SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended January 29, 2000
Commission File No. 1-11254
VERMONT PURE HOLDINGS, LTD.
(Exact name of registrant as specified in its charter)
Delaware 06-1325376
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Route 66; PO Box C; Randolph, VT 05060
(Address of principal executive offices) (Zip Code)
(802)728-3600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
CLASS MARCH 7, 2000
Common Stock, $.001 Par Value 10,289,758
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VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES
INDEX
Page Number
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of
January 29, 2000 (unaudited) and
October 30, 1999 4
Consolidated Statements of Operations
(unaudited) for the Three Months ended
January 29, 2000 and January 30, 1999 5
Consolidated Statements of Cash Flows
(unaudited) for the Three Months ended
January 29, 2000 and January 30, 1999 6
Notes to Consolidated Financial Statements
(unaudited) 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operation 8 - 11
Item 3. Quantitative and Qualitative Disclosure about
Market Risk 12
Part II - Other Information
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
2
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Item 6. Exhibits and Reports on Form 8-K 14
Signature 18
Exhibit Index 13 -17
3
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VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
January 29, October 30,
2000 1999
------------ -------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash ................................................................... $ 1,112,919 $ 367,018
Accounts receivable .................................................... 3,488,943 3,525,238
Notes receivable ....................................................... -- 975,000
Inventory .............................................................. 2,797,236 2,711,709
Current portion of deferred tax asset .................................. 601,922 601,922
Other current assets ................................................... 1,335,994 781,968
------------ ------------
TOTAL CURRENT ASSETS ............................................... 9,337,014 8,962,855
------------ ------------
PROPERTY AND EQUIPMENT - net of accumulated depreciation ..................... 11,261,074 11,122,258
------------ ------------
OTHER ASSETS:
Intangible assets - net of accumulated amortization .................... 10,684,185 10,443,207
Deferred tax asset ..................................................... 3,182,914 3,182,914
Other assets ........................................................... 130,037 122,996
------------ ------------
TOTAL OTHER ASSETS ................................................... 13,997,136 13,749,117
------------ ------------
TOTAL ASSETS .............................................................. $ 34,595,224 $ 33,834,230
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ....................................................... $ 2,728,134 $ 3,443,208
Current portion of customer deposits ................................... 47,716 45,033
Accrued expenses ....................................................... 672,133 851,371
Current portion of long term debt ...................................... 1,457,876 1,414,930
Current portion of obligations under capital leases .................... 169,668 180,589
------------ ------------
TOTAL CURRENT LIABILITIES ............................................ 5,075,527 5,935,131
Long term debt ......................................................... 1,516,821 1,663,893
Long term obligations under capital leases ............................. 352,310 379,583
Line of credit ......................................................... 13,500,000 11,689,792
Long term portion of customer deposits ................................. 765,630 684,334
------------ ------------
TOTAL LIABILITIES .................................................... 21,210,288 20,352,733
------------ ------------
STOCKHOLDERS' EQUITY:
Preferred stock - $.001 par value, 500,000 ............................. -- --
authorized shares, none issued and outstanding
shares at October 30, 1999
Common stock - $.001 par value, 50,000,000 ............................. 10,340 10,340
authorized shares, 10,339,758 issued and outstanding
shares at January 29, 2000 and 10,339,758 at
October 30, 1999
Paid in capital ........................................................ 23,197,724 23,197,724
Accumulated deficit .................................................... (9,654,378) (9,557,817)
Treasury stock, at cost, 50,000 shares ................................. (168,750) (168,750)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY ........................................... 13,384,936 13,481,497
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................................ $ 34,595,224 $ 33,834,230
============ ============
</TABLE>
See notes to consolidated financial statements
4
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VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months ended
-------------------------------
January 29, January 30,
2000 1999
<S> <C> <C>
SALES ...................................................... $ 6,423,768 $ 5,880,846
COST OF GOODS SOLD ......................................... 2,311,370 2,031,014
------------ ------------
GROSS PROFIT ............................................... 4,112,398 3,849,832
------------ ------------
OPERATING EXPENSES:
Selling, general and administrative expenses 3,521,629 2,716,990
Advertising expenses ....................... 509,462 688,541
Amortization ............................... 166,635 151,614
------------ ------------
TOTAL OPERATING EXPENSES ................................... 4,197,726 3,557,145
------------ ------------
INCOME (LOSS) FROM OPERATIONS .............................. (85,328) 292,687
------------ ------------
OTHER INCOME (EXPENSE):
Interest ................................... (278,713) (221,557)
Miscellaneous .............................. 272,887 --
------------ ------------
TOTAL OTHER INCOME (EXPENSE) ............................... (5,826) (221,557)
------------ ------------
NET INCOME (LOSS) .......................................... $ (91,154) $ 71,130
------------ ------------
NET INCOME (LOSS) PER SHARE - BASIC ........................ $ (0.01) $ 0.01
============ ============
NET INCOME (LOSS) PER SHARE - DILUTED ...................... $ (0.01) $ 0.01
============ ============
Weighted Average Shares Used in Computation - Basic ........ 10,289,758 10,250,901
============ ============
Weighted Average Shares Used in Computation - Diluted ...... 10,457,663 10,965,327
============ ============
</TABLE>
See notes to consolidated financial statements
5
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VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three months ended
----------------------------
January 29, January 30,
2000 1999
============= ============
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss) ...................................................................... $ (91,154) $ 71,130
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation ......................................................................... 452,330 333,389
Amortization ......................................................................... 166,635 151,614
(Gain) on settlement of note receivable .............................................. (295,000)
(Gain) loss on disposal of property and equipment .................................... 26,013 (13,117)
Changes in assets and liabilities (net of effect of acquisitions):
(Increase) Decrease in accounts receivable .......................................... 36,295 (535,466)
(Increase) Decrease in inventory ..................................................... (85,527) 194,950
(Increase) in other current assets ................................................... (554,026) (234,074)
(Increase) Decrease in other assets ................................................. 93,317 (62,053)
(Decrease) in accounts payable ....................................................... (715,074) (246,690)
Increase in customer deposits ........................................................ 93,979 53,840
(Decrease) Increase in accrued expenses .............................................. (179,238) 219,923
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES ..................................................... (1,051,451) (66,554)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment .............................................. (435,829) (550,553)
Proceeds from sale of fixed assets ..................................................... 13,125 --
Collection of note receivable .......................................................... 1,270,000
Cash used for acquistions .............................................................. (625,000) (132,090)
----------- -----------
NET CASH PROVIDED (USED IN) INVESTING ACTIVITIES .......................................... 222,296 (682,643)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of line of credit ............................................................. 1,810,208 1,682,000
Proceeds from debt ..................................................................... (114,433) --
Principal payment of debt .............................................................. (120,719) (518,055)
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES ................................................. 1,575,056 1,163,945
----------- -----------
NET INCREASE IN CASH ..................................................................... 745,901 414,748
CASH - Beginning of period ................................................................ 367,018 161,271
----------- -----------
CASH - End of period ..................................................................... $ 1,112,919 $ 576,019
=========== ===========
Cash paid for interest .................................................................... $ 230,370 $ 214,444
=========== ===========
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Equipment acquired under capital leases ................................................ $ 72,135 $ 31,113
=========== ===========
</TABLE>
See notes to consolidated financial statements
6
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VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Form 10-Q instructions and in the opinion of
management contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations, and cash flows for the periods presented. The results have been
determined on the basis of generally accepted accounting principles and
practices applied consistently with the Form 10-K for the year ended
October 30, 1999.
Certain information and footnote disclosures normally included in financial
statements presented in accordance with generally accepted accounting
principles have been condensed or omitted. The accompanying consolidated
financial statements should be read in conjunction with the financial
statements and notes thereto incorporated by reference from the Company's
Form 10-K for the year ended October 30, 1999.
2. LINE OF CREDIT
The Company amended and restated its five year revolving credit agreement
with First Union National Bank, on January 28, 2000. The revolving line of
credit was increased to $25 Million from $15 million under the terms and
conditions of the agreement. As of January 29, 2000, $13,500,000 had been
borrowed against this facility.
3. LEGAL PROCEEDINGS
The Company reached a settlement on December 1, 1999 with its largest
spring water source. As part of the settlement, the Spring Owner, the
Affiliate and others paid to the Company $1,270,000 and acknowledged the
Company's rights under the amended water supply contract and right of first
refusal to purchase the spring site. This settlement was mostly offset by
the Company issuing a $975,000 non-interest bearing convertible debenture
that the Company issued to the original debtor of the Spring Owner and
Affiliate.
4. SUBSEQUENT EVENT
In March 1999, Vermont Pure Holdings, Ltd. entered into distribution agree-
ments with several Snapple distributors in order to replace a major
customer. Effective March 1, 2000 the Company has modified its distribution
agreements with three of these distributors. Effective on this date,
Vermont Pure is the exclusive spring water carried by Mr. Natural Inc.,
Millrose Distributors, Inc. and Snapple of Long Island, Inc. The
distribution area of these distributors is the greater metropolitan New
York City area.
7
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PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
financial statements and notes thereto as filed in the Company's Form 10-K for
the year ended October 30, 1999.
FORWARD-LOOKING STATEMENTS
When used in the Form 10-Q and in future filings by the Company with the
Securities and Exchange Commission, the words or phrases "will likely result"
and "the Company expects," "will continue," "is anticipated," "estimated,"
"project," or "outlook" or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The Company wishes to caution readers not to
place undue reliance on any such forward-looking statements, each of which
speaks only as of the date made. Such statements are subject to certain risks
and uncertainties that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected. Among these
risks are water supply and bottling capacity constraints in the face of
significant growth, dependence on outside distributors, and reliance on
commodity price fluctuations as they influence raw material pricing, and rising
interest rates. The Company has no obligation to publicly release the result of
any revisions which may be made to any forward-looking statements to reflect
anticipated or unanticipated events or circumstances occurring after the date of
such statements.
RESULTS OF OPERATIONS
SALES - Sales for the first three months of fiscal year 2000 were $6,424,000, an
increase of $543,000 or 9% over sales of $5,881,000 for the corresponding period
last year. Excluding sales attributable to acquisitions made subsequent to the
first quarter of 1999, sales in the first three months of fiscal year 2000 were
2% over the corresponding period last year.
Sales for retail-size products decreased $ 484,000 or 18%, for the three months
of fiscal year 2000 compared to the corresponding period a year ago. The sales
decline is partially attributable to the termination of the Company's agreement
with its largest distributor and decreased averageselling prices. Average
selling prices for the three months ending January 29, 2000 were down 23%
compared to the corresponding period from the previous year. Hidden Spring and
Private Label revenues increased 290% and 33%, respectively, over the
corresponding period last year. Vermont Pure brand sales decreased 51% compared
to the corresponding period last year.
Sales for the home and office division increased $1,027,000 or 31%, for the
first three months of fiscal year 2000 compared to the corresponding period of
the prior year. Exclusive of acquisitions, sales of home and office related
products increased approximately 13% the first quarter of fiscal 2000 compared
to the same period last year. This is reflective of increased category growth
and market expansion.
COST OF GOODS SOLD - For the first three months of fiscal 2000, Cost of Goods
Sold was $2,311,000 compared to $2,031,000 for the same period in fiscal year
1999 resulting in gross profits of $4,112,000, or 64% of sales, and $3,850,000,
8
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or 65%, respectively. The increase in gross profit for the three month period
was due to an increase in sales volume which resulted in a lower cost per unit.
This had the effect of spreading the overhead burden over more units thereby
lowering the average unit cost. In addition, the Company's sales continued to be
skewed toward higher margin home and office sales.
OPERATING EXPENSES - For the first three months of fiscal year 2000 compared to
the corresponding period in fiscal year 1999, total operating expenses were
$4,198,000 and $3,557,000, an increase of $641,000 or 18%. Selling, general and
administrative expenses increased by $805,000 or 30%, for the first three months
of fiscal 2000. The increase in these costs was partially due to increased
freight and warehousing expenses relating to the PET inventory buildup as well
as the addition of the operating costs of acquired companies and the costs to
integrate these companies. The Company anticipates that it will continue to
pursue acquisitions in the future and that a key part of this growth strategy
will be maximizing the operating efficiencies of the acquired companies.
However, no assurance can be given that this effort will yield savings and
profit. The decrease of $179,000 in advertising and promotion expenses for the
respective periods was due to the Company's use of different distribution
channels that require less promotional support. However, given the competitive
nature of the industry, the Company anticipates that it will continue to spend
significant amounts in the future for advertising and promotion as it continues
to develop brand recognition and increase market penetration but can give no
assurances that increases in spending will result in higher sales. For the first
three months of fiscal year 2000, amortization increased $15,000 from the same
period one year ago as a result of increased goodwill from new acquisitions.
PROFIT FROM OPERATIONS - Profit from operations for the first three months of
fiscal 2000 was a loss of $107,000 as compared to a profit of $293,000 for the
corresponding period last year, a decrease of $400,000. The decrease is
attributable to additional operating costs of acquired companies as well as
inventory buildup costs.
OTHER INCOME/EXPENSE - Net interest expense increased $57,000 for the first
three months of fiscal year 2000 compared to the corresponding period in fiscal
year 1999. The increase in interest expense was a result of increased borrowing
to fund operations and finance acquisitions through a bank line of credit.
Miscellaneous income increased $273,000 during the first three months of fiscal
2000 compared to the corresponding period in fiscal 1999, reflecting the
transactions described in Part II, Item 1.
NET INCOME/LOSS- The Company's net loss for the first three months of fiscal
year 2000 was $91,000 compared to a net income of $71,000 for the corresponding
period last year, a decrease of $162,000.
LIQUIDITY AND CAPITAL RESOURCES
The net cash outflow from operations was $1,024,000 compared to a net cash
outflow of $67,000 for the same period last year. The decline of $957,000 was
attributable primarily to accelerating current liabilities payments, to fund the
Company's first quarter loss and to build inventory of retail product. The
Company's primary requirements for cash continues to be for the marketing and
promotional activities needed to effect market penetration and expand sales,
acquisition of operating assets needed to accommodate the growth of the
business, and debt repayment. These requirements may result in future net cash
outflows on a seasonal basis.
9
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As of January 29, 2000, the Company had working capital of $4,261,000 compared
to $3,028,000 on October 30, 1999, the end of the last fiscal year. The increase
in working capital of $1,233,000 reflects, primarily, the reduction of current
liabilities. Building inventory of retail product has become necessary during
the winter months because the Company does not have the capacity to meet
anticipated sales volume in the summer months. Scheduled debt repayments from
the financing of acquisitions and resulting integration costs and capital
expansion continues to be a significant use of cash for the Company.
The Company amended and restated its five year revolving credit agreement with
First Union National Bank, on January 28, 2000. The revolving line of credit was
increased to $25 Million from $15 million under the terms and conditions of the
agreement. The purpose of the loan continues to be for permitted acquisitions as
well as capital expenditures and working capital. Of the $25 million, $4.3
million will be allocated for a letter of credit to underwrite a new bond issue
for the Randolph, Vermont building expansion as well as new production equipment
purchases. As of January 29, 2000 $13,500,000 had been borrowed against this
facility. The proceeds were used for capital expenditures, working capital and
acquisition debt. Within 90 days subsequent to the signing of the new credit
agreement the Company must secure at least half of its debt utilizing interest
rate hedge instruments for the life of the agreement. For the remaining
outstanding debt under the agreement, the Company is required to pay interest
monthly at a rate of LIBOR plus 2.5%, currently approximately 8.5%. These rates
may change subject to certain financial covenants. The Company is required to
continue to meet loan covenants as defined in the agreement in order to have
access to the line of credit. The loan is secured by receivables, inventory,
equipment and intangible assets.
At October 30, 1999, the Company had recorded a deferred tax asset of
$3,793,000. No adjustments were made to this amount through the first quarter of
2000. Further recognition is dependent on future earnings.
Although the Company has increased its cash usage over the last year, due to
acquisitions, it anticipates that its working capital position will improve in
future quarters and will be adequate to fund operations when supplemented by its
operating line of credit. Future sales growth and acquisitions may require
significant capital additions. The Company anticipates that it will be able to
use its own resources and obtain financing for this expansion although no
assurance can be given that this financing will be available. The Company is
continuing to pursue an active program of evaluating acquisition options. To
complete any acquisitions, the Company anticipates using its capital resources
and the First Union facility described above.
YEAR 2000 READINESS DISCLOSURE
Computers, software and other equipment utilizing microprocessors that use only
two digits to identify a year in a date field may be unable to accurately
process certain date-based information at or after the January 1, 2000. This is
commonly referred to as the "Year 2000" or "Y2K" problem.
The Company has experienced no problems or issues relating to the Y2K problem as
of the date of this report. It has gone through transactions with substantially
all of the customer and vendor base and have not experienced any problems.
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Although the Company is satisfied that the business will not be impacted by the
possibility of a Y2K problem, it will maintain contingency plans for the
foreseeable future.
The foregoing Year 2000 capital disclosure constitutes a "Year 2000 readiness
disclosure" under the Year 2000 Information and Readiness Disclosure Act.
11
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PART I - ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risks relating to the Company's operations result primarily from changes
in interest rates and commodity prices (the resin prices for PET bottles).
Interest Rate Risks
At January 29, 2000 the Company had $13,500,000 of long term debt subject to
variable interest rates. Under the revolving line of credit agreement with First
Union National Bank the Company currently pays interest at a rate of LIBOR plus
2.5%. A hypothetical 100 basis point Increase in the LIBOR rate would result in
an additional $116,898 of interest expense on an annualized basis. As part of
the amended credit agreement with First Union, the Company is required to enter
into an interest rate swap agreement within 90 days of the signing of the
amended credit agreement that will fix 50% of the debt outstanding to fixed
interest rate for the life of the contract.
Commodity Price Risks
Although the Company has yearly contracts with its vendors that sets the
purchase price of its PET bottles, the vendors are entitled to pass on to the
Company any resin price increases. These prices are related to supply and demand
market factors for PET and, to a lesser extent the price of petroleum, from
where PET is derived. A hypothetical resin price increase of $.05 per pound
would result in an approximate price increase per bottle of $.005. During the
second half of fiscal 1999, resin prices rose twice for a total of $.10 per
pound, or $.01 per bottle.
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PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings
On October 1, 1999, the Company issued its $975,000 non-interest bearing
Convertible Debenture due September 30, 2001 (the "Debenture") to Marcon Capital
Corporation ("Marcon"). In consideration for the issuance of the Debenture,
Marcon transferred to the Company all of its rights under various loan
documents, including related collateral. The loan documents pertained to a loan
by Marcon to an affiliate (the "Affiliate") of the owner (the "Spring Owner") of
the Company's largest spring water source. The collateral included a mortgage
and security interests on the spring site and associated equipment; a guaranty
by the Spring Owner in favor of Marcon; a water supply contract in favor of
Marcon; the right to buy an equity ownership position in the Affiliate; and
other rights. As a result of this transaction, the Company became a creditor of
the Spring Owner and the Affiliate in the amount of approximately $905,000. The
purpose of the transaction was to minimize the possible adverse effect on the
Company' water supply due to defaults by the Spring Owner and the Affiliate in
their obligations to Marcon.
FOLLOWING ITS PURCHASE OF MARCON'S POSITION, THE COMPANY, AS CREDITOR, ATTEMPTED
TO NEGOTIATE WITH THE SPRING OWNER AND THE AFFILIATE TO RESOLVE THE MATTER. WHEN
THAT FAILED, THE COMPANY ADVISED THE SPRING OWNER AND THE AFFILIATE THAT IT WAS
EXERCISING ITS RIGHTS TO TAKE POSSESSION OF THE WATER SUPPLY CONTRACT AND
ACQUIRE AN EQUITY INTEREST IN THE AFFILIATE. THE SPRING OWNER AND THE AFFILIATE
THEN ATTEMPTED TO REPUDIATE THE COMPANY'S RIGHTS UNDER THE WATER SUPPLY
CONTRACT. THE COMPANY FILED THREE DIFFERENT LAWSUITS TO ENFORCE ITS RIGHTS: A
FORECLOSURE ACTION (VERMONT PURE HOLDINGS, LTD. V. PRISTINE MOUNTAIN SPRINGS,
INC., ET AL., WINDSOR COUNTY SUPERIOR COURT, VERMONT, FILED OCTOBER 22, 1999)
AND ACTIONS FOR EQUITABLE AND INJUNCTIVE RELIEF (VERMONT PURE HOLDINGS, LTD. V.
PRISTINE MOUNTAIN SPRINGS, INC., AMSOURCE LLC AND RONALD COLTON, WINDSOR COUNTY
SUPERIOR COURT, VERMONT, FILED NOVEMBER 17, 1999, AND VERMONT PURE HOLDINGS,
LTD. V. PRISTINE MOUNTAIN SPRINGS, INC., AMSOURCE LLC, RONALD COLTON, ET AL.,
Sullivan County Superior Court, New Hampshire, filed November 16, 1999).
These matters were settled by arbitration on December 1, 1999. As part of the
settlement, the Spring Owner, the Affiliate and others paid to the Company
$1,270,000 and acknowledged the Company's rights under the amended water supply
contract and right of first refusal to purchase the spring site. As amended, the
50-year water supply contract provides that the Company has an unqualified first
priority right to draw water from the spring site, subject to a co equal right
of the Affiliate to draw up to 5,000,000 gallons per month.
ITEM 2 - Changes in Securities
(a) None
(b) None
(c) None
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ITEM 3 - Defaults upon Senior Securities
None
ITEM 4 - Submission of Matters to a Vote of Security Holders
None
ITEM 5 - Other Information
None
ITEM 6 - Exhibits and Reports on Form 8-K
Exhibit
NUMBER DESCRIPTION
3.1 Amended and Restated Certificate of Incorporation of Registrant dated
January 12, 1994. (Incorporated by reference from Exhibit 3.3 of Form
10-KSB for fiscal year ended October 30, 1993 - File No. 1-11254.)
3.2 Amendment of Certificate of Incorporation of Registrant dated June 15,
1999.
3.3 By-Laws of Registrant. (Incorporated by reference from Exhibit 3.4 of
Registration Statement 33-46382.)
3.4 Amendment to By-Laws of Registrant Adopted March 26, 1997. (Incorporated by
reference from Exhibit 3.3 of Form 10-KSB for fiscal year ended October 25,
1997 - File No. 1-11254.)
10.1*Employment Agreement between the Registrant and Timothy G. Fallon dated as
of November 1, 1996. (Incorporated by reference from Exhibit 10.1 of Form
10-KSB for fiscal year ended October 25, 1997 - File No. 1-11254.)
10.2*Amendment to the November 1, 1996 Employment Agreement between t the
Registrant and Timothy G. Fallon. Dated November 1, 1999.
10.3*Employment Agreement between the Registrant and Bruce S. MacDonald dated as
of November 1, 1997. (Incorporated by reference from Exhibit 10.2 of Form
10-KSB for fiscal year ended October 25, 1999 - File No. 1-11254.)
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10.4*Stock Option Agreement between Registrant and Mr. Fallon. (Incorporated by
reference from Exhibit 10.7 of Form 10-K for fiscal year ended October 28,
1994, File No. 1-11254.)
10.5 1993 Performance Equity Plan. (Incorporated by reference from Exhibit 10.9
of Registration Statement 33-72940.)
10.6 Stock Purchase Agreement between Springs and Carolyn Howard relating to the
acquisition of A.M. Fridays, Inc. dated July 16, 1997. (Incorporated by
reference from Exhibit 10.1 of the Report on Form 10-QSB for the Quarter
Ended July 26, 1997.)
10.7 Stock Purchase Agreement between the Registrant and David Eger dated August
27, 1997 relating to Excelsior Spring Water Co. ("Excelsior").
(Incorporated by reference from Exhibit 10.1 of the Report on Form 8-K
dated September 11, 1997.)
10.8 Promissory Note from the Registrant to Mr. Eger in the principal amount of
$503,000. (Incorporated by reference from Exhibit 10.2 of the Report on
Form 8-K dated September 11, 1997.)
10.9 Form of Note Purchase Agreement betwee the Registrant and certain note
holders of Excelsior dated August 27, 1997. (Incorporated by reference from
Exhibit 10.3 of the Report on Form 8-K dated September 11, 1997.)
10.10Form of Stock Purchase Agreement between the Registrant and certain
stockholders of Excelsior dated August 27, 1997. (Incorporated by reference
from Exhibit 10.4 of the Report on Form 8-K dated September 11, 1997.)
10.11Schedule of Stock and Note Purchase Agreement information dated August 27,
1997 regarding the Excelsior purchase. (Incorporated by reference from
Exhibit 10.7 of the Report on Form 8-K dated September 11, 1997.)
10.12Consulting Agreement between the Registrant and Corporate Investors
Network, Inc. dated December 1, 1996. (Incorporated by reference from
Exhibit 10.1 of the Report on Form 10-QSB for the Quarter Ended January 25,
1997.)
10.131998 Incentive and Non-Statutory Stock Option Plan (Incorporated by
reference to Appendix A of the Registrant 1998 Proxy Statement.)
10.14Asset Purchase Agreement between Vermont Pure Holding, Ltd. and Vermont
Coffee Time, Inc. relating to the purchase certain assets and liabilities
dated December 19, 1997. (Incorporated by reference from Exhibit 10.1 of
the report on Form 10-QSB for the Quarter ended January 24, 1998).
15
<PAGE>
10.15Promissory Note Between Vermont Pure Springs, Inc. and Vermont Pure
Holdings and Coffee Time, Inc. dated January 5, 1998. (Incorporated by
reference from Exhibit 10.2 of the report on Form 10-QSB for the Quarter
ended January 24, 1998).
10.16Security Agreement between Vermont Pur Springs, Inc. and Vermont Pure
Holdings and Coffee Time, Inc. dated January 5, 1998. (Incorporated by
reference from Exhibit 10.3 of the report on Form 10-QSB for the Quarter
ended January 24, 1998).
10.17Consulting Agreement between Amy Berge and Vermont Pure Holdings, Ltd.
dated January 5, 1998. (Incorporated by reference from Exhibit 10.4 of the
report on Form 10-QSB for the Quarter ended January 24, 1998).
10.18Non Compete Agreement of Fred Beaucham and Jim Creed between Vermont Pure
Holdings, Ltd. and Sagamon Springs, Inc. dated January 6, 1998.
(Incorporated by reference from Exhibit 10.5 of the report on Form 10-QSB
for the Quarter ended April 25, 1998).
10.19Amended Loan and Security Agreement between Vermont Pure Springs, Inc and
First Union National Bank (formerly CoreStates Bank, N.A.) dated January
20, 1999.
10.201999 Employee Stock Purchase Plan (Incorporated by reference to Exhibit A
of the Registrant 1999 Proxy Statement.)
10.21Stock Purchase Agreement between the Registrant, Paul Hayes and Michael
Hayes dated July 27, 1999 relating to Adirondack Coffee Services, Inc.
10.22Promissory Note dated July 27 1999 from the Registrant to Mr. Hayes in the
Principal amount of $303,734.00
10.23Amended and Restated Spring Water Licenses and Supply Agreement between
Registrant and Pristine Mountain Springs of Vermont, Inc and Amsource, LLC
dated April 13, 1999.
10.24Loan Purchase Agreement to spring source dated September 30, 1999 between
the Registrant and Marcon Capital Corporation.
10.25Convertible Debenture Agreement dated September 30, 1999 between the
Registrant and Marcon Capital Corporation in the amount of $975,000.
10.26Amended and Restated Security Agreemen between Registrant and First Union
National Bank dated January 28, 2000
16
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10.27Amended and Restated Security Agreement between Vermont Pure Springs, Inc.
and First Union National Bank dated January 28, 2000.
10.28Loan Agreement between Registrant and Vermont Economic Development
Authority dated December 1, 1999
10.29Trust Indenture Between Registrant and Vermont Economic Development
Authority and First Union National Bank, as trustee, dated December 1,
1999.
10.30Amended and Restated Credit Agreement between Registrant and First Union
National Bank dated January 28, 2000.
10.31Settlement Agreement between Registrant and Pristine Mountain Springs,
Amsource LLC, Barton Lord and Ronald Colton dated December 1, 1999
10.32Amended and Restated Spring Water License and Supply Agreement between
Registrant and Mountain Springs, Amsource LLC, Barton Lord and Ronald
Colton dated December 15, 1999.
27 FINANCIAL DATA SCHEDULE
* Relates to compensation
17
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SIGNATURE
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.
Dated: March 7, 2000
Randolph, Vermont
VERMONT PURE HOLDINGS, LTD.
BY: /S/ BRUCE S. MACDONALD
Bruce S. MacDonald
Vice President, Chief Financial Officer
(Principal Accounting Officer and
Principal Financial Officer)
18
Amended and Restated
Security Agreement
THIS AGREEMENT is made this 28th day of January, 2000, between First Union
National Bank (successor by merger to CoreStates Bank, N.A.), for itself and as
administrative agent for the "Lenders" (the "Bank"), and Vermont Pure Holdings,
Ltd. (the "Debtor").
1. DEFINITIONS. As used herein and in any separate agreement between the
Bank and the Debtor in connection with this Agreement.
(a) "Account" means any right to payment for goods sold or leased or
for services rendered which is not evidenced by an Instrument or
Chattel Paper, whether or not it has been earned by performance
including all rights to payment under a charter or other contract
involving the use or hire of a vessel and all rights incident to
such charter or contract.
(b) "Qualified Account" means any Account meeting all the following
specifications: (i) it is lawfully owned by the Debtor and
subject to no lien, security interest or prior assignment, and
the Debtor has the right of assignment thereof and the power to
grant a security interest therein; (ii) it is a valid and
enforceable Account, representing the undisputed indebtedness of
an Account Debtor to the Debtor; (iii) it is not subject to any
defense, set-off, counter-claim, credit, allowance or adjustment;
(iv) no substantial part of any goods, the sale of which has
given rise to the Account, has been returned, rejected, lost or
damaged; (v) if it arises from the sale of goods by the Debtor,
such sale was an absolute sale and not on consignment or on
approval or on a sale or return basis nor subject to any other
repurchase or return agreement, and such goods have been shipped
to the Account Debtor; (vi) if it arises from the performance of
services, such services have actually been performed; (vii) it
arose in the ordinary course of the Debtor's business; (viii) no
notice of the Bankruptcy, receivership, reorganization,
insolvency, or financial embarrassment of the Account Debtor has
been received; (ix) the Account Debtor is not a subsidiary or
affiliate of the Debtor, does not control the Debtor, and is not
under the control of or under common control with the Debtor; and
(x) the Account meets such other specifications and requirements
which may from time to time be established by the Bank.
(c) "Account Debtor" means the Person who is obligated on an Account
or General Intangible.
(d) "Chattel Paper" means a writing or writings which evidence both a
monetary obligation and a security interest in or a lease of
specific goods.
(e) "Collateral" means (i) all of the Debtor's Inventory now owned or
hereafter acquired; (ii) all of the Debtor's Documents of Title
now owned or hereafter acquired; (iii) all of the Debtor's
Accounts now existing or hereafter arising; (iv) all of the
Debtor's Farm Products now existing or hereafter arising; (v) all
of the Debtor's Investment Property, General Intangibles, Chattel
<PAGE>
Paper and Instruments now existing or hereafter acquired or
arising; (vi) all guarantees of the Debtor's existing and future
Accounts and General Intangibles and all other security held by
the Debtor for the payment or satisfaction thereof; (vii) the
goods or the services, the sale or lease or performance of which
gave rise to any Account or General Intangible of the Debtor,
including any returned goods; (viii) all of the Debtor's
Equipment now owned or hereafter acquired; (ix) any balance or
share belonging to the Debtor of any deposit, agency or other
account with any bank and any other amounts which may be owing
from time to time by any bank to the Debtor;(x) all property of
any nature whatsoever of the Debtor now or hereafter in the
possession of or assigned or hypothecated to the Bank for any
purpose; (xi) all of the Debtors rights, privileges and licenses
relating to springs, spring rights, water rights and rights to
extract water from any property; and (xii) all Proceeds of all of
the foregoing, including all Proceeds of other Proceeds.
(f) "Debtor" means the Person who executes this Agreement as such.
The Debtor may be either a borrower from the Bank or a guarantor
of the indebtedness of another to the Bank, and in either case is
the Person obligated to pay the Liabilities secured hereby.
(g) "Document of Title" means a bill of lading, dock warrant, dock
receipt, warehouse receipt or order for the delivery of goods,
and also any other document which in the regular course of
business or financing is treated as adequately evidencing that
the Person in possession of it is entitled to receive, hold and
dispose of the document and the goods it covers.
(h) "Equipment" means tangible personal property held by the Debtor
for use primarily in business and includes equipment, machinery,
furniture, fixtures, dies, tools, and all accessories and parts
now or hereafter affixed thereto.
(i) "Farm Products" means crops or livestock or supplies used or
produced in farming operations or products of crops or livestock
in their unmanufactured states (such as ginned cotton, woolclip,
maple syrup, milk and eggs), if they are in the possession of a
Debtor engaged in raising, fattening, grazing or other farming
operations.
(j) "General Intangibles" means personal property of every kind and
description of Debtor other than goods, Accounts, Chattel Paper,
Documents of Title, Instruments and money, and includes without
limitation choses in action, books, records, customer lists, tax,
insurance and other kinds of refunds, patents, trademarks,
copyrights, trade names, plans, licenses and other rights in
personal property.
(k) "Instrument" means a negotiable instrument or a security or any
other writing which evidences a right to the payment of money and
is not itself a security agreement or lease and is of a type
which is, in ordinary course of business, transferred by delivery
with any necessary endorsement or assignment.
(l) "Inventory" means tangible personal property held by the Debtor
for sale or lease or to be furnished under contracts of service,
tangible personal property which the Debtor has so leased or
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<PAGE>
furnished, and raw materials, work in process and materials used,
produced or consumed in Debtor's business, and shall include
tangible personal property represented by Documents of Title. All
equipment, accessories and parts at any time attached or added to
items of Inventory or used in connection therewith shall be
deemed to be part of the Inventory.
(m) "Investment Property" has the meaning given to that term in the
Pennsylvania Uniform Commercial Code.
(n) "Lenders" has the meaning given to that term in the Loan
Agreement and includes, as of the date of this Security
Agreement, First Union National Bank and KeyBank National
Association.
(o) "Liabilities" means the "Obligations", as defined in the Loan
Agreement.
(p) "Loan Agreement" means that certain Amended and Restated Credit
Agreement dated of even date between Vermont Pure Holdings, Ltd.
and Vermont Pure Springs, Inc., as Borrowers, and First Union
National Bank, as Lender and administrative agent for the
Lenders, as the foregoing agreement may be amended, restated,
modified or supplemented from time to time.
(q) "Person" means an individual, a corporation, a government or
governmental subdivision or agency or instrumentality, a business
trust, an estate, a trust, a partnership, a cooperative, an
association, two or more Persons having a joint or common
interest, or any other legal or commercial entity.
(r) "Proceeds means whatever is received when Collateral is sold,
exchanged, collected or otherwise disposed of, including without
limitation insurance proceeds.
2. SECURITY INTEREST IN COLLATERAL. As Security for the payment of the
Liabilities the Debtor hereby assigns to the Bank and grants to the
Bank, and confirms its prior assignment and granting of, a lien upon
and security interest in the Collateral. Without the written consent
of the Bank, the Debtor will not create, incur, assume or suffer to
exist any other liens or security interests in the Collateral, except
the liens and encumbrances disclosed in the financial statements
mentioned in Section 6.1(o) of the Loan Agreement, or set forth on the
schedule attached as Schedule 10.3 to the Loan Agreement.
3. COLLECTION OF ACCOUNTS. The Bank hereby authorizes the Debtor to
collect all Accounts from the Account Debtors. The Proceeds of
Accounts so collected b y the Debtor shall be received and held by the
Debtor in trust for the Bank. After a default hereunder, the Debtor
shall deliver to the Bank within one day of the receipt thereof by the
Debtor all Proceeds in the form of cash, checks, drafts, notes and
other remittances received in payment of or on account of any of the
Debtor's Accounts. Such proceeds shall be deposited in a special
non-interest bearing bank account (the "Cash Collateral Account")
maintained with the Bank over which the Bank alone shall have power of
withdrawal. All Proceeds other than cash shall be deposited in
precisely the form in which received, except for the addition thereto
of the endorsement of the Debtor when necessary to permit collection
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<PAGE>
of the items, which endorsement the Debtor agrees to make. The Debtor
will not commingle any such Proceeds with any of the Debtor's other
funds or property but will hold them separate and apart from any other
funds or property and upon an express trust for the Bank until deposit
thereof is made in the Cash Collateral Account. Periodically, at the
Bank's discretion, the Bank will apply all or any part of the
collected Proceeds of Accounts on deposit in the Cash Collateral
Account to the payment in full or in part of such of the Liabilities
and in such order as the Bank may elect. The authority hereby given to
the Debtor to collect the Proceeds of Accounts in trust for the Bank
may be terminated by the Bank at any time. The Bank shall have the
right at any time, acting if it so chooses in the Debtor's name, to
collect the Debtor's accounts itself, to sell, assign, compromise,
discharge or extend the time for payment of any Account, to institute
legal action for the collection of any Account, and to do all acts and
things necessary or incidental thereto. The Debtor hereby ratifies all
that the Bank shall do by virtue hereof. The Bank may at any time,
after default hereunder, without notice to the Debtor, notify any
Account Debtor that the Account payable by such Account Debtor has
been assigned to the Bank and is to be paid directly to the Bank. At
the Bank's request the Debtor shall so notify Account Debtors and
shall indicate on all billings to Account Debtors that payments
thereon are to be made to the Bank. Without the written consent of the
Bank, the Debtor shall not compromise, discharge, extend the time for
payment of or otherwise grant any indulgence or allowance with respect
to any Account, except for immaterial discounts, credits, rebates or
reductions in the ordinary course of business consistent with past
practice.
4. PROCESSING AND SALES OF INVENTORY. So long as the Debtor is not in
default hereunder, the Debtor shall have the right, in the regular
course of its business, to process and sell its Inventory.
5. OTHER AGREEMENTS OR DEBTOR.
(a) The Debtor shall keep complete and accurate books and records and
make all necessary entries therein to reflect the quantities,
costs, values and location of its Inventory and Equipment, and
the transactions and facts giving rise to its Accounts and
General Intangibles and all payments, credits and adjustments
applicable thereto. The Debtor shall keep the Bank fully and
accurately informed as to the location of all such books and
records pertaining to the Collateral and shall permit the Bank's
agents to have access to the same extent as set forth in Section
8.11 of the Loan Agreement, to all such books and records and any
other records pertaining to the Debtor's business which the Bank
may request and, if deemed necessary by the Bank, after a default
hereunder, to remove them from the Debtor's place of business or
any other place where the same may be found for the purpose of
examining, auditing and copying the same. Any of the Debtor's
books and records so removed by the Bank's agents shall be
returned to the Debtor by the Bank as soon as the Bank shall have
completed its inspection, audit or copying thereof. The Bank
shall have the right to communicate with Account Debtors and
Debtor's accountant to the extent reasonably necessary to verify
account balances and any information provided by the Debtor. The
Bank's right to take possession of the Debtor's books and records
pertaining to the Collateral shall be enforceable at law by
action of replevin or by any other appropriate remedy at law or
in equity, and the Debtor consents to the entry of judicial
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<PAGE>
orders or injunctions enforcing such right without any notice to
the Debtor or any opportunity to be heard.
(b) In the event that any lien, assessment or tax liability against
the Debtor shall arise, whether or not entitled to priority over
the security interest of the Bank created hereby, the Debtor
shall give prompt notice thereof in writing to the Bank. The Bank
shall have the right (but shall be under no obligation) to pay
nay tax or other liability of the Debtor deemed by the Bank to
affect its interest. The Debtor shall repay to the Bank any sums
which the Bank shall have so paid, together with interest thereon
at the rate payable by the Debtor, at the time of payment by the
Bank, with respect to the Liabilities (or the highest such rate,
if there be more than one), but in no event less than six percent
(6%) per annum and the Debtor's liability to the Bank for such
repayment with interest shall be included in the Liabilities. In
addition, the Bank shall be subrogated to the extent of the
payment made by it to all rights of the recipient of such payment
against the assets of the Debtor. The Debtor shall furnish to the
Bank at such times as the Bank may reasonably require proof
satisfactory to the Bank of the making of payments or deposits
required by applicable law with respect to amounts withheld by
the Debtor from wages and salaries of employees and amounts
contributed by the Debtor on account of federal and other income
or wage taxes and amounts due under the Federal Insurance
Contributions Act. The Debtor represents, warrants and agrees
that, in respect to all employee pension or other benefit plans
maintained by the Debtor or any of its subsidiaries, the Debtor
is in full compliance, and will continue to comply fully, with
the Employee Retirement Income Security Act of 1974, as amended
and all rules and regulations adopted thereunder or pursuant
thereto. The Debtor continuously represents and warrants to the
Bank that all Collateral consisting of goods has been and will
continue to be produced in compliance with the requirements of
the Fair Labor Standards Act, including Sections 206 and 207
thereof, and will immediately notify Bank if Debtor has any
reason to believe otherwise.
(c) If any of the Debtor's Accounts or General Intangibles arises out
of a contract with the United States or any department, agency or
instrumentality thereof, the Debtor will immediately notify the
Bank thereof in writing and execute any instruments and take any
steps required by the Bank in order that the security interest of
the Bank hereunder in the Debtor's General Intangibles under such
contract and in all Accounts arising thereunder and in the
Proceeds thereof shall be perfected under the provisions of the
Federal Assignment of Claims Act.
(d) If any of the Debtor's Accounts is or becomes evidenced by a
promissory note, a trade acceptance or any other instrument for
the payment of money, the Debtor will promptly deliver such
instrument to the Bank appropriately endorsed to the Bank's
order. Regardless of the form of such endorsement, the Debtor
hereby waives presentment, demand, notice of dishonor, protest
and notice of protest and all other notices with respect thereto.
(e) The Debtor will keep its Inventory and Equipment insured against
such casualties and in such amounts as the Bank shall reasonably
require. All insurance policies shall be written for the benefit
of the Debtor as the insured, and shall name the Bank as loss
-5-
<PAGE>
payee, and such policies shall be delivered to and held by the
Bank. All such policies of insurance shall provide for at least
ten days' advance notice in writing to the Bank of any
cancellation thereof, and shall insure Bank notwithstanding the
act or neglect to act of Debtor. If the Debtor fails to pay the
premiums on any such insurance, the Bank shall have the right
(but shall be under no obligation) to pay such premiums for the
Debtor's account. The Debtor shall repay to the bank any sums
which the Bank shall have so paid, together with interest thereon
at the rate payable by the Debtor, at the time of payment by the
Bank, with respect to the Liabilities (or the highest such rate,
if there be more than one), but in no event less than six percent
(6%) per annum and the Debtor's liability to the Bank for such
repayment with interest shall be included in the Liabilities. The
Debtor hereby assigns to the Bank any return or unearned premium
which may be due upon cancellation of any such policies for any
reason whatsoever and directs the insurers to pay to the Bank any
amounts so due. The Debtor's rights to receive payment of such
return or unearned premiums and the proceeds of any such
insurance are included in the Liabilities. The Debtor hereby
assigns to the Bank any return or unearned premium which may be
due upon cancellation of any such policies for any reason
whatsoever and directs the insurers to pay to the Bank any
amounts so due. The Debtor's rights to receive payment of such
return or unearned premiums and the proceeds of any such
insurance are included in the Accounts and General Intangibles
which are hereby subjected to a security interest.
(f) The Debtor will maintain the equipment in good condition and
repair (subject to ordinary wear and tear) and will pay the cost
of repairs to or maintenance of the same and will not permit
anything to be done that may impair the value of the Equipment.
(g) Upon default hereunder, the Bank shall have the right to take
possession of any Inventory and the Debtor hereby assigns tot he
Bank its right of stoppage in transit with respect to any
Inventory. All costs of transportation, packing, storage and
insurance of any Inventory which the Bank may take into its
possession shall be promptly repaid to the Bank by the Debtor,
together with interest thereon at the rate payable by the Debtor,
at the time of payment by the Bank, with respect to the
Liabilities (or the highest such rate, if there be more than
one), but in no event less than six percent (6%) per annum and
the Debtor's liability to the Bank for such repayment with
interest shall be included in the Liabilities. If any oft he
Debtor" Inventory is or becomes represented by a Document of
Title, the Bank may require that such Document of Title be in
such form as to permit the Bank or anyone to whom the Bank may
negotiate the same to obtain delivery of the Inventory
represented thereby, and that it b delivered into the possession
of the Bank.
(h) At such intervals as the Bank may require, the Debtor shall
submit to the Bank a schedule reflecting in form and detail
reasonably satisfactory to the Bank the quantities, cost and
value of its Inventory and Equipment, and the amounts of all its
outstanding Accounts and the amount of the Accounts which are
Qualified Accounts and the value of all its General Intangibles.
The Bank may also require the Debtor to submit to the Bank copies
-6-
<PAGE>
of the invoices pertaining to all or any of its Accounts and
evidence of shipment of the Inventory the sale or leasing of
which have given rise to such Accounts.
(i) The Debtor shall promptly notify the Bank of any event causing
deterioration, loss or depreciation in value of any substantial
portion of the Debtor's Inventory and Equipment and the amount of
such loss or depreciation. The Debtor shall permit the Bank's
agents to have access to its Inventory and Equipment from time to
time, as reasonably requested by the Bank, or at any time after a
default hereunder, for purposes of examination, inspection, and
appraisal thereof and verification of the Debtor's records
pertaining thereto. Upon default by the Debtor, the Debtor shall
assemble the Inventory and Equipment and make them available to
the Bank at such place as may be designated by the Bank which is
reasonably convenient to both parties. At the request of the
Bank, the Debtor shall lease warehousing space in the Debtor's
own premises to the Bank for the purpose of taking any Inventory
into the custody of the Bank without removal thereof from such
premises and will erect such structures and post such signs as
the Bank may require in order to place such Inventory under the
exclusive control of the Bank.
(j) The Debtor will promptly notify the Bank (i) of any material
adverse change in the Debtor's financial condition or in the
financial condition of any Account Debtor or in the
collectibility of any of its Accounts, (ii) of all claims,
rejections, returns and adjustments which may result in a
reduction of the liability of any Account Debtor on an Account,
and which have a material adverse effect on Debtor's financial
condition, and (iii) of any Qualified Account which shall cease
for any reason to meet the specifications fixed hereby for
Qualified Accounts.
(k) The Debtor warrants that the Debtor's chief executive office and
all of its offices where it keeps its records concerning the
Collateral, all locations at which it keeps its Inventory and
Equipment and all locations at which it maintains a place of
business are listed in Section 18 hereof. Debtor further warrants
that Debtor has no plans for the removal of the Collateral to any
location not set forth in Section 18. The Debtor shall promptly
notify the Bank in writing of any change in the Debtor's name,
chief executive office or the location of the Debtor's records,
of any change in the location of the Collateral, of any change in
the location of any place of business and of the establishment of
any new place of business. If any of the Collateral or any of the
Debtor's records concerning the Collateral are at any time to be
located on premises leased by the Debtor or on premises owned by
the Debtor, subject to a mortgage or other lien, the Debtor shall
obtain and deliver to the Bank, prior to the delivery of any
Collateral or records concerning the Collateral to said premises,
an agreement in form satisfactory to the Bank, waiving the
landlord's or mortgagee's or lienholder's rights to enforce any
claim against the Debtor for moneys due under the lease, mortgage
or other lien by levy of distraint or other similar proceedings
against the Collateral or the Debtor's records concerning the
Collateral and assuring the Bank's ability to have access to the
Collateral and the Debtor's records concerning the Collateral in
order to exercise its rights hereunder to take possession
thereof.
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<PAGE>
(l) The Debtor shall pay to the Bank on demand, with interest at the
rate payable by the Debtor, at the time of payment by the Bank,
with respect to the Liabilities (or the highest such rate, if
there be more than one), but in no event less than six percent
(6%) per annum, any and all expenses (including reasonable
attorney's fees and legal expenses, filing fees, searches and
termination costs), which may have been incurred by the Bank (i)
to enforce payment of any Account or to enforce any General
Intangibles or to enforce any of the Liabilities, whether as
against an Account Debtor, the Debtor or any guarantor or surety
of any Account Debtor or of the Debtor; or (ii) in the
enforcement, prosecution or defense of any action growing out of
or connected with the subject matter of this Agreement, the
Liabilities, the Collateral or any of the Bank's rights therein
or thereto; (iii) in connection with the custody, preservation,
use, operation, preparation for sale or sale of any Collateral;
or (iv) in connection with preparation and completion of this
Agreement and any and all related agreements and consummation of
the financing arrangements described herein and any modification
or extension hereof; or (v) with respect to the enforcement,
protection or preservation from time to time of the Bank's rights
under this Agreement or with respect the Collateral. The Debtor's
liability to the Bank for such repayment with interest shall be
included in the Liabilities and is secured by the Collateral.
(m) The Debtor shall provide the Bank with all financial statements
or other financial documents as and when required under this Loan
Agreement. The Debtor further covenants and agrees to execute
from time to time any and all agreements and documents (including
financing statements) which the Bank may request in order to
perfect its lien on the Collateral and otherwise carry out the
provisions of this Agreement. The Debtor further authorizes the
Bank to file a carbon, photographic or other reproduction of this
Agreement or a financing statement previously filed under this
Agreement as a financing statement in any jurisdiction. If
certificates of title are issued or outstanding with respect to
any of the Collateral, the Debtor will cause the security
interest of the Bank to be properly noted thereon and will
promptly deliver such certificates to the Bank.
(n) Without the prior written consent of the Bank, the Debtor shall
not sell or otherwise dispose of its Equipment, other than
dispositions made in the ordinary course of business of obsolete
or worn out equipment, and, except in the ordinary course of
business, the Debtor shall not sell or dispose of its Inventory.
6. ENVIRONMENTAL MATTERS.
(a) As used in this Agreement, the following terms shall have the
following meanings: (i) "Environmental Laws" means any and all
applicable federal, state and local environmental laws, rules and
regulations whether now or existing or hereafter enacted together
with all amendments, modifications and supplements thereof; and
(ii) "Hazardous Materials" means any contaminants, hazardous
substances, regulated substances, or hazardous wastes which may
be the subject of liability pursuant to any Environmental Law.
(b) The Debtor represents and warrants that to the best of its
knowledge, no property owned or leased by the Debtor or any
subsidiary of the Debtor is in violation of any Environmental
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<PAGE>
Laws, no Hazardous Materials are present on said property in
violation of any Environmental Law and neither the Debtor nor nay
subsidiary of the Debtor has been identified in any litigation,
administrative proceedings or investigation as a responsible
party for any liability under and Environmental Laws.
(c) The Debtor shall not use, generate, treat, store, dispose of or
otherwise introduce, or permit any subsidiary to use, generate,
treat, store, dispose of or otherwise introduce, any Hazardous
Materials into or on any property owned or leased by the Debtor,
and will not, and will not permit any subsidiary to, cause,
suffer, allow or permit anyone else to do so, except in an
environmentally safe manner through methods which have been
approved by and meet all of the standards of the federal
Environmental Protection Agency and any other federal, state or
local agency with authority to enforce Environmental Laws. The
Debtor hereby agrees to indemnify, reimburse, defend and hold
harmless the Bank and its directors, officers, agents and
employees ("Indemnified Parties") for, from and against all
demands, liabilities, damages, costs, claims, suits, actions,
legal or administrative proceedings, interest, losses, expenses
and reasonable attorney's fees (including any such fees and
expenses incurred in enforcing this indemnity) asserted against,
imposed on or incurred by any of the Indemnified Parties,
directly or indirectly pursuant to or in connection with the
application of any Environmental Law, to acts or omissions
occurring at any time on or in connection with any property owned
or leased by the Debtor or any subsidiary of the Debtor or any
business conducted thereon.
7. DEFAULT. The Debtor shall be in default hereunder upon the occurrence
of any "Event of Default" as defined in the Loan Agreement (after the
expiration of any applicable notice and cure periods).
8. ACCELERATION AND ENFORCEMENT RIGHTS. Whenever the Debtor shall be in
default as aforesaid, (i) the Bank may declare the entire unpaid
amount of such of the Liabilities as are not then due and payable to
become immediately due and payable without notice to or demand on any
Obligor; and (ii) the Bank may at its option exercise from time to
time nay or all rights and remedies available to it under the Uniform
Commercial Code or otherwise available to it, including the right to
collect, receipt for, settle, compromise, adjust, sue for, foreclose
or otherwise realize upon any of the Collateral and to dispose of any
of the Collateral at public or private sale(s) or other proceedings,
with or without advertisement, and the Debtor agrees that the Bank or
its nominee may become the purchaser at any such sale(s). Bank shall
have the unconditional right to retain and obtain the full benefit of
all Collateral until all Liabilities of the Debtor to the Bank are
paid and satisfied in full. If nay notification of intended
disposition of the Collateral is required by law, such notice shall be
deemed reasonable fi mailed at least 10 days before such disposition
addressed to the Debtor at its Address shown herein. If any Note
secured hereby is payable on demand, Bank's right to require payment
shall not be restricted or impaired by the absence, non-occurrence or
waiver of an Event of Default, and it is understood that if such Note
is payable on demand, the Bank may require payment at any time.
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<PAGE>
9. APPLICATION OF COLLATERAL. The Proceeds of any Collateral received by
the Bank at any time before or after default, whether from sale or
Collateral or otherwise, may be applied to the payment in full or in
part of such of the Liabilities and in such order as the Bank may
elect. The Debtor, to the extent that it has any right, title or
interest in any of the Collateral, authorized Bank to proceed against
the Collateral in nay order that Bank may determine and waives and
releases any right to require the Bank to collect any of the
Liabilities from any source other than from the Collateral under any
theory of marshalling of assets, or otherwise, and specifically
authorizes the Bank to proceed against any of the Collateral in which
the Debtor has a right, title or interest with respect to any of the
Liabilities in any manner that the Bank may determine.
10. POWER OF ATTORNEY. The Debtor does hereby appoint any officer or agent
of the Bank as the Debtor's true and lawful attorney-in-fact, with
power to endorse the name of the Debtor upon any notes, checks,
drafts, money orders, or other instruments of payment or Collateral
that may come into possession of Bank; to sign and endorse the name of
the Debtor upon any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against Account Debtors,
assignments, verifications and notices in connection with Accounts,
and any instruments or documents relating thereto or to the Debtor's
rights therein; and to give written notice to such office and
officials of the United States Postal Service to effect such change or
changes of address so that all mail addressed to the Debtor may be
delivered directly to Bank (Bank will return all mail not related to
the Liabilities or the Collateral); granting unto Debtor's said
attorney full power to do any and all things necessary to be done with
respect to the above transactions as fully and effectually as Debtor
might or could do, and hereby ratifying all that said attorney shall
lawfully do or cause to be done by virtue hereof. This power of
attorney shall be irrevocable for the term of this Agreement and all
transactions hereunder.
11. TERM. The term of this Agreement shall commence with the date hereof
and end upon the full and final payment of the Liabilities, and the
Bank shall deliver to Debtor, at the Debtor's request, such of the
Collateral as shall not have been sold or otherwise disposed of
pursuant to this Agreement or the Loan Agreement.
12. SUCCESSORS AND ASSIGNS. All provisions herein shall inure to, and
become binding upon, the heirs, executors, administrators, successors,
representatives, receivers, trustees and assigns of the parties,
provided, however, that this Agreement shall not be assignable by the
Debtor without the prior written approval of the Bank.
