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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
____ EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended DECEMBER 31, 1996 or
____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ______________ to _______________
Commission file number 1-12630
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CENTERPOINT PROPERTIES CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
MARYLAND 36-3910279
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(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
401 NORTH MICHIGAN AVENUE, SUITE 3000, CHICAGO, ILLINOIS 60611
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (312) 346-5600
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Securities registered pursuant to Section 12(b) of the Act:
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<CAPTION>
<S> <C>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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Common Stock, par value $.001 New York Stock Exchange
8.22% Convertible Subordinated Debentures due 2004 New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:
NONE
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(Title of Class)
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.
X Yes No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
As of March 19, 1997, the aggregate market value of the voting stock held by
non-affiliates of the registrant was $495,767,438 (based on 15,864,558 shares
held by non-affiliates and computed by reference to the reported closing
price).
The registrant had 16,706,229 shares of its common stock, $.001 par value,
outstanding as of March 19, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Common Stock and Debenture Prospectuses of the registrant, dated
December 3, 1993, and a Common Stock Prospectus of the registrant, dated January
19, 1995, each filed pursuant to Rule 424 under the Securities Act of 1933, as
amended, portions of the Registration Statement on Form S-3 dated January 6,
1997, portions of the registrant's Form 10-Q for the quarter ended September 30,
1995, portions of the 10-K for the year ended December 31, 1995 and portions of
the 10-Q for quarter ended September 30, 1996 are incorporated by reference
into Part IV of this Annual Report on Form 10-K. A portion of the registrant's
definitive proxy statement is incorporated by reference into Part III of this
Annual Report on Form 10-K.
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TABLE OF CONTENTS
PART I Page
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Item 1. Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 2. Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 21
Item 4. Submission of Certain Items to a Vote of Security Holders. . . . . 21
PART II
Item 5. Market for Registrant's Common Equity and Related Matters. . . . . 22
Item 6. Selected Historical Financial Data. . . . . . . . . . . . . . . . 23
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . . . . . . . . . . 25
Item 8. Financial Statements and Supplementary Data. . . . . . . . . . . . 30
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure. . . . . . . . . . . . . . . . . . . . . . . 30
PART III
Item 10. Directors and Executive Officers of the Registrant. . . . . . . . 31
Item 11. Executive Compensation. . . . . . . . . . . . . . . . . . . . . . 31
Item 12. Security Ownership of Certain Beneficial Owners and Management. . 31
Item 13. Certain Relationships and Related Transactions. . . . . . . . . . 31
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. . 32
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PART I
ITEM 1. BUSINESS.
THE COMPANY
CenterPoint Properties Corporation (the "Company") is a fully
integrated real estate company focused on the acquisition, development,
redevelopment, management and ownership of warehouse/industrial property
located in Greater Chicago (defined as the area within a 150-mile radius of
Chicago, including Milwaukee, Wisconsin and South Bend, Indiana), which,
according to a ranking of markets published by Torto Wheaton Research and
information published by CB Commercial, totals approximately 1.2 billion
square feet, making it the largest warehouse/industrial market in the United
States. The Company's investment and management portfolio currently consists
of 70 warehouse/industrial properties containing approximately 13.3 million
square feet (see the table of warehouse/industrial properties beginning on p.
14). The Company also owns and manages three retail properties, one office
property and one apartment property, has issued two mortgages on
warehouse/industrial properties, and is currently developing eight
build-to-suit projects. The Company's total investment and management
portfolio, including the non-industrial properties, mortgage investments and
build-to-suit projects, is approximately 16.4 million square feet. Based on
published statistics regarding square feet of space owned and managed by
other firms and publicly available information filed with the Securities and
Exchange Commission, as well as its knowledge and experience in the market,
the Company believes it is the largest owner and operator of
warehouse/industrial property in Greater Chicago. The Company's properties
are currently 98% leased, with the warehouse/industrial properties occupied
by 132 tenants in diverse industries and no tenant accounting for the lease
of more than 6% of the total square footage of the Company's
warehouse/industrial portfolio. Substantially all of the Company's
properties have been constructed or renovated during the past ten years.
INVESTMENT OBJECTIVES AND BUSINESS POLICIES
The Company's objective is to maximize stockholder value by pursuing a
business strategy focused on investment and ownership of warehouse/industrial
properties in Greater Chicago and a growth strategy consisting of (i)
intensive management of its existing properties and (ii) the acquisition of
existing leased warehouse/industrial properties, build-to-suit projects and
properties suitable for redevelopment; and (iii) development of buildings for
purchase by tenants or institutions generating fee income for the Company.
BUSINESS STRATEGIES
- WAREHOUSE/INDUSTRIAL PROPERTY. The Company believes that for the
following reasons investment in warehouse/industrial property provides
the opportunity for attractive returns and stable cash flow:
- LOW CAPITAL REQUIREMENTS. The cost per square foot of developing
warehouse/industrial properties typically ranges between $40-45 per
square foot, which is lower than the cost of developing other types of
property. From the Company's perspective, this results in less capital
committed to any particular property, permitting greater
diversification of the Company's risk. In addition, relative to other
property types, fewer tenant improvements are required to renew or
lease warehouse industrial space, minimizing the level of recurring
capital expenditures necessary to sustain rental income.
- HIGH TENANT RETENTION. Unlike office, retail and multi-family
buildings, most warehouse/industrial buildings are occupied by a
single tenant. Relocation tends to be costly for
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tenants of warehouse/industrial properties because of high tenant
investment in production set up expenses, machinery and other site
specific improvements (in many cases higher than the landlord's
investment). To avoid these costs, tenants typically lease space that
exceeds their immediate needs or space in buildings that are readily
expandable. Tenant retention and expansion therefore tend to be higher
than for other property types.
- FAVORABLE LEASE TERMS. Warehouse/industrial buildings generally are
leased on a "triple net" basis, under which tenants are contractually
obligated to pay directly, or reimburse the landlord, for virtually
all costs of occupancy, including property taxes, utilities, insurance
and maintenance. In addition, the leases generally provide for rent
growth through contractual rent increases or increases tied to certain
indices such as the Consumer Price Index.
- SHORT CONSTRUCTION PERIODS. The Company believes that the
comparatively short development period for industrial buildings
(typically six to nine months) relative to other property types has
resulted in less speculative building and, therefore, a supply of
industrial property that more closely corresponds to tenant demand.
This has kept vacancy levels on average lower than for other property
types and has produced greater rental rate stability.
- LOW COST OF MANAGEMENT. The Company believes that the cost of
managing warehouse/industrial property tends to be less than for other
property types, because of large average tenant spaces, more limited
building and tenant improvements to maintain, and relatively long
lease terms.
- LIMITED INSTITUTIONAL COMPETITION. The Company believes that higher
overall investment returns are achievable for warehouse/industrial
property than other property types because such assets, typically $3
to $6 million in purchase price, are too small to justify
institutional attention. The Company's typical competitor for assets
of this size is a sponsor of a single asset partnership that typically
has a higher cost of capital and less financial flexibility than the
Company.
GREATER CHICAGO. The Company believes that Greater Chicago offers
significant opportunities for investment in and ownership of
warehouse/industrial property for the following reasons:
- ECONOMIC CHARACTERISTICS AND GROWTH. Greater Chicago is the nation's
largest warehouse/industrial market, with a diverse tenant base that
lessens cyclical risk and a central continental location and
transportation infrastructure that support continued growth. Greater
Chicago is currently enjoying very favorable trends in growth,
business investment, utilization and employment, which have resulted
in increased space demand and increasing rents. Although the Company
believes it is the largest owner and operator of warehouse/industrial
property in Greater Chicago, its properties represented less than 1.3%
of the market (based on square footage) as of December 31, 1996,
allowing substantial opportunities for future growth through
acquisitions.
- MANAGEMENT EXPERIENCE. The Company's executive officers have over 100
years of combined real estate experience, primarily in
warehouse/industrial properties located in Greater Chicago. Since
1977, these executive officers have completed approximately 300
industrial or commercial real estate projects aggregating over
approximately 30 million square feet. This experience creates numerous
opportunities for acquisitions, redevelopments and build-to-suits
because of management's long-standing relationships with tenants and
brokers within Greater
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Chicago. Management's market knowledge enables the Company to rapidly
evaluate and respond to investment and leasing transactions and to
actively create such opportunities.
- BUSINESS EFFICIENCIES. The Company believes that geographic
concentration provides significant business efficiencies. As a large
owner of warehouse/industrial property located in most major Greater
Chicago submarkets, the Company is able to market multiple locations
and buildings and consequently has a competitive advantage in securing
leasing opportunities. The Company also believes that operating
economies of scale resulting from geographic concentration enhance its
ability to offer lower occupancy costs to its tenants. The Company
believes that its focus on warehouse/industrial properties in Greater
Chicago also enables the expansion of its portfolio without a
corresponding increase in general and administrative expense.
GROWTH STRATEGIES
INTENSIVE PROPERTY MANAGEMENT. The Company strives to provide the
highest possible service to its tenants by addressing its tenants' occupancy
needs and meeting their evolving space requirements. The Company seeks to
become the "industrial landlord of choice" in the markets it operates.
Management believes tenant satisfaction resulting from the Company's "hands
on" management approach increases rental revenues by increasing tenant
retention, minimizing reletting expense and facilitating rental increases.
Management also believes that tenant satisfaction creates profitable
expansion and build-to-suit opportunities from existing tenants.
To develop its tenant franchise, the Company provides a variety of
tenant services, including providing high quality, attractive space; promptly
and fairly attending to tenant building or billing concerns; obtaining the
lowest possible utility, insurance and real estate tax charges; and
responding rapidly to expansion or space reconfiguration requests. The
Company views tenant service as a key factor in its business and has
established tenant satisfaction as one of its primary corporate goals and a
principal measure in the Company's incentive pay program for employees.
The Company's tenant service strategy benefits from the size and
concentration of the Company's real estate holdings in Greater Chicago. As a
large owner of warehouse/industrial properties in a single geographic market,
the Company believes it can obtain for its tenants the benefits of bulk
purchase of goods and services. Management believes that minimizing tenants'
occupancy costs builds tenant loyalty and provides the Company with a
significant marketing advantage.
The Company's own staff is responsible for managing the Company's
entire real estate portfolio. The Company currently staffs six management
regions, each serving a particular segment of Greater Chicago, and each
staffed with a team consisting of a regional manager, an assistant manager
and accounting support personnel. Each team is responsible for all aspects
of the management and leasing of its assigned properties. The Company
intends to establish additional regional offices as the size of its portfolio
increases.
To incentivize employees to provide the highest level of tenant
service, the Company has established a pay-for-performance compensation plan
under which the incentive pay of each participating employee depends in part
on the results of an annual tenant satisfaction survey administered by the
Company's independent directors. Employee incentive pay is also dependent on
the achievement of targeted portfolio occupancy and targeted per share funds
from operations, each of which the Company believes is enhanced by tenant
service.
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VALUE-ADDED INVESTMENTS. The Company seeks to acquire
warehouse/industrial properties that have an initial cash yield greater than
the Company's long term cost of capital (currently estimated to be 9.5 to
10.0%), that offer the best opportunity for cash flow growth and that meet
the Company's investment criteria. The Company focuses on three types of
transactions to which it can add value through the application of its
development, management, construction, marketing and financial expertise.
These transactions include the acquisition of: (i) existing leased
properties, (ii) build-to-suit projects and (iii) older, economically viable
properties that can be redeveloped. A table of the Company's
warehouse/industrial properties with a description of each investment type is
set forth beginning on page 14 hereof.
- LEASED PROPERTIES. The Company focuses primarily on
warehouse/industrial properties and build-to-suits with purchase
prices ranging between $3 million and $6 million, which management
believes are too small to be efficiently acquired on an individual
basis by most institutions. Competition for these properties is
primarily limited to private entities formed to purchase and operate
single assets. The Company believes that scarcity of private equity
capital due to the reduction in real estate tax benefits from property
ownership and the reluctance of banks and other financial institutions
to provide financing at attractive rates have kept initial required
yields for smaller warehouse/industrial properties relatively high.
As a public company with significant access to capital, including its
lines of credit, the Company believes that it will continue to be able
to take advantage of numerous acquisition opportunities in this price
range.
- BUILD-TO-SUIT PROPERTIES. In a build-to-suit transaction, the Company
typically enters into a fixed-price forward purchase commitment for a
property that has been substantially preleased to a single tenant,
thereby eliminating the construction and leasing risk generally
associated with speculative building. Although tenants are involved
in site selection and design decisions, it is management's policy to
acquire buildings readily adaptable to a variety of tenants and
alternative uses. The Company has achieved and expects to continue to
achieve favorable yields from build-to-suit transactions because of
the Company's active involvement in the creation and financing of
these projects.
- REDEVELOPMENT PROPERTIES. The Company will seek to acquire certain
warehouse/industrial properties for redevelopment, subdivision and
re-leasing. Such properties are generally larger than the leased
properties and build-to-suits acquired by the Company and typically
involve significant reconfiguration and redevelopment expense prior to
re-leasing. Competition for these properties is limited because, in
management's experience, institutional investors generally lack
redevelopment capability and prefer to invest in new leased product
and because smaller privately held firms typically lack the capital
necessary to engage in redevelopments. Management intends to acquire
for redevelopment only properties with sufficient existing cash flow
or expected cash flow from pre-leasing to cover the capital cost of
the Company's initial investment. Redevelopment projects will be
acquired only if the Company determines that underlying tenant demand
exists to complete the leasing of any vacant space at favorable rates,
that a substantial rent advantage can be secured through lower
property acquisition cost and that the anticipated increase in Company
cash flow justifies associated project risks.
- REDEPLOYMENT OF CAPITAL. The Company will seek, where possible, to
sell properties in transactions intended to qualify as tax-free
exchanges under applicable provisions of the
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Internal Revenue Code and redeploy the proceeds of such sales
in properties with higher yielding opportunities where the Company
believes significant value can be added.
The Company has developed the following investment criteria which it has
determined are important to maximize its return on investment:
- ADAPTABLE STRUCTURE AND CONFIGURATION. To maximize occupancy and
minimize reletting expense and portfolio vacancy, the Company seeks
"generic" properties or properties that have flexible floor plans
amenable to inexpensive subdivision and adaptable to a wide variety of
industrial or warehouse uses. A building should typically be
single-story, with a ceiling height of at least 18 feet (measured from
the floor to the lowest point of the horizontal roof supports). The
building must be structurally sound, capable of bearing heavy floor
loads and readily divisible for use by multiple tenants. Generally,
less than 10% of the building's gross leasable area should be devoted
to office or similar uses. The Company generally does not intend to
invest in tenant-specific improvements not usable by other potential
tenants, and it generally does not intend to acquire limited or
special use properties, such as those devoted to research and
development, heavy manufacturing processes or retail warehouse
outlets.
- LOCATION AND TRANSPORTATION ACCESS. To be acceptable to diverse
tenants, a property should be located in a well-maintained industrial
park or area zoned for industrial uses and be in close proximity to
easily accessible interstate highway interchanges. The building
itself should have adequate loading docks and be sited to permit truck
access and circulation. Rail service is also desirable.
- ENVIRONMENTAL AND ZONING COMPLIANCE. A property must be in compliance
with applicable environmental regulations, must not present material
financial risk to the Company due to potential remediation costs
associated with prior or ongoing practices or environmental conditions
at the property, and must not be likely to be threatened by
ascertainable material environmental hazards emanating from
surrounding properties. The intended use of the property must also be
in compliance with all applicable zoning, fire and business
ordinances.
- EXPANSION POTENTIAL. A property should have available additional land
to permit expansion by existing tenants.
- TENANT CREDIT. A property should be leased to one or more
well-managed, creditworthy tenants that are capable of meeting their
rent and other lease obligations. A tenant's operations must be
environmentally sound and must not damage the property or impair
reletting. The tenant's business should also be consistent with the
Company's tenant diversification goals.
- LEASE CHARACTERISTICS. Existing or anticipated leases should provide
for (i) rents consistent with the rents paid by comparable tenants in
similar facilities in the same submarkets; (ii) the pass through to
tenants of all operating, maintenance, tax and administrative costs
and increases in such costs; (iii) rent indexation or fixed rental
increases that equal or exceed management's expectation for inflation;
and (iv) a term consistent with the amount of the Company's investment
in the property and compatible with the Company's overall lease
expiration schedule.
- FEE DEVELOPMENT. In addition to revenues from value-added investment,
the Company earns fees from the development of assets for purchase by
tenants and institutions. Typically, these
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transactions have yields below the Company's investment return hurdle,
but offer substantial profit opportunities relative to the level of
required capital and management time. The Company is afforded these
opportunities as a consequence of the size of its existing portfolio
and its market penetration. The Company's fee development business
has been, and is expected to continue to be, a recurring source of
revenue.
THE COMPANY'S MARKET AREA: GREATER CHICAGO
The Company's target market is Greater Chicago, the region within a
150-mile radius of the City of Chicago, including Milwaukee, Wisconsin and
South Bend, Indiana. Greater Chicago lies at the center of one of the
nation's principal population and production regions and, as a consequence,
has become a major warehouse/industrial market. Management believes that the
size, location, transportation and demographic advantages, tenant diversity,
favorable growth trends and real estate market conditions of its target
market will support continued leasing and acquisition activity, enhancing the
Company's growth in per share distributable cash flow.
LOCATION, TRANSPORTATION AND DEMOGRAPHIC ADVANTAGES
Greater Chicago encompasses over 1.2 billion square feet of
warehouse/industrial property, making the area the largest
warehouse/industrial market in the United States. The area has achieved its
prominence as a manufacturing and distribution center as a result of its
central continental location and extensive air, roadway, rail and water
transportation infrastructure connecting the Greater Chicago area with a
contiguous 13-state region consisting of Illinois, Wisconsin, Michigan, Ohio,
Pennsylvania, West Virginia, Tennessee, Kentucky, Indiana, Missouri, Iowa,
Nebraska and Minnesota.
The latest census report issued by the United States Department of
Commerce reported that this 13-state region accounted for $1.6 trillion in
gross product (representing approximately one-third of the nation's economic
activity), produced by 1.8 million industrial and commercial firms serving a
residential population of approximately 78 million residents. Published
census data indicate that Greater Chicago is the dominant economic, work and
population center of this region as the home to over eight million residents
and over 59,000 diverse industrial and commercial firms. The diversity of
Greater Chicago business provides the Company the opportunity to capitalize
on different trends affecting real estate demand and usage by different
manufacturers and wholesalers. The diversity of business also reduces the
Company's exposure to changes in the fortunes of any single type of business.
ECONOMIC AND EMPLOYMENT TRENDS
Current manufacturing, productivity, business investment, capacity
utilization, and employment trends in the Midwest region of the U.S. and in
Greater Chicago are positive. The Midwest Manufacturing Index for the
Midwest region, as published by the Federal Reserve Bank of Chicago, has been
steadily expanding since 1991 and was at its highest level at December 31,
1995 in more than eight years. The Midwest region has also recorded
increases in manufacturing and wholesale employment and has exceeded the
rates of growth of the United States as a whole. Management believes that
these trends are favorable indicators of growth in the warehouse/industrial
property market.
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WAREHOUSE/INDUSTRIAL DEMAND AND SUPPLY
Total absorption of warehouse/industrial space in the Greater Chicago
area is at record levels. Several factors contribute to the lag in supply of
industrial properties in Chicago:
- Desirable land close to Chicago has become difficult to acquire
because land loan financing generally is unavailable.
- High-growth municipalities in the Chicago market are beginning to
impose restrictive zoning and impact fees on new development.
- Traditional industrial real estate funding sources (such as banks and
insurance companies) have continued to curtail their lending activity.
TRANSACTIONS DURING 1996
During 1996, the Company accomplished the following:
1996 ACQUISITIONS
- In April, 1996, the Company purchased a 630,000 square foot industrial
warehouse building in Hodgkins, Illinois for approximately $13.2
million. The acquisition was funded with advances under the Company's
lines of credit.
- In May, 1996, the Company acquired an industrial property in
Milwaukee, Wisconsin (184,000 square feet) for $5.1 million and an
industrial property in Elk Grove Village, Illinois (42,000 square
feet) for $1.2 million. The acquisitions were funded with advances
under the Company's lines of credit.
- In May, 1996, the Company acquired an existing 60-year land lease for
50 acres within Chicago's O'Hare International Airport. Under the
terms of the lease, base rent is $0.30 per square foot, escalating by
$0.009 per square foot per year. Base rent is also increased in
relation to the development of the premises. An additional amount for
percentage rent is due under the lease in an amount equal to 3.13% of
net cash flow, net financing proceeds and net residual receipts.
O'Hare Express Center, being developed on the land, will be a $60
million air freight forwarding and warehouse complex. The 825,000
square foot complex is anticipated to be constructed in three phases
over a three year period. The first building, a 138,000 facility for
Burlington Air Express has been completed and was sold to Burlington
Air Express in October 1996. Two buildings consisting of
approximately 315,000 square feet for Air Canada, DHL Airways,
Alliance Airlines and a tenant yet to be identified are under
construction or development.
- In June, 1996, the Company acquired industrial properties in Franklin
Park, Illinois (274,000 square feet), Itasca, Illinois (202,000 square
feet) and two in Elk Grove Village (82,000 square feet and 152,000
square feet) for $9.3 million, $10 million, $2.9 million and $5.2
million, respectively. These acquisitions were funded by the
assumption of two mortgages totaling $13.3 million, $7.2 million from
the proceeds of dispositions of properties in May, 1996 (described
below) and the balance from advances under the Company's lines of
credit.
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- In September, 1996, two industrial properties were purchased. The
first property, located in Northlake, Illinois (1,354,000 square
feet), was purchased for approximately $22.6 million and funded in
part with a $16.0 million advance under the Company's line of credit
with Lehman Brothers Holdings Inc. and in part with proceeds of a
public offering of shares of the Company's Common Stock completed on
July 2, 1996. The other property, located in Franklin Park, Illinois
(66,000 square feet), was purchased for approximately $1.9 million and
funded with proceeds from the exchange properties sold in May, 1996.
- In October, 1996, the Company acquired three industrial properties and
one office building. The three industrial properties, located in
Buffalo Grove, Illinois (118,000 square feet), Lemont, Illinois
(64,000 square feet), and St. Charles, Illinois (103,000 square feet),
were purchased for approximately $6.0 million, $2.3 million and $3.3
million, respectively, and were funded in part with a $4.0 million
advance under the Company's line of credit with Lehman Brothers
Holdings, Inc. and in part with the proceeds from a tax free exchange
of properties in May, 1996 and September, 1996. The office building,
located in Elgin, Illinois (118,000 square feet), was purchased for
approximately $5.2 million and funded with an advance under the
Company's line of credit with Lehman Brothers Holdings, Inc.
- In November, 1996, the Company purchased an industrial property,
located in Arlington Heights, Illinois (500,000 square feet), for
approximately $15.0 million which was funded with an advance under the
Company's new unsecured credit facility co-led by The First National
Bank of Chicago and Lehman Brothers Holdings, Inc.
1996 DISPOSITIONS
- In April, 1996, the Company sold a retail property at 4833 W.
Diversey, Chicago, Illinois (12,000 square feet) for approximately
$0.7 million.
- In May, 1996, the Company sold an industrial property at 1390 Lunt,
Elk Grove Village, Illinois (31,000 square feet) for approximately
$1.2 million upon the exercise of a tenant purchase option. In
addition, the Company sold industrial properties located at 960-1100
Maplewood Drive, Itasca, Illinois (123,000 square), 905-909 Irving
Park Road, Itasca, Illinois (46,000 square feet), 6845 Santa Fe Drive,
Hodgkins, Illinois (64,000 square feet) and 1001 Frontenac Road,
Naperville, Illinois (68,000 square feet) for an aggregate of $15.1
million. The net proceeds from these dispositions were redeployed in
new investments and acquisitions in transactions intended to qualify
as a tax-free exchange under applicable provisions of the Internal
Revenue Code.
- In June, 1996, the Company sold an industrial property at 5954 W.
116th Street, Alsip, Illinois (18,000 square feet) for approximately
$0.5 million.
- In September, 1996, the Company disposed of property located in St.
Charles, Illinois (313,000 square feet) in a transaction that is
intended to qualify as a tax-free exchange under applicable provisions
of the Internal Revenue Code. Consideration for the property was
approximately $5.4 million.
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1996 SECURITIES OFFERINGS
- The Company filed a shelf registration statement on Form S-3
(Registration Statement No. 33-93074) in June, 1995 for the
registration of $200,000,000 in debt securities, common stock,
preferred stock and securities warrants, and the registration
statement was declared effective by the Commission on July 27, 1995.
On January 22, 1996, the Company filed a post-effective amendment to
the registration statement, removing the registration of debt
securities, preferred stock and warrants to purchase debt securities
and preferred stock. On June 26, 1996, the Company filed a prospectus
supplement relating to the offering, under the shelf registration
statement on Form S-3, of up to 3,450,000 shares of common stock.
Lehman Brothers, Inc. agreed to purchase 3,000,000 shares on a firm
commitment basis, at prevailing market prices, with an over-allotment
option to purchase up to an additional 450,000 shares. On July 2,
1996, the Company completed the public offering of 3,450,000 shares of
common stock at $23.75 a share, resulting in net proceeds of
approximately $80.2 million after underwriting discounts. The
proceeds of the offering were used to repay approximately $55.2
million then outstanding under the Company's lines of credit and to
fund approximately $24.9 million in investments.
- On December 19, 1996, the Company filed a shelf registration statement
on Form S-3 (Registration Statement No. 333-18235) for the
registration of $200,000,000 in debt securities, common stock,
preferred stock and securities warrants, and the registration
statement was declared effective by the Commission on January 6, 1997.
The Prospectus included in the Registration Statement is a combined
Prospectus which also relates to common stock remaining outstanding
under Registration Statement No. 33-93074.
1996 FINANCINGS
- In April, 1996, the Company refunded its outstanding 1991 and 1993 tax
exempt and related taxable bonds by issuing new tax exempt and taxable
bonds in the aggregate principal amount of $22.22 million. The City
of Gary, Indiana, was the nominal issuer of both the refunded and the
refunding bonds. The new bonds were issued under a flexible
"multi-modal" facility permitting the issuance of indebtedness in
maturities up to five years, with the interest rate resetting to
market on the maturity date selected. The new issuance facility is
guaranteed by The Royal Bank of Scotland, which also guaranteed the
refunded debt. The refunding bonds were issued in a tax exempt tranche
of $20.54 million and a $1.68 million taxable tranche. Both tranches
have a nominal maturity of March 1, 2031. The refunded bonds were
issued in two series, 1991 ($15.5 million) and 1993 ($7.5 million),
which were divided into tax exempt and taxable tranches aggregating
$20.54 million and $2.46 million, respectively. The balance of the
bonds ($0.78 million) not refunded through the reissuance of new bonds
was refunded with cash on hand.
- On October 24, 1996, the Company closed a $135 million unsecured
credit facility to replace the Company's secured line of credit with
Lehman Brothers Holdings Inc. and the Company's secured line of credit
with LaSalle National Bank. The $135 million line of credit is co-led
by The First National Bank of Chicago, as administrative agent, and
Lehman Brothers Holdings Inc., as documentation agent, and the
participating banks included The First National Bank of Boston,
NationsBank, N.A., Bank of America Illinois and LaSalle National Bank.
The current interest rate is LIBOR plus 1.15% for LIBOR borrowings and
First Chicago's corporate base rate plus .15% for other borrowings.
The Company borrowed $20.8 million under the new unsecured line of
credit to repay and terminate its secured line
-9-
<PAGE>
of credit with Lehman Brothers Holdings Inc., and the Company
terminated its secured line of credit with LaSalle National Bank.
OTHER DEVELOPMENTS IN 1996
- At the Annual Meeting of Stockholders on May 14, 1996, the
stockholders approved, among other things, an amendment to the
Articles of Incorporation of the Company authorizing the issuance of
2,272,727 shares of new non-voting Class B Common Stock. Upon
stockholder approval of the amendment to the Articles of
Incorporation, the issued and outstanding shares of Series A Preferred
Stock were automatically converted, on a one for one basis, into
shares of Class B Common Stock.
- Prior to June 12, 1996, the Company's Common Stock and 8.22%
Convertible Subordinated Debentures (the "Debentures") were listed on
the American Stock Exchange under the symbol "CNT." On June 12, 1996,
the Company's Common Stock and Debentures were listed on the New York
Stock Exchange under the symbol "CNT."
SUBSEQUENT DEVELOPMENTS
- From December 31, 1996 through March 5, 1997, an additional $2,195,000
of convertible subordinated debentures have been converted to 120,259
shares of common stock, leaving a balance of convertible subordinated
debentures outstanding of $12,185,000.
- On January 17, 1997, the Company acquired an industrial property
located in Waukegan, Illinois for approximately $6.4 million, which
was funded with a $5.1 million advance under the Company's unsecured
credit facility co-led by The First National Bank of Chicago and
Lehman Brothers Holdings, Inc. and the remainder from working capital.
- On March 6, 1997, the Company completed a public offering of 2,250,000
shares of common stock at $31.50 per share under its shelf
registration statement declared effective by the Securities and
Exchange Commission in January, 1997. Net proceeds from the offering
after the underwriting discounts were approximately $67.2 million. The
proceeds of the offering were used to repay approximately $58.2
million outstanding under the Company's unsecured credit facility
co-led by The First National Bank of Chicago and Lehman Brothers
Holdings, Inc. with the balance of $9.0 million to fund investments.
EMPLOYEES
At March 1, 1997, the Company had 100 full-time and 30 part-time
employees. Of the full-time employees, 82 are involved with property
management, operations, leasing and acquisition activities, 8 are involved
with general financial administration, financing activities, reporting and
acquisition analysis, and 10 are clerical workers. All property management
and maintenance activities are currently provided by the Company's employees.
The Company does not intend to enter into any agreement with any entity or
person relating to such services. However, the Company's Articles of
Incorporation do not contain any prohibition on the use of third parties to
perform such services, and such services may therefore be performed by third
parties in the future.
-10-
<PAGE>
ENVIRONMENTAL MATTERS
Under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), as well as similar state and
local laws, owners and operators of property, both past and present, may be
held financially responsible for the investigation and, if appropriate, the
remediation of releases or threatened releases of hazardous substances into
the environment. Other parties who arranged for the disposal of hazardous
substances or transported hazardous substances for disposal at a property
also may be held liable. Liability under CERCLA and similar laws is strict,
joint and several unless a legally and factually sufficient basis for
apportionment is demonstrated and in most instances, liability may be imposed
without regard to the party's culpability concerning the presence of
hazardous substances at the property. Potentially responsible parties may be
liable to one another, the government and under some circumstances, third
parties.
To the extent the Company in the future may incur hazardous substance
response costs in connection with any of its properties, the Company may seek
to recover such costs from responsible parties under CERCLA. Costs
recoverable under CERCLA must be incurred in a manner consistent with the
National Contingency Plan. The National Contingency Plan establishes a
procedure whereby contaminated properties may be identified and, if
necessary, remediated. If conducted in the appropriate manner, the costs that
may be recovered will include but may not be limited to funds expended to
investigate and to remediate hazardous substance releases. Costs associated
with any such environmental activity may be substantial.
All of the Company's existing properties have been, and all properties
the Company may acquire in the future will be, subjected to a Phase I and or
similar environmental assessments. The purpose of a Phase I environmental
assessment is to determine if past and present uses of a property indicate
the potential for soil or groundwater contamination or if other environmental
conditions might affect the value of or future uses of the property. Phase I
environmental assessments generally include the following: visual inspection
of environmental conditions at and around the property; review of available
land use records; interviews with the property representatives; examination
of information from environmental agencies; and a walk through survey for
suspected asbestos containing or other toxic materials.
Apart from certain conditions currently being remedied, as described
below, the Phase I and Phase II environmental assessment reports have not
revealed any environmental condition affecting any of the Company's existing
properties or any properties under binding contract that the Company believes
requires remediation that would have a material adverse effect on the
Company's business or assets, nor is the Company aware of any such
environmental condition. The Company believes that either the properties are
in compliance or the remediation activities are in compliance in all material
respects with applicable Federal, state and local laws, ordinances and
regulations concerning the presence of hazardous substances. The Company has
not been notified by any governmental authority, and is not otherwise aware,
of any material noncompliance, liability or claim relating to hazardous
substances in connection with any of its properties. Based on its current
knowledge and currently applicable laws and regulations, the Company is aware
of the following environmental issues, none of which the Company believes are
material to its financial condition:
1. Certain remediation activities are currently being conducted at
Great Lakes Industrial Center by Neo Industries, a previous tenant, which is
investigating chromium releases from its plating operations and is currently
remediating the chromium contamination in the soil and the groundwater. The
Company does not expect to incur any remediation costs with respect to this
property.
-11-
<PAGE>
2. Certain of the properties are in the vicinity of properties that
contain or have contained storage tanks or on which hazardous substances or
petroleum products have been or may in the future be used or stored. Based
on the Phase I and, in some cases, additional environmental assessments
conducted with respect to its properties, the Company is not aware that these
conditions have had, and believes it unlikely that these conditions will
have, any adverse effect on its properties. Should there be any adverse
effect requiring response by the Company, the Company believes that it may be
able to recover its response costs from the responsible parties.
3. Limited quantities of asbestos containing materials ("ACM") are
present in various building materials at many of the Company's properties.
The ACM present at the properties generally is in good condition and for the
most part is non-friable. The Company has implemented an operation and
maintenance plan for ACM, including periodic inspections. This plan includes
removal and abatement activity whenever damaged ACM is discovered in areas
where human exposure may occur. It also includes an annual ACM abatement
program and ACM abatement during property renovation or reconstruction.
4. The former owner/operator of one property, 1700 West Hawthorne
Lane, West Chicago, Illinois, has removed various underground and
above-ground storage tanks and performed remediation of releases from these
tanks where necessary. Closure reports have been or are being submitted by
the former owner/operator for each tank removal. The Company expects to
receive Illinois Environmental Protection Agency closure certification for
each tank from the former owner/operator in due course.
It is possible, however, that the environmental assessments of the
Company's properties do not reveal all environmental liability concerns or
that there are material environmental liabilities of which the Company is
unaware. Given the nature of the properties that are now owned by the Company
or that may be acquired in the future, no assurances can be given that (i)
future laws, ordinances or regulations will not require or impose any
material expenditures or liabilities in connection with environmental
conditions by or on the Company or its properties; (ii) the current
environmental condition of the Company's properties will not be affected by
tenants and occupants of such properties, by the condition of properties in
the vicinity of such properties or by third parties unrelated to the Company;
and (iii) prior owners of any of the Company's properties did not create
environmental problems of which the Company is not aware.
COMPETITION
All of the Company's existing properties are, and all of the
properties that it may acquire in the future are expected to be, located in
areas that include numerous other warehouse/industrial properties, many of
which may be deemed to be more suitable to a potential tenant than the
Company's properties. The resulting competition could have a material adverse
effect on the Company's ability to lease its properties and to increase the
rentals charged on existing leases.
INVESTMENT IN AND ADVANCES TO AFFILIATE
The Company holds approximately 99% of the economic interest in
CenterPoint Realty Services Corporation, an Illinois corporation ("CRS"). To
maintain compliance with limitations on income from business activities
received by REITs and their qualified REIT subsidiaries, the Company holds
its interest in CRS in the form of non-voting equity ownership which
qualifies CRS as an unconsolidated taxable subsidiary.
-12-
<PAGE>
As of December 31, 1996, the Company had advanced to CRS approximately
$6.3 million under a demand loan with an interest rate of 8.125%. The
proceeds of the loan were required for development projects. Principal and
interest are due upon demand.
ITEM 2. PROPERTIES.
THE COMPANY'S WAREHOUSE/INDUSTRIAL PROPERTIES
The Company's investment portfolio of warehouse/industrial properties
consists of 70 properties totaling approximately 13.3 million square feet.
During 1996, the Company acquired 13 fully-leased warehouse/industrial
properties with a total area of approximately 3.8 million square feet, and
the Company disposed of 7 warehouse/industrial properties with a total area
of approximately 0.5 million square feet.
LOCATION. The Company's current properties are well located, with
convenient access to area interstate highway, rail, and air transportation.
The properties are in good physical condition, nearly all of them having been
built or substantially renovated within the last 10 years.
BUILDING CHARACTERISTICS. Most of the space in the
warehouse/industrial properties currently owned by the Company or under
contract has been designed for warehousing and distribution. The remainder of
the space is comprised of light manufacturing space. A number of the
industrial properties include both distribution and light manufacturing space
so as to provide tenants with increased flexibility. The Company's largest
industrial property contains approximately 1,354,000 rentable square feet in
a multi-tenant subdivided warehousing and manufacturing complex. The
Company's present warehouse/industrial properties have an average project
size of approximately 177,000 square feet, and, on average, a tenant at an
industrial property occupies approximately 101,000 rentable square feet.
Although a number of the industrial properties are single-tenant
build-to-suit facilities, all are designed to be divisible and to be leased
by multiple tenants. The Company has had substantial experience in
subdividing older space for new tenants.
The Company's present warehousing and distribution properties, as well
as warehousing and distribution properties under contract, are designed for
bulk storage of materials and manufactured goods in buildings with interior
heights typically of 22 feet or more. All of the warehousing and distribution
properties have dock facilities for trucks as well as grade level loading for
lighter vehicles and vans. Typically, the distribution buildings are used for
storage and contain a minimal amount of office space.
