (60) days prior to the
date fixed for redemption to the Owner of each Bond to be redeemed in whole or
in part at the address shown on the registration books. Any notice mailed as
provided above shall be conclusively presumed to have been duly given, whether
or not the Owner receives the notice. No further interest shall accrue on the
principal of any Bond called for redemption after the redemption date if moneys
sufficient for such redemption have been deposited with the Trustee.
If less than all the Bonds are to be redeemed, the particular Bonds or
portions thereof to be redeemed shall be selected by the Trustee by lot.
The Bonds are issued pursuant to and in full compliance with the
Constitution and laws of the Commonwealth, particularly the Act, and by
appropriate action duly taken by the Authority which authorizes the execution
and delivery of the Agreement and the Indenture. The Bonds have been issued
under the provisions of the Act.
Notwithstanding anything to the contrary contained herein or in the
Indenture, the Agreement, or in any other instrument or document executed by or
on behalf of the Authority in connection herewith, no stipulation, covenant,
agreement or obligation contained herein or therein shall be deemed or construed
to be a stipulation, covenant, agreement or obligation of any present or future
member, commissioner, director, trustee, officer, employee or agent of the
Authority, or of any successor to the Authority, in any such person's individual
capacity, and no such person, in his individual capacity, shall be liable
personally for any breach or nonobservance of or for any failure to perform,
fulfill or comply with any such stipulations, covenants, agreements or
obligations, nor shall any recourse be had for the payment of the principal of
or premium, if any, or interest on any of the Bonds or for any claim based
thereon or on any such stipulation, covenant, agreement or obligation, against
any such person, in his individual capacity, either directly or through the
Authority or any successor to the Authority, under any rule of law or equity,
statute or constitution or by the enforcement of any assessment or penalty or
otherwise, and all such liability of any such person, in his individual
capacity, is hereby expressly waived and released.
The Owner of this Bond shall have no right to enforce the provisions of
the Indenture or to institute action to enforce the covenants therein, or to
take any action with respect to any default
B-6
<PAGE>
under the Indenture, or to institute, appear in or defend any suit or other
proceedings with respect thereto, unless certain circumstances described in the
Indenture shall have occurred. In certain events, on the conditions, in the
manner and with the effect set forth in the Indenture, the principal of all the
Bonds issued under the Indenture and then outstanding may become or may be
declared due and payable before the stated maturity thereof, together with
interest accrued thereon.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Authority and the rights of the Owners of the Bonds at any time by the Authority
with the consent of the Company, the Bank and the holders of all Bonds at the
time outstanding. Any such consent or any waiver by the Company, the Bank and
the holders of all Bonds shall be conclusive and binding upon the Owner and upon
all future Owners of this Bond and of any Bond issued in replacement hereof
whether or not notation of such consent or waiver is made upon this Bond. The
Indenture also contains provisions which, subject to certain conditions, permit
or require the Trustee to waive certain past defaults under the Indenture and
their consequences.
It is hereby certified, recited and declared that all acts, conditions
and things required to exist, happen and be performed precedent to and in
connection with the execution and delivery of the Indenture and the issuance of
this Bond do exist, have happened and have been performed in due time, form and
manner as required by law; and that the issuance of this Bond and the issue of
which it forms a part, together with all other obligations of the Authority does
not exceed or violate any constitutional or statutory limitation.
This Bond shall not be valid or become obligatory for any purpose or be
entitled to any security or benefit under the Indenture until the certificate of
authentication hereon shall have been signed by the Trustee or a duly appointed
authenticating agent pursuant to the Indenture.
B-7
<PAGE>
IN WITNESS WHEREOF, the Montgomery County Industrial Development
Authority has caused this Bond to be signed in its name and on its behalf by the
manual or facsimile signature of its Chairperson or Vice Chairman and its
corporate seal to be affixed, imprinted or reproduced hereon and attested by the
manual or facsimile signature of its Secretary or Assistant Secretary, all as of
the Date of Issuance.
MONTGOMERY COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
Attest:_____________________ By:__________________________________
Secretary Chairperson
(SEAL)
(Form of Certificate of Authentication)
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds of the issue described in the
within-mentioned Trust Indenture.