13. THE DEBTOR'S AUTHORITY AND CAPACITY, ETC. The Debtor represents and
warrants that the Bank is obtaining and shall maintain at all times a
first lien on all of the Collateral, except as disclosed by the
financial statements mentioned in Section 6.1(o) of the Loan Agreement
or as set forth on the Schedule attached as Schedule 10.3 to the Loan
Agreement. If the Debtor is a corporation, the Debtor further
represents and warrants that it is duly organized, validly in
existence and in good standing in its state of incorporation and any
other state where the nature or extent of its business requires
qualification, that the execution and performance by the Debtor of
this Agreement and any related agreements is authorized by the
Debtor's Board of Directors and does not violate the Articles of
Incorporation or By-Laws of the Debtor or any other Agreement or
contract by which the Debtor is bound. The Debtor represents and
warrants that this Agreement is the legal, valid and binding
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<PAGE>
obligation of the Debtor enforceable against the Debtor in accordance
with its terms.
14. CONSENT TO JURISDICTION AND VENUE. IN ANY LEGAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER, EACH UNDERSIGNED
PARTY HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF
ANY STATE OR FEDERAL COURT LOCATED IN ANY COUNTY IN THE COMMONWEALTH
OF PENNSYLVANIA WHERE THE BANK MAINTAINS AN OFFICE AND AGREES NOT TO
RAISE ANY OBJECTION TO SUCH JURISDICTION OR TO THE LAYING OR
MAINTAINING OF THE VENUE OF ANY SUCH PROCEEDING IN SUCH COUNTY. EACH
UNDERSIGNED PARTY AGREES THAT SERVICE OF PROCESS IN ANY SUCH
PROCEEDING MAY BE DULY EFFECTED UPON ITS BY MAILING A COPY THEREOF, BY
REGISTERED MAIL, POSTAGE PREPAID, TO EACH UNDERSIGNED PARTY.
15. WAIVER OF JURY TRIAL. EACH UNDERSIGNED PARTY HEREBY WAIVES, AND THE
BANK BY ITS ACCEPTANCE HEREOF THEREBY WAIVES, TRIAL BY JURY IN ANY
LEGAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING
OUT OF OR RELATED TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK TO
ENTER INTO, ACCEPT OR RELY UPON THIS AGREEMENT.
16. MISCELLANEOUS. The construction and interpretation of this Agreement
and all agreements shall be governed by the laws of the Commonwealth
of Pennsylvania. No modification hereof shall be binding or
enforceable unless in writing and signed by the party against whom
enforcement is sought. If any provision of this Agreement is
determined to be unenforceable or invalid, such determination shall
not affect or impair the remaining provisions of the Agreement. No
rights are intended to be created hereunder for the benefit of any
third party beneficiary hereof. The individual signatory(ies) on
behalf of the Debtor represents that he(they) is(are) authorized to
execute this Agreement on behalf of the Debtor. This Agreement
supplements the Debtor's obligations under any promissory notes or
separate agreements with the Bank. This Security Agreement amends and
restates, but does not supercede the Liabilities or other obligations
of the Debtor under, that previous security agreement executed and
delivered by the Debtor to CoreStates Bank, N.A.,
predecessor-in-interest to First Union National Bank on or about April
8, 1998.
17. LOCATIONS OF DEBTOR. The Debtor represents and warrants that the
following addresses (together with any additional addresses which may
be shown on any attached schedule) correctly set forth all of the
locations where the Debtor maintains a place of business, its records
or the Collateral.
Chief Executive Office:
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<PAGE>
Route66, Paramount Industrial Park,
Randolph, Vermont 05060
Other Locations: None.
18. NAME OF DEBTOR. The Debtor represents and warrants that the name of
the Debtor shown on this Agreement is the correct, full legal name of
the Debtor and that the Debtor has not at any time changed its name,
identity or corporate structure, been the surviving corporation in a
merger, acquired any other business, or engaged in business under an
assumed name or trade name except as set forth below.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
under seal and intending to be legally bound on the day and year first above
written.
First Union National Bank (successor
by merger to CoreStates Bank, N.A.), for
itself and as administrative agent for
the "Lenders"
VERMONT PURE HOLDINGS, LTD.
- ------------------------------------- By--------------------------------------
(Name of Corporate or Partnership (Signature)
Debtor)
By----------------------------------- ----------------------------------------
Timothy Fallon, Chief Executive David W. Mills, Vice President
Officer and President
- ------------------------------------- Address
Bruce MacDonald, Chief Financial
Officer and Secretary
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Amended and Restated
Security Agreement
THIS AGREEMENT is made this 28th day of January, 2000, between First Union
National Bank (successor by merger to CoreStates Bank, N.A.), for itself and as
administrative agent for the "Lenders" (the "Bank"), and Vermont Pure Springs,
Inc. (the "Debtor").
1. DEFINITIONS. As used herein and in any separate agreement between the
Bank and the Debtor in connection with this Agreement.
(a) "Account" means any right to payment for goods sold or leased or
for services rendered which is not evidenced by an Instrument or
Chattel Paper, whether or not it has been earned by performance
including all rights to payment under a charter or other contract
involving the use or hire of a vessel and all rights incident to
such charter or contract.
(b) "Qualified Account" means any Account meeting all the following
specifications: (i) it is lawfully owned by the Debtor and
subject to no lien, security interest or prior assignment, and
the Debtor has the right of assignment thereof and the power to
grant a security interest therein; (ii) it is a valid and
enforceable Account, representing the undisputed indebtedness of
an Account Debtor to the Debtor; (iii) it is not subject to any
defense, set-off, counter-claim, credit, allowance or adjustment;
(iv) no substantial part of any goods, the sale of which has
given rise to the Account, has been returned, rejected, lost or
damaged; (v) if it arises from the sale of goods by the Debtor,
such sale was an absolute sale and not on consignment or on
approval or on a sale or return basis nor subject to any other
repurchase or return agreement, and such goods have been shipped
to the Account Debtor; (vi) if it arises from the performance of
services, such services have actually been performed; (vii) it
arose in the ordinary course of the Debtor's business; (viii) no
notice of the Bankruptcy, receivership, reorganization,
insolvency, or financial embarrassment of the Account Debtor has
been received; (ix) the Account Debtor is not a subsidiary or
affiliate of the Debtor, does not control the Debtor, and is not
under the control of or under common control with the Debtor; and
(x) the Account meets such other specifications and requirements
which may from time to time be established by the Bank.
(c) "Account Debtor" means the Person who is obligated on an Account
or General Intangible.
(d) "Chattel Paper" means a writing or writings which evidence both a
monetary obligation and a security interest in or a lease of
specific goods.
(e) "Collateral" means (i) all of the Debtor's Inventory now owned or
hereafter acquired; (ii) all of the Debtor's Documents of Title
now owned or hereafter acquired; (iii) all of the Debtor's
Accounts now existing or hereafter arising; (iv) all of the
Debtor's Farm Products now existing or hereafter arising; (v) all
of the Debtor's Investment Property, General Intangibles, Chattel
<PAGE>
Paper and Instruments now existing or hereafter acquired or
arising; (vi) all guarantees of the Debtor's existing and future
Accounts and General Intangibles and all other security held by
the Debtor for the payment or satisfaction thereof; (vii) the
goods or the services, the sale or lease or performance of which
gave rise to any Account or General Intangible of the Debtor,
including any returned goods; (viii) all of the Debtor's
Equipment now owned or hereafter acquired; (ix) any balance or
share belonging to the Debtor of any deposit, agency or other
account with any bank and any other amounts which may be owing
from time to time by any bank to the Debtor; (x) all property of
any nature whatsoever of the Debtor now or hereafter in the
possession of or assigned or hypothecated to the Bank for any
purpose; (xi) all of the Debtors rights, privileges and licenses
relating to springs, spring rights, water rights and rights to
extract water from any property; and (xii) all Proceeds of all of
the foregoing, including all Proceeds of other Proceeds.
(f) "Debtor" means the Person who executes this Agreement as such.
The Debtor may be either a borrower from the Bank or a guarantor
of the indebtedness of another to the Bank, and in either case is
the Person obligated to pay the Liabilities secured hereby. all
Proceeds of other Proceeds.
(g) "Document of Title" means a bill of lading, dock warrant, dock
receipt, warehouse receipt or order for the delivery of goods,
and also any other document which in the regular course of
business or financing is treated as adequately evidencing that
the Person in possession of it is entitled to receive, hold and
dispose of the document and the goods it covers.
(h) "Equipment" means tangible personal property held by the Debtor
for use primarily in business and includes equipment, machinery,
furniture, fixtures, dies, tools, and all accessories and parts
now or hereafter affixed thereto.
(i) "Farm Products" means crops or livestock or supplies used or
produced in farming operations or products of crops or livestock
in their unmanufactured states (such as ginned cotton, woolclip,
maple syrup, milk and eggs), if they are in the possession of a
Debtor engaged in raising, fattening, grazing or other farming
operations.
(j) "General Intangibles" means personal property of every kind and
description of Debtor other than goods, Accounts, Chattel Paper,
Documents of Title, Instruments and money, and includes without
limitation choses in action, books, records, customer lists, tax,
insurance and other kinds of refunds, patents, trademarks,
copyrights, trade names, plans, licenses and other rights in
personal property.
(k) "Instrument" means a negotiable instrument or a security or any
other writing which evidences a right to the payment of money and
is not itself a security agreement or lease and is of a type
which is, in ordinary course of business, transferred by delivery
with any necessary endorsement or assignment.
(l) "Inventory" means tangible personal property held by the Debtor
for sale or lease or to be furnished under contracts of service,
-2-
<PAGE>
tangible personal property which the Debtor has so leased or
furnished, and raw materials, work in process and materials used,
produced or consumed in Debtor's business, and shall include
tangible personal property represented by Documents of Title. All
equipment, accessories and parts at any time attached or added to
items of Inventory or used in connection therewith shall be
deemed to be part of the Inventory.
(m) "Investment Property" has the meaning given to that term in the
Pennsylvania Uniform Commercial Code.
(n) "Lenders" has the meaning given to that term in the Loan
Agreement and includes, as of the date of this Security
Agreement, First Union National Bank and KeyBank National
Association.
(o) "Liabilities" means the "Obligations", as defined in the Loan
Agreement.
(p) "Loan Agreement" means that certain Amended and Restated Credit
Agreement dated of even date between Vermont Pure Holdings, Ltd.
and Vermont Pure Springs, Inc., as Borrowers, and First Union
National Bank, as Lender and administrative agent for the
Lenders, as the foregoing agreement may be amended, restated,
modified or supplemented from time to time.
(q) "Person" means an individual, a corporation, a government or
governmental subdivision or agency or instrumentality, a business
trust, an estate, a trust, a partnership, a cooperative, an
association, two or more Persons having a joint or common
interest, or any other legal or commercial entity.
(r) "Proceeds means whatever is received when Collateral is sold,
exchanged, collected or otherwise disposed of, including without
limitation insurance proceeds.
2. SECURITY INTEREST IN COLLATERAL. As Security for the payment of the
Liabilities the Debtor hereby assigns to the Bank and grants to the
Bank, and confirms its prior assignment and granting of, a lien upon
and security interest in the Collateral. Without the written consent
of the Bank, the Debtor will not create, incur, assume or suffer to
exist any other liens or security interests in the Collateral, except
the liens and encumbrances disclosed in the financial statements
mentioned in Section 6.1(o) of the Loan Agreement, or set forth on the
schedule attached as Schedule 10.3 to the Loan Agreement.
3. COLLECTION OF ACCOUNTS. The Bank hereby authorizes the Debtor to
collect all Accounts from the Account Debtors. The Proceeds of
Accounts so collected b y the Debtor shall be received and held by the
Debtor in trust for the Bank. After a default hereunder, the Debtor
shall deliver to the Bank within one day of the receipt thereof by the
Debtor all Proceeds in the form of cash, checks, drafts, notes and
other remittances received in payment of or on account of any of the
Debtor's Accounts. Such proceeds shall be deposited in a special
non-interest bearing bank account (the "Cash Collateral Account")
maintained with the Bank over which the Bank alone shall have power of
withdrawal. All Proceeds other than cash shall be deposited in
precisely the form in which received, except for the addition thereto
of the endorsement of the Debtor when necessary to permit collection
-3-
<PAGE>
of the items, which endorsement the Debtor agrees to make. The Debtor
will not commingle any such Proceeds with any of the Debtor's other
funds or property but will hold them separate and apart from any other
funds or property and upon an express trust for the Bank until deposit
thereof is made in the Cash Collateral Account. Periodically, at the
Bank's discretion, the Bank will apply all or any part of the
collected Proceeds of Accounts on deposit in the Cash Collateral
Account to the payment in full or in part of such of the Liabilities
and in such order as the Bank may elect. The authority hereby given to
the Debtor to collect the Proceeds of Accounts in trust for the Bank
may be terminated by the Bank at any time. The Bank shall have the
right at any time, acting if it so chooses in the Debtor's name, to
collect the Debtor's accounts itself, to sell, assign, compromise,
discharge or extend the time for payment of any Account, to institute
legal action for the collection of any Account, and to do all acts and
things necessary or incidental thereto. The Debtor hereby ratifies all
that the Bank shall do by virtue hereof. The Bank may at any time,
after default hereunder, without notice to the Debtor, notify any
Account Debtor that the Account payable by such Account Debtor has
been assigned to the Bank and is to be paid directly to the Bank. At
the Bank's request the Debtor shall so notify Account Debtors and
shall indicate on all billings to Account Debtors that payments
thereon are to be made to the Bank. Without the written consent of the
Bank, the Debtor shall not compromise, discharge, extend the time for
payment of or otherwise grant any indulgence or allowance with respect
to any Account, except for immaterial discounts, credits, rebates or
reductions in the ordinary course of business consistent with past
practice.
4. PROCESSING AND SALES OF INVENTORY. So long as the Debtor is not in
default hereunder, the Debtor shall have the right, in the regular
course of its business, to process and sell its Inventory.
5. OTHER AGREEMENTS OR DEBTOR.
(a) The Debtor shall keep complete and accurate books and records and
make all necessary entries therein to reflect the quantities,
costs, values and location of its Inventory and Equipment, and
the transactions and facts giving rise to its Accounts and
General Intangibles and all payments, credits and adjustments
applicable thereto. The Debtor shall keep the Bank fully and
accurately informed as to the location of all such books and
records pertaining to the Collateral and shall permit the Bank's
agents to have access to the same extent as set forth in Section
8.11 of the Loan Agreement, to all such books and records and any
other records pertaining to the Debtor's business which the Bank
may request and, if deemed necessary by the Bank, after a default
hereunder, to remove them from the Debtor's place of business or
any other place where the same may be found for the purpose of
examining, auditing and copying the same. Any of the Debtor's
books and records so removed by the Bank's agents shall be
returned to the Debtor by the Bank as soon as the Bank shall have
completed its inspection, audit or copying thereof. The Bank
shall have the right to communicate with Account Debtors and
Debtor's accountant to the extent reasonably necessary to verify
account balances and any information provided by the Debtor. The
Bank's right to take possession of the Debtor's books and records
pertaining to the Collateral shall be enforceable at law by
action of replevin or by any other appropriate remedy at law or
in equity, and the Debtor consents to the entry of judicial
-4-
<PAGE>
orders or injunctions enforcing such right without any notice to
the Debtor or any opportunity to be heard.
(b) In the event that any lien, assessment or tax liability against
the Debtor shall arise, whether or not entitled to priority over
the security interest of the Bank created hereby, the Debtor
shall give prompt notice thereof in writing to the Bank. The Bank
shall have the right (but shall be under no obligation) to pay
nay tax or other liability of the Debtor deemed by the Bank to
affect its interest. The Debtor shall repay to the Bank any sums
which the Bank shall have so paid, together with interest thereon
at the rate payable by the Debtor, at the time of payment by the
Bank, with respect to the Liabilities (or the highest such rate,
if there be more than one), but in no event less than six percent
(6%) per annum and the Debtor's liability to the Bank for such
repayment with interest shall be included in the Liabilities. In
addition, the Bank shall be subrogated to the extent of the
payment made by it to all rights of the recipient of such payment
against the assets of the Debtor. The Debtor shall furnish to the
Bank at such times as the Bank may reasonably require proof
satisfactory to the Bank of the making of payments or deposits
required by applicable law with respect to amounts withheld by
the Debtor from wages and salaries of employees and amounts
contributed by the Debtor on account of federal and other income
or wage taxes and amounts due under the Federal Insurance
Contributions Act. The Debtor represents, warrants and agrees
that, in respect to all employee pension or other benefit plans
maintained by the Debtor or any of its subsidiaries, the Debtor
is in full compliance, and will continue to comply fully, with
the Employee Retirement Income Security Act of 1974, as amended
and all rules and regulations adopted thereunder or pursuant
thereto. The Debtor continuously represents and warrants to the
Bank that all Collateral consisting of goods has been and will
continue to be produced in compliance with the requirements of
the Fair Labor Standards Act, including Sections 206 and 207
thereof, and will immediately notify Bank if Debtor has any
reason to believe otherwise.
(c) If any of the Debtor's Accounts or General Intangibles arises out
of a contract with the United States or any department, agency or
instrumentality thereof, the Debtor will immediately notify the
Bank thereof in writing and execute any instruments and take any
steps required by the Bank in order that the security interest of
the Bank hereunder in the Debtor's General Intangibles under such
contract and in all Accounts arising thereunder and in the
Proceeds thereof shall be perfected under the provisions of the
Federal Assignment of Claims Act.
(d) If any of the Debtor's Accounts is or becomes evidenced by a
promissory note, a trade acceptance or any other instrument for
the payment of money, the Debtor will promptly deliver such
instrument to the Bank appropriately endorsed to the Bank's
order. Regardless of the form of such endorsement, the Debtor
hereby waives presentment, demand, notice of dishonor, protest
and notice of protest and all other notices with respect thereto.
(e) The Debtor will keep its Inventory and Equipment insured against
such casualties and in such amounts as the Bank shall reasonably
require. All insurance policies shall be written for the benefit
of the Debtor as the insured, and shall name the Bank as loss
-5-
<PAGE>
payee, and such policies shall be delivered to and held by the
Bank. All such policies of insurance shall provide for at least
ten days' advance notice in writing to the Bank of any
cancellation thereof, and shall insure Bank notwithstanding the
act or neglect to act of Debtor. If the Debtor fails to pay the
premiums on any such insurance, the Bank shall have the right
(but shall be under no obligation) to pay such premiums for the
Debtor's account. The Debtor shall repay to the bank any sums
which the Bank shall have so paid, together with interest thereon
at the rate payable by the Debtor, at the time of payment by the
Bank, with respect to the Liabilities (or the highest such rate,
if there be more than one), but in no event less than six percent
(6%) per annum and the Debtor's liability to the Bank for such
repayment with interest shall be included in the Liabilities. The
Debtor hereby assigns to the Bank any return or unearned premium
which may be due upon cancellation of any such policies for any
reason whatsoever and directs the insurers to pay to the Bank any
amounts so due. The Debtor's rights to receive payment of such
return or unearned premiums and the proceeds of any such
insurance are included in the Liabilities. The Debtor hereby
assigns to the Bank any return or unearned premium which may be
due upon cancellation of any such policies for any reason
whatsoever and directs the insurers to pay to the Bank any
amounts so due. The Debtor's rights to receive payment of such
return or unearned premiums and the proceeds of any such
insurance are included in the Accounts and General Intangibles
which are hereby subjected to a security interest.
(f) The Debtor will maintain the equipment in good condition and
repair (subject to ordinary wear and tear) and will pay the cost
of repairs to or maintenance of the same and will not permit
anything to be done that may impair the value of the Equipment.
(g) Upon default hereunder, the Bank shall have the right to take
possession of any Inventory and the Debtor hereby assigns to the
Bank its right of stoppage in transit with respect to any
Inventory. All costs of transportation, packing, storage and
insurance of any Inventory which the Bank may take into its
possession shall be promptly repaid to the Bank by the Debtor,
together with interest thereon at the rate payable by the Debtor,
at the time of payment by the Bank, with respect to the
Liabilities (or the highest such rate, if there be more than
one), but in no event less than six percent (6%) per annum and
the Debtor's liability to the Bank for such repayment with
interest shall be included in the Liabilities. If any oft he
Debtor'' Inventory is or becomes represented by a Document of
Title, the Bank may require that such Document of Title be in
such form as to permit the Bank or anyone to whom the Bank may
negotiate the same to obtain delivery of the Inventory
represented thereby, and that it b delivered into the possession
of the Bank.
(h) At such intervals as the Bank may require, the Debtor shall
submit to the Bank a schedule reflecting in form and detail
reasonably satisfactory to the Bank the quantities, cost and
value of its Inventory and Equipment, and the amounts of all its
outstanding Accounts and the amount of the Accounts which are
Qualified Accounts and the value of all its General Intangibles.
The Bank may also require the Debtor to submit to the Bank copies
of the invoices pertaining to all or any of its Accounts and
-6-
<PAGE>
evidence of shipment of the Inventory the sale or leasing of
which have given rise to such Accounts.
(i) The Debtor shall promptly notify the Bank of any event causing
deterioration, loss or depreciation in value of any substantial
portion of the Debtor's Inventory and Equipment and the amount of
such loss or depreciation. The Debtor shall permit the Bank's
agents to have access to its Inventory and Equipment from time to
time, as reasonably requested by the Bank, or at any time after a
default hereunder, for purposes of examination, inspection, and
appraisal thereof and verification of the Debtor's records
pertaining thereto. Upon default by the Debtor, the Debtor shall
assemble the Inventory and Equipment and make them available to
the Bank at such place as may be designated by the Bank which is
reasonably convenient to both parties. At the request of the
Bank, the Debtor shall lease warehousing space in the Debtor's
own premises to the Bank for the purpose of taking any Inventory
into the custody of the Bank without removal thereof from such
premises and will erect such structures and post such signs as
the Bank may require in order to place such Inventory under the
exclusive control of the Bank.
(j) The Debtor will promptly notify the Bank (i) of any material
adverse change in the Debtor's financial condition or in the
financial condition of any Account Debtor or in the
collectibility of any of its Accounts, (ii) of all claims,
rejections, returns and adjustments which may result in a
reduction of the liability of any Account Debtor on an Account,
and which have a material adverse effect on Debtor's financial
condition, and (iii) of any Qualified Account which shall cease
for any reason to meet the specifications fixed hereby for
Qualified Accounts.
(k) The Debtor warrants that the Debtor's chief executive office and
all of its offices where it keeps its records concerning the
Collateral, all locations at which it keeps its Inventory and
Equipment and all locations at which it maintains a place of
business are listed in Section 18 hereof. Debtor further warrants
that Debtor has no plans for the removal of the Collateral to any
location not set forth in Section 18. The Debtor shall promptly
notify the Bank in writing of any change in the Debtor's name,
chief executive office or the location of the Debtor's records,
of any change in the location of the Collateral, of any change in
the location of any place of business and of the establishment of
any new place of business. If any of the Collateral or any of the
Debtor's records concerning the Collateral are at any time to be
located on premises leased by the Debtor or on premises owned by
the Debtor, subject to a mortgage or other lien, the Debtor shall
obtain and deliver to the Bank, prior to the delivery of any
Collateral or records concerning the Collateral to said premises,
an agreement in form satisfactory to the Bank, waiving the
landlord's or mortgagee's or lienholder's rights to enforce any
claim against the Debtor for moneys due under the lease, mortgage
or other lien by levy of distraint or other similar proceedings
against the Collateral or the Debtor's records concerning the
Collateral and assuring the Bank's ability to have access to the
Collateral and the Debtor's records concerning the Collateral in
order to exercise its rights hereunder to take possession
thereof.
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<PAGE>
(l) The Debtor shall pay to the Bank on demand, with interest at the
rate payable by the Debtor, at the time of payment by the Bank,
with respect to the Liabilities (or the highest such rate, if
there be more than one), but in no event less than six percent
(6%) per annum, any and all expenses (including reasonable
attorney's fees and legal expenses, filing fees, searches and
termination costs), which may have been incurred by the Bank (i)
to enforce payment of any Account or to enforce any General
Intangibles or to enforce any of the Liabilities, whether as
against an Account Debtor, the Debtor or any guarantor or surety
of any Account Debtor or of the Debtor; or (ii) in the
enforcement, prosecution or defense of any action growing out of
or connected with the subject matter of this Agreement, the
Liabilities, the Collateral or any of the Bank's rights therein
or thereto; (iii) in connection with the custody, preservation,
use, operation, preparation for sale or sale of any Collateral;
or (iv) in connection with preparation and completion of this
Agreement and any and all related agreements and consummation of
the financing arrangements described herein and any modification
or extension hereof; or (v) with respect to the enforcement,
protection or preservation from time to time of the Bank's rights
under this Agreement or with respect the Collateral. The Debtor's
liability to the Bank for such repayment with interest shall be
included in the Liabilities and is secured by the Collateral.
(m) The Debtor shall provide the Bank with all financial statements
or other financial documents as and when required under this Loan
Agreement. The Debtor further covenants and agrees to execute
from time to time any and all agreements and documents (including
financing statements) which the Bank may request in order to
perfect its lien on the Collateral and otherwise carry out the
provisions of this Agreement. The Debtor further authorizes the
Bank to file a carbon, photographic or other reproduction of this
Agreement or a financing statement previously filed under this
Agreement as a financing statement in any jurisdiction. If
certificates of title are issued or outstanding with respect to
any of the Collateral, the Debtor will cause the security
interest of the Bank to be properly noted thereon and will
promptly deliver such certificates to the Bank.
(n) Without the prior written consent of the Bank, the Debtor
shall not sell or otherwise dispose of its Equipment, other
than dispositions made in the ordinary course of business of
obsolete or worn out equipment, and, except in the ordinary
course of business, the Debtor shall not sell or dispose of
its Inventory.
6. ENVIRONMENTAL MATTERS.
(a) As used in this Agreement, the following terms shall have the
following meanings: (i) "Environmental Laws" means any and all
applicable federal, state and local environmental laws, rules and
regulations whether now or existing or hereafter enacted together
with all amendments, modifications and supplements thereof; and
(ii) "Hazardous Materials" means any contaminants, hazardous
substances, regulated substances, or hazardous wastes which may
be the subject of liability pursuant to any Environmental Law.
(b) The Debtor represents and warrants that to the best of its
knowledge, no property owned or leased by the Debtor or any
subsidiary of the Debtor is in violation of any Environmental
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<PAGE>
Laws, no Hazardous Materials are present on said property in
violation of any Environmental Law and neither the Debtor nor nay
subsidiary of the Debtor has been identified in any litigation,
administrative proceedings or investigation as a responsible
party for any liability under and Environmental Laws.
(c) The Debtor shall not use, generate, treat, store, dispose of or
otherwise introduce, or permit any subsidiary to use, generate,
treat, store, dispose of or otherwise introduce, any Hazardous
Materials into or on any property owned or leased by the Debtor,
and will not, and will not permit any subsidiary to, cause,
suffer, allow or permit anyone else to do so, except in an
environmentally safe manner through methods which have been
approved by and meet all of the standards of the federal
Environmental Protection Agency and any other federal, state or
local agency with authority to enforce Environmental Laws. The
Debtor hereby agrees to indemnify, reimburse, defend and hold
harmless the Bank and its directors, officers, agents and
employees ("Indemnified Parties") for, from and against all
demands, liabilities, damages, costs, claims, suits, actions,
legal or administrative proceedings, interest, losses, expenses
and reasonable attorney's fees (including any such fees and
expenses incurred in enforcing this indemnity) asserted against,
imposed on or incurred by any of the Indemnified Parties,
directly or indirectly pursuant to or in connection with the
application of any Environmental Law, to acts or omissions
occurring at any time on or in connection with any property owned
or leased by the Debtor or any subsidiary of the Debtor or any
business conducted thereon.
7. DEFAULT. The Debtor shall be in default hereunder upon the occurrence
of any "Event of Default" as defined in the Loan Agreement (after the
expiration of any applicable notice and cure periods).
8. ACCELERATION AND ENFORCEMENT RIGHTS. Whenever the Debtor shall be in
default as aforesaid, (i) the Bank may declare the entire unpaid
amount of such of the Liabilities as are not then due and payable to
become immediately due and payable without notice to or demand on any
Obligor; and (ii) the Bank may at its option exercise from time to
time nay or all rights and remedies available to it under the Uniform
Commercial Code or otherwise available to it, including the right to
collect, receipt for, settle, compromise, adjust, sue for, foreclose
or otherwise realize upon any of the Collateral and to dispose of any
of the Collateral at public or private sale(s) or other proceedings,
with or without advertisement, and the Debtor agrees that the Bank or
its nominee may become the purchaser at any such sale(s). Bank shall
have the unconditional right to retain and obtain the full benefit of
all Collateral until all Liabilities of the Debtor to the Bank are
paid and satisfied in full. If nay notification of intended
disposition of the Collateral is required by law, such notice shall be
deemed reasonable fi mailed at least 10 days before such disposition
addressed to the Debtor at its Address shown herein. If any Note
secured hereby is payable on demand, Bank's right to require payment
shall not be restricted or impaired by the absence, non-occurrence or
waiver of an Event of Default, and it is understood that if such Note
is payable on demand, the Bank may require payment at any time.
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<PAGE>
9. APPLICATION OF COLLATERAL. The Proceeds of any Collateral received by
the Bank at any time before or after default, whether from sale or
Collateral or otherwise, may be applied to the payment in full or in
part of such of the Liabilities and in such order as the Bank may
elect. The Debtor, to the extent that it has any right, title or
interest in any of the Collateral, authorized Bank to proceed against
the Collateral in nay order that Bank may determine and waives and
releases any right to require the Bank to collect any of the
Liabilities from any source other than from the Collateral under any
theory of marshalling of assets, or otherwise, and specifically
authorizes the Bank to proceed against any of the Collateral in which
the Debtor has a right, title or interest with respect to any of the
Liabilities in any manner that the Bank may determine.
10. POWER OF ATTORNEY. The Debtor does hereby appoint any officer or agent
of the Bank as the Debtor's true and lawful attorney-in-fact, with
power to endorse the name of the Debtor upon any notes, checks,
drafts, money orders, or other instruments of payment or Collateral
that may come into possession of Bank; to sign and endorse the name of
the Debtor upon any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against Account Debtors,
assignments, verifications and notices in connection with Accounts,
and any instruments or documents relating thereto or to the Debtor's
rights therein; and to give written notice to such office and
officials of the United States Postal Service to effect such change or
changes of address so that all mail addressed to the Debtor may be
delivered directly to Bank (Bank will return all mail not related to
the Liabilities or the Collateral); granting unto Debtor's said
attorney full power to do any and all things necessary to be done with
respect to the above transactions as fully and effectually as Debtor
might or could do, and hereby ratifying all that said attorney shall
lawfully do or cause to be done by virtue hereof. This power of
attorney shall be irrevocable for the term of this Agreement and all
transactions hereunder.
11. TERM. The term of this Agreement shall commence with the date hereof
and end upon the full and final payment of the Liabilities, and the
Bank shall deliver to Debtor, at the Debtor's request, such of the
Collateral as shall not have been sold or otherwise disposed of
pursuant to this Agreement or the Loan Agreement.
12. SUCCESSORS AND ASSIGNS. All provisions herein shall inure to, and
become binding upon, the heirs, executors, administrators, successors,
representatives, receivers, trustees and assigns of the parties,
provided, however, that this Agreement shall not be assignable by the
Debtor without the prior written approval of the Bank.
13. THE DEBTOR'S AUTHORITY AND CAPACITY, ETC. The Debtor represents and
warrants that the Bank is obtaining and shall maintain at all times a
first lien on all of the Collateral, except as disclosed by the
financial statements mentioned in Section 6.1(o) of the Loan Agreement
or as set forth on the Schedule attached as Schedule 10.3 to the Loan
Agreement. If the Debtor is a corporation, the Debtor further
represents and warrants that it is duly organized, validly in
existence and in good standing in its state of incorporation and any
other state where the nature or extent of its business requires
qualification, that the execution and performance by the Debtor of
this Agreement and any related agreements is authorized by the
Debtor's Board of Directors and does not violate the Articles of
Incorporation or By-Laws of the Debtor or any other Agreement or
contract by which the Debtor is bound. The Debtor represents and
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<PAGE>
warrants that this Agreement is the legal, valid and binding
obligation of the Debtor enforceable against the Debtor in accordance
with its terms.
14. CONSENT TO JURISDICTION AND VENUE. IN ANY LEGAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER, EACH UNDERSIGNED
PARTY HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF
ANY STATE OR FEDERAL COURT LOCATED IN ANY COUNTY IN THE COMMONWEALTH
OF PENNSYLVANIA WHERE THE BANK MAINTAINS AN OFFICE AND AGREES NOT TO
RAISE ANY OBJECTION TO SUCH JURISDICTION OR TO THE LAYING OR
MAINTAINING OF THE VENUE OF ANY SUCH PROCEEDING IN SUCH COUNTY. EACH
UNDERSIGNED PARTY AGREES THAT SERVICE OF PROCESS IN ANY SUCH
PROCEEDING MAY BE DULY EFFECTED UPON ITS BY MAILING A COPY THEREOF, BY
REGISTERED MAIL, POSTAGE PREPAID, TO EACH UNDERSIGNED PARTY.
15. WAIVER OF JURY TRIAL. EACH UNDERSIGNED PARTY HEREBY WAIVES, AND THE
BANK BY ITS ACCEPTANCE HEREOF THEREBY WAIVES, TRIAL BY JURY IN ANY
LEGAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING
OUT OF OR RELATED TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK TO
ENTER INTO, ACCEPT OR RELY UPON THIS AGREEMENT.
16. MISCELLANEOUS. The construction and interpretation of this Agreement
and all agreements shall be governed by the laws of the Commonwealth
of Pennsylvania. No modification hereof shall be binding or
enforceable unless in writing and signed by the party against whom
enforcement is sought. If any provision of this Agreement is
determined to be unenforceable or invalid, such determination shall
not affect or impair the remaining provisions of the Agreement. No
rights are intended to be created hereunder for the benefit of any
third party beneficiary hereof. The individual signatory(ies) on
behalf of the Debtor represents that he(they) is(are) authorized to
execute this Agreement on behalf of the Debtor. This Agreement
supplements the Debtor's obligations under any promissory notes or
separate agreements with the Bank. This Security Agreement amends and
restates, but does not supercede the Liabilities or other obligations
of the Debtor under, that previous security agreement executed and
delivere by the Debtor to CoreStates Bank, N.A.,
predecessor-in-interest to First Union National Bank on or about April
8, 1998.
17. LOCATIONS OF DEBTOR. The Debtor represents and warrants that the
following addresses (together with any additional addresses which may
be shown on any attached schedule) correctly set forth all of the
locations where the Debtor maintains a place of business, its records
or the Collateral.
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<PAGE>
Chief Executive Office:
Route 66, Paramount Industrial Park, Randolph, Vermont 05060
Other Locations:
70 West Red Oak Lane, White Plains, NY 10604
11 Hedding Drive P.O. Box C
Randolph, VT 05060 Randolph, VT
36 Shunpike Road, Ste. 1 611 River Road
Williston, VT 05495 White River Jct.,VT0 05001
96 Old Poquonock Rd. 235 Canal Street
Bloomfield, CT 06002 Shelton, CT
11Corporate Dr. 14 Jewel Dr.
Halfmoon, NY 12065 Wilmington, MA 01887
258 Sonwil Ave. 395 Big Bay Road
Buffalo, NY 14225 Queensbury, NY 12804
1344 University Ave., Ste. 800 210 Terminal Road
Rochester, NY 14607 Liverpool, NY 13088
22 Veterans Lane, Ste. 102
Plattsburgh, NY 12901
18. NAME OF DEBTOR. The Debtor represents and warrants that the name of
the Debtor shown on this Agreement is the correct, full legal name of
the Debtor and that the Debtor has not at any time changed its name,
identity or corporate structure, been the surviving corporation in a
merger, acquired any other business, or engaged in business under an
assumed name or trade name except as set forth below.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
under seal and intending to be legally bound on the day and year first above
written.
First Union National Bank (successor
by merger to CoreStates Bank, N.A.),for
itself and as administrative agent
for the "Lenders"
VERMONT PURE SPRINGS, INC. By
- -----------------------------------
(Name of Corporate or Partnership Debtor) (Signature
By--------------------------------- ---------------------------------------
Timothy Fallon, Chief Executive
Officer and President David W. Mills, Vice President
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<PAGE>
- -----------------------------------
Bruce MacDonald, Chief Financial
Officer and Secretary ---------------------------------------
Address
---------------------------------------
(City)
-13-
LOAN AGREEMENT
Dated as of December 1, 1999
Among
VERMONT ECONOMIC DEVELOPMENT AUTHORITY
and
VERMONT PURE HOLDINGS, LTD.
and
VERMONT PURE SPRINGS, INC.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I ............ DEFINITIONS 2
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 3
Section 2.01 ........ Loan of Funds to the Company 3
Section 2.02 ........ Use of Proceeds 3
Section 2.03 ........ Establishment of Completion Date 3
Section 2.04 ........ Covenants for Benefit of Bondholders and Bank 4
ARTICLE III .......... PAYMENT PROVISIONS 4
Section 3.01 ........ Loan Payments 4
Section 3.02 ........ Letters 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 7
Section 3.08 ........ Assignment of Authority's Rights 8
Section 3.09 ........ Assignment by Company 8
Section 3.10 ........ Indemnity Against Claims 8
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 10
Section 4.01 ........ General Obligation of the Company 10
Section 4.02 ........ Assignment to Trustee 10
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
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<PAGE>
TABLE OF CONTENTS
(continued)
Page
ARTICLE V ........ TAX MATTERS 12
Section 5.01 ........ Prohibited Uses 12
Section 5.02 ........ Covenants and Representations with Respect
to Arbitrage 13
ARTICLE VI ........ INSURANCE; DESTRUCTION, DAMAGE, EMINENT DOMAIN 13
Section 6.01 ........ Insurance to be Maintained 13
Section 6.02 ........ Destruction, Damage and Eminent Domain 13
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 14
Section 7.01 ........ Compliance with Laws 14
Section 7.02 ........ Power to Perform Obligations 15
Section 7.03 ........ Inspection 15
Section 7.04 ........ Additional Information 15
ARTICLE VIII ........ EVENTS OF DEFAULT AND REMEDIES 15
Section 8.01 ........ Events of Default 15
Section 8.02 ........ Acceleration 16
Section 8.03 ........ Payment of Loan Payments on Default;
Suit Therefor 16
Section 8.04 ........ Other Remedies 17
Section 8.05 ........ Waiver 17
Section 8.06 ........ Cumulative Rights 17
Section 8.07 ........ No Exercise of Remedies Without Consent of Bank 18
Section 8.08 ........ Determination of Taxability Not a Default 18
ARTICLE IX ........ OPTIONS TO TERMINATE AGREEMENT 18
Section 9.01 ........ Option to Terminate Upon Defeasance 18
Section 9.02 ........ Option to Terminate Upon the Occurrence
of Certain Events 18
ARTICLE X ........ MISCELLANEOUS 20
Section 10.01 ........ Approval of Indenture 20
Section 10.02 ........ Illegal Provisions Disregarded 20
Section 10.03 ........ Limitation of Liability of the Agency 20
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<PAGE>
TABLE OF CONTENTS
(continued)
Page
Section 10.04 ........ No Recourse as to the Agency 20
Section 10.05 ........ Reference to Statute or Regulation 21
Section 10.06 ........ Notices 21
Section 10.07 ........ Applicable Law 22
Section 10.08 ........ Amendments 22
Section 10.09 ........ Term of Agreement 22
Section 10.10 ........ Amounts Remaining in Bond Fund 22
Section 10.11 ........ Survival of Covenants, Conditions and
Representations 22
Section 10.12 ........ Multiple Counterparts 22
Section 10.13 ........ Consent 22
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<PAGE>
THIS LOAN AGREEMENT dated December 1, 1999 (the "Agreement"), is by and
among VERMONT ECONOMIC DEVELOPMENT AUTHORITY (with its successors, the
"Authority"), VERMONT PURE HOLDINGS, LTD., a Delaware corporation (with its
successors, "Holdings") and VERMONT PURE SPRINGS, INC., a Delaware corporation
(with its successors, "Springs," and, collectively with Holdings, the
"Company").
W I T N E S S E T H :
WHEREAS, the Authority is a body corporate and politic and a public
instrumentality of the State, organized and existing under the Act, and is
authorized under the Act to finance industrial facilities; and
WHEREAS, the Company has requested the Authority to finance a project (the
"Project") that consists of, among other things (i) construction, acquisition
and improvement of an approximately 38,000 square foot addition to the Company's
existing spring water production and bottling facility located on Route 66 in
the Catamount Industrial Park within the Town of Randolph, together with related
machinery and equipment therefor; and (ii) the payment of a portion of the costs
of issuance of 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 as of December 1, 1999 (the "Indenture") between the Authority and 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 Letters
of Credit for the Series A Bonds and the Series A-T Bonds, respectively, at such
times and in such amounts as shall be sufficient to pay when due the principal
of, premium, if any, interest and Purchase Price on the Bonds and to credit all
amounts paid under such Letters of Credit against the Company's obligation to
make loan repayments 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 directors 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 foregoing, its obligation to make payment of principal of,
premium, if any, Purchase Price 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
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<PAGE>
WHEREAS, in order to assure full and prompt payment of the Bonds, the
Company, among other things, has caused the Bank to issue its Letters of Credit
to assure payment of principal of, Purchase Price and interest on the Bonds when
due (subject to reduction and reinstatement as provided therein) pursuant to the
Reimbursement Agreement.
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. This Agreement is a
financing document in accordance with Chapter 12 of Title 10 of the Vermont
Statutes Annotated, as amended (the "Act").
ARTICLE I.
DEFINITIONS
Section 1.01. Definitions. Terms used as defined terms in the recitals
shall have the same meanings throughout this Agreement, and, in addition
thereto, capitalized terms 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 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 certificat 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
2
<PAGE>
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 content
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 provide
to the Bank or that consent of the Bank be obtained, such provisions shall be
effective only when (i) the Letters of Credit are in effect, (ii) the Bank, in
its capacity as provider of the Letters 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.
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
be evidenced to the Authority and the Trustee by a certificate signed by an
Authorized Representative of the Company stating in effect that (i) construction
of the Project has been completed and all costs of labor, services, materials
and supplies used in connection with such construction have been paid; (ii) all
equipment for the Project has been acquired and installed and all costs and
expenses incurred in connection therewith have been paid; and (iii) 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
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<PAGE>
subsequently come into being. Forthwith upon completion of the Project, the
Company agrees to cause such certificate to be 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 Letters of Credit, and the participation by the
Bank in the funding of advances under the Letters 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 or the Indenture. The Company shall be given an
immediate credit in the amount of (i) all draws paid to the Trustee under the
Letters of Credit and (ii) the proceeds of the remarketing of Bonds used to pay
the Purchase Price of the Bonds pursuant to Article V of the Indenture, 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 Letters of
Credit by the Trustee) from draws under the Letters 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 same 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. The loan payments required by this Section 3.01(a) shall be reduced
after payment of the principal, premium if any and interest on the Bonds in
accordance with the terms of the Indenture has been made.
(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
4
<PAGE>
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. Letters of Credit. Concurrently with the issuance by the
Authority of the Bonds, the Company shall cause to be delivered to the Trustee
the Letters of Credit issued by the Bank, authorizing the Trustee to make draws
on the Bank, up to an aggregate stated amount of Four Million Three Hundred
Eighty-Four Thousand Seventy-Two Dollars and Eighty-Eight Cents ($4,384,072.88),
of which Four Million Three Hundred Thousand Dollars ($4,300,000) shall be in
respect of aggregate principal on the Bonds and Eighty-Four Thousand Seventy-Two
Dollars and Eighty-Eight Cents ($84,072.88) shall be in respect of up to
forty-six (46) days' aggregate 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 Letters of Credit), on the dates and times hereinafter set forth, for
deposit in the Bond Fund, the following sums:
(i) 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 Letters of Credit.
It is understood and agreed that 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, as applicable. The
Company assents to such assignment. The Authority hereby directs the Company and
the Company hereby agrees to pay to the Trustee at the Principal 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 the 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) with respect to
the Bonds 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
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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 Letters 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 hereunder, 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 leasing or 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, as agreed to by the Company under the
provisions of the agreements governing such fees, charges and expenses;
(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 or permitted 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
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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 the written
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 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 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
Series A Bonds or Series A-T Bonds issued under the Indenture, together with all
other amounts due and payable by the Company hereunder and under the Indenture,
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 Accountant, delivered to the Trustee,
no further loan payments shall be payable hereunder and, with the consent of the
Bank (if any Letter of Credit remains outstanding or if any amounts are due and
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owin to the Bank under the Reimbursement Agreement or any of the other Related
Documentation (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 or accounts 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 or account 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 Related
Documentation (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 and amounts payable under this Agreement, the Authority will assign
to the Trustee all of the Authority's rights (except the Authority's rights to
indemnification and the payment of its fees and expenses and the reasonable fees
and expenses of its attorneys and other professionals) 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 of the Company to the Bank under 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
written 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 Letters 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.
Section 3.10. Indemnity Against Claims.
(a) The Company agrees that at all times it will protect and hold the
Authority and the Trustee and their officers, directors, 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, construction, installment, equipping or operation of the
Project Facilities; and the Authority and the Trustee 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,
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excepting only willful misconduct of the Authority or the Trustee or their
officers, directors, 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 or the Trustee or their officers, directors, members,
employees and agents shall be in excess of the net proceeds actually recovered
and received by, or on behalf of, the Authority or the Trustee from 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 and its directors, officers, agents and employees
(collectively, the "Indemnitees") harmless from and against any and all claims,
liabilities, losses, damages, fines, penalties, and expenses, including
out-of-pocket, incidental expenses, legal fees and expenses, and the allocated
costs and expenses of in-house counsel and legal staff ("Losses") that may be
imposed on, incurred by, or asserted against, the Indemnitees or any of them for
following any instructions or other directions upon which the Trustee is
authorized to rely pursuant to the terms of this Agreement and the Indenture. In
addition to and not in limitation of the immediately preceding sentence, the
Company also agrees to indemnify and hold the Indemnitees and each of them
harmless from and against any and all Losses that may be imposed on, incurred
by, or asserted against the Indemnitees or any of them in connection with or
arising out of the Trustee's performance under this Agreement or the Indenture,
provided the Trustee has not acted with gross negligence or engaged in willful
misconduct.
(c) The Company will indemnify, hold harmless and defend the Authority
and the Trustee, counsel to 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
Letters 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
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 the same in its sole discretion.
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(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 provisions of this Section
3.10 shall survive the termination of this Agreement and the Indenture and the
resignation or removal of the Trustee for any reason.
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 on a first priority basis to the Trustee and then, subordinately, to
the Bank (except for the right of the Authority to receive its reasonable fees
and expenses and the reasonable fees and expenses of its attorneys and other
professionals 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, counsel to 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, counsel to 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 further
the Authority from loss.
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
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payable hereunder (except its right to receive its fees and expenses and the
reasonable fees and expenses of its attorneys and other professionals and to
indemnification) to the Trustee pursuant to the Indenture, IN TRUST, to be held
and applied pursuant to the provisions of the Indenture, and, subject and
subordinate to the prior assignment to the Trustee, 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 hereunder or under the Indenture or the Reimbursement Agreement, such
payments to be paid by the Company to the Trustee or the Bank, as applicable,
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.
(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 Holdings and Springs each agrees that it will
maintain its existence as a Delaware corporation, will maintain its status as an
entity authorized to conduct business in the State, will not dissolve or
otherwise dispose of all or substantially all of its assets and will not
consolidate with or merge into another entity except as permitted by the
Reimbursement Agreement.
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 State 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.
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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.
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, which notice shall state the proposed Substitution Date and shall
be revocable by the Company prior to delivery of such Substitute Letter of
Credit. Any Substitute Letter of Credit shall be delivered to the Trustee 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 fifth (5th)
Business Day prior to 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
o 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 it is being issued to replace 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, an opinion to the effect
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. 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.
TAX MATTERS
Section 5.01. Prohibited Uses. The Company covenants and agrees that it
will not knowingly take or authorize or permit, to the extent such action is
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within the control of the Company, any action to be taken with respect to the
Project and the Project Facilities, the proceeds of the Bonds (including
investment earnings thereon) or any insurance, condemnation or other proceeds
derived directly or indirectly in connection with the Project or the Project
Facilities which will result in the loss of the exclusion of interest on the
Series A Bonds from federal gross income under Section 103 of the Code (except
for any Series A Bonds during any period while such Bond is held by a person
referred to in Section 147(a) of the Code); and the Company also will not
knowingly omit to take any action in its power which, if omitted, would cause
such result. The Company covenants for the benefit of the Bondholders to comply
with all of the requirements of Section 6.13 and 7.09 of the Indenture. The
preceding sentence shal control in case of conflict or ambiguity with any other
provision of this Agreement. The Company covenants and agrees to notify the
Trustee and the Authority of the occurrence of any event of which the Company
has notice and which event would require the Company to prepay the amounts due
hereunder because of a redemption of the Series A Bonds upon a Determination of
Taxability.
Section 5.02. Covenants and Representations with Respect to Arbitrage. The
Authority, to the extent it has control over proceeds of the Series A Bonds, and
the Company covenant and represent to each other and to and for the benefit of
the Holders of the Series A Bonds that so long as any of the Series A Bonds
remain Outstanding, moneys on deposit in any fund in connection with the Series
A Bonds, whether such moneys were derived from the proceeds of the sale of the
Series A Bonds or from any other sources, will not be used in a manner which
will cause the Series A Bonds to be "arbitrage bonds" within the meaning of
Section 148 of the Code and any lawful regulations promulgated thereunder, as
the same exist on this date or may from time to time hereafter be amended,
supplemented or revised. The Company also covenants for the benefit of the
Holders of the Series A Bonds to comply with all of the provisions of the Tax
Certificate of the Company. The Company reserves the right, however, to make any
investmen of such moneys permitted by the laws of the State, if, when and to the
extent that said Section 148 or regulations promulgated thereunder shall be
repealed or relaxed or shall be held void by final judgment of a court of
competent jurisdiction, but only upon receipt of an opinion of nationally
recognized bond counsel to the effect that such proposed investment will not
adversely affect the exclusion from gross income of interest of the Series A
Bonds for federal income tax purposes.
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 and the Trustee as additional insureds.
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
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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 any of the Letters 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 any of the Letters 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, 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. If the Bank is in default under the terms of any of the Letters 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 60 days after the Compan 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
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recommendation or request of any officer of the Company to acquire and carry out
the Project have been and will be 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 State, 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,
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.
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 fails to make any payment required by Sections
3.01, 3.03, 3.04 or 3.05 hereof when due; or
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(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
written 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 60 days after the Authority or the Trustee gives the Company
written 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 60-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 declaration by the Bank of an Event of Default under and as
defined in the Reimbursement Agreement;
Section 8.02. Acceleration. Subject to the provisions of this Agreement,
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 terms of any
of the Letters of Credit), may, and upon the written request of the Holders 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 therein
provided. Upon such declaration by the Trustee, 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 such Section 8.02 of the Indenture and (ii) all
other amounts due and owing as loan payments hereunder.
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
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payment of the Bonds, as applicable, 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 and other payments due hereunder, 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 and expenses incurred by it up to the date of such distribution.
Section 8.04. Other Remedies. Upon the occurrence of an Event of Default
hereunder, the Authority or its assignee may pursue whatever remedies may be
available at law or in equity as may appear necessary or desirable to collect
the amounts payable by the Company hereunder, or to enforce performance and
observance of any obligation, agreement or covenant of the Company under this
Agreement.
No action taken pursuant to this Section 8.04 shall relieve the Company (i)
of any of the Company's obligations, duties, liabilities, covenants and
representations contained herein or (ii) of any condition contained herein, all
of which shall survive any such action.
Section 8.05. 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
8.06. 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
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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 8.07. 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 terms of any of the Letters 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.
Section 8.08. Determination of Taxability Not a Default. Notwithstanding
anything to the contrary contained in this Agreement, in the event of a breach
or inaccuracy of any applicable statutory or regulatory requirement or of a
covenant or representation of the Company relating to the exclusion from gross
income of interest on the Series A Bonds for purposes of federal income
taxation, such breach or inaccuracy shall not be considered an Event of Default
hereunder so long as the Company performs all of its obligations arising out of
the breach or inaccuracy including, without limitation, the payment of all
amounts due under Sections 3.01, 3.04 and 3.05 hereof if such breach or
inaccuracy results in a Determination of Taxability with respect to the Bonds.
Pursuant to the provisions of Section 4.01(b)(1) of the Indenture the Series A
Bonds are subject to mandatory redemption at any time, in whole, within one
hundred eighty (180) days after the occurrence of a Determination of Taxability.
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
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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);
(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 State
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 the 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 the Bonds redeemed pursuant to this
Section 9.02 will be made in accordance with the terms of the Indenture.
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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, the other Bond Documents and a copy
of the Letters 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. 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 10.03. Limitation of Liability of the Agency. 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 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 10.03, there shall be no other recourse for damages of any kind
or nature by the Company or any other Person against the Authority, counsel to
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.
Section 10.04. No Recourse as to the Agency. Except as expressly provided
in Section 10.03 above, no recourse under or upon any obligation, covenant or
agreement contained herein or in any Bond shall be had against the Authority,
counsel to 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, counsel to the Authority or such members, officers,
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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 10.05. 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 10.06.
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:
Vermont Economic Development Authority
58 East State Street
Montpelier, Vermont 05602
Attention: Manager
to the Company to:
Vermont Pure Holdings, Ltd.
66 Catamount Center
Randolph Center, VT 05061
Attention: Bruce MacDonald, Chief Financial Officer
Vermont Pure Springs, Inc.
66 Catamount Center
Randolph Center, VT 05061
Attention: Bruce MacDonald, Chief Financial Officer
to the Trustee to:
First Union National Bank
123 S. Broad Street
Philadelphia, Pennsylvania 19109
Attention: James Matthews, Assistant Vice President
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
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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
2240 Butler Pike, Plymouth Meeting, Pennsylvania 19462, Attention: Carl Goeltz,
Vice President.
Section 10.07. Applicable Law. This Agreement shall be deemed to be a
contract made in the State and governed by the law of the State.
Section 10.08. 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 the Bonds, consented to by the Trustee and the Bank, so long as
the Bank is not in default under the terms of any of the Letters of Credit.
Section 10.09. Term of Agreement. Except as provided in Section 3.10, this
Agreement and the respective obligations of the parties hereto shall be in full
force and effect from the date hereof until all principal and Purchase Price of,
premium, if any, and interest on the Bonds and all other amounts due hereunder
and under the Indenture shall have been paid or provision for such payment shall
have been made pursuant to the terms and provisions hereof and of the Indenture.
Section 10.10. 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 this Agreement and
the Indenture, shall, to the extent of any unreimbursed draws under the Letters
of Credit, or any other Obligations owing by the Company to the Bank under the
Reimbursement Agreement or any of the other Related Documentation (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. 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 10.13. 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 VERMONT ECONOMIC DEVELOPMENT AUTHORITY has
caused this Agreement to be executed in its name and on its behalf by its
Manager under seal, and VERMONT PURE HOLDINGS, LTD. and VERMONT PURE SPRINGS,
INC. each have caused this Agreement to be executed in its name and on its
behalf by its authorized Officer under seal as of the day and year first above
written.