LEASE CHARACTERISTICS. The Company believes that the lease agreements
for its warehouse/industrial properties, which in most cases provide for
scheduled or indexed increases in rent, as well as the strengthening economy,
will provide opportunities for rental growth. The Company, in substantially
all cases, passes operating expenses and real estate tax increases on to
tenants. The leases for the warehouse/industrial properties currently owned
by the Company have terms between one and 15 years, with a weighted average
remaining term, based on square footage, of approximately 4.8 years as of
December 31, 1996.
Tenant Diversity. The composition of tenants in the
warehouse/industrial properties currently owned by the Company reflects the
commercial diversity of businesses operating in Greater Chicago. At December
31, 1996, no single industry, other than Wholesale Trade-Durable Goods and
Trucking/Warehousing, accounted for more than 7% of the leased space in the
warehouse/industrial properties currently owned by the Company. Wholesale
Trade-Durable Goods and Trucking/Warehousing, which encompasses a wide
variety of industries, accounted for 44.2% of the leased space in the
-13-
<PAGE>
warehouse/industrial properties currently owned by the Company at December
31, 1996, and the five largest industries, other than Wholesale Trade-Durable
Goods and Trucking/Warehousing, represented by tenants accounted collectively
for only 25.1% of such space. In addition, no single tenant comprised more
than 5% of the Company's total revenues as of December 31, 1996.
OTHER INFORMATION REGARDING WAREHOUSE/INDUSTRIAL PROPERTIES. The
following table sets forth certain information regarding the Company's
portfolio of warehouse/industrial properties, separately identifying 1996
investments of the Company:
-14-
<PAGE>
<TABLE>
<CAPTION>
Year of Original
Construction/ Annualized
Last Redevelopment Base Average
And/or Rent Rent
1996 INVESTMENTS Expansion (1) Revenue Per Sq. Ft.(2)
- ---------------- ------------- ------- --------------
<S> <C> <C> <C>
10740 W. Grand Ave., Franklin Park, IL(7) 1965/1971 $239,976.00 $3.64
16400 West 103rd Street, Lemont, IL (7) 1983/1995 274,803.84 4.32
400 North Wolf Road, North Lake, IL 1956/1997 4,050,866.75 2.99
1100 Chase Avenue, Elk Grove Village, IL (7) 1980/1996 171,475.00 4.12
2553 North Edgington, Franklin Park, IL 1967/1995 1,347,546.75 4.91
6600 River Road, Hodgkins, IL 1968 1,398,000.00 2.22
1800 Bruning Drive, Itasca, IL 1975/1978 1,059,969.00 5.25
1501 Pratt Ave., Elk Grove Village, IL 1973 600,572.63 3.95
911 Commerce, Buffalo Grove, IL (6) 1993 700,994.13 5.94
7501 North 81st Street, Milwaukee, WI 1987 559,500.00 3.04
875 Fargo Avenue, Elk Grove Village, IL 1980 345,945.63 4.20
425 South 37th Avenue, St. Charles, IL (7) 1975 390,585.75 3.79
1500 West Dundee Road, Arlington Hts., IL (6) 1969 1,938,280.88 3.88
------------ ----
Subtotal 13,078,516.34 3.47
------------- ----
Average 3.47 (9)
PREVIOUSLY OWNED PROPERTIES
- ---------------------------
1827 North Bendix Drive, South Bend, IN (6) 1964/1990 554,580.00 2.78
800 Chase Avenue, Elk Grove Village, IL (6) 1972 1,182,792.00 3.46
2600 Elmhurst Road, Elk Grove Village, IL 1995 509,701.41 4.85
11743 South Mayfield, Alsip, IL (6) 1962 155,264.50 3.70
1733 Downs Drive, West Chicago, IL 1975 353,852.00 2.43
1700 Butterfield Road Mundelein, IL 1976 226,750.00 3.78
750 East 110th Street, Chicago, IL 1966 231,036.00 3.23
10601 Seymour Ave., Franklin Park, IL (6) 1963/1970 1,120,992.00 1.66
11601 S. Central Avenue, Alsip, IL 1970 871,870.00 3.37
825-845 Hawthorne Lane, West Chicago, IL (6) 1974 407,037.88 2.56
850 Arthur Avenue, Elk Grove Village, IL (7)(8) 1971/1973 245,867.81 5.79
4400 S. Kolmar, Chicago, IL (6) 1966 438,840.00 4.77
11701 S.Central Avenue, Alsip, IL 1970 855,000.00 2.85
1645 Downs Drive, West Chicago, IL 1975 349,356.00 2.70
1810-1820 Industrial Drive, Libertyville, IL 1977 256,700.03 3.02
745 Birginal Road, Bensenville, IL 1974 392,655.50 3.47
1700 West Hawthorne, West Chicago, IL (6) 1959/1969 1,381,800.00 1.88
8901 102nd Street, Pleasant Prairie, WI 1990 571,361.06 5.41
8200 100th Street, Pleasant Prairie, WI 1990 541,205.19 3.65
1120 Frontenac, Naperville, IL 1980/1994 540,432.00 3.51
1800 Industrial Drive, Libertyville, IL 1992/1994 802,803.13 4.58
1 Wildlife Way, Long Grove, IL 1994 644,133.13 11.91
7001 Adams Street, Willowbrook, IL 1994 186,068.13 7.35
655 Wheat Lane, Wood Dale, IL (7) 1984 194,945.88 4.72
900 W. University Dr., Arlington Heights, IL 1974 501,083.38 5.81
1300 Northpoint Road, Waukegan, IL 1994 304,820.38 4.69
<CAPTION>
Percent of
GLA Leased
Percent of as of
GLA Total December 31, Number Property
1996 INVESTMENTS Sq. Ft.(3) GLA (4) 1996 of tenants Type (5)
- ---------------- ---------- ------- ---- ---------- --------
<S> <C> <C> <C> <C> <C>
10740 W. Grand Ave., Franklin Park, IL(7) 66,000 0.50% 100% 1 ACQ
16400 West 103rd Street, Lemont, IL (7) 63,612 0.48% 100% 1 ACQ
400 North Wolf Road, North Lake, IL 1,353,582 10.17% 100% 4 ACQ
1100 Chase Avenue, Elk Grove Village, IL (7) 41,651 0.31% 100% 1 ACQ
2553 North Edgington, Franklin Park, IL 274,303 2.06% 100% 4 ACQ
6600 River Road, Hodgkins, IL 630,410 4.74% 100% 1 ACQ
1800 Bruning Drive, Itasca, IL 202,000 1.52% 100% 1 ACQ
1501 Pratt Ave., Elk Grove Village, IL 151,900 1.14% 100% 2 ACQ
911 Commerce, Buffalo Grove, IL (6) 118,009 0.89% 100% 2 ACQ
7501 North 81st Street, Milwaukee, WI 183,958 1.38% 100% 1 ACQ
875 Fargo Avenue, Elk Grove Village, IL 82,368 0.62% 100% 1 ACQ
425 South 37th Avenue, St. Charles, IL (7) 103,106 0.78% 100% 1 ACQ
1500 West Dundee Road, Arlington Hts., IL (6) 500,000 3.76% 100% 2 ACQ
------- ----- ---- -
Subtotal 3,770,899 28.35% 0% 22
--------- ------ - --
Average 209,494 (10)
PREVIOUSLY OWNED PROPERTIES
- ---------------------------
1827 North Bendix Drive, South Bend, IN (6) 199,730 1.50% 100% 1 ACQ
800 Chase Avenue, Elk Grove Village, IL (6) 341,848 2.57% 100% 1 ACQ
2600 Elmhurst Road, Elk Grove Village, IL 105,000 0.79% 100% 1 BTS
11743 South Mayfield, Alsip, IL (6) 42,000 0.32% 100% 2 ACQ
1733 Downs Drive, West Chicago, IL 145,528 1.09% 100% 1 ACQ
1700 Butterfield Road Mundelein, IL 60,000 0.45% 100% 1 ACQ
750 East 110th Street, Chicago, IL 71,510 0.54% 100% 1 ACQ/RDV
10601 Seymour Ave., Franklin Park, IL (6) 677,000 5.09% 100% 1 ACQ/RDV
11601 S. Central Avenue, Alsip, IL 259,000 1.95% 100% 1 ACQ
825-845 Hawthorne Lane, West Chicago, IL (6) 158,772 1.19% 100% 2 ACQ
850 Arthur Avenue, Elk Grove Village, IL (7)(8) 42,490 0.32% 100% 1 ACQ
4400 S. Kolmar, Chicago, IL (6) 92,000 0.69% 100% 1 ACQ
11701 S.Central Avenue, Alsip, IL 300,000 2.26% 100% 1 ACQ
1645 Downs Drive, West Chicago, IL 129,390 0.97% 100% 1 ACQ
1810-1820 Industrial Drive, Libertyville, IL 85,000 0.64% 100% 1 ACQ
745 Birginal Road, Bensenville, IL 113,266 0.85% 100% 1 ACQ
1700 West Hawthorne, West Chicago, IL (6) 735,196 5.53% 100% 1 ACQ
8901 102nd Street, Pleasant Prairie, WI 105,637 0.79% 100% 1 ACQ
8200 100th Street, Pleasant Prairie, WI 148,472 1.12% 100% 1 ACQ
1120 Frontenac, Naperville, IL 153,902 1.16% 100% 1 ACQ
1800 Industrial Drive, Libertyville, IL 175,196 1.32% 100% 1 ACQ
1 Wildlife Way, Long Grove, IL 54,100 0.41% 100% 1 RDV
7001 Adams Street, Willowbrook, IL 25,324 0.19% 100% 1 BTS
655 Wheat Lane, Wood Dale, IL (7) 41,300 0.31% 100% 1 ACQ
900 W. University Dr., Arlington Heights, IL 86,254 0.65% 100% 1 ACQ
1300 Northpoint Road, Waukegan, IL 65,000 0.49% 100% 1 ACQ
15
<PAGE>
<CAPTION>
Year of Original
Construction/ Annualized
Last Redevelopment Base Average
And/or Rent Rent
PREVIOUSLY OWNED PROPERTIES Expansion (1) Revenue Per Sq. Ft.(2)
- --------------------------- ------------- ------- --------------
<S> <C> <C> <C>
1015 East State Parkway, Schaumburg, IL 1980 140,740.00 7.19
21399 Torrence Avenue, Sauk Village, IL 1987 966,845.13 2.59
920 Frontenac, Naperville, IL 1987 0.00 0.00
2764 Golfview, Naperville, IL 1985 96,524.32 4.82
1150 Shore Road, Naperville, IL 1985 174,888.00 5.79
1651 Frontenac, Naperville, IL 1978 92,762.76 3.05
800 Enterprise Court, Naperville, IL 1985 183,666.00 5.25
1500 Shore Drive, Naperville, IL 1985 164,715.34 3.81
1560 Frontenac, Naperville, IL 1987 275,615.69 3.22
1020 Frontenac, Naperville, IL 1980 392,435.69 3.94
1510 Frontenac, Naperville, IL 1986 281,330.53 2.68
720 Frontenac, Naperville, IL 1991 515,986.03 3.00
1850 Greenleaf, Elk Grove Village, IL 1965 232,800.00 3.97
820 Frontenac, Naperville, IL 1988 529,933.75 3.45
4501 West Augusta Boulevard, Chicago, IL 1942/1989 901,782.56 2.08
1201 Lunt Avenue, Elk Grove Village, IL 1971 47,430.00 6.43
950-970 Tower Road, Mundelein, IL 1979/1990 158,280.66 4.13
201 Mississippi Street, Gary, IN 1945/1988 3,583,530.00 3.41
425 West 151st Street, East Chicago, IN 1913/1991 1,192,997.25 3.42
1520 Pratt Avenue, Elk Grove Village, IL 1968 243,147.61 3.89
2339-41 Ernie Krueger Court, Waukegan, IL 1990/1993 217,800.00 4.00
2743 Armstrong Court, Des Plaines, IL 1989 391,544.28 7.34
1250 Carolina Drive, West Chicago, IL 1988 561,541.00 3.74
900 East 103rd Street, Chicago, IL 1910/1990 2,161,717.25 3.76
1319 Marquette Drive, Romeoville, IL 1990 470,355.94 12.94
620-630 Butterfield Road, Mundelein, IL 1990 245,040.00 10.11
5990 Touhy Avenue, Niles, IL 1960/1993 1,363,490.88 4.61
825 Tollgate Road,Elgin, IL 1989 421,885.84 5.08
5619-25 West 115th Street, Alsip, IL 1974 1,772,850.25 4.47
1400 Busse Road, Elk Grove Village, IL 1975 626,225.25 4.22
245 Beinoris Drive, Wood Dale, IL 1988/1993 85,776.00 7.15
--------- ----
Subtotal 32,314,585.38 3.39
------------- ----
Average 3.39
----
GRAND TOTAL ALL WAREHOUSE/INDUSTRIAL PROPERTIES $45,393,101.72 $3.41
AVERAGE ALL WAREHOUSE/INDUSTRIAL PROPERTIES $3.41 (9)
<CAPTION>
Percent of
GLA Leased
Percent of as of
GLA Total December 31, Number Property
PREVIOUSLY OWNED PROPERTIES Sq. Ft.(3) GLA (4) 1996 of tenants Type (5)
- --------------------------- ---------- ------- ---- ---------- --------
<S> <C> <C> <C> <C> <C>
1015 East State Parkway, Schaumburg, IL 19,576 0.15% 100% 1 ACQ
21399 Torrence Avenue, Sauk Village, IL 372,835 2.80% 100% 1 ACQ
920 Frontenac, Naperville, IL 121,200 0.91% 0% 0 ACQ
2764 Golfview, Naperville, IL 20,022 0.15% 100% 1 ACQ
1150 Shore Road, Naperville, IL 30,184 0.23% 100% 1 ACQ
1651 Frontenac, Naperville, IL 30,414 0.23% 100% 1 ACQ
800 Enterprise Court, Naperville, IL 34,984 0.26% 100% 1 ACQ
1500 Shore Drive, Naperville, IL 43,230 0.32% 100% 2 ACQ
1560 Frontenac, Naperville, IL 85,608 0.64% 100% 2 ACQ
1020 Frontenac, Naperville, IL 99,684 0.75% 100% 1 ACQ
1510 Frontenac, Naperville, IL 104,886 0.79% 100% 1 ACQ
720 Frontenac, Naperville, IL 171,935 1.29% 100% 2 ACQ
1850 Greenleaf, Elk Grove Village, IL 58,627 0.44% 100% 1 ACQ
820 Frontenac, Naperville, IL 153,604 1.15% 100% 1 ACQ
4501 West Augusta Boulevard, Chicago, IL 432,661 3.25% 95% 7 RDV
1201 Lunt Avenue, Elk Grove Village, IL 7,380 0.06% 100% 1 ACQ
950-970 Tower Road, Mundelein, IL 38,359 0.29% 100% 3 BTS
201 Mississippi Street, Gary, IN 1,052,173 7.91% 97% 15 RDV
425 West 151st Street, East Chicago, IN 349,236 2.63% 90% 9 RDV
1520 Pratt Avenue, Elk Grove Village, IL 62,546 0.47% 100% 1 ACQ
2339-41 Ernie Krueger Court, Waukegan, IL 54,450 0.41% 100% 1 BTS
2743 Armstrong Court, Des Plaines, IL 53,325 0.40% 100% 1 BTS
1250 Carolina Drive, West Chicago, IL 150,000 1.13% 100% 2 BTS
900 East 103rd Street, Chicago, IL 575,462 4.33% 100% 3 RDV
1319 Marquette Drive, Romeoville, IL 36,349 0.27% 100% 1 BTS
620-630 Butterfield Road, Mundelein, IL 24,237 0.18% 100% 1 BTS
5990 Touhy Avenue, Niles, IL 295,964 2.22% 100% 3 RDV
825 Tollgate Road,Elgin, IL 83,122 0.62% 100% 2 ACQ
5619-25 West 115th Street, Alsip, IL 396,979 2.98% 98% 5 RDV
1400 Busse Road, Elk Grove Village, IL 148,436 1.12% 90% 10 ACQ
245 Beinoris Drive, Wood Dale, IL 11,989 0.09% 100% 1 BTS/RDV
------ ---- ---- -
Subtotal 9,532,372 71.65% 0% 110
--------- ------ - ---
Average 167,235
-------
GRAND TOTAL ALL WAREHOUSE/INDUSTRIAL PROPERTIES 13,303,271 100% 0% 132
AVERAGE ALL WAREHOUSE/INDUSTRIAL PROPERTIES 177,377 (10)
</TABLE>
16
<PAGE>
- -----------------------
(1) First date of original construction; second date is year of last
redevelopment and/or expansion. If only one date appears, it is the
acquisition date; the property has not been redeveloped or expanded.
(2) Determined by dividing 1996 annualized base rent revenue by GLA.
(3) "GLA" means gross leasable area.
(4) Determined as a percent of the total GLA for the warehouse/industrial
properties.
(5) ACQ refers to an existing leased property acquired by the Company, BTS
refers to a build-to-suit property and RDV refers to a redevelopment
property.
(6) Properties purchased through a sale-leaseback to the previous owner have no
operating history relevant to third party usage.
(7) Properties purchased from an owner occupant have no prior operating history
relevant to third party usage.
(8) The seller of this property holds a note payable by the Company in the
principal amount of $575,000 and secured by this property.
(9) Average Rent per square foot equals annualized base rental revenue divided
by GLA leased as of December 31, 1996.
(10) Average size equals total GLA divided by the number of properties.
LEASE EXPIRATIONS
The following table shows as of December 31, 1996 scheduled lease
expirations for the Company's warehouse/industrial properties commencing January
1, 1997 and for the next ten years, assuming that no tenants exercise renewal
options:
<TABLE>
<CAPTION>
AVERAGE % OF TOTAL
BASE RENT PROPERTIES % OF 1997
GLA OF ANNUALIZED PER SQ. FT. GLA BASE RENT
NO. OF EXPIRING BASE RENT UNDER REPRESENTED REPRESENTED
LEASES LEASES EXPIRING EXPIRING BY EXPIRING BY EXPIRING
YEAR ENDING DECEMBER 31 EXPIRING (SQ. FT.) LEASES LEASES LEASES LEASES
-------- --------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
1997.................... 24 2,246,042 $5,890,276 $2.62 16.88% 12.98%
1998.................... 19 1,754,141 5,555,776 3.17 13.19% 12.24%
1999.................... 17 1,712,125 5,344,156 3.12 12.87% 11.77%
2000.................... 25 1,343,358 5,339,378 3.97 10.10% 11.76%
2001.................... 14 981,585 3,697,505 3.77 7.38% 8.15%
2002.................... 8 993,795 4,110,207 4.14 7.47% 9.05%
2003.................... 6 462,450 2,138,987 4.63 3.48% 4.71%
2004.................... 4 834,196 2,349,345 2.82 6.27% 5.18%
2005.................... 3 671,970 1,514,491 2.25 5.05% 3.34%
2006.................... 7 1,560,437 5,146,761 3.30 11.73% 11.34%
</TABLE>
-17-
<PAGE>
OPTIONS TO PURCHASE GRANTED TO CERTAIN TENANTS
The following warehouse/industrial properties of the Company are subject to
purchase options granted to certain tenants as follows:
* Separate portions of the building complex at 4501 Augusta Boulevard are
subject to (i) an option to purchase at fixed prices ranging from
$2,779,320 to $3,447,970 exercisable between September 1 and October 31 of
each year commencing in 1994 and terminating in 2003 and (ii) an option to
purchase at a fixed price of $3,145,000 exercisable upon 60 days prior
written notice on December 15, 1997.
* 1319 Marquette Drive is subject to a purchase option, exercisable at any
time during the term of the existing lease (which term will expire on
December 31, 2000), at a price based upon annual rent (less $18,175)
capitalized at 9.75% commencing December 11, 1997. In lieu of a right of
first refusal, the Company is currently negotiating an additional option
under which the tenant will have the right, exercisable upon 30 days
notice, to purchase the property for the same price as the Company paid for
the property. Should the additional option be exercised, the Company will
have the right to designate another property of equivalent value for the
tenant to acquire, which the Company will take in lieu of receiving the net
proceeds from the sale of this property in a tax-free like-kind exchange.
* 38 Barrington Road (one of the buildings included in the 4-48 Barrington
Road property) is subject to an option to purchase exercisable on or before
December 31, 1997 at a purchase price equal to "fair market value" as
determined by mutual agreement or independent appraisal.
One Waterfowl Way is subject to an option to purchase at any time through
October 31, 1999, exercisable on or before February 1, 1999. The purchase
price is equal to the annualized monthly rent being paid as of the closing
of the purchase, capitalized at 10%.
* 8901 102nd Street is subject to an option to purchase exercisable on
February 28, 2006 at a purchase price equal to 95% of "fair market value,"
equal to the average of three independent appraisals.
* 1700 West Hawthorne is subject to a purchase option exercisable at any time
prior to December 1, 1998 (with the closing to occur during December, 1999
regardless of when the option exercised) at a price of $12,809,333 and
again between December 1, 2002, and December 1, 2003 (with the closing to
occur during December, 2004 regardless of when the option is exercised) at
a price of $15,033,636. If the property is expanded, at tenant's option,
the purchase price will be increased to $12,909,333 for the first exercise
period, and $15,233,636 for the second exercise period, plus the cost of
construction.
* 655 Wheat Lane was subject to an option to purchase the premises which was
exercised by the tenant who will purchase the property in May, 1997 for a
purchase price of $1,730,211.
* 850 Arthur Avenue is subject to an option exercisable during March of 1999
to purchase the premises on August 31, 1999 for a purchase price equal to
the fair market value of the premises as determined by the Company or by an
appraisal process.
-18-
<PAGE>
* 1020 Frontenac Road is subject to a purchase option exercisable after
July 1, 1997 and on or before June 30, 1998 for a purchase price of
$3,750,000 with a closing date on the later of January 2, 1998 or the 180th
day after receipt of notice of exercise.
* 2600 Elmhurst Road is subject to an option exercisable on or before July
31, 2000 to purchase the premises during January of 2001 for a purchase
price of $5,000,000.
In each case, the option price exceeds the price paid or to be paid by the
Company for the property. The Company believes that even if all of the purchase
options are exercised, such exercise will not have an adverse effect upon the
operations of the Company or its ability to maintain its distribution policy.
In addition, if any purchase option is exercised, the Company intends to either
distribute the cash proceeds to stockholders or reinvest the cash proceeds in
additional properties. No assurance can be given that such distribution or
reinvestment will occur.
In addition to purchase options, the Company has granted to tenants of
certain properties a right of first refusal (in the event the Company has
received an unsolicited offer from a third party to purchase the property which
the Company desires to accept) or a right of first offer (in the event the
Company has not received an unsolicited third party offer for the property but
desires to entertain an offer). The properties subject to one or both of these
rights include One Waterfowl Way, 8901 102nd Street, 1319 Marquette Drive,
825 Tollgate Road, 1400 Busse Road, 1651 Frontenac Road, 7001 Adams Street, 950
Tower Road and 6312 W. 74th Street. The existence of those rights will not
compel the Company to sell a property for a price less than the price the
Company desires to accept.
THE COMPANY'S OTHER PROPERTIES
In addition to its warehouse/industrial properties, the Company owns three
retail properties having approximately 61,000 square feet of GLA, one office
property having approximately 118,000 square feet of GLA, one 682-unit apartment
complex located at 440 North Lake Street, Miller, Indiana and known as Lakeshore
Dunes Apartments and a fully leased parking lot. One retail property, located in
Chicago, Illinois, containing approximately 12,000 square feet was sold to the
lessee in April, 1996. The Company does not intend to acquire properties other
than warehouse/industrial properties in the future. The Company believes,
however, that these properties are favorable investments for the Company, adding
to distributable cash flow per share. Furthermore, the Lakeshore Dunes
Apartments were financed through the issuance of tax-exempt revenue bonds on
favorable terms, benefiting the Company by reducing its overall borrowing costs.
The Company has no present plans to sell those properties but would entertain a
sale if the price were sufficiently high, given other investment opportunities
that would be available to the Company, and the enhanced operating performance
expected to result, from redeployment of the sales proceeds.
-19-
<PAGE>
The following table sets forth certain information regarding the Company's
retail properties:
<TABLE>
<CAPTION>
PERCENT
OF
YEAR OF GLA AVERAGE
ACQUISITION/ PERCENT LEASED RENT
LAST YEAR OF TOTAL OF AS OF ANNUALIZED PER NUMBER
REDEVELOPMENT ORIGINAL GLA TOTAL DECEMBER BASE RENT SQ.FT. OF
OF CONSTRUCTION/ (SQ.FT.) GLA 31, 1996 REVENUE (4) TENANTS
EXPANSION (1) EXPANSION (2) (3) -------- ------- --- -------
------------- --------- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
4-48 Barring Rd. 1994 1991 38,633 63.1% 70.0% $292,205 $10.80 9
Streamwood, IL
84-120 McHenry Rd. 1990/1993 1989 20,535 33.6% 100.0% 340,165 16.57 8
Wheeling, IL
351 North Rohlwing Rd. 1993 1989 2,015 3.3% 100.0% 61,440 30.49 1
Itasca, IL ----- ---- ------ ----- -
TOTAL 61,183 100.0% $693,810 $13.98 18
------ ------ -------- ------ --
------ ------ -------- ------ --
</TABLE>
(1) First date is year of acquisition; second date is year of most recent
redevelopment or expansion. If only one date appears, it is the
acquisition date; the property has not been redeveloped or expanded.
(2) "GLA" means gross leasable area.
(3) Determined as a percent of the total GLA for the retail properties.
(4) Determined by dividing 1996 annualized base rent revenue by GLA.
The tenants of the Company's retail properties are typical of tenants in
smaller retail centers in Greater Chicago. Generally, the leases require
tenants to pay a fixed base, or "minimum" rent, subject to scheduled increases.
In some cases, tenants are required to pay as additional rent a percentage in
sales in excess of stated levels. Tenants generally are required to pay their
proportionate share of common area maintenance charges, insurance expenses,
operating expenses and real estate taxes. The tenant of one property, 4833 West
Diversey, has a right of first offer should the Company desire to sell the
property.
The following table shows as of December 31, 1996 scheduled lease
expirations for the retail properties commencing January 1, 1997, and for the
next nine years, assuming no tenants exercise renewal options.
<TABLE>
<CAPTION>
GLA OF `ANNUALIZED AVERAGE BASE % OF TOTAL RETAIL % OF 1996 RETAIL
NO. OF EXPIRING BASE RENT RENT PROPERTIES GLA BASE RENT
YEAR ENDING LEASES LEASES EXPIRING PER SQ. FT. UNDER REPRESENTED BY REPRESENTED BY
DECEMBER 31 EXPIRING (SQ. FT.) LEASES EXPIRING LEASES EXPIRING LEASES EXPIRING LEASES
- ----------- -------- --------- ------ --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1997 1 1,600 $15,876 $9.92 2.62% 2.29%
1998 2 5,954 65,300 10.97 9.73% 9.41%
1999 3 6,078 76,075 12.52 9.93% 10.96%
2000 3 8,934 89,316 10.00 14.60% 12.87%
2001 3 9,232 101,427 10.99 15.09% 14.62%
2002 0 0 0 0.00 0.00% 0.00%
2003 0 0 0 0.00 0.00% 0.00%
2004 1 4,126 58,988 14.30 6.74% 8.50%
2005 2 5,514 108,747 19.72 9.01% 15.67%
2006 2 6,140 116,640 19.00 10.04% 16.81%
</TABLE>
-20-
<PAGE>
Lakeshore Dunes Apartments, which was completed in 1971 and renovated
between 1991 and September, 1993 is comprised of 682 units in 15 contiguous
buildings located on an approximately 20.12 acre site in Miller, Indiana, a
suburb of Gary, Indiana, located on Lake Michigan. The property is bordered by
the Indiana Dunes National Park and by the Calumet Lagoon and is less than
one-half mile from public beaches. Amenities of the complex include redesigned
units with updated kitchens and appliances, carpeting, lighting, windows and
mini-blinds, bathrooms and fixtures, elevators, laundry rooms, play lots, tennis
courts, picnic areas, a new poolhouse with three pools, roads, parking areas,
landscaping and a 24-hour safety patrol and card access system. The community
center also serves as the management and leasing office. The Company maintains a
complete management, leasing and maintenance team at the property.
As of December 31, 1996, 656 of the units, or 96%, were leased, providing
for a monthly base rent of approximately $310,000 or $7.97 per square foot
(determined by dividing monthly base rent by total square footage of the
apartment units), or an annualized base rent of $3,720,000. Current leases
provide for customary one year terms and require that tenants pay a fixed rent
based on the type of apartment and square footage. Tenants are responsible for
utilities. The following table sets forth the apartment mix at this property as
of December 31, 1996:
<TABLE>
<CAPTION>
NUMBER OF UNITS TOTAL GLA AVERAGE GLA PER AVERAGE MONTHLY
TYPE OF APARTMENT IN COMPLEX (SQ. FT.) APARTMENT (SQ. FT.) RENT PER UNIT
- ----------------- ---------- --------- ------------------- -------------
<S> <C> <C> <C> <C>
Studio 48 20,208 421 $ 332
One Bedroom 171 99,009 579 431
Deluxe One Bedroom 43 29,283 681 442
Two Bedroom 390 308,100 790 491
Three Bedroom 30 28,500 950 635
----- ---------
TOTALS: 682 485,100
----- ---------
----- ---------
</TABLE>
A 118,018 square foot headquarters quality office property was purchased in
1996. The property, located at 777 Big Timber Road in Elgin, Illinois, is fully
leased to a single tenant for ten years through September, 2007. On October 1,
1997, upon completion of building renovation, the annualized minimum rent will
be $1,208,000 or $10.24 per square foot. In the interim, minimum rent is
increasing as the tenant occupies completed space.
In 1996, a parking lot within an industrial park was purchased. The
parking lot is leased for ten years through January 2006 for an annual minimum
rent of $26,400.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not subject to or involved in, nor is the Company aware of,
any pending or threatened litigation which could be material to the financial
position or results of operations of the Company. For a description of
remediation activities currently underway at certain of the Company's
properties, see "Environmental Matters" under Item 1 above.
ITEM 4. SUBMISSION OF CERTAIN ITEMS TO A VOTE OF SECURITY HOLDERS.
None.
-21-
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED MATTERS.
(a) Prior to June 12, 1996, the Company's Common Stock was listed and
traded on the American Stock Exchange under the symbol "CNT." Effective on
June 12, 1996, the Company's Common Stock is listed and traded on the New
York Stock Exchange under the symbol "CNT." The following table sets forth,
for the periods indicated, the high and low sale prices of the Common Stock
(as reported by the AMEX prior to June 12, 1996 and as reported by the NYSE
on and after June 12, 1996) and the cash distributions paid in such periods.
CASH
QUARTERLY PERIOD ENDING HIGH LOW DISTRIBUTION/SHARE
December 31, 1994 $19-7/8 $17-1/2 $0.375
March 31, 1995 19-5/8 18-3/8 0.390
June 30, 1995 20-3/4 19-5/8 0.390
September 30, 1995 22-7/8 20-1/2 0.390
December 31, 1995 23-3/8 21-5/8 0.390
March 31, 1996 24-1/8 22 0.405
June 30, 1996 27 26-1/8 0.405
September 30, 1996 26-7/8 26-3/4 0.405
December 31, 1996 32-3/4 30-7/8 0.405
(b) As of March 19, 1997, there were approximately 147 holders of
record of the Company's Common Stock.
-22-
<PAGE>
ITEM 6.
SELECTED HISTORICAL FINANCIAL DATA
The following tables set forth, on a historical basis, Selected
Financial Data for the Company. The following table should be read in
conjunction with the historical financial statements of the Company and
"MANAGEMENT DISCUSSION AND ANALYSIS STATEMENTS OF THE COMPANY AND RESULTS OF
OPERATION," both included elsewhere in this Form 10-K.
The Selected Financial Data for the Company is not necessarily
indicative of the actual financial position of the Company or results of
operations at any future date or for a future period.
CENTERPOINT PROPERTIES CORPORATION AND SUBSIDIARIES
SELECTED HISTORICAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA, RATIOS AND NUMBER OF PROPERTIES)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<C> <S> <S> <S> <S> <S>
Operating Data:
Revenues $63,330 $46,952 $33,633 $9,068 $6,456
Expenses:
Operating expenses excluding depreciation and amortization (1) (20,751) (14,773) (11,442) (4,124) (2,566)
Depreciation and other amortization (10,648) (8,456) (6,176) (2,539) (1,365)
General and administrative (2,567) (2,150) (1,573) (3,223) (1,091)
Interest expense:
Interest incurred, net (9,865) (11,563) (11,073) (3,808) (2,502)
Amortization of deferred financing costs (1,127) (1,150) (976) (228) (107)
------ ------- ------- ------ ------
Operating income (loss) 18,372 8,860 2,393 (4,854) (1,175)
Other expense (2) (100) (16) (34) (76) --
------ ------- ------- ------ ------
Income (loss) before extraordinary item 18,272 8,844 2,359 (4,930) (1,175)
Extraordinary item (3,331) (632) -- -- --
------ ------- ------- ------ ------
Net income (loss) 14,941 8,212 2,359 (4,930) (1,175)
Net income (loss) per share 1.00 .82 .41 (3.90) (1.78)
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Balance Sheet Data:
Investment in real estate (before accumulated depreciation) $429,034 $317,460 $248,281 $180,396 $43,101
Net investment in real estate 398,828 295,884 234,825 172,946 37,332
Total assets 451,206 334,866 254,073 190,289 42,720
Total debt 177,349 145,271 179,492 131,963 42,790
Stockholders' equity (deficit) 248,114 168,320 59,016 46,240 (5,720)
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Other Data:
Funds from Operations (3) $ 30,445 $ 20,492 $ 13,138 $(2,110) $ 297
EBITDA (4) 39,912 30,013 20,58 41,564 2,799
Net cash flow:
Operating activities 29,551 16,473 8,976 275 324
Investing activities (111,554) (82,557) (65,311) (140,120) (2,982)
Financing activities 80,194 68,542 52,837 142,443 3,115
Distributions 24,065 15,953 8,775 1,295
Return of capital portion of distribution 12,280 8,554 4,320 -- --
Number of properties included in operating results (5) 76 6953 38 5
Ratio of earnings to fixed charges (6) 2.33 1.63 1.19 -- --
</TABLE>
-23-
<PAGE>
- --------------------------
(1) Operating expenses include real estate taxes, repairs and maintenance,
insurance and utilities and exclude interest, depreciation and
amortization and general and administrative expenses.
(2) Other expense includes gains and losses on property dispositions in
1996, and other miscellaneous operating and non-operating items.
(3) Funds from Operations represents net income (loss), excluding
extraordinary items, sales of (or adjustments to basis of) properties
plus depreciation and amortization, convertible subordinated debenture
interest and amortization of deferred financing costs on convertible
subordinated debentures. Funds from operations is computed as follows:
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
------- ------ ------ ------- -- ----
<C> <S> <S> <S> <S> <S>
Net income (loss) $14,941 $8,212 $2,359 ($4,930) ($1,175)
Extraordinary item 3,331 632 -- -- --
Depreciation and amortization 10,648 8,456 6,176 2,540 1,365
Amortization of deferred financing costs, debentures 67 135 267 13
Convertible subordinated debenture interest 1,385 3,057 4,336 267 --
Loss on disposition of properties 73 -- -- -- --
------- ------ ------ ------- -- ----
Funds from Operations $30,445 $20,492 $13,138 ($2,110) $190
------- ------ ------ ------- -- ----
------- ------ ------ ------- -- ----
</TABLE>
Management of the Company believes that Funds from Operations is helpful
to investors as a measure of the performance of equity REIT shares
because, along with cash flows from operating activities, financing
activities and investing activities, it provides investors an
understanding of the ability of the Company to incur and service debt
and to make capital expenditures. Funds from Operations does not
represent cash flow from operations as defined by generally accepted
accounting principles ("GAAP"), should not be considered by the reader
as an alternative to net income as an indicator of the Company's
operating performance or to cash flows as a measure of liquidity, and is
not indicative of cash available to fund all cash flow needs. Investors
are cautioned that Funds from Operations, as calculated by the Company,
may not be comparable to similarly titled but differently calculated
measurers for other REITs.
The National Association of Real Estate Investment Trusts (NAREIT)
defines funds from operations as net income before extraordinary items
plus depreciation and amortization less the amortization of deferred
financing costs.
(4) Earnings before interest, income taxes, depreciation and amortization.
Management believes that EBITDA is helpful to investors as an indication
of property operations, because it excludes costs of financing and
non-cash depreciation and amortization amounts. EBITDA does not
represent cash flows from operations as defined by GAAP, should not be
considered by the reader as an alternative to net income as an indicator
of the Company's operating performance, and is not indicative of cash
available to fund all cash flow needs.
-24-
<PAGE>
(5) Increase in the number of properties in 1993 reflects the disposition of
one property in January 1993 and the acquisition of 34 properties in
December 1993. Increase in number of properties in 1994 reflects the
acquisition of 15 properties throughout 1994. Increase in number of
properties reflects acquisition of 16 properties throughout 1995.
Increase in number of properties in 1996 reflects acquisition of 15
properties and the disposition of 8 properties throughout 1996. See
"MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS."
(6) The ratio of earnings to fixed charges for the years ended December 31,
1992 through December 31, 1993, was less than one to one. The
approximate dollar amounts (in thousands) necessary to cover the
deficiencies in those periods were as follows: 1993 - $5,400; 1992 -
$2,006.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
GENERAL BACKGROUND
The following is a discussion of the historical operating results of the
Company. This discussion should be read in conjunction with the Financial
Statements and the information set forth under "SELECTED HISTORICAL FINANCIAL
DATA."