DAUPHIN DEPOSIT BANK AND TRUST
COMPANY, as Trustee
By_________________________________
Authorized Representative
Date of Authentication:______________________
B-7
<PAGE>
(Form for Transfer)
FOR VALUE RECEIVED, __________________ , the undersigned, hereby sells,
assigns and transfers unto (Tax Identification or Social Security No. _________)
the within Bond and all rights thereunder, and hereby irrevocably constitutes
and appoints attorney to transfer the within Bond on the books kept for
registration thereof with full power of substitution in the premises.
Dated_____________________________________ ____________________________
NOTICE: Signature(s) must be guaranteed NOTICE: The signature to this
by an approved eligible guarantor institution, assignment must correspond
an institution which is participant in a with the name as it appears
Securities Transfer Association recognized upon the face of the within
signature guarantee program. Bond in every particular,
without alteration or
enlargement or any change
whatever.
B-8
<PAGE>
EXHIBIT "C"
CONSTRUCTION FUND REQUISITION
NO.____________
Date:____________________
Dauphin Deposit Bank and Trust Company
213 Market Street
Harrisburg, PA 17101
Attention: Corporate Trust Services
Mail Code 001-01-02
Ladies and Gentlemen:
On behalf of the Montgomery County Industrial Development Authority
(the "Authority"), I hereby requisition pursuant to Section 6.06 of a Trust
Indenture, dated December 26, 1996 (the "Indenture") between the Authority and
Dauphin Deposit Bank and Trust Company, as Trustee, the sum of $ to be paid as
follows:
Name and Address of Payee: Purpose of Obligation:
-------------------------- ----------------------
I hereby certify that: (a) such obligation has been incurred by
Collegeville Inn Conference & Training Center, Inc., as applicable, in
connection with the acquisition, construction and equipping of the Project
Facilities, as defined in the Indenture; (b) each item is a proper charge
against the Construction Fund; (c) such obligation has not been the basis for a
prior requisition which has been paid; (d) no written notice of any lien, right
to lien or attachment upon, or claim affecting the right to receive payment of,
any of the moneys payable under the requisition above has been received; (e) the
payment of such requisition will not violate the prohibitions or requirements
relating to the use of proceeds set forth in the Agreement; and (f) no Event of
Default, as such phrase defined in the Indenture and in the Agreement or event
which after notice or lapse of time or both would constitute such an Event of
Default has occurred and not been waived or cured.
C-1
<PAGE>
NOTE: THIS REQUISITION IS NOT COMPLETE AND IS NOT TO BE PAID UNTIL THE
APPROVAL OF THE BANK IS RECEIVED IN THE FORM OF EXHIBIT "D" TO THE INDENTURE.
COLLEGEVILLE INN CONFERENCE &
TRAINING CENTER, INC.
By_________________________________
Authorized Representative
C-2
<PAGE>
EXHIBIT "D"
BANK APPROVAL
CoreStates Bank, N.A., Reading, Pennsylvania, issuer of the Letter of
Credit hereby approves the Company's Requisition No. __________.
CORESTATES BANK, N.A.
By_______________________
Dated:_____________________
D-1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS CONTAINED IN THE COMPANY'S 10-K FOR THE PERIOD
ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 2,267,813
<SECURITIES> 0
<RECEIVABLES> 5,900,572
<ALLOWANCES> (531,428)
<INVENTORY> 304,579
<CURRENT-ASSETS> 9,903,710
<PP&E> 8,143,131
<DEPRECIATION> (969,175)
<TOTAL-ASSETS> 20,381,557
<CURRENT-LIABILITIES> 7,103,336
<BONDS> 3,560,548
0
0
<COMMON> 3,801,974
<OTHER-SE> 3,170,179
<TOTAL-LIABILITY-AND-EQUITY> 20,381,557
<SALES> 35,293,962
<TOTAL-REVENUES> 35,293,962
<CGS> 28,511,922
<TOTAL-COSTS> 34,273,273
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 95,157
<INCOME-PRETAX> 1,263,072
<INCOME-TAX> 510,796
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 752,276
<EPS-PRIMARY> 0.26
<EPS-DILUTED> 0.26
</TABLE>