(SEAL) VERMONT ECONOMIC DEVELOPMENT AUTHORITY
By_______________________________________________
Rosalea Bradley
Manager
(SEAL) VERMONT PURE HOLDINGS, LTD.
By_______________________________________________
Authorized Officer
(SEAL) VERMONT PURE SPRINGS, INC.
By_______________________________________________
Authorized Officer
23
VERMONT ECONOMIC DEVELOPMENT AUTHORITY
and
FIRST UNION NATIONAL BANK, as Trustee
TRUST INDENTURE
Dated as of December 1, 1999
VERMONT ECONOMIC DEVELOPMENT AUTHORITY
VARIABLE RATE DEMAND/FIXED RATE
REVENUE BONDS
(VERMONT PURE SPRINGS, INC. PROJECT)
1999 SERIES A
VERMONT ECONOMIC DEVELOPMENT AUTHORITY
VARIABLE RATE DEMAND/FIXED RATE
REVENUE BONDS
(VERMONT PURE SPRINGS, INC. PROJECT)
1999 SERIES A-T (TAXABLE)
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I ...........DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS 4
Section 1.01 .......Definitions 4
Section 1.02 .......Content of Certificates and Opinions 16
Section 1.03 .......Interpretation 17
ARTICLE II ..........THE BONDS 17
Section 2.01 .......Authorization of Bonds 17
Section 2.02 .......Terms of Bonds; Interest on the Bonds 18
Section 2.03 .......Execution of Bonds 20
Section 2.04 .......Authentication 21
Section 2.05 .......Form of Bonds 21
Section 2.06 .......Transfer of Bonds 21
Section 2.07 .......Exchange of Bonds 22
Section 2.08 .......Bond Register 22
Section 2.09 .......Temporary Bonds 22
Section 2.10 .......Bonds Mutilated, Lost, Destroyed or Stolen 23
Section 2.11 .......Cancellation and Destruction of Surrendered Bonds 23
Section 2.12 .......Acts of Bondholders; Evidence of Ownership 23
Section 2.13 .......Book-Entry Bonds; Securities Depository 23
ARTICLE III .........ISSUANCE OF BONDS; APPLICATION OF PROCEEDS 25
Section 3.01 .......Issuance of the Bonds 25
Section 3.02 .......Disposition of Proceeds of the Bonds and Other Amounts 25
ARTICLE IV ..........REDEMPTION OF BONDS BEFORE MATURITY 25
Section 4.01 .......Extraordinary and Mandatory Redemption 25
(a) .................Extraordinary Redemption of Bonds 25
(b) .................Mandatory Redemption of Bonds 25
(c) .................Mandatory Sinking Fund Redemption 26
Section 4.02 .......Optional Redemption 28
Section 4.03 .......Notice of Redemption 28
Section 4.04 .......Interest on Bonds Called for Redemption 28
Section 4.05 .......Cancellation 28
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TABLE OF CONTENTS
Page
Section 4.06 .......Partial Redemption of Bonds 28
Section 4.07 .......Payment of Redemption Price with Available Moneys;
Consent of Letter of Credit Bank to Optional Redemption 29
ARTICLE V ...........CONVERSION OF INTEREST RATE; DEMAND PURCHASE OPTION 29
Section 5.01 .......Conversion of Interest Rate on Conversion Date 29
Section 5.02 .......Delivery of Bonds After Conversion Date 31
Section 5.03 .......Mandatory Tender upon Substitution of Letters of Credit 31
Section 5.04 .......Demand Purchase Option 32
Section 5.05 .......Funds for Purchase of Bonds 33
Section 5.06 .......Delivery of Purchased Bonds 35
Section 5.07 .......Sale of Bonds by Remarketing Agent 35
Section 5.08 .......Delivery of Proceeds of Sale of Purchased Bonds 35
Section 5.09 .......Duties of Trustee and Tender Agent with Respect
to Purchase of Bonds 36
Section 5.10 .......No Purchases or Sales After Certain Defaults 36
ARTICLE VI ..........REVENUES AND FUNDS 37
Section 6.01 .......Creation of the Bond Fund 37
Section 6.02 .......Payments into the Bond Fund 37
Section 6.03 .......Use of Moneys in the Bond Fund 37
Section 6.04 .......Custody of Separate Trust Fund 38
Section 6.05 .......Construction Fund 38
Section 6.06 .......Payments into the Construction Fund; Disbursements 38
Section 6.07 .......Use of Money in the Construction Fund Upon Default 38
Section 6.08 .......Use of Money in the Construction Fund Upon
Completion of the Project 38
Section 6.09 .......Nonpresentment of Bonds 39
Section 6.10 .......Moneys to be Held in Trust 39
Section 6.11 .......Repayment to the Bank and the Company from the
Bond Fund or the Construction Fund 39
Section 6.12 .......Letters of Credit 39
Section 6.13 .......Rebate Fund 40
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TABLE OF CONTENTS
Page
Section 6.14 .......Investment of Moneys in Funds 41
ARTICLE VII .........THE AUTHORITY; PARTICULAR COVENANTS 42
Section 7.01 .......Covenant as to Payment; Faith and Credit
of Commonwealth Not Pledged 42
Section 7.02 .......Extension of Payment of Bonds 42
Section 7.03 .......Against Encumbrances 43
Section 7.04 .......Power to Issue Bonds and Make Pledge and Assignment 43
Section 7.05 .......Accounting Records and Financial Statements 43
Section 7.06 .......Other Covenants 43
Section 7.07 .......Waiver of Laws 44
Section 7.08 .......Further Assurances 44
Section 7.09 .......Tax Covenants 44
Section 7.10 .......Corporate Organization, Authorization and Power 45
Section 7.11 .......Rights and Duties of the Authority 46
(a) .................Remedies of the Authority 46
(b) .................Limitations on Actions 46
(c) .................Responsibility 46
(d) .................Financial Obligations 47
ARTICLE VIII ........EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS 47
Section 8.01 .......Events of Default 47
Section 8.02 .......Acceleration 48
Section 8.03 .......Other Remedies 50
Section 8.04 .......Legal Proceedings by Trustee 50
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 51
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 52
Section 8.11 .......Trustee and Bondholders Entitled to All Remedies
Under Act; Remedies Not Exclusive 52
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TABLE OF CONTENTS
Page
Section 8.12 .......Trustee's Right to Receiver 52
Section 8.13 .......Subrogation Rights of Bank 52
Section 8.14 .......Waiver of Default 53
ARTICLE IX ..........THE TRUSTEE; THE TENDER AGENT AND THE REMARKETING AGENT 53
Section 9.01 .......Duties, Immunities and Liabilities of Trustee 53
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 56
Section 9.06 .......Compensation 56
Section 9.07 .......The Tender Agent 56
Section 9.08 .......Qualifications of Tender Agent 57
Section 9.09 .......Qualifications of Remarketing Agent;
Resignation; Removal 57
Section 9.10 .......Construction of Ambiguous Provisions 58
ARTICLE X ...........MODIFICATION OR AMENDMENT OF THE INDENTURE 58
Section 10.01 ......Amendments Permitted 58
Section 10.02 ......Effect of Supplemental Indenture 58
Section 10.03 ......Trustee Authorized to Join in Amendments and
Supplements; Reliance on Counsel 59
ARTICLE XI ..........DEFEASANCE 59
Section 11.01 ......Discharge of Indenture 59
Section 11.02 ......Discharge of Liability on Bonds 60
Section 11.03 ......Deposit of Money or Securities with Trustee 60
Section 11.04 ......Payment of Bonds After Discharge of Indenture 61
ARTICLE XII .........MISCELLANEOUS 61
Section 12.01 ......Liability of Authority Limited to Revenues 61
Section 12.02 ......Limitation of Liability of Directors,
Etc., of Authority 61
Section 12.03 ......Reserved 62
Section 12.04 ......Successor Is Deemed Included in
All References to Predecessor 62
Section 12.05 ......Limitation of Rights to Parties,
Bank, Company and Bondholders 62
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TABLE OF CONTENTS
Page
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
EXHIBIT "A" (FLOATING RATE FORM OF SERIES A BOND) . 1
EXHIBIT "B" (FIXED RATE FORM OF SERIES A BOND) .... 1
EXHIBIT "C" (FLOATING RATE FORM OF SERIES A-T BOND) 1
EXHIBIT "D" (FIXED RATE FORM OF SERIES A-T BOND) .. 1
EXHIBIT "E" CONSTRUCTION FUND REQUISITION ......... 1
EXHIBIT "F" BANK APPROVAL 1
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THIS TRUST INDENTURE, made and entered into as of December 1, 1999, by and
between the VERMONT ECONOMIC DEVELOPMENT AUTHORITY, a body corporate and politic
and a public instrumentality of the State of Vermont created under the Act (the
"Authority") and First Union National Bank, as trustee (the "Trustee") and
tender agent (the "Tender Agent");
W I T N E S E T H:
Certain of the terms and words used in these Recitals, and in the following
Granting Clauses, are defined in Section 1.01 of this Indenture.
WHEREAS, the Authority is a body politic and corporate and a public
instrumentality of the State, organized and existing under the Act, and is
authorized under the Act to finance industrial facilities; and
WHEREAS, in order to permit the Company to finance the Project Facilities,
the Authority will make certain funds available to the Company; and
WHEREAS, the Authority has determined that it shall undertake the financing
of 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 loan the proceeds of the Bonds to the Company, and
wherein the Company agrees, among other things, to 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 the 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 and
Purchase Price 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 Bonds will be issued as two series of bonds respectively
designated generally as "Variable Rate Demand/Fixed Rate Revenue Bonds (Vermont
Pure Springs, Inc. Project) 1999 Series A" and "Variable Rate Demand/Fixed Rate
Revenue Bonds (Vermont Pure Springs, Inc. Project) 1999 Series A-T
(Taxable);"and
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WHEREAS, the Agreement provides that the Authority will loan the proceeds
of the Bonds to the Company and the Company will make certain loan payments to
the Authority payable in installments equal to payments of debt service on the
Bonds when due; and WHEREAS, the Agreement further provides that the Company
will cause the Letters 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 a
Reimbursement Agreement whereunder the Bank has agreed to issue and maintain the
Letters of Credit as provided for therein and herein, and the Company has agreed
to reimburse the Bank for any draws made by the Trustee on the Letters of Credit
and for other costs, expenses and charges, as specified in the Reimbursement
Agreement; and
WHEREAS, this Indenture is a security document under the Act and 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 Authority
board of directors duly adopted prior to such execution and delivery.
GRANTING CLAUSES AND AGREEMENT
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 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 and Purchase Price 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
Expenses and any Additional Payments to the extent payable to the Authority and
any rights of the Authority to indemnification), (iii) to bring actions and
proceedings thereunder or for the enforcement thereof, and (iv) to do any and
all things which th Authority is or may become entitled to do under the
Agreement, the Collateral Documents and the other Bond Documents.
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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 (except moneys and securities held from time to time in the Rebate
Fund); provided, however, that in consideration of the issuance by the Letter of
Credit Bank of the Letters 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 to
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, subject and subordinate to the
prior rights of the Owners and only to the extent of payments made pursuant to
the Letters of Credit that have not been reimbursed by the Company.
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
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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 shall then be in place
for any Series of Bonds, the Trust Estate corresponding thereto 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
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 Chapter 12 of Title 10 of the Vermont Statutes Annotated,
as amended.
"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, or the Purchase Price of, the Bonds or
(ii) reimbursed to the Letter of Credit Bank for monies drawn on the Letters of
Credit to pay debt service on, or the Purchase Price of, the Bonds.
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"Administrative Expenses" means those expenses of the Authority, the
Trustee 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 Projects, including without limiting the generality of the
foregoing, fees and expenses of the Authority's, the Trustee's, the Bank's and
the Placement Agent's counsel.
"Agreement" means the Loan Agreement dated as of December 1, 1999,
between the Authority and the Company, together with all supplements thereto.
"Authority" means the Vermont Economic 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
Chief Financial Officer or any other person designated as an Authorized
Representative of the Company by a Certificate of the Company signed by a
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
letters 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 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 First Union National Bank, a national banking
association, organized and existing under the laws of the United States of
America, whose principal office is located in the City of Charlotte, North
Carolina, 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, collectively, the Authority's Series A Bonds and the
Authority's Series A-T Bonds.
"Business Day" means any day other than (i) a Saturday or Sunday, (ii)
a legal holiday on which banking institutions in the State of New York, the
State, the City of New York, the City of Charlotte, North Carolina, the city in
which the principal corporate trust office of the Trustee is located, the city
in which the delivery office of the Tender Agent is located or the city in which
the principal office of the Bank is located, are authorized or required by law
to close, 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 signed in the name of the Authority by its Executive
Director, Director of Finance Programs or General Counsel 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 signed 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 Letters of Credit.
"Closing Date" means January 28, 2000, 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.
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"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.
"Company" means, collectively, Vermont Pure Holdings, Ltd., a Delaware
corporation, and Vermont Pure Springs, Inc., a Delaware corporation, as
co-borrowers under the Agreement.
"Completion Date" means the date of completion of a Project, as that
date shall be certified as provided in Section 2.03 of the Agreement.
"Construction Fund" means the fund by that name established pursuant to the
provisions of 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 of a Series is converted from a Floating
Rate to a Fixed Rate as of the Optional Conversion Date.
"Cost" or "Costs," means any cost in respect of the Projects 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) not unsatisfactory to the Trustee.
"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,
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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 a 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, the next succeeding
Business Day.
"Determination of Taxability" means, with respect to any Series A
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 in writing 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 Series A 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 in writing 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 clauses (i) or (v) above shall be
deemed to have occurred unless the Trustee shall have received a written opinion
addressed to the Trustee of Palmer & Dodge LLP or 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 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 cancelled.
"Event of Default" means any of the events specified in Section 8.01
of this Indenture.
"Event of Taxability" means, with respect to any Series A 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 Series A
Bond is or was untrue or that a covenant of the Company has been breached) that
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has the effect of causing interest payable on any Series A Bond to be includible
in gross income for federal income tax purposes under Section 103 of the Code
other than by reason that such interest (i) is includible in the gross income of
an owner or former owner of any Series A 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 subjec to any alternative minimum tax.
"Fiscal Year" means with respect to the Company the period of twelve
(12) consecutive months beginning May 1 of each year, or such other period
established by the Company as its new Fiscal Year.
"Fixed Rate" means the interest rate in effect on any Bonds from and
after a Conversion Date, as said rate is determined in accordance with Section
2.02(d) hereof.
"Fixed Rate Bonds" means any Bonds which shall be 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 of any Series at a price equal to the principal amount thereof,
exclusive of accrued interest, if any, thereon; said rate of interest to be in
effect on such Bonds from the date of issuance of such Bonds until (but not
including) the Conversion Date for such Bonds, 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 of America.
"Holder," "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, as originally executed or as
it may from time to time be supplemented, modified or amended by any
Supplemental Indenture.
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"Interest Payment Date" means, prior to a Conversion Date with respect
to a Series of Bonds, the first (1st) day of each calendar month, or if such
date is not a Business Day, the next succeeding Business Day, commencing March
1, 2000 and from and after a Conversion Date with respect to a Series of Bonds,
January 1 and July 1 of each year, commencing on the January 1 or July 1 next
following such Conversion Date.
"Investment Securities" means any of the following which at the time
are legal investments under the laws of the State for moneys held hereunder and
then proposed to be invested therein:
(A) Government Obligations;
(B) 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;
(C) certificates of deposit of, or time or demand deposits in, any
bank (including the Trustee and any of its affiliates) or savings and loan
association rated or having securities rated in one of the three highest Rating
Categories (without regard to modifiers) of Moody's or S&P;
(D) certificates which evidence ownership of the right to the payment
of the principal of and interest on obligations described in clauses (A) and (B)
of this definition, provided that such obligations are held in the custody of a
bank or trust company acceptable to the Trustee in a special account separate
from the general assets of such custodian;
(E) obligations which are rated, at the time of purchase, in one of
the two highest Rating Categories (without regard to modifiers) of Moody's and
the interest on which is not includible 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 (A) or (B) of this definition;
(F) guaranteed investment contracts or other similar financial
instruments with a commercial bank, insurance company or other financial
institution (including the Trustee and any of its affiliates) whose long term
debt obligations are rated, at the time of purchase, in one of the two highest
Rating Categories (without regard to modifiers) by Moody's;
(G) mutual funds invested primarily in obligations described in
clauses (A), (B) and (H) 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
(G), money market mutual funds, including, without limitation, any mutual fund
for which the Trustee or an affiliate of the Trustee serves as investment
manager, administrator, shareholder servicing agent, and/or custodian or
subcustodian, notwithstanding that (i) the Trustee or an affiliate of the
Trustee receives fees from such funds for services rendered, (ii) the Trustee
charges and collects fees for services rendered pursuant to this Indenture,
which fees are separate from the fees received from such funds, and (iii)
services performed for such funds and pursuant to this Indenture may at times
duplicate those provided to such funds by the Trustee or its affiliates;
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(H) repurchase agreements issued by financial institutions (including
the Trustee and any of its affiliates) (i) insured by the Federal Deposit
Insurance Corporation or (ii) whose senior debt obligations at the time of
purchase are rated 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 (A) or (B) 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 or a custodian acting on behalf
of the Trustee has possession of the collateral, (2) the Trustee has a perfected
first security interest in the collateral, (3) the collateral is free and clear
of any third-party liens and (4) failure to maintain the requisite collateral
percentage will require the Trustee to liquidate the collateral; and
(I) any other security or obligation provided that the Bank and the
Company 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 or upon the order of the
purchasers thereof upon original issuance.
"Letter of Credit" means each of the Irrevocable Direct Pay Letters of
Credit issued by the Letter of Credit Bank pursuant to the provisions of the
Reimbursement Agreement, for the benefit of the Holders of the Series A Bonds
and of the Series A-T Bonds, respectively, 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 Letters of
Credit, and its lawful successors and assigns, and to the extent applicable, the
issuer of any Substitute Letter of Credit.
"Letter of Credit Termination Date" means the later of (i) that date
upon which a Letter of Credit shall expire or terminate pursuant to its terms,
or (ii) that date to which the expiration or termination of such Letter of
Credit may be extended, from time to time, either by extension or renewal of
such 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
written 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.
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"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 Executive Director, Director of Finance
Programs or General Counsel of the Authority; or with respect to the Company, a
Certificate duly executed by an Authorized Representative 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 each January 1 or July 1 (or the next
succeeding Business Day to such January 1 or July 1) while any Bond of a Series
is outstanding, from and after which the interest rate on a Series of the Bonds
may be converted from a Floating Rate to a 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; (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 and (iv) Undelivered Bonds.
"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 Advisor" means First Union Securities, Inc., its successors
and assigns.
"Pledge Agreement" means (i) the Pledge and Security Agreement dated
as of January 28, 2000, by and between the Bank and the Company, and any
amendments or supplements thereto, and (ii) the pledge and security agreement
entered into by the Company with any Substitute Bank, and any amendments or
supplements thereto.
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"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 corporation or national banking association 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.
"Principal Office" means the 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.
"Project" means the construction, acquisition and improvement of an
approximately 38,000 square foot addition to the Company's existing spring water
production and bottling facility located on Route 66 in the Catamount Industrial
Park within the Town of Randolph, together with related machinery and equipment
for such addition and for the existing production facilities at such location,
and 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 facilities constituting the Project.
"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 if the Bonds are rated by Moody's and S&P if 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 Fund" means the fund by that name established pursuant
to the provisions of Section 6.13 hereof.
"Record Date" means, prior to a Conversion Date, that day which is the
Business Day next preceding any Interest Payment Date and from and after a
Conversion Date with respect to a Series of Bonds, that date which is the
fifteenth calendar day next preceding any Interest Payment Date for such Series
of Bonds.
"Reimbursement Agreement" means the Reimbursement Agreement dated as
of January 28, 2000, by and between the Company and the Bank, 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.
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"Remarketing Agent" means (singly or collectively, as the case may be)
the remarketing agent(s) appointed by the Company and at the time serving as
such under the Remarketing Agreement.
"Remarketing Agreement" means the Remarketing Agreement, dated as of
December 1, 1999, by and between the Company and First Union Securities, Inc.
"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 Letters 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.
"S&P" means Standard & Poor's, a division of McGraw Hill Companies, 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 written approval of the Company.
"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 Company 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
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.
"Series" means each separately designated series of Bonds authorized
to be issued under this Indenture.
"Series A Bonds" means the Authority's $3,195,000 Variable Rate
Demand/Fixed Rate Revenue Bonds (Vermont Pure Springs, Inc. Project) 1999 Series
A authorized to be issued under this Indenture.
"Series A-T Bonds" means the Authority's $1,105,000 Variable Rate
Demand/Fixed Rate Revenue Bonds (Vermont Pure Springs, Inc. Project) 1999 Series
A-T (Taxable) authorized to be issued under this Indenture.
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"State" means the State of Vermont.
"Substitute Bank" means a savings and loan association or savings bank
or 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, that has been assigned the same or higher rating as the Letter of
Credit it is being issued to replace in effect immediately prior to the
substitution of the Substitute Letter of Credit pursuant to the provisions
herein.
"Substitute Letter of Credit" means a letter of credit delivered to
the Trustee in compliance with Section 4.07 of the Agreement (i) issued by the
Bank or a Substitute Bank, (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 it is being issued to replace,
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 for a Series of Bonds,
forty-six (46) days' interest (computed at a rate of 15% per annum with respect
to the Series A Bonds and at a rate of 17% per annum with respect to the Series
A-T Bonds) on all the Bonds of such Series at the time Outstanding and (ii) from
and after the Conversion Date for a Series of Bonds, two hundred fourteen (214)
days' interest (computed at the Fixed Rate on such Bonds at the time
Outstanding).
"Substitution Date" shall mean the date the Company delivers
Substitute Letters 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.
"Tax Certificate" means the Tax Certificate and Agreement, delivered
by the Authority and the Company at the time of and with respect to the issuance
and delivery of the Series A Bonds.
"Tender Agent" means First Union National Bank and its successors and
any corporation or association resulting from or surviving any consolidation or
merger to which it or its successors may be a party or any corporation or
association to which it may sell all or substantially all of its corporate trust
business and any successor Tender Agent at the time serving as successor Tender
Agent hereunder and under the Tender Agent Agreement. "Delivery Office" of the
Tender Agent means 213 Market Street, Harrisburg, Pennsylvania 17101 Attention:
Corporate Trust Services 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 as of
December 1, 1999 among 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 First Union National Bank, a national banking
association organized and existing under the laws of the United States and its
successor and any corporation or association resulting from or surviving any
consolidation or merger to which it or its successors may be a party or any
corporation or association to which it may sell or otherwise transfer all or
substantially all of its corporate trust business and any successor trustee at
the time serving as successor trustee hereunder.
"Undelivered Bonds" shall have the meaning given to such phrase in
Sections 5.01, 5.03 or 5.04 hereof.
"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 a
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 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
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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) a Letter of Credit is in effect or (ii) the Bank, in its
capacity as provider of the Letters of Credit, is the Holder of any Bonds.
ARTICLE II.
THE BONDS
Section 2.01. Authorization of Bonds.
(a) 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
shall be designated as "Vermont Economic Development Authority Variable Rate
Demand/Fixed Rate Revenue Bonds (Vermont Pure Springs, Inc. Project) 1999 Series
A" and "Vermont Economic Development Authority Variable Rate Demand/Fixed Rate
Revenue Bonds (Vermont Pure Springs, Inc. Project) 1999 Series A-T (Taxable),"
respectively.
(b) The aggregate principal amount of Bonds which may be issued and
Outstanding under this Indenture shall not exceed Four Million Three Hundred
Thousand Dollars ($4,300,000). No additional bonds may be issued under this
Indenture. The Bonds shall be issued in the aggregate principal amount of Four
Million Three Hundred Thousand Dollars ($4,300,000), comprising aggregate
principal amount of Three Million One Hundred Ninety-Five Thousand Dollars
($3,195,000) of Series A Bonds and One Million One Hundred Five Thousand Dollars
($1,105,000) of Series A-T Bonds. This Indenture constitutes a continuing
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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 and Purchase Price of and
premium, if any, 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 with respect to a Series of Bonds, (i) such Bonds shall be
Outstanding in 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 the authorized denominations of $100,000 or any integral multiple of
$5,000 in excess thereof. From and after the Conversion Date with respect to a
Series of Bonds, subject to the requirements of the following paragraph, (i)
such Bonds shall be Outstanding in denominations of $5,000 or any integral
multiple of $5,000 and (ii) 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 with
respect to a Series of Bonds, the Bonds of such Series shall be lettered "VR"
and shall be numbered consecutively from 1 upward, and after the Conversion Date
with respect to a Series of Bonds, the Bonds of such Series shall be lettered
"FR" and shall be numbered consecutively from 1 upward.
On or after its respective Conversion Date, the Bonds of any Series
may be issued in denominations of five thousand dollars ($5,000) or any integral
multiple thereof upon delivery to the Trustee of (A) a disclosure document
relating to such Bonds, and (B) an opinion or opinions of independent counsel to
the effect that such disclosure document fairly and accurately describes such
Bonds, the security for such Bonds and the financing documents relating to such
Bonds and such security, and that the disclosure document (except the financial
and statistical data therein as to which no opinion need be expressed) does not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, and (C) a certificate of the Company that the
Company has undertaken to provide continuing disclosure information as required
by United States Securities and Exchange Commission Rule ss.240.15c2-12 ("the
Rule") as in effect on such Conversion Date, or an opinion of nationally
recognized bond counsel, who may be counsel to the Authority, the Remarketing
Agent or the Trustee, to the effect that compliance with the Rule is not
required.
(b) Each Bond shall be dated the Issue Date and shall bear interest,
payable (i) prior to the Conversion Date with respect to a Series of Bonds, on
the first day of each calendar month, or if such date is not a Business Day, the
next succeeding Business Day commencing March 1, 2000, (ii) on the Conversion
Date with respect to a Series of Bonds, (iii) from and after the Conversion Date
with respect to a Series of Bonds, on January 1 or July 1 of each year,
commencing on the January 1 or July 1 next following the Conversion Date, and
(iv) on the maturity date for such Bond set forth in the next succeeding
paragraph, 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 after a Record Date and on or
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before the succeeding Interest Payment Date, in which case from the succeeding
Interest Payment Date, 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, if
the Company 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 Date of
Issue.
The Series A Bonds shall mature on January 1, 2020. The Series A-T
Bonds shall mature on January 1, 2011.
(c) (i) From the Issue Date to the Conversion Date with respect to a
Series of Bonds, the Bonds of such Series shall bear interest at the Floating
Rate therefor. The Floating Rate for each Series of Bonds 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 for each Series of Bonds 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 held by such Bondholder.
(iii) If for any reason the interest rate on any Series 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 week 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. If for any
reason the interest rate on any Series A-T 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 week
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 115% 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
or in accordance with (c)(iii) above 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.
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Anything herein to the contrary notwithstanding, the Floating Rate
with respect to the Series A Bonds shall in no event exceed 15% per annum, and
the Floating Rate with respect to the Series A Bonds shall in no event exceed
17% per annum.
(d) The Bonds of a Series shall bear interest at a Fixed Rate from and
after the Conversion Date for such Series until the maturity of such Series of
Bonds. The Fixed Rate for any Series of Bonds 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 for a Series of Bonds, interest on
such 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 for a Series of Bonds,
interest on such Bonds shall be computed on the basis of a 360-day year of
twelve 30-day months.
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 on the applicable Interest Payment Date 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, which shall
be to a bank in the United States. 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 reregistration of the
Bond.
The principal of the Bonds shall be payable in lawful money of the
United States of America at the designated office of the Trustee; provided,
however that payment of the Purchase Price of Bonds tendered pursuant to
Sections 5.01, 5.03 and 5.04 hereof shall be paid in lawful money of the United
States of America at the Delivery Office of the Tender Agent to the Owner of
Bonds entitled to receive such Purchase Price. Except as permitted under 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
Executive Director, Director of Finance Programs or General Counsel, under its
seal. 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 signed any of the Bonds shall cease to be such officer or
officers of the Authority before the Bonds so signed 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 signed 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.
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Only such of the Bonds as shall bear thereon a certificate of
authentication substantially in the form set forth on the forms of Bond attached
hereto as Exhibits A, B, C and D, 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.
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 Exhibits
A, B, C and D 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
signed 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 Undelivered Bond is deemed tendered to the Tender
Agent as provided in Section 5.01, 5.03 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 the
Undelivered Bond.
Section 2.05. Form of Bonds. The Floating Rate Bonds and the certificate of
authentication to be endorsed thereon prior to the Conversion Date for each
Series of Bonds are to be in substantially the form set forth in Exhibits A and
C attached hereto, 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 forms set forth in Exhibit B and D attached hereto, with
appropriate variations, omissions and insertions as permitted or required by
this Indenture.
Section 2.06. Transfer of Bonds. Except as provided in Section 2.13 hereof,
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
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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 a 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 designated
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 a 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 upon prior written notice by any Bondholder or its 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 to the Trustee definitive Bonds as promptly thereafter as practicable,
and thereupon the temporary Bonds may be surrendered, for cancellation, in
exchange therefor at the designated 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.
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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 cancelled by it and
delivered to, or upon the written 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 at the written direction of the Authority may pay the same
without surrender thereof with funds provided by the Authority or available
hereunder for such purpose). 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 cancelled 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 its 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 and Purchase Price of, premium, if any, and interest on,
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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) to change the Securities Depository
or (2) to discontinue the book-entry system, then the Company shall notify the
Trustee in writing of such determination and the Trustee shall notify the
Securities Depository of such determination or such notice and of the
availability of certificates for the beneficial 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 bond based solely upon registration
information provided to the Trustee by the Securities Depository or
Participants, 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) 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
relating to the payment of the Bonds 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 or
beneficial owners 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 beneficial owners, as
provided herein. The Trustee may conclusively rely on information from the
Securities Depository and its Participants as to the names, addresses, amount of
Bonds beneficially owned, and taxpayer identification numbers 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 from the acting Securities Depository 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 in
connection with a tender pursuant to Section 5.01, 5.03 or 5.04 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 a Participant acting on behalf of or at the
discretion of the beneficial owner purchasing such Bonds.
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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 Four Million Three
Hundred Thousand Dollars ($4,300,000), comprising aggregate principal amount of
Three Million One Hundred Ninety-Five Thousand Dollars ($3,195,000) of Series A
Bonds and One Million One Hundred Five Thousand Dollars ($1,105,000) of Series
A-T Bonds.
Section 3.02. 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, if any. The
Trustee shall deposit all such amounts in a special fund which the Trustee is
hereby directed to establish, 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
delivered to the Trustee on the Closing Date 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 identified on the Closing
Statement to reimburse the Company for costs of the Project previously paid by
the Company; and
(c) Transfer to the credit of the Construction Fund the balance of the
Clearing Fund not otherwise reserved for the payment of the items described in
subsections (a) and (b) above.
ARTICLE IV.
REDEMPTION OF BONDS BEFORE MATURITY
Section 4.01. Extraordinary and Mandatory Redemption.
(a) Extraordinary Redemption of Bonds. The Bonds are callable for
extraordinary redemption in the event (i) 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 (ii) 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 of Bonds.
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(1) The Bonds are subject to mandatory redemption within one
hundred eighty (180) days after the occurrence of a Determination of
Taxability, in whole, 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.
(2) The Bonds of each Series are also subject to mandatory
redemption five (5) Business Days prior to the Letter of Credit
Termination Date corresponding to such Series, 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 such Letter of
Credit Termination Date, the Trustee shall not have received a
Substitute Letter of Credit for such Series of Bonds which will be
effective on or before such Letter of Credit Termination Date.
(c) Mandatory Sinking Fund Redemption.
(1) The Series A Bonds are subject to mandatory redemption on the
Interest Payment Date occurring in the month of January in each of the
years set forth below commencing on the Interest Payment Date
occurring in January of 2001 (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
2001 $215,000
2002 215,000
2003 215,000
2004 215,000
2005 215,000
2006 215,000
2007 215,000
2008 215,000
2009 215,000
2010 215,000
2011 55,000
2012 110,000
2013 110,000
2014 110,000
2015 110,000
2016 110,000
2017 110,000
2018 110,000
2019 110,000
2020* 110,000
- --------------------
*Final maturity
(2) The Series A-T Bonds are subject to mandatory redemption on
the Interest Payment Date occurring in the month of January in each of
the years set forth below commencing on the Interest Payment Date
occurring in January of 2001 (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
2001 $105,000
2002 105,000
2003 105,000
2004 105,000
2005 105,000
2006 105,000
2007 105,000
2008 105,000
2009 105,000
2010 105,000
2011* 55,000
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- --------------------
*Final maturity
Section 4.02. Optional Redemption. On or prior to the Conversion Date for a
Series of Bonds, the Bonds of such Series 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 for a Series of Bonds, if the length of time from
the Conversion Date to the final maturity date of such Series of Bonds is seven
(7) years or more, the Bonds of such Series are subject to redemption by the
Authority, at the option of the Company, on or after the fifth anniversary of
such 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.
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 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 Available 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 cancelled 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. If less than all of the Bonds are to be redeemed pursuant to Section
4.01(a) hereof, the particular Bonds or portions thereof to be redeemed shall be
selected pro rata from each Series and within a Series 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
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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 cancelled Bond to the Trustee.
(c) (i) Prior to the Conversion Date for a Series of Bonds, in case a
Bond of such Series is of a denomination larger than $100,000, a portion of such
Bond ($5,000 or any integral multiple thereof) may be redeemed, but Bonds of
such Series 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 for a Series of Bonds, in case a Bond
of such Series 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
of such Series 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 Bonds. 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 shall select for
redemption Bonds in an aggregate principal amount equal to such excess by lot.
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 from the sources and in the order
provided in Section 6.03 hereof. On each date that the Bonds are subject to
redemption, the Trustee shall draw on the Letter of Credit therefor in an amount
sufficient to pay the full redemption price of the Bonds then subject to
redemption. As long as the Bank is not in default under the terms of any of the
Letters of Credit, the Trustee shall not call Bonds for optional redemption
unless it has received 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 a Series of Bonds shall be converted from a Floating Rate to a Fixed
Rate upon the exercise by the Company of the Conversion Option, and the Bonds of
such Series shall be subject to mandatory tender for purchase by the Owners
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thereof on the Conversion Date for such Series of Bonds. To exercise the
Conversion Option for a Series of Bonds, the Company shall notify the Trustee,
the Tender Agent, the Bank, the Authority and the Remarketing Agent in writing
at least thirty-five (35) days prior to such Conversion Date of its intent to
convert the Bonds of a Series and cause the Remarketing Agent to furnish to the
Trustee the information set forth in paragraph 1 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 such Conversion Date to the
Owner of each Bond being converted at the address shown on the registration
books of th 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 such Conversion Date, together
with a form of such Substitute Letter of Credit; (ii) a Company Certificate to
the effect that the representations and warranties of the Company 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; and (iii) with respect to
the Series A Bonds only, an opinion of nationally recognized bond counsel to the
effect that the proposed conversion of the interest rate on the Series A Bonds
will not cause the interest on the Series A Bonds to be includible in gross
income of the Holders of such Bonds for federal income tax purposes. 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 for such Series of Bonds.
2. That the existing Letter of Credit securing such Bonds will expire two
(2) Business Days after such Conversion Date.
3. That unless firm commitments for the purchase of all Outstanding Bonds
of a Series 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 such Bonds.
4. That in the event the Company elects not to rescind the optional
conversion of such Bonds, all such Bonds shall be subject to mandatory purchase
on such Conversion Date pursuant to this Section 5.01.
On or prior to such Conversion Date, Owners of such Bonds shall be required to
deliver such 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 such Conversion
Date ("Undelivered Bonds"), for which there has been irrevocably deposited in
trust with the Trustee or the Tender Agent an amount of Available 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 SUCH BONDS TO DELIVER SUCH 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 SUCH UNDELIVERED BONDS SHALL NO LONGER
BE ENTITLED TO THE BENEFITS 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 Conversion Date, the
Remarketing Agent has not presented to the Company firm commitments for the
purchase of all of such Bonds, the Company, at its option, may rescind an
optional conversion and the mandatory tender of such 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 notify the affected Owners of such
rescission immediately, and thereafter such Bonds shall bear interest at the
Floating Rate in effect for the current Weekly Period and thereafter such Bonds
shall bear interest at the Floating Rate until any subsequent Conversion Date
effected in accordance with this Indenture.
The Bonds of a Series 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 such 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.
Notwithstanding any provision of this Indenture to the contrary, the
exercise by the Company of a Conversion Option with respect to one Series of
Bonds shall not require or be conditioned on the exercise at any time by the
Company of a Conversion Option with respect to any other Series of Bonds issued
under this Indenture.
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 for a Series of Bonds, the Trustee or the Tender Agent, as the
case may be, shall deliver Bonds in the form of Exhibits B and D hereto, as
appropriate. Prior to the delivery by the Trustee of such Bonds, there shall be
delivered to the Trustee sufficient Bonds to make the required delivery to
Owners and also filed with the Trustee a request and authorization to the
Trustee on behalf of the Authority and signed by the Executive Director,
Director of Finance Programs or General Counsel or any authorized officer of the
Authority to authenticate and deliver such 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, at the expense of the Company and without
making any charge therefor to the Owner of such Bonds.
Section 5.03. Mandatory Tender upon Substitution of Letters of Credit.
Prior to the Conversion Date for a Series of Bonds, the Bonds of such Series 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 of such
Series at the address shown on the registration books of the Bond Registrar
notifying such Owner that its Bonds are subject to mandatory purchase. No such
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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 for such Series of Bonds.
2. That the existing Letter of Credit securing such Bonds will expire
two (2) Business Days after the Substitution Date.
3. That if the Company satisfies the conditions precedent to delivery
of the Substitute Letter of Credit, all Bonds of such Series 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 such 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 Available 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 deemed to be no longer
Outstanding with respect to such prior Owners. IN THE EVENT OF A FAILURE BY AN
OWNER OF SUCH BONDS TO DELIVER SUCH 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 SUCH UNDELIVERED BONDS SHALL NO LONGER BE
ENTITLED TO THE BENEFITS OF THIS INDENTURE, EXCEPT FOR THE PURPOSE OF PAYMENT O
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 such Bonds shall be rescinded and the Trustee shall notify
the Owners of such Bonds of such rescission immediately and thereafter such
Bonds shall continue to be secured by the existing Letters of Credit in
accordance with its terms until their respective termination dates.
Section 5.04. Demand Purchase Option. Prior to the Conversion Date for a
Series of Bonds, any Bond of such Series 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 Office and Delivery Office, respectively, and to the Remarketing
Agent at its 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 of
such Series 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
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next succeeding the date of delivery of such notice and which date shall be
prior to the Conversion Date for such Series of Bonds; and
(ii) 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 Bonds, 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 (ii)
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 Available 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 shall be deemed to be no longer Outstanding with respect to
such tendering Owner. IN THE EVENT OF A FAILURE BY AN OWNER OF SUCH BONDS TO
DELIVER SUCH 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 BENEFITS 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 (ii) 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 Sections
2.02(C) and 2.02(D) 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(c), 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 for such
Bonds (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 for such Bonds and not
the Substitute Letter of Credit to fund such payment);
(ii) proceeds of the remarketing of Bonds; and
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(iii) any other Available Moneys furnished to the Trustee or the
Tender Agent and available for such purpose.
(b) Payment for Bonds purchased pursuant to Sections 5.01, 5.03 or
5.04 shall be made as follows:
(i) On 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 for such Bonds 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 such 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.
(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 "Bond
Remarketing Account" and the "Bond Bank Account." An amount equal to
the proceeds received by the Trustee pursuant to a draw under the
Letters of Credit shall be transferred by the Trustee in immediately
available funds to the Tender Agent for deposit in the Bond 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 Bond 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 the proceeds of the remarketing of the
Bonds but not more than an amount equal to the amount deposited in the
Bond 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 Bond 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 Bond Bank
Account to the extent available. If amounts on deposit in the Bond
Bank Account are insufficient to pay the Purchase Price to the
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tendering Bondholders, the Tender Agent shall make up any such
deficiency from amounts on deposit in the Bond Remarketing Account.
(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 for such Bonds 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.
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 affiliates thereof.
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.
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(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 Principal 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 for such Bonds 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 for such Bonds has been reinstated in accordance with the terms of the
Pledge Agreement and such 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
Unremarketed Bonds, the funds for which have been obtained by a drawing under
the Letter of Credit for such Bonds, 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 separate
accounts, 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)
Business 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 appropriate 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
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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 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 Letters 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(c) hereof, funds for the payment 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 Letters of Credit;
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(ii) amounts deposited into the Bond Fund which constitute Available
Moneys (other than moneys drawn by the Trustee under the Letters 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 VI 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 the "Construction Fund".
Section 6.06. Payments into the Construction Fund; Disbursements. The
Construction Fund shall initially consist of those monies deposited therein
pursuant to Section 3.02. Moneys on deposit in the Construction Fund shall be
applied to pay 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 "E" hereto signed by the Company and approved
by the Bank in the form of Exhibit "F" hereto. 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 concerning the Construction Fund 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 after payment of the
Bonds 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 the terms of any of the Letters 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 or Dates to the Letter of Credit
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Bank to reimburse the Letter of Credit Bank for a drawing or drawings affected
pursuant to Section 6.12(b) 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 an Authorized Representative of the Company, 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 or its agent 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.
Section 6.11. Repayment to the Bank and the Company from the Bond Fund or
the Construction 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 America 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. Letters of Credit
(a) During the term of a Letter of Credit, the Trustee shall draw
moneys under such 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 to which
such Letter of Credit relates, and (ii) in an amount sufficient to pay when due
the Purchase Price of such 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 each Letter of Credit on the next Interest Payment Date.
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(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 a 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 are Pledged Bonds prior to the date such payment is due, and (ii)
amounts drawn by the Trustee under a 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) Each Letter of Credit shall terminate in accordance with its terms
on the Letter of Credit Termination Date therefor. 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 such 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 of America
and not for the benefit of the Holders of the Series A 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 each fifth Bond Year (each, a "Rebate Computation Date"), the Company shall
calculate, or cause to be calculated, the amount relating to the Series A Bonds
required to be paid to the United States of America (the "Rebate Amount")
pursuant to Section 148 of the Code. On or before the sixtieth day after such
date, the Trustee at the written 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 Rebate Amount 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 Rebate Amount for such period.
Subject to subsection (c) of this Section 6.13, as of the last day on
which the last Series A 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 written 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 Rebate
Amount for the period from the date of issuance of the Series A 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 Rebate Amount for such period.
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After making any transfer required for a Rebate Computation Date and
the Final Computation Date, the Trustee shall immediately pay or cause to be
paid to the United States of America, as directed in writing by the Company, 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
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 of America 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 other provisions of this Section 6.13, the
Company hereby agrees and covenants to calculate the amount to be deposited in
the Rebate Fund and the amount to be rebated to the United States of America
pursuant to Section 148(f) of the Code in any manner not inconsistent with its
arbitrage covenants set forth in the Tax Certificate delivered on the date of
issuance of the Series A Bonds. Such calculation shall be made with due regard
to all regulations under such Section 148(f) that are applicable to the Series A
Bonds, 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 this Section 6.13, except that the
Trustee shall be liable for its gross negligence or willful misconduct. The
Company shall indemnify and hold harmless the Trustee and its directors,
officers, employees and agents (collectively, the "Indemnitees") from and
against any liabilities, claims, losses, damages, fines, penalties and expenses,
including out-of-pocket expenses and legal fees and expenses (collectively, the
"Losses") which the Trustee may incur in the exercise and performance of its
duties and obligations under this Section 6.13, excepting only those damages,
costs, expenses or liabilities caused by the Trustee's gross negligence or
willful misconduct. In addition to and not in limitation of the preceding
sentence, the Company shall indemnify and hold the Indemnitees and each of them
harmless from and against all Losses that may be imposed on, incurred by or
asserted against the Indemnitees or any of them for following any instruction or
direction given pursuant to this Section 6.13. 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 this Section 6.13, the Trustee shall have no obligation to
cause compliance on its 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 a
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
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directions of the Company shall be subject to the limitations set forth in
Section 7.09 hereof, and 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.
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 in writing 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, 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 at the best price obtainable, 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 or sale.
ARTICLE VII.
THE AUTHORITY; PARTICULAR COVENANTS
Section 7.01. Covenant as to Payment; Faith and Credit of Commonwealth Not
Pledged. The Authority covenants that it will promptly pay or cause to be paid
the principal of, interest, premium, if any, and other charges, if any, on the
Bonds at the place, on the dates and in the manner provided herein and in the
Bonds, provided, however, that the Bonds do not now and shall never constitute a
general obligation of the Authority or a debt or pledge of the faith and credit
or the taxing power of the State or of any political subdivision, municipality
or other local agency thereof and are not and will not be secured by an
obligation or pledge of any moneys raised by taxation, and all covenants and
undertakings by the Authority hereunder and under the Bonds to make payments are
special obligations of the Authority payable solely from the revenues and funds
pledged hereunder.
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
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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,
and at the expense of the Company, 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 corporate trust
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 upon prior
written notice.
(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. Other Covenants.
(a) The Trustee shall promptly collect all amounts due from the
Company pursuant to the Agreement, shall (subject to the provisions of Article
IX hereof) perform all duties imposed upon it pursuant to the Agreement and,
subject to the provisions of Article IX hereof, shall diligently enforce, and
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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.
(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 and the Company. The
Trustee shall give such written consent only if (1) notification of such
amendment, modification or termination has been given to the Rating Agency then
rating the Bonds, (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 loan 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 7.06(b) have been satisfied.
Section 7.07. 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 7.08. 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.
Section 7.09. Tax Covenants. The Authority covenants to the extent it has
control of any proceeds of the Series A Bonds, 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 Series A 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 Series A Bonds or any
other funds of the Authority or the Company, or take or omit to take any action
that would cause the Series A Bonds to be "arbitrage bonds" within the meaning
of Section 148(a) of the Code. To that end, the Authority, to the extent
applicable, and the Company will comply with all requirements of Section 148 of
the Code to the extent applicable to the Series A Bonds. In the event that at
any time the Authority or the Company is of the opinion that for purposes of
this Section 7.09 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, or otherwise to provide for the payment of rebate to the United
States, the Authority or the Company shall so instruct the Trustee in writing,
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and the Trustee shall take such action as shall be set forth in such
instructions, including, without limitation, the establishment of separate
subaccounts within the funds established hereunder for the deposit of proceeds
of the Series A Bonds and the Series A-T Bonds, respectively. The covenants of
the Authority and the Company 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
relating to the Series A Bonds 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 Series A Bonds from time to
time. This covenant shall survive payment in full or defeasance of the Series A
Bonds. The Company specifically covenants 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 Tax Certificate.
Notwithstanding any provision of this Section 7.09 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 7.09 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 7.10. Corporate Organization, Authorization and Power. The
Authority represents and warrants as follows:
(i) it is a body corporate and politic and a public instrumentality of
the State created under the Act, with the power under and pursuant to the
Act to execute and deliver this Indenture and the Agreement and to perform
its obligations hereunder, and to issue and sell the Bonds pursuant to this
Indenture and the Agreement; and
(ii) it has taken all necessary action and has complied with all
provisions of the Constitution of the State and the Act required to make
this Indenture and the Agreement and the Bonds the valid obligations of the
Authority which they purport to be; and, when executed and delivered by the
parties hereto, this Indenture and the Agreement will each constitute a
valid and binding agreement of the Authority enforceable in accordance with
its terms, except as enforceability may be subject to the exercise of
judicial discretion in accordance with general equitable principles and to
applicable bankruptcy, insolvency, reorganization, moratorium and other
laws for the relief of debtors heretofore or hereafter enacted to the
extent that the same may be constitutionally applied; and
(iii) when delivered to and paid for by the initial purchasers in
accordance with the terms of this Indenture, the Bonds will constitute
valid and binding special obligations of the Issuer enforceable in
accordance with their terms, except as enforceability may be subject to the
exercise of judicial discretion in accordance with general equitable
principles and to applicable bankruptcy, insolvency, reorganization,
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moratorium and other laws for the relief of debtors heretofore or hereafter
enacted to the extent that the same may be constitutionally applied, and
will be entitled to the benefits of this Indenture and the Agreement; and
(iv) The Authority makes no other representations or warranties,
either express or implied, of any nature or kind, including, without
limitation, a representation or warranty that interest on the Series A
Bonds is or will continue to be exempt from federal or state income
taxation.
Section 7.11. Rights and Duties of the Authority.
(a) Remedies of the Authority. Notwithstanding any contrary provision
in this Indenture and the Agreement, the Authority shall have the right to take
any action not prohibited by law or make any decision not prohibited by law with
respect to proceedings for indemnity against the liability of the Authority and
its officers, directors, employees and agents and for collection or
reimbursement of moneys due to it under this Indenture and the Agreement for its
own account. The Authority may enforce its rights under this Indenture and the
Agreement which have not been assigned to the Trustee by legal proceedings for
the specific performance of any obligation contained herein or for the
enforcement of any other legal or equitable remedy, and may recover damages
caused by any breach by the Company of its obligations to the Authority under
the Agreement, including any amounts required to be paid by the Company pursuant
to the Agreement, court costs, reasonable attorney's fees and other costs and
expenses incurred in enforcing such obligations.
(b) Limitations on Actions. Without limiting the generality of
Subsection 7.11(c), the Authority shall not be required to monitor the financial
condition of the Company and shall not have any responsibility or other
obligation with respect to reports, notices, certificates or other documents
filed with it hereunder.
(c) Responsibility. The Authority shall be entitled to the advice of
counsel (who may be counsel for any party) and shall not be liable for any
action taken or omitted to be taken in good faith in reliance on such advice.
The Authority may rely conclusively on any communication or other document
furnished to it under this Indenture or the Agreement and reasonably believed by
it to be genuine. The Authority shall not be liable for any action (i) taken by
it in good faith and reasonably believed by it to be within the discretion or
powers conferred upon it, or (ii) in good faith omitted to be taken by it
because reasonably believed to be beyond the discretion or powers conferred upon
it, (iii) taken by it pursuant to any direction or instruction by which it is
governed under this Indenture and the Agreement or (iv) omitted to be taken by
it by reason of the lack of direction or instruction required for such action,
nor shall it be responsible for the consequences of any error of judgment
reasonably made by it. It shall in no event be liable for the application or
misapplication of funds, or for other acts or defaults by any person except its
own directors, officers and employees. When any consent or other action by the
Authority is called for by this Indenture and the Agreement, the Authority may
defer such action pending such investigation or inquiry or receipt of such
evidence, if any, as it may require in support thereof. It shall not be required
to take any remedial action (other than the giving of notice) unless reasonable
indemnity is provided for any expense or liability to be incurred thereby. It
shall be entitled to reimbursement for expenses reasonably incurred or advances
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reasonably made, with interest at the "base rate" of the Trustee, as announced
from time to time (or, if none, the nearest equivalent), in the exercise of its
rights or the performance of its obligations hereunder, to the extent that it
acts without previously obtaining indemnity. No permissive right or power to act
shall be construed as a requirement to act; and no delay in the exercise of any
such right or power shall affect the subsequent exercise of that right or power.
The Authority shall not be required to take notice of any breach or default by
the Company under this Agreement except when given notice thereof by the
Trustee. No recourse shall be had by the Company, the Trustee or any Bondholder
for any claim based on this Indenture and the Agreement, the Bonds or any
agreement securing the same against any director, officer, agent or employee of
the Authority alleging personal liability on the part of such person unless such
claim is based upon the willful dishonesty of or intentional violation of law by
such person. No covenant, stipulation, obligation or agreement of the Authority
contained in this Indenture and the Agreement shall be deemed to be a covenant,
stipulation, obligation or agreement of any present or future director, officer,
employee or agent of the Authority in his or her individual capacity, and no
person executing a Bond shall be liable personally thereon or be subject to any
personal liability or accountability by reason of the issuance thereof.
(d) Financial Obligations. Nothing contained in this Indenture or the
Agreement is intended to impose any pecuniary liability on the Authority nor
shall it in any way obligate the Authority to pay any debt or meet any financial
obligations to any person at any time in relation to the Project except from
moneys received under the provisions of this Indenture and the Agreement;
provided, however, that nothing contained in this Indenture and the Agreement
shall in any way obligate the Authority to pay such debts or meet such financial
obligations from moneys received from the Authority's own account.
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 and the Company by the
Trustee, or to the Authority, the Company and the Trustee by the Holders of not
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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 a 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 such 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 any of the
Letters 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 Section 8.01(f) or (g)
hereof), as long as the Bank is not in default under the terms of any of the
Letters of Credit. The Trustee shall not be deemed to have actual knowledge of
the existence of an Event of Default under Section 8.01(d) or (e) unless it has
received written notice thereof from the Bank, the Authority or the Owners of
25% in principal amoun of the Bonds then Outstanding.
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 terms of any of the Letters
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 Holders, 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 immediately due and the Acceleration Price (as hereafter defined)
shall thereupon become payable on the first (1st) Business Day following the
Acceleration Date (the "Payment Date"). Thereupon, the Trustee, among other
things, shall draw immediately upon each of the Letters 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 Holders, 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 Letters 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, Holders of not less than 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 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 or declare the
principal amount of all Bonds then Outstanding and interest accrued thereon to
such date to be immediately due, unless directed in writing by the Bank or
unless the Bank shall be in default of its obligations under terms of any of the
Letters of Credit or a voluntary or involuntary case has been commenced by the
filing of a petition under the United States 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 office of the Trustee stated
in such notice. 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 Letters of Credit as provided in Section 6.12 hereof in an amount
that is sufficient to pay the Acceleration Price due on the Outstanding Bonds on
the Payment Date.
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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 Indenture, the Agreement, 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 Letters 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 terms of any of the the Letters of
Credit or a voluntary or involuntary case has not been commenced by the filing
of a petition under the United States 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;
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
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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,
the Bank shall have the right to direct the method and the place of conducting
all remedial proceedings by the Trustee hereunder, provided that the Trustee is
provided indemnification and that such direction shall not be otherwise than in
accordance with law or the provisions of this Indenture as long as the Bank
shall not be in default under the terms of any of the Letters of Credit.
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 terms of
any of the Letters of Credit or a voluntary or involuntary case has been
commenced by the filing of a petition under the United States 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.
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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
Letters of Credit, 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 this Indenture, 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, Purchase Price 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
Letters 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 any Letter of
Credit or any Substitute Letter of Credit, as the case may be, and has not been
reimbursed or paid therefor.
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Section 8.14. Waiver of Default. As long as the Bank is not in default of
its obligations under the terms of any of the Letters of Credit and the Letters
of Credit are 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 any Letter of
Credit has not been reinstated to cover principal and interest on the Bonds in
accordance with the terms of such 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),
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 person would
exercise or use under the circumstances in the conduct of his own affairs.
(b) The Authority shall remove the Trustee if at any time requested to
do so by an instrument or concurrent instruments in writing signed 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 the
Trustee 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, at the discretion of the
Company and with the consent of the Bank, 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, at the expense of the
Company, 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
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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 acceptance of
appointment by a successor Trustee as provided in this subsection, the Company
shall mail or cause to be mailed a notice of the succession of such Trustee to
the trusts hereunder to the Bondholders at the addresses shown on the
registration books maintained by the Trustee. If the Company 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 Company.