The results of the Company reflect cumulative significant acquisition,
build-to-suit and redevelopment activities. Since 1989, the Company has
grown its portfolio from six properties, with approximately 1.9 million
square feet in area, to 76 properties with approximately 14.0 million square
feet in area as of December 31, 1996, an annual compound growth rate of
35.1%. In addition, through the issuance of mortgages on properties and
build-to-suit projects under development, the Company has a total investment
of 16.4 million square feet in area.
In 1994, the Company grew its portfolio by 50% during the year by
concluding 14 warehouse/industrial acquisitions, one build-to-suit project,
and three building expansions having an aggregate area of 2.1 million square
feet, and, in 1995, the Company grew its portfolio of owned properties by 35%
during the year by concluding 15 warehouse/industrial acquisitions and one
build-to-suit project having an aggregate area of 2.7 million square feet.
In addition in 1995, the Company invested in three development projects and
issued a convertible mortgage on a warehouse/industrial property for an
aggregate area of 1.1 million square feet. In 1996 the Company grew its
portfolio of owned properties by 33% during the year by concluding 13
warehouse/industrial property acquisitions, one office property acquisition
and the acquisition of one parking lot. The Company disposed of seven
warehouse/industrial properties and one retail property in 1996. The
Company's total increase in area, net of disposals, was 3.4 million square
feet. In addition, the Company invested in eight build-to-suit projects and
issued a mortgage on one warehouse/industrial property for an aggregate area
of 1.9 million square feet. The Company's Consolidated Financial Statements
for the year ended December 31, 1996, 1995 and 1994 reflect partial period
results for acquisitions, dispositions and expansions made during each
respective year as well as full year results, including the lease-up of
previously vacant space, related to the properties owned by the Company as of
January 1, 1996, 1995 and 1994, respectively. The Company's 1994
acquisitions included two additional properties and 1996 acquisitions
included three additional properties previously owned by entities in which
certain executive officers of the Company had an interest. These
transactions satisfied the Company's investment criteria and were approved by
the Company's independent directors.
-25-
<PAGE>
Finally, the historical results of the Company reflect the Company's
significant property redevelopment and development activities in which
substantial capital costs and related expenses were incurred in advance of
receipt of rental income. At December 31, 1996, the Company and its
subsidiaries had $28.4 million invested in build-to-suit projects under
development which are not producing income. Four of the Company's properties
preceding the IPO, with a total area of approximately 1.9 million square
feet, were property redevelopments and the Company currently holds several
additional properties it intends to redevelop. Redevelopments are typically
larger properties that are acquired, subdivided and released. During
construction, certain costs are capitalized; however, in certain
circumstances, such costs are expended after completion but prior to leasing,
resulting in a decline in net income.
RESULTS OF OPERATIONS
COMPARISON OF YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER 31, 1995.
Total revenues increased by $16.3 million or 34.9% over the same period
last year. The revenues of the Company are derived primarily from base rents
and additional rents from expense reimbursements, pursuant to the terms of
tenant leases for occupied space at the warehouse/industrial properties.
These properties represent approximately 95% of the gross leasable area of
the Company's portfolio as of December 31, 1996.
Rental revenues increased by $10.3 million in 1996 primarily because of
full period income from sixteen warehouse/industrial properties acquired
totaling 2.7 million square feet in 1995 and thirteen warehouse/industrial
properties acquired totaling 3.3 million square feet in 1996 net of seven
property disposals. Initial minimum net rental income from the 1996
acquisition properties is approximately $13.1 million, providing an average
annual capitalization rate (initial minimum net rental income divided by the
purchase price) of approximately 11.2%. In addition, mortgage interest
income, which originated in December, 1995, contributed $1.4 million to the
increase in revenue. Real estate fee income primarily consisting of fees
earned by the Company in connection with its build-to-suit and development
activities and third party management fees increased by $3.7 million and
equity in net income of affiliate increased by $1.0 million due to their
increased activity in build-to-suit activity. The Company's unconsolidated
affiliate began operations during the third quarter of 1995 and did not
recognize income from development activities until 1996.
On a "same-store" basis (comparing the results of operations, on a cash
basis, of the properties owned at December 31, 1995, with the results of
operations of the same properties at December 31, 1996), the Company
recognized a 4.1 % increase in revenues primarily due to lease up of vacant
space, rental increases on renewed leases and contractual increases in
minimum rent under leases in place.
Total operating expenses, excluding general and administrative expenses,
interest, depreciation and amortization, increased by $6.0 million, from
$14.8 million in 1995 to $20.8 million in 1996. $4.1 million of the increase
is due to real estate taxes. The majority of the real estate tax increase,
$3.3 million, resulted from 1995 and 1996 acquisitions and the balance, $0.8
million, from tax increases throughout the portfolio with the largest
increase in Cook County, Illinois. Insurance, utilities and property
operating and leasing expenses, all components of operating expenses,
increased at levels comparable to the level of acquisitions.
-26-
<PAGE>
Depreciation and other amortization increased by $2.2 million, from $8.4
million in 1995 to $10.6 million in 1996. The increase is due primarily to
full period depreciation on acquisitions completed during 1995 and
depreciation from dates of acquisition for the 1996 additions 1996.
General and administrative expenses increased by $0.4 million, from
$2.1 million in 1995 to $2.5 million in 1996, due primarily to the growth of
the Company.
Interest incurred decreased by $1.7 million over the same period last
year due to the conversion to common stock of $8.9 million of convertible
subordinated debentures. Although the acquisition level was higher during
1996, interest expense was held to the same level as 1995 due to the
repayment of debt from a public offering that closed in July, 1996, and
reduced borrowing rates.
Other expenses increased by $84,000 from the same period last year due
to the loss on disposition of three properties totaling $72,000.
As a result of the factors described above, net income, before
extraordinary item, increased by $9.4 million from $8.9 million in 1995 to
$18.4 million in 1996, an increase of 106.6%. Earnings before interest,
income taxes, depreciation and amortization increased by $10.0 million, from
$30.0 million in 1995 to $40.0 million in 1996.
In 1996, the Company incurred an extraordinary loss of $3.3 million
representing a write off of unamortized deferred financing costs as a result
of the refunding of the its outstanding 1991 and 1993 tax exempt and related
taxable bonds by issuing new tax exempt and taxable bonds and the replacement
of its $92 million secured lines of credit with a $135 million unsecured
credit facility at a significant savings in interest.
COMPARISON OF YEAR END DECEMBER 31, 1995 TO YEAR END DECEMBER 31, 1994
Total revenues increased by $12.3 million or 36.6% over last year. The
revenues of the Company are derived primarily from base rents and additional
rents from expense reimbursements, pursuant to the terms of tenant leases for
occupied space at the warehouse/industrial properties. These properties
represent approximately 95% of the gross leasable area of the Company's
portfolio as of December 31, 1995.
Revenues increased in 1995 primarily because of full period income from
15 properties acquired in 1994 and partial year income from acquisition and
development activity concluded during the year. During 1995 the Company
acquired 16 warehouse/industrial properties (including one build-to-suit
project) with a total area of approximately 2.7 million square feet. Initial
minimum net rental income from the 1995 acquisition properties is
approximately $7.2 million, providing an average annual capitalization rate
(initial minimum net rental income divided by the purchase price) of
approximately 11.16%. Mortgage interest income is due to the issuance, by the
Company, of a convertible mortgage note receivable in December, 1995. In
addition, fee income, primarily due to fees earned by the Company in
connection with its build-to-suit and development activities and third party
management fees increased by $0.3 million, from $1.1 million in 1994 to $1.4
million in 1996. The equity in net income of affiliate of $32,608 represents
the income from the Company's unconsolidated affiliate, CenterPoint Realty
Services Corporation, which was formed during the second quarter of 1995.
In addition, on a "same-store" basis (comparing the results of
operations, on a cash basis, of the properties owned at December 31, 1994,
with the results of operations of the same properties at
-27-
<PAGE>
December 31, 1995), the Company recognized a 5.7% increase in revenues
primarily due to rental increases on renewed leases, lease up of vacancy and
contractual increases in minimum rent under leases in place.
Total operating expenses (total expenses excluding general and
administrative, incentive stock awards, depreciation, amortization and
interest expense) increased by $3.4 million, from $11.4 million in 1994 to
$14.8 million in 1995. The increase resulted primarily from expenses for a
full year of operations from properties acquired during 1994 and expenses for
a partial year for properties acquired in 1995. Real estate taxes, insurance,
utilities and property operating and leasing expenses, all components of
operating expenses, increased at levels comparable to the level of
acquisitions.
Depreciation and other amortization expense increased by $2.3 million,
from $6.2 million in 1994 to $8.5 million in 1995. Depreciation on
properties acquired in 1994 and 1995 accounted for $2.2 million of the
increase and the remaining $0.1 million is increased amortization of leasing
expenses due to leasing activity. General and administrative expenses
increased by $0.5 million from $1.6 million in 1994 to $2.1 million in 1995
due primarily to the growth of the Company.
Interest incurred increased in 1995 by $0.5 million, from $11.1 million
in 1994 to $11.6 million in 1995. The increase is due to increased
borrowings to fund acquisitions net of interest savings from the repayment of
the Company's lines of credit of approximately $29.9 million following its
second public offering completed in January, 1995, and $48.0 million repaid
from proceeds of its private equity offering in September, 1995.
Amortization of deferred financing costs was $0.2 million higher than the
previous year due to costs incurred in completing 3 debt transactions, the
expansion of the Lehman revolving line of credit to $52 million, the
expansion of the LaSalle line of credit to $40 million and the placement of
$50 million of securitized bonds.
As a result of the factors described above, net income, before
extraordinary item, increased by $6.4 million from $2.4 million in 1994 to
$8.8 million in 1995. Earnings before interest, income taxes, depreciation
and amortization for the year increased by $9.6 million from $20.7 million in
1994 to $30.3 million in 1995.
In 1995, the Company incurred an extraordinary loss of $632,419
representing a write off of unamortized deferred financing costs as a result
of early extinguishment of certain debt obligations resulting from the
Company's 1995 debt transactions.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow generated from Company operations has historically been
utilized for working capital purposes and making distributions, while
proceeds from financings and capital raises have been used to fund
acquisitions and other capital costs. Cash flow from operations during 1996
of $29.6 million was used to pay $24.1 million of current year distributions
and $4.9 million of distributions declared in the fourth quarter of 1995 and
paid in the first quarter of 1996.
Acquisitions, construction in progress on development projects, and
improvements and additions to properties of approximately $114.9 million for
the year were funded with borrowings under the Company's lines of credit and
mortgage notes payable totaling $15.7 million, proceeds from the disposition
of real estate of $19.0 million and $80.2 million of net proceeds from the
July 2, 1996 public offering of common stock.
-28-
<PAGE>
The issuance of mortgage notes receivable of $18.5 million was funded by
repayments of mortgage notes receivable of $5.5 million and the balance of
borrowings under the Company's lines of credit and mortgage notes payable.
At December 31, 1996, the Company's debt constitutes approximately 22.8%
of its fully diluted market capitalization. At that date, the Company's
fully diluted equity market capitalization was approximately $570 million,
and its fully diluted total market capitalization was approximately $732
million. The Company's leverage ratios benefited during 1996 from the
conversion of approximately $8.9 million of its 8.22% Convertible
Subordinated Debentures, due 2004, to 485,680 shares of common stock.
At December 31, 1996, the Company had a $135 million unsecured credit
facility co-led by First Chicago NBD and Lehman Brothers with participating
banks including ABN LaSalle, Bank of America, Bank of Boston and NationsBank.
As of December 31, 1996, the Company had outstanding borrowings of
approximately $46.1 million under the unsecured revolving line of credit
(approximately 6.5% of the Company's fully diluted market capitalization),
and the Company had remaining availability of approximately $89 million under
its unsecured line of credit
On July 2, 1996, the Company completed a public offering of 3,450,000
shares of common stock at $23.75 per share. Net proceeds from the offering,
after the underwriting discounts, were approximately $80.2 million. The
proceeds of the offering were used to repay approximately $55.3 million then
outstanding under the Company's lines of credit and to fund future
investments. The public offering left the entire amount under the Company's
lines of credit available.
Subsequent to year end, on March 6, 1997, the Company completed a public
offering of 2,250,000 shares of common stock at $31.50 per share under a
shelf registration statement declared effective by the Securities and
Exchange Commission in January 1997. Net proceeds from the offering after
the underwriting discounts were approximately $67.2 million. The proceeds of
the offering were used to refund approximately $58.2 million outstanding
under the Company's line of credit with the balance of $9.0 million to fund
investments.
In January 1997, Moody's Investors Service assigned investment grade
ratings to the Company's senior unsecured debt and preferred stock issuable
under the Company's shelf registration and convertible subordinated notes.
These investment grade ratings further enhance the Company's financial
flexibility.
As of December 31, 1996, the Company had approximately $977,000 in
restricted cash, most of which was held in real estate tax escrows for
tenants requiring such escrows under the terms of their leases. The Company
believes that its liquidity is adequate for operations and that positive cash
flow from operations, as supplemented by proceeds of borrowings under its
lines of credit and other financings, will be adequate to fund the Company's
acquisition activities and allow distributions to the Company's stockholders
in accordance with the requirements for qualification as a REIT.
During 1996, the Company declared distributions of $24.1 million,
representing an annualized distribution rate of approximately $1.62 per
share. The following factors, among others, will affect the future
availability of funds for distribution: (i) scheduled increases in base
rents under existing leases and (ii) changes in minimum base rents
attributable to replacement of existing leases with new or replacement leases.
-29-
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See Index to Financial Statements on Page F-1 of this Annual Report on
Form 10-K for the financial statements and financial statement schedules.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
-30-
<PAGE>
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Item 10 is incorporated herein pursuant to General Instruction G to Form
10-K by referencing the Company's definitive proxy statement, which will be
filed with the Securities and Exchange Commission pursuant to Regulation 14A
not later than 120 days after the close of the fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
Item 11 is incorporated herein pursuant to General Instruction G to Form
10-K by referencing the Company's definitive proxy statement, which will be
filed with the Securities and Exchange Commission pursuant to Regulation 14A
not later than 120 days after the close of the fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Item 12 is incorporated herein pursuant to General Instruction G to Form
10-K by referencing the Company's definitive proxy statement, which will be
filed with the Securities and Exchange Commission pursuant to Regulation 14A
not later than 120 days after the close of the fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Item 13 is incorporated herein pursuant to General Instruction G to Form
10-K by referencing the Company's definitive proxy statement, which will be
filed with the Securities and Exchange Commission pursuant to Regulation 14A
not later than 120 days after the close of the fiscal year.
-31-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this report:
(1) (2) The consolidated financial statements and related schedules
indicated in Part II, Item 8, "Financial Statements and
Supplementary Data."
(3) Exhibit 10.44 - Second Amendment to Stock Option Plan
(4) Exhibit 10.45 - Settlement Agreement and Mutual Release
(5) Exhibit 10.46 - Employment Separation Agreement between the
Company and Robert L. Stovall
(6) Exhibit 10.47 - Documents relating to City of Gary, Indiana
Revenue Refinancing Bonds, Series 1996A and Series 1996B, of The
Miller Partnership, L.P.
(7) Exhibit 10.48 - First Amendment to Unsecured Revolving Credit
Agreement
(8) Exhibit 10.49 - Second Amendment to Unsecured Revolving Credit
Agreement
(9) Exhibit 11 - Computation of Earnings per Share
(10) Exhibit 12 - Computation of Ratio of Earnings to Fixed Charges
(11) Exhibit 13 - Annual Report to Security Holders
(12) Exhibit 21 - List of Subsidiaries
(13) Exhibit 23 - Consent of Independent Accountants
(14) Exhibit 27 - Financial Data Schedule
The following exhibits are incorporated by reference from the
Registrant's Registration Statement on Form S-11 (File No. 33-69710),
referencing the exhibit numbers used in such Registration Statement:
EXHIBIT NUMBER DESCRIPTION
4.3 Form of Indenture
10.3(a) Mortgage Documents regarding 440 North Lake
Street, Gary, IN
10.3(c) Mortgage Documents regarding 905-909 Irving Park
Road, Itasca, IL
10.3(d) Mortgage Documents regarding 6845 Santa Fe,
Hodgkins, IL
-32-
<PAGE>
10.4 Form of Noncompetition Agreement for Executive Officers
10.5 Form of Employment Agreement for Executive Officers
10.10 Indemnification Agreement among John S. Gates,
Jr., Capital and Regional Properties and the Company
10.11 Indemnification Agreement among Robert L. Stovall,
Michael M. Mullen and the Company
10.12 Indemnification Agreement between David Kahnweiler
and the Company
The following exhibits are incorporated by reference from
Pre-Effective Amendment No. 2 to the Registrant's Registration
Statement on Form S-11 (File No. 33-69710), referencing the exhibit
numbers used in such Amendment No. 2:
EXHIBIT NUMBER DESCRIPTION
4.1 Form of certificate representing Common Stock
4.2 Form of certificate representing Debentures
10.1 Stock Option Plan
The following exhibits are incorporated by reference from the
Registrant's Registration Statement on Form S-11 (File No. 33-85440),
referencing the numbers used in such Registration Statement:
EXHIBIT NUMBER DESCRIPTION
10.32 Registration Rights Agreement between the Company
and Corum Zeller Venture
10.38 Promissory Note from the Company to the Prudential
Insurance Company of America
10.39 Mortgage, Security Agreement and Fixture Filing
relating to the Promissory Note form the Company to The
Prudential Insurance Company of America
The following exhibits are incorporated by reference from the
Registrant's Form 10-Q for the fiscal quarter ended September 30,
1995, referencing the numbers used in such Form 10-Q:
EXHIBIT NUMBER DESCRIPTION
4.1 1995 Restricted Stock Incentive Plan
-33-
<PAGE>
4.2 1995 Director Stock Plan
4.3 Bonus Stock Grant Agreement between the Company and
John S. Gates, Jr.
4.4 Bonus Stock Grant Agreement between the Company and
Robert L. Stovall
4.5 Series A Preferred Stock Purchase Agreement between the
Company and LaSalle Advisors Limited Partnership
4.6 Registration Rights Agreement between the Company and
LaSalle Advisors Limited Partnership
The following exhibits are incorporated by reference from the
Registrant's Form 10-K for the fiscal year ended December 31, 1995,
referencing the numbers used in such Form 10-K:
EXHIBIT NUMBER DESCRIPTION
4.1 Indenture of CP Financing Trust
10.1 First Amendment to Stock Option Plan
10.2 Mortgage Documents regarding 850 Arthur Street, Elk
Grove Village, Illinois
10.3(a) Mortgage, Assignment of Rents and Leases and Security
Agreement of CP Financing Trust regarding the following
properties in Cook County, Illinois
1520 Pratt, Elk Grove Village
1201 Lunt, Elk Grove Village
1390 Lunt, Elk Grove Village
5619-25 W. 115th St., Alsip
900 University Dr., Arlington Heights
10.3(b) Mortgage, Assignment of Rents and Leases and Security
Agreement of CP Financing Trust regarding the
following properties in DuPage County, Illinois
7001 Adams, Willowbrook
245 Benoris, Wood Dale
1733 Downs Dr., W. Chicago
1645 Downs Dr., W. Chicago
10.3(c) Mortgage, Assignment of Rents and Leases and Security
Agreement of CP Financing Trust regarding the
following properties in Lake County, Illinois
1300 Northpoint, Waukegan
-34-
<PAGE>
1800 Industrial Dr., Libertyville
950-970 Tower Rd., Mundelein
1 Wildlife Way, Long Grove
1810-20 Industrial Dr., Libertyville
1700 Butterfield, Mundelein
10.3(d) Mortgage, Assignment of Rents and Leases and Security
Agreement of CP Financing Trust regarding the
following property in Kane County, Illinois
315 Kirk Rd., St. Charles
10.3(e) Mortgage, Assignment of Rents and Leases and Security
Agreement of CP Financing Trust regarding the
following property in Will County, Illinois
1319 Marquette, Romeoville
10.3(f) Mortgage, Assignment of Rents and Leases and Security
Agreement of CP Financing Trust regarding the
following properties in Wisconsin
8200 100th St., Pleasant Prairie
8901 102nd St., Pleasant Prairie
10.3(g) Mortgage, Assignment of Rents and Leases and Security
Agreement of CP Financing Trust regarding the following
property in Indiana
201 E. Mississippi, Gary
10.3(h) Assignment and Assumption of Mortgage and Other
Obligations between CP Financing Trust and Great Lakes
Industrial Partners, L.P.
10.3(i) Assignment and Assumption of Tenant Leases and
Contracts between CP Financing Trust and the Company
10.3(j) Assignment and Assumption of Tenant Leases and
Contracts between CP Financing Trust and Great Lakes
Industrial Partners, L.P.
The following exhibit is incorporated by reference from the
Registrant's Form 10-Q for the fiscal quarter ended September 30,
1996, referencing the number used in such Form 10-Q:
EXHIBIT NUMBER DESCRIPTION
10.43 Unsecured Revolving Credit Agreement among The
First National Bank of Chicago, Lehman Brothers
Holdings Inc., the other Lenders named therein
and the Company
-35-
<PAGE>
The following exhibits are incorporated by reference from the
Registrant's Registration Statement on Form S-3 (File No. 333-18235),
referencing the exhibit numbers used in such Form S-3:
EXHIBIT NUMBER DESCRIPTION
3.1 Amended and Restated Articles of Incorporation
3.2 Amended and Restated By-Laws
4.3 Form of Senior Securities Indenture
4.4 Form of Subordinated Securities Indenture
(b) During the fourth quarter of 1996, the Company filed a Current
Report on Form 8-K/A on November 27, 1996 to report pro forma financial
information and financial statements which were not reported on the Form 8-K
filed on October 2, 1996 which reported the acquisition by the Company of
properties which constituted more than 10% of the total assets of the Company
and its consolidated subsidiaries between April 30, 1996 and September 18,
1996.
(c) An annual report will be sent to Stockholders subsequent to this
filing, and the Company will furnish copies of such report to the Securities
and Exchange Commission.
(d) Not applicable.
-36-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CENTERPOINT PROPERTIES CORPORATION,
a Maryland corporation
By: /s/ John S. Gates, Jr.
------------------------------
John S. Gates, Jr., President
and Chief Executive Officer
(Principal Executive Officer)
By: /s/ Paul S. Fisher
------------------------------
Paul S. Fisher, Executive Vice
President and Chief
Financial Officer
(Principal Financial and
Accounting Officer)
Pursuant to the requirements of the Securities Act of 1934, this report
has been signed by the following persons on behalf of the registrant in the
capacities and on the dates indicated.
SIGNATURE NAME AND TITLE DATE
/s/ Martin Barber Martin Barber, Chairman March 9, 1997
- ----------------------- and Director
/s/ John S. Gates, Jr. John S. Gates, Jr., President March 9, 1997
- ----------------------- Chief Executive Officer and
Director
/s/ Robert L. Stovall Robert L. Stovall, Executive March 9, 1997
- ----------------------- Vice President, Chief Operating
Officer and Director
/s/ Nicholas C. Babson Nicholas C. Babson, Director March 9, 1997
- -----------------------
/s/ Alan D. Feld Alan D. Feld, Director March 9, 1997
- -----------------------
/s/ John J. Kinsella John J. Kinsella, Director March 9, 1997
- -----------------------
/s/ Thomas E. Robinson Thomas E. Robinson, Director March 9, 1997
- -----------------------
-37-
<PAGE>
CENTERPOINT PROPERTIES CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
PAGE(S)
---------
Consolidated Financial Statements:
Report of Independent Accountants. . . . . . . . . . . . . . . . . .F-2
Consolidated Balance Sheets as of December 31, 1996 and 1995 . . . .F-3
Consolidated Statements of Operations for the years ended
December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . .F-4
Consolidated Statements of Stockholders' Equity for
the years ended December 31, 1996, 1995 and 1994 . . . . . . . . .F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . .F-6
Notes to Consolidated Financial Statements . . . . . . . . .F-7 to F-20
Financial Statement Schedules:
Report of Independent Accountants. . . . . . . . . . . . . . . . . F-21
Schedule II - Valuation and Qualifying Accounts. . . . . . . . . . F-22
Schedule III - Real Estate and Accumulated Depreciation. . F-23 to F-27
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
CenterPoint Properties Corporation
We have audited the accompanying consolidated balance sheets of
CenterPoint Properties Corporation and Subsidiaries as of December 31, 1996
and 1995, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility
of the Corporation's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
CenterPoint Properties Corporation and Subsidiaries as of December 31, 1996
and 1995, and the consolidated results of their operations and their cash
flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
February 13, 1997, except for Notes 17 and 18,
as to which the date is March 6, 1997
F-2
<PAGE>
CENTERPOINT PROPERTIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
DECEMBER 31,
1996 1995
------------ ------------
Assets:
Investment in real estate:
Land $ 72,003,830 $ 49,413,885
Buildings 284,625,543 219,911,526
Building improvements 43,583,267 39,054,302
Furniture, fixtures, and equipment 10,429,242 9,080,444
Construction in progress 18,392,364
------------ ------------
429,034,246 317,460,157
Less accumulated depreciation 30,206,095 21,576,209
------------ ------------
Net investment in real estate 398,828,151 295,883,948
Cash and cash equivalents 1,069,522 2,877,760
Restricted cash and cash equivalents 976,821 1,301,362
Tenant accounts receivable, net 10,193,323 8,743,344
Mortgage notes receivable 22,665,117 9,588,154
Investment in and advances to affiliate 9,672,971 5,356,526
Prepaid expenses and other assets 3,630,443 4,841,456
Deferred expenses, net 4,169,660 6,273,583
------------ ------------
$451,206,008 $334,866,133
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $114,450,683 $121,970,756
Line of credit 46,100,000
Convertible subordinated debentures payable 14,380,000 23,244,000
Notes payable 2,418,475 56,660
Distributions payable 4,952,274
Accounts payable 4,130,360 1,781,433
Accrued expenses 17,914,158 11,837,810
Rents received in advance and security deposits 3,698,586 2,703,253
------------ ------------
203,092,262 166,546,186
------------ ------------
Commitments and contingencies
Stockholders' equity:
Series A preferred stock, $.001 par value,
10,000,000 shares authorized; 0 and 2,272,727
issued and outstanding, respectively 2,273
Common stock, $.001 par value, 47,727,273 shares
authorized; 14,333,231 and 10,358,958 issued and
outstanding, respectively 14,333 10,359
Class B common stock, $.001 par value, 2,272,727
shares authorized; 2,272,727 and 0 issued and
outstanding, respectively 2,273
Additional paid-in-capital 276,141,599 187,160,773
Retained earnings (deficit) (27,725,936) (18,602,473)
Unearned compensation - restricted stock (318,523) (250,985)
------------ ------------
Total stockholders' equity 248,113,746 168,319,947
------------ ------------
$451,206,008 $334,866,133
------------ ------------
------------ ------------
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
CENTERPOINT PROPERTIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,
YEAR ENDED DECEMBER 31,
1996 1995 1994
Revenue:
Minimum rents $41,950,923 $33,870,187 $24,651,035
Straight-line rents 2,086,548 1,349,323 810,451
Expense reimbursements 11,413,363 8,781,299 6,924,468
Miscellaneous tenant income 156,192 1,395,452 114,189
Mortgage interest income 1,513,684 84,492
Real estate fee income 5,140,898 1,438,706 1,132,665
Equity in net income of affiliate 1,068,766 32,608
----------- ----------- -----------
Total revenue 63,330,374 46,952,067 33,632,808
----------- ----------- -----------
Expenses:
Real estate taxes 11,867,536 7,719,144 5,180,882
Repair and maintenance 1,867,954 1,276,485 1,074,399
Insurance 493,312 399,833 275,883
Utilities 1,154,552 1,179,359 1,272,754
Property operating and leasing 5,367,445 4,199,075 3,637,437
General and administrative 2,567,757 2,149,549 1,573,122
Depreciation and amortization 10,647,887 8,455,668 6,175,816
Interest expense:
Interest incurred, net 9,864,953 11,563,047 11,072,850
Amortization of deferred
financing costs 1,126,968 1,149,955 976,460
----------- ----------- -----------
Total expenses 44,958,364 38,092,115 31,239,603
----------- ----------- -----------
Operating income 18,372,010 8,859,952 2,393,205
Other expense 99,887 15,605 34,155
----------- ----------- -----------
Income before extraordinary item 18,272,123 8,844,347 2,359,050
Extraordinary item,
early extinguishment of debt (3,330,684) (632,419)
----------- ----------- -----------
Net income $14,941,439 $8,211,928 $2,359,050
----------- ----------- -----------
----------- ----------- -----------
Income before extraordinary
item per share $1.22 $0.88 $0.41
Extraordinary item per share (0.22) (0.06)
----------- ----------- -----------
Net income per share $1.00 $0.82 $0.41
----------- ----------- -----------
----------- ----------- -----------
Distributions per share $1.62 $1.56 $1.50
----------- ----------- -----------
----------- ----------- -----------
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
CENTERPOINT PROPERTIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CLASS B COMMON
PREFERRED STOCK STOCK COMMON STOCK
------------------ ----- ------------ ADDITIONAL
NUMBER NUMBER NUMBER PAID-IN
OF SHARES AMOUNT OF SHARES AMOUNT OF SHARES AMOUNT CAPITAL
--------- ------ --------- ------ --------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994 0 $0 0 $0 5,348,054 $5,348 $50,680,697
Conversion of convertible subordinated
debentures to common stock 794,621 795 14,073,954
Incentive stock award 1,100 1 22,549
Shares issued for purchase of properties 272,108 272 5,299,728
Distributions in connection with acquisitions
of interests in properties (89,922)
Additional offering costs for initial public
offering (115,545)
Distributions declared on common stock,
$1.50 per share
Net income 2,359,050
--------- ------ --------- ------ ---------- ------ -----------
Balance, December 31, 1994 0 0 0 0 6,415,883 6,416 69,871,461
Issuance of common stock:
Public offering, less $5,160,329 of
offering costs 2,587,500 2,588 42,058,958
Private offering 149,200 149 3,387,198
Shares issued for purchase of property 48,261 48 1,122,020
Issuance of preferred stock in private offering 2,272,727 2,273 49,997,727
Conversion of convertible subordinated
debentures to common stock 1,137,165 1,137 20,314,606
Shares issued for stock options exercised 600 1 10,949
Incentive stock awards 17,499 17 341,213
Director stock awards 2,850 3 56,641
Amortization of unearned compensation
Distributions declared on common stock,
$1.56 per share
Distributions declared on preferred stock,
$0.44 per share
Net income
--------- ------ --------- ------ ---------- ------ -----------
Balance, December 31, 1995 2,272,727 2,273 0 0 10,358,958 10,359 187,160,773
Issuance of common stock:
Public offering, less $2,386,799 of
offering costs 3,450,000 3,450 79,547,251
Conversion of preferred stock to Class B
common stock (2,272,727) (2,273) 2,272,727 2,273
Conversion of convertible subordinated
debentures to common stock 485,680 486 8,682,532
Shares issued for stock options exercised 27,787 28 507,919
Incentive stock awards 8,290 8 186,517
Director stock awards 2,516 2 56,607
Amortization of unearned compensation
Distributions declared on common stock,
$1.62 per share
Distributions declared on preferred stock,
$0.42 per share
Distributions declared on Class B common
stock, $1.25 per share
Net income
--------- ------ --------- ------ ---------- ------ -----------
Balance, December 31, 1996 0 0 2,272,727 $2,273 14,333,231 $14,333 $276,141,599
--------- ------ --------- ------ ---------- ------ -----------
--------- ------ --------- ------ ---------- ------ -----------
</TABLE>
<TABLE>
<CAPTION>
UNEARNED
RETAINED COMPENSATION- TOTAL
EARNINGS RESTRICTED STOCKHOLDERS'
(DEFICIT) STOCK EQUITY
--------- ----- ------
<S> <C> <C> <C>
Balance, January 1, 1994 ($4,446,010) $0 $46,240,035
Conversion of convertible subordinated
debentures to common stock 14,074,749
Incentive stock award 22,550
Shares issued for purchase of properties 5,300,000
Distributions in connection with acquisitions
of interests in properties (89,922)
Additional offering costs for initial public
offering (115,545)
Distributions declared on common stock,
$1.50 per share (8,774,790) (8,774,790)
Net income 2,359,050
-----------
Balance, December 31, 1994 (10,861,750) 0 59,016,127
Issuance of common stock:
Public offering, less $5,160,329 of
offering costs 42,061,546
Private offering 3,387,347
Shares issued for purchase of property 1,122,068
Issuance of preferred stock in private offerin 50,000,000
Conversion of convertible subordinated
debentures to common stock 20,315,743
Shares issued for stock options exercised 10,950
Incentive stock awards (341,230)
Director stock awards 56,644
Amortization of unearned compensation 90,245 90,245
Distributions declared on common stock,
$1.56 per share (14,951,061) (14,951,061)
Distributions declared on preferred stock,
$0.44 per share (1,001,590) (1,001,590)
Net income 8,211,928 8,211,928
----------- ------------- -------------
Balance, December 31, 1995 (18,602,473) (250,985) 168,319,947
Issuance of common stock:
Public offering, less $2,386,799 of
offering costs 79,550,701
Conversion of preferred stock to Class B
common stock
Conversion of convertible subordinated
debentures to common stock 8,683,018
Shares issued for stock options exercised 507,947
Incentive stock awards (186,525)
Director stock awards 56,609
Amortization of unearned compensation 118,987 118,987
Distributions declared on common stock,
$1.62 per share (20,276,721) (20,276,721)
Distributions declared on preferred stock,
$0.42 per share (947,045) (947,045)
Distributions declared on Class B common
stock, $1.25 per share (2,841,136) (2,841,136)
Net income 14,941,439 14,941,439
----------- ------------- ------------
Balance, December 31, 1996 ($27,725,936) ($318,523) $248,113,746
----------- ------------- ------------
----------- ------------- ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
CENTERPOINT PROPERTIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $14,941,439 $8,211,928 $2,359,050
Adjustments to reconcile net income
to net cash provided by
operating activities:
Extraordinary item-early extinguishment
of debt 3,330,684 632,419
Bad debts 462,245 432,832 120,000
Depreciation 10,198,721 8,160,904 6,005,507
Amortization of deferred
financing costs 1,126,968 1,149,955 976,460
Other amortization 449,166 294,764 170,309
Incentive stock awards 175,596 146,889 22,550
Interest on converted debentures 76,810 235,219 150,993
Equity in net income of affiliate (1,068,766) (32,608)
Loss on disposal of real estate 60,155
Net changes in:
Tenant accounts receivable (1,889,660) (4,003,068) (3,017,872)
Prepaid expenses and other assets (937,062) (292,895) (849,660)
Rents received in advance and
security deposits 589,497 119,470 829,282
Accounts payable and accrued
expenses 2,035,585 1,417,067 2,209,622
---------- ---------- ---------
Net cash provided by operating activities 29,551,378 16,472,876 8,976,241
---------- ---------- ---------
Cash flows from investing activities:
Change in restricted cash and
cash equivalents 324,541 4,580 3,746,938
Acquisition of real estate (85,267,555) (61,880,989) (52,421,967)
Construction in progress (17,063,084)
Improvements and additions to properties (12,574,683) (5,031,108) (10,224,418)
Disposition of real estate 18,990,923 2,383,650
Change in deposits on acquisitions 1,036,708 (501,821) (2,979,153)
Issuance of mortgage notes receivable (18,523,150) (9,588,154)
Repayment of mortgage notes receivable 5,543,033
Investment in and advances to affiliate (1,047,679) (5,323,918)
Receivables from affiliates and employees 106,116 273,960 (351,305)
Additions to deferred expenses (3,079,206) (2,892,829) (3,081,079)
----------- ----------- -----------
Net cash used in investing activities (111,554,036) (82,556,629) (65,310,984)
------------- ------------ ------------
Cash flows from financing activities:
Proceeds from sale of preferred stock 50,000,000
Proceeds from sale of common stock 82,445,447 50,620,172
Offering costs paid (2,386,799) (4,386,217) (2,565,511)
Proceeds from line of credit 46,100,000
Proceeds from issuance of mortgage
notes payable 45,881,822 50,000,000 125,016,046
Repayments of mortgage notes payable (62,704,903) (63,929,723) (57,893,250)
Repayments of notes payable (123,327) (111,734) (79,534)
Repayments of notes payable to CRP-London (5,012,233)
Distributions (29,017,176) (13,649,784) (6,628,100)
Conversion of convertible subordinated
debentures payable (644) (868) (164)
------------- ------------ -----------
Net cash provided by financing activities 80,194,420 68,541,846 52,837,254
------------- ------------ -----------
Net change in cash and cash equivalents (1,808,238) 2,458,093 (3,497,489)
Cash and cash equivalents, beginning of the year 2,877,760 419,667 3,917,156
------------- ------------ -----------
Cash and cash equivalents, end of year $1,069,522 $ 2,877,760 $419,667
------------- ------------ -----------
------------- ------------ -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
1. ORGANIZATION
CenterPoint Properties Corporation (the "Company"), a Maryland
corporation, and its subsidiaries, owns and operates primarily
warehouse/industrial properties in the metropolitan Chicago area and operates
as a real estate investment trust.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
Minimum rents are recognized on a straight-line basis over the terms of
the respective leases. Unbilled rents receivable represents the amount that
straight-line rental revenue exceeds rents due under the lease agreements.
Unbilled rents receivable, included in tenants accounts receivable, at
December 31, 1996 and 1995 were $4,098,745 and $2,262,468, respectively.
Recoveries from tenants for taxes, insurance and other property operating
expenses are recognized in the period the applicable costs are incurred.
The Company provides an allowance for doubtful accounts against the
portion of accounts receivable which is estimated to be uncollectible.
Accounts receivable in the consolidated balance sheets are shown net of an
allowance for doubtful accounts of $747,715 and $500,000 as of December 31,
1996 and 1995, respectively.
Miscellaneous tenant income in 1995 includes a lease buy out fee of
$1,200,000 realized in connection with the early termination of a tenant's
lease.
DEFERRED EXPENSES
Deferred expenses consist principally of financing fees and leasing
commissions. Leasing commissions are amortized on a straight-line basis over
the terms of the respective agreements ranging from 1 to 8 years. Financing
costs are amortized over the terms of the respective agreements. Deferred
expenses relating to debenture conversions of $257,148 and $646,022 were
charged to paid-in capital in 1996 and 1995, respectively, and fully
amortized deferred expenses of $56,973 and $994,496 were written off in 1996
and 1995, respectively. The balances are as follows:
DECEMBER 31
-----------
1996 1995
---- ----
Deferred financing costs, net of accumulated
amortization of $827,868 and $1,474,949 $2,098,035 $4,912,839
Deferred leasing costs, net of accumulated
amortization of $1,381,925 and $962,286 2,071,625 1,360,744
---------- ----------
$4,169,660 $6,273,583
---------- ----------
---------- ----------
F-7
<PAGE>
PROPERTIES
Real estate assets are stated at cost. Interest and real estate taxes
and other directly related expenses incurred during construction periods are
capitalized and amortized on the same basis as the related assets.
Depreciation expense is computed using the straight-line method based upon
the following estimated useful lives:
YEARS
-----
Building and improvements 31.5 and 40
Land improvements 15
Furniture, fixtures and equipment 4 to 15
Construction allowances for tenant improvements are capitalized and
amortized over the terms of each specific lease. Repairs and maintenance are
charged to expense when incurred. Expenditures for improvements are
capitalized. When assets are sold or retired, their cost and related
accumulated depreciation are removed from the accounts with the resulting
gains or losses reflected in operations.
In accordance with the requirements of Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of" issued in 1995, the Company has
reviewed the recoverability of the carrying value of its investment in real
estate. The Company has conducted such reviews annually by estimating the
fair value of its properties generally by analysis and comparison of the
capitalized values of the expected net operating cash flows of the
properties. If management determines that an impairment of property has
occurred, the carrying value of such property will be reduced to its fair
value.
CASH AND CASH EQUIVALENTS
For purposes of the consolidated financial statements, the Company
considers all liquid investments purchased with original maturities of three
months or less to be cash equivalents.
INVESTMENT IN AND ADVANCES TO AFFILIATE
The Company accounts for its investment in affiliate using the equity
method whereby its cost of the investment is adjusted for its share of equity
in net income or loss from the date of acquisition and reduced by
distributions received.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates
INCOME TAXES
F-8
<PAGE>
The Company qualifies as a real estate investment trust ("REIT") under
sections 856-860 of the Internal Revenue Code beginning January 1, 1994. In
order to qualify as a REIT, the Company is required to distribute at least
95% of its taxable income to stockholders and to meet certain asset and
income tests as well as certain other requirements. As a REIT, the Company
will generally not be liable for Federal income taxes, provided it satisfies
the necessary distribution requirements. The distributions declared and paid
for the years ended December 31, 1996, 1995 and 1994 represent a return of
capital of approximately 51%, 54% and 50% respectively.
EARNINGS PER COMMON SHARE
Income per share amounts are based on the weighted average of common and
common equivalent (stock options and convertible preferred stock in 1996 and
1995) shares outstanding of 15,008,053, 9,993,540 and 5,755,250, for 1996,
1995, and 1994, respectively. The convertible preferred stock is considered
common stock equivalents as they participate in dividends with common stock
and was converted into common stock in 1996. The assumed conversion of the
convertible subordinated debentures into common shares for purposes of
computing fully diluted earnings (loss) per share in 1996, 1995 and 1994
would be anti-dilutive.
RECLASSIFICATIONS
The consolidated statements of operations for prior periods have been
reclassified to conform with current classifications with no effect on
results of operations.
3. PROPERTY ACQUISITIONS AND DISPOSITIONS
During the year ended December 31, 1996 and 1995, the Company acquired
fifteen and sixteen properties, respectively, consisting principally of
single-tenant buildings for an aggregate amount of approximately $103,532,000
and approximately $65,828,000, respectively. Substantially all of these
properties were acquired in singular transactions and, except for three of
the transactions in 1996, involved unrelated third parties. The three
properties acquired from related parties is discussed in Note 11, Related
Party Transactions. The properties acquired were funded with borrowings
under the Company's lines of credit, proceeds from five properties sold
during 1996 in transactions that qualify as a tax-free exchange, proceeds of
a public offering of shares of the Company's common stock completed on July
2, 1996, and the issuance of shares of the Company's common stock with
respect to one property in 1995. The acquisitions have been accounted for
utilizing the purchase method of accounting and ,accordingly, the results of
operations of the acquired properties are included in the consolidated
statements of operations from the dates of acquisition.
The Company disposed of eight properties during the year ended December
31, 1996 and one property during the year ended December 31, 1995. In 1996,
five of the properties were disposed of in transactions that qualify as a
tax-free exchange under applicable provisions of the Internal Revenue Code.
Due to the effect of the January, 1995 public offering, the September,
1995 private offering, the July, 1996 public offering and the subsequent
acquisitions and dispositions of properties, the historical results are not
indicative of the future results of operations. The following unaudited pro
forma
F-9
<PAGE>
information is presented as if the 1994 and 1995 acquisitions and
dispositions of properties, the January, 1995 public offering, the September,
1995 private offering and the corresponding repayment of certain debt had
occurred on January 1, 1994 and as if the July, 1996 public offering, the
corresponding repayment of certain debt, and the 1996 acquisitions and
dispositions had all occurred on January 1, 1995 (or on the date the property
first commenced operations with a third party tenant, if later). The
unaudited pro forma information is based upon the historical consolidated
statements of operations before any extraordinary items and does not purport
to present what actual results would have been had the transactions, in fact,
occurred at the beginning of 1995 or 1994, or to project results for any
future period.
<TABLE>
<CAPTION>
PROFORMA FOR THE YEAR ENDED DECEMBER 31 (UNAUDITED)
---------------------------------------------------
1996 1995 1994
---- ---- ----
(in thousands, except for per share data)
<S> <C> <C> <C>
Total revenues $68,144 $57,411 $39,871
Total expenses 48,338 41,764 32,155
------- ------- -------
Income before extraordinary item $19,806 $15,647 $ 7,716
------- ------- -------
------- ------- -------
Income before extraordinary item
per common share $ 1.18 $ 1.03 $ 0.71
------- ------- -------
------- ------- -------
</TABLE>
4. MORTGAGE NOTES RECEIVABLE
Mortgage notes receivable at December 31, 1996 and 1995 consist of the
following:
<TABLE>
<CAPTION>
ESTIMATED
CARRYING AMOUNT OF NOTES PERIODIC BALLOON FINAL
PROPERTY PLEDGED DECEMBER 31, INTEREST PAYMENT PAYMENT AT MATURITY
AS COLLATERAL 1996 1995 RATE TERMS MATURITY DATE
- ------------- ---- ---- ---- ----- -------- ----
<S> <C> <C> <C> <C> <C> <C>
1150 Spring Lake Drive
Itasca, IL $908,791 $838,154 (a) (b) $908,791 01/31/97
1800 Wolf Road
DesPlaines, IL 8,750,000 8,750,000 11.25% (b) 8,750,000 12/01/00
4833 Diversey Road
Chicago, IL 929,652 10.50% $8,828(c) 6/01/10
6634 West 68th Street
Bedford Park, IL 4,749,750 11.00% (b) 4,749,750 7/01/01(f)
777 Remington
Bolingbrook, IL(e) 2,676,924 8.50% (b) 2,676,924(d) 3/15/98
1400 West 35th Street
Chicago, IL 4,650,000 8.25% (d) 4,650,000 6/30/97
----------- ----------
$22,665,117 $9,588,154
----------- ----------
----------- ----------
</TABLE>
(a) Prime plus 1.0%
(b) Monthly payments of interest only.
(c) The monthly payment is an increasing payment per the loan schedule. This
amount is the required payment at December 31, 1996.
F-10
<PAGE>
(d) No payments are required until maturity, when principal and accrued
interest are due.
(e) This mortgage note is a construction loan which will increase through
construction.
(f) The borrower has an option to extend the term of this loan for two one year
periods at an increased interest rate of 12% for the first year and 13% for
the second year.
As of December 31, 1996 mortgage notes receivable mature as follows:
1997............................................... $5,570,427
1998............................................... 2,694,420
1999............................................... 24,170
2000............................................... 8,781,770
2001............................................... 4,790,155
Thereafter......................................... 804,175
-----------
Total....................................... $22,665,117
-----------
-----------
Based on borrowing rates available at the end of 1996 and 1995 for
mortgage loans with similar terms and maturities, the fair value of the
mortgage notes receivable approximates the carrying values.
Land and buildings related to such mortgages exceeding the carrying
value of the mortgages at December 31, 1996 have been pledged as collateral
for the above debt.
5. INVESTMENT IN AND ADVANCES TO AFFILIATE
The Company holds approximately 99% of the economic interest in
CenterPoint Realty Services Corporation ("CRS"). To maintain compliance with
limitations on income from business activities received by REITs and their
qualified REIT subsidiaries, the Company holds its interest in CRS in the
form of non-voting equity ownership which qualifies as an unconsolidated
taxable subsidiary.
As of December 31, 1996 and 1995, the Company had advanced to CRS
approximately $6,300,000 and $5,200,000, respectively, under a demand loan
with an interest rate of 8.125%. The proceeds of the loans were required for
development projects. Principal and interest is due upon demand.
F-11
<PAGE>
6. MORTGAGE NOTES PAYABLE
Mortgage notes payable at December 31, 1996 and 1995 consist of the
following:
<TABLE>
<CAPTION>
ESTIMATED
CARRYING AMOUNT OF NOTES PERIODIC BALLOON FINAL
PROPERTY PLEDGED DECEMBER 31, INTEREST PAYMENT PAYMENT AT MATURITY
AS COLLATERAL 1996 1995 RATE TERMS MATURITY DATE
- ------------- ---- ---- ---- ----- -------- ----
<S> <C> <C> <C> <C> <C> <C>
MORTGAGE NOTES PAYABLE:
440 North Lake Street
Miller, IN $20,540,000 $15,500,000 (a) (a) $20,540,000 3/01/31
1,680,000 7,500,000 (a) (a) 1,680,000 3/01/31
905 Irving Park Road (h)
Itasca, IL 1,978,378 9.00%(b) $18,295(c) 1,912,026 7/18/97
6843 Santa Fe Drive
Hodgkins, IL 2,076,673 10.13%(b) 18,934(c)
351 North Rohlwing Road
Itasca, IL 340,705 10.50%(b) 3,493(c)
850 Arthur Avenue
Elk Grove Village, IL 575,000 575,000 8.00% 11,500(d) 575,000 10/03/00
1800 Bruning Drive
Itasca, IL 5,655,683 8.40% 47,910(c) 5,570,116 10/10/97
2553 North Edgington
Franklin Park, IL 6,000,000 (e) (f) 6,000,000 11/30/98
POOL MORTGAGE NOTES
PAYABLE:
Designated pools of 20
properties 50,000,000 50,000,000 7.62% 317,500(f) 50,000,000 11/01/02
Designated pools of 18
properties 30,000,000 30,000,000 6.91% 172,750(f) 30,000,000 5/15/99
LINES OF CREDIT:
Revolving line of credit 14,000,000 (g) (f)
------------ ------------
$114,450,683 $121,970,756
------------ ------------
------------ ------------
</TABLE>
(a) This debt consists of Economic Development Revenue Bonds issued by the
City of Gary, Indiana and is collateralized by a letter of credit. The
letter of credit contains certain financial covenants pertaining to the
tangible net worth and liabilities in relation to portfolio value of the
Company. In April 1996, the bonds outstanding at December 31, 1995 were
refunded. The new bonds were issued in two series; $20,540,000 tax exempt
and $1,680,000 taxable, bearing interest in the Weekly Adjustable Interest
Rate Mode at a rate determined by the Remarketing Agent (4.35% on the tax
exempt bonds and 5.85% on the taxable bonds at December 31, 1996). The
new bonds require monthly payments of interest only.
(b) The effective interest rate is 8.0% pursuant to a mortgage assumption
credit received in connection with the acquisition of the related
properties.
F-12
<PAGE>
(c) Amount represents the monthly payment of principal and interest.
(d) The loan requires quarterly payments of interest only.
(e) The interest rate is one month LIBOR plus 1.75% (7.38% at December 31,
1996).
(f) The loan requires monthly payments of interest only.
(g) This $52,000,000 revolving line of credit which was collateralized by 6
properties was replaced by a $135 million unsecured line of credit in
October, 1996 (see Note 7). The interest rate was one month LIBOR plus
1.5% (7.25% at December 31, 1995 on $4,000,000 and 7.1875% at December 31,
1995 on $10,000,000).
(h) During 1996, the Company sold the property subject to the mortgage which
was not repaid due to the prepayment cost. The Company will pay the note
upon maturity in 1997 and is collateralized by a $2.0 million letter of
credit purchased by the Company (see Note 10).
As of December 31, 1996 mortgage notes mature as follows:
1997............................................... $ 5 ,655,683
1998............................................... 6,000,000
1999............................................... 30,000,000
2000............................................... 575,000
2001............................................... 0
Thereafter......................................... 72,220,000
------------
Total........................................ $114,450,683
------------
------------
Based on borrowing rates available to the Company at the end of 1996
and 1995 for mortgage loans with similar terms and maturities, the fair value
of the mortgage notes payable approximates the carrying values.
Land, buildings and equipment related to such mortgages with an
aggregate net book value of approximately $174 million at December 31, 1996
have been pledged as collateral for the above debt.
7. LINE OF CREDIT
In October, 1996, the Company obtained a $135 million unsecured line of
credit. The current interest rate is LIBOR plus 1.15% for LIBOR borrowings
and First Chicago's corporate base rate plus .15% for other borrowings (a
range of 6.938% to 7.138% at December 31, 1996). The line requires payments
of interest only when LIBOR contracts mature and monthly on borrowings under
First Chicago's corporate base rate. The line matures on October 24, 1999.
There is a fee of 1/4% per year on the average unused balance of the line.
At December 31, 1996, the Company had $88.9 million available under the line.
F-13
<PAGE>
8. EXTRAORDINARY ITEM
In 1996 and 1995, the Company incurred losses of $3,330,684 and
$632,419, respectively, representing a write off of unamortized deferred
financing costs as a result of early extinguishment of certain debt
obligations.
9. CONVERTIBLE SUBORDINATED DEBENTURES PAYABLE
Concurrent with the initial public offering in December, 1993, the
Company issued $58,500,000 of convertible subordinated debentures
("Debentures") due 2004. At December 31, 1996 and 1995, $14,380,000 and
$23,244,000 of debentures were outstanding, respectively. The Debentures are
unsecured general obligations of the Company and are subordinate to all
existing and subsequently incurred indebtedness of the Company. The
Debentures are optionally redeemable by the Company, at par, commencing
December 4, 1998. Holders may convert the Debentures at any time, without
premium, to common stock of the Company at a conversion price of $18.25 per
share, subject to certain adjustments. The Debentures bear interest at 8.22%
per annum, payable semiannually on January 15 and July 15 of each year,
commencing July 15, 1994. During 1996, 1995 and 1994, debentures totaling
$8,864,000, $20,754,000 and $14,502,000, respectively, were converted into
shares of common stock. Based principally on the conversion feature and
share price of common stock at the end of 1996 and 1995, the fair value of
the Debentures approximates $25,805,000 and $29,453,000, respectively.
10. NOTES PAYABLE
Notes payable at December 31, 1996 includes amounts payable to related
parties as a consequence of properties acquired and settlement of tax
reimbursement obligations of the Company during 1996 totaling $483,333.
These notes payable are interest free. Also outstanding at December 31, 1996
is a $1,935,142 note, scheduled to mature in July 1997, which is
collateralized by a $2.0 million letter of credit purchased by the Company.
At December 31, 1995, the amount payable consists of an equipment loan with
an interest rate at 8.00%, monthly principal and interest payments of $3,114,
and final payment was made in 1996.
11. RELATED PARTY TRANSACTIONS
In June, 1996, the Company acquired three properties in which Robert
Stovall, the Company's Chief Operations Officer and a director, and Michael
Mullen, the Company's Executive Vice President of Acquisitions had an
interest and, in which they, continue to own an insignificant interest in two
of the properties. The three properties were purchased for an aggregate
amount of approximately $24.6 million in transactions which satisfied the
Company's investment criteria and were approved by the Company's independent
directors.
12. CAPITAL STOCK
On December 10, 1993, the Company completed an initial public offering
of 3,750,000 shares of common stock at $18.25 per share.
F-14
<PAGE>
As of December 31, 1996 the Company has reserved 1,500,000 shares of
common stock for future issuance under the 1993 Stock Option Plan, 150,000
shares of common stock for future issuance under the 1995 Restricted Stock
Incentive Plan, 75,000 shares of common stock for future issuance under the
1995 Director Stock Plan, 787,945 shares of common stock for issuance upon
the conversion of the Debentures and 1,000,000 shares of common stock for
future issuance under the dividend reinvestment and stock purchase plan.
On January 19, 1995, the Company completed a second public offering of
2,587,500 shares of common stock at $18.25 per share. Net proceeds from the
offering after the underwriting discounts and associated costs were
approximately $42 million. The proceeds of the offering were used to repay a
term loan from Lehman Brothers, Inc. "Lehman" of $19.3 million, repay
borrowings under a line of credit from Lehman of $10.4 million and the
purchase of three properties.
On June 5, 1995, the Company filed a shelf registration statement with
the Securities and Exchange Commission for an aggregate amount of $200
million of common stock, preferred stock, debt securities and security
warrants of the Company. On July 27, 1995, the registration statement, as
amended, was declared effective by the Securities and Exchange Commission.
On January 23, 1996 the Company filed post effective amendment No. 1 to the
shelf registration statement removing preferred stock and debt securities
from the registration statement. On January 26, 1996 the registration
statement, as amended by post effective amendment No. 1, was declared
effective by the Securities and Exchange Commission.
On July 26, 1995, the Company filed an additional registration statement
to register 200,000 shares of common stock owned by one of the Company's
founders, Capital and Regional Properties, plc (CRP-London), through an
affiliate. The shares were purchased by CRP-London at the time of the
Company's initial public offering. The shares were sold and CRP-London
continues to hold 1,008,478 common shares in the Company.
On September 22, 1995, the Company completed a $50 million private
equity placement of non-voting preferred stock. In May, 1996, the preferred
stock automatically converted, on a share for share basis, to non-voting
common stock, upon shareholder approval of an amendment to the Company's
charter permitting non-voting common stock at the Company's annual meeting.
The distribution on the non-voting shares is equal to the distribution paid
on the voting shares of the Company plus an additional $.0468 per share.
Unless previously converted, after three years, the shares will be converted
to voting common shares on a share for share basis up to 4.9 percent of the
Company's then outstanding voting shares with all shares to fully convert
within ten years. As the shares convert to voting common, the distribution
paid shall be the same as all other voting common shares. Proceeds of the
offering were used to pay down borrowings under a line of credit from Lehman
of $48.1 million and the balance to fund working capital.
On July 2, 1996, the Company completed a public offering of 3,450,000
shares of common stock at $23.75 per share under a shelf registration
statement declared effective by the Securities and Exchange Commission in
January, 1996. The proceeds of the offering were used to refund approximately
$55.3 million outstanding under the Company's lines of credit and the balance
of $24.9 million to fund investments.
F-15
<PAGE>
On December 19, 1996 the Company filed a shelf registration statement
with the Securities and Exchange Commission for an aggregate amount of $200
million of common stock, preferred stock, debt securities and securities
warrants of the Company. The prospectus included in this registration
statement is a combined prospectus which also relates to the shelf
registration statement filed with the Securities and Exchange Commission on
June 5, 1995. On January 6, 1997 this registration was declared effective by
the Securities and Exchange Commission.
Under the terms of the Company's Restricted Stock Grant Agreements,
certain key employees were granted 7,829 restricted shares of the Company's
common stock in 1995. Shares were awarded in the name of each of the
employees, who have all the rights of other common stockholders, subject to
certain restrictions and forfieture provisions. Restrictions on the shares
expired one year after the date of award.
In 1996 and 1995, under the terms of the Company's 1995 Restricted Stock
Incentive Plan, adopted in 1995, certain key employees were granted 8,290 and
9,670 restricted shares, respectively, of the Company's common stock. Shares
were awarded in the name of each of the participants, who have all the rights
of other common stockholders, subject to certain restrictions and forfeiture
provisions. Restrictions on the shares expire no more than eight years after
the date of award, or earlier if certain performance targets are met.
Unearned compensation was recorded at the date of awards based on the
market value of shares. Unearned compensation, which is shown as a separate
component of stockholders' equity, is being amortized to expense over the
eight year vesting period. The amount amortized to expense during 1996 and
1995 was $118,987 and $90,245, respectively. Shares reserved under the 1995
Restricted Stock Incentive Plan for future grants at December 31, 1996 were
132,040.
13. STOCK OPTION PLAN
The Company has adopted the 1993 Stock Option Plan (the "Plan") and in
May, 1996, increased the maximum number of shares from 750,000 to 1,500,000
shares of common stock which may be granted for qualified and non-qualified
options. The Company adopted the Plan to provide additional incentives to
attract and retain directors, officers and key employees. The Plan was
amended in 1995 to provide that each independent director receive an option
for 3,000 shares of common stock at fair market value at the time of being
elected or re-elected to the Board. Options are to be granted by the
Compensation Committee of the Board of Directors. The term of the option
shall be fixed by the Compensation Committee, but no option shall be
exercisable more than 10 years after the date of grant.
The options granted are at fair market value on the date of grant, are
for 10 year terms and become exercisable in 20% annual increments after one
year from date of grant. Option activity for the three years ended December
31, 1996 is as follows:
F-16
<PAGE>
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------ -------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 606,839 494,460 453,960 $18.25
Granted 104,428 $22.50 112,979 $19.55 40,500* 19.76
Exercised (27,787) 18.28 (600) 18.25
------- ------- ------
Outstanding at end of year 683,480 606,839 494,460
------- ------- -------
------- ------- -------
* Includes 3,000 shares under
separate agreement
Exercisable at end of year 282,784 189,084 90,792
Available for future grant at year end 791,133 145,561 258,540
Weighted average per share fair value of
options granted during the year $2.43 $2.41
</TABLE>
The fair value of each option grant was estimated on the date of grant
using the Black-Scholes option-pricing model with the following assumptions:
1996 1995
---- ----
Risk free interest rate 6.1% 7.0%
Dividend yield 6.5% 6.5%
Expected lives 6 years 6 years
Expected volatility 17.4% 17.4%
The following table summarized information about stock options at
December 31, 1996:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------- -------------------
<TABLE>
<CAPTION>
Weighted
Average Weighted Weighted
Range Number Remaining Average Number Average
of Exercise Price Outstanding at Contractual Excercise Exercisable Exercise
12/31/96 Life Price at 12/31/96 Price
<S> <C> <C> <C> <C> <C>
$18.25-$22.50 683,480 7.6 years $19.20 282,784 $18.44
</TABLE>
The Company has applied Accounting Principles Board Opinion No. 25 and
related interpretations in accounting for its Plan, accordingly, no
compensation costs have been recognized. Had
F-17
<PAGE>
compensation costs for the Company's Plan been determined based on the
fair value at the grant date for options granted in 1996 and 1995 in
accordance with the method required by Statement of Financial Accounting
Standards No. 123, the Company's net income and net income per share would
have been reduced to the pro forma amounts as follows:
YEAR ENDED DECEMBER 31,
(IN THOUSANDS, EXCEPT PER SHARE DATA)
-------------------------------------
1996 1995
------- ------
Net income As reported $14,941 $8,212
Pro forma 14,848 8,171
Net income per share As reported 1.00 0.82
Pro forma 0.99 0.82
14. FUTURE RENTAL REVENUES
Under existing noncancelable operating lease agreements as of December
31, 1996, tenants of the warehouse/industrial properties are committed to pay
in aggregate the following minimum rentals:
1997 $ 43,960,000
1998 39,482,000
1999 33,724,000
2000 29,300,000
2001 24,559,000
Thereafter 74,644,000
------------
Total $245,669,000
------------
------------
At December 31, 1996, 656 of the total 682 apartments available for
rental at the Lakeshore Dunes property were leased. Lease terms are
generally for one year.
No single tenant represented more than 10% of consolidated minimum rents
in 1996, 1995 and 1994.
F-18
<PAGE>
15. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Supplemental disclosure of cash flow information:
Interest paid, net of interest capitalized $9,915,937 $12,988,842 $9,542,272
Interest capitalized 142,263 20,386 63,240
Income taxes paid 46 25 6,625
In conjunction with the property
acquisitions, the Company assumed the following
assets and liabilities:
Purchase of real estate $103,531,749 $65,828,289 $59,048,485
Accounts receivable 614,227 44,953 3,900
Prepaid expenses and other assets 359,861
Accounts payable and accrued expenses (5,380,601) (1,764,645) (1,330,418)
Mortgage notes payable (13,307,681) (575,000)
Notes payable (550,000)
Prepaid acquisition costs (530,540)
Issuance of Common Stock (1,122,068) (5,300,000)
----------- ----------- -----------
Acquisition of real estate $85,267,555 $61,880,989 $52,421,967
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
In conjunction with the property acquisitions, the
Company disposed of the following assets and
liabilities:
Sale of real estate $(22,481,151) $(2,429,336)
Accounts receivable (591,663)
Prepaid expenses and other assets (22,432)
Mortgage notes receivable 935,000
Accounts payable and accrued expenses 1,099,794 45,686
Mortgage notes payable 2,069,529
Disposition of real estate $(18,990,923) $(2,383,650)
------------- ------------
------------- ------------
Conversion of convertible subordinated debentures
payable:
Convertible subordinated dentures converted $8,864,000 $20,754,000 $14,502,000
485,680, 1,137,165 and 794,621 shares of common stock
issued at $18.25 per share 8,863,356 20,753,132 14,501,836
Cash disbursed for fractional shares $ 644 $ 868 $ 164
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
F-19
<PAGE>
16. COMMITMENTS AND CONTINGENCIES
In the normal course of business, from time to time, the Company is
involved in legal actions relating to the ownership and operations of its
properties. In management's opinion, the liabilities, if any, that may
ultimately result from such legal actions are not expected to have a
materially adverse effect on the consolidated financial position or results
of operations of the Company.
The Company has entered into several contracts for the acquisition of
properties. Each acquisition is subject to satisfactory completion of due
diligence and, in the case of developments, completion and occupancy of the
project.
At December 31, 1996, ten of the properties owned are subject to
purchase options held by certain tenants. The purchase options are
exercisable at various intervals through 2006 for amounts which are greater
than the net book value of the assets. The tenant at a property in Woodale,
IL has exercised its option to purchase the building in May, 1997.
17. SUBSEQUENT EVENTS
Since December 31, 1996 through March 5, 1997, an additional
$2,195,000 of convertible subordinated debentures have been converted to
120,259 shares of common stock leaving a balance of convertible subordinated
debentures outstanding of $12,185,000.
On January 17, 1997, the Company acquired an industrial property
located in Waukegan, Illinois for approximately $6.4 million, which was
funded with a $5.1 million advance under the Company's line of credit and
working capital.
18. SUPPLEMENTAL EARNINGS PER SHARE
On March 6, 1997, the Company completed a public offering of 2,250,000
shares of common stock at $31.50 per share under a shelf registration
statement declared effective by the Securities and Exchange Commission in
January 1996. Net proceeds from the offering after the underwriting discounts
were approximately $67.2 million. The proceeds of the offering were used to
refund approximately $58.2 million outstanding under the Company's line of
credit with the balance of $9.0 million to fund investments.
In accordance with Accounting Principles Board Opinion No. 15, "Earnings
Per Share", when a portion of the proceeds of a common stock offering have
been used to retire debt, supplemental earnings per share data is required to
be furnished to show what earnings per share would have been for the latest
fiscal year if the retirement of debt had taken place at the beginning of the
fiscal year. Net income per share would have been $1.13 per share for the
fiscal year 1996 if the $58.2 million of outstanding borrowings were retired
at the beginning of fiscal year 1996.
F-20
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
CenterPoint Properties Corporation
Our report on the consolidated financial statements of CenterPoint
Properties Corporation and subsidiaries is included as page F-2 of this Form
10-K. In connection with our audits of such financial statements, we have
also audited the related financial statement schedules listed in the Index to
Consolidated Financial Statements on page F-1 of this Form 10-K.
In our opinion, these financial statement schedules referred to above,
when considered in relation to the basic financial statements taken as a
whole, present fairly, in all material respects, the information required to
be included therein.
Chicago, Illinois COOPERS & LYBRAND L.L.P.
February 13, 1997, except for Notes 17 and 18, as
to which the date is March 6, 1997
F-21
<PAGE>
CENTERPOINT PROPERTIES CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
SCHEDULE II
<TABLE>
<CAPTION>
CHARGE TO
BEGINNING COST AND ENDING
BALANCE EXPENSES RECOVERIES DEDUCTIONS(A) BALANCE
--------- --------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
DESCRIPTION
For year ended December 31, 1996:
Allowance for doubtful
accounts $500,000 $462,245 $ - ($214,530) $747,715
-------- -------- --------- ---------- --------
-------- -------- --------- ---------- --------
For year ended December 31, 1995:
Allowance for doubtful
accounts $120,000 $432,832 $ - ($52,832) $500,000
-------- -------- --------- ---------- --------
-------- -------- --------- ---------- --------
For year ended December 31, 1994:
Allowance for doubtful
accounts $ - $120,000 $ - $ - $120,000
-------- -------- --------- ---------- --------
-------- -------- --------- ---------- --------
</TABLE>
- ------------------------------
NOTE: (a) Deductions represent write-off of accounts receivable
against the allowance for doubtful accounts.
F-22
<PAGE>
SCHEDULE III
CENTERPOINT PROPERTIES CORPORATION AND SUBSIDIARIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
COSTS CAPITALIZED
INITIAL COSTS SUBSEQUENT TO ACQUISITION
-------------------------- -------------------------------------
BUILDINGS AND BUILDINGS
ENCUMBRANCES IMPROVEMENTS AND CARRYING
DESCRIPTION (a) LAND (a) LAND IMPROVEMENTS COSTS (b)
- ------------------------- ------------ ------------ ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
WAREHOUSE/INDUSTRIAL
PROPERTIES:
425 W. 151st Street
East Chicago, IN $ 251,536 $ 1,804,598 13,368 4,253,211 $1,154,879
201 Mississippi Street
Gary, IN $ 50,000,000 (h) 807,099 9,947,821 274,972 13,176,006
1201 Lunt Avenue
Elk Grove Village, IL (h) 57,077 146,030
620 Butterfield Road
Mundelein, IL 30,000,000 (g) 335,002 1,973,803 60,645
1319 Marquette Drive
Romeoville, IL (h) 948,119 2,529,547
900 E. 103rd Street
Chicago, IL 2,225,819 10,693,050 2,992,807
1520 Pratt Avenue
Elk Grove Village, IL (h) 498,278 1,557,548 6,192
1850 Greenleaf
Elk Grove Village, IL 508,829 1,385,671 1,370
2743 Armstrong Court
Des Plaines, IL 1,319,584 2,679,478 500 112,442
5990 Touhy Avenue
Niles, IL 2,047,099 8,508,597 448,088
950 Tower Road
Mundelein, IL (h) 171,300 778,248 107,128
2339 Ernia Krueger Court
Waukegan, IL (g) 157,578 1,819,024
4501 W. Augusta Blvd.
Chicago, IL 174,815 4,998,464 692,194
1800 Industrial Drive
Libertyville, IL (h) 672,818 3,741,129 395,030 2,445,889
1400 Busse Road
Elk Grove Village, IL 439,080 5,719,146 243,218
1250 Carolina Drive
West Chicago, IL (g) 582,754 3,835,870 200,481
5619 W. 115th Street
Alsip, IL (h) 2,266,891 12,169,490 1,403,417
825 Tollgate Road
Elgin, IL (g) 711,866 3,583,878 12,533
720 Frontenac
Naperville, IL (g) 1,013,777 4,055,105 21,727 100,317
820 Frontenac
Naperville, IL (g) 906,476 3,625,899 103
1120 Frontenac
Naperville, IL (g) 790,927 3,163,704 22,949 612,277
1510 Frontenac
Naperville, IL (g) 621,303 2,485,208 16,564 69,229
1020 Frontnac
Naperville, IL (g) 590,853 2,363,408 11,189 85,445
1560 Frontenac
Naperville, IL (g) 508,458 2,033,830 10,872 65,388
<CAPTION>
LIFE UPON
GROSS AMOUNTS AT WHICH WHICH
CARRIED AT CLOSE OF PERIOD DEPRECIATION
------------------------- IN LATEST
BUILDINGS INCOME
AND ACCUMULATED DATE OF DATE STATEMENT IS
DESCRIPTION LAND IMPROVEMENTS TOTAL (c)(d) DEPRECIATION CONSTRUCTION ACQUIRED COMPUTED
- ------------------------- ----------- ------------ ------------- ----------- -------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
WAREHOUSE/INDUSTRIAL
PROPERTIES:
425 W. 151st Street
East Chicago, IN $ 264,902 $ 7,212,689 $ 7,477,691 $2,255,461 1913/1988-199 1987 (f)
201 Mississippi Street
Gary, IN 1,082,071 23,123,821 24,205,898 7,290,565 1946/1985-198 1985 (f)
1201 Lunt Avenue
Elk Grove Village, IL 57,077 146,030 203,107 14,164 1971 1993 (f)
620 Butterfield Road
Mundelein, IL 395,647 1,973,803 2,369,450 191,460 1990 1993 (f)
1319 Marquette Drive
Romeoville, IL 948,119 2,529,547 3,447,666 245,368 1990-1991 1993 (f)
900 E. 103rd Street
Chicago, IL 2,225,819 13,685,857 15,911,676 1,250,287 1910 1993 (f)
1520 Pratt Avenue
Elk Grove Village, IL 498,278 1,563,740 2,062,018 150,938 1968 1993 (f)
1850 Greenleaf
Elk Grove Village, IL 508,629 1,387,041 1,895,670 133,921 1965 1993 (f)
2743 Armstrong Court
Des Plaines, IL 1,320,084 2,791,920 4,112,004 265,483 1989-1990 1993 (f)
5990 Touhy Avenue
Niles, IL 2,047,099 8,956,685 11,003,784 839,069 1957 1993 (f)
950 Tower Road
Mundelein, IL 171,300 885,376 1,056,676 79,558 1979 1993 (f)
2339 Emia Krueger Court
Waukegan, IL 157,578 1,819,024 1,976,602 176,446 1990 1993 (f)