(e) Any Trustee appointed under the provisions of this Section in
succession to the Trustee shall be a trust company or bank having the requisite
trust powers and 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 if the Bonds are rated by a Rating Agency, any
successor trustee shall be rated, or its main banking affiliate or parent entity
shall be rated, at least Baa3/P-3 or otherwise be acceptable to the Rating
Agency. 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 or association into
which the Trustee may be merged or converted or with which it may be
consolidated or any company or association resulting from any merger, conversion
or consolidation to which it shall be a party or any company or association 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, in the other Bond Documents and in
the Bonds contained shall be taken as statements of the Authority or the parties
thereto, 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 Trust Estate 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
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makes no representation that the proceeds of the Bonds will be sufficient for
purpose of the Projects. The Trustee shall, however, be responsible for its
representations contained in its certificate of authentication on the Bonds. The
Trustee shall not be responsible for any use of moneys disbursed by it under the
terms of this Indenture. 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 its 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. The
Trustee may have other trust and financial relationships with the Authority, the
Bank and the Company.
(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 grossly negligent in ascertaining the pertinent facts. The permissive rights
of the Trustee to do things enumerated in this Indenture shall not be construed
as a duty.
(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 Letters of Credit in accordance with their respective 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.
(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.
(f) The Trustee shall not be required to file any bond or security.
(g) The Trustee may employ and act through agents and attorneys in the
performance of its duties hereunder and shall not be responsible for the costs
of such agents and attorneys selected by it with reasonable care.
(h) The Trustee shall not be required to expend its own funds in the
performance of its duties hereunder.
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
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presented by the proper party or parties. The Trustee may consult with counsel,
who may be counsel of or to the Authority or the Company, 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 by reference to the
Bond Register.
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 in accordance with its retention
schedules and shall be subject during normal business hours of the Trustee upon
prior written notice to the inspection of the Authority 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.
Section 9.07. The Tender Agent. First Union National Bank, 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 (unless the Trustee is also
the Tender Agent) 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
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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
the Pledged Bonds Custodian 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 of America 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, or its main banking
affiliate or parent entity 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'
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; provided that such removal shall not take effect until
the appointment of a successor Tender Agent, and in accordance with the
provisions hereof. 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 be entitled to the same rights and
immunities provided to the Trustee under this Article IX.
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' notice to the Authority, the Company and the Trustee and the Tender
Agent. 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 and the
Tender Agent. 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 and the Tender Agent. The resignation or removal
of the Remarketing Agent shall not become effective until a successor
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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 and the Bank.
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 terms of any of the Letters of Credit), provided that the
Trustee determines that such modification or amendment will not materially
adversely affect the interests of the Bondholders or result in any material
impairment of the security hereby given. In making such determination, the
Trustee may rely on an opinion of Counsel selected by the Trustee. Any other
modification or amendment must be approved by a majority in aggregate principal
amount of the Bonds then Outstanding, provided that such consent of the
Bondholders shall no be required if such modification or amendment is consented
to in writing by the Bank provided that (a) the Bank is not then in default of
its obligations under the terms of any of the Letters of Credit and (b) no
voluntary or involuntary case has been commenced by the filing of a petition
under the United States Bankruptcy Code or any other law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or adjustment of debts by
or against the Bank. The foregoing to the contrary notwithstanding, no such
modification or amendment shall, without the consent of 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 addresses 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,
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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 Company
in any of the following ways, provided that the Company also pays or causes to
be paid any other sums payable hereunder and under the Agreement by the
Authority or the Company:
(a) by paying or causing to be paid the principal of and interest on
the Bonds, as and when the same become due and payable;
(b) with respect to Bonds which bear interest at a Fixed Rate, by
depositing or causing to be deposited 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 Company 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 and under the Agreement by the Company or the Company, then and in
that case, at the election of the Company (evidenced by a Certificate of the
Company filed with the Trustee, signifying the intention of the Company 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
Company under this Indenture and the Agreement shall cease, terminate, become
void and be completely discharged and satisfied. In such event, upon Request of
the Company, the Trustee shall cause an accounting for such period or periods as
may be requested by the Company to be prepared and filed with the Authority to
the extent such accountin has not been previously 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 Company, that may be necessary or
desirable to evidence such discharge and satisfaction, and the Trustee, as
directed in writing by the Company, shall pay over, transfer, assign or deliver
all moneys or securities or other property held by it pursuant to this
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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 or (iv) the payment of any and all sums due to the
United States of America pursuant to Section 6.13 hereof, to the Company.
Section 11.02. Discharge of Liability on Bonds. With respect to Bonds which
bear interest at a Fixed Rate, 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 a 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 Company 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 Company may at any time surrender to the Trustee for cancellation
by it any Bonds previously issued and delivered, which the Company 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. 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 Truste shall have been irrevocably instructed (by request of the Company) to
apply such money to the payment of such principal, premium 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 Accountant, satisfactory
in form and content to the Trustee, demonstrating that the Government
Obligations so deposited and the income therefor 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, premium, if any, and interest become due and (ii) an opinion
acceptable to the Rating Agency and the Trustee, and addressed to the Trustee,
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 addresse 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 or Purchase Price of or premium and 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 special 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.
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 or her
individual capacity, and neither the members of the Authority, counsel to the
Authority or any officer of the Authority 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 or her
pursuant to this Indenture or the Act. Notwithstanding anything herein to the
contrary, no provision, covenant or agreement contained in this Indenture or in
the Bonds or any obligations herein or therein imposed upon the Authority or the
breach thereof, shall constitute or give rise to or impose upon the Authority a
pecuniary liability or a charge upon its general credit. In making the
agreements, provisions and covenants set forth in this Indenture, the Authority
has not obligated itself except with respect to its rights and interest in the
Agreement, as hereinabove provided.
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Section 12.03. Reserved.
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.
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 first
class United States mail, 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 Office of the Trustee, or at such other address as may have
been filed in writing by the Trustee with the Authority and the Company. 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, first-class postage prepaid, in a post office
letter box, addressed, as the case may be,
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To the Trustee: First Union National Bank
123 S. Broad Street
Philadelphia, PA 19109
Attention: James Matthews, Assistant
Vice President
To the Authority: Vermont Economic Development Authority
58 East State Street
Montpelier, Vermont 05602
Attention: Manager
(or such other address as may have been filed in writing by the Authority with
the Trustee),
To the Company: Vermont Pure Holdings, Ltd.
66 Catamount Center
Randolph Center, Vermont 05061
Attention: Bruce MacDonald, Chief
Financial Officer
Vermont Pure Springs, Inc.
66 Catamount Center
Randolph Center, Vermont 05061
Attention: Bruce MacDonald, Chief
Financial Officer
(or such other address as may have been filed in writing by the Company with the
Trustee), To the
Remarketing Agent: First Union Securities, Inc.
301 South College Street, DC8
Charlotte, North Carolina 28288-0600
Attention: William Bingham, Vice President
Telecopier No: (709) 383-5079
(or such other address as may have been filed in writing by the Remarketing
Agent with the Trustee),
To the Tender Agent: First Union National Bank
Corporate Trust Operations
3C3 1525 West W.T. Harris Boulevard
Charlotte, North Carolina 28288
(or such other address as may have been filed in writing by the Tender Agent
with the Trustee),
To the Bank: First Union National Bank
2240 Butler Pike
Plymouth Meeting, Pennsylvania 19462
Attention: Carl Goeltz, Vice President
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(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 signed and
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 Company 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, Purchase Price 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
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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 corporate trust industry standards, to the extent
practicable, and with due regard for the requirements of Section 7.09 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 Company or the Trustee shall preserve undestroyed, shall together
constitute but one and the same instrument.
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IN WITNESS WHEREOF, VERMONT ECONOMIC DEVELOPMENT AUTHORITY has caused this
Indenture to be signed in its name by its Executive Director, Director of
Finance Programs or General Counsel and its seal to be hereunto affixed, and
First Union National Bank, as Trustee, in token 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 its corporate seal to be hereunto affixed,
all as of the day and year first above written.
[SEAL] VERMONT ECONOMIC DEVELOPMENT
AUTHORITY
By___________________________________
Rosalea Bradley
Manager
[SEAL] FIRST UNION NATIONAL BANK, as Trustee
By__________________________________
Authorized Officer
Attest:_____________________
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EXHIBIT "A"
(FLOATING RATE FORM OF SERIES A BOND)
No. VR- ***$_________***
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
hereof, Cede & Co., has an interest herein.
UNITED STATES OF AMERICA
STATE OF VERMONT
VERMONT ECONOMIC DEVELOPMENT AUTHORITY
VARIABLE RATE DEMAND/FIXED RATE
REVENUE BOND
(VERMONT PURE SPRINGS, INC. PROJECT)
1999 SERIES A
DATED DATE MATURITY DATE CUSIP
January 28, 2000 JANUARY 1, 2020
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF VERMONT
OR OF THE ISSUER EXCEPT TO THE EXTENT PERMITTED BY SUBCHAPTER 4 OF CHAPTER 12 OF
TITLE 10 OF THE VERMONT STATUTES ANNOTATED. ALL AMOUNTS OWNED HEREUNDER ARE
PAYABLE ONLY FROM THE SOURCES PROVIDED IN THE TRUST INDENTURE DESCRIBED BELOW,
AND NO PUBLIC FUNDS MAY BE USED FOR THAT PURPOSE.
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 VERMONT ECONOMIC DEVELOPMENT
AUTHORITY (the "Authority"), for value received, promises to pay from the source
and as hereinafter provided, to CEDE & CO. or registered assigns, on January 1,
2020, upon surrender hereof, the principal sum of ______________________ Dollars
($____________), unless this Bond (as hereinafter defined) duly shall have been
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called for earlier redemption and payment of the redemption price shall have
been made or provided for, and in like manner to pay interest on said sum at the
rate described below on the first day of each calendar month, or if such date is
not a Business Day, the next succeeding Business Day and on the Conversion Date
(as defined in the Indenture, as hereinafter defined), commencing March 1, 2000
(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 after a Record Date
(hereinafter defined) and on or before the succeeding Interest Payment Date, in
which case from such succeeding Interest Payment Date, or unless no interest has
been paid or duly provided for on the Bonds (as hereinafter defined), in which
case from January 28, 2000 (the "Date of Issuance"), until payment of the
principal hereof has been made or duly provided for; 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 designated office of First Union National Bank, 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 as of
December 1, 1999, between the Authority and the Trustee (which trust 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 Business Day next
preceding such Interest Payment Date (the "Record Date") and shall be paid by
check mailed by the Trustee on the applicable Interest Payment Date 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 (hereinafter defined) of this Bond shall be
payable by First Union National Bank (together with any successor Tender Agent,
the "Tender Agent") to the registered Owner hereof, upon presentation hereof, at
the Delivery 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 on which
banking institutions in the State of New York, the State of Vermont, the City of
New York, or the city in which the corporate trust office of the Trustee and the
Tender Agent having responsibility for the administration of the Indenture or
the principal office of the Bank are authorized or required by law to close or
(iii) a day on which the New York Stock Exchange is closed.
This Bond and the Bonds of the Series of which it is a part is
comprised of a duly authorized issue of bonds designated as "Variable Rate
Demand/Fixed Rate Revenue Bonds (Vermont Pure Springs, Inc. Project) 1999 Series
A" (the "Bonds") issued in the aggregate principal amount of $3,195,000 under
and by virtue of Chapter 12 of Title 10 of the Vermont Statutes Annotated, as
amended (the "Act"), and by virtue of a resolution duly adopted by the Authority
on November 5, 1999 (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 (hereinafter called the "Project") for the benefit of
Vermont Pure Holdings, Ltd., a Delaware corporation, and Vermont Pure Springs,
Inc., a Delaware corporation (collectively, the "Company").
Pursuant to a Loan Agreement dated as of December 1, 1999 (the
"Agreement") by and between the Authority and the Company, the Authority is
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lending the proceeds of the Bonds to the Company and the Company has agreed to
make loan repayments sufficient for the prompt payment when due of the principal
and Purchase Price of, premium, if any, and interest on the Bonds to the Trustee
for the account of the Authority.
The Bonds are all issued under and are 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 First Union National Bank (in such
capacity, the "Bank") and dated the Date of Issuance of the Bonds, which will
expire, unless earlier terminated or extended, on January 28, 2005. 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 First Union Securities, Inc., Charlotte, North Carolina
(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 defined in the Indenture); the term "Optional Conversion Date"
means each January 1 or July 1 (or the next succeeding Business Day to such
January 1 or July 1) while any Bond is outstanding, 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. Any capitalized terms used in
this Bond and not defined herein shall have the meanings ascribed to such terms
in the Indenture.
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 days but not more than thirty 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, 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 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 Available 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 SUCH UNDELIVERED BONDS, AND ANY UNDELIVERED BONDS
SHALL NO LONGER BE ENTITLED TO THE BENEFITS OF THE 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 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, at the expense of the Company, 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 at its Principal Office and
the Tender Agent at its principal 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; and
(b) 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.
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 (b)
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 Available 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
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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 BENEFITS 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 (b) 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 Substitute Letters of Credit. The Bonds shall be subject to
mandatory tender by the Owners thereof on the date of delivery of the Substitute
Letters 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 Available
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
BENEFITS 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 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 Agent at its
principal office pursuant to (a) above shall be delivered to the Remarketing
Agent at 301 South College Street, DC8, Charlotte, North Carolina 28288-0600,
Attention: William Bingham, Vice President, Telecopier No.: (709) 383-5079, or
to the office designated for such purpose by any successor Remarketing Agent;
and any delivery of a notice required to be made to the Tender Agent at its
Principal Office shall be delivered to the Tender Agent at 3C3 1525 West W.T.
Harris Boulevard, Charlotte, North Carolina 28288, Attention: Corporate Trust
Services, and any delivery of Bonds required to be made to the Tender Agent
pursuant to (b) abov shall be delivered to the Tender Agent at 3C3 1525 West
W.T. Harris Boulevard, Charlotte, North Carolina 28288, Attention: Corporate
Trust Services or to the office designated for such purpose by any successor
Tender Agent (the "Delivery Office").
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This Bond is transferable by the registered Owner hereof in person or
by its attorney duly authorized in writing, at the designated 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, 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 extraordinary 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 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
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<PAGE>
interest payable on any Bond to be includible 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 includible 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 (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 in
writing 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 in writing 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 clauses
(i) or (v) above shall be deemed to have occurred unless the Trustee shall have
received a written opinion addressed to the Trustee of Palmer & Dodge LLP or
other nationally recognized bond counsel satisfactory to the Trustee, 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 cancelled.
A-8
<PAGE>
Mandatory Sinking Fund Redemption
The Bonds are subject to mandatory redemption on the Interest Payment
Date occurring in the month of January in each of the years set forth below
commencing on the Interest Payment Date occurring in January of 2001 (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
2001 $215,000
2002 215,000
2003 215,000
2004 215,000
2005 215,000
2006 215,000
2007 215,000
2008 215,000
2009 215,000
2010 215,000
2011 55,000
2012 110,000
2013 110,000
2014 110,000
2015 110,000
2016 110,000
2017 110,000
2018 110,000
2019 110,000
2020* 110,000
- --------------------
*Final maturity
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.
A-9
<PAGE>
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.
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.
The Bonds are issued pursuant to and in full compliance with the
Constitution and laws of the State of Vermont, 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 counsel to the
Authority or 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 directl 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 or her 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.
A-10
<PAGE>
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 Bank and the holders of all Bonds at the time
outstanding. Any such consent or any waiver by 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.
No director, officer, employee or agent of the Authority nor any
person executing this bond (by facsimile signature or otherwise) shall be
personally liable, either jointly or severally, hereon or be subject to any
personal liability or accountability by reason of the issuance hereof.
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.
VERMONT ECONOMIC DEVELOPMENT
AUTHORITY
By:________________________________
Manager
VERMONT ECONOMIC DEVELOPMENT
AUTHORITY
By:________________________________
Vice Chairman
(SEAL)
A-11
<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.
FIRST UNION NATIONAL BANK, as Trustee
and Tender Agent
By:________________________________
Authorized Signature
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
by an approved eligible guarantor
institution, an institution which is a
participant in a Securities Transfer
Association recognized signature guarantee
program.
- ------------------------------
NOTICE: The signature to this assignment
must correspond with the name as it appears
upon the face of the within Bond in every
particular, without alteration or enlargement
or any change whatever.
A-12
<PAGE>
EXHIBIT "B"
(FIXED RATE FORM OF SERIES A 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
hereof, Cede & Co., has an interest herein.
UNITED STATES OF AMERICA
STATE OF VERMONT
VERMONT ECONOMIC DEVELOPMENT AUTHORITY
VARIABLE RATE DEMAND/FIXED RATE
REVENUE BOND
(VERMONT PURE SPRINGS, INC. PROJECT)
1999 SERIES A
No. FR- CUSIP ___________
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF VERMONT
OR OF THE ISSUER EXCEPT TO THE EXTENT PERMITTED BY SUBCHAPTER 4 OF CHAPTER 12 OF
TITLE 10 OF THE VERMONT STATUTES ANNOTATED. ALL AMOUNTS OWNED HEREUNDER ARE
PAYABLE ONLY FROM THE SOURCES PROVIDED IN THE TRUST INDENTURE DESCRIBED BELOW,
AND NO PUBLIC FUNDS MAY BE USED FOR THAT PURPOSE.
KNOW ALL MEN BY THESE PRESENTS that the VERMONT ECONOMIC DEVELOPMENT AUTHORITY
(the "Authority"), for value received, promises to pay from the source and as
hereinafter provided, to CEDE & CO. or registered assigns, on January 1, 2020,
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 of __% per annum on January 1 or
July 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 after a Record Date (hereinafter defined) and on or
before the succeeding Interest Payment Date, in which case from such succeeding
Interest Payment Date or unless no interest has been paid or duly provided for
on the Bonds (as hereinafter defined), in which case from the Conversio Date (as
defined in the Indenture, as hereinafter defined), until payment of the
principal hereof has been made or duly provided for; provided, however, that if
B-1
<PAGE>
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
Conversion Date. The principal of this Bond is payable in lawful money of the
United States of America at the designated office of First Union National Bank,
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 as of
December 1, 1999 between the Authority and the Trustee (which trust 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 fifteenth day next
preceding any Interest Payment Date (the "Record Date") and shall be paid by
check mailed by the Trustee on the applicable Interest Payment Date 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 any day other than (i) a
Saturday or Sunday, (ii) a legal holiday on which banking institutions in the
State of New York, the State of Vermont, the City of New York, or the city in
which the corporate trust office of the Trustee and the Tender Agent having
responsibility for the administration of the Indenture or the principal office
of the Bank are authorized or required by law to close, or (iii) a day on which
the New York Stock Exchange is closed.
This Bond and the Bonds of the Series of which it is a part is
comprised of a duly authorized issue of bonds (the "Bonds") of the Authority
designated as "Variable Rate Demand/Fixed Rate Revenue Bonds (Vermont Pure
Springs, Inc. Project) 1999 Series A" (the "Bonds") originally issued in the
aggregate principal amount of $3,195,000 under and by virtue of Chapter 12 of
Title 10 of the Vermont Statutes Annotated, as amended (the "Act"), and by
virtue of a resolution duly adopted by the Authority on November 5, 1999 (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 for the
benefit of Vermont Pure Holdings, Ltd., a Delaware corporation, and Vermont Pure
Springs, Inc., a Delaware corporation (collectively, the "Company").
Pursuant to a Loan Agreement dated as of December 1, 1999 (the
"Agreement") by and between the Authority and the Company, the Authority is
lending the proceeds of the Bonds to the Company and the Company has agreed to
make loan repayments sufficient for the prompt payment when due of the principal
and Purchase Price of, premium, if any, and interest on the Bonds to the Trustee
for the account of the Authority.
The Bonds are all issued under, 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 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
B-2
<PAGE>
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. Any capitalized terms used in this Bond and not defined herein shall have
the meanings ascribed to such terms in the Indenture.
This Bond is transferable by the registered Owner hereof in person or
by his attorney duly authorized in writing, at the designated 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 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 extraordinary 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 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
B-3
<PAGE>
covenant of the Company has been breached) that has the effect of causing
interest payable on any Bond to be includible 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 includible 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 (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 in
writing 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 in writing 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 clauses
(i) or (v) above shall be deemed to have occurred unless the Trustee shall have
received a written opinion addressed to the Trustee of Palmer & Dodge LLP or
other nationally recognized bond counsel satisfactory to the Trustee, 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 cancelled.
B-4
<PAGE>
Mandatory Sinking Fund Redemption
The Bonds are subject to mandatory redemption on the Interest Payment
Date occurring in the month of January in each of the years set forth below
commencing on the Interest Payment Date occurring in January 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
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
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.
No such option 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
redemption.
If less than all of the Bonds are to be redeemed, the particular Bonds
or portions thereof to be redeemed shall be selected by the Trustee by lot.
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.
B-5
<PAGE>
The Bonds are issued pursuant to and in full compliance with the
Constitution and laws of the State of Vermont, 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 counsel to the
Authority or 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
or her 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 or her 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 Bank and the holders of all Bonds at the time
outstanding. Any such consent or any waiver by 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.
No director, officer, employee or agent of the Authority nor any
person executing this bond (by facsimile signature or otherwise) shall be
personally liable, either jointly or severally, hereon or be subject to any
personal liability or accountability by reason of the issuance hereof.
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
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<PAGE>
of authentication hereon shall have been signed by the Trustee or a duly
appointed authenticating agent pursuant to the Indenture.
VERMONT ECONOMIC DEVELOPMENT
AUTHORITY
By:________________________________
Manager
VERMONT ECONOMIC DEVELOPMENT
AUTHORITY
By:________________________________
Vice Chairman
(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.
FIRST UNION NATIONAL BANK, as Trustee
and Tender Agent
By:________________________________
Authorized Signature
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.
B-7
<PAGE>
Dated _________
NOTICE: Signature(s) must be guaranteed
by an approved eligible guarantor
institution, an institution which is a
participant in a Securities Transfer
Association recognized signature guarantee
program.
- ------------------------------
NOTICE: The signature to this assignment
must correspond with the name as it appears
upon the face of the within Bond in every
particular, without alteration or enlargement
or any change whatever.
Dated _________
B-8
<PAGE>
EXHIBIT "C"
(FLOATING RATE FORM OF SERIES A-T BOND)
No. VR- ***$_________***
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
hereof, Cede & Co., has an interest herein.
UNITED STATES OF AMERICA
STATE OF VERMONT
VERMONT ECONOMIC DEVELOPMENT AUTHORITY
VARIABLE RATE DEMAND/FIXED RATE
REVENUE BOND
(VERMONT PURE SPRINGS, INC. PROJECT)
1999 SERIES A-T (TAXABLE)
DATED DATE MATURITY DATE CUSIP
January 28, 2000 JANUARY 1, 2011
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF VERMONT
OR OF THE ISSUER EXCEPT TO THE EXTENT PERMITTED BY SUBCHAPTER 4 OF CHAPTER 12 OF
TITLE 10 OF THE VERMONT STATUTES ANNOTATED. ALL AMOUNTS OWNED HEREUNDER ARE
PAYABLE ONLY FROM THE SOURCES PROVIDED IN THE TRUST INDENTURE DESCRIBED BELOW,
AND NO PUBLIC FUNDS MAY BE USED FOR THAT PURPOSE.
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 VERMONT ECONOMIC DEVELOPMENT
AUTHORITY (the "Authority"), for value received, promises to pay from the source
and as hereinafter provided, to CEDE & CO. or registered assigns, on January 1,
2011, upon surrender hereof, the principal sum of ______________________ Dollars
($____________), unless this Bond (as hereinafter defined) duly shall have been
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called for earlier redemption and payment of the redemption price shall have
been made or provided for, and in like manner to pay interest on said sum at the
rate described below on the first day of each calendar month, or if such date is
not a Business Day, the next succeeding Business Day and on the Conversion Date
(as defined in the Indenture, as hereinafter defined), commencing March 1, 2000
(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 after a Record Date
(hereinafter defined) and on or before the succeeding Interest Payment Date, in
which case from such succeeding Interest Payment Date, or unless no interest has
been paid or duly provided for on the Bonds (as hereinafter defined), in which
case from January 28, 2000 (the "Date of Issuance"), until payment of the
principal hereof has been made or duly provided for; 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 designated office of First Union National Bank, 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 as of
December 1, 1999, between the Authority and the Trustee (which trust 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 Business Day next
preceding such Interest Payment Date (the "Record Date") and shall be paid by
check mailed by the Trustee on the applicable Interest Payment Date 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 (hereinafter defined) of this Bond shall be
payable by First Union National Bank (together with any successor Tender Agent,
the "Tender Agent") to the registered Owner hereof, upon presentation hereof, at
the Delivery 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 on which
banking institutions in the State of New York, the State of Vermont, the City of
New York, or the city in which the corporate trust office of the Trustee and the
Tender Agent having responsibility for the administration of the Indenture or
the principal office of the Bank are authorized or required by law to close or
(iii) a day on which the New York Stock Exchange is closed.
This Bond and the Bonds of the Series of which it is a part is
comprised of a duly authorized issue of bonds designated as "Variable Rate
Demand/Fixed Rate Revenue Bonds (Vermont Pure Springs, Inc. Project) 1999 Series
A-T (Taxable)" (the "Bonds") issued in the aggregate principal amount of
$1,105,000 under and by virtue of Chapter 12 of Title 10 of the Vermont Statutes
Annotated, as amended (the "Act"), and by virtue of a resolution duly adopted by
the Authority on November 5, 1999 (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 (hereinafter called the "Project") for the
benefit of Vermont Pure Holdings, Ltd., a Delaware corporation, and Vermont Pure
Springs, Inc., a Delaware corporation (collectively, the "Company").
Pursuant to a Loan Agreement dated as of December 1, 1999 (the
"Agreement") by and between the Authority and the Company, the Authority is
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lending the proceeds of the Bonds to the Company and the Company has agreed to
make loan repayments sufficient for the prompt payment when due of the principal
and Purchase Price of, premium, if any, and interest on the Bonds to the Trustee
for the account of the Authority.
The Bonds are all issued under and are 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 First Union National Bank (in such
capacity, the "Bank") and dated the Date of Issuance of the Bonds, which will
expire, unless earlier terminated or extended, on January 28, 2005. 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 First Union Securities, Inc., Charlotte, North Carolina
(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 defined in the Indenture); the term "Optional Conversion Date"
means each January 1 or July 1 (or the next succeeding Business Date to such
January 1 or July 1) while any Bond is outstanding, 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. Any capitalized terms used in
this Bond and not defined herein shall have the meanings ascribed to such terms
in the Indenture.
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 days but not more than thirty 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, 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 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 Available 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 SUCH UNDELIVERED BONDS, AND ANY UNDELIVERED BONDS
SHALL NO LONGER BE ENTITLED TO THE BENEFITS OF THE 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 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, at the expense of the Company, 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 at its Principal Office and
the Tender Agent at its principal 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; and
(b) 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.
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 (b)
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 Available 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
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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 BENEFITS 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 (b) 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 Substitute Letters of Credit. The Bonds shall be subject to
mandatory tender by the Owners thereof on the date of delivery of the Substitute
Letters 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 Available
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
BENEFITS 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 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 Agent at its
principal office pursuant to (a) above shall be delivered to the Remarketing
Agent at 301 South College Street, DC8, Charlotte, North Carolina 28288-0600,
Attention: William Bingham, Vice President, Telecopier No.: (709) 383-5079, or
to the office designated for such purpose by any successor Remarketing Agent;
and any delivery of a notice required to be made to the Tender Agent at its
Principal Office shall be delivered to the Tender Agent at 3C3 1525 West W.T.
Harris Boulevard, Charlotte, North Carolina 28288, Attention: Corporate Trust
Services, and any delivery of Bonds required to be made to the Tender Agent
pursuant to (b) abov shall be delivered to the Tender Agent at 3C3 1525 West
W.T. Harris Boulevard, Charlotte, North Carolina 28288, Attention: Corporate
Trust Services or to the office designated for such purpose by any successor
Tender Agent (the "Delivery Office").
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This Bond is transferable by the registered Owner hereof in person or
by its attorney duly authorized in writing, at the designated 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, 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 extraordinary 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 January in each of the years set forth below
commencing on the Interest Payment Date occurring in January of 2001 (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
2001 $105,000
2002 105,000
2003 105,000
2004 105,000
2005 105,000
2006 105,000
2007 105,000
2008 105,000
2009 105,000
2010 105,000
2011* 55,000
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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.
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.
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.
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The Bonds are issued pursuant to and in full compliance with the
Constitution and laws of the State of Vermont, 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 counsel to the
Authority or 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 directl 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 or her 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 Bank and the holders of all Bonds at the time
outstanding. Any such consent or any waiver by 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.
No director, officer, employee or agent of the Authority nor any
person executing this bond (by facsimile signature or otherwise) shall be
personally liable, either jointly or severally, hereon or be subject to any
personal liability or accountability by reason of the issuance hereof.
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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.
VERMONT ECONOMIC DEVELOPMENT
AUTHORITY
By:________________________________
Manager
VERMONT ECONOMIC DEVELOPMENT
AUTHORITY
By:________________________________
(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.
FIRST UNION NATIONAL BANK, as Trustee
and Tender Agent
By:________________________________
Authorized Signature
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.
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Dated _________
NOTICE: Signature(s) must be guaranteed
by an approved eligible guarantor
institution, an institution which is a
participant in a Securities Transfer
Association recognized signature guarantee
program.
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NOTICE: The signature to this assignment
must correspond with the name as it appears
upon the face of the within Bond in every
particular, without alteration or enlargement
or any change whatever.
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EXHIBIT "D"
(FIXED RATE FORM OF SERIES A-T 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
hereof, Cede & Co., has an interest herein.
UNITED STATES OF AMERICA
STATE OF VERMONT
VERMONT ECONOMIC DEVELOPMENT AUTHORITY
VARIABLE RATE DEMAND/FIXED RATE
REVENUE BOND
(VERMONT PURE SPRINGS, INC. PROJECT)
1999 SERIES A-T
No. FR- CUSIP ___________
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF VERMONT
OR OF THE ISSUER EXCEPT TO THE EXTENT PERMITTED BY SUBCHAPTER 4 OF CHAPTER 12 OF
TITLE 10 OF THE VERMONT STATUTES ANNOTATED. ALL AMOUNTS OWNED HEREUNDER ARE
PAYABLE ONLY FROM THE SOURCES PROVIDED IN THE TRUST INDENTURE DESCRIBED BELOW,
AND NO PUBLIC FUNDS MAY BE USED FOR THAT PURPOSE.
KNOW ALL MEN BY THESE PRESENTS that the VERMONT ECONOMIC DEVELOPMENT AUTHORITY
(the "Authority"), for value received, promises to pay from the source and as
hereinafter provided, to CEDE & CO. or registered assigns, on January 1, 2011,
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 of __% per annum on January 1 or
July 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 after a Record Date (hereinafter defined) and on or
before the succeeding Interest Payment Date, in which case from such succeeding
Interest Payment Date or unless no interest has been paid or duly provided for
on the Bonds (as hereinafter defined), in which case from the Conversio Date (as
defined in the Indenture, as hereinafter defined), until payment of the
principal hereof has been made or duly provided for; provided, however, that if
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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
Conversion Date. The principal of this Bond is payable in lawful money of the
United States of America at the designated office of First Union National Bank,
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 as of
December 1, 1999 between the Authority and the Trustee (which trust 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 fifteenth day next
preceding any Interest Payment Date (the "Record Date") and shall be paid by
check mailed by the Trustee on the applicable Interest Payment Date 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 any day other than (i) a
Saturday or Sunday, (ii) a legal holiday on which banking institutions in the
State of New York, the State of Vermont, the City of New York, or the city in
which the corporate trust office of the Trustee and the Tender Agent having
responsibility for the administration of the Indenture or the principal office
of the Bank are authorized or required by law to close, or (iii) a day on which
the New York Stock Exchange is closed.
This Bond and the Bonds of the Series of which it is a part is
comprised of a duly authorized issue of bonds (the "Bonds") of the Authority
designated as "Variable Rate Demand/Fixed Rate Revenue Bonds (Vermont Pure
Springs, Inc. Project) 1999 Series A-T (Taxable)" (the "Bonds") originally
issued in the aggregate principal amount of $1,105,000 under and by virtue of
Chapter 12 of Title 10 of the Vermont Statutes Annotated, as amended (the
"Act"), and by virtue of a resolution duly adopted by the Authority on November
5, 1999 (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 for the benefit of Vermont Pure Holdings, Ltd., a Delaware
corporation, and Vermont Pure Springs, Inc., a Delaware corporation
(collectively, the "Company").
Pursuant to a Loan Agreement dated as of December 1, 1999 (the
"Agreement") by and between the Authority and the Company, the Authority is
lending the proceeds of the Bonds to the Company and the Company has agreed to
make loan repayments sufficient for the prompt payment when due of the principal
and Purchase Price of, premium, if any, and interest on the Bonds to the Trustee
for the account of the Authority.
The Bonds are all issued under, 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 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
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<PAGE>
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. Any capitalized terms used in this Bond and not defined herein shall have
the meanings ascribed to such terms in the Indenture.
This Bond is transferable by the registered Owner hereof in person or
by his attorney duly authorized in writing, at the designated 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 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 extraordinary 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 January in each of the years set forth below
commencing on the Interest Payment Date occurring in January 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:
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<PAGE>
Mandatory Sinking
Year Account Payments
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*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
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.
No such option 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
redemption.
If less than all of the Bonds are to be redeemed, the particular Bonds
or portions thereof to be redeemed shall be selected by the Trustee by lot.
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.
The Bonds are issued pursuant to and in full compliance with the
Constitution and laws of the State of Vermont, 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
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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 counsel to the
Authority or 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
or her 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 or her 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 Bank and the holders of all Bonds at the time
outstanding. Any such consent or any waiver by 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.
No director, officer, employee or agent of the Authority nor any
person executing this bond (by facsimile signature or otherwise) shall be
personally liable, either jointly or severally, hereon or be subject to any
personal liability or accountability by reason of the issuance hereof.
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<PAGE>
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.
VERMONT ECONOMIC DEVELOPMENT
AUTHORITY
By:________________________________
Manager
VERMONT ECONOMIC DEVELOPMENT
AUTHORITY
By:________________________________
Vice Chairman
(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.
FIRST UNION NATIONAL BANK, as Trustee
and Tender Agent
By:________________________________
Authorized Signature
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.
D-6
<PAGE>
Dated _________
NOTICE: Signature(s) must be guaranteed
by an approved eligible guarantor
institution, an institution which is a
participant in a Securities Transfer
Association recognized signature guarantee
program.
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NOTICE: The signature to this assignment
must correspond with the name as it appears
upon the face of the within Bond in every
particular, without alteration or enlargement
or any change whatever.
D-7
<PAGE>
EXHIBIT "E"
CONSTRUCTION FUND REQUISITION
NO._______
Date:______________
First Union National Bank, as Trustee
123 S. Broad Street
Philadelphia, Pennsylvania 19109
Attention:
Ladies and Gentlemen:
On behalf of the Vermont Economic Development Authority (the
"Authority"), I hereby requisition from the Construction Fund pursuant to
Section 6.06 of a Trust Indenture dated as of December 1, 1999 (the "Indenture")
between the Authority and First Union National Bank, 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 Vermont
Pure Holdings, Ltd. and Vermont Pure Springs, Inc., as co-borrowers, in
connection with the acquisition, construction and equipping of the Project 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 defined in the Indenture and in the Agreement or event which after
notice or lapse of time or both would constitute 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 "F" TO THE INDENTURE.
VERMONT PURE HOLDINGS, LTD.
By_________________________________
Authorized Officer
VERMONT PURE SPRINGS, INC.
By_________________________________
Authorized Officer
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<PAGE>
EXHIBIT "F"
BANK APPROVAL
First Union National Bank, Philadelphia, Pennsylvania, issuer of the
Letter of Credit hereby approves Requisition No. ______________.
FIRST UNION NATIONAL BANK
By_________________________________
Dated: _________________
F-1
AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of January 28, 2000,
by and among
VERMONT PURE HOLDINGS, LTD.
and
VERMONT PURE SPRINGS, INC.,
jointly and severally, the Borrowers,
the Lenders referred to herein,
and
FIRST UNION NATIONAL BANK,
as Lender and Administrative Agent
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I ..... DEFINITIONS ............................................. 1
SECTION 1.1 ... Definitions ............................................. 1
SECTION 1.2 ... General ................................................. 15
SECTION 1.3 ... Other Definitions and Provisions ........................ 15
ARTICLE II .... REVOLVING CREDIT FACILITY ............................... 15
SECTION 2.1 ... Revolving Credit Loans .................................. 15
SECTION 2.2 ... Procedure for Advances of Revolving Credit Loans ........ 15
SECTION 2.3 ... Repayment of Loans ...................................... 16
SECTION 2.4 ... Notes ................................................... 17
SECTION 2.5 ... Permanent Reduction of the Aggregate Commitment ......... 17
SECTION 2.6 ... Termination of Credit Facility .......................... 18
SECTION 2.7 ... Use of Proceeds ......................................... 18
ARTICLE III ... LETTER OF CREDIT FACILITY ............................... 18
SECTION 3.1 ... L/C Commitment .......................................... 18
SECTION 3.2 ... Procedure for Issuance of Letters of Credit ............. 19
SECTION 3.3 ... Commissions and Other Charges ........................... 19
SECTION 3.4 ... L/C Participations ...................................... 19
SECTION 3.5 ... Reimbursement Obligation of the Borrowers ............... 20
SECTION 3.6 ... Obligations Absolute .................................... 21
SECTION 3.7 ... Effect of Application ................................... 22
ARTICLE IV .... GENERAL LOAN PROVISIONS ................................. 22
SECTION 4.1 ... Interest ................................................ 22
SECTION 4.2 ... Notice and Manner of Conversion or Continuation of Loans 24
SECTION 4.3 ... Fees .................................................... 25
SECTION 4.4 ... Manner of Payment ....................................... 25
SECTION 4.5 ... Crediting of Payments and Proceeds ...................... 26
SECTION 4.6 ... Adjustments ............................................. 26
SECTION 4.7 ... Nature of Obligations of Lenders Regarding Extensions
of Credit; Assumption by the Administrative Agent ....... 27
SECTION 4.8 ... Changed Circumstances ................................... 27
SECTION 4.9 ... Indemnity ............................................... 29
SECTION 4.10 .. Capital Requirements .................................... 29
SECTION 4.11 .. Taxes ................................................... 30
SECTION 4.12 .. Security ................................................ 31
ARTICLE V ..... CLOSING; CONDITIONS OF CLOSING AND BORROWING ............ 31
SECTION 5.1 ... Closing ................................................. 32
SECTION 5.2 ... Conditions to Closing and Initial Extensions of Credit .. 32
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<PAGE>
SECTION 5.3 ... Conditions to All Extensions of Credit .................. 36
ARTICLE VI .... REPRESENTATIONS AND WARRANTIES OF THE BORROWERS ......... 37
SECTION 6.1 ... Representations and Warranties .......................... 37
SECTION 6.2 ... Survival of Representations and Warranties, Etc ......... 44
ARTICLE VII ... FINANCIAL INFORMATION AND NOTICES ....................... 44
SECTION 7.1 ... Financial Statements and Projections .................... 44
SECTION 7.2 ... Officer's Compliance Certificate ........................ 45
SECTION 7.3 ... Accountants' Certificate ................................ 45
SECTION 7.4 ... Other Reports ........................................... 46
SECTION 7.5 ... Notice of Litigation and Other Matters .................. 46
SECTION 7.6 ... Accuracy of Information ................................. 47
ARTICLE VIII .. AFFIRMATIVE COVENANTS ................................... 47
SECTION 8.1 ... Preservation of Corporate Existence and Related Matters . 47
SECTION 8.2 ... Maintenance of Property ................................. 48
SECTION 8.3 ... Insurance ............................................... 48
SECTION 8.4 ... Accounting Methods and Financial Records ................ 48
SECTION 8.5 ... Payment and Performance of Obligations .................. 48
SECTION 8.6 ... Compliance With Laws and Approvals ...................... 48
SECTION 8.7 ... Environmental Laws ...................................... 48
SECTION 8.8 ... Compliance with ERISA ................................... 49
SECTION 8.9 ... Compliance With Agreements .............................. 49
SECTION 8.10 .. Conduct of Business ..................................... 49
SECTION 8.11 .. Visits and Inspections .................................. 49
SECTION 8.12 .. Additional Subsidiaries ................................. 50
SECTION 8.13 .. Hedging Agreement ....................................... 50
SECTION 8.15 .. Further Assurances ...................................... 50
ARTICLE IX .... FINANCIAL COVENANTS ..................................... 50
SECTION 9.1 ... Leverage Ratio .......................................... 51
SECTION 9.2 ... Fixed Charge Coverage Ratio ............................. 51
SECTION 9.3 ... Interest Coverage Ratio ................................. 51
SECTION 9.4 ... Minimum Net Worth ....................................... 51
ARTICLE X ..... NEGATIVE COVENANTS ...................................... 52
SECTION 10.1 .. Limitations on Debt ..................................... 52
SECTION 10.2 .. Limitations on Guaranty Obligations ..................... 52
SECTION 10.3 .. Limitations on Liens .................................... 52
SECTION 10.4 .. Limitations on Loans, Advances, Investments
and Acquisitions ........................................ 53
SECTION 10.5 .. Limitations on Mergers and Liquidation .................. 55
SECTION 10.6 .. Limitations on Sale of Assets ........................... 56
SECTION 10.7 .. Limitations on Dividends and Distributions .............. 56
SECTION 10.8 .. Limitations on Exchange and Issuance of Capital Stock ... 56
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<PAGE>
SECTION 10.9 .. Transactions with Affiliates ............................ 56
SECTION 10.10 . Certain Accounting Changes .............................. 57
SECTION 10.11 . Amendments; Payments and Prepayments of Subordinated Debt 57
SECTION 10.12 . Restrictive Agreements .................................. 57
SECTION 10.13 . Capital Expenditures .................................... 57
ARTICLE XI .... DEFAULT AND REMEDIES .................................... 57
SECTION 11.1 .. Events of Default ....................................... 57
SECTION 11.2 .. Remedies ................................................ 60
SECTION 11.3 .. Default Remedies ........................................ 60
SECTION 11.4 .. Rights and Remedies Cumulative; Non-Waiver; etc ......... 61
ARTICLE XII ... THE ADMINISTRATIVE AGENT ................................ 61
SECTION 12.1 .. Appointment ............................................. 61
SECTION 12.2 .. Delegation of Duties .................................... 61
SECTION 12.3 .. Exculpatory Provisions .................................. 62
SECTION 12.4 .. Reliance by the Administrative Agent .................... 62
SECTION 12.5 .. Notice of Default ....................................... 62
SECTION 12.6 .. Non-Reliance on the Administrative Agent and Other Lenders 63
SECTION 12.7 .. Indemnification ......................................... 63
SECTION 12.8 .. The Administrative Agent in Its Individual Capacity ..... 64
SECTION 12.9 .. Resignation of the Administrative Agent: Successor
Administrative Agent ............................... 64
ARTICLE XIII .. MISCELLANEOUS ........................................... 65
SECTION 13.1 .. Notices ................................................. 65
SECTION 13.2 .. Expenses; Indemnity ..................................... 66
SECTION 13.3 .. Set-off ................................................. 66
SECTION 13.4 .. Governing Law ........................................... 67
SECTION 13.5 .. Consent to Jurisdiction ................................. 67
SECTION 13.6 .. Binding Arbitration; Waiver of Jury Trial ............... 67
SECTION 13.7 .. Reversal of Payments .................................... 68
SECTION 13.8 .. Injunctive Relief, Punitive Damages ..................... 69
SECTION 13.9 .. Accounting Matters ...................................... 69
SECTION 13.10 . Successors and Assigns; Participations .................. 69
SECTION 13.11 . Amendments, Waivers and Consents ........................ 72
SECTION 13.12 . Performance of Duties ................................... 72
SECTION 13.13 . All Powers Coupled with Interest ........................ 73
SECTION 13.14 . Survival of Indemnities ................................. 73
SECTION 13.15 . Titles and Captions ..................................... 73
SECTION 13.16 . Severability of Provisions .............................. 73
SECTION 13.17 . Counterparts ............................................ 73
SECTION 13.18 . Term of Agreement ....................................... 73
SECTION 13.19 . Inconsistencies with Other Documents; Independent
Effect of Covenants ..................................... 73
SECTION 13.20 . Amendment and Restatement ............................... 74
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<PAGE>
EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Account Designation
Exhibit D - Form of Notice of Prepayment
Exhibit E - Form of Notice of Conversion/Continuation
Exhibit F - Form of Officer's Certificate
Exhibit G - Form of Assignment and Acceptance
SCHEDULES
Schedule 1 - Lenders and Commitments
Schedule 6.1 (a) - Jurisdictions of Organization and Qualification
Schedule 6.l(b) - Subsidiaries and Capitalization
Schedule 6.1(i) - ERISA Plans
Schedule 6.1(1) - Material Contracts
Schedule 6.1(m) - Labor and Collective Bargaining Agreements
Schedule 6.1(t) - Debt and Guaranty Obligations
Schedule 6.1(u) - Litigation
Schedule 10.3 - Existing Liens
Schedule 10.4 - Existing Loans, Advances and Investments
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<PAGE>
THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of the 28th day of
January, 2000, by and among VERMONT PURE HOLDINGS, LTD., a Delaware business
corporation, VERMONT PURE SPRINGS, INC., a Delaware business corporation,
(herein, the foregoing shall be referred to collectively, jointly and severally
as the "Borrowers"), the Lenders whose signatures appear on the signature pages
hereto (the "Lenders"), and FIRST UNION NATIONAL BANK, a national bank ("First
Union") as a Lender and as Administrative Agent for the Lenders
RECITALS
A. The Borrowers and First Union had previously entered into, and are
currently parties to, that certain Loan and Security Agreement, dated as of
April 8, 1998 (the "Original Agreement"), whereby First Union agreed to extend
certain credit to the Borrowers, including a revolving working capital line of
credit in the amount up to Three Million and 00/100 Dollars ($3,000,000.00) and
a facility in the amount of up to Fifteen Million Dollars ($15,000,000) to
finance the acquisition of certain types of assets and business operations by
the Borrowers.
B. The Borrowers desire to increase the amount of credit available to them
under the Original Agreement, and to amend and restate the Original Agreement as
provided herein, including consolidating the current working capital line of
credit and acquisition facility for borrowing purposes.
C. The Borrowers have applied to The Vermont Economic Development Authority
for the issuance of certain industrial revenue bonds, the proceeds of which
would be to finance a 38,000 square foot expansion of the existing manufacturing
and warehouse facility of Borrowers located at Catamount Industrial Park on
Route 66, Randolph, Vermont, as well as to facilitate the purchase and
installation of equipment and bottling lines at such location (the "Bond
Transaction"). It is anticipated that, under the Revolving Credit Facility
provided for in this Credit Agreement, a direct pay letter of credit in the
approximate amount of Four Million Three Hundred Thousand and 00/100 Dollars
($4,300,000.00) will be issued by the Administrative Agent, on behalf of the
Lenders, in connection with such Bond Transaction.
D. First Union and the other Lenders hereto, desire to enter into this
Amended and Restated Credit Agreement, on the terms and conditions provided
herein. NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, such parties
hereby agree:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. The following terms when used in this Agreement
shall have the meanings assigned to them below:
<PAGE>
"Acquisition" means the purchase by the Borrowers of all or a portion of
the assets, stock or other equity interests of any Person.
"Acquisition Documents" means in connection with any Permitted Acquisition,
any asset purchase agreement or similar agreement, and all other documents
entered into or delivered in connection with any Permitted Acquisition.
"Adjusted Cash Flow" means, for the seller in any Permitted Acquisition,
Cash Flow plus all non-recurring seller's salaries, bonuses, withdrawals and
other non-recurring expenses.
"Administrative Agent" means First Union in its capacity as Administrative
Agent hereunder, and any successor thereto appointed pursuant to Section 12.9.
"Administrative Agent's Office" means the office of the Administrative
Agent specified in or determined in accordance with the provisions of Section
13.1(c).
"Affiliate" means, with respect to any Person, any other Person (other than
a Subsidiary) which directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such first
Person or any of their Subsidiaries. The term "control" means (a) the power to
vote five percent (5%) or more of the securities or other equity interests of a
Person having ordinary voting power, or (b) the possession, directly or
indirectly, of any other power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
"Aggregate Commitment" means the aggregate amount of the Lenders'
Commitments hereunder, as such amount may be reduced or modified at any time or
from time to time pursuant to the terms hereof. On the Closing Date, the
Aggregate Commitment shall be Twenty-Five Million and 00/100 Dollars
($25,000,000.00).
"Agreement" means this Amended and Restated Credit Agreement, as the same
may, from time to time, be amended, restated or otherwise modified.
"Applicable Law" means all applicable provisions of constitutions, laws,
statutes, ordinances, rules, treaties, regulations, permits, licenses,
approvals, interpretations and orders of courts or Governmental Authorities and
all orders and decrees of all courts and arbitrators.
"Applicable Margin" shall have the meaning assigned thereto in Section
4.1(c).
"Application" means an application submitted by the Borrowers in the form
specified by the Issuing Lender, from time to time, requesting the Issuing
Lender to issue a Letter of Credit.
"Assignment and Acceptance" shall have the meaning assigned thereto in
Section 13.10.
"Available Commitment" means, as to any Lender at any time, an amount equal
to (a) such Lender's Commitment less (b) such Lender's Extensions of Credit.
"Bond Transaction" shall have the meaning given to that term in the
Recitals.
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<PAGE>
"Base Rate" means, at any time, the higher of (a) the Prime Rate, and (b)
the Federal Funds Rate plus 1/2 of 1%. Each change in the Base Rate shall take
effect simultaneously with the corresponding change or changes in the Prime Rate
or the Federal Funds Rate.
"Base Rate Loan" means any Loan bearing interest at a rate based upon the
Base Rate, as provided in Section 4.1.
"Borrowers" means, unless the context requires otherwise, collectively,
jointly and severally, Vermont Pure Holdings, Ltd., and Vermont Pure Springs,
Inc., together with their permitted successors and assigns, including any
trustees or receivers in any bankruptcy proceedings.
"Business Day" means (a) for all purposes other than as set forth in clause
(b) below, any day other than a Saturday, Sunday, legal holiday, or day on which
banks and lending institutions in Charlotte, North Carolina or New York, New
York are authorized or directed by governmental or executive order to close for
business, and (b) with respect to all notices and determinations in connection
with, and payments of principal and interest on, any LIBOR Rate Loan, any day
that is a Business Day described in clause (a) and that is also a day for
trading by and between banks in Dollar deposits in the London interbank market.
"Capital Asset" means, with respect to the Borrowers and their
Subsidiaries, any asset that should, in accordance with GAAP, be classified and
accounted for as a capital asset on a Consolidated balance sheet of the
Borrowers and their Subsidiaries.
"Capital Expenditures" means expenditures for any fixed assets or
improvements, replacements, substitutions or additions thereto which have a
useful life of more than one year, including assets acquired pursuant to any
Capital Lease.
"Capital Lease" means any lease for property, real, personal or mixed,
under which such Person is the lessee and which, in accordance with GAAP, such
Lease is or should be capitalized on the books of such Person.
"Cash Flow" means, for the applicable immediately preceding rolling four
(4) quarters, the sum of the following, determined on a Consolidated basis,
without duplication, for the Borrowers and their Subsidiaries: (a) net income
for the applicable immediately preceding period, plus (b) the sum of (i)
Interest Expense, (ii) depreciation and amortization, and (iii) provision for
income tax expenses, in all of the foregoing cases without adjustment for
extraordinary gains or losses.
"Change of Control" means the occurrence of an event such that, or the
entering into an agreement whereby, any Person or two or more Persons acting in
concert shall have (i) acquired beneficial ownership (within the meaning of
Rules 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of more than 49% of the fully diluted common stock of the
Borrowers, or (ii) acquired voting control of the fully diluted common stock of
the Borrowers or of the board of directors.
"Closing Date" means the date of this Agreement or such later Business Day
upon which each condition described in Section 5.2 shall be satisfied or waived
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in all respects in a manner acceptable to the Administrative Agent, in its sole
discretion; provided, however, in no event shall the Closing Date be later than
January 31, 2000.
"Code" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, as amended, supplemented or otherwise modified from time
to time.
"Collateral" means all property and assets of the Borrowers which are now
or hereafter pledged to the Administrative Agent, for the ratable benefit of the
Lenders as security for the payment and performance of the Obligations, pursuant
to any Security Document.
"Collateral Assignments" means those certain collateral assignment
agreements previously executed in favor of First Union, as amended by those
certain modification agreements executed of even date herewith, whereby the
Borrowers pledge (and confirm their prior pledge of) to the Administrative
Agent, for the ratable benefit of Administrative Agent (in its individual
capacity as a Lender) and the other Lenders, as security for the Obligations,
the Borrowers' respective interests in all of their water and mineral rights,
contracts, licenses, trademarks, trade names, leaseholds, general intangibles,
intellectual property, landlord waivers, estoppel agreements, and
non-disturbance agreements, as any of the foregoing may from time to time be
amended, restated or modified.
"Commitment" means, as to any Lender, the obligation of such Lender to make
Loans to and issue or participate in Letters of Credit issued for the account of
the Borrowers hereunder in an aggregate principal or face amount at any time
outstanding not to exceed the amount set forth opposite such Lender's name on
Schedule 1 hereto, as the same obligations and commitments may be reduced or
modified at any time or from time to time pursuant to the terms hereof.
"Commitment Percentage" means, as to any Lender at any time, the ratio of
(a) the amount of the Commitment of such Lender to (b) the Aggregate Commitment
of all of the Lenders.
"Consolidated" means, when used with reference to financial statements or
financial statement items of the Borrowers and their Subsidiaries, such
statements or items on a consolidated basis in accordance with applicable
principles of consolidation under GAAP.
"Credit Facility" means the collective reference to the Revolving Credit
Facility and the L/C Facility.
"Current Maturities" means such portion of Funded Debt which was paid
pursuant to a contractual obligation to so pay such debt over the most recent
rolling four (4) quarters.
"Debt" means, with respect to the Borrowers and their Subsidiaries at any
date and without duplication, the sum of the following, calculated in accordance
with GAAP: (a) all liabilities, obligations and indebtedness including but not
limited to obligations evidenced by bonds, debentures, notes or other similar
instruments of any such Person, (b) all obligations to pay the deferred purchase
price of property or services of any such Person, except trade payables arising
in the ordinary course of business, (c) all obligations of any such Person as
lessee under Capital Leases, (d) all debt of any other Person secured by a Lien
on any asset of any such Person, (e) all Guaranty Obligations of any such
Person, (f) all obligations, contingent or otherwise, of any such Person
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relative to the face amount of letters of credit, whether or not drawn,
including without limitation any Reimbursement Obligation, and banker's
acceptances issued for the account of any such Person, (g) all obligations of
any such Person to redeem, repurchase, exchange, defease or otherwise make
payments in respect of capital stock or other securities of such Person, and (h)
all obligations incurred by any such Person pursuant to Hedging Agreements.
"Default" means any of the events specified in Section 11.1 which with the
passage of time, the giving of notice or any other condition, would constitute
an Event of Default.
"Default Rate" means a rate of interest equal to the Base Rate plus three
percent (3%) per annum. "Dollars" or "$" means, unless otherwise qualified,
dollars in lawful currency of the United States.