4501 W. Augusta Blvd.
Chicacgo, IL 174,815 5,680,658 5,885,473 511,930 1942-1943 1993 (f)
1800 Industrial Drive
Libertyville, IL 1,067,848 6,187,018 7,254,866 646,383 1992-1993 1993 (f)
1400 Busse Road
Elk Grove Village, IL 439,080 5,962,364 6,401,444 574,750 1987 1993 (f)
1250 Carolina Drive
West Chicago, IL 582,754 4,036,351 4,619,105 375,937 1989-1990 1993 (f)
5619 W. 115th Street
Alsip, IL 2,266,891 13,572,907 15,839,798 1,258,300 1974 1993 (f)
825 Tollgate Road
Elgin, IL 711,866 3,596,411 4,308,277 347,989 1989-1991 1993 (f)
720 Frontenac
Naperville, IL 1,035,504 4,155,422 5,190,926 397,205 1991 1993 (f)
820 Frontenac
Naperville, IL 906,476 3,626,002 4,532,478 351,726 1988 1993 (f)
1120 Frontenac
Naperville, IL 813,876 3,775,981 4,589,857 346,857 1980 1993 (f)
1510 Frontenac
Naperville, IL 636,867 2,554,437 3,191,304 243,451 1986 1993 (f)
1020 Frontnac
Naperville, IL 602,042 2,448,853 3,050,895 231,800 1980 1993 (f)
1560 Frontenac
Naperville, IL 519,330 2,099,218 2,618,548 199,862 1987 1993 (f)
</TABLE>
F-23
<PAGE>
SCHEDULE III (Continued)
CENTERPOINT PROPERTIES CORPORATION AND SUBSIDIARIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
COSTS CAPITALIZED
INITIAL COSTS SUBSEQUENT TO ACQUISITION
-------------------------- -------------------------------------
BUILDINGS AND BUILDINGS
ENCUMBRANCES IMPROVEMENTS AND CARRYING
DESCRIPTION (a) LAND (a) LAND IMPROVEMENTS COSTS (b)
- ------------------------- ------------ ------------ ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
1500 Shore Road
Naperville, IL (g) 260,397 1,041,585 6,869 37,165
800 Enterprise
Naperville, IL (g) 212,128 848,511 5,981 25,954
1651 Frontenac
Naperville, IL (g) 185,378 741,509 4,903 19,716
1150 Shore Road
Naperville, IL (g) 184,031 736,123 5,359 22,015
2764 Golfview
Naperville, IL (g) 124,548 498,189 3,725 26,563
920 Frontenac
Naperville, IL (g) 716,797 2,367,186 58,320
1300 Northpoint Road
Waukegan, IL (h) 591,513 2,366,052 16,529
1 Wildlife Way
Long Grove, IL (h) 530,400 2,121,600 122,159
900 W. University Drive
Arlington Heights, IL (h) 817,031 3,268,126 16,909 95,424
7001 Adams Street
Willowbrook, IL (h) 296,601 1,326,064 4,078
745 Birginal Drive
Benserville, IL 601,388 2,405,555 16,835
21399 Torrence Avenue
Sauk Village, IL 1,549,783 6,199,131 171,116 706,662
2600 N. Elmhurst Road
Elk Grove Village, IL (g) 841,564 3,366,256 5,108 32,236
655 Wheat Lane
Wood Dale, IL 299,887 1,202,568 2,997 117,864
8901 W. 102nd Street
Pleasant Prairie, WI (h) 900,049 3,607,546 17,842
8200 100th Street
Pleasant Prairie, WI (h) 1,220,068 4,890,293 17,839
1700 Hawthorne
West Chicigo, IL 2,522,201 10,088,802 680 25,368
1015 E. State Parkway
Schaumburg, IL 190,092 759,954 13,214
245 Beinoris Drive
Wood Dale, IL (h) 168,157 570,344 4,689
800-1000 Chase Avenue
Elk Grove Village, IL 2,250,230 9,000,920 (444,173) 36,853
750 E. 110th Street
Chicago, IL 335,121 1,340,485 6,630 185,086
825-845 Hawthorne
West Chicago, IL (g) 721,108 2,884,434 1,563 150,366
1700 Butterfield Road
Mundelein, IL (h) 342,640 1,370,558 (601) 141,289
1810-1820 Industrial
Drive
Libertyville, IL (h) 407,283 1,629,131 (5,239) 13,508
1733 Downs Drive
West Chicigo (h) 488,221 1,952,885 802 11,225
1645 Downs Drive
West Chicago (h) 508,352 2,033,407 487 470,075
<CAPTION>
LIFE UPON
GROSS AMOUNTS AT WHICH WHICH
CARRIED AT CLOSE OF PERIOD DEPRECIATION
------------------------- IN LATEST
BUILDINGS INCOME
AND ACCUMULATED DATE OF DATE STATEMENT IS
DESCRIPTION LAND IMPROVEMENTS TOTAL (c)(d) DEPRECIATION CONSTRUCTION ACQUIRED COMPUTED
- ------------------------- ----------- ------------ ------------- ----------- -------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1500 Shore Road
Naperville, IL 267,256 1,078,750 1,346,016 102,691 1985 1993 (f)
800 Enterprise
Naperville, IL 218,109 874,465 1,092,574 83,211 1985 1993 (f)
1651 Frontenac
Naperville, IL 190,281 761,255 951,506 72,592 1978 1993 (f)
1150 Shore Road
Naperville, IL 189,390 758,138 947,528 72,162 1985 1993 (f)
2764 Golfview
Naperville, IL 128,273 524,752 653,026 49,578 1985 1993 (f)
920 Frontenac
Naperville, IL 716,797 2,425,508 3,142,305 234,277 1987 1993 (f)
1300 Northpoint Road
Waukegan, IL 591,513 2,382,581 2,974,094 198,462 1994 1994 (f)
1 Wildlife Way
Long Grove, IL 530,400 2,243,759 2,774,159 185,928 1994 1994 (f)
900 E. University Drive
Arlington Heights, IL 833,940 3,363,550 4,197,490 265,580 1974 1994 (f)
7001 Adams Street
Willowbrook, IL 296,501 1,330,142 1,626,743 103,756 1994 1994 (f)
745 Birginal Drive
Benserville, IL 601,388 2,422,390 3,023,778 195,273 1974 1994 (f)
21399 Torrence Avenue
Sauk Village, IL 1,720,899 6,905,793 8,626,692 516,950 1987 1994 (f)
2600 N. Elmhurst Road
Elk Grove Village, IL 846,672 3,398,492 4,245,164 192,896 1995 1995 (f)
655 Wheat Lane
Wood Dale, IL 302,884 1,320,432 1,623,316 92,751 1984 1994 (f)
8901 W. 102nd Street
Pleasant Prairie, WI 900,049 3,625,388 4,525,437 254,059 1990 1994 (f)
8200 100th Street
Pleasant Prairie, WI 1,220,066 4,908,132 6,128,198 343,967 1990 1994 (f)
1700 Hawthorne
West Chicigo, IL 2,522,861 10,114,170 12,637,031 670,132 1959/1969 1994 (f)
1015 E. State Parkway
Schaumburg, IL 190,092 773,168 963,260 52,104 1980 1994 (f)
245 Beinoris Drive
Wood Dale, IL 168,157 575,033 743,190 54,442 1988 1984 (f)
800-1000 Chase Avenue
Elk Grove Village, IL 1,806,057 9,037,773 10,843,830 561,328 1972 1995 (f)
750 E. 110th Street
Chicago, IL 341,651 1,498,571 1,840,222 89,476 1966 1995 (f)
825-845 Hawthorne
West Chicago, IL 722,671 3,034,800 3,757,471 162,525 1974 1995 (f)
1700 Butterfield Road
Mundelein, IL 342,039 1,511,847 1,853,886 72,759 1976 1995 (f)
1810-1820 Industrial
Drive
Libertyville, IL 402,044 1,642,639 2,044,683 80,692 1977 1995 (f)
1733 Downs Drive
West Chicigo 489,023 1,964,110 2,453,133 95,976 1976 1995 (f)
1645 Downs Drive
West Chicago 508,839 2,503,482 3,012,321 117,531 1976 1995 (f)
</TABLE>
F-24
<PAGE>
SCHEDULE III (Continued)
CENTERPOINT PROPERTIES CORPORATION AND SUBSIDIARIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
COSTS CAPITALIZED
INITIAL COSTS SUBSEQUENT TO ACQUISITION
-------------------------- -------------------------------------
BUILDINGS AND BUILDINGS
ENCUMBRANCES IMPROVEMENTS AND CARRYING
DESCRIPTION (a) LAND (a) LAND IMPROVEMENTS COSTS (b)
- ------------------------- ------------ ------------ ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
10601 Seymour Avenue
Franklin Park, IL 2,020,136 8,080,543 90,808 387,115
11701 South Central
Alsip, IL 1,240,876 4,963,503 21,962 598,506
11601 South Central
Alsip, IL 1,071,276 4,285,103 47,893 245,815
850 Arthur Avenue
Elk Grove Village, IL 575,000 270,374 1,061,496 517 229,501
1827 North Bendix Drive
South Bend, IN (h) 1,010,000 4,039,993 24,445 105,320
11743 Mayfield
Alsip, IL 167,769 671,074 (24,474) (122,897)
4400 S. Kolmar
Chicago, IL (h) 603,028 2,412,113 8,860 57,727
6600 River Road
Hodgkins, IL 2,640,400 10,561,600 46,942 200,917
7501 N. 81st Street
Milwaukee, WI 1,018,359 4,073,434 18,433 74,113
1100 Chase Avenue
Elk Grove Village, IL 248,207 992,828 6,190 224,817
2553 N. Edgington
Franklin Park, IL 6,000,000 1,870,295 7,481,180 66,329 265,857
875 Fargo Avenue
Elk Grove Village,IL 571,546 2,284,185 13,973 56,266
1800 Bruning Drive
Itasca, IL 5,655,683 1,998,771 7,995,083 26,246 105,362
1501 Pratt
Elk Grove Village, IL 1,047,319 4,189,278 66,831 453,897
400 N. Wolf Road
Northlake, IL 4,504,358 18,017,433 35,806 1,603,535
10740 W. Grand Avenue
Franklin Park, IL 382,864 1,531,535 4,893 85,570
911 Commerce Court
Buffalo Grove, IL 1,171,443 4,885,772 13,805 226,566
16400 W. 103rd Street
Lemont, IL 446,030 1,748,120 21,364 121,829
425 S. 37th Avenue
St. Charles IL 643,856 2,575,422 6,633 191,906
1500 W. Dundee Road
Arlington Heights, IL 4,995,344 10,005,689 8,876 196,780
Lot 51-Naperville
Business Center
Naperville, IL 220,000 (1,651)
O'hare West
Elk Grove Village, IL 3,750,000 6,487,349 2,621 45,051
O'hare Express-A2
Elk Grove Village, IL 3,596,824 7,126
O'hare Express-B1
Elk Grove Village, IL 2,447,502 2,358
O'hare Express-B2
Elk Grove Village, IL 2,246,820 2,267
O'hare Express-C
Elk Grove Village, IL 3,553,418 3,649
<CAPTION>
LIFE UPON
GROSS AMOUNTS AT WHICH WHICH
CARRIED AT CLOSE OF PERIOD DEPRECIATION
------------------------- IN LATEST
BUILDINGS INCOME
AND ACCUMULATED DATE OF DATE STATEMENT IS
DESCRIPTION LAND IMPROVEMENTS TOTAL (c)(d) DEPRECIATION CONSTRUCTION ACQUIRED COMPUTED
- ------------------------- ----------- ------------ ------------- ----------- -------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
10601 Seymour Avenue
Franklin Park, IL 2,110,944 8,467,658 10,578,602 346,870 1963/1965 1995 (f)
11701 South Central
Alsip, IL 1,262,838 5,562,009 6,824,847 198,844 1972 1995 (f)
11601 South Central
Alsip, IL 1,119,169 4,530,918 5,650,087 172,743 1971 1995 (f)
850 Arthur Avenue
Elk Grove Village, IL 270,891 1,310,997 1,581,888 45,003 1972/1973 1995 (f)
1927 North Bendix Drive
South Bend, IN 1,034,445 4,145,313 5,179,758 147,342 1964/1990 1995 (f)
11743 Mayfield
Alsip, IL 143,295 548,177 691,472 23,710 1962 1995 (f)
440 S. Kolmar
Chicago, IL 611,888 2,469,840 3,081,728 87,263 1964 1995 (f)
660 River Road
Hodgkins, IL 2,687,342 10,762,517 13,449,859 239,137 Unknown 1996 (f)
7501 N. 81st Street
Milwaukee, WI 1,036,793 4,147,547 5,164,340 81,440 1987 1996 (f)
1100 Chase Avenue
Elk Grove Village, IL 254,397 1,217,645 1,472,042 22,925 1969 1996 (f)
2553 N. Adegington
Franklin Park, IL 1,936,624 7,747,037 9,683,681 129,679 1967/1989 1996 (f)
875 Fargo Avenue
Elk Grove Village,IL 585,519 2,340,451 2,925,970 39,745 1979 1996 (f)
1800 Bruning Drive
Itasca, IL 2,025,018 8,100,445 10,125,463 138,953 1975/1978 1996 (f)
1501 Pratt
Elk Grove Village, IL 1,114,149 4,643,176 5,757,325 75,857 1973 1996 (f)
400 N. Wolff Road
Northlake, IL 4,540,164 19,620,968 24,161,132 170,938 1956/1965 1996 (f)
10740 W. Grand Avenue
Franklin Park, IL 387,777 1,617,105 2,004,882 14,802 1964/1970 1996 (f)
911 Commercerce Court
Buffalo Grove, IL 1,185,248 4,912,338 6,097,586 31,271 1992 1996 (f)
16400 W. 103rd Street
Lemont, IL 467,394 1,869,949 2,337,343 11,893 1983 1996 (f)
425 S. 37th Avenue
St. Charles IL 650,490 2,767,327 3,417,817 17,284 1976 1996 (f)
1500 W. Dundee Road
Arlington Heights, IL 5,004,220 10,202,469 15,206,689 39,955 1969/1971 1996 (f)
Lot 51-Naperville
Business Center
Naperville, IL 218,349 218,349 1996 1996 (f)
O'hare West
Elk Grove Village, IL 3,752,621 6,532,400 10,285,021
O'hare Express-A2
Elk Grove Village, IL 3,603,950 3,603,950
O'hare Express-B1
2,449,860 2,449,860
O'hare Express-B2 2,249,087
O'hare Express-C
Elk Grove Village, IL 3,557,067 3,557,067
</TABLE>
F-25
<PAGE>
SCHEDULE III (Continued)
CENTERPOINT PROPERTIES CORPORATION AND SUBSIDIARIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
COSTS CAPITALIZED
INITIAL COSTS SUBSEQUENT TO ACQUISITION
-------------------------- -------------------------------------
BUILDINGS AND BUILDINGS
ENCUMBRANCES IMPROVEMENTS AND CARRYING
DESCRIPTION (a) LAND (a) LAND IMPROVEMENTS COSTS (b)
- ------------------------- ------------ ------------ ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
RETAIL PROPERTIES:
84 Old McHenry Road
Wheeling, IL 481,501 2,152,106 31,327
351 N. Rohlwing Road
Itasca, IL 81,377 464,390
4-48 Barrington Road
Streamwood, IL 572,945 2,297,240 (61,961) 51,389
RESIDENTIAL PROPERTIES:
440 North Lake Street
Miller, IN 22,220,000 710,000 3,086,493 102,484 17,217,741 3,980,075
OFFICE PROPERTIES:
777 Big Timber Road
Elgin, IL 1,093,395 4,373,578 142,600 610,985
OFFICES OF THE MANAGEMENT
COMPANY
Chicago, IL 2,638,592
------------ ------------ ------------ ---------- ------------ ----------
TOTALS $114,450,683 $ 70,703,593 $296,586,866 $1,300,237 $55,248,145 $5,195,405
------------ ------------ ------------ ---------- ------------ ----------
------------ ------------ ------------ ---------- ------------ ----------
<CAPTION>
LIFE UPON
GROSS AMOUNTS AT WHICH WHICH
CARRIED AT CLOSE OF PERIOD DEPRECIATION
------------------------- IN LATEST
BUILDINGS INCOME
AND ACCUMULATED DATE OF DATE STATEMENT IS
DESCRIPTION LAND IMPROVEMENTS TOTAL (c)(d) DEPRECIATION CONSTRUCTION ACQUIRED COMPUTED
- ------------------------- ----------- ------------ ------------- ----------- -------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
RETAIL PROPERTIES:
84 Old McHenry Road
Wheeling, IL 481,501 2,183,433 2,664,934 210,679 1989-1990 1993 (f)
351 N. Rohlwing Road
Itasca, IL 81,377 464,390 545,767 45,044 1989 1993 (f)
4-48 Barrington Road
Streamwood, IL 510,984 2,348,629 2,859,613 150,061 1989 1994 (f)
RESIDENTIAL PROPERTIES:
440 North Lake Street
Miller, IN 812,484 24,284,309 25,096,793 3,551,423 1971/1990-199 1990 (f)
OFFICE PROPERTIES:
777 Big Timber Road
Elgin, IL 1,235,995 4,984,562 6,220,657 31,225 1983 1996 (f)
OFFICES OF THE MANAGEMENT
COMPANY
Chicago, IL 2,638,592 2,638,592 981,889 Var. (f)
----------- ------------ ------------- ----------- -------------- -------- ------------
TOTALS $72,003,830 $357,030,416 $ 429,034,246 $30,206,095
----------- ------------ ------------- ----------- -------------- -------- ------------
----------- ------------ ------------- ----------- -------------- -------- ------------
</TABLE>
F-26
<PAGE>
CENTERPOINT PROPERTIES CORPORATION AND SUBSIDIARIES
SCHEDULE III (CONTINUED)
Notes to Schedule III:
(a) Initial cost for each respective property is the total acquisition costs
associated with its purchase.
(b) Carrying costs consist of capitalized construction period interest, taxes
and insurance.
(c) At December 31, 1996, the aggregate cost of land and buildings and
equipment for Federal income tax purposes was approximately $429 million.
(d) Reconciliation of real estate and accumulated depreciation:
RECONCILIATION OF REAL ESTATE
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995 1994
---- ---- ----
Balance at the beginning of year $317,460,157 $248,280,885 $180,395,511
Additions 135,342,293 71,315,130 67,885,374
Dispositions (23,768,204) (2,135,858)
------------- ------------ ------------
Balance at close of year $429,034,246 $317,460,157 $248,280,885
------------- ------------ ------------
------------- ------------ ------------
RECONCILIATION OF ACCUMULATED DEPRECIATION
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995 1994
---- ---- ----
Balance at the beginning of year $21,576,209 $13,455,505 $ 7,449,998
Depreciation expense 10,198,721 8,160,904 6,005,507
Dispositions (1,568,835) (40,200)
----------- ----------- -----------
Balance at close of year $30,206,095 $21,576,209 $13,455,505
----------- ----------- -----------
----------- ----------- -----------
(e) See description of encumbrances in Note 6 to Consolidated Financial
Statements.
(f) Depreciation is computed based upon the following estimated lives:
Buildings, improvements and carrying costs 31.5 to 40 years
Land improvements 15 years
Furniture, fixtures and equipment 4 to 15 years
(g) These properties collateralize a $30,000,000 mortgage loan payable.
(h) These 20 properties collateralize $50,000,000 of mortgage bonds
payable.
F-27
<PAGE>
SECOND AMENDMENT
CENTERPOINT PROPERTIES CORPORATION
1993 STOCK OPTION PLAN
The CenterPoint Properties 1993 Stock Option Plan (the "Plan") is hereby amended
to increase the number of authorized shares under the Plan from 750,000 to
1,500,000 and to increase the number of shares which may be issued to any one
individual from 300,000 to 500,000.
ARTICLE 1
Section 4.1 of the Plan is hereby amended in its entirety to henceforth read as
follows:
4.1 LIMITATION. Subject to adjustments authorized by Article 8.1 hereof,
no more than 1,500,000 shares of Common Stock (the "Reserved Shares")
may be issued pursuant to the Plan. No more than 500,000 shares may
be granted to any one individual.
ARTICLE 2
This amendment is effective as of the date adopted by the Board, subject to
approval by the shareholders of CenterPoint Properties Corporation.
<PAGE>
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
This Settlement Agreement and Mutual Release (the "Agreement") is entered
into as of July 31, 1996 by and among CenterPoint Properties Corporation, a
Maryland corporation (the "Company"), Michael M. Mullen ("Mullen"), Stephen L.
Schlader ("Schlader") and Robert L. Stovall ("Stovall"; Messrs. Mullen, Schlader
and Stovall being collectively referred to herein as the "Employees").
RECITALS:
WHEREAS, as contemplated in the Agreement and Plan of Recapitalization
dated as of September 27, 1993 (the "Plan of Recapitalization") among C&R USA
Corp., Capital and Regional USA Holdings Limited, Midcontinent REIT, Inc.,
Capital and Regional Properties and the other parties named therein pursuant to
which the Company was formed as a real estate investment trust, the Company
acquired certain Properties (as such term is defined in the Plan of
Recapitalization) from certain Property Affiliates (as such term is defined in
the Plan of Recapitalization) in which the Employees had ownership interests
(the "Formation Transactions"); and
WHEREAS, in connection with the Formation Transactions, the Company
executed and delivered separate Tax Reimbursement Agreements dated November 29,
1993 (collectively, the "Tax Reimbursement Agreements") with each of the
Employees; and
WHEREAS, the Employees have asserted claims that the Company has additional
payment obligations under the Tax Reimbursement Agreements; and
WHEREAS, the Company has denied and continues to deny the Employees' claim
that the Company has further liability to the Employees under the Tax
Reimbursement Agreement; and
WHEREAS, in order to avoid the burden and expense of litigation and to
reach a final settlement, the Employees and the Company desire to settle and
compromise any claims or potential claims which may arise from the Formation
Transactions and the other transactions described herein, on the terms and
conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and obligations set
forth below and for good and valuable consideration receipt of which is hereby
acknowledged, the Company and the Employees agree as follows:
1. SETTLEMENT NOTES. In consideration of the Employees' release set
forth in Section 2 below, the Company will issue $300,000 aggregate principal
amount of its non-interest bearing negotiable Promissory Notes (the "Notes"),
payable in 18 equal monthly installments, in
<PAGE>
the form attached hereto as Exhibit A (the "Notes"). The principal amount and
payee of each Note shall be determined by a written direction executed by all of
the Employees.
2. EMPLOYEE RELEASE. In consideration of the issuance of the Notes and
the entry into this Agreement which each Employee acknowledges would not be
entered into by the Company in the absence of the release set forth in this
Section 2, each Employee does hereby fully and forever release and discharge the
Company, its past and present parents, subsidiaries, divisions, sister and
affiliated companies, its predecessors, successors and assigns, and all of their
respective past and present stockholders, directors, officers, employees and
agents (collectively, the "Company Released Parties"), of and from any and all
claims, demands, liabilities, obligations, debts and causes of action, whether
known or unknown, or any kind or character that any Employee now has, claims to
have or has had, or which hereafter may accrue, against the Company Released
Parties, or any of them, including, without limitation, any claims arising out
of any matter related to the Formation Transactions and Tax Reimbursement
Agreements, but excluding, in the case of Stovall, any claims arising out of the
Employment Separation Agreement referred to in Section 4 below and excluding, in
the case of Mullen and Schlader, any claims arising out of their employment by
the Company subsequent to the date hereof.
3. COMPANY RELEASE. In consideration of the Employee Release, the
Company does hereby fully and forever release and discharge each Employee and
his heirs, administrators, executors and assigns (collectively, the "Employee
Released Parties") of and from any and all claims, demands, liabilities,
obligations, debts and causes of action, whether known or unknown, or any kind
or character that the Company now has, claims to have or has had, or which
hereafter may accrue, against the Employee Released Parties, or any of them,
arising out of any matter related to the Formation Transactions.
4. CONDITIONS TO ISSUANCE OF NOTES. The Company's issuance of the Notes
and its obligations thereunder are subject to (i) the execution and delivery of
this Agreement by each Employee and (ii) the execution and delivery by Stovall
of the Employment Separation Agreement in the form attached hereto as Exhibit B
and the seven day revocation period provided therein shall have expired without
Stovall's revocation of the release attached to the Employment Separation
Agreement.
5. GOVERNING LAW. This Agreement shall be governed and construed by the
laws of the State of Illinois applicable to agreements and releases made and to
be performed in Illinois.
THE EMPLOYEES ACKNOWLEDGE THAT THEY HAVE READ THIS AGREEMENT, INCLUDING THE
EMPLOYEE RELEASE, THAT THE EMPLOYEES HAVE CONSULTED INDEPENDENT COUNSEL IN
CONNECTION THEREWITH, THAT THE EMPLOYEES FULLY KNOW, UNDERSTAND AND APPRECIATE
ITS CONTENTS AND THAT THE EMPLOYEES HAVE EXECUTED THE SAME AND MADE COMPROMISE
PROVIDED FOR HEREIN VOLUNTARILY AND OF THEIR OWN FREE WILL.
-2-
<PAGE>
IN WITNESS WHEREOF, the Company and the Employees have executed this
Agreement as of the date first written above, and this Agreement may be executed
in counterparts with each executed counterpart constituting an original but all
together only one agreement.
CENTERPOINT PROPERTIES
CORPORATION
By:
------------------------------
-----------------------------------
Michael M. Mullen
------------------------------------
Stephen L. Schlader
------------------------------------
Robert L. Stovall
-3-
<PAGE>
NEGOTIABLE PROMISSORY NOTE
No. ___
$__________ ________, 1996
Chicago, Illinois
FOR VALUE RECEIVED, the undersigned, CENTERPOINT PROPERTIES CORPORATION, a
Maryland corporation (the "Company"), promises to pay to the order of
_________________ ("Holder"), the principal sum of ________________ Dollars
($_________) on ___________, payable in equal installments on the first of each
month commencing _______________, 1996. The principal amount hereof shall not
bear interest. The principal amount of this Note is payable in the City of
Chicago, State of Illinois.
This Note is one of three promissory notes in the aggregate principal
amount of $300,000 issued in connection with the Settlement Agreement and Mutual
Release dated as of July 31, 1996 among the Company and the initial holders of
the Notes.
Payments of principal are to be made in the lawful money of the United
States of America.
An Event of Default under this Note shall occur and be continuing upon a
default in payment which is not cured within thirty (30) days of written notice
thereof to the Company by the holder of this Note. When an Event of Default
occurs and is continuing, the holder of the Note may accelerate all amounts due
hereunder upon written notice to the Company.
This Note is binding upon the Company and its successors and assigns, and
shall inure to the benefit of the Holder and its successors and assigns. This
Note is made under and governed by the internal laws and decisions of the State
of Illinois, without regard to conflict of laws principles.
CENTERPOINT PROPERTIES
CORPORATION
By:
---------------------------
Its:
<PAGE>
EMPLOYMENT SEPARATION AGREEMENT
THIS EMPLOYMENT SEPARATION AGREEMENT (the "Agreement") is entered into as
of July 31, 1996 by and between Robert L. Stovall ("Executive") and CenterPoint
Properties Corporation, a Maryland corporation (the "Company").
RECITALS:
WHEREAS, the Company and the Executive have entered into an Employment
Agreement dated as of September, 1993 (the "Employment Agreement"); and
WHEREAS, the Company and the Executive desire to amend the term of the
Employment Agreement as provided herein; and
WHEREAS, at the end of term of Executive's employment with the Company as
amended herein, Executive desires to remain on the Board of Directors of the
Company or, in the alternative, act as a consultant to the Company for a limited
period of time after which his employment relationship with the Company shall
fully and finally terminate; and
WHEREAS, the Company and the Executive have reduced to writing in this
Agreement the terms and conditions of the Executive's continued employment with,
and separation from, the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and obligations set
forth below and for good and valuable consideration receipt of which is hereby
acknowledged, the Company and the executive agree as follows:
1. AMENDMENT OF EMPLOYMENT AGREEMENT.
(a) The last sentence of Section 3 of the Employment Agreement is
hereby amended in its entirety to read as follows:
"This agreement shall continue in full force and effect until October
31, 1997 unless earlier terminated as provided in Section 4."
(b) Section 10 of the Employment Agreement is hereby deleted in its
entirety.
2. RESIGNATION OF EXECUTIVE AS AN OFFICER. Effective as of October 31,
1997, Executive shall, without any further action, be deemed to have resigned
from the offices of Executive Vice President and Chief Operating Officer. The
Executive shall be entitled to use his current office space at the Company and
secretarial support until October 31, 1997. After
<PAGE>
October 31, 1997 and until this Agreement is terminated, the Executive shall be
entitled to secretarial support in connection with his duties as Vice Chairman.
3. EFFECT OF AMENDMENT TO EMPLOYMENT AGREEMENT. The foregoing amendment
to the Employment Agreement shall not be deemed or construed to amend any other
term or provision of the Employment Agreement, except as expressly provided
herein. All of the terms and provisions of the Employment Agreement shall
remain in full force and effect, unless specifically amended herein.
4. NOMINATION TO BOARD OF DIRECTORS; APPOINTMENT AS VICE CHAIRMAN;
DESIGNATION OF ASSET COMMITTEE.
(a) The Company agrees to nominate Executive to the Board of
Directors of the Company at the annual meeting of the stockholders held
each year through and including the year 2000; however, in the event the
stockholders do not re-elect Executive to the Board of Directors, the
Company shall not be required to nominate Executive to the Board of
Directors in any subsequent year, and, in such event, the Company shall
retain Executive as a consultant as set forth in Section 4(c) hereof. If
re-elected to the Board of Directors by the stockholders, the Executive
agrees to continue to serve as a member of the Board of Directors.
(b) By Board resolution in the form attached hereto as Exhibit A, the
Company agrees:
(i) to amend the By-Laws to create a Vice Chairman position in
the form attached hereto as Exhibit A;
(ii) to appoint Executive as Vice Chairman of the Board of
Directors until December 31, 2000.
(iii) to designate a new committee of the Board of Directors,
the Asset Committee and to maintain the Asset Committee during the
Term (as defined below). Upon adoption of the resolution creating the
Asset Committee, the Company agrees to appoint Executive as Chairman
of the Asset Committee until December 31, 2000.
(c) In the event that the stockholders of the Company fail to elect
Executive to the Board of Directors, the Executive will be retained by the
Company as a consultant to perform services comparable to the services he
would perform as a director of the Company and chairman of the Asset
Committee, and, in consideration for such services, Executive will receive
the compensation and benefits provided in Sections 7(c) and 7(d) hereof,
except Executive will not be entitled to receive any stock options under
the Company's Director Stock Option Plan.
-2-
<PAGE>
5. RESIGNATION OF EXECUTIVE AS A DIRECTOR. Effective as of December 31,
2000, Executive shall, without any further action, be deemed to have resigned as
a member of the Board of Directors of the Company, as Vice Chairman of the Board
of Directors and as Chairman of the Asset Committee.
6. TERM AND TERMINATION. The term of this Agreement shall commence on
the Effective Date (as defined below) and shall continue until December 31, 2000
(the "Term"), unless terminated earlier. This Agreement shall terminate prior
to December 31, 2000:
(a) if the Employment Agreement is terminated prior to October 31,
1997;
(b) if the Executive shall die;
(c) at the Company's election, upon delivery to the Executive of 60
days advance written notice by the Company of its intent to terminate;
(d) at the Company's election, for cause, which for purposes hereof
shall mean:
(i) the Executive's failure to perform his obligations under
this Agreement or under the Amended and Restated Non-Competition
Agreement (as defined in Section 9)and to remedy such failure to the
reasonable satisfaction of the Board of Directors within 30 days of
receipt of such notice;
(ii) the Executive's commission of acts of disloyalty,
dishonesty or material bad faith toward the Company or any of its
subsidiaries or affiliates including, but not limited to, theft or
fraud; or
(iii) the Executive's conviction for commission of a felony;
(e) at the Executive's election, upon delivery of six months advance
written notice by the Executive of the Executive's intent to terminate this
Agreement; or
(f) at the Executive's election, for cause, which for purposes hereof
shall mean the Company's failure to perform its obligations under this
Agreement and to remedy such failure within 30 days of receipt of such
notice.
7. COMPENSATION; BENEFITS.
(a) Until October 31, 1997, Executive shall be entitled to receive
the compensation and benefits set forth in the Employment Agreement,
subject to the terms and provisions of the Employment Agreement.
-3-
<PAGE>
(b) On October 31, 1997, the Executive shall have the option to
purchase from the Company the automobile currently made available to him by
the Company for its depreciated value, payable in cash.
(c) During the period commencing October 31, 1997 to December 31,
2000 (the "Post Employment Term"), the Company agrees to pay Executive
compensation at the annual rate of $25,000 plus the amount of any increase
after the date hereof in the compensation paid to the Chairman of the Board
of Directors of the Company for his services on the Board of Directors,
payable in cash or stock in a manner consistent with the practice adopted
by the Board of Directors for the compensation of directors. During the
Post Employment Term, the Executive shall be entitled to participate in the
Company's Director Stock Option Plan, provided the Executive continues to
be re-elected to the Board of Directors by the stockholders.
(d) During the Post Employment Term unless this Agreement is
terminated earlier, the Executive shall be entitled to receive the
following benefits:
(i) The Company shall pay the premiums for the term life
insurance policy which has been in effect for Executive. Upon the
request of Executive, the Company shall, at the expiration of the
Term, provide Executive with all necessary documents to continue the
life insurance policy and to assign the rights thereunder; provided,
the Executive shall be liable for the payment of all premiums
thereunder after the expiration of the Term.
(ii) The Company shall reimburse the Executive for his medical
continuation coverage insurance premiums under the Consolidated
Omnibus Reconciliation Act of 1985 ("COBRA") for the medical insurance
coverage which the Company maintains for the benefit of its executive
and managerial employees, provided that the Executive makes the
necessary elections to qualify for such COBRA coverage. Upon the
expiration of Executive's continuation coverage rights under COBRA,
the Company shall reimburse Executive for the premiums paid by him for
comparable medical insurance coverage to supplement his
Medicare/Medicaid coverage.
(iii) The Company shall reimburse the Executive for travel,
entertainment and other business expenses incurred by the Executive in
connection with the performance of his duties hereunder on the same
basis as the Company reimburses other directors for such expenses.
(iv) The Company shall reimburse the Executive for use of his
automobile (which may be the automobile purchased by him pursuant to
Section 7(b) or another automobile) on Company business at the
deductible per mile rate specified from time to time by the Internal
Revenue Service.
-4-
<PAGE>
(e) Except as expressly set forth herein, Executive shall not be
entitled during the Post Employment Period to participate in the Company's
Cash Bonus Plan (as such term is defined in the Employment Agreement), the
Company's 1995 Restricted Stock Incentive Plan or any other compensation
plan or benefit plan of the Company.
8. PAYMENTS ON TERMINATION
(a) Except as provided in Section 8(b) below, upon the termination of
this Agreement, the Company shall pay to the Executive that portion of his
compensation payable through the effective date of termination.
(b) In the case of termination pursuant to Section 6(a) (which
relates to a termination under Section 4(b) or 4(e) of the Employment
Agreement), Section 6(c) or Section 6(f) hereof, the Executive shall be
entitled to continuation of his monthly salary in the amount specified in
Section 7(c) hereof and the benefits provided in Sections 7(d)(i) and
7(d)(ii) hereof for the lesser of (i) the number of months following the
effective date of termination to the end of the Term and (ii) 17.5 months
following the effective date of termination.
9. COMPETITION AND CONFLICTS OF INTEREST. As a condition to this
Agreement, the Company has required the Executive to execute and deliver the
Amended and Restated Non-Competition Agreement in the form attached hereto as
Exhibit C (the "Amended and Restated Non-Competition Agreement").
10. RELEASE. As a condition to this Agreement, the Company has required
the Executive to sign and return within twenty one (21) days from date hereof
the General Release attached hereto as Exhibit B (the "Release"). This
Agreement shall not become effective until the Executive signs and returns the
Release and the seven (7) day revocation period specified in the Release shall
have expired without revocation by the Executive (the "Effective Date").
11. COMPANY RELEASE. In consideration of Executive's entry into the
Release, the Company agrees to release the Executive from claims and actions
arising out of Executive's errors or omissions in the course of his employment
with the Company prior to the date hereof, provided with respect to any such
claim or action (i) the Executive would be entitled to indemnification under the
Company's By-laws and (ii) so long as the Company maintains a directors and
officers liability insurance policy, the Company is entitled to recover any
damages it incurs as a result of Executive's errors or omissions under the
Company's directors and officers liability insurance policy (in excess of any
deductible amount provided for in such policy).
12. AMENDMENT TO STOCK OPTION AGREEMENTS. In consideration of Executive's
entry into this Agreement and the Amended and Restated Non-Competition
Agreement, the Company agrees to execute and deliver the Amendment to Stock
Option Agreements substantially in the form attached hereto as Exhibit D.
-5-
<PAGE>
13. ASSIGNMENT. As a personal service contract, this Agreement shall not
be assignable by the Executive, but shall be binding upon and inure to the
benefit of the Company's successors and assigns and shall inure to the benefit
of the Executive's heirs, executors, administrators and legal representatives.
14. NOTICES. All notices required or permitted to be given under this
Agreement shall be in writing, signed by the party giving notice and sent by
personal messenger, facsimile, overnight mail or deposited, postage prepaid,
certified mail, return receipt requested, in the United States mail, and
addressed as follows:
If to the Executive:
Robert L. Stovall
1312 N. Dearborn Pkwy.
Chicago, IL 60610
If to the Company:
CenterPoint Properties Corporation
401 N. Michigan Avenue, Suite 3000
Chicago, IL 60611
Attention: President
Facsimile: (312) 346-7696
Notice sent by personal messenger, facsimile or overnight mail shall be deemed
received upon delivery of the same. Notices sent by United States mail shall be
deemed received three (3) days after deposit in the United States mail service.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Illinois.
16. SEVERABILITY. If any provision of this Agreement shall be held
invalid or unenforceable, the remainder shall remain in full force and effect.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
-------------------------------
Robert L. Stovall
CENTERPOINT PROPERTIES
CORPORATION
By:
-----------------------------
Its:
-7-
<PAGE>
EXHIBIT A
CONSENT IN LIEU OF A SPECIAL MEETING
OF THE BOARD OF DIRECTORS OF
CENTERPOINT PROPERTIES CORPORATION
The undersigned, being all the directors of CENTERPOINT PROPERTIES
CORPORATION, a Maryland corporation (the "Corporation"), in lieu of holding a
special meeting, hereby adopt the following resolutions by unanimous written
consent pursuant to Section 2-408(c) of the General Corporation Law of Maryland:
1. AMENDMENT OF BYLAWS
WHEREAS, the Board of Directors of the Corporation believes that it is
in the best interests of the Corporation to amend the By-Laws of the
Corporation to add the position of Vice Chairman;
NOW THEREFORE BE IT RESOLVED, that the Corporation hereby amends the
By-Laws in the manner set forth below.
1. Section 4.1 of the By-Laws is hereby amended by adding "Vice
Chairman" after the word "Chairman."
2. A new Section 4.4A shall be added to the By-Laws and shall
read as follows:
"SECTION 4.4A VICE CHAIRMAN. The vice chairman shall assist the
chairman in the discharge of his duties as the chairman may direct and
shall perform such other duties as from time to time may be assigned
to him by the chairman or by the board of directors. In the absence
of the chairman or in the event of his inability or refusal to act,
the vice chairman shall perform the duties of the chairman, and when
so acting, shall have all the powers of and be subject to all the
restrictions upon the chairman. Except in those instances in which
the authority to execute is expressly delegated to another officer or
agent of the corporation or a different mode of execution is expressly
prescribed by the board
<PAGE>
of directors or these by-laws, the vice chairman may execute for the
corporation certificates for its shares and any contracts, deeds,
mortgages, bonds or other instruments which the board of directors has
authorized to be executed, and he may accomplish such execution either
under or without the seal of the corporation and either individually
or with the secretary, any assistant secretary, or any other officer
thereunto authorized by the board of directors, according to the
requirements of the form of the instrument."
2. APPOINTMENT OF STOVALL AS VICE CHAIRMAN
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby
appoints Robert L. Stovall as the initial Vice Chairman of the Board of
Directors to serve until the next annual meeting of the stockholders or
until his successor is duly elected and shall have qualified.
3. DESIGNATION OF ASSET COMMITTEE
WHEREAS, the Board of Directors of the Corporation believes that it is
in the best interests of the Corporation to designate a new committee of
the board of directors, the Asset Committee, to review and approve certain
acquisitions and dispositions of real property;
NOW THEREFORE BE IT RESOLVED, that the Board of Directors hereby
designates the establishment of the Asset Committee as follows:
1. AUTHORITY: The Asset Committee shall have the authority, subject
to the limitations set forth in the By-Laws, to approve all acquisitions
and dispositions of real property which require approval of the board of
directors.
2. NUMBER AND MEETINGS: The Asset Committee shall consist of the
vice chairman and such other members of the board of directors who wish to
attend any meeting of the Asset Committee. The vice chairman shall call
meetings of Asset Committee and fix the place and time of such meetings.
The vice chairman shall provide notice to each director of all meetings of
the Asset Committee in the manner set forth in Section 3.7 of the By-Laws.
3. MANNER OF ACTING: The Asset Committee shall meet at least twice
a year and shall keep minutes of its proceedings and report the same to the
full board as requested by the board. The vice chairman and at least one
other member of the board shall constitute a quorum for the transaction of
business and
<PAGE>
the affirmative vote of all of the members present at a meeting at which a
quorum is present shall be the act of the Asset Committee. In the event
that any member of the board present at a meeting of the Asset Committee
votes against an action or abstains, the action shall be deferred to the
vote of the full board of directors. The vice chairman of the board shall
act as chairman of the Asset Committee. The Asset Committee may adopt
other rules for the conduct of its business consistent with the manner in
which the board conducts its business pursuant to the By-Laws.
The actions taken by this Consent shall have the same force and effect as
if taken by the undersigned at a special meeting of the Board of Directors of
the Corporation, duly called and constituted pursuant to the laws of the State
of Maryland and the Corporation's By-Laws.
<PAGE>
This Consent may be signed in multiple counterparts, each of which shall be
deemed an original, and all of which, when taken together, shall constitute one
document.
Dated as of _______________, 1996
DIRECTORS:
------------------------------------
Martin Barber
------------------------------------
John S. Gates, Jr.
------------------------------------
Robert L. Stovall
------------------------------------
Nicholas C. Babson
------------------------------------
Alan D. Feld
------------------------------------
John J. Kinsella
------------------------------------
Thomas E. Robinson
<PAGE>
EXHIBIT B
RELEASE
ROBERT L. STOVALL ("Executive"), in consideration of the entry into the
Employment Separation Agreement dated as of July 31, 1996 (the "Employment
Separation Agreement") by CenterPoint Properties Corporation (the "Company"),
which Executive acknowledges would not be entered into by the Company in the
absence of this Release, does hereby fully and forever release and discharge the
Company, its past and present parents, subsidiaries, divisions, sister and
affiliated companies, its predecessors, successors and assigns, and all of their
respective past and present stockholders, directors, officers, employees and
agents (collectively, the "Released Parties"), of and from any and all claims,
demands, liabilities, obligations, debts and causes of action, whether known or
unknown, or any kind or character that Executive now has, claims to have or has
had, or which hereafter may accrue, against the Released Parties, or any of
them, arising under or based on Title VII of the Civil Rights Act of 1964, the
Age Discrimination in Employment Act of 1967 (the "ADEA") (excepting claims
which may arise under the ADEA after the execution of this Release), the
Americans With Disabilities Act of 1990, the Fair Labor Standards Act of 1938,
the Employee Retirement Income Security Act of 1974 (excepting claims for
benefits, if any, to which Executive is legally entitled thereunder), the
Rehabilitation Act of 1973, or any other federal, state or local law, statute,
ordinance, decision, order, policy or regulation prohibiting employment
discrimination or otherwise creating rights or claims for employees, including,
but not limited to, any and all claims alleging breach of public policy, the
implied obligation of good faith and fair dealing or any handbook, manual,
policy statement or employment practice, or alleging misrepresentation,
defamation, interference with contractual relations, intentional or negligent
infliction of emotional distress, invasion of privacy, negligence or wrongful
discharge.
<PAGE>
Executive acknowledges:
(a) That he has carefully read this Release and the Employment
Separation Agreement;
(b) That they were freely and voluntarily negotiated;
(c) That this Release is intended to release any and all past,
present and future claims hereinabove released, but is not a waiver of any
rights or claims, if any, which may arise under the ADEA after the
execution hereof;
(d) That he has been given a period of at least twenty-one (21) days
within which to consider this Release;
(e) That he has consulted with an attorney with respect to this
Release;
(f) That he may revoke this Release at any time within seven (7) days
after its execution;
(g) That this Release shall not become effective or enforceable until
such seven (7) days revocation period has expired;
(h) That he fully and completely understands the contents of this
Release and the Employment Separation Agreement; and
(i) That he has entered into the same knowingly and voluntarily,
without coercion or duress of any sort.
Dated this 31st day of July, 1996, at Chicago, Illinois.
------------------------------
Robert L. Stovall
-2-
<PAGE>
AMENDED AND RESTATED
NON-COMPETITION AGREEMENT
THIS AMENDED AND RESTATED NON-COMPETITION AGREEMENT (the "Agreement") made
this 31st day of July, 1996 by and between ROBERT L. STOVALL (the "Executive")
and CENTERPOINT PROPERTIES CORPORATION, a Maryland corporation (the "Company"),
amends and restates the Non-Competition Agreement dated September, 1993 (the
"Original Agreement") between Executive and the Company.
R E C I T A L S:
1. The Company is engaged in the business of owning, managing, operating
and leasing real estate, primarily warehouse and industrial property, in the
metropolitan Chicago area, the area defined by the United States Department of
Commerce as the Chicago Metropolitan Statistical Area, comprised of Lake, Cook,
DuPage, Kane, McHenry, Grundy, Kendall and Will Counties in Illinois, Kenosha
County in Wisconsin and Lake and Porter Counties in Indiana, and in other
markets outside metropolitan Chicago ("CenterPoint Market Area").
2. The Executive and the Company have entered into an Employment
Agreement dated September, 1993 (the "Employment Agreement") pursuant to which
the Original Agreement was executed and delivered.
3. The Executive and the Company are entering into an Employment
Separation Agreement dated of even date herewith (the "Employment Separation
Agreement") which, among other things, amends the Employment Agreement to
provide for a termination date of October 31, 1997 and provides for the
nomination of the Executive to the Board of Directors of the Company or, in the
event Executive is not elected by the stockholders of the Company to the Board
of Directors, the appointment of the Executive as a consultant until December
31, 2000, on the terms and conditions set forth therein. Unless otherwise
defined herein, capitalized terms used herein shall have the meanings ascribed
to such terms in the Employment Separation Agreement.
4. As a condition to continued employment with the Company under the
Employment Agreement, as amended, and the Company's entry into the Employment
Separation Agreement, in order to protect the Company's business relationships
and good will, and to guard against conflicts of interest the Executive is
willing to enter into this Agreement.
<PAGE>
AGREEMENT
In consideration of the foregoing recitals and the mutual promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree that the
Original Agreement is amended and restated in its entirety to henceforth provide
as follows:
1. COVENANT NOT TO COMPETE. The Executive recognizes and acknowledges
that the business of the Company is highly competitive and that by reason of his
employment by the Company, his duties as a director of the Company or his duties
as a consultant to the Company under the terms of the Employment Agreement and
the Employment Separation Agreement he will have access to confidential and
proprietary information regarding the Company and its business. The Executive
agrees, in consideration of his employment by the Company and in consideration
of the compensation set forth in Section 2 below, that during the Term (as
defined in the Employment Separation Agreement), unless the Executive is
terminated without cause by the Company as provided in the Employment Agreement
and in the Employment Separation Agreement, he will not anywhere in the
CenterPoint Market Area or in any other market in which the Company may in the
future conduct, or intend to conduct, its business own, directly or indirectly,
manage, operate, join, control, be employed by or participate in the ownership,
management, operation or control of, or consultation for, or be connected in any
manner with any business which acquires, owns, develops, constructs, operates,
leases and/or manages warehouse/industrial real estate (the "Real Estate
Business"), subject to the following exceptions:
(a) The Executive may continue to be a limited partner in any limited
partnership engaged in the Real Estate Business in which he is a limited
partner on the date of the Original Agreement.
(b) After October 31, 1998, the Executive may propose to obtain a
waiver from the foregoing restrictions by providing the Board of Directors
of the Company not less than thirty (30) days prior written notice setting
forth in sufficient detail the nature of the proposed activity and the
underlying potential conflict. The waiver shall be subject to the prior
consent of the independent directors of the Company, in their sole
discretion. If the waiver is not approved, the Executive shall be entitled
to voluntarily terminate the Employment Separation Agreement upon not less
than thirty (30) days prior written notice to the Company (notwithstanding
the longer notice period set forth in the Employment Separation Agreement).
2. CONFIDENTIAL INFORMATION. Executive acknowledges that as an executive
officer and director of the Company, he has and will continue to occupy a
position of trust with respect to business information of a secret or
confidential nature which is the property of the Company and which has been and
will be divulged to and developed by Executive during the course of Executive's
Employment Agreement and the Employment Separation Agreement. Executive
therefore agrees that (i) Executive shall not at any time use or disclose to any
third party any Confidential Information (as defined below), except in the
performance of his duties under the Employment Agreement and the Employment
Separation Agreement and (ii) Executive shall
-2-
<PAGE>
return promptly upon any termination of the Employment Separation Agreement any
and all copies of correspondence, memorandum, financial information, blueprints,
drawings and other data pertaining to the Confidential Information.
As used herein, the term "Confidential Information" shall mean all
information of a confidential nature in any form which is not generally known to
the public and which relates to the business of the Company.
3. COMPENSATION. As additional consideration for Executive's compliance
with the restrictions set forth herein, the Company agrees, during the Post
Employment Term, to pay Executive compensation at the annual rate of $100,000,
earned and payable in arrears in monthly installments.
4. PAYMENTS ON TERMINATION.
(a) Except as provided in Section 4(b) below, upon the termination of
the Employment Separation Agreement, the Company shall pay to the Executive
that portion of his compensation hereunder, if any, payable through the
effective date of termination.
(b) In the case of termination pursuant to Section 6(a) of the
Employment Separation Agreement (which relates to a termination under
Section 4(b) or 4(e) of the Employment Agreement), Section 6(c) or Section
6(f) of the Employment Separation Agreement, the Executive shall be
entitled to continuation of his monthly compensation hereunder for the
lesser of (i) the number of months following the effective date of
termination to the end of the Term and (ii) 17.5 months following the
effective date of termination.
5. SPECIFIC PERFORMANCE. The parties agree that the Executive's services
are of a special, unique and extraordinary character, that it would be extremely
difficult to quantify the money damages which would accrue to the Company by
reason of the Executive's failure to perform any of his obligations under this
Agreement, that it would be extremely difficult to replace such services, and
that any violation of the provisions of this paragraph would be likely to be
highly injurious to the Company. By reason of the foregoing, the Executive
consents and agrees that if he violates any of the provisions of this Agreement
the Company shall be entitled, in addition to any other rights and remedies that
it may have, including money damages, to apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce or prevent any continuing violation of the provisions
hereof. Therefore, if the Company shall institute any action or proceeding to
enforce the provisions of this Agreement against the Executive, the Executive
hereby waives the claim or defense that there is an adequate remedy at law and
agrees in any such action or proceeding not to interpose the claim or defense
that such remedy exists at law. The parties hereby specifically affirm the
appropriateness of injunctive or other equitable relief in any such action.
6. MODIFICATION. If, in connection with any action taken by the Company
to enforce the provisions of this Agreement, a court shall hold that all or any
portion of the restrictions
-3-
<PAGE>
contained herein are unreasonable under the circumstances then existing so as to
render such restrictions invalid or unenforceable, the parties agree that any
court of competent jurisdiction may reform such unreasonable restrictions to the
extent necessary to make such restrictions reasonable under the circumstances
then existing so as to render such restrictions both valid and enforceable.
7. BREACH. In the event that the Company hereafter believes that the
Executive has breached any of the covenants of this Agreement, it shall notify
the Executive of such alleged breach, setting forth the substance of said
alleged breach. Within ten (10) days from receipt by the Executive of such
notice, the Executive either shall remedy said alleged breach or provide the
Company with evidence that the activity concerned was permitted by the
provisions of this Agreement.
8. NOTICES. All notice required or permitted to be given under this
Agreement shall be sufficient if in writing and mailed by certified or
registered mail, return receipt requested and postage prepaid, addressed as
follows or to such other address as either party shall have notified the other.
If to the Executive:
Robert L. Stovall
1312 North Dearborn Parkway
Chicago, Illinois 60610
If to the Company:
CenterPoint Properties Corporation
401 North Michigan Avenue, Suite 3000
Chicago, Illinois 60611
FAX: (312) 456-3005
9. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Illinois.
10. PARTIAL INVALIDITY. If any provision of this Agreement shall be held
invalid or unenforceable, the remainder nevertheless shall remain in full force
and effect. If any provision is held invalid or unenforceable with respect to
particular circumstances, it nevertheless shall remain in full force and effect
in all other circumstances.
11. BENEFIT. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and assigns, and upon all persons,
corporations or entities which shall engage in the business herein contemplated
under the control and direction of the parties.
-4-
<PAGE>
12. ENTIRE AGREEMENT. This Agreement and the documents incorporated
herein by reference contain the entire agreement and understanding of the
parties, and no representations, promises, agreements or any understanding,
written or oral, not contained herein shall be of any force or effect.
13. MODIFICATIONS AND WAIVERS. No change, modification or waiver of any
provision of this Agreement shall be valid or binding unless it is in writing
dated subsequent to the date hereof, and signed by the party intended to be
bound. No waiver of any breach, term or condition of this Agreement by either
party shall constitute a subsequent waiver of the same or any other breach, term
or condition.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
------------------------------
Robert L. Stovall
CENTERPOINT PROPERTIES
CORPORATION
By:
---------------------------
Its:
--------------------------
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<PAGE>
AMENDMENT TO STOCK OPTION AGREEMENTS
THIS AMENDMENT TO STOCK OPTION AGREEMENTS dated as of July 31, 1996 between
CenterPoint Properties Corporation, a Maryland corporation (the "Company"), and
Robert L. Stovall (the "Optionee") amends the separate Stock Option Agreements
dated as of December 10, 1993, March 12, 1995 and March 12, 1996 each between
the Company and the Optionee (collectively, the "Option Agreements").
The parties hereto agree as follows:
1. AMENDMENT OF OPTION AGREEMENTS. A new subsection (c) is hereby added to
Section 5 of each of the Option Agreements to henceforth read as follows:
(C) Notwithstanding anything to the contrary contained herein or in
Section 7.2(a) of the Plan, in the case of the retirement of the
Optionee on or after the date the Optionee attained the age of 65, any
Option that is not exercisable on the date of retirement shall be
fully vested on and as of the date of the retirement of the Optionee.
2. EFFECT OF AMENDMENT. The amendment as set forth in Section 1 hereof shall
not be deemed or construed to amend any other term or provision of the Option
Agreements, except as expressly set forth herein.
IN WITNESS WHEREOF, the Optionee and the Company have executed this
Agreement as of the date first written above.
CENTERPOINT PROPERTIES CORPORATION
By:
-------------------------------------
Its: President and Chief Executive Officer
OPTIONEE
------------------------------------------
Robert L. Stovall
<PAGE>
LOAN AGREEMENT
CITY OF GARY, INDIANA
and
THE MILLER PARTNERSHIP, L.P.
-----------------------------------
RELATING TO
$20,540,000
CITY OF GARY, INDIANA
ADJUSTABLE RATE ECONOMIC DEVELOPMENT
REVENUE REFUNDING BONDS, SERIES 1996 A
(THE MILLER PARTNERSHIP, L.P. PROJECT)
AND
$1,680,000
CITY OF GARY, INDIANA
TAXABLE ADJUSTABLE RATE ECONOMIC DEVELOPMENT
REVENUE REFUNDING BONDS, SERIES 1996 B
(THE MILLER PARTNERSHIP, L.P. PROJECT)
DATED
AS OF
MARCH 1, 1996
Ice Miller Donadio & Ryan
Bond Counsel
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I. DEFINITIONS.................................................. 2
Section 1.1. Use of Defined Terms.......................................... 2
Section 1.2. Definitions................................................... 2
Section 1.3. Interpretation................................................ 4
Section 1.4. Captions and Headings......................................... 5
ARTICLE II. REPRESENTATIONS, WARRANTIES AND COVENANTS..................... 6
Section 2.1. Representations, Warranties and Covenants of the Issuer....... 6
Section 2.2. Representations, Warranties and Covenants of the Borrower..... 7
Section 2.3. Entire Agreement with Bank.................................... 8
ARTICLE III. ISSUANCE OF THE REFUNDING BONDS............................... 10
Section 3.1. Issuance of the Refunding Bonds; Application of Proceeds...... 10
Section 3.2. Disbursements from the Project Fund; Construction
Account Disbursements......................................... 10
Section 3.3. Investment of Fund Moneys..................................... 13
Section 3.4. Rebate Fund................................................... 13
Section 3.5. Arbitrage Covenants........................................... 13
ARTICLE IV. LOAN BY ISSUER; REPAYMENT OF THE LOAN; LOAN
PAYMENTS AND ADDITIONAL PAYMENTS.............................. 15
Section 4.1. Loan Repayment; Delivery of Notes and Letter of Credit........ 15
Section 4.2. Additional Payments........................................... 16
Section 4.3. Place of Payments............................................. 16
Section 4.4. Obligations Unconditional..................................... 16
Section 4.5. Assignment of Agreement and Revenues.......................... 17
Section 4.6. Letter of Credit.............................................. 17
- i -
<PAGE>
ARTICLE V. ADDITIONAL AGREEMENTS AND COVENANTS........................... 18
Section 5.1. Right of Inspection........................................... 18
Section 5.2. Sale, Lease or Grant of Use by Borrower....................... 18
Section 5.3. Indemnification............................................... 18
Section 5.4. Borrower Not to Adversely Affect Exclusion from Gross
Income of Interest on Refunding Bonds......................... 20
Section 5.5. Assignment by Issuer.......................................... 20
Section 5.6. Borrower's Performance Under Indenture........................ 20
Section 5.7. Maintenance of Project........................................ 20
Section 5.8. Continued Existence........................................... 20
ARTICLE VI. REDEMPTION OF REFUNDING BONDS................................. 21
Section 6.1. Optional Redemption........................................... 21
Section 6.2. Extraordinary Optional Redemption............................. 21
Section 6.3. Mandatory Redemption of Refunding Bonds....................... 22
Section 6.4. Actions by Issuer............................................. 23
Section 6.5. Required Deposits for Optional Redemption..................... 23
ARTICLE VII. EVENTS OF DEFAULT AND REMEDIES................................ 24
Section 7.1. Events of Default............................................. 24
Section 7.2. Remedies on Default........................................... 25
Section 7.3. No Remedy Exclusive........................................... 26
Section 7.4. Agreement to Pay Attorneys' Fees and Expenses................. 26
Section 7.5. No Waiver..................................................... 26
Section 7.6. Notice of Default............................................. 26
Section 7.7. Remedies Subject to Bank's Direction.......................... 26
ARTICLE VIII. MISCELLANEOUS................................................. 28
Section 8.1. Term of Agreement............................................. 28
Section 8.2. Notices....................................................... 28
Section 8.3. Extent of Covenants of the Issuer; No Personal Liability...... 28
Section 8.4. Binding Effect................................................ 28
Section 8.5. Amendments and Supplements.................................... 28
Section 8.6. Execution Counterparts........................................ 29
Section 8.7. Severability.................................................. 29
Section 8.8. Governing Law................................................. 29
- ii -
<PAGE>
Section 8.9. Amounts Remaining in Funds.................................... 29
- iii -
<PAGE>
THIS LOAN AGREEMENT is made and entered into as of March 1, 1996 between
the City of Gary, Indiana, a municipal corporation and political subdivision
existing under the laws of the State of Indiana (the "Issuer"), and The Miller
Partnership, L.P., an Illinois limited partnership (the "Borrower"), under the
circumstances summarized in the following recitals (the capitalized terms not
defined above or in the recitals being used therein as defined in or pursuant to
Article I hereof):
A. The Issuer is authorized and empowered by the provisions of Indiana
Code 36-7-11.9 and -12 and Indiana Code 5-1-5 (collectively, the "Act") to
issue bonds for the purpose of refinancing the cost of acquiring, repairing,
restoring, reconditioning, refinancing or constructing "economic development
facilities," as defined in the Act, and to loan the proceeds of such bonds
pursuant to a Loan Agreement to a "user," as defined in the Act, to be used for
such purposes, which loan agreement shall provide for the repayment of such loan
by such user and which may provide for such loan to be secured or evidenced by
one or more notes, debentures, bonds or other secured or unsecured debt
obligations of such user.
B. The Borrower and the Issuer have full right and lawful authority to
enter into this Agreement and to perform and observe the provisions hereof on
their respective parts to be performed and observed.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto covenant, agree and bind themselves as
follows (provided that any obligation of the Issuer created by or arising out of
this Agreement shall not be a general debt on its part but shall be payable
solely out of the Revenues):
<PAGE>
ARTICLE I.
DEFINITIONS
Section 1.1. USE OF DEFINED TERMS. Words and terms defined in the Indenture
shall have the same meanings when used herein, unless the context or use clearly
indicates another meaning or intent. In addition, the words and terms set forth
in Section 1.2 hereof shall have the meanings set forth therein unless the
context or use clearly indicates another meaning or intent.
Section 1.2. DEFINITIONS AS USED HEREIN:
"Additional Payments" means the amounts required to be paid by the Borrower
pursuant to the provisions of Section 4.2 hereof.
"Agreement" means this Loan Agreement, as amended or supplemented from time
to time.
"Authorized Borrower Representative" means the President or any Vice
President of the general partner of the Borrower.
"Engineer" means an individual or firm and qualified to practice the
profession of engineering or architecture under the laws of the State.
"Event of Default" means any of the events described as an Event of Default
in Section 7.1 hereof.
"Force Majeure" means any of the causes, circumstances or events described
as constituting Force Majeure in Section 7.1 hereof.
"Indenture" means the Trust Indenture, dated as of even date herewith,
between the Issuer and the Trustee, as amended or supplemented from time to
time.
"Loan" means the loan by the Issuer to the Borrower of the proceeds
received from the sale of the Refunding Bonds.
"Loan Payment Date" means any date on which any of the Loan Payments are
due and payable, whether at maturity, upon acceleration, call for redemption or
prepayment, or otherwise.
"Loan Payments" means the amounts required to be paid by the Borrower in
repayment of the Loan pursuant to the provisions of the Notes and of Section 4.1
hereof.
"Notes" means the Refunding Notes and any Additional Notes.
- 2 -
<PAGE>
"Notice Address" means:
(a) As to the Issuer: City of Gary, Indiana
City Building
Gary, Indiana 46402
Attention: Clerk
(b) As to the Borrower: The Miller Partnership, L.P.
401 N. Michigan Avenue
Suite 3000
Chicago, Illinois 60611
Attention: Paul Fisher
(c) As to the Trustee: Fifth Third Bank of Central Indiana
251 N. Illinois Street, Suite 1000
Indianapolis, Indiana 46204
Attention: Corporate Trust Department
(d) As to the Bank: The Royal Bank of Scotland plc,
acting through its New York Branch
Wall Street Plaza, 26th Floor
88 Pine Street
New York, New York 10005-1801
Attention: Derek I. Bonnar
(e) As to the Co-Remarket-
ing Agent, at: Gates Capital Corporation
100 Park Avenue
New York, New York 10017
Attention: Ameilia A. Recio
(f) As to the Paying Agent
Authenticating Agent
or Registrar, at: The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attention: Corporate Trust Department
(g) As to the
- 3 -
<PAGE>
Remarketing Agent: Everen Securities, Inc.
77 W. Wacker Drive, 28th Floor
Chicago, Illinois 60601-1994
Attention: Felicia Flowers-Smith
or such additional or different address, notice of which is given under Section
8.2 hereof.
"Prior Bonds Loan Agreement" means, collectively, the Loan Agreement,
Mortgage, Security Agreement, Assignment of Rents and Leases and Financing
Statement dated as of April 1, 1991, among the Issuer, the Borrower and The
Royal Bank of Scotland plc, Acting Through its New York Branch, as amended by
the First Supplemental Loan Agreement, Mortgage, Security Agreement, Assignment
of Rents and Leases and Financing Statement dated as of September 1, 1993.
"Project" means the Project as described on Exhibit B attached hereto.
"Refunding Bonds" means, collectively, the City of Gary, Indiana Adjustable
Rate Economic Development Revenue Refunding Bonds, Series 1996 A (The Miller
Partnership, L.P. Project) authorized in the Indenture in the original principal
amount of $20,540,000, and the City of Gary, Indiana Taxable Adjustable Rate
Economic Development Revenue Refunding Bonds, Series 1996 B (The Miller
Partnership, L.P. Project) authorized in the Indenture in the original principal
amount of $1,680,000.
"Refunding Notes" means the Note, Series 1996 A in the principal amount of
$20,540,000 and the Note, Series 1996 B of the Borrower in the principal amount
of $1,680,000, each dated as of even date with the Refunding Bonds, in the forms
attached hereto as Exhibit A evidencing the obligation of the Borrower to make
Loan Payments.
"Remarketing Agreement" means the Remarketing Agreement of even date
herewith between the Borrower and Everen Securities, Inc., as Remarketing Agent,
as amended and supplemented from time to time.
"Tax Certificate" means the Tax Representation Certificate of the Borrower
delivered in connection with the initial issuance and delivery of the Refunding
Bonds.
"Tax Regulatory Agreement" means the Tax Regulatory Agreement, dated as of
March 1, 1996, among the Borrower, the Issuer and the Trustee.
"Trustee" means the Trustee at the time acting as such under the Indenture,
originally Fifth Third Bank of Central Indiana, as Trustee, and any successor
Trustee as determined or designated under or pursuant to the Indenture.
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"Unassigned Issuer's Rights" means all of the rights of the Issuer to
receive Additional Payments under Section 4.2 hereof, to be held harmless and
indemnified under Section 5.3 hereof, to be reimbursed for attorney's fees and
expenses under Section 7.4 hereof, and to give or withhold consent to
amendments, changes, modifications, alterations and termination of this
Agreement under Section 8.5 hereof.
Section 1.3. INTERPRETATION. Any reference herein to the Issuer, to the
Issuing Authority or to any member or officer of either includes entities or
officials succeeding to their respective functions, duties or responsibilities
pursuant to or by operation of law or lawfully performing their respective
functions.
Any reference to a section or provision of the Constitution of the State or
the Act, or to a section, provision or chapter of the Indiana Code or to any
statute of the United States of America, includes that section, provision,
chapter or statute as amended, modified, revised, supplemented or superseded
from time to time; provided, that no amendment, modification, revision,
supplement or superseding Section, provision, chapter or statute shall be
applicable solely by reason of this provision if it constitutes in any way an
impairment of the rights or obligations of the Issuer, the Holders, the Trustee,
the Bank or the Borrower under this Agreement.
Unless the context indicates otherwise, words importing the singular number
include the plural number, and vice versa; the terms "hereof,""hereby,"
"herein," "hereto," "hereunder" and similar terms refer to this Agreement as a
whole; and the term "hereafter" means after, and the term "heretofore" means
before, the date of delivery of the Refunding Bonds. Words of any gender
include the correlative words of the other genders, unless the sense indicates
otherwise.
Section 1.4. CAPTIONS AND HEADINGS. The captions and headings in this
Agreement are solely for convenience of reference and in no way define, limit
or describe the scope or intent of any Articles, Sections, subsections,
paragraphs, subparagraphs or clauses hereof.
(End of Article I)
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ARTICLE II.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE ISSUER. The
Issuer represents and warrants that:
(a) It is a duly organized and validly existing municipality and
political subdivision existing under the laws of the State.
(b) It has full legal right, power and authority pursuant to the
Act to finance the Project through the issuance of the Refunding Bonds;
has made the necessary findings of public purpose, has given any
necessary notices and has taken all other steps and followed all
procedures required by the Constitution and laws of the State (including
the Act) in connection therewith; and has full legal right, power and
authority to (i) enter into this Agreement, the Bond Purchase Agreement,
the Letter of Representations and the Indenture, (ii) issue, sell and
deliver the Refunding Bonds and (iii) carry out and consummate all other
transactions contemplated by this Agreement, the Bond Purchase
Agreement, the Letter of Representations and the Indenture.
(c) It has duly authorized (i) the execution, delivery and
performance of this Agreement, the Refunding Bonds, the Bond Purchase
Agreement, the Letter of Representations and the Indenture, and (ii) the
taking of any and all such actions as may be required on the part of the
Issuer to carry out, give effect to and consummate the transactions
contemplated by such instruments.
(d) This Agreement, the Bond Purchase Agreement, the Letter of
Representations and the Indenture constitute legal, valid and binding
obligations of the Issuer, enforceable in accordance with their
respective terms; this Agreement, the Bond Purchase Agreement, the
Letter of Representations and the Indenture have been duly authorized,
executed and delivered by the Issuer; and, when authenticated by the
Trustee in accordance with the provisions of the Indenture, the
Refunding Bonds will have been duly authorized, executed, issued and
delivered and will constitute legal, valid and binding special
obligations of the Issuer in conformity with the provisions of the Act
and the Constitution of the State.
(e) There is no action, suit, proceeding, inquiry, or investigation
at law or in equity or before or by any court, public board or body,
pending or, to the best of the knowledge of the Issuer, threatened
against the Issuer, nor to the best of the knowledge of the Issuer is
there any basis therefor, which in any manner questions the validity of
the Act, the powers of the Issuer referred to in paragraph (b) above or
the validity of any proceedings taken by the Issuer in connection with
the issuance of the Refunding Bonds
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or wherein any unfavorable decision, ruling or finding could materially
adversely affect the transactions contemplated by this Agreement or
which, in any way, would adversely affect the validity or enforceability
of the Refunding Bonds, the Indenture, the Letter of Representations,
the Bond Purchase Agreement or this Agreement (or of any other
instrument required or contemplated for use in consummating the
transactions contemplated thereby and hereby).
(f) The execution and delivery by the Issuer of this Agreement, the
Refunding Bonds, the Letter of Representations, the Bond Purchase
Agreement and the Indenture in compliance with the provisions of each of
such instruments will not conflict with or constitute a breach of, or
default under, any material commitment, Agreement or other instrument to
which the Issuer is a party or by which it is bound, or under any
provision of the Act, the Constitution of the State or any existing law,
rule, regulation, ordinance, judgment, order or decree to which the
Issuer is subject.
(g) The Issuer will do or cause to be done all things necessary, so
far as lawful, to preserve and keep in full force and effect its existence
or to assure the assumption of its obligations under this Agreement, the
Letter of Representations, the Indenture and the Refunding Bonds by any
successor public body.
Section 2.2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.
The Borrower represents, warrants and covenants that:
(a) The Borrower is a limited partnership duly organized and validly
existing in full force and effect under the laws of the State of
Illinois, is authorized to transact business under the laws of the State
of Indiana, and has full power and authority to execute, deliver and
perform this Agreement, the Bond Purchase Agreement, the Reimbursement
Agreement, the Remarketing Agreement and the Refunding Notes and to
enter into and carry out the transactions contemplated by those
documents. That execution, delivery and performance does not, and will
not violate any provision of law applicable to the Borrower or its
Agreement of Limited Partnership and does not, and will not conflict
with or result in a default under any Agreement or instrument to which
the Borrower is a party or by which the Borrower is bound. This
Agreement, the Bond Purchase Agreement, the Reimbursement Agreement, the
Remarketing Agreement and the Refunding Notes, by proper action, have
been duly authorized, executed and delivered by the Borrower and are
valid and binding obligations of the Borrower.
(b) CenterPoint Properties Corporation, a Maryland corporation, is the
general partner of the Borrower and has a 99% ownership interest in the
Borrower. CenterPoint Realty Services Corporation, an Illinois
corporation, is a limited partner of the Borrower, and has a 1%
ownership interest in the Borrower.
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(c) The Project has been acquired, constructed, equipped and
installed, and is being operated, as required by the Prior Bonds Loan
Agreement. The Project is and will be operated and maintained in such
manner as to conform in all material respects with all applicable
zoning, planning, building, health, environmental and other applicable
governmental rules and regulations and such operation and maintenance
will be consistent with the Act.
(d) The representations contained in the Tax Certificate (which is
incorporated herein by this reference thereto) are true and correct and
the Borrower will observe the covenants contained therein as fully as if
set forth herein.
(e) The Borrower will not use, or cause any of the funds provided
by the Issuer hereunder to be used in such manner as to, or take or omit
to take any action, in violation of any provision of the Loan Agreement
or of the Tax Regulatory Agreement which would impair the exclusion from
gross income of interest on the Series 1996 A Bonds for federal income
tax purposes.
(f) Neither the Borrower nor CenterPoint is in default in the
payment of principal of, or interest on, any of the its respective
indebtedness for borrowed money, or in default under any instrument
under which, or subject to which, any indebtedness has been incurred,
and no event has occurred and is continuing under the provisions of any
Agreement involving the Borrower or CenterPoint that, with the lapse of
time or the giving of notice, or both, would constitute an event of
default thereunder.
(g) No litigation at law or in equity nor any proceeding before any
governmental agency or other tribunal involving the Borrower or
CenterPoint is pending or, to the knowledge of the Borrower, threatened,
in which any liability of the Borrower or CenterPoint is not adequately
covered by insurance or in which any judgment or order would have a
material and adverse effect upon the business or assets of the Borrower
or CenterPoint or would materially and adversely affect the operation of
the Project, the validity of this Agreement, the Bond Purchase
Agreement, the Reimbursement Agreement, the Remarketing Agreement and
the Refunding Notes or the performance of the Borrower's or
CenterPoint's respective obligations thereunder or the transactions
contemplated hereby.
(h) Neither the Borrower nor CenterPoint has made or will make any
changes to the Project or to the operation thereof which would affect
the qualification of the Project under the Act or impair the exclusion
from gross income for federal income tax purposes of the interest on the
Refunding Bonds.
Section 2.3. ENTIRE AGREEMENT WITH BANK.
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(a) The Borrower hereby represents to the Issuer that the
Reimbursement Agreement and the Mortgage (as defined in the
Reimbursement Agreement) and any other loan documents relating to the
Reimbursement Agreement constitute the entire Agreement between the
Borrower and the Bank respecting the loan of any funds to the Borrower.
The Borrower represents that there is no other agreement, either oral or
written, between the Borrower, on the one hand, or the Bank on the other
hand respecting the loan of any funds to the Borrower.
(b) The Borrower hereby covenants to the Issuer that it will not
take any action, directly or indirectly (including, but not limited to,
any amendment to Article II of the Reimbursement Agreement), nor fail to
take any action, directly or indirectly, which would cause any payment
under the Letter of Credit from the Bank to the Trustee to be a voidable
preference under Section 547 of Title 11 of the United States Code, 11
U.S.C. Section 101 ET SEQ. (the "Bankruptcy Code") which is recoverable
under Section 550(a) of the Bankruptcy Code in the event of the filing
of a petition in bankruptcy by or against the Borrower or the Issuer.
(End of Article II)
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ARTICLE III.
ISSUANCE OF THE REFUNDING BONDS
Section 3.1. ISSUANCE OF THE REFUNDING BONDS; APPLICATION OF PROCEEDS. To
provide funds to make the loan for purposes of refunding the Prior Bonds, the
Issuer will issue, sell and deliver the Refunding Bonds as required by the
provisions of the Bond Purchase Agreement. The Refunding Bonds will be issued
pursuant to the Indenture in the aggregate principal amount, will bear interest,
will mature and will be subject to redemption as set forth therein. The
Borrower hereby approves the terms and conditions of the Indenture and the
Refunding Bonds, and the terms and conditions under which the Refunding Bonds
will be issued, sold and delivered.
The proceeds from the sale of the Refunding Bonds shall be loaned to the
Borrower by depositing such proceeds with the Trustee which shall deposit them
in the Refunding Fund and thereafter disburse them as provided herein and in the
Indenture.
At the request of the Borrower, and for the purposes and upon fulfillment
of the conditions specified in the Indenture, the Issuer, in its sole
discretion, may provide for the issuance, sale and delivery of Additional Bonds
and loan the proceeds from the sale thereof to the Borrower.
Section 3.2. DISBURSEMENTS FROM THE REFUNDING FUND; REDEMPTION OF PRIOR
BONDS; REFUNDING ACCOUNT DISBURSEMENTS.
(a) The proceeds of the Refunding Bonds will be used to reimburse the
Bank for a draw on Letter of Credit no. LCA 09039300407NY, the purpose
of such draw being to provide funds for the redemption of the Prior Bonds.
Such refunding shall be accomplished by effecting the redemption of all
Prior Bonds in whole on April 1, 1996. The Issuer at the direction of the
Borrower hereby calls such Prior Bonds for redemption in whole on April 1,
1996, at the redemption price of 100% of the outstanding principal amount
thereof plus accrued interest to the redemption date. The Issuer has
heretofore directed the Prior Bonds Trustee to give notice of such
redemption pursuant to the provisions of the Prior Bonds Indenture and to
effect such redemption in accordance with the provisions of this Section.