"Eligible Assignee" means, with respect to any assignment 'of the rights,
interest and obligations of a Lender hereunder, a Person that is at the time of
such assignment (a) a commercial bank organized under the laws of the United
States or any state thereof, having combined capital and surplus in excess of
$500,000,000, (b) a commercial bank organized under the laws of any other
country that is a member of the Organization of Economic Cooperation and
Development, or a political subdivision of any such country, having combined
capital and surplus in excess of $500,000,000, (c) a finance company, insurance
company or other financial institution which in the ordinary course of business
extends credit of the type extended hereunder and that has total assets in
excess of $1,000,000,000, (d) already a Lender hereunder (whether as an original
party to this Agreement or as the assignee of another Lender), (e) the successor
(whether by transfer of assets, merger, operation of law, or otherwise) to all
or substantially all of the commercial lending business of the assigning Lender,
or (f) any other Person that has been approved in writing, as an Eligible
Assignee by the Borrowers and the Administrative Agent; provided, further, all
such entities shall comply, or shall have complied, with the provisions of
Section 13.10 herein.
"Employee Benefit Plan" means any employee benefit plan within the meaning
of Section 3(3) of ERISA which (a) is maintained for employees of the Borrowers
or any ERISA Affiliate or (b) has at any time within the preceding six years
been maintained for the employees of the Borrowers or any current or former
ERISA Affiliate.
"Environmental Laws" means any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but not limited
to, requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, and the
rules and regulations thereunder, each as amended, supplemented or otherwise
modified.
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"ERISA Affiliate" means any Person who together with the Borrowers is
treated as a single employer within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of ERISA.
"Eurodollar Reserve Percentage" means, for any day, the percentage
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1%) which is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
(including without limitation any basic supplemental or emergency reserves) in
respect of eurocurrency liabilities or any similar category of liabilities for a
member bank of the Federal Reserve System in New York City. "Event of Default"
means any of the events specified in Section 11.1, provided that any requirement
for passage of time, giving of notice, or any other condition, has been
satisfied.
"Extensions of Credit" means, as to any Lender at any time, an amount equal
to the sum of (a) the aggregate principal amount of all Revolving Credit Loans
made by such Lender then outstanding, plus (b) such Lender's Commitment
Percentage of the L/C Obligations then outstanding.
"FDIC" means the Federal Deposit Insurance Corporation, or any successor
thereto.
"Federal Funds Rate" means, the rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) representing the daily effective
federal funds rate as quoted by the Administrative Agent and confirmed in
Federal Reserve Board Statistical Release H.15 (519) or any successor or
substitute publication selected by the Administrative Agent. If, for any reason,
such rate is not available, then "Federal Funds Rate" shall mean a daily rate
which is determined, in the opinion of the Administrative Agent, to be the rate
at which federal funds are being offered for sale in the national federal funds
market at 9:00 a.m. (Philadelphia time). Rates for weekends or holidays shall be
the same as the rate for the most immediate preceding Business Day.
"First Union" means First Union National Bank, a national banking
association, and its predecessors (including CoreStates Bank, N.A.), successors
and assigns.
"Fiscal Year" means the fiscal year of the Borrowers and their Subsidiaries
ending on October 31 of each year.
"Fixed Charges" means the sum of: (a) Interest Expense paid in cash, (b)
Current Maturities, and (c) income taxes paid in cash.
"Fixed Charge Coverage" means the ratio of: (a) Cash Flow minus
non-financed Capital Expenditures to (b) Fixed Charges, as calculated on a
rolling four (4) quarter basis.
"Funded Debt" means, on a consolidated basis and without duplication:
(a) All items which should in conformity with GAAP be classified as
indebtedness for borrowed money and as such should be included on the
balance sheet of Borrowers, including without limitation, (i)
obligations under the Revolving Credit Notes, (ii) indebtedness,
obligations and liabilities for borrowed money or for the
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deferred purchase price of property, (iii) Capital Leases, (iv) all
indebtedness, obligations and liabilities secured by any lien,
mortgage, charge, encumbrance or security interest on any property
owned by Borrowers even though it has not assumed or otherwise become
liable for the payment thereof; and (v) Permitted seller Notes; but
excluding Subordinated Debt.
(b) All guarantees (whether by discount or otherwise), endorsements (other
than for collection or deposit in the ordinary course of Borrowers'
business) and other contingent obligations of Borrowers in respect of,
or to purchase or otherwise acquire or become liable upon,
indebtedness, obligations or liabilities of others, including without
limitation, surety bonds;
(c) All obligations or liabilities of Borrowers under or pursuant to any
letter of credit, surety Bonds or similar obligations.
"GAAP" means generally accepted accounting principles, as recognized by the
American Institute of Certified Public Accountants and the Financial Accounting
Standards Board, consistently applied and maintained on a consistent basis for
the Borrowers and their Subsidiaries throughout the period indicated and
consistent with the prior financial practice of the Borrowers and their
Subsidiaries.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"Governmental Authority" means any nation, province, state or political
subdivision thereof, and any government or any Person exercising executive,
legislative, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guaranty Obligation" means, with respect to the Borrowers and their
Subsidiaries, without duplication, any obligation, contingent or otherwise, of
any such Person pursuant to which such Person has directly or indirectly
guaranteed or become surety for any Debt or other obligation of any other Person
and, without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise of any such Person (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt or other
obligation (whether arising by virtue of partnership arrangements, by agreement
to keep well, to purchase assets, goods, securities or services, to take-or-pay,
or to maintain financial statement condition or otherwise) or (b) entered into
for the purpose of assuring in any other manner the obligee of such Debt or
other obligation for the payment thereof, or to protect such obligee against
loss in respect thereof (in whole or in part); provided that the term Guaranty
Obligation shall not include endorsements for collection or deposit in the
ordinary course of Borrowers' business.
"Hazardous Materials" means any substances or materials (a) which are or
become defined as hazardous wastes, hazardous substances, pollutants,
contaminants, chemical substances or mixtures or toxic substances under any
Applicable Law, (b) which are toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human
health or the environment and are or become regulated by any Governmental
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Authority, (c) the presence of which require investigation or remediation under
any Applicable Law, (d) the discharge or emission or release of which requires a
permit or license under any Applicable Law or other Governmental Approval, (e)
which are deemed to constitute a nuisance, a trespass or pose a health or safety
hazard to persons or neighboring properties, (f) which consist of underground or
aboveground storage tanks, whether empty, filled or partially filled with any
substance, or (g) which contain, without limitation, asbestos, polychlorinated
biphenyls, urea formaldehyde foam insulation, petroleum hydrocarbons, petroleum
derived substances or waste, crude oil, nuclear fuel, natural gas or synthetic
gas.
"Hedging Agreement" means any agreement with respect to an interest rate
swap, collar, cap, floor or a forward rate agreement or other agreement
regarding the hedging of interest rate risk exposure executed in connection with
hedging the interest rate exposure of the Borrowers, and any confirming letter
executed pursuant to such hedging agreement, all as amended, restated or
otherwise modified.
"Intangibles" means as of the date of any determination thereof the total
amount of goodwill, patents, trade names, trademarks, copyrights, franchises,
experimental expense, organization expense, unamortized debt discount and
expense, the excess of cost of shares acquired over book value of related assets
and such other assets as are properly classified as "intangible assets" of the
Borrowers determined in accordance with GAAP.
"Interest Coverage" means the ratio of: (a) the Borrowers' Cash Flow to (b)
the Borrowers' Interest Expense, calculated on a rolling four (4) quarter basis.
"Interest Expense" means interest expense paid in cash on account of Funded
Debt.
"Interest Period" shall have the meaning assigned thereto in Section
4.1(b).
"Investment" means any loan or advance to, or purchase or acquisition of
the securities or obligations of, any Person or the assumption of any liability
of another Person which, in each case, did not arise from sales to such Person
in the ordinary course of business.
"Issuing Lender" means First Union, in its capacity as issuer of any Letter
of Credit, or any successor thereto.
"L/C Commitment" means the lesser of (a) Five Million and 00/100 Dollars
($5,000,000.00) and (b) the Aggregate Commitment.
"L/C Facility" means the letter of credit facility established pursuant to
Article III hereof.
"L/C Obligations" means at any time, an amount equal to the sum of (a) the
aggregate undrawn and unexpired amount of the then issued and outstanding
Letters of Credit (including all Obligations owing in connection with any Letter
of Credit issued in connection with the Bond Transaction) and (b) the aggregate
amount of drawings under Letters of Credit which have not then been reimbursed
pursuant to Section 3.5.
"L/C Participants" means the collective reference to all the Lenders other
than the Issuing Lender.
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"Lender" means each Person executing this Agreement as a Lender set forth
on the signature pages hereto and each Person that hereafter becomes a party to
this Agreement as a Lender pursuant to Section 13.10.
"Lending Office" means, with respect to any Lender, the office of such
Lender maintaining such Lender's Commitment Percentage of the Loans. "Letter(s)
of Credit" shall have the meaning assigned thereto in Section 3.1.
"LIBOR" means the rate of interest per annum determined on the basis of the
rate for deposits in Dollars in minimum amounts of at least $5,000,000 for a
period equal to the applicable Interest Period which appears on the Telerate
Page 3750 at approximately 11:00 a.m. (London time) two (2) Business Days prior
to the first day of the applicable Interest Period (rounded upward, if
necessary, to the nearest one-sixteenth of one percent (1/16%)). If, for any
reason, such rate does not appear on Telerate Page 3750, then "LIBOR" shall be
determined by the Administrative Agent to be the arithmetic average (rounded
upward, if necessary, to the nearest one-sixteenth of one percent (1/16%)) of
the rate per annum at which deposits in Dollars would be offered by first class
banks in the London interbank market to the Administrative Agent approximately
11:00 a.m. (London time) two (2) Business Days prior to the first day of the
applicable Interest Period for a period equal to such Interest Period and in an
amount substantially equal to the amount of the applicable Loan as indicated on
Borrowers' Notice of Borrowing.
"LIBOR Rate" means an interest rate per annum equal to LIBOR plus the
Applicable Margin.
"LIBOR Rate Loan" means any Loan bearing interest at a rate based upon the
LIBOR Rate as provided in Section 4.1(a).
"Lien" means, with respect to any asset, any mortgage, lien pledge, charge,
security interest or encumbrance of any kind in respect of such asset. For the
purposes of this Agreement, a Person shall be deemed to own subject to a Lien
any asset which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, Capital Lease or other title
retention agreement relating to such asset.
"Loans" means the collective reference to the Revolving Credit Loans and
"Loan" means any of such Loans.
"Loan Documents" means, collectively, this Agreement, the Notes, the
Applications, any Hedging Agreement with any Lender (which such Hedging
Agreement is permitted or required hereunder), the Security Documents, the
Surety Agreements, all agreements, documents and instruments executed with and
delivered to any Lender in connection with the Bond Transaction, and each other
financing statement, stock power, document, instrument, certificate and
agreement executed and delivered by the Borrowers, their Subsidiaries or their
counsel in connection with this Agreement or otherwise referred to herein or
contemplated hereby, all as may be amended, restated or otherwise modified.
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"Material Adverse Effect" means, with respect to the Borrowers or any of
their Subsidiaries, a material adverse effect on the properties, assets,
business, prospects, operations or condition (financial or otherwise) of any
such Person or the ability of any such Person to perform its obligations under
the Loan Documents or Material Contracts to which it is a party.
"Material Contract" means (a) any contract or other agreement, written or
oral, of the Borrowers or any of their Subsidiaries involving monetary liability
of or to any such Person in an amount in excess of $250,000 per annum, or (b)
any other contract or agreement, written or oral, of the Borrowers or any of
their Subsidiaries the failure to comply with which could reasonably be expected
to have a Material Adverse Effect.
"Mortgage" means that certain Mortgage Deed, Security Agreement and
Financing Statement Agreement of even date executed in favor of the
Administrative Agent, for the ratable benefit of Administrative Agent (in its
individual capacity as a Lender) and the other Lenders, pursuant to which
Vermont Pure Springs, Inc. grants a security interest and mortgage upon all of
its respective real property, subject only to permitted liens consented to by
and disclosed to Administrative Agent, as of such mortgage may, from time to
time, be amended, restated or modified.
"Multiemployer Plan" means a "'multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrowers or any ERISA Affiliate is making, or
is accruing an obligation to make, contributions within the preceding six years.
"Net Worth" means, at any time, the total net worth of the Borrowers,
determined on a consolidated basis, without duplications, minus: (i) all loans
and advances to shareholders and (ii) guarantees of indebtedness of
shareholders, all as determined in accordance with GAAP.
"Notes" means the collective reference to the Revolving Credit Notes and
"Note" means any of such Notes.
"Notice of Account Designation" shall have the meaning assigned thereto in
Section 2.3(b).
"Notice of Borrowing" shall have the meaning, assigned thereto in Section
2.2(a).
"Notice of Conversion/Continuation" shall have the meaning assigned thereto
in Section 4.2.
"Notice of Prepayment" shall have the meaning assigned thereto in Section
2.3(c).
"Obligations" means, in each case, whether now in existence or hereafter
arising: (a) the principal of and interest on (including interest accruing,
after the filing of any bankruptcy or similar petition) the Loans, (b) the L/C
Obligations, (c) all payment and other obligations owing by the Borrowers to any
Lender or the Administrative Agent under any Hedging Agreement with any Lender
(which such Hedging Agreement is permitted or required hereunder), (d) any
payment and other obligations owing by the Borrowers to any Lender or the
Administrative Agent pursuant to the Bond Transaction, and (e) all other fees
and commissions (including attorney's fees), charges, indebtedness, loans,
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liabilities, financial accommodations, obligations, covenants and duties owing
by the Borrowers to the Lenders or the Administrative Agent, of every kind,
nature and description, direct or indirect, absolute or contingent, due or to
become due, contractual or tortious, liquidated or unliquidated, and whether or
not evidenced by any note, in each case under or in respect of this Agreement,
any Note, any Letter of Credit or any of the other Loan Documents.
"Officer's Compliance Certificate" shall have the meaning assigned thereto
in Section 7.2.
"Original Agreement" shall have the meaning given to that term in the
Recitals.
"Other Taxes" shall have the meaning assigned thereto in Section 4.11(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
"Pension Plan" means any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to the provisions of Title IV of ERISA or Section 412 of
the Code and which (a) is maintained for employees of the Borrowers or any ERISA
Affiliates or (b) has at any time within the preceding six years been maintained
for the employees of the Borrowers or any of their current or former ERISA
Affiliates.
"Permitted Acquisition" shall have the meaning assigned thereto in Section
10.4.
"Permitted Assumed Liabilities" means bottle deposit liabilities, Capital
Leases for vehicles and equipment, obligations for rent under operating leases,
and Permitted seller Debt.
"Permitted Seller Notes" means notes issued to sellers in connection with
any Permitted Acquisition, and issued in accordance to the conditions thereof,
which notes shall be unsecured and subordinated in right of payment to the
Borrowers' Obligations hereunder, with all of the foregoing to be in form and
substance satisfactory to each of the Lenders. Despite the subordination
provisions, Permitted Seller Notes shall be deemed to constitute Funded Debt,
not Subordinated Debt, for covenant calculation purposes.
"Person" means an individual, corporation, limited liability company,
partnership, association, trust, business trust, joint venture, joint stock
company, pool, syndicate, sole proprietorship, unincorporated organization,
Governmental Authority or any other form of entity or group thereof.
"Prime Rate" means, at any time, the rate of interest per annum publicly
announced from time to time by First Union as its Prime rate. Each change in the
Prime Rate shall be effective as of the opening of business on the day such
change in the Prime Rate occurs. The parties hereto acknowledge that the rate
announced publicly by First Union as its Prime Rate is an index or base rate and
shall not necessarily be First Union's lowest or best rate charged to its
customers or other banks.
"Purchase Price" means the aggregate amount of cash paid, Permitted Assumed
Liabilities assumed, and Permitted Seller Notes and common stock issued, in
connection with the Borrowers' undertaking any Permitted Acquisition.
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"Register" shall have the meaning assigned thereto in Section 13.10(d).
"Reimbursement Obligation" means the obligation of the Borrowers to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under
Letters of Credit.
"Required Lenders" means, at any date, any combination of Lenders who
collectively hold at least sixty-seven percent (67%) of the aggregate unpaid
principal amount of the Notes and any L/C Obligations, or if there are no L/C
Obligations, and if no amounts are outstanding under the Notes, then the term
"Required Lenders" means any combination of Lenders whose Commitment Percentages
aggregate at least sixty-seven percent (67%).
"Responsible Officer" means any of the following: the chief executive
officer, chief operating officer, chief financial officer, president, or the
chairman of the Borrowers or any other officer of the Borrowers reasonably
acceptable to the Administrative Agent.
"Revolving Credit Facility" means the revolving credit facility established
pursuant to Article II hereof, and shall include the Revolving Credit Loans.
"Revolving Credit Loans" means, for any Lender, any revolving loan made to
the Borrowers pursuant to Section 2.1, and all such revolving loans collectively
as the context requires.
"Revolving Credit Notes" means the collective reference to the Revolving
Credit Notes made by the Borrowers payable to the order of each Lender,
substantially in the form of Exhibit A hereto, evidencing the Revolving Credit
Facility, and any amendments and modifications thereto, any substitutes
therefor, and any replacements, restatements, renewals or extension thereof, in
whole or in part; "Revolving Credit Note" means any of such Revolving Credit
Notes.
"Security Agreements" means those certain security agreements previously
executed in favor of First Union, as amended and restated by those certain
amended and restated security agreements of even date herewith by the Borrowers
and the Sureties in favor of the Administrative Agent, for the ratable benefit
of the Lenders, whereby the Borrowers and the Sureties pledge to and grant (and
confirm their prior pledge and grant) to the Administrative Agent a lien against
and security interest in all tangible and intangible assets of the Borrowers and
the Sureties, including without limitation, all now owned or hereafter acquired
inventory, equipment, deposit accounts, investment property, general
intangibles, accounts receivable, contract rights (including water and mineral
rights) and other personal property of the Borrowers and the Sureties, as any of
the foregoing may from time to time be amended, restated or modified. The
Security Agreements also includes that certain Security Agreement dated of even
date wit this Agreement executed and delivered in favor of the Administrative
Agent, for the ratable benefit of the Lenders, whereby Adirondack Coffee
Service, Inc. grants to the Administrative Agent a lien against and security
interest in all of its tangible and intangible assets including without
limitation, all now owned or hereafter acquired inventory, equipment, deposit
accounts, investment property, general intangibles, accounts receivable,
contract rights (including water and mineral rights) and all other personal
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property of Adirondack Coffee Service, Inc., as the foregoing Security Agreement
may from time to time be amended, restated or modified.
"Security Documents" means the collective reference to the Mortgage, the
Security Agreements, the Stock Pledge Agreements, the Collateral Assignments,
and each other agreement or writing pursuant to which the Borrowers , the
Sureties or any Subsidiary thereof purports to pledge or grant to Administrative
Agent or any of the Lenders a security interest in any property or assets
securing the Obligations, or any such Person purports to guaranty the payment
and/or performance of the Obligations to the Lender.
"Solvent" means, as to the Borrowers and their Subsidiaries, on a
particular date, any such Person (a) has capital sufficient to carry on its
business and transactions and all business and transactions in which it is about
to engage and is able to pay its debts as they mature, (b) owns property having
a value, both at fair valuation and at present fair saleable value, greater than
the amount required to pay its probable liabilities (including contingencies),
and (c) does not believe that it will incur debts or liabilities beyond its
ability to pay such debts or liabilities as they mature.
"Stock Pledge Agreements" means those certain stock pledge agreements
previously executed in favor of First Union, as amended by those certain
amendment agreements of even date, by the Borrowers in favor of Administrative
Agent, for the ratable benefit of Administrative Agent (in its individual
capacity as a Lender) and the other Lenders, together with all necessary stock
powers, duly executed in blank, as any of the foregoing may from time to time be
amended, restated or modified. The Stock Pledge Agreements also includes that
certain Stock Pledge Agreement of even date, and related irrevocable stock
power, executed and delivered by Vermont Pure Springs, Inc. in favor of the
Administrative Agent, for the ratable benefit of the Lenders, granting a first
priority security interest in and lien on all of the issued and outstanding
shares of stock of Adirondack Coffee Service, Inc.
"Subordinated Debt" means indebtedness for borrowed money issued to a
Person other than a seller in a Permitted Acquisition which is unsecured and
subordinated in right of payment to the Borrowers' Obligations hereunder, with
all of the foregoing to be in form and substance satisfactory to the Lenders.
"Subsidiary" means as to any Person, any corporation, partnership, limited
liability company or other entity of which more than fifty percent (50%) of the
outstanding capital stock or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other managers of such
corporation, partnership, limited liability company or other entity is at the
time, directly or indirectly, owned by or the management is otherwise controlled
by such Person (irrespective of whether, at the time, capital stock or other
ownership interests of any other class or classes of such corporation,
partnership, limited liability company or other entity shall have or might have
voting power by reason of the happening of any contingency). Unless otherwise
qualified references to "Subsidiary" or "Subsidiaries" herein shall refer to
those of the Borrowers.
"Sureties" means, unless the context requires otherwise, collectively,
jointly and severally, Excelsior Springs Water Company, Inc., a New York
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business corporation, A.M. Fridays, Inc., a New Hampshire business corporation,
and Adirondack Coffee Service, Inc., a New York corporation, together with their
permitted successors and assigns, including any trustee or receiver in any
bankruptcy proceedings.
"Surety Agreements" means those certain surety agreements previously
executed in favor of First Union, as amended and restated by those certain
amended and restated guaranty agreements of even date herewith by the Sureties
in favor of the Administrative Agent, for the ratable benefit of the Lenders,
whereby the Sureties agree to act as unlimited sureties for the repayment,
finally and in full, of all of the Obligations, as any of the foregoing may be
from time to time amended, restated or modified. The Surety Agreement also means
that certain guaranty agreement of even date herewith executed by Adirondack
Coffee Service, Inc. in favor of the Administrative Agent, the ratable benefit
of the Lenders, whereby Adirondack Coffee Service, Inc. agrees to act as
unlimited surety for the repayment, finally and in full, of all of the
Obligations, as this document may from time to time be amended, restated or
modified.
"Taxes" shall have the meaning assigned thereto in Section 4.11(a).
"Termination Date" has the meaning given to that term in Section 2.6.
"Termination Event" means: (a) a "Reportable Event" described in Section
4043 of ERISA, or (b) the withdrawal of the Borrowers or any ERISA Affiliate
from a Pension Plan during a plan year in which it was a "substantial employer"
as defined in Section 4001 (a)(2) of ERISA, or (c) the termination of a Pension
Plan, the filing of a notice of intent to terminate a Pension Plan or the
treatment of a Pension Plan amendment as a termination under Section 4041 of
ERISA, or (d) the institution of proceedings to terminate, or the appointment of
a trustee with respect to, any Pension Plan by the PBGC or (e) any other event
or condition which would constitute grounds under Section 4042(a) of ERISA for
the termination of, or the appointment of a trustee to administer, any Pension
Plan, or (f) the partial or complete withdrawal of the Borrowers or any ERISA
Affiliate from a Multiemployer Plan, or (g) the imposition of a Lien pursuant to
Section 412 of the Code or Section 302 of ERISA, or (h) any event or condition
whic results in the reorganization or insolvency of a Multiemployer Plan under
Sections 4241 or 4245 of ERISA, or (i) any event or condition which results in
the termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution by PBGC of proceedings to terminate a Multiemployer Plan under
Section 4042 of ERISA.
"Uniform Customs" the Uniform Customs and Practice for Documentary Credits
(1994 Revision), International Chamber of Commerce Publication No. 500.
"UCC" means the Uniform Commercial Code as in effect in the Commonwealth
of Pennsylvania, or, as the context requires, the Uniform Commercial Code in
effect in each state where the Collateral may at any time be located, or where
Administrative Agent may need to take action to protect the Lenders' interest in
the Collateral, as any of the foregoing may be amended, restated or otherwise
modified.
"United States" means the United States of America.
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"Wholly-Owned" means, with respect to a Subsidiary, that all of the shares
of capital stock or other ownership interests of such Subsidiary are, directly
or indirectly, owned or controlled by the Borrowers and/or one or more of its
Wholly-Owned Subsidiaries.
SECTION 1.2 General. Unless otherwise specified, a reference in this
Agreement to a particular section, subsection, Schedule or Exhibit is a
reference to that section, subsection, Schedule or Exhibit of this Agreement.
Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and plural, and pronouns stated in
the masculine, feminine or neuter gender shall include the masculine, the
feminine and the neuter. Any reference herein to "Philadelphia time" shall refer
to the applicable time of day in Philadelphia, Pennsylvania.
SECTION 1.3 Other Definitions and Provisions.
(a) Use of Capitalized Terms. Unless otherwise defined therein, all
capitalized terms defined in this Agreement shall have the defined meanings when
used in this Agreement, the Notes and the other Loan Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement.
(b) Miscellaneous. The words "hereof," "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
SECTION 2.1 Revolving Credit Loans. Subject to the terms and conditions of
this Agreement, each Lender severally agrees to make Revolving Credit Loans to
the Borrowers from time to time from the Closing Date through the Termination
Date as requested by the Borrowers in accordance with the terms of Section 2.2;
provided, that (a) the aggregate principal amount of all outstanding Revolving
Credit Loans (after giving effect to any amount requested) shall not exceed the
Aggregate Commitment less the sum of all outstanding L/C Obligations; and (b)
the principal amount of the outstanding Revolving Credit Loans (after giving
effect to any amount requested) from any Lender to the Borrowers shall not at
any time exceed such Lender's Commitment less such Lender's Commitment
Percentage of outstanding L/C Obligations. Each Revolving Credit Loan by a
Lender shall be in a principal amount equal to the amount that such Lender's
Commitment Percentage bears to the aggregate principal amount of the Revolving
Credit Loan requested by the Borrowers on such occasion. Subject to the terms
and conditions hereof, the Borrowers may borrow, repay and reborrow Revolving
Credit Loans hereunder until the Termination Date.
SECTION 2.2 Procedure for Advances of Revolving Credit Loans.
(a) Requests for Borrowing. The Borrowers shall give the Administrative
Agent irrevocable prior written notice in the form attached hereto as Exhibit B
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(a "Notice of Borrowing") not later than 11:00 a.m. (Philadelphia time): (i) on
the same Business Day of the proposed advance, if the Loan is to bear interest
at the Base Rate; and (ii) at least three (3) Business Days before the day of
the proposed advance, if the Loan is to bear interest at the LIBOR Rate, in
either case specifying (A) the date of such borrowing, which shall be a Business
Day and shall conform to the time requirements listed above, (B) the amount of
such borrowing, which (x) if the advance is to accrue interest at the LIBOR
Rate, shall be in a minimum amount of $250,000, and multiple integrals of
$250,000 thereof, or (y) if the advance is to accrue interest at the Base Rate,
shall be in a minimum amount of $250,000, and multiple integrals of $250,000;
and (C) in the case of a LIBOR Rate Loan, the duration of the Interest Period
applicable thereto. Notices received after 11:00 a.m. (Philadelphia time) shall
be deemed received on the next Business Day. The Administrative Agent shall
promptly notify the Lenders of each Notice of Borrowing.
(b) Disbursement of Revolving Credit Loans. Not later than 2:00 p.m.
(Philadelphia time) on the proposed borrowing date, each Lender will make
available to the Administrative Agent, at the office of the Administrative
Agent, for the account of the Borrowers, and in funds immediately available,
such Lender's Commitment Percentage of the Revolving Credit Loans to be made on
such borrowing date. The Borrowers hereby irrevocably authorize the
Administrative Agent to disburse the proceeds of each borrowing requested
pursuant to this Section 2.2 in immediately available funds by crediting or
wiring such proceeds to the deposit account of the Borrowers identified in the
most recent notice delivered by the Borrowers to the Administrative Agent, each
such notice shall be substantially in the form of Exhibit C hereto (a "Notice of
Account Designation") or as otherwise agreed upon by the Borrowers and the
Administrative Agent from time to time. Subject to Section 4.7 hereof, the
Administrative Agent shall not be obligated to disburse the portion of the
proceeds of any Revolving Credit Loan requested pursuant to this Section 2.2 to
the extent that any Lender has not made available to the Administrative Agent
its Commitment Percentage of such Loan.
SECTION 2.3 Repayment of Loans.
(a) Repayment on Termination Date. On the Termination Date, the Borrowers
shall repay: (i) the outstanding principal amount of all Revolving Credit Loans,
(ii) all accrued but unpaid interest thereon, and (iii) all accrued but unpaid
costs, fees and expenses owing by the Borrowers to the Lenders or the
Administrative Agent under this Agreement. Additionally, the Borrowers shall
make such payments, or provide such cash collateral, as may be required pursuant
to this Agreement with respect to the L/C Obligations.
(b) Mandatory Repayment of Excess Loans. If at any time (i) the outstanding
principal amount of all Loans exceeds (ii) the sum of (A) Aggregate Commitment
minus (B) all outstanding L/C Obligations, the Borrowers shall repay immediately
upon notice from the Administrative Agent, by payment to the Administrative
Agent for the account of the Lenders, in immediately available funds, or shall
furnish Administrative Agent with cash collateral reasonably satisfactory to
Administrative Agent, the amount of such excess, and each such repayment shall
be applied by Administrative Agent first to the principal amount of outstanding
L/C Obligations, and second to the principal amount of outstanding Revolving
Credit Loans. Such cash collateral shall be applied in accordance with Section
11.2(b). Each such repayment shall be accompanied by any amount required to be
paid pursuant to Article IV hereof.
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(c) Optional Repayments. The Borrowers may at any time and from time to
time repay the Loans, in whole or in part, upon (i) at least three (3) Business
Days' irrevocable notice to the Administrative Agent with respect to LIBOR Rate
Loans, and (ii) one (1) Business Day irrevocable notice with respect to Base
Rate Loans (each such notice shall be substantially in the form of Exhibit D
attached hereto) (each, a "Notice of Prepayment") specifying the date and amount
of repayment and whether the repayment is of LIBOR Rate Loans, Base Rate Loans
or a combination thereof, and, if of a combination thereof, the amount allocable
to each. Upon receipt of such notice, the Administrative Agent shall promptly
notify each Lender of the terms and conditions regarding prepayment. If any such
notice is given, the amount specified in such notice shall be due and payable on
the date set forth in such notice. Partial repayments shall be in an aggregate
amount of $250,000 or a whole multiple of $250,000 in excess thereo with respect
to Base Rate Loans and $250,000 or a whole multiple of $250,000 in excess
thereof with respect to LIBOR Rate Loans. Each such repayment shall be
accompanied by any amount required to be paid pursuant to Article IV hereof.
(d) Limitation on Repayment of LIBOR Rate Loans. The Borrowers may not
repay any LIBOR Rate Loan on any day other than on the last day of the Interest
Period applicable thereto unless such repayment is accompanied by any amount
required to be paid pursuant to Article IV hereof.
SECTION 2.4 Notes.
Revolving Credit Notes. Each Lender's Revolving Credit Loans and the
obligation of the Borrowers to repay such Revolving Credit Loans shall be
evidenced by a separate Revolving Credit Note executed by the Borrowers payable
to the order of such Lender representing the Borrowers' obligation to pay such
Lender's Commitment plus interest and all other fees, charges and other amounts
due thereon. Each Revolving Credit Note shall be dated the date hereof and shall
bear interest on the unpaid principal amount thereof at the applicable interest
rate per annum specified in Section 4.1.
SECTION 2.5 Permanent Reduction of the Aggregate Commitment.
(a) Voluntary Reduction. The Borrowers shall have the right at any time and
from time to time, upon at least five (5) Business Days' prior written notice to
the Administrative Agent, to permanently reduce, without premium or penalty
(except for those costs and fees enumerated in Article IV hereof with respect to
LIBOR Rate Loans), (i) the entire Aggregate Commitment at any time or (ii)
portions of the Aggregate Commitment, from time to time, in an aggregate
principal amount not less than $500,000 or any whole multiple of $500,000 in
excess thereof.
(b) Conditions. Each permanent reduction permitted pursuant to this Section
2.6 shall be accompanied by a payment of principal sufficient to reduce the
aggregate outstanding Extensions of Credit of the Lenders after such reduction
to the Aggregate Commitment as so reduced, and if the Aggregate Commitment as so
reduced is less than the aggregate amount of all outstanding L/C Obligations,
the Borrowers shall be required to deposit in a cash collateral account opened
by the Administrative Agent an amount equal to the aggregate then undrawn and
unexpired amount of such Letters of Credit, together with an amount equal to all
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outstanding draws under all Letters of Credit, which have not been reimbursed
pursuant to Section 3.5 herein. Any reduction of the Aggregate Commitment to
zero shall be accompanied by payment of all outstanding Obligations (and
furnishing of cash collateral satisfactory to the Administrative Agent for all
L/C Obligations, together with an amount equal to all outstanding draws under al
Letters of Credit, which have not been reimbursed pursuant to Section 3.5
herein) and shall result in the termination of the Commitments and Credit
Facility. Such cash collateral shall be applied in accordance with Section
11.2(b). If the reduction of the Aggregate Commitment requires the repayment of
any LIBOR Rate Loan, such repayment shall be accompanied by any amount required
to be paid pursuant to Article IV hereof.
SECTION 2.6 Termination of Credit Facility. The Credit Facility shall
terminate on the earliest of (a) January 31, 2005; (b) the date of termination
by the Borrowers pursuant to Section 2.6(a); (c) the occurrence of an event in
Section 11.1(j) or (k); or (d) the date of termination by the Administrative
Agent on behalf of the Lenders pursuant to Section 11.2(a) (the "Termination
Date").
SECTION 2.7 Use of Proceeds. The Borrowers shall use the proceeds hereunder
solely to finance Permitted Acquisitions, (b) for Letter of Credit issuance (up
to the L/C Commitment), (c) for Capital Expenditures, and (d) for working
capital and general corporate requirements of the Borrowers and their
Subsidiaries, including the payment of certain fees and expenses incurred in
connection with the transactions described herein.
SECTION 3.1 L/C Commitment. Subject to the terms and conditions hereof, the
Issuing Lender, in reliance on the agreements of the other Lenders set forth in
Section 3.4(a), agrees to issue standby letters of credit ("Letters of Credit")
for the account of the Borrowers on any Business Day from the Closing Date
through but not including the Termination Date in such form as may be approved
from time to time by the Issuing Lender; provided, that the Issuing Lender shall
have no obligation to issue any Letter of Credit if, after giving effect to such
issuance: (a) the L/C Obligations would exceed the L/C Commitment, or (b) the
L/C Obligations, together with the outstanding principal amount of all Revolving
Credit Loans, would exceed the Aggregate Commitment (as the same may, from time
to time, be reduced pursuant to Section 2.6 herein); or (c) the Available
Commitment of any Lender would be less than zero. Each Letter of Credit shall
(i) be denominated in Dollars in a minimum amount of $75,000, (ii) be standby or
direct pay letter of credit issued to support obligations of the Borrowers or
any of their Subsidiaries, contingent or otherwise, incurred in the ordinary
course of business, including, without limitation, any letter of credit issued
in connection with the Bond Transaction, (iii) expire on a date satisfactory to
the Issuing Lender, which date shall be no later than one (1) year from the date
of issuance as to any standby letter of credit, or, if earlier, the Termination
Date (unless otherwise agreed by the Administrative Agent), and (iv) be subject
to the Uniform Customs and, to the extent not inconsistent therewith, the laws
of the Commonwealth of Pennsylvania. The Issuing Lender shall not at any time be
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obligated to issue any Letter of Credit hereunder if such issuance would
conflict with, or cause the Issuing Lender or any L/C Participant to exceed any
limits imposed by any Applicable Law. References herein to "issue" and
derivations thereof with respect to Letters of Credit shall also include
extensions or modifications of any existing Letters of Credit, unless the
context otherwise requires.
SECTION 3.2 Procedure for Issuance of Letters of Credit. The Borrowers may
from time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender at the Administrative Agent's Office an
Application therefor, completed to the satisfaction of the Issuing Lender,
together with such other certificates, documents and other papers and
information as the Issuing Lender may request. Upon receipt of any Application,
the Issuing Lender shall process such Application and the certificates,
documents and other papers and information delivered to it in connection
therewith in accordance with its customary procedures and shall, subject to
Section 3.1 and the terms and conditions herein, promptly issue the Letter of
Credit requested thereby (but in no event shall the Issuing Lender be required
to issue any Letter of Credit earlier than three (3) Business Days after its
receipt of the Application therefor and all such other certificates, documents
and other papers and information relating thereto) by issuing the original of
such Letter of Credit to the beneficiary thereof or as otherwise may be agreed
upon by the Issuing Lender and the Borrowers. The Issuing Lender shall promptly
furnish to the Borrowers a copy of such Letter of Credit and promptly notify
each Lender of the issuance, and upon request by any Lender, furnish to such
Lender a copy of such Letter of Credit together with notification of the amount
of such Lender's L/C Participation therein.
SECTION 3.3 Commissions and Other Charges.
(a) The Borrowers shall pay to the Administrative Agent, for the account of
the Issuing Lender and the L/C Participants, a letter of credit commission with
respect to each Letter of Credit issued, in an amount equal to applicable
percentage set forth in the definition of Applicable Margin multiplied by the
face amount of any Letter of Credit issued; provided, however, that the fee for
any Letter of Credit issued in connection with Bond Transaction shall be one and
seven eighths percent (1.875%) per annum . The determination of which fee
multiple to be used at any time shall be determined in accordance with the chart
and relevant provisions of Section 4.1 herein. Such commission shall be payable
on the date the respective Letter of Credit is issued.
(b) In addition to the foregoing commission, the Borrowers shall pay the
Administrative Agent an issuance fee equal to one-eighth of one percent (.125%)
of the face amount of each Letter of Credit, plus other applicable standard
issuance costs and expenses, payable on the date the respective Letter of Credit
is issued. These fees shall inure solely to the benefit of the Issuing Lender.
(c) The Administrative Agent shall, promptly following its receipt thereof,
and except as provided in Section 3.3(b) hereof, distribute to the Issuing
Lender and the L/C Participants all commissions and fees received by the
Administrative Agent in accordance with their respective Commitment Percentages.
SECTION 3.4 L/C Participations.
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(a) The Issuing Lender irrevocably agrees to grant and hereby grants to
each L/C Participant, and, to induce the Issuing Lender to issue Letters of
Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase
and hereby accepts and purchases from the Issuing Lender, on the terms and
conditions hereinafter stated, for such L/C Participant's own account and risk,
an undivided interest in the rights and obligations in each Letter of Credit
issued hereunder and the amount of each draft paid by the Issuing Lender
thereunder, equal to such L/C Participant's Commitment Percentage. Each L/C
Participant unconditionally and irrevocably agrees with the Issuing Lender that,
if a draft is paid under any Letter of Credit for which the Issuing Lender is
not reimbursed in full by the Borrowers in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Issuing Lender, upon demand
from the Issuing Lender and at the Issuing Lender's address for notices
specified herein, an amount equal to such L/C Participant's Commitment
Percentage of the amount of such draft which is not so reimbursed.
(b) Upon becoming aware of any amount required to be paid by any L/C
Participant to the Issuing Lender pursuant to Section 3.4(a) in respect of any
unreimbursed portion of any payment made by the Issuing Lender under any Letter
of Credit, the Issuing Lender shall notify each L/C Participant of the amount
and due date of such required payment and such L/C Participant shall pay to the
Issuing Lender the amount specified on or before the applicable due date. If any
such amount is paid to the Issuing Lender after the date such payment is due,
such L/C Participant shall pay to the Issuing Lender on demand, in addition to
such unpaid amount, the product of (i) such unpaid amount, times (ii) the daily
average Federal Funds Rate as determined by the Administrative Agent during the
period from and including the date such payment is due until the date on which
such payment is immediately available to the Issuing Lender, times (iii) the
product of the number of days that elapse during such period divided by 360. A
certificate of the Issuing Lender with respect to any amounts owing under this
Section 3.4(b) shall be conclusive in the absence of manifest error. With
respect to payment to the Issuing Lender of the unreimbursed amounts described
in this Section 3.4(b), if the L/C Participants receive notice that any such
payment is due (A) prior to 1:00 p.m. (Philadelphia time) on any Business Day,
such payment shall be due that Business Day, and (B) after 1:00 p.m.
(Philadelphia time) on any Business Day, such payment shall be due on the
following Business Day.
(c) Whenever, at any time after the Issuing Lender has made payment under
any Letter of Credit and has received from any L/C Participant such L/C
Participant's Commitment Percentage of such payment in accordance with this
Section 3.4 and the Issuing Lender thereafter receives any payment related to
such Letter of Credit (whether directly from the Borrowers or otherwise, or any
payment of interest on account thereof, the Issuing Lender will distribute to
such L/C Participant its pro rata share of such payment received (based upon the
ratio that such L/C Participant's Commitment Percentage bears to the amount
received by Issuing Lender); provided, that in the event that any such payment
received by the Issuing Lender shall be required to be returned by the Issuing
Lender, such L/C Participant shall return to the Issuing Lender the amount
thereof previously received.
SECTION 3.5 Reimbursement Obligation of the Borrowers. In the event of any
drawing under any Letter of Credit, the Borrowers agree to reimburse (either
with the proceeds of a Revolving Credit Loan as provided for in this Section 3.5
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or with funds from other sources), in same day funds, the Issuing Lender on each
date on which the Issuing Lender notifies the Borrowers of the date and amount
of a draft paid under any Letter of Credit for the amount of (a) such draft so
paid and (b) any amounts referred to in Section 3.3(c) incurred by the Issuing
Lender in connection with such payment. Unless the Borrowers shall immediately
notify the Issuing Lender that the Borrowers intend to reimburse the Issuing
Lender for such drawing from other sources or funds, the Borrowers shall be
deemed to have timely given a Notice of Borrowing to the Administrative Agent
requesting that the Lenders make a Revolving Credit Loan bearing interest at the
Base Rate on such date in the amount of (a) such draft so paid and (b) an
amounts referred to in Section 3.3(c) incurred by the Issuing Lender in
connection with such payment, and the Lenders shall make a Revolving Credit Loan
bearing interest at the Base Rate in such amount, the proceeds of which shall be
applied to reimburse the Issuing Lender for the amount of the related drawing
and costs and expenses. Each Lender acknowledges and agrees that its obligation
to fund a Revolving Credit Loan in accordance with this Section 3.5 to reimburse
the Issuing Lender for any draft paid under a Letter of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including, without limitation, non-satisfaction of the conditions set forth in
Section 2.3(a) or Article VI. If the Borrowers have elected to pay the amount of
such drawing with funds from other sources and shall fail to reimburse the
Issuing Lender as provided above, the unreimbursed amount of such drawing shall
bear interest at the rate which would be payable on any outstanding Base Rate
Loans which were then overdue from the date such amounts become payable (whether
at stated maturity, by acceleration or otherwise) until payment is full.
SECTION 3.6 Obligations Absolute. The Borrowers' obligations under this
Article III (including without limitation the Reimbursement Obligation) shall be
absolute and unconditional under any and all circumstances and irrespective of
any set-off, counterclaim or defense to payment which the Borrowers may have or
have had against the Issuing Lender or any beneficiary of a Letter of Credit.
The Borrowers also agree with the Issuing Lender that the Issuing Lender shall
not be responsible for, and the Borrowers' Reimbursement Obligation under
Section 3.5 shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even though such
documents shall in fact prove to be invalid, fraudulent or forged, or any
dispute between or among the Borrowers and any beneficiary of any Letter of
Credit or any other party to which such Letter of Credit may be transferred or
any claims whatsoever of Borrowers against any beneficiary of such Letter of
Credit or any suc transferee. The Issuing Lender shall not be liable for any
error, omission, interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with any Letter of
Credit, except for errors or omissions caused by the Issuing Lender' s gross
negligence or willful misconduct. The Borrowers agree that any action taken or
omitted by the Issuing Lender under or in connection with any Letter of Credit
or the related drafts or documents, if done in the absence of gross negligence
or willful misconduct and in accordance with the standards of care specified in
the Uniform Customs and, to the extent not inconsistent therewith, the UCC shall
be binding on the Borrowers and shall not result in any liability of the Issuing
Lender to the Borrowers. The responsibility of the Issuing Lender to the
Borrowers in connection with any draft presented for payment under any Letter of
Credit shall, in addition to any payment obligation expressly provided for in
such Letter of Credit, be limited to determining that the documents (including
each draft) delivered under such Letter of Credit in connection with such
presentment are in conformity with such Letter of Credit.
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SECTION 3.7 Effect of Application. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Article III, the provisions of this Article III shall apply.
SECTION 4.1 Interest.
(a) Interest Rate Options. Subject to the provisions of this Section 4.1
and Section 3.5 and provided no Event of Default has occurred and is continuing,
at the election of the Borrowers, the aggregate principal balance of (i) the
Revolving Credit Notes or any portion thereof shall bear interest at (A) the
Base Rate; or (B) LIBOR plus the Applicable Margin as set forth in Section
4.1(c); provided that the LIBOR Rate shall not be available until three (3)
Business Days after the Closing Date. The Borrowers shall select the rate of
interest (either the Base Rate or the LIBOR Rate) and Interest Period, if
applicable, for each Loan at the time a Notice of Borrowing is given pursuant to
Section 2.3 or at the time a Notice of Conversion/Continuation is given pursuant
to Section 4.2. Each Loan or portion thereof bearing interest based on the Base
Rate shall be a "Base Rate Loan," and each Loan or portion thereof bearing
interest based on the LIBOR Rate shall be a "LIBOR Rate Loan." Any Loan or any
portion thereof as to which the Borrowers have not duly specified an interest
rate as provided herein shall be deemed a Base Rate Loan.
(b) Interest Periods/LIBOR Loans. In connection with each LIBOR Rate Loan,
the Borrowers, by giving notice at the times described in Section 4.1(a), shall
elect an interest period (each, an "Interest Period") to be applicable to such
Loan, which Interest Period shall be a period of one (1), two (2), three (3) or
six (6) months with respect to each LIBOR Rate Loan; provided that
(i) the Interest Period shall commence on the date of the advance
of or conversion to any LIBOR Rate Loan and, in the case of immediately
successive Interest Periods, each successive Interest Period shall commence on
the date on which the next preceding Interest Period expires;
(ii) if any Interest Period would otherwise expire on a day that
is not a Business Day, such Interest Period shall expire on the next succeeding
Business Day; provided, however, that if the application of this rule would
cause the Interest Period to extend into the next succeeding calendar month, the
Interest Period affected by this rule shall expire on the next preceding
Business Day;
(iii) any Interest Period with respect to a LIBOR Rate Loan that
begins on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the relevant calendar
month at the end of such Interest Period;
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(iv) no Interest Period shall extend beyond the Termination Date;
and
(v) there shall be no more than four (4) Interest Periods
outstanding at any time.
(c) Applicable Margin. The Applicable Margin provided for in Section 4.1(a)
with respect to the Loans (the "Applicable Margin") shall be determined
according to the below referenced formula, which formula is based upon the ratio
of Funded Debt to Cash Flow, calculated (i) on the Closing Date, by reference to
the most recent Financial Statements presented by the Borrowers to the
Administrative Agent; and (ii) for each consecutive fiscal quarter thereafter,
by reference to quarterly Financial Statements and Officer's Compliance
Certificate delivered by the Borrowers to the Administrative Agent pursuant to
Sections 7.1(a) and 7.1(c) herein. The formula shall be as follows:
Ratio of Funded Applicable Margin Unused
Debt to Cash Flow for LIBOR Loans Letter of Credit Fee Commitment Fee
< 2.0 x 150 basis points 150 basis points 12.5 basis points
per annum per annum
> 2.0 x < 3.0 x 200 basis points 200 basis points 25.0 basis points
per annum per annum
per annum per annum
Administrative Agent on the first (1st) Business Day of the first (1st) month
following receipt by the Administrative Agent of the quarterly financial
statements for the Borrowers and their Subsidiaries and the accompanying
Officer's Compliance Certificate setting forth the ratio of Funded Debt to Cash
Flow of the Borrowers and their Subsidiaries as of the most recent fiscal
quarter end. Subject to Section 4.1(d), in the event the Borrowers fail to
deliver such financial statements and certificate within the time required by
Section 7.2(c) hereof, the Applicable Margin, Letter of Credit Fee, and Unused
Commitment Fee shall be the highest margin set forth above until the delivery of
such financial statements and certificate.
(d) Default Rate. Subject to Section 11.2, at the discretion of the
Administrative Agent and Required Lenders, upon the occurrence and during the
continuance of an Event of Default (provided, however, upon the occurrence of an
Event of Default in Sections 11.1(j) or 11.1(k) herein, all Obligations
hereunder shall immediately convert to and bear interest at the Default Rate),
all outstanding Loans shall bear interest at a rate per annum equal to the
Default Rate, and Borrowers shall be responsible for all "breakage" costs, fees
and expenses as provided for in Article IV herein with respect to LIBOR Rate
Loans automatically converted pursuant to this Section. Interest shall continue
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to accrue on the Notes and the outstanding but unreimbursed draws under the
Letters of Credit, after the filing, by or against the Borrowers of any petition
seeking any relief in bankruptcy or under any act or law pertaining to
insolvency or debtor relief, whether state, federal or foreign.
(e) Interest Payment and Computation. Interest on each Base Rate Loan shall
be payable in arrears on the first day of each calendar month. Interest on each
LIBOR Rate Loan shall be payable on the last day of each Interest Period
applicable thereto, and if such Interest Period extends over three (3) months,
at the end of each three (3) month interval during such Interest Period. All
interest rates, fees and commissions provided hereunder shall be computed on the
basis of a 360-day year and assessed for the actual number of days elapsed.
(f) Maximum Rate. In no contingency or event whatsoever shall the aggregate
of all amounts deemed interest hereunder or under any of the Notes or
Obligations charged or collected by the Administrative Agent or the Lenders
pursuant to the terms of this Agreement or pursuant to any of the Notes or
Letters of Credit exceed the highest rate permissible under any Applicable Law
which a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that the Lenders
have charged or received interest hereunder in excess of the highest applicable
rate, the rate in effect hereunder shall automatically be reduced to the maximum
rate permitted by Applicable Law and the Lenders shall at the Administrative
Agent's option (i) promptly refund to the Borrowers any interest received by
Lenders in excess of the maximum lawful rate or (ii) shall apply such excess to
the principal balance of the Obligations. It is the intent hereof that the
Borrowers no pay or contract to pay, and that neither the Administrative Agent
nor any Lender receive or contract to receive, directly or indirectly in any
manner whatsoever, interest in excess of that which may be paid by the Borrowers
under Applicable Law.
SECTION 4.2 Notice and Manner of Conversion or Continuation of Loans.
Provided that no Event of Default has occurred and is then continuing, the
Borrowers shall have the option to: (a) convert at any time, following the third
Business Day after the Closing Date, all or any portion of its outstanding Base
Rate Loans in a principal amount equal to $250,000 or any whole multiple of
$250,000 in excess thereof into one or more LIBOR Rate Loans and (b) upon the
expiration of any Interest Period, (i) convert all or any part of its
outstanding LIBOR Rate Loans in a principal amount equal to $250,000 or a whole
multiple of $250,000 in excess thereof into Base Rate Loans or (ii) continue
such LIBOR Rate Loans as LIBOR Rate Loans. Whenever the Borrowers desire to
convert or continue Loans as provided above, the Borrowers shall give the
Administrative Agent irrevocable prior written notice in the form attached as
Exhibit E (a "Notice of Conversion/Continuation") not later than 11:00 a.m.
(Philadelphia time) three (3) Business Days before the day on which a proposed
conversion or continuation of such Loan is to be effective. Each Notice of
Continuation/Conversation shall specify: (A) whether the Loans are to be
continued at or converted to the LIBOR Rate or the Base Rate, and in the case of
any LIBOR Rate Loan to be converted or continued, the last day of the Interest
Period therefor, (B) the effective date of such conversion or continuation
(which shall be a Business Day), (C) the principal amount of such Loans to be
converted or continued (provided the same is in the aggregate amounts required
hereunder), and (D) the Interest Period to be applicable to such converted or
continued LIBOR Rate Loan. Failure to otherwise comply with the terms and
conditions of this section shall result in the conclusive presumption that the
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Borrowers have selected the Base Rate at the end of any Interest Period. The
Administrative Agent shall promptly notify the Lenders of such Notice of
Conversion/Continuation.
SECTION 4.3 Fees.
(a) Unused Commitment Fee. Commencing on the Closing Date, the Borrowers
shall pay to the Administrative Agent, for the account of the Lenders, a
non-refundable commitment fee at a rate per annum equal to the rate established
in Section 4.1(c) herein, based upon the ratio of Borrowers' Funded Debt to Cash
Flow, which fee shall be calculated based upon the average daily unused portion
of the Aggregate Commitment. The commitment fee shall be payable in arrears on
the last Business Day of each quarter during the term of this Agreement,
commencing March 31, 2000, and again on the Termination Date. Such unused
commitment fee shall be distributed by the Administrative Agent to the Lenders
pro rata in accordance with each Lenders' respective Commitment Percentages.
(b) Administrative Agent's and Other Fees. In order to compensate the
Administrative Agent for syndicating and administrating the Loans and for its
obligations hereunder, the Borrowers agree to pay to the Administrative Agent,
for Administrative Agent's account, an annual fee in the amount of Fifteen
Thousand and no/100 Dollars ($15,000), payable on the date hereof, and on the
first day of each consecutive December thereafter for the duration of this
Agreement.
(c) Letter of Credit Fee. Upon the issuance of any Letter of Credit, and
again upon the renewal of any Letter of Credit, the Borrowers shall pay to the
Administrative Agent, those Letter of Credit Fees described in Section 3.3
herein.
(d) Closing Fee. In order to compensate the Lenders for their willingness
to extend credit to the Borrowers hereunder, and in consideration of the
Lenders' standing ready to extend credit hereunder, the Borrowers shall pay the
Administrative Agent, for the account of the Lenders based upon the Lenders'
Commitment Percentage, a closing fee equal to Sixty-Two Thousand Five Hundred
and no/100 Dollars ($62,500). The fee shall be paid on the Closing Date, and
shall be deemed unconditionally earned upon the execution of this Agreement,
regardless of whether or not any credit is subsequently extended, or Letters of
Credit issued, by the Lenders by and on behalf of the Borrowers.
SECTION 4.4 Manner of Payment. Each payment by the Borrowers on account of
the principal of or interest on the Loans or of any fee, commission or other
amounts (including the Reimbursement Obligation) payable to the Lenders under
this Agreement or any Note shall be made not later than 1:00 p.m. (Philadelphia
time) on the date specified for payment under this Agreement to the
Administrative Agent at the Administrative Agent's Office for the account of the
Lenders (other than as set forth below) pro rata in accordance with their
respective Commitment Percentages (except as specified below), in Dollars, in
immediately available funds and shall be made without any set-off, counterclaim
or deduction whatsoever. Any payment received after such time but before 2:00
p.m. (Philadelphia time) on such day shall be deemed a payment on such date for
the purposes of Section 11.1, but for all other purposes shall be deemed to have
been made on the next succeeding Business Day. Any payment received after 2:00
p.m. (Philadelphia time) shall be deemed to have been made on the next
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succeeding Business Day for all purposes. Upon receipt by the Administrative
Agent of each such payment, the Administrative Agent shall distribute to each
Lender at its address for notices set forth herein its pro rata share of such
payment in accordance with such Lender's Commitment Percentage (except as
specified below) and shall wire advice of the amount of such credit to each
Lender. Each payment by the Borrowers to the Administrative Agent of the Issuing
Lender's fees or L/C Participants' commissions shall be made in like manner, but
for the account of the Issuing Lender or the L/C Participants, as the case may
be. Each payment to the Administrative Agent of Administrative Agent's fees or
expenses shall be made for the account of the Administrative Agent, and any
amount payable to any Lender under Sections 4.8, 4.9, 4.10, 4.11 or l3.2 shall
be paid to the Administrative Agent for the account of the applicable Lender.