(b) Upon receipt of the proceeds of the Refunding Bonds and deposit
thereof to the Refunding Fund, the Trustee shall immediately transfer the
entire amount of the proceeds in the Refunding Fund to the Prior Bonds
Trustee for deposit in the Bond Fund established pursuant to the Prior
Indenture.
Section 3.3. INVESTMENT OF FUND MONEYS. At the written or oral request
(promptly confirmed in writing) of the Authorized Borrower Representative, any
moneys held as part of the Bond Fund, the Refunding Fund or the Rebate Fund
shall be invested or reinvested by the Trustee
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in Eligible Investments. In the absence of written direction from the Borrower
with respect to investment of moneys held in the Funds, the Trustee is hereby
directed without further authorization to invest funds in money market mutual
funds of the Trustee or its affiliates that qualify as Eligible Investments
under the definition thereof. The Issuer and the Borrower each hereby covenants
that it will restrict that investment and reinvestment and the use of the
proceeds of the Refunding Bonds in such manner and to such extent, if any, as
may be necessary, after taking into account reasonable expectations at the time
of delivery of and payment for the Series 1996 A Bonds, so that the Refunding
Bonds will not constitute arbitrage bonds under Section 148 of the Code.
The Borrower shall provide the Issuer with, and the Issuer may base its
certifications as authorized by the Bond Ordinance on, a certificate of the
Borrower for inclusion in the transcript of proceedings for the Refunding Bonds,
setting forth the reasonable expectations of the Borrower on the date of
delivery of and payment for the Refunding Bonds regarding the amount and use of
the proceeds of the Refunding Bonds and the facts, estimates and circumstances
on which those expectations are based.
Section 3.4. REBATE FUND. The Borrower agrees to make such payments to the
Trustee as are required of it under Section 5.11 of the Indenture. The
obligation of the Borrower to make such payments shall remain in effect and be
binding upon the Borrower notwithstanding the release and discharge of the
Indenture.
Section 3.5. ARBITRAGE COVENANTS. The Borrower and the Issuer each covenants
to the owners of the Refunding Bonds that, notwithstanding any other provision
of this Agreement or any other instrument, it shall take no action, nor shall
the Borrower direct the Trustee to take or approve the Trustee's taking any
action or direct the Trustee to make or approve the Trustee's making any
investment or use of proceeds of the Refunding Bonds or any other moneys which
may arise out of or in connection with this Agreement, the Indenture or the
project, which would cause the Series 1996 A Bonds to be treated as "arbitrage
bonds" within the meaning of Section 148 of the Code. In addition, the Borrower
covenants and agrees to comply with the requirements of Section 148(f) of the
Code as it may be applicable to the Series 1996 A Bonds or the proceeds derived
from the sale of the Refunding Bonds or any other moneys which may arise out of,
or in connection with, this Agreement, the Indenture or the Project throughout
the term of the Refunding Bonds. No provision of this Agreement shall be
construed to impose upon the Trustee any obligation or responsibility for
compliance with arbitrage regulations, except as provided in the Indenture.
(End of Article III)
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ARTICLE IV.
LOAN BY ISSUER; REPAYMENT OF THE LOAN;
LOAN PAYMENTS AND ADDITIONAL PAYMENTS
Section 4.1. LOAN REPAYMENT; DELIVERY OF NOTES AND LETTER OF CREDIT.
Upon the terms and conditions of this Agreement, the issuer will make the
Loan to the Borrower. In consideration of and in repayment of the loan, the
Borrower shall make, as Loan Payments, payments sufficient in time and amount
to pay when due all Bond Service Charges, all as more particularly provided
in the Refunding Notes and any Additional Note. The Refunding Notes shall be
executed and delivered by the Borrower concurrently with the execution and
delivery of this Agreement. All Loan Payments shall be paid to the Trustee
in accordance with the terms of the Notes for the account of the Issuer and
shall be held and applied in accordance with the provisions of the Indenture
and this Agreement. To the extent of payments made with respect to Bond
Service Charges pursuant to draws upon the Letter of Credit, the Borrower
shall receive a credit against its obligation to make loan payments under
this Agreement and the Refunding Notes.
In connection with the issuance of any Additional Bonds permitted by the
Bank, the Borrower shall execute and deliver to the Trustee one or more
Additional Notes in a form substantially similar to the form of the Refunding
Notes. All such Additional Notes shall:
(a) provide for payments of interest equal to the payments of
interest on the corresponding Additional Bonds;
(b) require payments of principal and prepayments and any premium
equal to the payments of principal, redemption payments and sinking fund
payments and any premium on the corresponding Additional Bonds;
(c) require all payments on any such Additional Notes to be made no
later than the due dates for the corresponding payments to be made on
the corresponding Additional Bonds; and
(d) contain by reference or otherwise optional and mandatory
prepayment provisions and provisions in respect of the optional and mandatory
acceleration or prepayment of principal and any premium corresponding with the
redemption and acceleration provisions of the corresponding Additional Bonds.
All Notes shall secure equally and ratably all outstanding Bonds, except
that, so long as no Event of Default described in paragraph (a), (b), (c), (g)
or (h) of Section 7.01 of the Indenture has occurred and is continuing, payments
by the Borrower on the Refunding Notes shall be used by the Trustee to reimburse
the Bank for drawings on the Letter of Credit used to pay Bond Service Charges
on the Refunding Bonds.
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Upon payment in full, in accordance with the Indenture, of the Bond Service
Charges on any series of Bonds, whether at maturity or by redemption or
otherwise, or upon provision for the payment thereof having been made in
accordance with the provisions of the Indenture, (i) the Notes issued
concurrently with those corresponding Bonds, of the same maturity, bearing the
same interest rate and in an amount equal to the aggregate principal amount of
the Bonds so surrendered and canceled or for the payment of which provision has
been made, shall be deemed fully paid, the obligations of the Borrower
thereunder shall be terminated, and any such Notes shall be surrendered by the
Trustee to the Borrower, and shall be canceled by the Borrower, or (ii) in the
event there is only one of those Notes, an appropriate notation shall be
endorsed thereon by the Trustee evidencing the date and amount of the principal
payment or prepayment equal to the Bonds so paid, or with respect to which
provision for payment has been made, and that Note shall be surrendered by the
Trustee to the Borrower for cancellation if all Bonds shall have been paid (or
provision made therefor) and canceled as aforesaid. Unless the Borrower is
entitled to a credit under express terms of this Agreement or the Notes, all
payments on each of the Notes shall be in the full amount required thereunder.
Except for such interest of the Borrower and the Bank as may hereafter
arise pursuant to Section 5.07 or 5.08 of the Indenture, the Borrower and the
Issuer each acknowledge that neither the Borrower nor the Issuer has any
interest in the Bond Fund and any moneys deposited therein shall be in the
custody of and held by the Trustee in trust for the benefit of the Holders and,
to the extent of amounts due under the Reimbursement Agreement, the Bank.
Section 4.2. ADDITIONAL PAYMENTS. The Borrower shall pay to the Issuer, as
Additional Payments hereunder, any and all costs and expenses incurred or to be
paid by the Issuer in connection with the issuance and delivery of the Refunding
Bonds and Additional Bonds or otherwise related to actions taken by the Issuer
under this Agreement or the Indenture.
The Borrower shall pay to the Trustee, the Registrar and any Paying Agent
or Authenticating Agent, their customary fees, charges and reasonable expenses
for acting as such under the Indenture.
The Borrower also shall pay the Remarketing Agent remarketing fees in
respect of the Refunding Bonds as provided in the Remarketing Agreement.
Any payments under this Section not paid when due shall bear interest at
the Interest Rate for Advances.
Section 4.3. PLACE OF PAYMENTS. The Borrower shall make all Loan Payments
directly to the Trustee in immediately available funds at its principal
corporate trust office in Indianapolis, Indiana. Additional Payments shall be
made directly to the person or entity to whom or to which they are due.
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Section 4.4. OBLIGATIONS UNCONDITIONAL. The obligations of the Borrower to
make Loan Payments, Additional Payments and any payments required of the
Borrower under Section 5.11 or Section 6.03 of the Indenture shall be absolute
and unconditional, and the Borrower shall make such payments without abatement,
diminution or deduction regardless of any cause or circumstances whatsoever
including, without limitation, any defense, set-off, recoupment or counterclaim
which the Borrower may have or assert against the Issuer, the Trustee, any
Paying Agent or Authenticating Agent, the Remarketing Agent, the Bank or any
other Person; provided that the Borrower may contest or dispute the amount of
any such obligation (other than Loan Payments) so long as such contest or
dispute does not result in an Event of Default under the Indenture.
Section 4.5. ASSIGNMENT OF AGREEMENT AND REVENUES. To secure the payment of
Bond Service Charges, the Issuer shall assign to the Trustee, by the Indenture,
all its right, title and interest in and to the Revenues, the Agreement (except
for Unassigned Issuer's Rights) and the Refunding Notes. The Borrower hereby
agrees and consents to that assignment.
Section 4.6. LETTER OF CREDIT. Simultaneously with the initial delivery of
the Refunding Bonds pursuant to the Indenture and the Bond Purchase Agreement,
the Borrower shall cause the bank to issue and deliver the Letter of Credit to
the Trustee. The Letter of Credit may be replaced by an Alternate Letter of
credit complying with the provisions of Section 5.09 of the Indenture and shall
be in substantially the form attached to the Reimbursement Agreement and made a
part thereof. The Borrower shall take whatever action may be necessary to
maintain the Letter of Credit or an Alternate Letter of Credit in full force and
effect during the period required by the Indenture, and shall pay to the Bank
all amounts due and payable under the Reimbursement Agreement.
(End of Article IV)
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ARTICLE V.
ADDITIONAL AGREEMENTS AND COVENANTS
Section 5.1. RIGHT OF INSPECTION. Subject to reasonable security and safety
regulations and upon reasonable notice, the Issuer, the Bank and the Trustee,
and their respective agents, shall have the right during normal business hours
to inspect the project.
Section 5.2. SALE, LEASE OR GRANT OF USE BY BORROWER. With the written
consent of the Bank, and subject to any lease or other Agreement to which the
Borrower is a party or by which it is bound, including in particular tenant
leases, the Borrower may sell, lease or grant the right to occupy and use the
project, in whole or in part, to others, provided that:
(a) No lease or grant shall relieve the Borrower from the Borrower's
obligations under this Agreement or the Notes and in the case of a sale of the
Project, the purchaser shall assume all of the obligations of the Borrower under
this Agreement and the Notes and an Alternate Letter of Credit shall have been
issued to secure the Refunding Bonds;
(b) In connection with any lease or grant the Borrower shall retain such
rights and interests as will permit the Borrower to comply with the Borrower's
obligations under this Agreement and the Notes;
(c) There is provided to the Issuer and the Trustee an opinion of
nationally recognized bond counsel that any such sale, lease or grant will not
impair materially the purposes of the Act to be accomplished by operation of the
Project as herein provided or adversely affect the exclusion from gross income
for federal income tax purposes of the interest on the Series 1996 A Bonds.
Section 5.3. INDEMNIFICATION. The Borrower releases the Issuer and the
Trustee from, agrees that the Issuer and the Trustee shall not be liable for,
and shall indemnify the Issuer and the Trustee against, all liabilities, claims,
costs and expenses, including attorneys fees and expenses, imposed upon,
incurred or asserted against the Issuer on account of: (a) any loss or damage to
property or injury to or death of or loss by any person that may be occasioned
by any cause whatsoever pertaining to the construction, maintenance, operation
and use of the Project; (b) any breach or default on the part of the Borrower in
the performance of any covenant or Agreement of the Borrower under this
Agreement, the Reimbursement Agreement, the Refunding Notes or any related
document, or arising from any act or failure to act by the Borrower, or any of
the Borrower's agents, contractors, servants, employees or licensees; (c) the
authorization, issuance, sale, trading, redemption or servicing of the Refunding
Bonds, and the provision of any information or certification furnished in
connection therewith concerning the Refunding Bonds, the Project or the Borrower
including, without limitation, the Preliminary Official Statement and the
Official Statement (each as defined in the Bond Purchase Agreement), any
information furnished by the Borrower for, and included in, or used as a basis
for preparation of, any certifications, information statements or reports
furnished by the Issuer, and any other information
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or certification obtained from the Borrower to assure the exclusion of the
interest on the Refunding Bonds from gross income of the Holders thereof for
federal income tax purposes; (d) the Borrower's failure to comply with any
requirement of this Agreement or the Code pertaining to such exclusion of that
interest, including the covenants in Section 5.4 hereof; and (e) any claim,
action or proceeding brought with respect to the matters set forth in (a), (b),
(c) or (d) above.
The Borrower agrees to indemnify the Trustee for, and to hold it harmless
against, all liabilities, claims, costs and expenses incurred without negligence
or willful misconduct on the part of the Trustee on account of any action taken
or omitted to be taken by the Trustee in accordance with the terms of this
Agreement, the Bonds, the Reimbursement Agreement, the Letter of Credit, the
Notes or the Indenture, or any action taken at the request of or with the
consent of the Borrower, including the costs and expenses of the Trustee in
defending itself against any such claim, action or proceeding brought in
connection with the exercise or performance of any of its powers or duties under
this Agreement, the Bonds, the Indenture, the Reimbursement Agreement, the
Letter of Credit or the Notes.
In case any action or proceeding is brought against the Issuer or the
Trustee in respect of which indemnity may be sought hereunder, the party seeking
indemnity promptly shall give notice of that action or proceeding to the
Borrower, and the Borrower upon receipt of that notice shall have the obligation
and the right to assume the defense of the action or proceeding; provided, that
failure of a party to give that notice shall not relieve the Borrower from any
of the Borrower's obligations under this Section unless that failure materially
prejudices the defense of the action or proceeding by the Borrower and then,
only to the extent of such prejudice to the Borrower. At the Borrower's
expense, an indemnified party may, upon delivery of written notice to, and the
prior written consent of the Borrower, employ separate counsel and participate
in the defense. The Borrower shall not be liable for any settlement made
without the Borrower's consent.
If the Borrower shall not have employed counsel to have charge of the
defense of the action, claim or proceeding, or if an indemnified party shall
have concluded reasonably that there may be a defense available to it or to any
other indemnified party which is different from or in addition to those
available to the Borrower or to any other indemnified party or if an indemnified
party shall have reasonably concluded that counsel representing other
indemnified parties cannot fairly represent such indemnified party because of a
conflict of interest, (i) the Borrower shall not have the right to direct the
defense of the action, claim or proceeding on behalf of that indemnified party
and (ii) legal and other expenses incurred by the indemnified party (including
without limitation, to the extent permitted by law, reasonable attorney's fees
and expenses) shall be borne by the Borrower.
The indemnification set forth above is intended to and shall include the
indemnification of all affected officials, directors, officers and employees of
the Issuer and the Trustee, respectively. That indemnification is intended to
and shall be enforceable by the Issuer and the Trustee, respectively, to the
full extent permitted by law.
- 16 -
<PAGE>
Section 5.4. BORROWER NOT TO ADVERSELY AFFECT EXCLUSION FROM GROSS INCOME
OF INTEREST ON SERIES 1996 A BONDS. The Borrower hereby represents that the
Borrower has taken and caused to be taken, and covenants that the Borrower will
take and cause to be taken, all actions that may be required of the Borrower,
alone or in conjunction with the Issuer, for the interest on the Series 1996 A
Bonds to be and remain excluded from gross income for federal income tax
purposes, and represents that the Borrower has not taken or permitted to be
taken on the Borrower's behalf, and covenants that the Borrower will not take or
permit to be taken on the Borrower's behalf, any actions that would adversely
affect such exclusion under the provisions of the Code.
If the Borrower becomes aware that any actions or facts have caused or will
cause the interest on the Series 1996 A Bonds to be includable in gross income
for federal income tax purposes, the Borrower promptly shall take such steps as
are necessary to cause redemption of the Refunding Bonds in whole at the
earliest practicable date.
Section 5.5. ASSIGNMENT BY ISSUER. Except for the assignment of this
Agreement to the Trustee, the Issuer shall not attempt to further assign,
transfer or convey its interest in the Revenues or this Agreement or create
any pledge or lien of any form or nature with respect to the Revenues or the
payments hereunder.
Section 5.6. BORROWER'S PERFORMANCE UNDER INDENTURE. The Borrower has
examined the Indenture and approves the form and substance of, and agrees to
be bound by, its terms. The Borrower, for the benefit of the Issuer and each
Bondholder, shall do and perform all acts and things required or contemplated
in the Indenture to be done or performed by the Borrower. The Borrower is a
third party beneficiary of certain provisions of the Indenture, and Section
8.05 of the Indenture is hereby incorporated herein by reference.
Section 5.7. MAINTENANCE OF PROJECT. The Borrower shall keep and
maintain or make arrangements with others to maintain the Project in good
order and condition and in rentable and tenantable state of repair, and will
make or make arrangements with others to make, as and when necessary, all
repairs, renewals and replacements, structural and nonstructural, exterior
and interior, ordinary and extraordinary, foreseen and unforeseen.
Section 5.8. CONTINUED EXISTENCE. Except as otherwise provided in or
permitted pursuant to the Reimbursement Agreement, the Borrower shall maintain
its existence and continue to be a limited partnership, duly formed, validly
existing and in full force and effect under the laws of the State of Illinois
and duly authorized to transact business in the State.
Section 5.9. TAX REGULATORY AGREEMENT. The Tax Regulatory Agreement is
incorporated herein by reference and is made a part hereof as if fully set
forth. The Borrower agrees to comply with the covenants and Agreements int he
Tax Regulatory Agreement.
(End of Article V)
- 17 -
<PAGE>
ARTICLE VI.
REDEMPTION OF REFUNDING BONDS
Section 6.1. OPTIONAL REDEMPTION. Provided no Event of Default shall have
occurred and be continuing, at any time and from time to time, the Borrower with
the consent of the Bank, may deliver moneys to the Trustee in addition to Loan
Payments or Additional Payments required to be made and direct the Trustee in
writing to use the moneys so delivered for the purpose of purchasing Refunding
Bonds or of reimbursing the Bank for drawings on the Letter of Credit used to
redeem Refunding Bonds called for optional redemption in accordance with the
applicable provisions of the Indenture.
Section 6.2. EXTRAORDINARY OPTIONAL REDEMPTION. The Borrower, with the
written consent of the Bank (except with respect to paragraph (c) of this
Section 6.2, as to which the consent of the Bank is not required), shall have,
subject to the conditions hereinafter imposed, the option to direct the
redemption of the entire unpaid principal balance of the Refunding Bonds in
accordance with the applicable provisions of the Indenture upon the occurrence
of any of the following events:
(a) The Project shall have been damaged or destroyed to such an
extent that (1) it cannot reasonably be expected to be restored, within a
period of three months, to the condition thereof immediately preceding such
damage or destruction or (2) its normal use and operation is reasonably
expected to be prevented for a period of three consecutive months;
(b) Title to, or the temporary use of, all or a significant part of
the Project shall have been taken under the exercise of the power of
eminent domain (1) to such extent that the Project cannot reasonably be
expected to be restored within a period of three months to a condition of
usefulness comparable to that existing prior to the taking or (2) as a
result of the taking, normal use and operation of the Project is reasonably
expected to be prevented for a period of three consecutive months;
(c) As a result of any changes in the Constitution of the State, the
constitution of the United States of America, or state or federal laws, or
as a result 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 Issuer, the Trustee or the Borrower in good faith, this
Agreement shall have become void or unenforceable or impossible of
performance in accordance with the intent and purpose of the parties as
expressed in this Agreement;
(d) If unreasonable burdens or excessive liabilities shall have been
imposed with respect to the Project or the operation thereof, including,
without limitation, federal, state
- 18 -
<PAGE>
or other ad valorem, property, income or other taxes not being imposed on
the date of this Agreement other than ad valorem taxes presently levied
upon privately owned property used for the same general purpose as the
Project; or
(e) Changes in the economic availability of raw materials, operating
supplies, energy sources or supplies, or facilities (including, but not
limited to, facilities in connection with the disposal of industrial
wastes) necessary for the operation of the Project shall have occurred or
technological or other changes shall have occurred which the Borrower
cannot reasonably overcome or control and which in the Borrower's reasonable
judgment render the operation of the Project uneconomic.
The Borrower also shall have the option, with the consent of the Bank, in
the event that title to or the temporary use of a portion of the Project shall
be taken under the exercise of the power of eminent domain, even if the taking
is not of such nature as to permit the exercise of the redemption option upon an
event specified in clause (b) above, to direct the redemption, at a redemption
price of 100% of the principal amount thereof prepaid, plus accrued interest to
the redemption date, of that part of the outstanding principal balance of the
Refunding Bonds as may be payable from the proceeds received by the Borrower
(after the payment of costs and expenses incurred in the collection thereof) in
the eminent domain proceeding, provided that the Borrower shall furnish to the
Issuer and the Trustee a certificate of an Engineer stating that (1) the
property comprising the part of the Project taken is not essential to continued
operations of the Project in the manner existing prior to that taking, (2) the
Project has been restored to a condition substantially equivalent to that
existing prior to the taking, or (3) other improvements have been acquired or
made which are suitable for the continued operation of the Project. In the
event that the amount of such proceeds received by the Borrower in the eminent
domain proceeding is insufficient to effect a redemption pursuant to Section
4.02 of the Indenture, such amount shall be transferred to the Bond Fund and
applied pursuant to Section 5.03 of the Indenture.
To exercise any option under this Section, the Borrower within 90 days
following the event authorizing the exercise of that option, or at any time
during the continuation of the condition referred to in clause (e) of the first
paragraph of this Section, shall give notice to the Issuer and to the Trustee,
together with a copy of the Bank's consent, specifying the date of redemption,
which date shall be not more than ninety days from the date that notice is
mailed, and shall make arrangements satisfactory to the Trustee for the giving
of the required notice of redemption.
The rights and options granted to the Borrower in this Section may be
exercised whether or not the Borrower is in default hereunder; provided, that
such default will not relieve the Borrower from performing those actions which
are necessary to exercise any such right or option granted hereunder. The
Borrower (with the written consent of the Bank, except with respect to clause
(c)) shall have the sole responsibility and authority to make the determinations
required in clauses (a), (b), (c), (d) and (e) of the first paragraph of this
Section. Neither the Issuer nor the Trustee shall have any duty or authority to
verify or determine the occurrence of any of the event
- 19 -
<PAGE>
described in said clauses, but shall rely conclusively on the Borrower's
representations and determinations with respect to such occurrences.
Section 6.3. MANDATORY REDEMPTION OF REFUNDING BONDS. If, as provided in
the Refunding Bonds and the Indenture, the Refunding Bonds become subject to
mandatory redemption as a result of a Determination of Taxability with
respect to the Series 1996 A Bonds or termination of the Letter of Credit or
any alternate Letter of Credit, the Borrower shall deliver to the Trustee,
upon the date requested by the Trustee, moneys sufficient to pay in full the
Refunding Bonds in accordance with the mandatory redemption provisions
relating thereto set forth in the Indenture.
Section 6.4. ACTIONS BY ISSUER. At the request of the Borrower or the
Trustee, the Issuer shall take all steps required of it under the applicable
provisions of the Indenture or the Bonds to effect the redemption of all or a
portion of the Bonds pursuant to this Article VI.
Section 6.5. REQUIRED DEPOSITS FOR OPTIONAL REDEMPTION. All amounts paid by
the Borrower pursuant to this article which are used to pay principal of,
premium, if any, or interest on the Bonds, or to reimburse the Bank for moneys
drawn under the Letter of Credit and used for such purposes, shall constitute
prepaid Loan Payments.
(End of Article VI)
- 20 -
<PAGE>
ARTICLE VII.
EVENTS OF DEFAULT AND REMEDIES
Section 7.1. EVENTS OF DEFAULT. Each of the following shall be an Event of
Default:
(a) The Borrower shall fail to pay when due any payment under any
Note;
(b) The Borrower shall fail to observe and perform any Agreement,
term or condition contained in this Agreement, and the continuation of such
failure for a period of 30 days after notice thereof shall have been given
to the Borrower by the Issuer or the Trustee, or for such longer period as
the Issuer and the Trustee may agree to in writing; provided, that if the
failure is other than the payment of money and is of such nature that it
can be corrected but not within the applicable period, that failure shall
not constitute an Event of Default so long as the Borrower institutes
curative action within the applicable period and diligently pursues that
action to completion within 150 days after the initial 30-day cure period;
and provided further that no such failure shall constitute an Event of
Default solely because it results in a Determination of Taxability;
(c) The Borrower shall: (i) admit in writing its inability to pay its
debts generally as they become due; (ii) have an order for relief entered
in any case commenced by or against it under the federal bankruptcy laws,
as now or hereafter in effect; (iii) commence a proceeding under any other
federal or state bankruptcy, insolvency, reorganization or similar law, or
have such a proceeding commenced against it and either have an order of
insolvency or reorganization entered against it or have the proceeding
remain undismissed and unstayed for 90 days; (iv) make an assignment for
the benefit of creditors; or (v) have a receiver or Trustee appointed for
it or for the whole or any substantial part of its property;
(d) There shall occur an "Event of Default" as defined in Section
7.01 of the Indenture.
Notwithstanding the foregoing, if, by reason of Force Majeure, the Borrower
is unable to perform or observe any Agreement, term or condition hereof
which would give rise to an Event of Default under subSection (b) hereof,
other than the payment of money, the Borrower shall not be deemed in
default during the continuance of such inability. However, the Borrower
shall promptly give notice to the Trustee and the Issuer of the existence
of an event of Force Majeure and shall use its best efforts to remove the
effects thereof; provided that the settlement of strikes or other
industrial disturbances shall be entirely within the Borrower's discretion.
The term Force Majeure shall mean, without limitation, the following:
- 21 -
<PAGE>
(i) acts of God; strikes; lockouts or other industrial disturbances;
acts of public enemies; orders or restraints of any kind of the government
of the United States of America or of the State or any of their
departments, agencies, political subdivisions or officials, or any civil or
military authority; insurrections; civil disturbances; riots; epidemics;
landslides; lightning; earthquakes; fires; hurricanes; tornados; storms;
droughts; floods; arrests; restraint of government and people; explosions;
breakage, malfunction or accident to facilities, machinery, transmission
pipes or canals; partial or entire failure of utilities; shortages of
labor, materials, supplies or transportation; or
(ii) any cause, circumstance or event not reasonably within the
control of the Borrower.
The declaration of an Event of Default under subSection (c) above, and the
exercise of remedies upon any such declaration, shall be subject to any
applicable limitations of federal bankruptcy law affecting or precluding that
declaration or exercise during the pendency of or immediately following any
bankruptcy, liquidation or reorganization proceedings.
Section 7.2. REMEDIES ON DEFAULT. Whenever an Event of Default shall have
happened and be continuing, any one or more of the following remedial steps may
be taken:
(a) If and only if acceleration of the principal amount of the Bonds
has been declared pursuant to Section 7.03 of the Indenture, the Trustee
shall declare all Loan Payments and Notes to be immediately due and
payable, whereupon the same shall become immediately due and payable;
(b) The Bank and the Trustee may have access to, inspect, examine and
make copies of the books, records, accounts and financial data of the
Borrower pertaining to the Project; and
(c) The Issuer or the Trustee may pursue all remedies now or
hereafter existing at law or in equity to collect all amounts then due and
thereafter to become due under this Agreement, the Letter of Credit or the
Notes or to enforce the performance and observance of any other obligation
or Agreement of the Borrower under those instruments.
Notwithstanding the foregoing, the Issuer shall not be obligated to take
any step which in its opinion will or might cause it to expend time or money or
otherwise incur liability unless and until a satisfactory indemnity bond has
been furnished to the Issuer at no cost or expense to the Issuer. Any amounts
collected as Loan Payments or applicable to Loan Payments and any other amounts
which would be applicable to payment of Bond Service Charges collected pursuant
to action taken under this Section shall be paid into the Bond Fund and applied
in accordance with the provisions of the Indenture or, if the outstanding Bonds
have been paid and discharged in
- 22 -
<PAGE>
accordance with the provisions of the Indenture, shall be paid as provided in
Section 5.08 of the Indenture for transfers of remaining amounts in the Bond
Fund.
The provisions of this Section are subject to the further limitation that
the rescission by the Trustee of its declaration that all of the Bonds are
immediately due and payable also shall constitute an annulment of any
corresponding declaration made pursuant to paragraph (a) of this Section and
a waiver and rescission of the consequences of that declaration and of the
Event of Default with respect to which that declaration has been made,
provided that no such waiver or rescission shall extend to or affect any
subsequent or other default or impair any right consequent thereon.
Section 7.3. NO REMEDY EXCLUSIVE. No remedy conferred upon or reserved
to the Issuer or the Trustee by this Agreement is intended to be exclusive of
any other available remedy or remedies but each and every such remedy shall
be cumulative and shall be in addition to every other remedy given under this
Agreement, the Letter of Credit or any Note, or now or hereafter existing at
law, in equity or by statute. No delay or omission to exercise any right or
power accruing upon any default shall impair that right or power or shall be
construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In
order to entitle the Issuer or the Trustee to exercise any remedy reserved to
it in this Article, it shall not be necessary to give any notice, other than
any notice required by law or for which express provision is made herein.
Section 7.4. AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES. If an Event of
Default should occur and the Issuer or the Trustee should incur expenses,
including attorneys' fees, in connection with the enforcement of this Agreement,
the Letter of Credit or any Note or the collection of sums due thereunder, the
Borrower shall reimburse the Issuer and the Trustee, as applicable, for the
reasonable expenses so incurred upon demand.
Section 7.5. NO WAIVER. No failure by the Issuer or the Trustee to
insist upon the strict performance by the Borrower of any provision hereof
shall constitute a waiver of their right to strict performance and no express
waiver shall be deemed to apply to any other existing or subsequent right to
remedy the failure by the Borrower to observe or comply with any provision
hereof.
Section 7.6. NOTICE OF DEFAULT. The Borrower and the Issuer shall notify
the Trustee and the bank immediately if it becomes aware of the occurrence of
any Event of Default hereunder or of any fact, condition or event which, with
the giving of notice or passage of time or both, would become an Event of
Default.
Section 7.7. REMEDIES SUBJECT TO BANK'S DIRECTION. Except in the case of an
Event Default pursuant to Section 7.01(g) or (h) of the Indenture, the Bank
shall have the right to direct the
- 23 -
<PAGE>
remedies to be exercised by the Trustee and the Issuer, whether under Article
VII of this Agreement or under Article VII of the Indenture.
(End of Article VII)
- 24 -
<PAGE>
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. TERM OF AGREEMENT. This Agreement shall be and remain in full
force and effect from the date of initial delivery of the Refunding Bonds until
such time as all of the Bonds shall have been fully paid (or provision made for
such payment) pursuant to the Indenture and all other sums payable by the
Borrower under this Agreement and the Notes shall have been paid, except for
obligations of the Borrower under Sections 3.4, 4.2, 5.3 and 7.4 hereof, which
shall survive any termination of this Agreement.
Section 8.2. NOTICES. All notices, certificates, requests or other
communications hereunder shall be in writing and shall be deemed to be
sufficiently given when mailed by first class mail, postage prepaid, and
addressed to the appropriate Notice Address. A duplicate copy of each notice,
certificate, request or other communication given hereunder to the Issuer, the
Borrower, the Bank, the Remarketing Agent or the Trustee shall also be given to
the others. The Borrower, the Issuer, the bank, the remarketing agent, and the
Trustee, by notice given hereunder, may designate any further or different
addresses to which subsequent notices, certificates, requests or other
communications shall be sent.
Section 8.3. EXTENT OF COVENANTS OF THE ISSUER; NO PERSONAL LIABILITY.
All covenants, obligations and Agreements of the Issuer contained in this
Agreement or the Indenture shall be effective to the extent authorized and
permitted by applicable law. No such covenant, obligation or Agreement shall
be deemed to be a covenant, obligation or Agreement of any present or future
member, officer, agent or employee of the Issuer in other than his or her
official capacity, and neither the members of the Legislative Authority of
the Issuer nor any official executing the Bonds shall be liable personally on
the bonds or be subject to any personal liability or accountability by reason
of the issuance thereof or by reason of the covenants, obligations or
Agreements of the Issuer contained in this Agreement or in the Indenture.
Section 8.4. BINDING EFFECT. This Agreement shall inure to the benefit
of and shall be binding in accordance with its terms upon the Issuer, the
Borrower and their respective successors and assigns; provided that this
Agreement may not be assigned by the Borrower (except in connection with a
sale, lease or grant of use pursuant to Section 5.2 hereof) and may not be
assigned by the Issuer except to the Trustee pursuant to the Indenture or as
otherwise may be necessary to enforce or secure payment of Bond Service
Charges. This Agreement may be enforced only by the parties, their assignees
and others who may, by law, stand in their respective places.
Section 8.5. AMENDMENTS AND SUPPLEMENTS. Except as otherwise expressly
provided in this Agreement, any note or the Indenture, subsequent to the
issuance of the Refunding Bonds and prior to all conditions provided for in the
Indenture for release of the Indenture having been met,
- 25 -
<PAGE>
this Agreement or any Note may not be effectively amended, changed, modified,
altered or terminated except in accordance with the applicable provisions of
Article XI of the Indenture.
Section 8.6. EXECUTION COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be regarded as an original and all
of which shall constitute but one and the same instrument.
Section 8.7. SEVERABILITY. If any provision of this Agreement, or any
covenant, obligation or Agreement contained herein, is determined by a court of
competent jurisdiction to be invalid or unenforceable, that determination shall
not affect any other provision, covenant, obligation or Agreement, each of which
shall be construed and enforced as if the invalid or unenforceable portion were
not contained herein. That invalidity or unenforceability shall not affect any
valid and enforceable application thereof, and each such provision, covenant,
obligation or Agreement shall be deemed to be effective, operative, made,
entered into or taken in the manner and to the full extent permitted by law.
Section 8.8. GOVERNING LAW. This Agreement shall be deemed to be a contract
made under the laws of the State and for all purposes shall be governed by and
construed in accordance with the laws of the State of Indiana.
Section 8.9. AMOUNTS REMAINING IN FUNDS. Any amounts in the Bond Fund
remaining unclaimed by the Holders of Bonds for four years after the due date
thereof (whether at stated maturity, by redemption or pursuant to any mandatory
sinking fund requirements or otherwise), shall be paid to the Borrower; provided
that if the Trustee shall have drawn on the Letter of Credit, and the bank is
owed any amount by the Borrower pursuant to the Reimbursement Agreement, such
amounts remaining in the Bond Fund shall belong and be paid first to the Bank to
the extent of such unpaid amounts. With respect to that principal of and any
premium and interest on the Bonds to be paid from moneys paid to the Borrower or
the Bank pursuant to the preceding sentence, the Holders of the Bonds entitled
to those moneys shall look solely to the Borrower for the payment of those
moneys.
Further, any amounts remaining in the Bond Fund (subject to any limitations
in the Indenture) and any other special funds or accounts (other than the
Remarketing Reimbursement Fund and the Rebate Fund) created under this Agreement
or the Indenture after all of the outstanding Bonds shall be deemed to have been
paid and discharged under the provisions of the Indenture and all other amounts
required to be paid under this Agreement, the Notes and the Indenture have been
paid, shall be paid (to the extent that those moneys are in excess of the
amounts necessary to effect the payment and discharge of the outstanding Bonds)
first, to the Bank to the extent that any amount is owed by the Borrower to the
Bank under the terms of the Letter of Credit or Reimbursement Agreement, and
then to the Borrower.
(End of Article VIII)
- 26 -
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Borrower have executed this Loan
Agreement, all as of the date first above written.
CITY OF GARY, INDIANA
By:
-----------------------------------
Scott L. King, Mayor
ATTEST:
- ------------------------------------
Katie Hall, Clerk
- 27 -
<PAGE>
THE MILLER PARTNERSHIP, L.P.
By:CenterPoint Properties Corporation,
its General Partner
By
-----------------------------------
Paul S. Fisher, Executive Vice
President
- 28 -
<PAGE>
EXHIBIT A
NOTE, SERIES 1996 A
$20,540,000 April 1, 1996
The Miller Partnership, L.P., an Illinois limited partnership (the
"Borrower"), for value received, promises to pay to Fifth Third Bank of Central
Indiana, as Trustee (the "Trustee") under the Indenture hereinafter referred to,
the principal sum of
TWENTY MILLION FIVE HUNDRED FORTY THOUSAND DOLLARS
($20,540,000)
and to pay (i) interest on the unpaid balance of such principal sum from and
after the date of this Note at the interest rate borne by the Series 1996 A
Bonds from time to time and (ii) interest on overdue principal, and to the
extent permitted by law, on overdue interest, at the interest rate provided
under the terms of the Series 1996 A Bonds.
This Note has been executed and delivered by the Borrower pursuant to a
certain Loan Agreement (the "Agreement"), dated as of March 1, 1996, between the
City of Gary, Indiana (the "Issuer") and the Borrower. Capitalized terms used
but not defined herein shall have the meanings ascribed to such terms in the
Agreement and the Indenture, as defined below.
Under the Agreement, the Issuer has loaned the Borrower the proceeds
received from the sale of the $20,540,000 aggregate principal amount of City of
Gary, Indiana Adjustable Rate Economic Development Revenue Refunding Bonds,
Series 1996 A (The Miller Partnership, L.P. Project), dated the date of their
initial delivery (the "Series 1996 A Bonds"), to be applied to the refunding of
the Series 1991 A Bonds and the Series 1993 A Bonds. The Borrower has agreed to
repay such loan by making Loan Payments at the times and in the amounts set
forth in this Note. The Series 1996 A Bonds have been issued, concurrently with
the execution and delivery of this Note, pursuant to, and are secured by, the
Trust Indenture (the "Indenture"), dated as of March 1, 1996, between the Issuer
and the Trustee.