Subject to Section 4.1(b)(ii) if any payment under this Agreement or any Note
shall be specified to be made upon a day which is not a Business Day, it shall
be made on the next succeeding day which is a Business Day and such extension of
time shall in such case be included in computing any interest if payable along
with such payment.
SECTION 4.5 Crediting of Payments and Proceeds. In the event that the
Borrowers shall fail to pay any of the Obligations when due and the Obligations
have been accelerated pursuant to Section 11.2, all payments received by the
Lenders upon the Notes and the other Obligations, and all net proceeds from the
enforcement of the Obligations shall be applied by Administrative Agent first to
all expenses then due and payable by the Borrowers hereunder, then to all
indemnity obligations then due and payable by the Borrowers hereunder, then to
all Administrative Agent's and Issuing Lender's fees then due and payable
hereunder, then to all other fees and commissions then due and payable
hereunder, then to accrued and unpaid interest on the Notes and Reimbursement
Obligations, then to any termination payments due in respect of a Hedging
Agreement with any Lender (which such Hedging Agreement is permitted or required
hereunder) (pro rata in accordance with all such amounts due), then to the
principal amount of the Notes and Reimbursement Obligation outstanding (pro rata
in accordance with all such amounts due) and then to the cash collateral account
described in Section 11.2(b) hereof to the extent of any L/C Obligations then
outstanding.
SECTION 4.6 Adjustments. If, subsequent to an Event of Default, any Lender
(a "Benefitted Lender") shall at any time: (a) receive any payment of all or
part of the Obligations owing to it, or interest thereon (outside of payments
tendered by the Administrative Agent to such Lender); or (b) receive any
collateral in respect of the Obligations owing to it (whether voluntarily or
involuntarily, by set-off or otherwise) in a greater proportion than any such
payment to and collateral received by any other Lender (except for permitted
discrepancies based upon the Lender's Commitment Percentage), if any, in respect
of the Obligations owing to such other Lender, or interest thereon; such
Benefited Lender shall purchase for cash from the other Lenders such portion of
each such other Lender's Extensions of Credit, or shall provide such other
Lenders with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such Benefited Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders, except
for permitted discrepancies based upon each Lender's Commitment Percentage;
provided, that if all or any portion of such excess payment or benefits is
thereafter recovered from such Benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits shall be returned by the other
Lenders to such Benefited Lender to the extent of such recovery, but without
interest. The Borrowers agree that each Lender so purchasing a portion of
another Lender's Extensions of Credit may exercise all rights of payment
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(including, without limitation, rights of set-off) with respect to such portion
as fully as if such Lender were the direct holder of such portion. All of the
foregoing is expressly subject to the terms and conditions herein regarding
limitations on remedies, and enforcement thereof by the Lenders, Required
Lenders and Administrative Agent. If any Lender shall at any time prior to an
Event of Default receive any payment of money or collateral, from a party other
than the Administrative Agent, such Lender shall promptly notify Administrative
Agent of such receipt, and forthwith deliver such collateral or monies to the
Administrative Agent for the account of the Lenders.
SECTION 4.7 Nature of Obligations of Lenders Regarding Extensions of
Credit; Assumption by the Administrative Agent. The obligations of the Lenders
under this Agreement to make the Loans and issue or participate in Letters of
Credit are several and are not joint or joint and several. Unless the
Administrative Agent shall have received notice from a Lender prior to a
proposed borrowing date that such Lender will not make available to the
Administrative Agent such Lender's ratable portion of the amount to be borrowed
on such date (which notice shall not release such Lender of its obligations
hereunder), the Administrative Agent may assume that such Lender has made and
will make such portion available to the Administrative Agent on the proposed
borrowing date in accordance with Section 2.3(b), and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrowers on such
date a corresponding amount. If any Lender shall make such amount available to
Administrative Agent, on a date after such borrowing date, such Lender shall pay
to the Administrative Agent on demand an amount, until paid, equal to the
product of (a) the amount not made available by such Lender to Administrative
Agent in accordance with the terms hereof, times (b) the daily average Federal
Funds Rate during such period as determined by the Administrative Agent, times
(c) the product of (i) the number of days that elapsed from and including such
borrowing date to the date on which such amount not made available by such
Lender in accordance with the terms hereof shall have become immediately
available to the Administrative Agent, divided by (ii) 360. A certificate of the
Administrative Agent with respect to any amounts owing under this Section shall
be conclusive, absent manifest error. The above notwithstanding, if such
Lender's Commitment Percentage of such borrowing is not made available to the
Administrative Agent by such Lender within three (3) Business Days of such
borrowing date, the Administrative Agent shall be entitled to recover such
amount made available by the Administrative Agent from the Borrowers on demand,
together with interest thereon at the rate per annum applicable to Base Rate
Loans hereunder. The failure of any Lender to make available its Commitment
Percentage of any Loan requested by the Borrowers shall not relieve such Lender
or any other Lender of their respective obligations hereunder to make their
Commitment Percentages of such Loan available on the borrowing date. No Lender
shall be responsible for the failure of any other Lender to make its Commitment
Percentage of such Loan available on the borrowing date.
SECTION 4.8 Changed Circumstances.
(a) Circumstances Affecting LIBOR Rate Availability. If, with respect to
any Interest Period, the Administrative Agent or any Lender (after consultation
with Administrative Agent) shall determine that, by reason of circumstances
affecting the foreign exchange and interbank markets generally, deposits in
eurodollars, in the applicable amounts are not being quoted via Telerate Page
3750 or offered to the Administrative Agent or such Lender for such Interest
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Period, then the Administrative Agent shall forthwith give notice thereof to the
Borrowers. Thereafter, until the Administrative Agent notifies the Borrowers
that such circumstances no longer exist, the obligation of the Lenders to make
LIBOR Rate Loans and the right of the Borrowers to convert any Loan to or
continue any Loan as a LIBOR Rate Loan shall be suspended, and the Borrowers
shall: (i) repay in full (or cause to be repaid in full) the then outstanding
principal amount of each such LIBOR Rate Loans together with accrued interest
thereon, o the last day of the then current Interest Period applicable to such
LIBOR Rate Loan, or (ii) convert the then outstanding principal amount of each
such LIBOR Rate Loan to a Base Rate Loan as of the last day of such Interest
Period.
(b) Laws Affecting LIBOR Rate Availability. If, after the date hereof,
there shall occur the introduction of, or any change in, any Applicable Law, or
any change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or should there occur any change in the compliance by
any Lender (or any of their respective Lending Offices) with any request or
directive (whether or not having the force of law) of any such Authority,
central bank or comparable agency, the effect of which makes it unlawful or
impossible for any of the Lenders (or any of their respective Lending Offices)
to honor its obligations hereunder to make or maintain any LIBOR Rate Loan, such
Lender shall promptly give notice thereof to the Administrative Agent and the
Administrative Agent shall promptly give notice to the Borrowers and the other
Lenders. Thereafter, and until the Administrative Agent notifies the Borrowers
that such circumstances no longer exist, (i) the obligations of the Lenders to
make LIBOR Rate Loans and the right of the Borrowers to convert any Loan or
continue any Loan as a LIBOR Rate Loan shall be suspended and thereafter the
Borrowers may select only Base Rate Loans hereunder, and (ii) if any of the
Lenders may not lawfully continue to maintain a LIBOR Rate Loan to the end of
the then current Interest Period applicable thereto, the applicable LIBOR Rate
Loan shall immediately be converted to a Base Rate Loan for the remainder of
such Interest Period.
(c) Increased Costs. If, after the date hereof, there shall occur the
introduction of, or any change in, any Applicable Law, or in the interpretation
or administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
should the compliance by any of the Lenders (or any of their respective Lending
Offices) with any request or directive (whether or not having the force of law)
of such Authority, central bank or comparable agency:
(i) subject any of the Lenders (or any of their respective Lending
Offices) to any tax, duty or other charge with respect to any Note, Letter of
Credit or Application, or shall change the basis of taxation of payments to any
of the Lenders (or any of their respective Lending Offices) of the principal of
or interest on any Note, Letter of Credit or Application or any other amounts
due under this Agreement in respect thereof (except for changes in the rate of
tax on the overall net income of any of the Lenders or any of their respective
Lending Offices imposed by the jurisdiction in which such Lender is organized or
is or should be qualified to do business, or where such Lending Office is
located); or
(ii) impose, modify or deem applicable any reserve (including, without
limitation, any imposed by the Board of Governors of the Federal Reserve
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System), special deposit, insurance or capital or similar requirement against
assets of, deposits with or for the account of, or credit extended by any of the
Lenders (or any of their respective Lending Offices) or shall impose on any of
the Lenders (or any of their respective Lending Offices) or the foreign exchange
and interbank markets any other condition affecting any Note;
and the result of any of the foregoing is to increase the costs to any of the
Lenders of maintaining any LIBOR Rate Loan or issuing or participating in
Letters of Credit or to reduce the yield or amount of any sum received or
receivable by any of the Lenders under this Agreement or under the Notes in
respect of a LIBOR Rate Loan or Letter of Credit or Application, then such
Lender shall promptly notify the Administrative Agent, and the Administrative
Agent shall promptly notify the Borrowers of such fact and demand compensation
from the Borrowers therefor and, within fifteen (15) days after such notice by
the Administrative Agent, the Borrowers shall pay to such Lender such additional
amount or amounts as will compensate such Lender or Lenders for such increased
cost or reduction. The Administrative Agent will promptly notify the Borrowers
of any event of which it has knowledge which will entitle such Lender to
compensation pursuant to this Section 4.8(c); provided, that the Administrative
Agent shall incu no liability whatsoever to the Lenders or the Borrowers in the
event it fails to do so. The amount of such compensation shall be determined, in
the applicable Lender's sole discretion, based upon the assumption that such
Lender funded its Commitment Percentage of the LIBOR Rate Loans in the London
interbank market and using any reasonable attribution or averaging methods which
such Lender deems appropriate and practical. A certificate of such Lender
setting forth the basis for determining such amount or amounts necessary to
compensate such Lender shall be forwarded to the Borrowers through the
Administrative Agent and shall be conclusively presumed to be correct save for
manifest error.
SECTION 4.9 Indemnity. The Borrowers hereby indemnify each of the Lenders
against any loss or expense which may arise or be attributable to each Lender's
obtaining, liquidating or employing deposits or other funds acquired to effect,
fund or maintain any Loan (a) as a consequence of any failure by the Borrowers
to make any payment when due hereunder in connection with a LIBOR Rate Loan, (b)
due to any failure of the Borrowers to borrow on a date specified therefor in a
Notice of Borrowing or Notice of Continuation/Conversion or (c) due to any
payment, prepayment (whether mandatory or permissive) or conversion of any LIBOR
Rate Loan (whether mandatory or permissive) on a date other than the last day of
the Interest Period therefor. The amount of such loss or expense shall be
determined, in the applicable Lender's sole discretion, based upon the
assumption that such Lender funded its Commitment Percentage of the LIBOR Rate
Loans in the London interbank market and using any reasonable attribution or
averaging methods which such Lender deems appropriate and practical. A
certificate of such Lender setting forth the basis for determining such amount
or amounts necessary to compensate such Lender shall be forwarded to the
Borrowers through the Administrative Agent and shall be conclusively presumed to
be correct save for manifest error.
SECTION 4.10 Capital Requirements. If either (a) the introduction of, or
any change in, or in the interpretation of, any Applicable Law or (b) compliance
with any guideline or request from any central bank or comparable agency or
other Governmental Authority (whether or not having the force of law), has or
would have the effect of reducing the rate of return on the capital of, or has
affected or would affect the amount of capital required to be maintained by, any
Lender or any corporation controlling such Lender as a consequence of, or with
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reference to the Commitments and other commitments of this type, below the rate
which the Lender or such other corporation could have achieved but for such
introduction, change or compliance, then within five (5) Business Days after
written demand by any such Lender, the Borrowers shall pay to such Lender from
time to time as specified by such Lender additional amounts sufficient to
compensate such Lender or other corporation for such reduction in return. A
certificate as to such amounts submitted to the Borrowers and the Administrative
Agent by such Lender, shall, in the absence of manifest error, be presumed to be
correct and binding for all purposes.
SECTION 4.11 Taxes.
(a) Payments Free and Clear. Any and all payments by the Borrowers
hereunder or under the Notes or the Letters of Credit shall be made free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholding, and all liabilities with respect
thereto excluding, (i) in the case of each Lender and the Administrative Agent,
income and franchise taxes imposed by the jurisdiction under the laws of which
such Lender or the Administrative Agent (as the case may be) is organized, or is
or should be qualified to do business, or any political subdivision thereof and
(ii) in the case of each Lender, income and franchise taxes imposed by the
jurisdiction of such Lender's Lending Office or any political subdivision
thereof (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If the
Borrowers shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any Note or Letter of Credit to any Lender or the
Administrative Agent, (A) the sum payable by Borrowers shall be increased as may
be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 4.11) such Lender or
the Administrative Agent (as the case may be) receives an amount equal to the
amount such party would have received had no such deductions been made, (B) the
Borrowers shall make such deductions, (C) the Borrowers shall pay the full
amount deducted to the relevant taxing authority or other authority in
accordance with applicable law, and (D) the Borrowers shall deliver to the
Administrative Agent evidence of such payment to the relevant taxing authority
or other authority in the manner provided in Section 4.11(d).
(b) Stamp and Other Taxes. In addition, the Borrowers shall pay any present
or future stamp, registration, recordation or documentary taxes or any other
similar fees or charges or excise or property taxes, levies of the United States
or any state or political subdivision thereof, or any applicable foreign
jurisdiction, which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Loans, the Letters of Credit, the other Loan Documents, or the perfection of any
rights or security interest in respect thereto (hereinafter referred to as
"Other Taxes").
(c) Indemnity. The Borrowers shall indemnify each Lender and the
Administrative Agent for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes and Other Taxes imposed by any jurisdiction on
amounts payable under this Section 4.11) paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Such indemnification shall be made by Borrowers within thirty (30) days from the
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date such Lender or the Administrative Agent (as the case may be) makes written
demand therefor.
(d) Evidence of Payment. Within thirty (30) days after the date of any
payment by Borrowers of Taxes or Other Taxes, the Borrowers shall furnish to the
Administrative Agent, at its address referred to in Section 13.1, the original
or a certified copy of a receipt evidencing payment thereof or other evidence of
payment satisfactory to the Administrative Agent.
(e) Delivery of Tax Forms. Each Lender organized under the laws of a
jurisdiction other than the United States or any state thereof shall deliver to
the Borrowers, with a copy to the Administrative Agent, on the Closing Date or
concurrently with the delivery of the relevant Assignment and Acceptance, as
applicable, (i) two United States Internal Revenue Service Forms 4224 or Forms
1001, as applicable (or successor forms) properly completed and certifying in
each case that such Lender is entitled to a complete exemption from withholding
or deduction for or on account of any United States federal income taxes, and
(ii) an Internal Revenue Service Form W-8 or W-9 or successor applicable form,
as the case may be, to establish an exemption from United States backup
withholding taxes. Each such Lender further agrees to deliver to the Borrowers,
with a copy to the Administrative Agent, a Form 1001 or 4224 and Form W-8 or
W-9, or successor applicable forms or manner of certification, as the case may
be, on o before the date that any such form expires or becomes obsolete or after
the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrowers, certifying in the case of a Form
1001 or 4224 that such Lender is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal income
taxes (unless in any such case an event (including without limitation any change
in treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders such forms inapplicable or
the exemption to which such forms relate unavailable and such Lender notifies
the Borrowers and the Administrative Agent that it is not entitled to receive
payments without deduction or withholding of United States federal income taxes)
and, in the case of a Form W-8 or W-9, establishing an exemption from United
States backup withholding tax.
(f) Survival. Without prejudice to the survival of any other agreement of
the Borrowers hereunder, the agreements and obligations of the Borrowers
contained in this Section 4.11 shall survive the payment in full of the
Obligations and the termination of the Commitments.
SECTION 4.12 Security. The Obligations of the Borrowers shall be secured as
provided in the Security Documents.
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SECTION 5.1 Closing. The closing shall take place at the offices of
Stradley, Ronon, Stevens & Young, L.L.P., commencing at 2:00 p.m. on January 27,
2000, or on such other date as the parties hereto shall mutually agree.
SECTION 5.2 Conditions to Closing and Initial Extensions of Credit. The
obligation of the Lenders to close this Agreement and to make the initial Loan
or issue the initial Letter(s) of Credit is subject to the satisfaction of each
of the following conditions:
(a) Executed Loan Documents. This Agreement, the Revolving Credit Notes,
the Security Documents and other Loan Documents shall be in a form and substance
satisfactory to Administrative Agent, shall have been duly authorized, executed
and delivered to the Administrative Agent by the parties thereto, shall be in
full force and effect, no Default shall exist thereunder, and the Borrowers
shall have delivered original counterparts thereof to the Administrative Agent.
(b) Closing Certificates; etc.
(i) Officers' Certificate of the Borrowers. The Administrative Agent
shall have received a certificate from a Responsible Officer, in form and
substance satisfactory to the Administrative Agent, to the effect that all
representations and warranties of the Borrowers contained in this Agreement and
the other Loan Documents are true, correct and complete; that the Borrowers are
not in violation of any of the covenants contained in this Agreement and the
other Loan Documents; that, after giving effect to the transactions contemplated
by this Agreement, no Default or Event of Default has occurred and is
continuing; and that the Borrowers have satisfied each of the closing
conditions.
(ii) Certificate of Secretary of the Borrowers and Sureties. The
Administrative Agent shall have received a certificate of the secretary or
assistant secretary of the Borrowers and the Sureties certifying as to the
incumbency and genuineness of the signature of each officer of the Borrowers and
the Sureties executing Loan Documents to which it is a party and certifying that
attached thereto is a true, correct and complete copy of (A) the articles of
incorporation of the Borrowers and the Sureties and all amendments thereto,
certified as of a recent date by the appropriate Governmental Authority in the
Borrowers' and the Sureties jurisdiction(s) of incorporation, (B) the bylaws of
the Borrowers and the Sureties as in effect on the date of such certifications,
(C) resolutions duly adopted by the Board of Directors of the Borrowers and the
Sureties authorizing the borrowings contemplated hereunder and the execution,
delivery and performance of this Agreement and the other Loan Documents to which
it is a party, and (D) each certificate required to be delivered pursuant to
Section 5.2(b)(iii).
(iii) Certificates of Good Standing. To the extent requested by
the Administrative Agent, the Administrative Agent shall have received long form
certificates as of a recent date of the good standing of the Borrowers and the
Sureties under the laws of Borrowers' and the Sureties' jurisdiction of
organization and each other jurisdiction where the Borrowers and the Sureties
are qualified to do business and a certificate of the relevant taxing
authorities of such jurisdictions certifying that such Person has filed required
tax returns and owes no delinquent taxes.
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(iv) Opinions of Counsel. The Administrative Agent shall have
received favorable opinions of counsel to the Borrowers and the Sureties
addressed to the Administrative Agent and the Lenders with respect to the
Borrowers and the Sureties, the Loan Documents and such other matters as the
Lenders shall request.
(v) Tax Forms. The Administrative Agent shall have received
copies of the United States Internal Revenue Service forms required by Section
4.11(e) hereof, if any.
(c) Collateral.
(i) Filings and Recordings. All filings and recordations that are
necessary to perfect the security interests of the Lenders in the Collateral
described in the Security Documents shall have been received by the
Administrative Agent, and the Administrative Agent shall have received evidence
satisfactory to the Administrative Agent that upon such filings and recordations
such security interests shall constitute valid and perfected Liens thereon,
subject only to Liens previously disclosed in writing to Administrative Agent
and approved by Administrative Agent.
(ii) Pledged Collateral. The Administrative Agent shall have
received (A) original stock certificates or other certificates evidencing the
capital stock or other ownership interests pledged pursuant to the Stock Pledge
Agreements, together with an undated stock power for each such certificate duly
executed in blank by the registered owner thereof; (B) copies of all relevant
contracts, licenses, leases, and agreements assigned to Administrative Agent for
the benefit of the Lenders, pursuant to the Collateral Assignment; and (C) each
original promissory note pledged to Administrative Agent, for the benefit of the
Lenders, pursuant to the Security Documents.
(iii) Lien Search. The Administrative Agent shall have received
the results of a Lien search (including a search as to judgments, pending
litigation and tax matters) made against the Borrowers and the Sureties (and, if
applicable, the Subsidiaries) under the Uniform Commercial Code (or applicable
judicial docket) as in effect in any state or jurisdiction therein in which any
of Borrowers' and the Sureties assets are located, or where Borrowers and the
Sureties conduct any of their respective business or operations, or where any of
the Borrowers and the Sureties are incorporated or authorized to do business,
indicating among other things that the Collateral is free and clear of any Lien
except for Liens permitted hereunder.
(iv) Hazard and Liability Insurance. The Administrative Agent
shall have received (i) a report from the Borrowers' independent insurance
consultant, in form and substance reasonably satisfactory to the Administrative
Agent, stating that insurance satisfying the requirements of the Loan Documents
is in effect and (ii) received certificates of insurance, evidence of payment of
all insurance premiums for the current policy year of each, and, if requested by
the Administrative Agent, copies (certified by a Responsible Officer) of
insurance policies, in the form required under the Security Documents and
otherwise in form and substance reasonably satisfactory to the Administrative
Agent, and (iii) certificates for all such policies of insurance, showing
Administrative Agent as loss payee, without contribution by Administrative
Agent, which certificates shall provide that no modification, amendment,
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termination or cancellation of said policies shall be effective unless
Administrative Agent has been given thirty (30) days' prior written notice
thereof.
(v) Title Insurance. The Administrative Agent shall have received
a marked-up commitment for a policy of title insurance from a title insurance
company acceptable to the Administrative Agent, insuring Lenders' first priority
Liens, and showing no Liens prior to Lenders' Liens other than for ad valorem
taxes not yet due and payable, and/or Liens disclosed in writing to
Administrative Agent prior to the date hereof, and for which the Administrative
Agent has given its prior written consent to the existence of such Liens. The
final title insurance policy shall be delivered within thirty (30) days after
the Closing Date. Further, the Borrowers agree to provide or obtain any
customary affidavits and indemnities as may be required or necessary to obtain
title insurance satisfactory to the Administrative Agent.
(vi) Title Exceptions. The Administrative Agent shall have
received copies of all recorded documents creating exceptions to the title
policy referred to in Section 5.2(c)(v).
(vii) Matters Relating to Flood Hazard Properties. The
Administrative Agent shall have received a flood hazard certification from the
National Research Center, or any successor agency thereto, regarding each parcel
of real property securing any portion of the Obligations.
(viii) Surveys. The Administrative Agent shall have received
copies of as-built surveys of a recent date of each parcel of real property to
be Collateral under this Agreement, certified as of a recent date by a
registered engineer or land surveyor. Each such survey shall be accompanied by
an affidavit (a "Survey Affidavit") of an authorized signatory of the owner of
such property stating that there have been no improvements or encroachments to
the property since the date of the respective survey such that the existing
survey is no longer accurate. Such survey shall show the area of such property,
all boundaries of the land with courses and distances indicated, including chord
bearings and arc and chord distances for all curves, and shall show dimensions
and locations of all easements, private drives, roadways, and other facts
materially affecting such property, and shall show such other details as the
Administrative Agent may reasonably request, including without limitation, any
encroachment (and the extent thereof in feet and inches) onto the property, or
by any of the improvements on the property upon adjoining land or upon any
easement burdening the property; any improvements, to the extent constructed,
and the relation of the improvements by distances to the boundaries of the
property, to any easements burdening the property, and to the established
setback lines, building lines and the street lines; and if improvements are
existing, (A) a statement of the number of each type of parking space required
by applicable laws, ordinances, orders, rules, regulations, restrictive
covenants and easements affecting the improvement, and the number of each such
type of parking space provided, and (B) the locations of all utilities serving
the improvement.
(ix) Environmental Assessments. The Administrative Agent shall
have received a Phase I environmental assessment and such other environmental
reports reasonably requested by the Administrative Agent regarding each parcel
of real property which is Collateral hereunder, which assessment shall be
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conducted by an environmental engineering firm acceptable to the Administrative
Agent showing no environmental conditions or liabilities in violation of
Environmental Laws that could reasonably be expected to have a Material Adverse
Effect.
(x) Other Real Property Information. The Administrative Agent
shall have received such other certificates, documents and information as are
reasonably requested by the Lenders, including, without limitation, engineering
and structural reports, permanent certificates of occupancy and evidence of
zoning compliance, each in form and substance satisfactory to the Administrative
Agent.
(d) Consents; Defaults.
(i) Governmental and Third Party Approvals. The Borrowers shall
have obtained all necessary approvals, authorizations and consents of any Person
and of all Governmental Authorities and courts having jurisdiction with respect
to the transactions contemplated by this Agreement and the other Loan Documents.
(ii) No Injunction, Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any Governmental Authority to enjoin, restrain, or prohibit, or to obtain
substantial damages in respect of, or which is related to or arises out of this
Agreement or the other Loan Documents or the consummation of the transactions
contemplated hereby or thereby, or which, in the Administrative Agent's sole
discretion, would make it inadvisable to consummate the transactions
contemplated by this Agreement and such other Loan Documents.
(iii) No Event of Default. No Default or Event of Default shall
have occurred and be continuing.
(e) Financial Matters.
(i) Financial Statements. The Administrative Agent shall have
received the most recent Consolidated financial statements of the Borrowers and
their Subsidiaries, all in form and substance satisfactory to the Administrative
Agent and dated for the period ending not earlier than July 31, 1999.
(ii) Financial Condition Certificate. The Borrowers shall have
delivered to the Administrative Agent a certificate, in form and substance
satisfactory to the Administrative Agent, and certified as accurate by a
Responsible Officer, that (A) the Borrowers and each of their Subsidiaries are
each Solvent, (B) the Borrowers' and the Sureties' payables are current and not
past due, (C) attached thereto is a pro forma balance sheet of the Borrowers and
their Subsidiaries setting forth on a pro forma basis the financial condition of
the Borrowers and their Subsidiaries on a Consolidated basis as of that date,
reflecting on a pro forma basis the effect of the transactions contemplated
herein, including all fees and expenses in connection therewith, and evidencing
compliance on a pro forma basis with the covenants contained in Articles IX and
X hereof, (D) attached thereto are the financial projections previously
delivered to the Administrative Agent representing the good faith opinions of
the Borrowers and senior management thereof as to the projected results for the
five (5) year period commencing on the date hereof; and (E) attached thereto is
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a calculation of the Applicable Margin pursuant to Section 4.1(c).
(iii) Payment at Closing; Fee Letters. The Borrowers shall have
paid the fees set forth or referenced in Section 4.3 and any other accrued and
unpaid fees or commissions due hereunder (including, without limitation, legal
fees and expenses) to the Administrative Agent and Lenders, and to any other
Person such amount as may be due thereto in connection with the transactions
contemplated hereby, including all taxes, fees and other charges in connection
with the execution, delivery, recording, filing and registration of any of the
Loan Documents. The Administrative Agent shall have received duly authorized and
executed copies of the fee letter agreement referred to in Section 4.3(c).
(f) Miscellaneous.
(i) Notice of Borrowing. The Administrative Agent shall have
received a Notice of Borrowing from the Borrowers in accordance with Section
2.3(a), and a Notice of Account Designation specifying the account or accounts
to which the proceeds of any Loans made after the Closing Date are to be
disbursed.
(ii) Proceedings and Documents. All opinions, certificates and
other instruments and all proceedings in connection with the transactions
contemplated by this Agreement shall be satisfactory in form and substance to
the Lenders. The Lenders shall have received copies of all other instruments and
other evidence as the Lenders may reasonably request, in form and substance
satisfactory to the Lenders, with respect to the transactions contemplated by
this Agreement and the taking of all actions in connection therewith.
(iii) Due Diligence and Other Documents. The Borrowers shall have
delivered to the Administrative Agent such other documents, certificates and
opinions as the Administrative Agent may reasonably request, all in form and
substance satisfactory to the Administrative Agent. Additionally, Administrative
Agent (or its counsel) shall have undertaken such due diligence as the
Administrative Agent deems necessary or advisable, with the results thereof
being satisfactory to Administrative Agent and its counsel.
SECTION 5.3 Conditions to All Extensions of Credit. The obligations of the
Lenders to make any Extensions of Credit, whether on the date hereof or
hereafter, or change or convert any interest rate hereunder, is subject to the
satisfaction of the following conditions precedent on the relevant borrowing,
conversion, or issue date, as applicable:
(a) Continuation of Representations and Warranties. The
representations and warranties contained in Article VI shall be true and correct
on: (i) the date Borrowers submit an Application, Notice of Borrowing, or Notice
of Continuation/Conversion to Administrative Agent, and (ii) on the date of such
continuation, conversation, borrowing or issuance, with the same effect as if
made on such date; provided and except for any such warranty and representation
which is not a continuing representation or warranty and which makes express
reference to an earlier date.
(b) No Existing Default. No Default or Event of Default shall have
occurred and be continuing hereunder (i) on the borrowing date with respect to
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such Loan or after giving effect to the Loans to be made on such date or (ii) on
the issue date with respect to such Letter of Credit or after giving affect to
such Letters of Credit on such date, or (iii) on the date Borrowers submit a
Notice of Continuation/Conversion, Notice of Borrowing, or Application.
(c) Material Adverse Effect. There shall not have occurred any
Material Adverse Effect since the later of: (i) the Closing Date, or (ii) the
latest borrowing hereunder or issuance of Letter of Credit.
(d) Notice of Borrowing, etc. The Borrowers shall submit to
Administrative Agent a Notice of Borrowing, or a Notice of
Continuation/Conversation, or an Application, as the case may be, completed in
accordance with the terms hereof, and, in the case of an Application or Notice
of Borrowing, the Borrowers shall also submit a duly executed Officer's
Compliance Certificate.
(e) Additional Documents. The Borrowers shall, in addition to and in
conjunction with any of the foregoing, submit such other documents, instruments,
opinions, information, or certificates, as the Administrative Agent may, in the
reasonable exercise of its discretion, so request.
(f) The Bond Transaction. Prior to the issuance of any Letter of
Credit in connection with the Bond Transaction, such agreements, documents,
instruments, opinions, information, certificates or other matters as the
Administrative Agent or the Lenders may require, and as are or may be customary
in connection with the issuance of such a direct pay letter of credit in
connection with industrial revenue bond financings.
ARTICLE VI
SECTION 6.1 Representations and Warranties. To induce the Administrative
Agent and Lenders to enter into this Agreement and to induce the Lenders to make
Extensions of Credit, and/or convert or continue the interest rate in effect
from time to time, the Borrowers hereby represent and warrant to the
Administrative Agent and Lenders both before and after giving effect to the
transactions contemplated hereunder, including, without limitation, any
Extension of Credit or continuation or conversion of an interest rate, that:
(a) Organization; Power; Qualification. Each of the Borrowers and their
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of their incorporation or formation, has the power and
authority to own their properties and to carry on their business as now being
and hereafter proposed to be conducted and are duly qualified and authorized to
do business in each jurisdiction in which the character of their properties or
the nature of their business requires such qualification and authorization. The
jurisdictions in which the Borrowers and their Subsidiaries are organized and
qualified to do business as of the Closing Date are described on Schedule
6.1(a).
(b) Ownership. Each Subsidiary of the Borrowers as of the Closing Date is
listed on Schedule 6.l(b). As of the Closing Date, the capitalization of the
Borrowers and their Subsidiaries consists of the number of shares, authorized,
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issued and outstanding, of such classes and series, with or without par value,
described on Schedule 6.1(b). All outstanding shares of the Borrowers and their
Subsidiaries have been duly authorized and validly issued and are fully paid and
nonassessable. The shareholders of the Subsidiaries of the Borrowers and the
number of shares owned by each as of the Closing Date are described on Schedule
6.1(b). As of the Closing Date, there are no outstanding stock purchase
warrants, subscriptions, options, securities, instruments or other rights of any
type or nature whatsoever, which are convertible into, exchangeable for or
otherwise provide for or permit the issuance or purchase of capital stock of the
Borrowers or their Subsidiaries, except as described on Schedule 6.1(b).
(c) Authorization of Agreement, Loan Documents and Borrowing. Each of the
Borrowers and their Subsidiaries has the right, power and authority and has
taken all corporate and other action necessary to authorize the execution,
delivery and performance of this Agreement and each of the other Loan Documents
to which any of the Borrowers or Subsidiaries are a party. This Agreement and
each of the other Loan Documents have been duly executed and delivered by the
duly authorized officers of the Borrowers and each of their Subsidiaries which
are a party thereto, and each such document constitutes the legal, valid and
binding obligation of the Borrowers or their Subsidiary which are a party
thereto, enforceable in accordance with their respective terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar state or federal debtor relief laws from time to time in effect which
affect the enforcement of creditors' rights in general and the availability of
equitable remedies.
(d) Compliance of Agreement, Loan Documents and Borrowing with Laws, Etc.
The execution, delivery and performance by the Borrowers and their Subsidiaries
of the Loan Documents to which each such Person is a party, in accordance with
their respective terms, the borrowings hereunder and the transactions
contemplated hereby, do not and will not, by the passage of time, the giving of
notice or otherwise, (i) require any Governmental Approval or violate any
Applicable Law relating to the Borrowers or any of their Subsidiaries, (ii)
conflict with, result in a breach of or constitute a default under the articles
of incorporation, bylaws or other organizational documents of the Borrowers or
any of their Subsidiaries, or under any indenture, agreement or other instrument
to which such Person is a party or by which any of their properties may be
bound, or (iii) result in or require the creation or imposition of any Lien upon
or with respect to any property now owned or hereafter acquired by such Person
other than Liens arising under the Loan Documents.
(e) Compliance with Law; Governmental Approvals. Each of the Borrowers and
their Subsidiaries (i) has all Governmental Approvals required by any Applicable
Law for it to conduct its business, each of which is in full force and effect,
is final and not subject to review on appeal and is not the subject of any
pending or, to the best of Borrowers' or their Subsidiaries' knowledge,
threatened by any direct or collateral proceeding, and (ii) is in compliance
with each Governmental Approval applicable to it and in compliance with all
other material Applicable Laws relating to it or any of its respective
properties or the businesses conducted by it, as such existed on the date
hereof.
(f) Tax Returns and Payments. Each of the Borrowers and their Subsidiaries
has duly filed or caused to be filed all federal, state, local and other tax
returns required by Applicable Law to be filed, and has paid, or made adequate
provision for the payment of, all federal, state, local and other taxes,
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assessments and governmental charges or levies upon it and its property, income,
profits and assets which are due and payable, except where such Borrower or
Subsidiary has made adequate reserves therefor in accordance with GAAP and is
diligently and in good faith contesting such tax, lien, charge or assessment. No
Governmental Authority has asserted any Lien or other claim against the
Borrowers or Subsidiary thereof with respect to unpaid taxes which has not been
discharged or resolved, except where such Borrower or Subsidiary has made
adequate reserves therefor in accordance with GAAP and is diligently and in good
faith contesting such tax, lien, charge or assessment. The charges, accruals and
reserves on the books of the Borrowers and any of their Subsidiaries in respect
of federal, state, local and other taxes for all Fiscal Years and portions
thereof since the date of the last audit of the Borrowers and any of their
Subsidiaries by any taxing authority are in the judgment of the Borrowers
adequate, and the Borrowers do not anticipate any additional taxes or
assessments for any of such years.
(g) Intellectual Property Matters. Each of the Borrowers and their
Subsidiaries owns or possesses rights to use all franchises, licenses,
copyrights, copyright applications, patents, patent rights or licenses, patent
applications, trademarks, trademark rights, trade names, trade name rights,
copyrights and rights with respect to the foregoing which are required to
conduct its business. To the best of the Borrowers' knowledge, no event has
occurred which permits, or after notice or lapse of time or both would permit,
the revocation or termination of any such rights, and neither the Borrowers nor
any Subsidiary thereof is liable to any Person for infringement under Applicable
Law with respect to any such rights as a result of its business operations.
(h) Environmental Matters
(i) The properties owned, leased or operated by the Borrowers and
their Subsidiaries, together with all properties which are the subject of any of
the Collateral Assignments (herein, the "Properties") do not now contain, and to
the best of their knowledge have not previously contained, any Hazardous
Materials in amounts or concentrations which (A) constitute or constituted a
violation of applicable Environmental Laws, or (B) could give rise to liability
under applicable Environmental Laws;
(ii) The Borrowers, each Subsidiary and such Properties and all
operations conducted in connection therewith are in compliance, and to the best
of the Borrowers' knowledge, have been in compliance, with all applicable
Environmental Laws, and there is no contamination at, under or about such
Properties or such operations which could interfere with the continued operation
of such Properties or impair the fair saleable value thereof,
(iii) Neither the Borrowers nor any Subsidiary thereof has
received any notice of violation, alleged violation, non-compliance, liability
or potential liability regarding environmental matters, Hazardous Materials, or
compliance with Environmental Laws, nor does the Borrowers or any Subsidiary
thereof have knowledge or reason to believe that any such notice will be
received or is being threatened;
(iv) To the best of the Borrowers' knowledge, Hazardous Materials
have not been transported or disposed of to or from the Properties, in violation
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of, or in a manner, or to a location which could give rise to liability under,
Environmental Laws, nor have any Hazardous Materials been generated, treated,
stored or disposed of at, on or under any of such Properties in violation of, or
in a manner that could give rise to liability under, any applicable
Environmental Laws;
(v) No judicial proceedings or governmental or administrative
action is pending, or, to the knowledge of the Borrowers, threatened, under any
Environmental Law to which the Borrowers or any Subsidiary thereof is or will be
named as a party, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect to
Borrowers, any Subsidiary or such Properties or operations; and
(vi) There has been no release, or to the best of the Borrowers'
knowledge, threat of release, of Hazardous Materials at or from the Properties,
now or, to the best of Borrowers' knowledge in the past, in violation of or in
amounts or in a manner that could give rise to liability under Environmental
Laws.
(i) ERISA.
(i) As of the Closing Date, neither the Borrowers nor any ERISA
Affiliate maintains or contributes to, or has any obligation under, any Employee
Benefit Plans other than those identified on Schedule 6.1(i);
(ii) The Borrower and each ERISA Affiliate is in compliance with all
applicable provisions of ERISA and the regulations and published interpretations
thereunder with respect to all Employee Benefit Plans except for any required
amendments for which the remedial amendment period as defined in Section 401(b)
of the Code has not yet expired. Each Employee Benefit Plan that is intended to
be qualified under Section 401(a) of the Code has been determined by the
Internal Revenue Service to be so qualified, and each trust related to such plan
has been determined to be exempt under Section 501(a) of the Code. No liability
has been incurred by the Borrower or any ERISA Affiliate which remains
unsatisfied for any taxes or penalties with respect to any Employee Benefit Plan
or any Multiemployer Plan;
(iii) No Pension Plan has been terminated, nor has any accumulated
funding deficiency (as defined in Section 412 of the Code) been incurred
(without regard to any waiver granted under Section 412 of the Code), nor has
any funding waiver from the Internal Revenue Service been received or requested
with respect to any Pension Plan, nor has the Borrower or any ERISA Affiliate
failed to make any contributions or to pay any amounts due and owing as required
by Section 412 of the Code, Section 302 of ERISA or the terms of any Pension
Plan prior to the due dates of such contributions under Section 412 of the Code
or Section 302 of ERISA, nor has there been any event requiring disclosure under
Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any Pension Plan;
(iv) Neither the Borrower nor any ERISA Affiliate has: (A) engaged in
a nonexempt prohibited transaction described in Section 406 of ERISA or Section
4975 of the Code, (b) incurred any liability to the BPGC which remains
outstanding other than the payment of premiums and there are no premium payments
which are due and unpaid, (C) failed to make a required contribution or payment
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to a Multiemployer Plan, or (D) failed to make a required installment or other
required payment under Section 412 of the Code;
(v) No Termination Event has occurred or is reasonably expected to
occur; and
(vi) No proceeding, claim, lawsuit and/or investigation is existing
or, to the best knowledge of the Borrower after due inquiry, threatened
concerning or involving any (A) employee welfare benefit plan (as defined in
Section 3(1) of ERISA) currently maintained or contributed to by the Borrower or
any ERISA Affiliate, (B) Pension Plan, or (C) Multiemployer Plan.
(j) Margin Stock. Neither the Borrower nor any subsidiary thereof is
engaged principally or as one of its activities in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" (as each
such term is defined or used in Regulation U of the Board of Governors of the
Federal Reserve System). No part of the proceeds of any of the Loans or Letters
of Credit will be used for purchasing or carrying margin stock or for any
purpose which violates, or which would be inconsistent with, the provisions of
Regulation T, U or X of such Board of Governors.
(k) Government Regulation. Neither the Borrower nor any Subsidiary thereof
is an "investment company" or a company "controlled" by an "investment company"
(as each such term is defined or used in the Investment Company Act of 1940, as
amended), and neither the Borrowers nor any Subsidiary thereof is, or after
giving effect to any Extension of Credit will be, subject to regulation under
the Public Utility Holding Company Act of 1935 or the Interstate Commerce Act,
each as amended, or any other Applicable Law which limits its ability to incur
or consummate the transactions contemplated hereby.
(l) Material Contracts. Schedule 6.1(1) sets forth a complete and accurate
list of all Material Contracts of the Borrowers and their Subsidiaries in effect
as of the Closing Date not listed on any other Schedule hereto. Other than as
set forth in Schedule 6.1(1), each such Material Contract is, and after giving
effect to the consummation of the transactions contemplated by the Loan
Documents will be, in full force and effect in accordance with the terms
thereof. The Borrowers and their Subsidiaries have delivered to the
Administrative Agent a true and complete copy of each Material Contract required
to be listed on Schedule 6.1(1) or any other Schedule hereto.
(m) Employee Relations. Each of the Borrowers and their Subsidiaries has a
stable work force in place and is not, as of the Closing Date, party to any
collective bargaining Agreement nor has any labor union been recognized as the
representative of its employees except as set forth on Schedule 6.1(m). The
Borrowers knows of no pending, threatened or contemplated strikes, work stoppage
or other collective labor disputes involving its employees or those of their
Subsidiaries.
(n) Burdensome Provisions. Neither the Borrowers nor any Subsidiary thereof
is a party, to any indenture, agreement, lease or other instrument, or subject
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to any corporate or partnership restriction, Governmental Approval or Applicable
Law which could reasonably be expected to have a Material Adverse Effect.
(o) Financial Statements. The (i) Consolidated balance sheets and audited
financial statements of the Borrowers and their Subsidiaries as of October 31,
1998, and the related statements of income and retained earnings and cash flows
for the Fiscal Years then ended, and (ii) unaudited Consolidated balance sheet
of the Borrowers and their Subsidiaries as of July 31, 1999 and related
unaudited interim statements of revenue and retained earnings, copies of which
have been furnished to the Administrative Agent and each Lender, are complete
and correct and fairly present the assets, liabilities, and financial position
of the Borrowers and their Subsidiaries as of such dates, and the results of the
operations and changes of financial position for the periods then ended. All
such financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP. The Borrowers and their Subsidiaries
have no Debt, obligation or other unusual forward or long-term commitment which
is not fairly reflected in the foregoing financial statements or in the notes
thereto.
(p) No Material Adverse Change. Since July 31, 1999, there has been no
material adverse change in the properties, business, operations, prospects, or
condition (financial or otherwise) of the Borrowers and their Subsidiaries, and
no event has occurred or condition arisen that could reasonably be expected to
have a Material Adverse Effect.
(q) Solvency. As of the Closing Date and after giving effect to each
Extension of Credit made hereunder, the Borrowers and each of their Subsidiaries
will be Solvent.
(r) Titles to Properties. Each of the Borrowers and their Subsidiaries has:
(i) such title to the real property owned by it as is necessary or desirable to
the conduct of its respective business, and (ii) valid and legal title to all of
its personal property and assets, including, but not limited to, those reflected
on the balance sheets of the Borrowers and their Subsidiaries delivered pursuant
to Section 6.1(m), except that property which has been disposed of by the
Borrowers or their Subsidiaries subsequent to such date, which dispositions have
been in the ordinary course of business, pursuant to an arm's length transaction
for fair market value, or as otherwise expressly permitted hereunder.
(s) Liens. None of the properties and assets of the Borrowers or any
Subsidiary thereof is subject to any Lien, except Liens permitted pursuant to
Section 10.3. No financing statement under the Uniform Commercial Code has been
filed in any state or other jurisdiction against the Borrowers or any Subsidiary
thereof, and no Borrower or Subsidiary has otherwise signed any financing or
security agreement (whether of record or not), except as permitted or noted in
Section 10.3 hereof.
(t) Debt and Guaranty Obligations. Schedule 6.l(t) is a complete and
correct listing of all Debt and Guaranty Obligations of the Borrowers and their
Subsidiaries as of the Closing Date in excess of Two Thousand and 00/100 Dollars
($200,000.00). The Borrowers and their Subsidiaries have performed and are in
compliance with all of the terms of such Debt and Guaranty Obligations and all
instruments and agreements relating thereto, and no default or event of default,
or event or condition which with notice or lapse of time or both would
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constitute such a default or event of default on the part of the Borrowers or
their Subsidiaries exists with respect to any such Debt or Guaranty Obligation.
(u) Litigation. Except for matters existing on the Closing Date and set
forth on Schedule 6.1(u), there are no actions, suits or proceedings pending
nor, to the knowledge of the Borrowers, threatened against or in any other way
relating adversely to or affecting the Borrowers or any Subsidiary thereof or
any of their respective properties in any court or before any arbitrator of any
kind or before or by any Governmental Authority.
(v) Absence of Defaults. No event has occurred or is continuing which
constitutes a Default or an Event of Default, or which constitutes, or which
with the passage of time or giving of notice or both would constitute, a default
or event of default by the Borrowers or any Subsidiary thereof under any
Material Contract or judgment, decree or order to which the Borrowers or their
Subsidiaries is a party or by which the Borrowers or their Subsidiaries or any
of their respective properties may be bound or which would require the Borrowers
or their Subsidiaries to make any payment thereunder prior to the scheduled
maturity date therefor.
(w) Accuracy and Completeness of Information. All written information,
reports and other papers and data produced by or on behalf of the Borrowers or
any Subsidiary thereof and furnished to the Lenders were, at the time the same
were so furnished, complete and correct in all material respects to the extent
necessary to present the recipient with a true and accurate knowledge of the
subject matter. No document furnished or written statement made to the
Administrative Agent or the Lenders by the Borrowers or any Subsidiary thereof
in connection with the negotiation, preparation or execution of this Agreement
or any of the Loan Documents contains or will contain any untrue statement of a
fact material to the creditworthiness of the Borrowers or their Subsidiaries or
omits or will omit to state a fact necessary in order to make the statements
contained therein not misleading. The Borrowers are not aware of any facts which
they have not disclosed in writing to the Administrative Agent having a Material
Adverse Effect, or insofar as the Borrowers can now foresee, could reasonably be
expected to have a Material Adverse Effect.
(x) Organizational Documents. The organizational documents (bylaws,
charters, articles of incorporation, limited partnership agreements, operating
agreements and any amendments thereto, etc.) of the Borrowers and their
Subsidiaries, presented to the Administrative Agent and the Lenders prior to or
concurrent with the date hereof, are the true, accurate, complete and current
version of such documents, and the Borrowers shall not, nor shall they permit
their Subsidiaries to, amend, alter or modify their organizational documents,
except as may be otherwise permitted herein in connection with any Permitted
Acquisition or merger, consolidation or reorganization.
(y) Year 2000 Compliance. Borrowers have taken, and shall continue to take,
all action necessary to ensure that their computer hardware, computer-based
systems, and software (together with those of its Subsidiaries) are now, and
shall be after December 31, 1999, able to effectively and accurately process
data including dates and date sensitive functions (the "Year 2000 Problem").
Borrowers have also investigated the Year 2000 readiness of their key suppliers
and vendors and have developed contingency plans, where necessary. Borrowers
represent and warrant that the Year 2000 Problem will not have a Material
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Adverse Effect on Borrowers' business condition (financial or otherwise),
operations, properties, prospects or ability to repay any of the Obligations.
Upon request, Borrowers shall provide assurances acceptable to Lender that
Borrowers' computer systems and software are Year 2000 compliant. Borrower shall
immediately advise Lender in writing of any material changes in Borrowers' Year
2000 plan, timetable or budget.
SECTION 6.2 Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Article VI and all
representations and warranties contained in any certificate, or any of the Loan
Documents (including but not limited to any such representation or warranty made
in or in connection with any amendment thereto) shall constitute representations
and warranties made under this Agreement. All representations and warranties
made under this Agreement shall be made or deemed to be made at and as of the
Closing Date, shall survive the Closing Date and shall not be waived by the
execution and delivery of this Agreement, any investigation made by or on behalf
of the Lenders made after the date of this Agreement or any borrowing hereunder.
ARTICLE VII
FINANCIAL INFORMATION AND NOTICES
Until all the Obligations have been paid and satisfied in full and the
Commitments terminated, unless Borrowers have obtained an amendment, waiver or
consent, as applicable, in the manner set forth in Section 13.11 hereof, the
Borrowers will furnish or cause to be furnished to the Administrative Agent and
to the Lenders at their respective addresses as set forth on Schedule I, or such
other office as may be designated by the Administrative Agent and Lenders from
time to time:
SECTION 7.1 Financial Statements and Projections.
(a) Quarterly Financial Statements. As soon as practicable and in any event
within forty-five (45) days after the end of the first three (3) Fiscal quarters
on each Fiscal Year, an unaudited Consolidated and consolidating balance sheet
of the Borrowers and their Subsidiaries as of the close of such Fiscal quarter,
and unaudited Consolidated and consolidating statements of income, retained
earnings and cash flows for the Fiscal quarter then ended, together with
statements through that portion of the Fiscal Year then ended, including the
notes thereto, all in reasonable detail setting forth in comparative form the
corresponding figures for the preceding Fiscal Year and prepared by the
Borrowers in accordance with GAAP and, if applicable, containing disclosure of
the effect on the financial position or results of operations of any change in
the application of accounting principles and practices during the period,
certified by the chief financial officer of the Borrowers to present fairly in
all material respects the financial condition of the Borrowers and their
Subsidiaries as of their respective dates and the results of operations of the
Borrowers and their Subsidiaries for the respective periods then ended, subject
to normal year end adjustments.
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Additionally, as soon as is available, but in no event later than
forty-five (45) days after the end of the each fiscal quarter, the Borrowers
shall present Administrative Agent with their Quarterly 10Q Report, together
with all other schedules, documents, certificates and information which the
Borrowers are required to submit to the Securities and Exchange Commission (or
any successor agency thereto, the "SEC").
(b) Annual Financial Statements. As soon as available and in any event
within ninety (90) days after the end of each Fiscal Year, an audited
Consolidated balance sheet of the Borrowers and their Subsidiaries as of the
close of such Fiscal Year and audited Consolidated statements of income,
retained earnings and cash flows for the Fiscal Year then ended, including the
notes thereto, all in reasonable detail setting forth in comparative form the
corresponding figures for the preceding Fiscal Year. Such statements shall be
prepared by an independent certified public accounting firm acceptable to the
Administrative Agent in accordance with GAAP and, if applicable, containing
disclosure of the effect on the financial position or results of operation of
any change in the application of accounting principles and practices during the
year, and shall be accompanied by a report thereon by such certified public
accountants that is not qualified with respect to the scope of limitations
imposed by the Borrowers o any of their Subsidiaries or with respect to
accounting principles followed by the Borrowers or any of their Subsidiaries
which are not in accordance with GAAP.
Additionally, as soon as is available, but in no event later than ninety
(90) days after the end of each Fiscal Year, the Borrowers shall present
Administrative Agent with their Annual 10K Report, including a CPA Management
letter prepared by a certified public accountant acceptable to Administrative
Agent, together with all other schedules, documents, certificates, and
information which the Borrowers are required to submit to the SEC.
(c) Annual Business Plan and Financial Projections. As soon as practicable
and in any event within ninety (90) days prior to the beginning of each Fiscal
Year, a business plan of the Borrowers and their Subsidiaries for the ensuing
five (5) Fiscal Years, such plan to be prepared in accordance with GAAP and to
include, on a quarterly basis, the following: a quarterly operating and capital
budget, a projected income statement, statement of cash flows and balance sheet,
and a report containing management's discussion and analysis of such
projections, accompanied by a certificate from the chief financial officer of
the Borrowers to the effect that, to the best of such officer's knowledge, such
projections are good faith estimates of the financial condition and operations
of the Borrowers and their Subsidiaries for such five (5) Fiscal Year period.
SECTION 7.2 Officer's Compliance Certificate. At each time financial
statements are delivered pursuant to Sections 7.1(a) or (b) and at such other
times as the Administrative Agent shall reasonably request, a certificate of the
chief financial officer or the treasurer of the Borrowers in the form of Exhibit
F attached hereto (an "Officer's Compliance Certificate").
SECTION 7.3 Accountants' Certificate. At each time financial statements are
delivered pursuant to Section 7.1(b), a certificate of the independent public
accountants certifying such financial statements addressed to the Administrative
Agent for the benefit of the Lenders:
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(a) stating that in making the examination necessary for the certification
of such financial statements, they obtained no knowledge of any Default or Event
of Default or, if such is not the case, specifying such Default or Event of
Default and its nature and period of existence; and
(b) including the calculations prepared by such accountants required to
establish whether or not the Borrowers and their Subsidiaries are in compliance
with the financial covenants set forth in Article IX hereof as of the end of
each respective period; and
(c) including a fully executed copy of a letter from such accountants to
the Borrowers (i) expressly acknowledging that a primary intent of the Borrowers
(with respect to such statements) is for such accountants' examination and
report with respect to such statements of the Borrowers to benefit or influence
the Lenders (A) in connection with Extensions of Credit and other financial
accommodations to the Borrowers from time to time, or (B) otherwise in
connection with the preparation, review, execution, delivery, amendment,
modification, administration, collection and/or enforcement of the Loan
Documents, and (ii) expressly authorizing the Lenders to rely on the examination
and report of such accountants with respect to the audited financial statements
of the Borrowers as of and for such Fiscal Year then ending.
SECTION 7.4 Other Reports.
(a) Promptly upon receipt thereof, in addition to those reports which may
be required pursuant to Section 7.1 (b) herein, copies of all reports, if any,
submitted to the Borrowers or its Board of Directors by its independent
certified public accountants in connection with their auditing and accounting
function, including, without limitation, any management report and any
management responses thereto; and
(b) Such other information regarding the operations, business affairs and
financial condition of the Borrowers or any of their Subsidiaries as the
Administrative Agent or any Lender may reasonably request.
SECTION 7.5 Notice of Litigation and Other Matters. Prompt (but in no event
later than ten (10) days after an officer of the Borrowers obtains knowledge
thereof) telephonic and written notice of:
(a) the commencement of all proceedings and investigations by or before any
Governmental Authority and all actions and proceedings in any court or before
any arbitrator against or involving the Borrowers or any Subsidiary thereof or
any of their respective properties, assets or businesses in which, if adversely
determined, could result in liability in an amount equal to or greater than One
Hundred Thousand Dollars ($100,000);
(b) any notice of any violation received by the Borrowers or any Subsidiary
thereof from any Governmental Authority including, without limitation, any
notice of a violation of any Environmental Laws;
(c) any labor controversy that has resulted in, or threatens to result in,
a strike or other work action against the Borrowers or any Subsidiary thereof,
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(d) any attachment, judgment, lien, levy or order exceeding $100,000
(whether individually or in the aggregate) that may be assessed against or
threatened against the Borrowers or any Subsidiary thereof.
(e) any Default or Event of Default, or any event which constitutes or
which with the passage of time or giving of notice or both would constitute a
default or event of default under any Loan Documents or Material Contract to
which the Borrowers or any of their Subsidiaries is a party or by which the
Borrowers or any Subsidiary thereof or any of their respective properties may be
bound;
(f) (i) any unfavorable determination letter from the Internal Revenue
Service regarding the qualification of an Employee Benefit Plan under Section
401(a) of the Code (alone, with a copy thereof), (ii) all notices received by
the Borrowers or any ERISA Affiliate of the PBGC's intent to terminate any
Pension Plan or to have a trustee appointed to administer any Pension Plan,
(iii) all notices received by the Borrowers or any ERISA Affiliate from a
multi-employer Plan sponsor concerning the imposition or amount of withdrawal
liability pursuant to Section 4202 of ERISA and (iv) the Borrowers obtaining
knowledge or reason to know that any of the Borrowers or any ERISA Affiliate has
filed or intends to file a notice of intent to terminate any Pension Plan under
a distress termination within the meaning of Section 4041(c) of ERISA; and
(g) any event which makes any of the representations set forth in Section
6.1 inaccurate in any material respect; and
(h) the occurrence of any Material Adverse Effect.
SECTION 7.6 Accuracy of Information. All written information, reports,
statements and other papers and data furnished by or on behalf of the Borrowers
to the Administrative Agent or any Lender (other than financial forecasts)
whether pursuant to this Article VII or any other provision of this Agreement,
or any of the Security Documents, shall be, at the time the same is so
furnished, complete and correct in all material respects to the extent necessary
to give the Administrative Agent or any Lender complete, true and accurate
knowledge of the subject matter based on the Borrowers' knowledge thereof.
Until all of the Obligations have been paid and satisfied in full and the
Commitments terminated, unless an amendment, waiver or consent, as applicable,
has been obtained in the manner provided for in Section 13.11, the Borrowers
will, and will cause each of their Subsidiaries to:
SECTION 8.1 Preservation of Corporate Existence and Related Matters. Except
as permitted by Section 10.5, preserve and maintain their separate corporate
existence and all rights, franchises, licenses and privileges necessary to the
conduct of its business, and qualify and remain qualified as a foreign
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corporation and authorized to do business in each jurisdiction where the nature
and scope of its activities require it to so qualify under Applicable Law.
SECTION 8.2 Maintenance of Property. In addition to the requirements of any
of the Security Documents, protect and preserve all properties useful in and
material to its business, including copyrights, patents, trade names and
trademarks; maintain in good working order and condition all buildings,
equipment and other tangible real and personal property; and from time to time
make or cause to be made all renewals, replacements and additions to such
property necessary for the conduct of its business, so that the business carried
on in connection therewith may be properly and advantageously, conducted at all
times.
SECTION 8.3 Insurance. Maintain insurance with financially sound and
reputable insurance companies against such risks and in such amounts as are
customarily maintained by similar businesses, and as otherwise may be required
by the Security Documents and Applicable Law. On the Closing Date, and from time
to time thereafter, deliver to the Administrative Agent upon its request, a
detailed list of the insurance then in effect, stating the names of the
insurance companies, the amounts and rates of the insurance, the dates of the
expiration thereof and the properties and risks covered thereby.
Additionally, upon the Administrative Agent's request, the Borrowers shall
deliver to Administrative Agent such certificates as Administrative Agent may
require; in each case listing the Administrative Agent, for and on behalf of the
Lenders as the loss payee (without contribution), and providing that no
amendment, modification, cancellation or termination shall be effective against
Administrative Agent, unless the Administrative Agent shall have received thirty
(30) days prior written notice thereof.
SECTION 8.4 Accounting Methods and Financial Records. Maintain a system of
accounting, and keep such books, records and accounts (which shall be true and
complete in all material respects) as may be required or as may be necessary to
permit the preparation of financial statements in accordance with GAAP and in
compliance with the regulations of any Governmental Authority having
jurisdiction over them or any of their respective properties.
SECTION 8.5 Payment and Performance of Obligations. Pay and discharge all
Obligations under this Agreement and the other Loan Documents, and pay or
discharge (a) all taxes, assessments and other governmental charges that may be
levied or assessed upon it or any of its property, and (b) all other
indebtedness, obligations and liabilities in accordance with customary trade
practices; provided, that the Borrowers or such Subsidiary may contest any item
described in clauses (a) or (b) of this Section 8.5, so long as such contest is
done in good faith, by proceedings diligently contested, and the Borrowers have
established adequate reserves therefor in accordance with GAAP. SECTION 8.6
Compliance With Laws and Approvals. Observe and remain in compliance with all
Applicable Laws and maintain in full force and effect all Governmental
Approvals, in each case applicable to the conduct of its business. SECTION 8.7
Environmental Laws. In addition to and without limiting the generality of
Section 8.6 Compliance with Laws and Approvals. Observe and remain in
compliance with all Applicable Laws and maintain in full force and effect all
Governmental Approvals, in each case applicable to the conduct of its business.
SECTION 8.7 Environmental Laws. In addition to and without limiting the
generality of Section 8.6, (a) comply with, and ensure such compliance by all
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tenants and subtenants of the Properties, with all applicable Environmental Laws
and obtain, maintain, comply with and ensure that all tenants and subtenants
obtain, comply with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws, (b) conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws, and promptly comply with all lawful orders and directives of
any Governmental Authority regarding Environmental Laws, and (c) defend,
indemnify and hold harmless the Administrative Agent and the Lenders, and their
respective parents, Subsidiaries, Affiliates, employees, agents, officers and
directors, from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs an expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of, or in any way relating to the
presence of Hazardous Materials, or the violation of or noncompliance with or
liability under any Environmental Laws applicable to the operations of the
Borrowers or such Subsidiary, or any orders, requirements or demands of
Governmental Authorities related thereto, including, without limitation,
reasonable attorney's and consultant's fees, investigation and laboratory fees,
response costs, court costs and litigation expenses, except to the extent that
any of the foregoing directly result from the gross negligence or willful
misconduct of the party seeking indemnification therefor.
SECTION 8.8 Compliance with ERISA. In addition to and without limiting the
generality of Section 8.6, (a) comply with all applicable provisions of ERISA
and the regulations and published interpretations thereunder with respect to all
Employee Benefit Plans, (b) not take any action or fail to take action the
result of which could be a liability to the PBGC or to a Multiemplover Plan, (c)
not participate in any prohibited transaction that could result in any civil
penalty under ERISA or tax under the Code, (d) operate each Employee Benefit
Plan in such a manner that will not incur any tax liability under Section 4980B
of the Code or any liability to any qualified beneficiary as defined in Section
4980B of the Code and (e) furnish to the Administrative Agent upon the
Administrative Agent's request such additional information about any Employee
Benefit Plan as may be reasonably requested by the Administrative Agent.
SECTION 8.9 Compliance With Agreements. Comply in all respects with each
term, condition and provision of all leases, agreements and other instruments
entered into in the conduct of its business including, without limitation, any
Material Contract; provided, that the Borrowers or such Subsidiary may contest
any such lease, agreement or other instrument, so long as such contest is
conducted in good faith, through applicable proceedings diligently conducted,
and provided Borrowers maintain adequate reserves therefore in accordance with
GAAP.
SECTION 8.10 Conduct of Business. Engage only in businesses in
substantially the same fields as the businesses conducted on the Closing Date
and in lines of business reasonably related thereto.
SECTION 8.11 Visits and Inspections. Permit representatives of the
Administrative Agent or any Lender, from time to time, to visit and inspect
their properties; inspect, audit and make extracts from their books, records and
files, including, but not limited to, management letters prepared by independent
accountants; and discuss with their principal officers, and their independent
accountants, their business, assets, liabilities, financial condition, results
of operations and business prospects. Notwithstanding the foregoing (and
provided that no Event of Default has occurred and is continuing), the Borrowers
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shall be provided with reasonable advance notice of any discussions to be held
with the Borrowers' independent accountants, and the Borrowers shall also be
afforded the opportunity to participate and join in such discussions.
SECTION 8.12 Additional Subsidiaries. In the event that, subsequent to the
Closing Date, any Borrower shall acquire or create any new subsidiary, the
Borrowers shall, within ten (10) days subsequent to such creation or
acquisition, cause such Subsidiary to execute and deliver to Administrative
Agent:
(a) duly executed Stock Pledge Agreements, or supplements thereto, such
that all of the capital stock or other equity interests of such Subsidiary is
pledged to the Administrative Agent for the benefit of, and on account of the
Lenders;
(b) such other documents, agreements, instruments and certificates as the
Administrative Agent and the Lenders may reasonably request, to bind such
Subsidiary to the terms and provisions of this Agreement, and to cause
Subsidiary to pledge such Subsidiary's interests, if any, in the property given
as Collateral for the payment and performance of the Obligations; and
(c) favorable legal opinions addressed to the Administrative Agent and the
Lenders in form and substance satisfactory to such entities, with respect to the
Subsidiary's organizational status, and with respect to the documents,
agreements and certificates delivered by such Subsidiary pursuant to the
provisions of Section 8.12(a) and 8.12(b) herein.
SECTION 8.13 Hedging Agreement. Within ninety (90) days of the Closing
Date, the Borrowers agree to purchase interest rate protection, in the form of a
Hedging Agreement, from one of the Lenders, or from some other Person not a
party to this transaction; provided, however, in the event that the Borrowers
purchase (to the extent not previously purchased) such protection from a
non-party to this Agreement, (i) such Hedging Agreement must be in a form and
substance satisfactory to all of the Lenders, all of whom shall evidence their
consent or disapproval in writing, and (ii) the Administrative Agent shall have
no obligation to allow such non-party to obtain any interest in the Collateral.
At a minimum, any such Hedging Agreement shall provide interest rate protection
covering at least fifty percent (50%) of the Aggregate Commitment, and shall be
for a duration of at least three (3) years.
SECTION 8.14 Further Assurances. Make, execute and deliver all such
additional and further acts, things, deeds and instruments as the Administrative
Agent or any Lender may reasonably require to document and consummate the
transactions contemplated hereby and to vest completely in the Administrative
Agent and the Lenders their respective rights under this Agreement, the Notes,
the Letters of Credit and the other Loan Documents.
ARTICLE IX.
FINANCIAL COVENANTS
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Until all of the Obligations have been paid and satisfied in full and the
Commitments terminated, unless an amendment, waiver or consent, as applicable,
has been obtained in the manner set forth in Section 13.11 hereof, the Borrowers
and their Subsidiaries on a Consolidated basis will not:
SECTION 9.1 Leverage Ratio: At any time, permit the ratio of Funded Debt to
the sum of (i) Cash Flow plus, without duplication, (ii) Adjusted Cash Flow for
all Permitted Acquisitions during the prior four quarters to exceed
(a) 3.75 to 1.00, for the period commencing on the Closing Date and ending
on October 31, 2002;
(b) 3.00 to 1.00, for the period commencing on November 1, 2002 and ending
on October 31, 2003; and
(c) 2.25 to 1.00, for the period commencing on November 1, 2003 until the
Termination Date.
Additionally, in the event there shall occur any Permitted Acquisition, the
Borrowers shall not, after giving effect to such Permitted Acquisition, permit
the Funded Debt to the sum of (i) Cash Flow plus, without duplication, (ii)
Adjusted Cash Flow for all Permitted Acquisitions during the prior four quarters
to exceed, calculated as of the effective date of such Permitted Acquisition, on
a proforma basis:
(i) 3.50 to 1.00; for the period commencing on the Closing Date and
ending on October 31, 2002;
(ii) 2.75 to 1.00; for the period commencing on November 1, 2002, and
ending on October 31, 2003; and
(iii) 2.00 to 1.00, for the period commencing on November 1, 2003,
until the Termination Date.
SECTION 9.2 Fixed Charge Coverage Ratio: Permit the Fixed Charge Coverage
ratio to be less than 1.25 to 1.00, measured as of the end of each fiscal
quarter.
SECTION 9.3 Interest Coverage Ratio: Permit the Interest Coverage ratio to
be less than to 2.50 to 1.0 as of the end of each fiscal quarter.
SECTION 9.4 Minimum Net Worth. The Borrowers shall maintain an initial
minimum Net Worth equal to or greater than eleven million and 00/100 Dollars
($11,000,000). Commencing on November 1, 1999, and as of and for the end of each
fiscal quarter thereafter, the Borrowers shall cause their Net Worth to increase
by the sum of: (i) 75% of Borrowers' net income, as determined in accordance
with GAAP, on a Consolidated basis, plus (ii) 100% of their equity issuances or
pooling transactions; provided further, in the event net income for any such
period is negative, the Borrowers shall not be entitled to subtract such
shortfall from their calculation of, nor obligations regarding, minimum Net
Worth.
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ARTICLE X.
NEGATIVE COVENANTS
Until all of the Obligations have been paid and satisfied in full and the
Commitments terminated, unless consent has been obtained in the manner set forth
in Section 13.11 hereof, the Borrowers have not and will not permit any of their
Subsidiaries to:
SECTION 10.1 Limitations on Debt. Create, incur, assume or suffer to exist
any Debt except:
(a) the Obligations;
(b) Debt incurred in connection with a Hedging Agreement (i) with a
counterparty and upon terms and conditions (including interest rate) reasonably
satisfactory to the Administrative Agent or (ii) required pursuant to Section
8.13;
(c) Subordinated Debt; provided that after giving effect to such
Subordinated Debt issuance, Borrower's ratio of: (i) the sum of (A) Funded Debt
plus (B) Subordinated Debt; divided by (ii) Cash Flow, shall not exceed 4.5 to
1.0, measured on a rolling, prior four (4) quarter basis.
(d) Debt existing on the Closing Date and not otherwise permitted under
this Section 10.1, as set forth on Schedule 6.1(t), as the same may be renewed
or refinanced (but not the increase of the aggregate principal amount thereof)
thereof;
(e) purchase money Debt of the Borrowers and their Subsidiaries in an
aggregate amount not to exceed $1,000,000 on any date of determination; and
provided, that no agreement or instrument with respect to Debt permitted to be
incurred by this Section shall restrict, limit or otherwise encumber (by
covenant or otherwise) the ability of any Subsidiary of the Borrowers to make
any payment to the Borrowers or any of their Subsidiaries (in the form of
dividends, intercompany advances or otherwise) for the purpose of enabling the
Borrowers to pay the Obligations.
SECTION 10.2 Limitations on Guaranty Obligations. Create, incur, assume or
suffer to exist any Guaranty Obligations except Guaranty Obligations in favor of
the Administrative Agent for the benefit of the Administrative Agent and the
Lenders.
SECTION 10.3 Limitations on Liens. Create, incur, assume or suffer to
exist, any Lien on or with respect to any of its assets or properties (including
without limitation shares of capital stock or other ownership interests), real
or personal, whether now owned or hereafter acquired, except:
(a) Liens for taxes, assessments and other governmental charges or levies
(excluding any Lien imposed pursuant to any of the provisions of ERISA or
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Environmental Laws) not yet due or as to which the period of grace (not to
exceed thirty (30) days), if any, related thereto has not expired, or which are
being contested in good faith and by appropriate proceedings diligently
contested, if adequate reserves are maintained by Borrowers to the extent
required by GAAP;
(b) the claims of materialmen, mechanics, carriers, warehousemen,
processors or landlords for labor, materials, supplies or rentals incurred in
the ordinary course of business, (i) which are not overdue for a period of more
than thirty (30) days or (ii) which are being contested in good faith and by
appropriate proceedings diligently contested, if Borrower maintains adequate
reserves therefor in accordance with GAAP.
(c) Liens consisting of deposits or pledges made in the ordinary course of
business in connection with, or to secure payment of, obligations under workers'
compensation, unemployment insurance or similar legislation or obligations (not
to exceed $50,000 under customer service contracts;
(d) Liens constituting encumbrances in the nature of zoning restrictions,
easements and rights or restrictions of record on the use of real property,
which in the aggregate are not substantial in amount and which do not, in any
case, detract from the value of such property or impair the use thereof in the
ordinary conduct of business;
(e) Liens of the Administrative Agent for the benefit of the Administrative
Agent and the Lenders;
(f) Liens not otherwise permitted under Section 10.3 and in existence on
the Closing Date and described on Schedule 10.3;
(g) Liens securing Debt permitted under Section 10.1(e); provided that (i)
such Liens shall be created substantially simultaneously with the acquisition of
the related asset, (ii) such Liens do not at any time encumber any property
other than the property financed by such Debt, (iii) the amount of Debt secured
thereby is not increased and (iv) the principal amount of Debt secured by any
such Lien shall at no time exceed one hundred percent (100%) of the original
purchase price of such property at the time it was acquired and (v) such Lien
shall not prohibit the attachment or perfection of the Administrative Agent's or
Lenders' Liens pursuant to this Agreement; and
(h) Liens securing Debt, as and to the extent provided in Section 8.13 and
10.1(b).
SECTION 10.4 Limitations on Loans, Advances, Investments and Acquisitions.
Purchase, own, invest in or otherwise acquire, directly or indirectly, any
capital stock, interests in any partnership or joint venture (including without
limitation the creation or capitalization of any Subsidiary), evidence of Debt
or other obligation or security, substantially all or a portion of the business
or assets of any other Person or any other investment or interest whatsoever in
any other Person, or make or permit to exist, directly or indirectly, any loans,
advances or extensions of credit to, or any investment in cash or by delivery of
property in, any Person except:
(a) investments not otherwise permitted by this Section 10.4 in
Subsidiaries existing on the Closing Date and the other existing loans, advances
and investments not otherwise permitted by this Section 10.4 described on
Schedule 10.4;
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(b) investments in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency thereof
maturing within 120 days from the date of acquisition thereof, (ii) commercial
paper maturing no more than 120 days from the date of creation thereof and
currently having the highest rating obtainable from either Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc. or Moody's
Investors Service, Inc., (iii) certificates of deposit maturing no more than 120
days from the date of creation thereof issued by commercial banks incorporated
under the laws of the United States of America, each having combined capital,
surplus and undivided profits of not less than $500,000,000 and having a rating
of "A" or better by a nationally recognized rating agency; provided, that the
aggregate amount invested in such certificates of deposit shall not at any time
exceed $5,000,000 for any one such certificate of deposit and $10,000,000 for
any one such bank, or (iv) time deposits maturing no more than 30 days from the
date of creation thereof with commercial banks or savings banks or savings and
loan associations each having membership either in the FDIC or the deposits of
which are insured by the FDIC and in amounts not exceeding the maximum amounts
of insurance thereunder; and
(c) investments by the Borrowers or any Subsidiary in the form of
acquisitions of all or substantially all of the business or a line of business
(whether by the acquisition of capital stock, assets or any combination thereof)
of any other Person, provided such acquisition is a Permitted Acquisition. As
used herein, an acquisition shall be deemed a Permitted Acquisition, provided
the following conditions are satisfied:
(i) The Purchase Price paid by the Borrowers in connection with such
acquisition shall be less than $3,000,000 in connection with a
single acquisition; or, in the event of more than one
acquisition, said Purchase Price shall not exceed $10,000,000 in
the aggregate during any four (4) rolling fiscal quarter period.
In the event that the consideration proposed to be paid or
assumed exceeds the aforementioned levels, the Borrowers must
obtain prior written consent of the Required Lenders.
Additionally, the Borrowers shall not pay any form of
consideration, nor assume any liability, that is not a
constituent part of the definition herein of Purchase Price.
(ii) The Purchase Price for any acquisition shall not exceed six times
the seller's most recent rolling four (4) quarters' Adjusted Cash
Flow, and the cash paid for any acquisition shall not exceed four
times the seller's most recent rolling four (4) quarters Adjusted
Cash Flow.
(iii)No Default or Event of Default exists at the proposed time of
the acquisition, nor would any Default or Event of Default exist
after giving effect to such acquisition.
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(iv) The Administrative Agent and each of the Lenders shall have
received at least thirty (30) days prior written notice of any
proposed acquisition.
(v) The Lenders shall be satisfied with the nature and type of assets
being acquired in connection with such acquisition, and shall be
satisfied (both as to form and substance) with the Acquisition
Documents governing such acquisition.
(vi) No liabilities, either contingent or otherwise, shall be acquired
by the Borrowers or the Subsidiaries in connection with such
acquisition except for Permitted Assumed Liabilities.
(vii)The Borrowers shall grant the Administrative Agent, for the
ratable benefit of the Lenders, a first priority, perfected
security interest in all property that the Borrowers acquire from
the seller in connection with such acquisition.
(viii)The Borrowers shall certify compliance with all financial
covenants contained in this Agreement, on a pro forma basis after
giving effect to the Permitted Acquisition, using historical
Adjusted Cash Flow of the seller for the most recently ended
fiscal quarter prior to the date of the proposed acquisition, as
if the proposed acquisition had been consummated on the first day
of such period.
SECTION 10.5 Limitations on Mergers and Liquidation. Merge, consolidate or
enter into any similar combination with any other Person or liquidate, wind-up
or dissolve itself (or suffer any liquidation or dissolution); provided, however
in the event that no Default then exists or would exist after giving effect to
any proposed transaction:
(a) any Wholly-Owned Subsidiary of the Borrowers may merge with any other
Wholly-Owned Subsidiary of the Borrowers;
(b) any Wholly-Owned Subsidiary may merge into the Person such Wholly-Owned
Subsidiary was formed to acquire in connection with an acquisition permitted by
Section 10.4(c);
(c) any Wholly-Owned Subsidiary of the Borrowers may wind-up into the
Borrowers or any other Wholly-Owned Subsidiary of the Borrowers including,
without limitation, the contemplated dissolution of A.M. Fridays, Inc., provided
that the assets of A.M. Fridays, Inc. (if any) are transferred to one or more of
the Borrowers, under and subject to the existing liens and security interest
granted in favor of the Lenders; and
(d) any of the Borrowers may merge with and into any other Person; provided
the Borrower is the surviving entity, and the Administrative Agent's and
Lenders' positions in the Loan Documents and Security Documents are not
otherwise impaired.
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SECTION 10.6 Limitations on Sale of Assets. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets in an
amount in excess, whether individually or in the aggregate, Five Hundred
Thousand and 00/100 Dollars ($500,000.00) (including, without limitation, the
sale of any receivables and leasehold interests and any sale-leaseback or
similar transaction), whether now owned or hereafter acquired, except:
(a) the sale of inventory in the ordinary course of business;
(b) the sale of obsolete assets no longer used or usable in the business of
the Borrowers or any of their Subsidiaries; provided the aggregate fair market
value of the assets sold does not exceed (in addition to the $500,000 amount set
forth above in this Section 10.6) Seventy-five and 00/100 Dollars ($75,000.00)
during any Fiscal Year;
(c) the transfer of assets to the Borrowers or any Wholly-Owned Subsidiary
of the Borrowers pursuant to Section 10.5(c); and
(d) the sale or discount without recourse of accounts receivable arising in
the ordinary course of Borrowers' business in connection with the compromise or
collection thereof.
SECTION 10.7 Limitations on Dividends and Distributions. Declare or pay any
dividends upon any of its capital stock; purchase, redeem, retire or otherwise
acquire, directly or indirectly, any shares of its capital stock, or make any
distribution of cash, property or assets among the holders of shares of its
capital stock, or make any change in its capital structure; provided that:
(a) the Borrowers or any Subsidiary may pay dividends in shares of its own
capital stock; and
(b) any Subsidiary may pay cash dividends to the Borrowers.
SECTION 10.8 Limitations on Exchange and Issuance of Capital Stock. Issue,
sell or otherwise dispose of any class or series of capital stock that, by its
terms or by the terms of any security into which it is convertible or
exchangeable, is, or upon the happening of an event or passage of time would be,
(a) convertible or exchangeable into Debt or (b) required to be redeemed or
repurchased, including at the option of the holder, in whole or in part, or has,
or upon the happening of an event or passage of time would have, a redemption or
similar payment due.
SECTION 10.9 Transactions with Affiliates. Directly or indirectly (a) make
any loan or advance to, or purchase or assume any note or other obligation to or
from, any of its officers, directors, shareholders or other Affiliates, or to or
from any member of the immediate family of any of its officers, directors,
shareholders or other Affiliates, or subcontract any operations to any of its
Affiliates or (b) enter into, or be a party to, any other transaction with any
of its Affiliates, except pursuant to the reasonable requirements of its
business and upon fair and reasonable terms that are fully disclosed to and
approved in writing by the Required Lenders prior to the consummation thereof
and are no less favorable to it than it would obtain in a comparable arm's
length transaction with a Person not its Affiliate.
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SECTION 10.10 Certain Accounting Changes. Change its Fiscal Year end, or
make any change in its accounting treatment and reporting practices except as
required by GAAP.
SECTION 10.11 Amendments; Payments and Prepayments of Subordinated Debt.
Amend or modify (or permit the modification or amendment of) any of the terms or
provisions of any Subordinated Debt, or cancel or forgive, make any voluntary or
optional payment or prepayment on, or redeem or acquire for value (including
without limitation by way of depositing with any trustee with respect thereto
money or securities before due for the purpose of paying when due) any
Subordinated Debt.
SECTION 10.12 Restrictive Agreements. Enter into any agreement which
contains any negative pledge on assets, or which restricts, limits or otherwise
encumbers Borrowers ability to incur Liens on or with respect to any of its
assets or properties.
SECTION 10.13 Capital Expenditures. The Borrowers shall not during any
Fiscal Year, on a Consolidated basis, make any Capital Expenditures, whether for
cash, credit, exchange or on any other terms, to the extent that the
consideration for such Capital Expenditures is greater than 1.0 times the
Borrowers' annual depreciation expense.
ARTICLE XI
DEFAULT AND REMEDIES
SECTION 11.1 Events of Default. Each of the following shall constitute an
Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary, or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
Governmental Authority or otherwise:
(a) Default in Payment of Principal of Loans and Reimbursement Obligations.
The Borrowers shall default in any payment of principal of any Loan, Note or
Reimbursement Obligation when and as due (whether at maturity, by reason of
acceleration or otherwise).
(b) Other Payment Default. The Borrowers shall default in the payment when
and as due (whether at maturity, by reason of acceleration or otherwise) of
interest on any Loan, Note or Reimbursement Obligation or the payment of any
other Obligation, and such default shall continue unremedied for three (3)
Business Days.
(c) Misrepresentation. Any representation or warranty made or deemed to be
made by the Borrowers or any of their Subsidiaries under this Agreement, any
Loan Document or any amendment hereto or thereto (including representations and
warranties that, by operation of this Agreement, are deemed to be re-affirmed
upon the occurrence of certain events and conditions), shall at any time prove
to have been incorrect or misleading in any material respect when made or deemed
made.
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(d) Default in Performance of Certain Covenants. The Borrowers shall
default in the performance or observance of any covenant or agreement contained
in Section 7.5(e) or Articles VIII, IX or X of this Agreement.
(e) Default in Performance of Other Covenants and Conditions. The Borrowers
or any Subsidiary thereof shall default in the performance or observance of any
term, covenant, condition or agreement contained in this Agreement (other than
as specifically provided for otherwise in this Section 11.1) or any other Loan
Document and such default shall continue for a period of ten (10) days after
written notice thereof has been given to the Borrowers by the Administrative
Agent, except with respect to the covenants set forth in Sections 7.1 and 7.2,
with respect to which such default need only be continuing for a period of ten
(10) days after written notice thereof has been given to the Borrowers by the
Administrative Agent.
(f) Hedging Agreement. Any termination payment shall be due by the
Borrowers under any Hedging Agreement, after the expiration of any notice and
cure period, if any, and such amount is not paid within three (3) Business Days
of the due date thereof.
(g) Debt Cross-Default. The Borrowers or any of their Subsidiaries shall:
(i) default in the payment of any Debt (other than the Notes or any
Reimbursement Obligation) the aggregate outstanding amount of which Debt is in
excess of $50,000 beyond the period of grace if any, provided in the instrument
or agreement under which such Debt was created, or (ii) default in the
observance or performance of any other agreement or condition relating to any
Debt (other than the Notes or any Reimbursement Obligation) the aggregate
outstanding amount of which Debt is in excess of $100,000 or contained in any
instrument or agreement evidencing, securing or relating thereto or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such Debt (or a
trustee or agent on behalf of such holder or holders) to cause, with the giving
of notice if required, any such Debt to become due prior to its stated maturity.
(h) Other Cross-Defaults. The Borrowers or any of their Subsidiaries shall
default in the payment when due, or in the performance or observance, of any
obligation or condition of any Material Contract; provided and except, the
foregoing shall not apply so long as the existence of any such default is being
contested by the Borrowers or such Subsidiary in good faith by appropriate
proceedings diligently conducted, and adequate reserves in respect thereof have
been established on the books of the Borrowers or such Subsidiary to the extent
required by GAAP.
(i) Change in Control. There shall occur a Change in Control.
(j) Voluntary Bankruptcy Proceeding. The Borrowers or any Subsidiary
thereof shall (i) commence a voluntary case under the federal bankruptcy laws
(as now or hereafter in effect), (ii) file a petition seeking to take advantage
of any other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition for adjustment of debts, (iii) consent
to or fail to contest in a timely and appropriate manner any petition filed
against it in an involuntary case under such bankruptcy laws or other laws, (iv)
apply for or consent to, or fail to contest in a timely and appropriate manner,
the appointment of, or the taking of possession by, a receiver, custodian,
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trustee, or liquidator of itself or of a substantial part of its property,
domestic or foreign, (v) admit in writing its inability to pay its debts as they
become due, (vi) make a general assignment for the benefit of creditors, or
(vii) take any corporate action for the purpose of authorizing any of the
foregoing.
(k) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be
commenced against the Borrowers or any Subsidiary thereof in any court of
competent jurisdiction seeking (i) relief under the federal bankruptcy laws (as
now or hereafter in effect) or under any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding up or adjustment of
debts, or (ii) the appointment of a trustee, receiver, custodian, liquidator or
the like for the Borrowers or any Subsidiary thereof or for all or any
substantial part of their respective assets, domestic or foreign, and such case
or proceeding shall continue without dismissal or stay for a period of sixty
(60) consecutive days, or an order granting the relief requested in such case or
proceeding (including, but not limited to, an order for relief under such
federal bankruptcy laws) shall be entered.
(l) Failure of Agreements. Any provision of this Agreement or of any other
Loan Document shall for any reason cease to be valid and binding on the
Borrowers or Subsidiary party thereto or any such Person shall so state in
writing, or this Agreement or any other Loan Document shall for any reason cease
to create a valid and perfected first priority Lien on, or security interest in,
any of the collateral purported to be covered thereby, in each case other than
in accordance with the express terms hereof or thereof.
(m) Termination Event. The occurrence of any of the following events: (i)
the Borrowers or any ERISA Affiliate fails to make full payment when due of all
amounts which, under the provisions of any Pension Plan or Section 412 of the
Code, the Borrowers or any ERISA Affiliate is required to pay as contributions
thereto, (ii) an accumulated funding deficiency in excess of $250,000 occurs or
exists, whether or not waived, with respect to any Pension Plan, (iii) a
Termination Event or (iv) the Borrowers or any ERISA Affiliate as employers
under one or more Multiemployer Plans, makes a complete or partial withdrawal
from any such Multiemployer Plan and the plan sponsor of such Multiemployer
Plans notifies such withdrawing employer that such employer has incurred a
withdrawal liability requiring payments in an amount exceeding $250,000.
(n) Judgment. A judgment or order for the payment of money which causes the
aggregate amount of all such judgments to exceed $200,000 in any Fiscal Year
shall be entered against the Borrowers or any of their Subsidiaries by any court
and such judgment or order shall continue without discharge or stay for a period
of thirty (30) days.
(o) Loss of Revenue. Should the Borrowers lose any broker, distributor or
customer which, for the most recent twelve month period (measured back from the
end of the most recent calendar month) accounted for fifteen percent (15%) or
more of the Borrowers' gross revenue for such period unless, within 45 days of
receiving notice or obtaining knowledge of such termination, the Borrowers shall
provide to the Administrative Agent projections (satisfactory to the Lenders)
indicating that such lost revenues will not cause or result in a Default or
Event of Default (it being understood that such projections shall include, among
other items, a compliance certificate showing the anticipated effect of such
loss on the Borrowers' revenues, and such projections contain assumptions
satisfactory to the Lenders).
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SECTION 11.2 Remedies. Upon the occurrence of an Event of Default, with the
consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Borrowers:
(a) Acceleration, Termination of Facilities. Declare the principal of and
interest on the Loans, the Notes, the Reimbursement Obligations at the time
outstanding, and all other amounts owed to the Lenders and to the Administrative
Agent under this Agreement or any of the other Loan Documents (other than any
Hedging Agreement) (including, without limitation, all L/C Obligations, whether
or not the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) and all other Obligations (other
than obligations owing under any Hedging Agreement), to be forthwith due and
payable, whereupon the same shall immediately become due and payable without
presentment, demand, protest or other notice of any kind, all of which are
expressly waived, anything in this Agreement or the other Loan Documents to the
contrary notwithstanding, and terminate the Credit Facility and any right of the
Borrowers to request borrowings or Letters of Credit thereunder; provided, that
upon the occurrence of an Event of Default specified in Section 11.1(j) or (k),
the Credit Facility shall be automatically terminated and all Obligations (other
than obligations owing under any Hedging Agreement) shall automatically become
due and payable.
(b) Letters of Credit. With respect to all Letters of Credit which have not
been presented for honor at the time of an acceleration pursuant to the
preceding paragraph, require the Borrowers at such time to deposit in a cash
collateral account opened by the Administrative Agent an amount equal to the
aggregate unexpired amount of such Letters of Credit, which are outstanding, but
have not yet been drawn on or presented for payment. Amounts held in such cash
collateral account shall be applied by the Administrative Agent to the payment
of drafts drawn under such Letters of Credit, and the unused portion thereof
after all such Letters of Credit shall have expired or been fully drawn upon, if
any, shall be applied to repay the other Obligations. After all such Letters of
Credit shall have expired or been fully drawn upon, the Reimbursement Obligation
shall have been satisfied, and all other Obligations shall have been paid in
full, the balance, if any, in such cash collateral account shall be returned to
the Borrowers.
(c) Rights of Collection. Exercise on behalf of the Lenders all of its
other rights and remedies under this Agreement, the other Loan Documents and
Applicable Law, in order to satisfy all of the Borrowers' Obligations.
SECTION 11.3 Default Remedies. Upon the occurrence of a Default, which is
not also an Event of Default, and until the Borrowers cure such Default (if
permitted), the Administrative Agent may, in its sole discretion: (i)
immediately suspend Borrowers' rights under this Agreement to borrow under any
Note or apply for the issuance of any Letter of Credit or other Extension of
Credit, and to the extent that the Borrower has previously submitted an
Application, yet the Issuing Lender has not presented the Letter of Credit to
the applicable beneficiary for the beneficiary's account, the Issuing Lender
need not present such Letter of Credit to the beneficiary until such Default is
cured, if permitted, and (ii) immediately suspend Borrowers' rights to request a
continuation or conversion of any interest rate. The Administrative Agent shall
be entitled to exercise such remedies without presentment, demand, protest or
other notice of any kind to Borrowers, all of which are hereby expressly waived.
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SECTION 11.4 Rights and Remedies Cumulative; Non-Waiver; Etc. The
enumeration of the rights and remedies of the Administrative Agent and the
Lenders set forth in this Agreement is not intended to be exhaustive and the
exercise by the Administrative Agent and the Lenders of any right or remedy
shall not preclude the exercise of any other rights or remedies, all of which
shall be cumulative, and shall be in addition to any other right or remedy
allowed hereunder, under the Loan Documents or that may now or hereafter exist
in law or in equity or by suit or otherwise. No delay or failure to take action
on the part of the Administrative Agent or any Lender in exercising any right,
power or privilege shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or privilege preclude another or
further exercise thereof or the exercise of any other right, power or privilege
or shall be construed to be a waiver of any Event of Default. No course of
dealing between the Borrowers, the Administrative Agent and the Lenders or their
respective agents or employees shall be effective to change, modify or discharge
any provision of this Agreement or any of the other Loan Documents or to
constitute a waiver of any Event of Default.
ARTICLE XII
THE ADMINISTRATIVE AGENT
SECTION 12.1 Appointment. Each of the Lenders hereby irrevocably designates
and appoints First Union as Administrative Agent of such Lenders under this
Agreement and the other Loan Documents for the term hereof and each such Lender
irrevocably authorizes First Union as Administrative Agent for such Lender, to
take such action on its behalf under the provisions of this Agreement and the
other Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the Administrative Agent by the terms of this Agreement
and such other Loan Documents together with such other powers as are reasonably
incidental thereto. Any provision elsewhere in this Agreement or such other Loan
Documents to the contrary notwithstanding, the Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein and
therein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or the other Loan Documents or otherwise exist
against the Administrative Agent. Any reference to the Administrative Agent in
this Agreement shall be deemed to refer to the Administrative Agent solely in
its capacity as Administrative Agent and not in its capacity as a Lender.
SECTION 12.2 Delegation of Duties. The Administrative Agent may execute any
of its respective duties under this Agreement and the other Loan Documents by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by the Administrative Agent with reasonable care;
provided, however, that the Administrative Agent shall be responsible if the
Borrowers provide prompt written notice to the Administrative Agent of any
dereliction in the performance of any such delegated duties which the
Administrative Agent, in its sole discretion, deems to be curable, and with
respect to which the Administrative Agent fails to use reasonable efforts to
cure such dereliction by any such agent or attorney-in-fact.
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SECTION 12.3 Exculpatory Provisions. Neither the Administrative Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates shall be (a) liable for any action lawfully taken or
omitted to be taken by it or such Person under or in connection with this
Agreement or the other Loan Documents (except for actions occasioned solely by
its or such Person's or entities' own gross negligence or willful misconduct),
or (b) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrowers or any of their
Subsidiaries or of any officer thereof, whether contained in this Agreement or
the other Loan Documents or in any certificate, report, statement or other
document referred to or provided for in, or received by the Administrative Agent
under or in connection with this Agreement or the other Loan Documents, nor for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or the other Loan Documents, nor for any failure of the
Borrowers or any of their Subsidiaries to perform its obligations hereunder or
thereunder. Outside of Administrative Agent's general duties hereunder, and
excepting Administrative Agent's gross negligence or willful misconduct (and
that of its employees, agents, Affiliates, Subsidiaries, officers and attorneys
in fact), the Administrative Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of this Agreement, or to inspect the
properties, books or records of the Borrowers or any of their Subsidiaries.
SECTION 12.4 Reliance by the Administrative Agent. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation reasonably believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel (including, without limitation,
counsel to the Borrowers), independent accountants and other experts selected by
the Administrative Agent. The Administrative Agent may deem and treat the payee
of any Note as the owner thereof for all purposes unless such Note shall have
been transferred in accordance with Section l3.10 hereof. The Administrative
Agent shall be fully justified in failing or refusing to take any action under
this Agreement and the other Loan Documents unless it shall first receive the
advice or concurrence of the Required Lenders as the Administrative Agent deems
appropriate, or shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by
Administrative Agent's taking or continuing any such action; provided and except
the Administrative Agent shall not be indemnified for Administrative Agent's own
gross negligence or willful misconduct. The Administrative Agent shall in all
cases be fully protected in acting or in refraining from acting, under this
Agreement and the Notes in accordance with a request of the Required Lenders,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Lenders and all future holders of the Notes.
SECTION 12.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless it has received notice from a Lender, the Borrowers, or
any third party submitting reports and statements pursuant to this Agreement,
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default." In the event that the
Administrative Agent receives such a notice, it shall promptly give notice
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thereof to the Lenders. The Administrative Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders; provided further that unless and until the Administrative
Agent shall have received such directions, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem necessary or
advisable, or in the best interests of the Lenders, to the extent that other
provisions of this Agreement expressly require that any such action be taken or
not be taken only with the consent and authorization or the request of the
Lenders or Required Lenders notwithstanding.
SECTION 12.6 Non-Reliance on the Administrative Agent and Other Lenders.
Each Lender expressly acknowledges that neither the Administrative Agent nor any
of its respective officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates has made any representations or warranties to it and
that no act by the Administrative Agent hereinafter taken, including any review
of the affairs of the Borrowers or any of their Subsidiaries, shall be deemed to
constitute any representation or warranty by the Administrative Agent to any
Lender. Each Lender represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as such Lender has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Borrowers and their Subsidiaries and made its own decision to make the Loans and
issue or participate in Letters of Credit hereunder and enter into this
Agreement. Each Lender also represents that it will, independently and without
reliance upon the Administrative Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrowers and their Subsidiaries. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder or by the other Loan Documents, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, financial and other condition or creditworthiness of the Borrowers or
any of their Subsidiaries, which information may come into the possession of the
Administrative Agent or any of its respective officers, directors, employees,
agents, attorneys-in-fact, Subsidiaries or Affiliates.
SECTION 12.7 Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such and (to the extent not reimbursed
by the Borrowers and without limiting the obligation of the Borrowers to do so),
ratably according to the respective amounts of their Commitment Percentages,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, attorneys fees, or
disbursements of any kind whatsoever which may at any time be imposed on,
incurred by or asserted against the Administrative Agent in any way relating to
or arising out of this Agreement or the other Loan Documents, or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing, provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
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costs, expenses or disbursements resulting solely from the Administrative
Agent's bad faith, gross negligence or willful misconduct. The agreements in
this Section 12.7 shall survive the termination of this Agreement and the
payment of the Notes, any Reimbursement Obligation and all other amounts payable
hereunder.
SECTION 12.8 The Administrative Agent in Its Individual Capacity. The
Administrative Agent and its respective Subsidiaries and Affiliates may make
loans to, accept deposits from and generally engage in any kind of business with
the Borrowers as though the Administrative Agent were not an Administrative
Agent hereunder. With respect to any Loans made or renewed by it, any Note
issued to it, and any Letter of Credit issued by it or participated in by it,
the Administrative Agent shall have the same rights and powers under this
Agreement and the other Loan Documents as any Lender and may exercise the same
as though it were not an Administrative Agent, and the terms "'Lender" and
"Lenders" shall include the Administrative Agent in its individual capacity.
SECTION 12.9 Resignation of the Administrative Agent: Successor
Administrative Agent. Subject to the appointment and acceptance of a successor
as provided below, the Administrative Agent may resign at any time by giving
notice thereof to the Lenders and the Borrowers. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Administrative
Agent, which successor shall have minimum capital and surplus of at least
$500,000,000. If no successor Administrative Agent shall have been so appointed
by the Required Lenders and shall have accepted such appointment within thirty
(30) days after the Administrative Agent's giving of notice of resignation, then
the Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which successor shall have minimum capital and surplus of
at least $500,000,000. Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all
rights, powers, privileges and duties of the retiring, Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. After any retiring Administrative Agent's resignation
hereunder as Administrative Agent, the provisions of this Section 12.9 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Administrative Agent.
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ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Notices.
(a) Method of Communication. Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing, or by
telephone subsequently confirmed in writing. Any notice shall be effective if
delivered by hand delivery or sent via telecopy, recognized overnight courier
service or certified mail, return receipt requested, and shall be presumed to be
received by a party hereto (i) on the date of delivery if delivered by hand or
sent by telecopy, (ii) on the next Business Day if sent by recognized overnight
courier service and (iii) on the third Business Day following the date sent by
certified mail, return receipt requested.
(b) Addresses for Notices. Notices to any party shall be sent to it at the
following addresses, or any other address as to which all the other parties are
notified in writing.
If to the Borrowers: Vermont Pure Springs, Inc.
Catamount Industrial Park
Route 66, P.O. Box C
Randolph Center, VT 05060
Attention: Bruce MacDonald,
Chief Financial Officer
Telephone No.: (802) 728-3600
Telecopy No.:(802) 728-4614
With copies to: Ledgewood Law Firm
521 Locust Street
Philadelphia, PA 19102
Attention: Kevin F. Berry, Esquire
Telephone No.: (215) 731-9450
Telecopy No.: (215) 735-2513
If to First Union as
Administrative Agent: First Union National Bank
PA 4848
1339 Chestnut Street
Philadelphia, PA 19107
Telephone No.: (215) 786-2161
Telecopy No.: (215) 786-8448
Attention: David W. Mills, Vice President
With copies to: Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103
Attention: Paul A. Patterson, Esquire
Telephone No.: (215) 564-8000
Telecopy No.: (215) 564-8120
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If to any Lender: To the Address set forth on Schedule 1 hereto
(c) Administrative Agent's Office. The Administrative Agent hereby
designates its office located at the address set forth above, or any subsequent
office which shall have been specified for such purpose by written notice to the
Borrowers and Lenders as provided for herein, as the Administrative Agent's
Office referred to herein, to which payments are to be made and at which Loans
will be disbursed and Letters of Credit issued.
SECTION 13.2 Expenses; Indemnity. The Borrowers will (a) pay all
out-of-pocket expenses of the Administrative Agent in connection with (i) the
preparation, execution, negotiation and delivery of this Agreement and each
other Loan Document, whenever the same shall be executed and delivered,
including without limitation all out-of-pocket syndication and due diligence
expenses and reasonable fees and disbursements of counsel for the Administrative
Agent and (ii) the preparation, execution and delivery of any waiver, amendment
or consent by the Administrative Agent or the Lenders relating to this Agreement
or any other Loan Document, including, without limitation reasonable fees and
disbursements of counsel for the Administrative Agent, (b) pay all reasonable
out-of-pocket expenses of the Administrative Agent and each Lender actually
incurred in connection with the administration and enforcement of any rights and
remedies of the Administrative Agent and Lenders under this Agreement, including
consulting with appraisers, accountants, engineers, attorneys and other Persons
concerning the nature, scope or value of any right or remedy of the
Administrative Agent or any Lender hereunder or under any other Loan Document or
any factual matters in connection therewith, which expenses shall include
without limitation the reasonable fees and disbursements of such Persons, and
(c) defend, indemnify and hold harmless the Administrative Agent and the
Lenders, and their respective parents, Subsidiaries, Affiliates, employees,
agents, officers and directors, from and against any losses, penalties, fines,
liabilities, settlements damages, costs and expenses, suffered by any such
Person in connection with any claim, investigation, litigation or other
proceeding (whether or not the Administrative Agent or any Lender is a party
thereto) and the prosecution and defense thereof, arising out of or in any way
connected with the Agreement, any other Loan Document or the Loans, including
without limitation reasonable attorney's an consultant's fees, except to the
extent that any of the foregoing directly result from the gross negligence or
willful misconduct of the party seeking indemnification therefor.
SECTION 13.3 Set-off. In addition to any rights now or hereafter granted
under Applicable Law and not by way of limitation of any such rights, upon and
after the occurrence of any Event of Default and during the continuance thereof,
the Lenders and any assignee or participant of a Lender in accordance with
Section 13.10 are hereby authorized by the Borrowers at any time or from time to
time, without notice to the Borrowers or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and to apply any
and all deposits (general or special, time or demand, including, but not limited
to, indebtedness evidenced by certificates of deposit, whether matured or
unmatured) and any other indebtedness at any time held or owing by the Lenders,
or any such assignee or participant to or for the credit or the account of the
Borrowers, against and on account of the Obligations irrespective of whether or
not (a) the Lenders shall have made any demand under this Agreement or any of
the other Loan Documents or (b) the Administrative Agent shall have declared any
or all of the Obligations to be due and payable as permitted by Section 11.2 and
although such Obligations shall be contingent or unmatured. The Administrative
Agent and the Lenders shall incur no penalties, nor be responsible for the
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payment of any fees, costs, expenses or "breakage" costs on account of
exercising such remedies and such setoff; the foregoing being the sole
responsibility of the Borrowers. SECTION 13.4 Governing Law. This Agreement, the
Notes and the other Loan Documents, unless otherwise expressly set forth
therein, shall be governed by, construed and enforced in accordance with the
laws of the Commonwealth of Pennsylvania, without reference to the conflicts or
choice of law principles thereof.
SECTION 13.5 Consent to Jurisdiction. The Borrowers hereby irrevocably
consent to the personal jurisdiction of the state and federal courts located in
Philadelphia County, Pennsylvania, in any action, claim or other proceeding
arising out of any dispute in connection with this Agreement, the Notes and the
other Loan Documents, any rights or obligations hereunder or thereunder, or the
performance of such rights and obligations. The Borrowers hereby irrevocably
consent to the service of a summons and complaint and other process in any
action, claim or proceeding brought by the Administrative Agent or any Lender in
connection with this Agreement, the Notes or the other Loan Documents, any
rights or obligations hereunder or thereunder, or the performance of such rights
and obligations, on behalf of themselves or their property, in the manner
specified in Section 13.1. Nothing in this Section 13.5 shall affect the right
of the Administrative Agent or any Lender to serve legal process in any other
manner permitted by Applicable Law or affect the right of the Administrative
Agent or any Lender to bring any action or proceeding against the Borrowers or
their properties in the courts of any other jurisdictions.
SECTION 13.6 Binding Arbitration; Waiver of Jury Trial.
(a) Binding Arbitration. Upon demand of any party, whether made before or
after institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to the Notes or any other Loan
Documents ("Disputes"), between or among parties to the Notes or any other Loan
Document, all Disputes shall be resolved by binding arbitration as provided
herein. Institution of a judicial proceeding by a party does not waive the right
of that party to demand arbitration hereunder. Disputes may include, without
limitation, tort claims, counterclaims, claims brought as class actions, claims
arising from Loan Documents executed in the future, disputes as to whether a
matter is subject to arbitration, or claims concerning any aspect of the past,
present or future relationships arising out of or connected with the Loan
Documents. Arbitration shall be conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association and Title 9 of the U.S. Code. All arbitration hearings
shall be conducted in Philadelphia, Pennsylvania. The expedited procedures set
forth in Rule 51, et seq. of the Arbitration Rules shall be applicable to claims
of less than $1,000,000. All applicable statutes of limitation shall apply to
any Dispute. A judgment upon the award may be entered in any court having
jurisdiction. Any arbitration proceeding demanded hereunder shall begin within
ninety (90) days after such demand thereof and shall be concluded within
one-hundred and twenty (120) days after such demand. These time limitations may
not be extended unless a party hereto shows cause for extension and then such
extension shall not exceed a total of sixty (60) days. The panel from which all
arbitrators are selected shall be comprised of licensed attorneys. The single
arbitrator selected for expedited procedure shall be a retired judge from the
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highest court of general jurisdiction, state or federal, of the state where the
hearing will be conducted. The parties hereto do not waive any applicable
Federal or state substantive law except as provided herein. Notwithstanding the
foregoing, this paragraph shall not apply to any Hedging Agreement that is a
Loan Document.
(b) Jury Trial. THE ADMINISTRATIVE AGENT, EACH LENDER AND THE BORROWERS
HEREBY ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION THEY HAVE IRREVOCABLY
WAIVED THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM
OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS
AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THEREUNDER, THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS, AND THE
INTERPRETATION THEREOF.
(c) Preservation of Certain Remedies. The preceding binding arbitration
provisions, notwithstanding, the parties hereto and to the other Loan Documents
preserve, without diminution, certain remedies that such Persons may employ or
exercise freely, either alone, in conjunction with or during a Dispute. Each
such Person shall have and hereby reserves the right to proceed in any court of
proper jurisdiction or by self help to exercise or prosecute the following
remedies: (i) all rights to foreclose against any real or personal property or
other Collateral or security by exercising a power of sale granted in the Loan
Documents or under applicable law or by judicial foreclosure and sale, (ii) all
rights of self help including peaceful occupation of property and collection of
rents, set off, and peaceful possession of property, (iii) obtaining provisional
or ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and in filing an involuntary bankruptcy
proceeding, and (iv) when applicable, a judgment by confession of judgment.
Preservation of these remedies does not limit the power of an arbitrator to
grant similar remedies that may be requested by a party in a Dispute. SECTION
13.7 Reversal of Payments. To the extent the Borrowers make a payment or
payments to the Administrative Agent for the ratable benefit of the Lenders, or
the Administrative Agent receives any payment or proceeds of the collateral
which payments or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or federal law, common law or equitable cause, then, to the extent of such
payment or proceeds repaid, the Obligations or part thereof intended to be
satisfied shall be revived and continued in full force and effect as if such
payment or proceeds had not been received by the Administrative Agent.
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SECTION 13.8 Injunctive Relief, Punitive Damages.
(a) The Borrowers recognize that, in the event the Borrowers fail to
perform, observe or discharge any of its obligations or liabilities under this
Agreement, any remedy of law may prove to be inadequate relief to the Lenders.
Therefore, the Borrowers agree that the Lenders, at the Lenders' option, shall
be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
(b) The Administrative Agent, Lenders and Borrowers (on behalf of
themselves and their Subsidiaries) hereby agree that no such Person shall have a
remedy of punitive, consequential, special or exemplary damages against any
other party to a Loan Document and each such Person hereby waives any right or
claim to punitive, consequential, special or exemplary damages that they may now
have or may arise in the future in connection with any Dispute, whether such
Dispute is resolved through arbitration or judicially.
SECTION 13.9 Accounting Matters. All financial and accounting calculations,
measurements and computations made for any purpose relating to this Agreement,
including, without limitation, all computations utilized by the Borrowers or any
Subsidiary thereof to determine compliance with any covenant contained herein,
shall, except as otherwise expressly contemplated hereby or unless there is an
express written direction by the Administrative Agent to the contrary agreed to
by the Borrowers, be performed in accordance with GAAP as in effect on the
Closing Date. In the event that changes in GAAP shall be mandated by the
Financial Accounting Standards Board, or any similar accounting body of
comparable standing, or shall be recommended by the Borrowers' certified public
accountants, to the extent that such changes would modify such accounting terms
or the interpretation or computation thereof, such changes shall be followed in
defining such accounting terms only from and after the date the Borrowers and
the Lenders shall have amended this Agreement to the extent necessary to reflect
any such changes in the financial covenants and other terms and conditions of
this Agreement.
SECTION 13.10 Successors and Assigns; Participations.
(a) Benefit of Agreement. This Agreement shall be binding, upon and inure
to the benefit of the Borrowers, the Administrative Agent and the Lenders, all
future holders of the Notes, or any part of the indebtedness evidenced thereby,
and their respective successors and assigns; provided, however, the Borrowers
shall not assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of each Lender.
(b) Assignment by Lenders. Each Lender may, with the consent of the
Borrower (which consent shall only be required provided that no Default or Event
of Default has occurred) and the consent of the Administrative Agent, which
consents shall not be unreasonably withheld, assign to one or more Eligible
Assignees all or a portion of its interests, rights and obligations under this
Agreement (including, without limitation, all or a portion of the Extensions of
Credit owing to such Lender and the Notes held by such Lender); provided that:
(i) each such assignment shall be of an equivalent, and not a varying,
percentage of all the assigning Lender's rights and obligations under this
Agreement;
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(ii) if less than all of the assigning Lender's Commitment is to be
assigned, the Commitment so assigned shall not be less than $5,000,000;
(iii) the parties to each such assignment shall execute and deliver to
the Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance in the form of Exhibit F attached hereto (an
"Assignment and Acceptance"), together with any Notes or Letters of Credit
subject to such assignment;
(iv) such assignment shall not, without the consent of the Borrowers,
require the Borrowers to file a registration statement with the Securities and
Exchange Commission or apply to or qualify the Loans or the Notes under the blue
sky laws of any state; and
(v) the assigning Lender shall pay to the Administrative Agent an
assignment fee of $3,500 upon such Lender's delivery of the Assignment and
Acceptance to the Administrative Agent; provided that no such fee shall be
payable upon any assignment by a Lender to an Affiliate thereof.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five (5) Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereby
and (B) the Lender thereunder shall, to the extent provided in such assignment,
be released from its obligations under this Agreement.
(c) Rights and Duties Upon Assignment. By executing and delivering an
Assignment and Acceptance, the assigning and assuming Lender thereunder confirm
to and agree with each other and the other parties hereto to be bound by the
terms and provisions of this Agreement, to the extent set forth in such
Assignment and Acceptance.
(d) Register. The Administrative Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the Lenders and the amounts of the Commitment and the
Extensions of Credit with respect to each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrowers, the Administrative Agent and the Lenders may
treat each person whose name is recorded in the Register as a Lender hereunder
for all purposes of this Agreement. The Register shall be available for
inspection by the Borrowers or any Lender at any reasonable time upon reasonable
prior notice.
(e) Issuance of New Notes. Upon its receipt of a completed Assignment and
Acceptance executed by the Borrowers, the assigning Lender and an Eligible
Assignee together with any Note or Notes subject to such assignment, the
Administrative Agent shall, if such Assignment and Acceptance has been completed
and is substantially in the form of Exhibit G:
(i) accept such Assignment and Acceptance;
(ii) record the information contained therein in the Register;
(iii)give prompt notice thereof to the Lenders and the Borrowers; and
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(iv) promptly deliver a copy of such Assignment and Acceptance to the
Borrowers.
Within five (5) Business Days after receipt of notice, the Borrowers shall
execute and deliver to the Administrative Agent, in exchange for the surrendered
Note or Notes, a new Note or Notes to the order of such Eligible Assignee in
amounts equal to the Commitment assumed by such Eligible Assignee pursuant to
such Assignment and Acceptance; together with a new Note or Notes to the order
of the assigning Lender in an amount equal to the Commitment retained by it
hereunder. Such new Note or Notes shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form of
the assigned Notes delivered to the assigning Lender; provided however, the new
Note or Notes may contain such language as the assigning Lender, the
Administrative Agent, or the Eligible Assignee may in the reasonable exercise of
its discretion, deem necessary to preserve the priority of the security interest
in the Collateral which is security for the Obligations. Each surrendered Note
or Notes shall be canceled and returned to the Borrowers.
(f) Participations. Each Lender may sell participations to one or more
banks or other entities in all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Extensions of Credit and the Notes held by it); provided that:
(i) each such participation shall be in an amount not less than
$5,000,000;
(ii) such Lender's obligations under this Agreement (including,
without limitation, its Commitment) shall remain unchanged;
(iii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations;
(iv) such Lender shall remain the holder of the Notes held by it for
all purposes of this Agreement;
(v) the Borrowers, the Administrative Agent and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement;
(vi) such Lender shall not permit such participant the right to
approve any waivers, amendments or other modifications to this Agreement or any
other Loan Document other than waivers, amendments or modifications which would
reduce the principal of or the interest rate on any Loan or Reimbursement
Obligation, extend the term or increase the amount of the Commitment, reduce the
amount of any fees to which such participant is entitled, extend any scheduled
payment date for principal of any Loan or, except as expressly contemplated
hereby or thereby, release substantially all of the Collateral; and
(vii) any such disposition shall not, without the consent of the
Borrowers, require the Borrowers to file a registration statement with the
Securities and Exchange Commission to apply to qualify the Loans or the Notes
under the blue sky law of any state.
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(g) Disclosure of Information; Confidentiality. The Administrative Agent
and the Lenders shall hold all non-public information with respect to the
Borrowers obtained pursuant to the Loan Documents in accordance with their
customary procedures for handling confidential information; provided, that the
Administrative Agent may disclose information relating to this Agreement to Gold
Sheets and other similar bank trade publications, such information to consist of
deal terms and other information customarily found in such publications and
provided further, that the Administrative Agent and Lenders may disclose any
such information to the extent such disclosure is required by law or requested
by any regulatory authority. Any Lender may, in connection with any assignment,
proposed assignment, participation or proposed participation pursuant to this
Section 13.10, disclose to the assignee, participant, proposed assignee or
proposed participant, any information relating to the Borrowers furnished to
such Lende by or on behalf of the Borrowers; provided, that prior to any such
disclosure, each such assignee, proposed assignee, participant or proposed
participant shall agree with the Borrowers or such Lender to preserve the
confidentiality of any confidential information relating to the Borrowers
received from such Lender.
(h) Certain Pledges or Assignments. Nothing herein shall prohibit any
Lender from pledging or assigning any Note to any Federal Reserve Bank in
accordance with Applicable Law.
SECTION 13.11 Amendments, Waivers and Consents. Except as set forth below,
any term, covenant, agreement or condition of this Agreement or any of the other
Loan Documents may be amended or waived by the Lenders if, but only if, such
amendment, waiver or consent is in writing signed by the Required Lenders (or by
the Administrative Agent with the consent of the Required Lenders) and delivered
to the Administrative Agent and, in the case of an amendment, signed by the
Borrowers; provided, that no amendment, waiver or consent shall (a) increase the
amount or extend the time of the obligation of the Lenders to make Loans or
issue or participate in Letters of Credit (including without limitation pursuant
to Section 2.7); (b) extend the originally scheduled time or times of payment of
the principal of any Loan or Reimbursement Obligation or the time or times of
payment of interest on any Loan or Reimbursement Obligation; (c) reduce the rate
of interest or fees payable on any Loan or Reimbursement Obligation; (d) reduce
the principal amount of any Loan or Reimbursement Obligation; (e) permit any
subordination of the principal or interest on any Loan or Reimbursement
Obligation; (f) permit any assignment (other than as specifically permitted or
contemplated in this Agreement) of any of the Borrower's rights and obligations
hereunder; (g) release any material portion of the Collateral or release any
Security Document (other than as specifically permitted or contemplated in this
Agreement or the applicable Security Document); or (h) amend the provisions of
this Section 13.11 or the definition of Required Lenders; unless each of the
Lenders has given their prior written consent to the course of action proposed
to be taken in (a) through (h) hereof. In addition, no amendment, waiver or
consent to the provisions of (a) Article XII shall be made without the written
consent of the Administrative Agent and (b) Article III without the written
consent of the Issuing Lender.
SECTION 13.12 Performance of Duties. The Borrowers' obligations under this
Agreement and each of the Loan Documents shall be performed by the Borrowers at
its sole cost and expense.
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SECTION 13.13 All Powers Coupled with Interest. All powers of attorney and
other authorizations granted to the Lenders, the Administrative Agent and any
Persons designated by the Administrative Agent or any Lender pursuant to any
provisions of this Agreement or any of the other Loan Documents shall be deemed
coupled with an interest and shall be irrevocable so long as any of the
Obligations remain unpaid or unsatisfied or this Agreement has not been
terminated.
SECTION 13.14 Survival of Indemnities. Any termination of this Agreement
notwithstanding, the indemnities to which the Administrative Agent and the
Lenders are entitled under the provisions of this Article XIII and any other
provision of this Agreement and the Loan Documents shall continue in full force
and effect and shall protect the Administrative Agent and the Lenders against
events arising after such termination as well as before.
SECTION 13.15 Titles and Captions. Titles and captions of Articles,
Sections and subsections in this Agreement are for convenience only, and neither
limit nor amplify the provisions of this Agreement.
SECTION 13.16 Severability of Provisions. Any provision of this Agreement
or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 13.17 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and shall be binding
upon all parties, their successors and assigns, and all of which taken together
shall constitute one and the same agreement.
SECTION 13.18 Term of Agreement. This Agreement shall remain in effect from
the Closing Date through and including the date upon which all Obligations shall
have been indefeasibly and irrevocably paid, performed and satisfied in full.
The Administrative Agent is hereby permitted to release all Liens on the
Collateral in favor of the Administrative Agent, for the ratable benefit of
itself and the Lenders, upon repayment of the outstanding principal of and all
accrued interest on the Loans, payment of all outstanding fees and expenses
hereunder and the termination of the Lender's Commitments. No termination of
this Agreement shall affect the rights and obligations of the parties hereto
arising prior to such termination.
SECTION 13.19 Inconsistencies with Other Documents; Independent Effect of
Covenants. (a) In the event there is a conflict or inconsistency between this
Agreement and any other Loan Document, the terms of this Agreement shall
control; provided, however, that any provision of the Security Documents which
imposes additional burdens on the Borrowers or their Subsidiaries or further
restricts the rights of the Borrowers or their Subsidiaries or gives the
Administrative Agent or Lenders additional rights shall not be deemed to be in
conflict or inconsistent with this Agreement and such provisions shall be given
full force and effect.
(b) The Borrowers expressly acknowledge and agree that each covenant
contained in Articles VIII, IX, or X hereof shall be given independent effect.
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Accordingly, the Borrowers shall not engage in any transaction or other act
otherwise permitted under any covenant contained in Articles VIII, IX, or X if,
before or after giving effect to such transaction or act, the Borrowers shall or
would be in breach of any other covenant contained in Articles VIII, IX, or X.
SECTION 13.20 Amendment and Restatement. This Agreement is an amendment and
restatement of the Original Agreement between the Borrowers and First Union, and
it is not intended to be, nor shall it be construed as, a novation of the
Borrowers' responsibilities and obligations to First Union pursuant to the
Original Agreement. It is specifically acknowledged and agreed that the security
interests and rights granted to First Union pursuant to the Original Agreement,
are to continue in full force and effect (except to the extent, if any, modified
herein), and the priority and perfection of all such security interests in the
Collateral shall continue to date from the dates originally established in
connection with the Original Agreement.
(Remainder of page intentionally left blank - signatures on next page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers, all as of the day and
year first written above.
ATTEST: VERMONT PURE HOLDINGS, LTD.,
as Borrower
By:_______________________________ By:________________________________
Name: Bruce MacDonald Name: Timothy Fallon
Title: Chief Financial Officer and Title: Chief Executive Officer and
Secretary President
(Corporate Seal)
ATTEST: VERMONT PURE SPRINGS, INC.,
as Borrower
By:_______________________________ By:________________________________
Name: Bruce MacDonald Name: Timothy Fallon
Title: Chief Financial Officer and Title: Chief Executive Officer and
Secretary President
(Corporate Seal)
FIRST UNION NATIONAL BANK,
as Administrative Agent and Lender
By:________________________________
Name: David W. Mills
Title: Vice President
KEYBANK NATIONAL ASSOCIATION,
as Lender
By:________________________________
Name: John W. Kingston
Title: Senior Vice President
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Schedule 1
(Lenders and Commitments)
LENDER COMMITMENT
PERCENTAGE COMMITMENT
First Union National Bank
PA 4848
1339 Chestnut Street
Philadelphia, PA 19107
Attn:
Telephone No.: (215) 786-2161
Telecopy No.: (215) 786-8448 60% $15,000,000
KeyBank National Association
149 Bank Street
P.O. Box 949
Burlington, VT
Telephone No.: (802) 660-4474
(800) 642-5154
Telecopy No.: (802) 864-6908 40% $10,000,000
-76-
<PAGE>
EXHIBIT A-1
to
Credit Agreement
dated as of January 28, 2000,
by and among
VERMONT PURE HOLDINGS, LTD. and VERMONT PURE SPRINGS, INC.,
as Borrowers,
the Lenders party thereto,
and
First Union National Bank,
as Administrative Agent
FORM OF REVOLVING CREDIT NOTE
REVOLVING CREDIT NOTE
-77-
<PAGE>
$15,000,000 January 28, 2000
FOR VALUE RECEIVED, the undersigned, VERMONT PURE HOLDINGS, LTD. and
VERMONT PURE SPRINGS, INC. (the "Borrowers"), promise to pay to the order of
First Union National Bank (the "Lender"), at the place and times provided in the
Credit Agreement referred to below, the principal sum of Fifteen Million Dollars
($15,000,000) or, if less, the principal amount of all Revolving Credit Loans
made by the Lender from time to time pursuant to that certain Credit Agreement,
dated as of even date herewith (as amended, restated or otherwise modified, the
"'Credit Agreement") among the Borrowers, the Lenders who are or may become a
party thereto (collectively, the "Lenders") and First Union National Bank, as
Administrative Agent. Capitalized terms used herein and not defined herein shall
have the meanings assigned thereto in the Credit Agreement.
All payments of principal and interest on this Revolving Credit Note shall
be payable in lawful currency of the United States of America in immediately
available funds to the account designated in the Credit Agreement.
This Revolving Credit Note is entitled to the benefits of, and evidences
Obligations incurred under, the Credit Agreement, to which reference is made for
a description of the security for this Revolving Credit Note and for a statement
of the terms and conditions on which the Borrowers are permitted and required to
make prepayments and repayments of principal of the Obligations evidenced by
this Revolving Credit Note and on which such Obligations may be declared to be
immediately due and payable.
THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF PENNSYLVANIA, WITHOUT REFERENCE TO THE CONFLICTS OR
CHOICE OF LAW PRINCIPLES THEREOF.
The Debt evidenced by this Revolving Credit Note is senior in right of
payment to all Subordinated Debt referred to in the Credit Agreement.
The Borrowers hereby waive all requirements as to diligence, presentment,
demand of payment, protest and (except as required by the Credit Agreement)
notice of any kind with respect to this Revolving Credit Note.
After the occurrence of an Event of Default, as defined in the Credit
Agreement, each of the Borrowers jointly and severally irrevocably authorizes
and empowers any attorney or any clerk of any court of record to appear for and
confess judgment against any one or more of the Borrowers for such sums as are
due owing under this Note, with our without declaration, with costs of suit,
without stay of execution and with an amount not to exceed the greater of
fifteen percent (15%) of the principal amount owing under this Note, or Five
Thousand Dollars ($5,000) added for collection fees. If a copy of this Note,
verified by affidavit by or on behalf of the Lender shall have been filed in
such action, it shall not be necessary to file the original with this Note. The
authority granted under the warrant of attorney to confess judgment shall not be
exhausted by the initial exercise thereof, and may be exercised by the Lender
from time to time.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Revolving Credit
Note under seal as of the day and year first above written.
ATTEST: VERMONT PURE HOLDINGS, LTD.,
as Borrower
By:_______________________________ By:________________________________
Name: Bruce MacDonald Name: Timothy Fallon
Title: Chief Financial Officer and Title: Chief Executive Officer and
Secretary President
(Corporate Seal)
ATTEST: VERMONT PURE SPRINGS, INC.,
as Borrower
By:_______________________________ By:________________________________
Name: Bruce MacDonald Name: Timothy Fallon
Title: Chief Financial Officer and Title: Chief Executive Officer and
Secretary President
(Corporate Seal)
-79-
<PAGE>
REVOLVING CREDIT NOTE
$10,000,000 January 28, 2000
FOR VALUE RECEIVED, the undersigned, VERMONT PURE HOLDINGS, LTD. and
VERMONT PURE SPRINGS, INC. (the "Borrowers"), promise to pay to the order of
KeyBank National Association (the "Lender"), at the place and times provided in
the Credit Agreement referred to below, the principal sum of Ten Million Dollars
($10,000,000) or, if less, the principal amount of all Revolving Credit Loans
made by the Lender from time to time pursuant to that certain Credit Agreement,
dated as of even date herewith (as amended, restated or otherwise modified, the
"'Credit Agreement") among the Borrowers, the Lenders who are or may become a
party thereto (collectively, the "Lenders") and First Union National Bank, as
Administrative Agent. Capitalized terms used herein and not defined herein shall
have the meanings assigned thereto in the Credit Agreement.
All payments of principal and interest on this Revolving Credit Note shall
be payable in lawful currency of the United States of America in immediately
available funds to the account designated in the Credit Agreement.
This Revolving Credit Note is entitled to the benefits of, and evidences
Obligations incurred under, the Credit Agreement, to which reference is made for
a description of the security for this Revolving Credit Note and for a statement
of the terms and conditions on which the Borrowers are permitted and required to
make prepayments and repayments of principal of the Obligations evidenced by
this Revolving Credit Note and on which such Obligations may be declared to be
immediately due and payable.
THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF PENNSYLVANIA, WITHOUT REFERENCE TO THE CONFLICTS OR
CHOICE OF LAW PRINCIPLES THEREOF.
The Debt evidenced by this Revolving Credit Note is senior in right of
payment to all Subordinated Debt referred to in the Credit Agreement.
The Borrowers hereby waive all requirements as to diligence, presentment,
demand of payment, protest and (except as required by the Credit Agreement)
notice of any kind with respect to this Revolving Credit Note.
After the occurrence of an Event of Default, as defined in the Credit
Agreement, each of the Borrowers jointly and severally irrevocably authorizes
and empowers any attorney or any clerk of any court of record to appear for and
confess judgment against any one or more of the Borrowers for such sums as are
due owing under this Note, with our without declaration, with costs of suit,
without stay of execution and with an amount not to exceed the greater of
fifteen percent (15%) of the principal amount owing under this Note, or Five
Thousand Dollars ($5,000) added for collection fees. If a copy of this Note,
verified by affidavit by or on behalf of the Lender shall have been filed in
such action, it shall not be necessary to file the original with this Note. The
authority granted under the warrant of attorney to confess judgment shall not be
exhausted by the initial exercise thereof, and may be exercised by the Lender
from time to time.
-80-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Revolving Credit
Note under seal as of the day and year first above written.
ATTEST: VERMONT PURE HOLDINGS, LTD.,
as Borrower
By:_______________________________ By:________________________________
Name: Bruce MacDonald Name: Timothy Fallon
Title: Chief Financial Officer and Title: Chief Executive Officer and
Secretary President
(Corporate Seal)
ATTEST: VERMONT PURE SPRINGS, INC.,
as Borrower
By:_______________________________ By:________________________________
Name: Bruce MacDonald Name: Timothy Fallon
Title: Chief Financial Officer and Title: Chief Executive Officer and
Secretary President
(Corporate Seal)
-81-
<PAGE>
EXHIBIT B
to
Credit Agreement
dated as of January 28, 2000,
by and among
VERMONT PURE HOLDINGS, LTD. and VERMONT PURE SPRINGS, INC.,
as Borrowers,
the Lenders party thereto,
and
First Union National Bank,
as Administrative Agent
FORM OF NOTICE OF BORROWING
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<PAGE>
NOTICE OF BORROWING
Dated as of______________
First Union National Bank,
PA 4848
1339 Chestnut Street
Philadelphia, PA 19107
Attention:_____________________
Telephone No.: (215) 786-2161
Telecopy No.: (215) 786-8448
Ladies and Gentlemen:
This irrevocable Notice of Borrowing is delivered to you under Section
2.3(a) of the Credit Agreement dated as of , 1999 (as amended, restated or
otherwise modified, the "Credit Agreement"), by and among VERMONT PURE HOLDINGS,
LTD. and VERMONT PURE SPRINGS, INC. (the "Borrowers"), the lenders party thereto
(the "Lenders") and First Union National Bank, as Administrative Agent.
1. The Borrowers hereby request that the Lenders make a Revolving Credit
Loan to the Borrowers in the aggregate principal amount of $ . [Complete with an
amount in accordance with Section 2.2(a) of the Credit Agreement.]
2. The Borrowers hereby requests that such Loan be made on the following
Business Day: . [Complete with a Business Day in accordance with Section 2.2(a)
of the Credit Agreement.]
3. The Borrowers hereby requests that the Revolving Credit Loan bear
interest at the following interest rate, plus the Applicable Margin, if
applicable, as set forth below:
Component of Loan Interest Rate Interest Period Termination Date for
(LIBOR Rate only) Interest Period (if
applicable)
Base Rate or
LIBOR Rate
4. The principal amount of all Loans and L/C Obligations outstanding as of
the date hereof (including the requested Loan) does not exceed the maximum
amount permitted to be outstanding pursuant to the terms of the Credit
Agreement.
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<PAGE>
5. All of the conditions applicable to the Loan requested herein as set
forth in the Credit Agreement have been satisfied as of the date hereof and will
remain satisfied to the date of such Loan.
6. Capitalized terms used herein and not defined herein shall have the
meanings assigned thereto in the Credit Agreement.
[Signature Page Follows]
-84-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Notice of Borrowing
on behalf of the Borrowers this day of , .
ATTEST: VERMONT PURE HOLDINGS, LTD.,
as Borrower
By:_______________________________ By:________________________________
Name: Bruce MacDonald Name: Timothy Fallon
Title: Chief Financial Officer and Title: Chief Executive Officer and
Secretary President
(Corporate Seal)
ATTEST: VERMONT PURE SPRINGS, INC.,
as Borrower
By:_______________________________ By:________________________________
Name: Bruce MacDonald Name: Timothy Fallon
Title: Chief Financial Officer and Title: Chief Executive Officer and
Secretary President
(Corporate Seal)
-85-
<PAGE>
EXHIBIT C
to
Credit Agreement
dated as of January 28, 2000,
by and among
VERMONT PURE HOLDINGS, LTD. and VERMONT PURE SPRINGS, INC.
as Borrowers,
the Lenders party thereto,
and
First Union National Bank,
as Administrative Agent
FORM OF NOTICE OF ACCOUNT DESIGNATION
-86-
<PAGE>
NOTICE OF ACCOUNT DESIGNATION
Dated as of:____________
First Union National Bank, as Administrative Agent
PA 4848
1339 Chestnut Street
Philadelphia, PA 19107
Attention:
Telephone No.: (215) 786-2161
Telecopy No.: (215) 786-8448
Ladies and Gentlemen:
This Notice of Account Designation is delivered to you under Section 2.2(b)
of the Credit Agreement dated as of , 1999 (as amended, restated or otherwise
modified, the "Credit Agreement") by and among, VERMONT PURE HOLDINGS, LTD. and
VERMONT PURE SPRINGS, INC. (the "Borrowers"), the lenders party thereto (the
"Lenders") and First Union National Bank, as Administrative Agent.
1. The Administrative Agent is hereby authorized to disburse all Loan
proceeds into the following account(s):
___________________________________
ABA Routing Number:________________
Account Number:____________________
2. This authorization shall remain in effect until revoked or until a
subsequent Notice of Account Designation is provided to the Administrative
Agent.
3. Capitalized terms used herein and not defined herein shall have the
meanings assigned thereto in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Notice of Account
Designation this _____day of _______________, _____.
ATTEST: VERMONT PURE HOLDINGS, LTD.,
as Borrower
By:_______________________________ By:________________________________
Name: Bruce MacDonald Name: Timothy Fallon
Title: Chief Financial Officer and Title: Chief Executive Officer and
Secretary President
(Corporate Seal)
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<PAGE>
ATTEST: VERMONT PURE SPRINGS, INC.,
as Borrower
By:_______________________________ By:________________________________
Name: Bruce MacDonald Name: Timothy Fallon
Title: Chief Financial Officer and Title: Chief Executive Officer and
Secretary President
(Corporate Seal)
-88-
<PAGE>
EXHIBIT D
to
Credit Agreement
dated as of January 28, 2000,
by and among
VERMONT PURE HOLDINGS, LTD. and VERMONT PURE SPRINGS, INC.
as Borrowers,
the Lenders party thereto,
and
First Union National Bank,
as Administrative Agent
FORM OF NOTICE OF PREPAYMENT
-89-
<PAGE>
NOTICE OF PREPAYMENT
Dated as of:_____________
First Union National Bank, as Administrative Agent
PA 4848
1339 Chestnut Street
Philadelphia, PA 19107
Attention:
Telephone No.: (215) 786-2161
Telecopy No.: (215) 786-8448
Ladies and Gentlemen:
This irrevocable Notice of Prepayment is delivered to you under Section
2.3(c) of the Credit Agreement dated as of , 1999 (as amended, restated or
otherwise modified, the "Credit Agreement"), by and among, VERMONT PURE
HOLDINGS, LTD. and VERMONT PURE SPRINGS, INC. (the "Borrowers"), the lenders
party thereto (the "Lenders") and First Union National Bank, as Administrative
Agent.
1. The Borrowers hereby provides notice to the Administrative Agent that it
shall repay the following [Base Rate Loans] and/or [LIBOR Rate Loans]: .
(Complete with an amount in accordance with Section 2.3 of the Credit
Agreement.)
2. The Loan to be prepaid is a Revolving Credit Loan.
3. The Borrowers shall repay the above-referenced Loans on the following
Business Day: . (Complete with a Business Day at least one (1) Business Day
subsequent to the date of this Notice of Prepayment with respect to any Base
Rate Loan that is a Revolving Credit Loan and three (3) Business Days subsequent
to date of this Notice of Prepayment with respect to any LIBOR Rate Loan that is
a Revolving Credit Loan.)
4. Capitalized terms used herein and not defined herein shall have the
meanings assigned thereto in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Notice of Prepayment
this _____day of ____________, ______.
ATTEST: VERMONT PURE HOLDINGS, LTD.,
as Borrower
By:_______________________________ By:________________________________
Name: Bruce MacDonald Name: Timothy Fallon
Title: Chief Financial Officer and Title: Chief Executive Officer and
Secretary President
(Corporate Seal)
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<PAGE>
ATTEST: VERMONT PURE SPRINGS, INC.,
as Borrower
By:_______________________________ By:________________________________
Name: Bruce MacDonald Name: Timothy Fallon
Title: Chief Financial Officer and Title: Chief Executive Officer and
Secretary President
(Corporate Seal)
-91-
<PAGE>
EXHIBIT E
to
Credit Agreement
dated as of January 28, 2000,
by and among
VERMONT PURE HOLDINGS, LTD. and VERMONT PURE SPRINGS, INC.
as Borrowers,
the Lenders party thereto,
and
First Union National Bank,
as Administrative Agent
FORM OF NOTICE OF CONVERSION/CONTINUATION
-92-
<PAGE>
NOTICE OF CONVERSION/CONTINUATION
Dated as of:_________________
First Union National Bank, as Administrative Agent
PA 4848
1339 Chestnut Street
Philadelphia, PA 19107
Attention:
Telephone No.: (215) 786-2161
Telecopy No.: (215) 786-8448
Ladies and Gentlemen:
This irrevocable Notice of Conversion/Continuation (the "Notice") is
delivered to you under Section 4.2 of the Credit Agreement dated as of , , 1999
(as amended, restated or otherwise modified, the "Credit Agreement"), by and
among VERMONT PURE HOLDINGS, LTD. and VERMONT PURE SPRINGS, INC. (the
"Borrowers"), the lenders party thereto (the "Lenders") and First Union National
Bank, as Administrative Agent.
1. This Notice is submitted for the purpose of. (Check one and complete
applicable information in accordance with the Credit Agreement.)
* Converting all or a portion of a Base Rate Loan into a LIBOR Rate Loan
(a) The aggregate outstanding principal balance of such Loan is $ .
(b) The principal amount of such Loan to be converted is $ .
(c) The requested effective date of the conversion of such Loan is , .
(d) The requested Interest Period applicable to the converted Loan is
months.
* Converting a portion of LIBOR Rate Loan into a Base Rate Loan
-93-
<PAGE>
(a) The aggregate outstanding principal balance of such Loan is $ .
(b) The last day of the current Interest Period for such Loan is , .
(c) The principal amount of such Loan to be converted is $ .
(d) The requested effective date of the conversion of such Loan is , .
* Continuing all or a portion of a LIBOR Rate Loan as a LIBOR Rate Loan
(a) The aggregate outstanding principal balance of such Loan is $ .
(b) The last day of the current Interest Period for such Loan is , .
(c) The principal amount of such Loan to be continued is $ .
(d) The requested effective date of the continuation of such Loan is , .
(e) The requested Interest Period applicable to the continued Loan is
_______ months.
2. The principal amount of all Loans and L/C Obligations outstanding as of
the date hereof does not exceed the maximum amount permitted to be outstanding
pursuant to the terms of the Credit Agreement.
3. All of the conditions applicable to the conversion or continuation of
the Loan requested herein as set forth in the Credit Agreement have been
satisfied or waived as of the date hereof and will remain satisfied or waived to
the date of such Loan.
4. Capitalized terms used herein and not defined herein shall have the
meanings assigned thereto in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Notice of
Conversion/ Continuation this ____day of ________________, _____.
ATTEST: VERMONT PURE HOLDINGS, LTD.,
as Borrower
By:_______________________________ By:________________________________
Name: Bruce MacDonald Name: Timothy Fallon
Title: Chief Financial Officer and Title: Chief Executive Officer and
Secretary President
(Corporate Seal)
ATTEST: VERMONT PURE SPRINGS, INC.,
as Borrower
By:_______________________________ By:________________________________
Name: Bruce MacDonald Name: Timothy Fallon
Title: Chief Financial Officer and Title: Chief Executive Officer and
Secretary President
(Corporate Seal)
-94-
<PAGE>
EXHIBIT F
to
Credit Agreement
dated as of January 28, 2000,
by and among
VERMONT PURE HOLDINGS, LTD. and VERMONT PURE SPRINGS, INC.
as Borrowers,
the Lenders party thereto,
and
First Union National Bank,
as Administrative Agent
FORM OF OFFICER'S COMPLIANCE CERTIFICATE
-95-
<PAGE>
OFFICER'S COMPLIANCE CERTIFICATE
The undersigned, on behalf of VERMONT PURE HOLDINGS, LTD. and VERMONT PURE
SPRINGS, INC. (the "Borrowers"), hereby certify to the Administrative Agent and
the Lenders each as defined in the Credit Agreement referred to below, as
follows:
1. This Certificate is delivered to you pursuant to Section 7.2 of the
Credit Agreement dated as of , 1999 (as amended, restated or otherwise modified,
the "Credit Agreement"), by and among the Borrowers, the lenders party thereto
(the "Lenders") and First Union National Bank, as Administrative Agent.
Capitalized terms used herein and not defined herein shall have the meanings
assigned thereto in the Credit Agreement.
2. I have reviewed the financial statements of the Borrowers and their
Subsidiaries dated as of and for the period[s] then ended and such statements
fairly present in all material respects the financial condition of the Borrowers
and its Subsidiaries as of the dates indicated and the results of their
operations and cash flows for the period[s] indicated.
3. I have reviewed the terms of the Credit Agreement, and the related Loan
Documents and have made, or caused to be made under my supervision, a review in
reasonable detail of the transactions and the condition of the Borrowers and
their Subsidiaries during the accounting period covered by the financial
statements referred to in Paragraph 2 above. Such review has not disclosed the
existence during or at the end of such accounting period of any condition or
event that constitutes a Default or an Event of Default, nor do I have any
knowledge of the existence of any such condition or event as at the date of this
Certificate [except, if such condition or event existed or exists, describe the
nature and period of existence thereof and what action the Borrowers have taken,
is taking and proposes to take with respect thereto].
4. The Applicable Margin and calculations determining such figure are set
forth on the attached Schedule 1 and the Borrowers and their Subsidiaries are in
compliance with the financial covenants contained in Article IX of the Credit
Agreement as shown on such Schedule 1 and the Borrowers and their Subsidiaries
are in compliance with the other covenants and restrictions contained in the
Credit Agreement.
WITNESS the following signatures as of the____day of __________,____.
ATTEST: VERMONT PURE HOLDINGS, LTD.,
as Borrower
By:_______________________________ By:________________________________
Name: Bruce MacDonald Name: Timothy Fallon
Title: Chief Financial Officer and Title: Chief Executive Officer and
Secretary President
(Corporate Seal)
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<PAGE>
ATTEST: VERMONT PURE SPRINGS, INC.,
as Borrower
By:_______________________________ By:________________________________
Name: Bruce MacDonald Name: Timothy Fallon
Title: Chief Financial Officer and Title: Chief Executive Officer and
Secretary President
(Corporate Seal)
-97-
<PAGE>
Schedule 1
to
Officer's Compliance Certificate
-98-
<PAGE>
EXHIBIT G
to
Credit Agreement
dated as of January 28, 2000,
by and among
VERMONT PURE HOLDINGS, LTD. and VERMONT PURE SPRINGS, INC.
as Borrowers,
the Lenders party thereto,
and
First Union National Bank,
as Administrative Agent
FORM OF ASSIGNMENT AND ACCEPTANCE
-99-
<PAGE>
ASSIGNMENT AND ACCEPTANCE
Dated as of:__________________
Reference is made to the Credit Agreement dated as of , 1999 as amended,
restated or otherwise modified (the "Credit Agreement") by and among VERMONT
PURE HOLDINGS, LTD. and VERMONT PURE SPRINGS, INC. (the "Borrowers"), the
lenders party thereto (the "Lenders") and First Union National Bank, as
Administrative Agent. Capitalized terms used herein which are not defined herein
shall have the meanings assigned thereto in the Credit Agreement.
_______________________ (the "Assignor") and _________________________ (the
"Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, as of the Effective Date (as
defined below), a % interest in and to all of the Assignor's interest, rights
and obligations with respect to its Revolving Credit Commitment and Revolving
Credit Loans (including such percentage of the outstanding L/C Obligations) and
the Assignor thereby retains % of its interest therein. This Assignment and
Acceptance is entered pursuant to, and authorized by, Section 13.10 of the
Credit Agreement.
2. The Assignor (i) represents that, as of the date hereof, its Commitment
Percentage (without giving effect to assignments thereof which have not yet
become effective) under the Credit Agreement is %, the outstanding balances of
its Revolving Credit Loans (including its Revolving Credit Commitment Percentage
of the outstanding L/C Obligations) (unreduced by any assignments thereof which
have not yet become effective) under the Credit Agreement is $ ; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto, other
than that the Assignor is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any adverse
claim; (iii) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrowers or their Subsidiaries
or the performance or observance by the Borrowers or their Subsidiaries of any
of their obligations under the Credit Agreement or any other instrument or
document furnished or executed pursuant thereto; and (iv) attaches the Revolving
Credit Note delivered to it under the Credit Agreement and requests that the
Borrowers exchange such Revolving Credit Note for new Revolving Credit Notes
payable to each of the Assignor and the Assignee as follows:
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<PAGE>
Revolving Credit Note
Payable to the Order of: Principal Amount of Note:
_______________________ $_______________________
_______________________ $_______________________
3. The Assignee (i) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance; (ii) confirms that it has received
a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 7.1 thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (iii) agrees
that it will, independently and without reliance upon the Assignor or any other
Lender or Administrative Agent and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iv) confirms that it is
an Eligible Assignee; (v) appoints and authorizes the Administrative Agent to
take such action as agent on its behalf and to exercise such powers under the
Credit Agreement and the other Loan Documents as are delegated to the
Administrative Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (vi) agrees that it will perform in accordance
with their terms all the obligations which by the terms of the Credit Agreement
and the other Loan Documents are required to be performed by it as a Lender;
(vii) agrees to hold all confidential information in a manner consistent with
the provisions of Section 13.10(g) of the Credit Agreement; and (viii) includes
herewith for the Administrative Agent the two forms required by Section 4.11(e)
of the Credit Agreement (if not previously delivered).
4. The effective date for this Assignment and Acceptance shall be as set
forth in Section 1 of Schedule 1 hereto (the "Effective Date"). Following the
execution of this Assignment and Acceptance, it will be delivered to the
Administrative Agent for, to the extent required by the Credit Agreement,
consent by the Borrowers and the Administrative Agent and acceptance and
recording in the Register.
5. Upon such consents, acceptance and recording, from and after the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and
the other Loan Documents to which Lenders are parties and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations of a
Lender under each such agreement, and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement and the other Loan
Documents.
6. Upon such consents, acceptance and recording, from and after the
Effective Date, the Administrative Agent shall make all payments in respect of
the interest assigned hereby (including payments of principal, interest, fees
and other amounts) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE DEEMED TO BE A CONTRACT UNDER
SEAL AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF PENNSYLVANIA, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
-101-
<PAGE>
WITNESS the following signatures as of the _______ day of ______, ________.
ASSIGNOR:
By:______________________________
Title:___________________________
ASSIGNEE:
By:______________________________
Title:___________________________
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<PAGE>
Acknowledged and Consented to on behalf of the Borrowers:
ATTEST: VERMONT PURE HOLDINGS, LTD.,
as Borrower
By:_______________________________ By:________________________________
Name: Bruce MacDonald Name: Timothy Fallon
Title: Chief Financial Officer and Title: Chief Executive Officer and
Secretary President
(Corporate Seal)
ATTEST: VERMONT PURE SPRINGS, INC.,
as Borrower
By:_______________________________ By:________________________________
Name: Bruce MacDonald Name: Timothy Fallon
Title: Chief Financial Officer and Title: Chief Executive Officer and
Secretary President
(Corporate Seal)
Consented to and Accepted by:
FIRST UNION NATIONAL BANK,
as Administrative Agent
By:_______________________________
Name:_____________________________
Title:____________________________
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<PAGE>
Schedule 1
to
Assignment and Acceptance
1. Effective Date __________________, _____
2. Assignor's Interest Prior to Assignment
(a) Revolving Credit Commitment Percentage _______%
(b) Outstanding balance of Revolving Credit Loans $_____________
(c) Outstanding balance of Assignor's Revolving
Credit Commitment Percentage of the L/C
Obligations $_____________
3. Assigned Interest (from Section
1) of Revolving Credit Loans _______%
4. Assignee's Extensions of Credit After Effective Date
(a) Total outstanding balance of Assignee's
Revolving Credit Loans (line 2(b) times line 3) $_____________
(b) Total outstanding balance of Assignee's
Revolving Credit Commitment Percentage of
the L/C Obligations (line 2(c) times line 3) $_____________
5. Retained Interest of Assignor after Effective Date
(a) Retained Interest (from Section 1) of Revolving
Credit Commitment Percentage $______________
(b) Outstanding balance of Assignor's Revolving
Credit Loans (line 2(b) times line 5(a)) $______________
(c) Outstanding balance of Assignor's Revolving
Credit Commitment Percentage of L/C Obligations
(line 2(c) times line 5(a)) $______________
-104-
<PAGE>
6. Payment Instructions
(a) If payable to Assignor, to the account of Assignor to:
_______________________________________________
_______________________________________________
ABA No.:_______________________________________
Account Name:__________________________________
Account No.:___________________________________
Attn:__________________________________________
Ref:___________________________________________
(b) If payable to Assignee, to the account of Assignee to:
_______________________________________________
_______________________________________________
ABA No.:_______________________________________
Account Name:__________________________________
Account No.:___________________________________
Attn:__________________________________________
Ref:___________________________________________
-105-
SETTLEMENT AGREEMENT
1. The parties to this Settlement Agreement are Vermont Pure Holdings, Ltd.
("Vermont Pure"), and Pristine Mountain Springs, Inc., Amsource LLC, Barton
Lord and Ronald Colton (collectively, the "Debtors").
2. The Debtors shall pay to Vermont Pure the sum of One Million Two Hundred
Seventy Thousand Dollars ($1,270,000.00) no later than December 15, 1999.
One hundred fifty thousand dollars ($150,000.00) of this amount shall be
delivered to Charles Dougherty as escrow agent ("Escrow Agent"), pending
the resolution of issues described in paragraph three of this Settlement
Agreement. The balance of One Million One Hundred Twenty Thousand Dollars
($1,120,000.00) shall be delivered to Vermont Pure at its offices in
Randolph, Vermont.
3. Vermont Pure shall provide the Debtors with proof that Wesfield
Construction Company has been paid in cash or equivalent accepted by
Wesfield the sum of One Hundred Thirty Thousand Dollars ($130,000.00) in
connection with the June 18, 1999 disbursement by Marcon Capital
Corporation. If Vermont Pure cannot provide this proof by December 31,
1999, the Escrow Agent shall refund the Debtors the One Hundred Fifty
Thousand Dollars ($150,000.00) held in escrow. If Vermont Pure takes the
position that it has offered such evidence, the Debtors may elect by
written notice delivered to Vermont Pure by January 4, 2000, to offer
evidence to the contrary, so long as such offer of evidence is made on or
before January 15, 2000. The parties hereby appoint the mediator Charles
Dougherty to serve as arbitrator of any dispute between the parties on the
adequacy of such proof of payment to Wesfield. The decision of the
arbitrator (which shall be rendered by January 30, 2000 unless the
arbitrator determines that additional evidence is required) on the process
and substance for resolving such dispute shall be final, binding and
non-appealable. The parties shall split equally the cost of any
arbitration.
4. The Debtors hereby acknowledge that the assignment of all rights of
Amsource LLC under the Amended and Restated Spring Water License and Water
Supply Agreement, dated April 13, 1999 ("Water Supply Agreement"), to
Vermont Pure is final, absolute and irrevocable, and hereby irrevocably and
finally waive any objection to or argument against the enforcement by
Vermont Pure of that agreement according to its terms. The Debtors shall
execute a binding acknowledgement (the "Acknowledgement"), in a form
suitable for recording in Vermont land records, confirming all of the
rights provided to Vermont Pure under the Water Supply Agreement and this
Settlement Agreement, including (without limitation) rights to purchase
water on a priority basis and the rights of first refusal provided for in
<PAGE>
the Water Supply Agreement. None of the Debtors shall take any action to
interfere with Vermont Pure's rights under the Water Supply Agreement.
5. Vermont Pure and the Debtors shall execute an Addendum to the Water Supply
Agreement providing that Amsource, LLC, shall have the right to purchase on
a priority equal to Vermont Pure's up to five million (5,000,000) gallons
per month from the Pristine Mountain Spring in Stockbridge (the "Spring").
By equal priority, this paragraph means that the parties shall have an
equal right, superior to any other party, to purchase in the aggregate the
first ten million (10,000,000) gallons per month from the Spring; any
shortfall in supply shall be borne equally by the parties. Vermont Pure
shall retain all other priority rights provided by the Water Supply
Agreement, and Pristine shall not convey priority rights in the Spring to
any other party. The rights provided to Amsource under the Addendum may
only be exercised by Amsource. Amsource's rights under the Addendum shall
be non-assignable, except that in the event that a majority of Amsource's
membership interests are transferred or conveyed by the Debtors, Amsource
may continue to exercise the rights provided by the Addendum.
6. This Settlement Agreement does not effect any novation of any of the Loan
Documents (i.e., as that term is defined in the Debenture Purchase
Agreement and related documents, dated December 29, 1998) assigned by
Marcon Capital Corporation to Vermont Pure. In the event of a failure to
make the payments required or execute the Addendum and Acknowledgement
provided by this Settlement Agreement, Vermont Pure may enforce the terms
of this Settlement Agreement, or, at its sole election, any or all of the
Loan Documents. By making this Settlement Agreement, Vermont Pure is
postponing its enforcement of the Loan Documents in return for the actual
performance of the above-referenced obligations under the Settlement
Agreement. Provided, however, that if Vermont Pure elects to enforce the
Loan Documents instead of this Settlement Agreement, then, notwithstanding
Paragraph four above, the Acknowledgement shall be no longer enforceable,
and the parties shall be free to argue claims and positions regarding the
Water Supply Agreement. Further provided, that in the event Vermont Pure
elects to enforce this Settlement Agreement, it shall be entitled to
recover interest on all past due sums at the rate of 14 percent per year.
7. Vermont Pure and the Debtor shall stay all pending court actions unless
there is a failure to make the payment, or execute the Acknowledgement or
Addendum of this Settlement Agreement, at which point any party may, with
written notice to all other parties, pursue pending court actions, and
institute other proceedings. Simultaneously upon the payment of all money
required under this Settlement Agreement, and the execution and tendering
of the Acknowledgement and Addendum related to the Water Supply Agreement,
the parties shall jointly stipulate to the dismissal of all pending
litigation against each other with prejudice, and Vermont Pure shall
provide the Debtors with all original Loan Documents marked "paid and
satisfied", and shall execute all other documents provided by the Debtors
which are reasonably necessary to terminate any security interest provided
<PAGE>
by the Loan Documents. Without limitation, the Loan Documents terminated by
Vermont Pure in such circumstance shall include all rights of conversion
into ownership interest in Amsource, LLC.
8. Upon the payment of all money required under this Settlement Agreement, and
the execution and tendering of the Acknowledgement and Addendum related to
the Water Supply Agreement, Vermont Pure shall indemnify the Debtors
against all claims made by Marcon arising out of or connected to the Loan
Documents or the operating agreement of Amsource, LLC, and the parties
shall exchange mutual releases, excepting only performance of the
obligations arising under this Settlement Agreement and Water Supply
Agreement. In the event any party prevails in an action to enforce the
terms of this Settlement Agreement, that party may recover its reasonable
costs of litigation, including attorneys' fees.
9. Vermont Pure hereby represents that it is fully authorized to make this
Settlement Agreement, and that it makes this Settlement Agreement freely
and voluntarily following the advice of counsel of its choice, and that
Vermont Pure's agreement is not based on any representation or warranty by
the Debtors, except those contained in this Settlement Agreement. The
Debtors hereby represent that Lincoln Craighead is no longer involved in
the management of Amsource. The Debtors further represent that they are
fully authorized to execute this Settlement Agreement on behalf of Amsource
and Pristine Mountain Springs, Inc., and that all Debtors make this
Settlement Agreement freely and voluntarily, following full advice of
counsel of their choosing, and not based on any representations or
warranties of Vermont Pure.
Dated at Boston Massachusetts, this first day of December, 1999.
/s/: Timothy Fallon
- --------------------------------
Vermont Pure Holdings, Ltd.
By Timothy Fallon, its President
/s/: Ronald Colton
- --------------------------------
Amsource, LLC
By Ronald Colton, President
/s/: Ronald Colton
- --------------------------------
Pristine Mountain Springs, Inc.
By Ronald Colton, President
/s/: Ronald Colton
- --------------------------------
Ronald Colton
/s/: Barton Lord
- --------------------------------
Barton Lord
<PAGE>
Approved as to form:
/s/: Kevin Berry
- ---------------------------------
Vermont Pure Counsel, Kevin Berry
/s/: Michael Marks
- --------------------------------
Vermont Pure Counsel, Michael Marks
/s/: Biron Bedard
- --------------------------------
Amsource LLC Counsel, Biron Bedard
/s/: Frank Kenison
- --------------------------------
Amsource LLC Counsel, Frank Kenison
/s/: M.B. Neisner, Jr.
- --------------------------------
Pristine Mountain Springs of Vermont, Inc. Counsel, M.B. Neisner, Jr.
/s/: M.B. Neisner
- --------------------------------
Ronald Colton Counsel, M.B. Neisner
/s/: Biron Bedard
- --------------------------------
Barton Lord Counsel, Biron Bedard
Witnessed by Mediator:
/s/: Charles Dougherty
- --------------------------------
Charles Dougherty
ADDENDUM TO
AMENDED AND RESTATED SPRING WATER LICENSE
AND SUPPLY AGREEMENT AND ACKNOWLEDGMENT
PARTIES
The parties to this Addendum are Vermont Pure Holdings, Ltd. ("Vermont
Pure"), Pristine Mountain Springs, Inc. ("Pristine"), Amsource LLC ("Amsource"),
Barton Lord ("Lord") and Ronald Colton ("Colton").
BACKGROUND
The parties make this agreement based upon the following facts, which
the parties acknowledge to be true and correct:
1. Pristine and Amsource, LLC ("Amsource") were the original parties to an
Amended and Restated Spring Water License and Supply Agreement ("Water
Supply Contract") dated April 13, 1999. A short form version of the Water
Supply Contract was recorded in the Town of Stockbridge Land Records at
Book 59, Page 571-586.
2. Under the terms of the Water Supply Contract, Amsource's rights under the
contract were assignable.
3. Amsource's rights under the Water Supply Contract included, but are not
limited to, the right to purchase spring water from Pristine's spring
property located in Stockbridge, Vermont, a real property license to enter
the Stockbridge property to take and purchase water, and a right of first
refusal to purchase and/or lease Pristine's spring property.
4. Pursuant to a collateral assignment of the Spring Water License and Supply
Agreement ("Collateral Assignment") Amsource and Pristine collaterally
assigned their rights under the Water Supply Contract to Marcon Capital
Corporation ("Marcon").
5. Pursuant to an Assignment, dated September 30, 1999, Marcon assigned its
rights under the Water Supply Contract, in addition to other rights, to
Vermont Pure.
6. Pursuant to a written notice dated October 8, 1999, and recorded in the
Town of Stockbridge Land Records, Vermont Pure assumed all of Amsource's
rights under the Water Supply Contract From October 8th forward. These
<PAGE>
included, but were not limited to, the right to purchase water from the
Pristine Mountain Spring, the right to exercise the real property license
to enter the Pristine Mountain Spring property for purposes of taking
water, and the right of first refusal.
7. Pursuant to paragraph 4 of the Settlement Agreement between Vermont Pure
and Pristine dated December 1, 1999, Vermont Pure and Pristine agreed to
the terms of this Addendum and Acknowledgment in relation to the Water
Supply Contract and Amsource LLC agreed to assign all of its rights and
obligations under the Water Supply Contract to Vermont Pure.
Agreement Terms
In Recognitionof the foregoing and the exchange of goods and valuable
consideration, receipt of which is hereby acknowledged, Vermont Pure, Pristine
and Amsource, intending to be legally bound, make the following agreement:
1. Pristine, Amsource, Lord and Colton hereby acknowledge that the assignment
of all rights of Amsource under the Water Supply Contract to Vermont and
the assumption of those rights by Vermont Pure, was final, absolute and
irrevocable. It is agreed between the parties that Vermont Pure is not
obligated to purchase all of its requirements for spring water from
Pristine. Pristine, Amsource, Lord and Colton hereby irrevocably and
finally waive any objection to or argument against the enforcement by
Vermont Pure of the Water Supply Contract according to its terms. Without
limiting the generality of the foregoing, Pristine and Amsource hereby
formally confirm all of Vermont Pure's rights previously provided under the
Water Supply Contract to Amsource including (without limitation) the rights
to purchase water on a priority basis; and the right of first refusal to
purchase or lease the Pristine Spring as provided in the Water Supply
Contract.
2. Pristine, Amsource Barton Lord and Ronald Colton shall take no action to
interfere with the rights provided Vermont Pure under the Water Supply
Contract or this Addendum.
3. The Water Supply Contract shall remain in full force and effect, except to
the extent that it is amended by this Addendum as follows: Vermont Pure
shall have an equal priority with Amsource to purchase five million gallons
of water per month from the spring in Stockbridge, Vermont. By equal
priority, this paragraph means that Amsource and Vermont Pure shall have an
equal right, superior to any other party, to purchase in the aggregate the
first ten million gallons per month from the spring. Any shortfall in
supply shall be borne equally by Vermont Pure and Amsource. provided,
further, in the event Vermont Pure determines that it needs more than one
million gallons per month for the months of September through May or two
million gallons per month for the months of June, July and August in any
<PAGE>
year then Vermont Pure shall notify Pristine in writing at least seven (7)
days prior to purchasing water for the succeeding seven (7) day period as
to its requirements ("Requirements") for spring water and if Vermont Pure
does not use the full requirements and if Pristine can prove by executed
contracts that it could have sold the unused water and lost such sales,
Vermont Pure shall be deemed to have bought the unused water and shall pay
Pristine for same according to the terms of the Water Supply Contract.
However, in the event Vermont Pure does not notify Pristine of its intent
to use its full five million gallon equal right as set forth above, any
amount not so purchased shall be available on a priority basis for purchase
by Amsource. Vermont Pure shall retain all other priority rights provided
by the Water Supply Contract. Pristine shall not convey priority rights in
the spring to any other party.
4. The equal priority rights provided by amsource under this addendum may only
be exercised by amsource, and are non-assignable. provided, however, that
in the event that a majority of amsource's membership interests are
transferred or conveyed to another party, amsource, llc may continue to
exercise the rights provided by this addendum. n except to the extent
provided for by this addendum, all other provisions of the water supply
contract remain in full force and effect and are fully enforceable by
vermont pure and pristine.
5. Barton Lord and Ronald Colton join this agreement inasmuch as they are
parties to a settlement agreement involving the remaining parties. Messrs.
Colton and Lord are also principals of amsource. Mr. Colton is a principal
shareholder of Pristine.
DATED AT _________________________THIS __________ DAY OF ____________, 1999.
WITNESS: VERMONT PURE HOLDINGS, LTD.
_____________________ BY: ____________________________
Duly Authorized Agent
STATE OF ______________________)
SS
________________________COUNTY )
On this _________ day of _____________, 1999, personally appeared
_________________________, duly authorized agent of Vermont Pure Holdings, Ltd.,
and acknowledged this instrument, by him sealed and subscribed, to be his free
act and deed and the free act and deed of the corporation.
<PAGE>
[graphic omitted]
Notary Public
Dated at __________________________ this ___________ day of
________________, 1999.
WITNESS: AMSOURCE, LLC
_______________________ BY:___________________________
Duly Authorized Agent
STATE OF ___________________)
)SS
___________________ COUNTY )
On this ___________ day of ___________________, 1999, personally appeared
___________________________, duly authorized agent of Pristine Mountain Springs,
Inc. and acknowledged this instrument, by him sealed and subscribed, to be his
free act and deed and the free act and deed of the corporation.
[GRAPHIC OMITTED]
Notary Public
WITNESS: PRISTINE MOUNTAIN SPRINGS, INC.
_______________________ BY:_______________________________
Duly Authorized Agent
STATE OF _________________)
)SS
___________________ COUNTY)
On this ____________ day of _________________, 1999, personally appeared
__________________________, and acknowledged this instrument, by him sealed and
subscribed, to be his free act and deed and the free act and deed of the
corporation.
[GRAPHIC OMITTED]
Notary Public
Dated at ___________________, this ____________ day of
__________________, 1999.
<PAGE>
WITNESS:
_________________________ _______________________________
Barton Lord
STATE OF ________________)
) SS
_________________ COUNTY )
On this ____________ day of ________________, 1999, personally appeared
Barton Lord and acknowledged this instrument, by him sealed and subscribed, to
be his free act and deed and the free act and deed of the corporation.
______________________________
Notary Public
Dated at _____________________, this _______________ day of
______________________, 1999.
WITNESS:
__________________________ _____________________________
Barton Lord
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<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
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<NAME> VERMONT PURE. HOLDINGS, LTD.
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<CURRENCY> U.S. DOLLARS
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-28-2000
<PERIOD-START> OCT-21-1999
<PERIOD-END> JAN-29-2000
<EXCHANGE-RATE> 1
<CASH> 1,112,919
<SECURITIES> 0
<RECEIVABLES> 3,488,943
<ALLOWANCES> 372,065
<INVENTORY> 2,797,236
<CURRENT-ASSETS> 9,337,014
<PP&E> 16,573,373
<DEPRECIATION> 5,312,299
<TOTAL-ASSETS> 34,595,224
<CURRENT-LIABILITIES> 5,075,527
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0
0
<COMMON> 10,340
<OTHER-SE> 13,374,596
<TOTAL-LIABILITY-AND-EQUITY> 34,595,224
<SALES> 6,423,768
<TOTAL-REVENUES> 6,423,768
<CGS> 2,311,370
<TOTAL-COSTS> 2,311,370
<OTHER-EXPENSES> 4,197,726
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 278,713
<INCOME-PRETAX> (91,154)
<INCOME-TAX> 0
<INCOME-CONTINUING> (91,154)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (91,154)
<EPS-BASIC> (.01)
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