To provide funds to pay the Bond Service Charges on the Series 1996 A Bonds
as and when due, or to reimburse the Bank for draws under the Letter of Credit
to make such payments, the Borrower hereby agrees to and shall make Loan
Payments as follows: on each Interest Payment Date the amount equal to interest
due on the Series 1996 A Bonds on such Interest Payment Date, and on any date
upon which principal of the Series 1996 A Bonds is due, the amount equal to the
principal due and payable on the Series 1996 A Bonds on such date and on any
redemption date, the amount equal to the principal due and payable on the Series
1996 A Bonds pursuant to any mandatory redemption of the Series 1996 A Bonds
(each such day being
A-1
<PAGE>
a "Loan Payment Date"). In addition, to provide funds to pay the Bond Service
Charges on the Series 1996 A Bonds as and when due at any other time, the
Borrower hereby agrees to and shall make Loan Payments on any other date on
which any Bond Service Charges on the Series 1996 A Bonds shall be due and
payable, whether at maturity, upon acceleration, call for redemption, tender for
purchase or otherwise.
If payment or provision for payment in accordance with the Indenture is
made in respect of the Bond Service Charges on the Series 1996 A Bonds from
moneys other than Loan Payments, this Note shall be deemed paid to the extent
such payments or provision for payment of Bond Service Charges has been made.
The Borrower shall receive a credit against its obligation to make Loan Payments
hereunder to the extent of the moneys delivered to the Trustee under and
pursuant to the Letter of Credit and any other amounts on deposit in the Bond
Fund and available to pay Bond Service Charges on the Series 1996 A Bonds
pursuant to the Indenture. Subject to the foregoing, all Loan Payments shall be
in the full amount required hereunder.
All Loan Payments shall be payable in immediately available funds and shall
be made to the Trustee at its corporate trust office in Indianapolis, Indiana
for the account of the Issuer, deposited in the Bond Fund and used as provided
in the Indenture.
The obligation of the Borrower to make the payments required hereunder
shall be absolute and unconditional and the Borrower shall make such payments
without abatement, diminution or deduction regardless of any cause or
circumstances whatsoever including, without limitation, any defense, set-off,
recoupment or counterclaim which the Borrower may have or assert against the
Issuer, the Trustee, the Remarketing Agent, the Bank or any other person.
This Note is subject to optional, extraordinary optional and mandatory
prepayment, in whole or in part upon the same terms and conditions, on the same
dates and at the same prepayment prices, as the Series 1996 A Bonds are subject
to optional, extraordinary optional and mandatory redemption. Any optional,
extraordinary optional and mandatory prepayment is also subject to satisfaction
of any applicable notice, deposit or other requirements set forth in the
Agreement or the Indenture.
Whenever an Event of Default under Section 7.01 of the Indenture shall have
occurred and, as a result thereof, the principal of and any premium on all
Series 1996 A Bonds then outstanding, and interest accrued thereon shall have
been declared to be immediately due and payable pursuant to Section 7.03 of the
Indenture, the unpaid principal amount of and any premium and accrued interest
on this Note also shall be due and payable on the date on which the principal of
and premium and interest on the Series 1996 A Bonds have been declared due and
payable; provided that the annulment of a declaration of acceleration of the
Series 1996 A Bonds shall also constitute an annulment of any corresponding
declaration with respect to this Note.
A-2
<PAGE>
IN WITNESS WHEREOF, the Borrower has signed this Note on April 1, 1996.
THE MILLER PARTNERSHIP, L.P.
By
-------------------------------------
A-3
<PAGE>
NOTE, SERIES 1996 B
$1,680,000 April 1, 1996
The Miller Partnership, L.P., an Illinois limited partnership (the
"Borrower"), for value received, promises to pay to Fifth Third Bank of Central
Indiana, as Trustee (the "Trustee") under the Indenture hereinafter referred to,
the principal sum of
ONE MILLION SIX HUNDRED EIGHTY THOUSAND DOLLARS
($1,680,000)
and to pay (i) interest on the unpaid balance of such principal sum from and
after the date of this Note at the interest rate borne by the Series 1996 B
Bonds from time to time and (ii) interest on overdue principal, and to the
extent permitted by law, on overdue interest, at the interest rate provided
under the terms of the Series 1996 B Bonds.
This Note has been executed and delivered by the Borrower pursuant to a
certain Loan Agreement (the "Agreement"), dated as of March 1, 1996, between the
City of Gary, Indiana (the "Issuer") and the Borrower. Capitalized terms used
but not defined herein shall have the meanings ascribed to such terms in the
Agreement and the Indenture, as defined below.
Under the Agreement, the Issuer has loaned the Borrower the proceeds
received from the sale of the $1,680,000 aggregate principal amount of City of
Gary, Indiana Taxable Adjustable Rate Economic Development Revenue Refunding
Bonds, Series 1996 B (The Miller Partnership, L.P. Project), dated the date of
their initial delivery (the "Series 1996 B Bonds"), to be applied to the
refunding of the Series 1991 B Bonds and the Series 1993 B Bonds. The Borrower
has agreed to repay such loan by making Loan Payments at the times and in the
amounts set forth in this Note. The Series 1996 B Bonds have been issued,
concurrently with the execution and delivery of this Note, pursuant to, and are
secured by, the Trust Indenture (the "Indenture"), dated as of March 1, 1996,
between the Issuer and the Trustee.
To provide funds to pay the Bond Service Charges on the Series 1996 B Bonds
as and when due, or to reimburse the Bank for draws under the Letter of Credit
to make such payments, the Borrower hereby agrees to and shall make Loan
Payments as follows: on each Interest Payment Date the amount equal to interest
due on the Series 1996 B Bonds on such Interest Payment Date, and on any date
upon which principal of the Series 1996 B Bonds is due, the amount equal to the
principal due and payable on the Series 1996 B Bonds on such date and on any
redemption date, the amount equal to the principal due and payable on the Series
1996 B Bonds pursuant to any mandatory redemption of the Series 1996 B Bonds
(each such day being a "Loan Payment Date"). In addition, to provide funds to
pay the Bond Service Charges on the Series 1996 B Bonds as and when due at any
other time, the Borrower hereby agrees
A-4
<PAGE>
to and shall make Loan Payments on any other date on which any Bond Service
Charges on the Series 1996 B Bonds shall be due and payable, whether at
maturity, upon acceleration, call for redemption, tender for purchase or
otherwise.
If payment or provision for payment in accordance with the Indenture is
made in respect of the Bond Service Charges on the Series 1996 B Bonds from
moneys other than Loan Payments, this Note shall be deemed paid to the extent
such payments or provision for payment of Bond Service Charges has been made.
The Borrower shall receive a credit against its obligation to make Loan Payments
hereunder to the extent of the moneys delivered to the Trustee under and
pursuant to the Letter of Credit and any other amounts on deposit in the Bond
Fund and available to pay Bond Service Charges on the Series 1996 B Bonds
pursuant to the Indenture. Subject to the foregoing, all Loan Payments shall be
in the full amount required hereunder.
All Loan Payments shall be payable in immediately available funds and shall
be made to the Trustee at its corporate trust office in Indianapolis, Indiana
for the account of the Issuer, deposited in the Bond Fund and used as provided
in the Indenture.
The obligation of the Borrower to make the payments required hereunder
shall be absolute and unconditional and the Borrower shall make such payments
without abatement, diminution or deduction regardless of any cause or
circumstances whatsoever including, without limitation, any defense, set-off,
recoupment or counterclaim which the Borrower may have or assert against the
Issuer, the Trustee, the Remarketing Agent, the Bank or any other person.
This Note is subject to optional, extraordinary optional and mandatory
prepayment, in whole or in part upon the same terms and conditions, on the same
dates and at the same prepayment prices, as the Series 1996 B Bonds are subject
to optional, extraordinary optional and mandatory redemption. Any optional,
extraordinary optional and mandatory prepayment is also subject to satisfaction
of any applicable notice, deposit or other requirements set forth in the
Agreement or the Indenture.
Whenever an Event of Default under Section 7.01 of the Indenture shall have
occurred and, as a result thereof, the principal of and any premium on all
Series 1996 B Bonds then outstanding, and interest accrued thereon shall have
been declared to be immediately due and payable pursuant to Section 7.03 of the
Indenture, the unpaid principal amount of and any premium and accrued interest
on this Note also shall be due and payable on the date on which the principal of
and premium and interest on the Series 1996 B Bonds have been declared due and
payable; provided that the annulment of a declaration of acceleration of the
Series 1996 B Bonds shall also constitute an annulment of any corresponding
declaration with respect to this Note.
A-5
<PAGE>
IN WITNESS WHEREOF, the Borrower has signed this Note on April 1, 1996.
THE MILLER PARTNERSHIP, L.P.
By
-------------------------------------
A-6
<PAGE>
EXHIBIT B
The Project
The Project consists of the 14-building, 682 unit multi-family housing
project, located at 415 North Lake Street, in the City of Gary, Indiana.
B-1
<PAGE>
TRUST INDENTURE
between
CITY OF GARY, INDIANA
and
FIFTH THIRD BANK OF CENTRAL INDIANA
as Trustee
------------------------------
Securing:
$20,540,000
CITY OF GARY, INDIANA
ADJUSTABLE RATE ECONOMIC
DEVELOPMENT REVENUE REFUNDING BONDS,
SERIES 1996 A
(THE MILLER PARTNERSHIP, L.P. PROJECT)
AND
$1,680,000
CITY OF GARY, INDIANA
TAXABLE ADJUSTABLE RATE ECONOMIC
DEVELOPMENT REVENUE REFUNDING BONDS,
SERIES 1996 B
(THE MILLER PARTNERSHIP, L.P. PROJECT)
Dated as of March 1, 1996
------------------------------------------
------------------------------------------
Ice Miller Donadio & Ryan
Bond Counsel
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.02. Interpretation . . . . . . . . . . . . . . . . . . . . . . .18
Section 1.03. Captions and Headings. . . . . . . . . . . . . . . . . . . .19
ARTICLE II AUTHORIZATION AND TERMS OF REFUNDING
BONDS; ADDITIONAL BONDS. . . . . . . . . . . . . . . . . .20
Section 2.01. Authorized Amount of Bonds . . . . . . . . . . . . . . . . .20
Section 2.02. Issuance of Refunding Bonds. . . . . . . . . . . . . . . . .20
Section 2.03. Maturity and Interest. . . . . . . . . . . . . . . . . . . .21
Section 2.04. Tender Options . . . . . . . . . . . . . . . . . . . . . . .24
Section 2.05. Mandatory Tender Upon Conversion to a New Interest
Rate Mode . . . . . . . . . . . . . . . . . . . . . . . . .26
Section 2.06. Mandatory Tender Upon Delivery of an Alternate Letter
of Credit . . . . . . . . . . . . . . . . . . . . . . . . .27
Section 2.07. Delivery of the Refunding Bonds. . . . . . . . . . . . . . .28
Section 2.08. Issuance and Delivery of Additional Bonds. . . . . . . . . .29
ARTICLE III TERMS OF BONDS GENERALLY . . . . . . . . . . . . . . . . . .31
Section 3.01. Form of Bonds. . . . . . . . . . . . . . . . . . . . . . . .31
Section 3.02. Variable Terms . . . . . . . . . . . . . . . . . . . . . . .31
Section 3.03. Execution and Authentication of Bonds. . . . . . . . . . . .32
Section 3.04. Source of Payment of Bonds . . . . . . . . . . . . . . . . .32
Section 3.05. Payment and Ownership of Bonds . . . . . . . . . . . . . . .32
Section 3.06. Transfer and Exchange of Bonds . . . . . . . . . . . . . . .33
Section 3.07. Mutilated, Lost, Wrongfully Taken or Destroyed Bonds . . . .35
Section 3.08. Cancellation of Bonds. . . . . . . . . . . . . . . . . . . .35
ARTICLE IV REDEMPTION OF BONDS. . . . . . . . . . . . . . . . . . . . .37
Section 4.01. Terms of Redemption of Refunding Bonds . . . . . . . . . . .37
Section 4.02. Partial Redemption . . . . . . . . . . . . . . . . . . . . .38
Section 4.03. Issuer's Election to Redeem. . . . . . . . . . . . . . . . .39
Section 4.04. Notice of Redemption . . . . . . . . . . . . . . . . . . . .39
Section 4.05. Payment of Redeemed Bonds. . . . . . . . . . . . . . . . . .41
Section 4.06. Variation of Redemption Provisions . . . . . . . . . . . . .42
- i -
<PAGE>
ARTICLE V PROVISIONS AS TO FUNDS, PAYMENTS, PROJECT
AND AGREEMENT. . . . . . . . . . . . . . . . . . . . . . .43
Section 5.01. Creation of Refunding Fund . . . . . . . . . . . . . . . . .43
Section 5.02. Disbursements From and Records of Refunding Fund . . . . . .43
Section 5.03. Creation of Bond Fund; Letter of Credit. . . . . . . . . . .44
Section 5.04. Creation of Remarketing Reimbursement Fund . . . . . . . . .47
Section 5.05. Investment of Bond Fund, Refunding Fund, Rebate Fund
and Remarketing Reimbursement Fund . . . . . . . . . . . .47
Section 5.06. Moneys to be Held in Trust . . . . . . . . . . . . . . . . .48
Section 5.07. Nonpresentment of Bonds. . . . . . . . . . . . . . . . . . .48
Section 5.08. Repayment to the Bank or the Borrower from the Bond Fund . .48
Section 5.09. Extension of Letter of Credit; Alternate Letter of Credit. .49
Section 5.10. Compliance with Section 148 of the Code. . . . . . . . . . .50
Section 5.11. Rebate Fund. . . . . . . . . . . . . . . . . . . . . . . . .50
ARTICLE VI THE TRUSTEE, REGISTRAR, PAYING AGENTS AUTHENTICATING
AGENTS AND REMARKETING AGENT . . . . . . . . . . . . . . .52
Section 6.01. Trustee's Acceptance and Responsibilities. . . . . . . . . .52
Section 6.02. Certain Rights and Obligations of the Trustee. . . . . . . .53
Section 6.03. Fees, Charges and Expenses of Trustee, Registrar,
Paying Agents and Authenticating Agents. . . . . . . . . .56
Section 6.04. Intervention by Trustee. . . . . . . . . . . . . . . . . . .57
Section 6.05. Successor Trustee. . . . . . . . . . . . . . . . . . . . . .57
Section 6.06. Appointment of Co-Trustee. . . . . . . . . . . . . . . . . .57
Section 6.07. Resignation by the Trustee . . . . . . . . . . . . . . . . .58
Section 6.08. Removal of the Trustee . . . . . . . . . . . . . . . . . . .58
Section 6.09. Appointment of Successor Trustee . . . . . . . . . . . . . .58
Section 6.10. Adoption of Authentication . . . . . . . . . . . . . . . . .60
Section 6.11. Registrars . . . . . . . . . . . . . . . . . . . . . . . . .60
Section 6.12. Designation and Succession of Paying Agents. . . . . . . . .61
Section 6.13. Designation and Succession of Authenticating Agents. . . . .62
Section 6.14. Dealing in Bonds . . . . . . . . . . . . . . . . . . . . . .63
Section 6.15. Representations, Agreements and Covenants of Trustee . . . .63
Section 6.16. [RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . .63
Section 6.17. Concerning the Remarketing Agent . . . . . . . . . . . . . .63
Section 6.18. Qualifications of Remarketing Agent. . . . . . . . . . . . .64
Section 6.19. Remarketing of Refunding Bonds . . . . . . . . . . . . . . .65
Section 6.20. Delivery of Purchased Refunding Bonds and Remarketing
of Pledged Bonds . . . . . . . . . . . . . . . . . . . . . .66
- ii -
<PAGE>
ARTICLE VII DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE
AND HOLDERS. . . . . . . . . . . . . . . . . . . . . . . . .69
Section 7.01. Defaults; Events of Default. . . . . . . . . . . . . . . . .69
Section 7.02. Notice of Default. . . . . . . . . . . . . . . . . . . . . .70
Section 7.03. Acceleration . . . . . . . . . . . . . . . . . . . . . . . .70
Section 7.04. Other Remedies; Rights of Holders. . . . . . . . . . . . . .71
Section 7.05. Right of Holders to Direct Proceedings . . . . . . . . . . .72
Section 7.06. Application of Moneys. . . . . . . . . . . . . . . . . . . .72
Section 7.07. Remedies Vested in Trustee . . . . . . . . . . . . . . . . .74
Section 7.08. Rights and Remedies of Holders . . . . . . . . . . . . . . .74
Section 7.09. Termination of Proceedings . . . . . . . . . . . . . . . . .75
Section 7.10. Waivers of Events of Default . . . . . . . . . . . . . . . .75
ARTICLE VIII SUPPLEMENTAL INDENTURES. . . . . . . . . . . . . . . . . . .76
Section 8.01. Supplemental Indentures Generally. . . . . . . . . . . . . .76
Section 8.02. Supplemental Indentures Not Requiring Consent of Holders . .76
Section 8.03. Supplemental Indentures Requiring Consent of Holders . . . .77
Section 8.04. Acceptance of Supplemental Credit Facility . . . . . . . . .79
Section 8.05. Consent of Borrower and Bank . . . . . . . . . . . . . . . .79
Section 8.06. Authorization to Trustee; Effect of Supplement . . . . . . .80
Section 8.07. Opinion of Counsel . . . . . . . . . . . . . . . . . . . . .80
Section 8.08. Modification by Unanimous Consent. . . . . . . . . . . . . .80
ARTICLE IX DEFEASANCE . . . . . . . . . . . . . . . . . . . . . . . . .82
Section 9.01. Release of Indenture . . . . . . . . . . . . . . . . . . . .82
Section 9.02. Payment and Discharge of Bonds . . . . . . . . . . . . . . .82
Section 9.03. Survival of Certain Provisions . . . . . . . . . . . . . . .83
ARTICLE X COVENANTS AND AGREEMENTS OF THE ISSUER . . . . . . . . . . .85
Section 10.01. Covenants and Agreements of the Issuer . . . . . . . . . . .85
Section 10.02. Observance and Performance of Covenants, Agreements,
Authority and Actions. . . . . . . . . . . . . . . . . . .86
ARTICLE XI AMENDMENTS TO THE AGREEMENT, THE NOTE AND THE
LETTER OF CREDIT . . . . . . . . . . . . . . . . . . . . .88
Section 11.01. Amendments Not Requiring Consent of Holders. . . . . . . . .88
Section 11.02. Amendments Requiring Consent of Holders. . . . . . . . . . .88
- iii -
<PAGE>
ARTICLE XII MEETINGS OF HOLDERS. . . . . . . . . . . . . . . . . . . . .90
Section 12.01. Purposes of Meetings . . . . . . . . . . . . . . . . . . . .90
Section 12.02. Call of Meetings . . . . . . . . . . . . . . . . . . . . . .90
Section 12.03. Voting . . . . . . . . . . . . . . . . . . . . . . . . . . .90
Section 12.04. Meetings . . . . . . . . . . . . . . . . . . . . . . . . . .91
Section 12.05. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . .91
ARTICLE XIII MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . .92
Section 13.01. Limitation of Rights . . . . . . . . . . . . . . . . . . . .92
Section 13.02. Severability . . . . . . . . . . . . . . . . . . . . . . . .92
Section 13.03. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . .92
Section 13.04. Suspension of Mail . . . . . . . . . . . . . . . . . . . . .94
Section 13.05. Payments Due on Saturdays, Sundays and Holidays. . . . . . .94
Section 13.06. Instruments of Holders . . . . . . . . . . . . . . . . . . .94
Section 13.07. Priority of this Indenture . . . . . . . . . . . . . . . . .95
Section 13.08. Extent of Covenants; No Personal Liability . . . . . . . . .95
Section 13.09. Rating Categories. . . . . . . . . . . . . . . . . . . . . .95
Section 13.10. Binding Effect . . . . . . . . . . . . . . . . . . . . . . .95
Section 13.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . . .96
Section 13.12. Governing Law. . . . . . . . . . . . . . . . . . . . . . . .96
- iv -
<PAGE>
TRUST INDENTURE
THIS TRUST INDENTURE (the "Indenture") dated as of March 1, 1996 by and
between the City of Gary, Indiana, a municipal corporation and political
subdivision existing under the laws of the State of Indiana (the "Issuer"), and
Fifth Third Bank of Central Indiana, a state banking association organized and
existing under the laws of the United States of America and duly authorized to
exercise corporate trust powers, as trustee (the "Trustee"), under the
circumstances summarized in the following recitals (the capitalized terms not
defined in the recitals and granting clauses being used therein as defined in
Article I hereof):
A. By virtue of the authority of the laws of the State of Indiana, and
particularly the Indiana Constitution and Title 36, Article 7, Chapters 11.9 and
12, and Title 5, Article 1, Chapter 5 of the Indiana Code, as supplemented and
amended (collectively, the "Act") and pursuant to the Bond Legislation referred
to below, the Issuer is authorized to enter into this Indenture and to do or
cause to be done all the acts and things herein provided or required to be done,
to issue the Refunding Bonds, and to use the proceeds of the Refunding Bonds to
make a loan that will provide moneys to assist in financing the refunding of the
Prior Bonds, the proceeds of which were used to finance the costs of the
Project, which Project creates or preserves jobs and employment opportunities
and improves the economic welfare of the people of the State of Indiana and the
costs of issuance of the Prior Bonds;
B. The Issuer has determined to issue and sell the Refunding Bonds in the
aggregate principal amount of $22,220,000 for the purpose described above and to
enter into this Indenture and secure the Bonds by the pledge and assignment of
the Revenues;
C. All acts and conditions required to happen, exist and be performed
precedent to and in the issuance of the Refunding Bonds and the execution and
delivery of this Indenture have happened, exist and have been performed, or at
the delivery of the Refunding Bonds will exist, will have happened and will have
been performed (i) to make the Refunding Bonds, when issued, delivered and
authenticated, valid obligations of the Issuer in accordance with the terms
hereof and (ii) to make this Indenture a valid, binding and legal trust
agreement for the security of the Bonds in accordance with its terms; and
D. The Trustee has accepted the trusts created by this Indenture, and in
evidence thereof has joined in the execution hereof;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that to secure the payment of
Bond Service Charges on the Bonds according to their true intent and meaning, to
secure the performance and observance of all of the covenants, agreements,
obligations and conditions contained therein and herein, and to declare the
terms and conditions upon and subject to which the Bonds are and are intended to
be issued, held, secured and enforced, and in consideration of the premises and
the acceptance by the Trustee of the trusts created herein and of the purchase
and
<PAGE>
acceptance of the Refunding Bonds by the Holders, and for other good and
valuable consideration, the receipt of which is acknowledged, the Issuer has
executed and delivered this Indenture and absolutely assigns hereby to the
Trustee, and to its successors in trust, and its and their assigns, all right,
title and interest of the Issuer in and to (i) the Revenues, including, without
limitation, all Loan Payments and other amounts receivable by or on behalf of
the Issuer under the Agreement in respect of repayment of the Loan; (ii) the
Agreement, except for the Unassigned Issuer's Rights; and (iii) the Notes.
TO HAVE AND TO HOLD unto the Trustee and its successors in trust and its
and their assigns forever.
BUT IN TRUST, NEVERTHELESS, and subject to the provisions hereof,
(a) except as provided otherwise herein, for the equal and proportionate
benefit, security and protection of all present and future Holders of the Bonds
issued or to be issued under and secured by this Indenture,
(b) for the enforcement of the payment of the principal of and interest
and any premium on the Bonds, when payable, according to the true intent and
meaning thereof and of this Indenture, and
(c) to secure the performance and observance of and compliance with the
covenants, agreements, obligations, terms and conditions of this Indenture;
in each case, without preference, priority or distinction, as to lien or
otherwise, of any one Bond over any other by reason of designation, number, date
of the Bonds or of authorization, issuance, sale, execution, authentication,
delivery or maturity thereof, or otherwise, so that each Bond and all Bonds
shall have the same right, lien and privilege under this Indenture and shall be
secured equally and ratably hereby, it being intended that the lien and security
of this Indenture shall take effect from the date hereof, without regard to the
date of the actual issue, sale or disposition of the Bonds, as though upon that
date all of the Bonds were actually issued, sold and delivered to purchasers for
value; provided, however, that moneys drawn under the Letter of Credit shall be
applied only to the payment of the principal of and interest on the Refunding
Bonds or the purchase price of Refunding Bonds or Beneficial Ownership
Interests; and provided further however, that
(i) if the principal of the Bonds and the interest due or to become
due thereon together with any premium required by redemption of any of the
Bonds prior to maturity shall be well and truly paid, at the times and in
the manner to which reference is made in the Bonds, according to the true
intent and meaning thereof, or the outstanding Bonds shall have been paid
and discharged in accordance with Article IX hereof, and
- 2 -
<PAGE>
(ii) if all of the covenants, agreements, obligations, terms and
conditions of the Issuer under this Indenture shall have been kept,
performed and observed and there shall have been paid (or provided for) to
the Trustee, the Bank, the Registrar, the Paying Agents and the
Authenticating Agents all sums of money due or to become due to them in
accordance with the terms and provisions hereof,
this Indenture and the rights assigned hereby shall cease, determine and be
void, except as provided in Section 9.03 hereof with respect to the survival of
certain provisions hereof; otherwise, this Indenture shall be and remain in full
force and effect.
It is declared that all Bonds issued hereunder and secured hereby are to be
issued, authenticated and delivered, and that all Revenues assigned hereby are
to be dealt with and disposed of under, upon and subject to, the terms,
conditions, stipulations, covenants, agreements, obligations, trusts, uses and
purposes provided in this Indenture. The Issuer has agreed and covenanted, and
agrees and covenants with the Trustee and with each and all Holders, as follows:
- 3 -
<PAGE>
ARTICLE I.
DEFINITIONS
DEFINITIONS. In addition to the words and terms defined elsewhere in this
Indenture, the words and terms defined in this Section shall have the meanings
herein specified unless the context or use clearly indicates another or
different meaning or intent. Those words and terms not expressly defined herein
and used herein with initial capitalization where rules of grammar do not
otherwise require capitalization, or which are otherwise defined terms under the
Agreement, as hereinafter defined, shall have the meanings assigned to them in
the Agreement.
"Act" means, collectively, Title 36, Article 7, Chapters 11.9 and 12 and
Title 5, Article 1, Chapter 5 of the Indiana Code, as supplemented and amended.
"Additional Bonds" means Bonds which may be issued under Section 2.08 of
this Indenture.
"Additional Notes" means any non-negotiable promissory note or notes, in
addition to the Refunding Notes, delivered by the Borrower to the Trustee in
connection with the issuance of Additional Bonds, as provided in the Agreement.
"Adjustable Rate" means any interest rate to be borne on the Refunding
Bonds other than the Fixed Interest Rate.
"Agreement" means the Loan Agreement dated as of even date with this
Indenture, between the Issuer and the Borrower, as amended or supplemented from
time to time.
"Alternate Letter of Credit" means an irrevocable letter of credit
authorizing drawings thereunder by the Trustee issued by a bank, a trust company
or other financial institution and meeting the requirements of Section 5.09
hereof.
"Authenticating Agent" means the Registrar for the Bonds and any bank,
trust company or other Person designated as an Authenticating Agent for the
Bonds by or in accordance with Section 6.13 of this Indenture, each of which
shall be a transfer agent registered in accordance with Section 17(A) of the
Securities Exchange Act of 1934, as amended.
"Authorized Borrower Representative" means (i) the President or any Vice
President of the general partner of the Borrower or (ii) any other the person
designated at the time pursuant to the Agreement to act on behalf of the
Borrower by written instrument furnished to the Issuer and the Trustee,
containing the specimen signature of such person and signed by any officer of
the Borrower. Such instrument may designate an alternate or alternates.
- 4 -
<PAGE>
"Bank" means The Royal Bank of Scotland plc, acting through its New York
Branch, and its successors and assigns. Upon issuance and effectiveness of any
Alternate Letter of Credit, "Bank" shall mean the issuer thereof and its
successors and assigns.
"Beneficial Owner" means with respect to a Refunding Bond, a Person owning
the Beneficial Ownership Interest therein, as evidenced to the satisfaction of
the Trustee.
"Beneficial Ownership Interest" means the right to receive payments and
notices with respect to the Refunding Bonds which are held by the Depository
under a book entry system.
"Bond Counsel" means an attorney-at-law or firm of attorneys (other than an
employee of the Borrower but including any law firm serving as counsel to the
Borrower) satisfactory to the Trustee and the Bank and nationally recognized as
experienced in matters relating to the tax exemption of interest on bonds of
states and political subdivisions.
"Bond Fund" means the Bond Fund created in Section 5.03 hereof.
"Bond Purchase Agreement" means, as to the Refunding Bonds, the Bond
Purchase Agreement dated as of or after the date hereof but on or prior to the
date of initial delivery of the Refunding Bonds, among the Issuer, the
Underwriter and the Borrower and, as to any Additional Bonds, the bond placement
agreement provided for in the Bond Legislation providing for the issuance of the
Additional Bonds.
"Bond Purchase Date" means any Bond Purchase Date as defined and provided
for in Section 2.04, 2.05 or 2.06 hereof.
"Bond Legislation" or "Bond Ordinance" means (a) when used with reference
to the Refunding Bonds, the ordinance providing for their issuance and approving
the Agreement, this Indenture, the Bond Purchase Agreement and related matters;
(b) when used with reference to an issue of Additional Bonds, the ordinance
providing for the issuance of the Refunding Bonds, to the extent applicable, and
the legislation providing for the issuance of the Additional Bonds and approving
any amendment or supplement to the Agreement, any Supplemental Indenture and
related matters; and (c) when used with reference to Bonds when Additional Bonds
are outstanding, the ordinance providing for the issuance of the Refunding Bonds
and the ordinance providing for the issuance of the then outstanding and the
then to be issued Additional Bonds; in each case as amended or supplemented from
time to time. The Bond Legislation is incorporated herein by reference.
"Bond Service Charges" means, for any series of Bonds, the principal of,
premium, if any, and interest on such Bonds for any period or payable at any
time, whether due on an Interest Payment Date, at maturity or upon acceleration,
redemption or upon tender for purchase.
"Bonds" means the Refunding Bonds and any Additional Bonds.
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"Book entry form" or "Book entry system" means, with respect to the
Refunding Bonds, a form or system, as applicable, under which (i) the Beneficial
Ownership Interests may be transferred only through a book entry and (ii)
physical Refunding Bond certificates in fully registered form are registered
only in the name of a Depository or its nominee as Holder, with the physical
Refunding Bond certificates "immobilized" in the custody of the Depository. The
book entry system maintained by and the responsibility of the Depository and not
maintained by or the responsibility of the Issuer or the Trustee is the record
that identifies, and records the transfer of the interests of, the owners of
book entry interests in the Refunding Bonds.
"Borrower" means The Miller Partnership, L.P., an Illinois limited
partnership, and its successors and assigns.
"Business Day" means a day of the year, other than a Saturday or Sunday, on
which commercial banks located in the city or cities in which the principal
corporate trust office of the Paying Agent, the principal corporate trust office
of the Registrar, the principal office of the Remarketing Agent, and the
principal office of the Bank are located, are not required or authorized to
remain closed and on which The New York Stock Exchange is not closed.
"CenterPoint" means CenterPoint Properties Corporation, a Maryland
corporation.
"Closing Date" means, with respect to the Refunding Bonds, the date of
delivery of and payment for the Refunding Bonds.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time. Reference to the Code and Sections of the Code include relevant
applicable regulations and proposed regulations thereunder (and under the
related provisions of the Internal Revenue Code of 1954, as amended) and any
successor provisions to those Sections, regulations or proposed regulations.
"Depository" means any securities depository that is a clearing agency
under federal law operating and maintaining, with its participants or otherwise,
a book entry system to record ownership of book entry interests in bonds, and to
effect transfers of book entry interests in bonds in book entry form, and
includes and means initially The Depository Trust Company (a limited purpose
trust company), New York, New York.
"Determination of Taxability" means and shall occur when, (i) the Trustee
receives written notice from the Borrower, supported by an opinion of Bond
Counsel, that interest on the Series 1996 A Bonds is includable in the gross
income of Holders of the Series 1996 A Bonds for federal income tax purposes or
(ii) the Internal Revenue Service shall claim in writing that interest on the
Series 1996 A Bonds is includable in the gross income of Holders of the Series
1996 A Bonds for federal income tax purposes; provided, that such a claim shall
not be deemed a Determination of Taxability unless the Borrower is afforded
reasonable opportunity (at the Borrower's sole expense
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and for a period not to exceed 2 years) to pursue any judicial or administrative
remedy available to the Borrower with respect to such claim.
"Direct Participant" means a Participant as defined in the Letter of
Representations.
"Eligible Funds" means amounts on deposit in the Bond Fund (other than
funds derived from a draw on the Letter of Credit) for a continuous period of
(i) 91 consecutive days or (ii) such shorter period if an opinion of counsel
acceptable to the Bank and the Trustee is delivered to the Issuer, the Bank and
the Trustee stating that such shorter period will not result in voidable
preferences, during which period there shall not have occurred the filing of a
voluntary or involuntary petition in bankruptcy under the United States
Bankruptcy Code, 11 U.S.C. Sections 101 ET. SEQ., or the commencement of a
proceeding under any other applicable laws concerning insolvency, reorganization
or bankruptcy, by or against the Borrower or the Issuer.
"Eligible Investments" means:
(i) Government Obligations;
(ii) Federal Home Loan Mortgage Corporation (FHLMC) and Farm Credit
Banks (Federal Land Banks, Federal Intermediate Credit Banks and Banks for
Cooperatives) participation certificates and senior debt obligations which
bear interest at a fixed rate and are fully amortizing;
(iii) Federal National Mortgage Association's (FNMA) mortgage backed
securities and senior debt obligations which bear interest at a fixed rate
and are fully amortizing;
(iv) Student Loan Marketing Association (Sallie Mae) letter of
credit backed issues and senior debt obligations;
(v) Federal funds, certificates of deposits, time deposits and
bankers' acceptances (having original maturities of not more than 365 days)
of any bank (including the Trustee and any of its affiliates) the
unsecured, uninsured and unguaranteed debt obligations of which (or, in the
case of a bank subsidiary in a bank holding company, debt obligations of
the bank holding company) are at all times rated at least "AA" or "A-1" or
its equivalent by either Rating Service;
(vi) commercial paper (having original maturities of not more than
270 days) rated at least "A-1" or its equivalent by either Rating Service;
(vii) obligations rated at least "AA" or "A-1" or its equivalent by
either Rating Service, or unrated general obligations of any Person which
has outstanding other
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unsecured, uninsured and unguaranteed obligations which are so rated by
either Rating Service;
(viii) repurchase agreements with any institution the unsecured,
uninsured and unguaranteed debt obligations of which (or, in the case of a
bank subsidiary in a bank holding company, debt obligations of the bank
holding company) are rated at least "AA" or its equivalent by either Rating
Service;
(ix) tax-exempt obligations of any state of the United States of
America or any political subdivision or other instrumentality of any such
state and such obligations are rated in either of the two highest rating
categories (i.e., "AA" or higher) of either Rating Service and are not
"specified private activity bonds" as defined in Section 57(a)(5)(C) of the
Code;
(x) tax-exempt money market funds (including those of the Trustee
or any of its affiliates) which are "qualified regulated investment
companies" within the meaning of IRS Notice 87-22, dated October 25, 1987,
and which meet the other requirements of IRS Notice 87-22 and any
subsequent regulation necessary to exempt investments in such funds from
the definition of "investment property" under Section 148 of the Code whose
assets are solely invested in obligations rated in either of the two
highest rating categories by either Rating Service;
(xi) money market funds (including those of the Trustee or any of
its affiliates) the assets of which are obligations of or guaranteed by the
United States of America and which funds are rated "Am" or "Am-G" or higher
by S&P; and
(xii) obligations approved in writing by the Bank;
provided, however, that "Eligible Investments" with respect to any proceeds
resulting from a draw under the Letter of Credit shall mean only Government
Obligations maturing as needed to pay principal of and interest on the Bonds on
a timely basis, and in no event more than thirty days after purchase. In
addition, moneys in the Remarketing Reimbursement Fund may be invested only in
Government Obligations which mature no later than the Bond Purchase Date next
following the date of such investment.
"Event of Default" means an Event of Default hereunder as described in
Section 7.01 hereof.
"Executive" means the Mayor of the Issuer or in his or her absence any
official or member thereof.
"Extraordinary Services" and "Extraordinary Expenses" means all services
rendered and all reasonable expenses properly incurred by the Trustee, Paying
Agent, Authenticating Agents
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and Registrar under this Indenture, other than Ordinary Services and Ordinary
Expenses. Extraordinary Services and Extraordinary Expenses shall specifically
include services rendered or expenses incurred by the Trustee in connection
with, or in contemplation of, an Event of Default.
"First Optional Redemption Date" means the earlier to occur of the April 1
occurring in the year which is (i) at least ten (10) full years after the Fixed
Interest Rate Commencement Date or (ii) a number of years after the Fixed
Interest Rate Commencement Date equal to the number of full years between the
Fixed Interest Rate Commencement Date and the maturity date of the Refunding
Bonds, multiplied by 1/2 and rounded up to the nearest whole number.
"Fiscal Officer" means the Clerk of the Issuer.
"Five Year Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary, during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date and ending on the March 31 or September
30 nearest to but not later than the date which is five years from the Interest
Rate Adjustment Date, in the judgment of the Remarketing Agent (taking into
consideration current transactions and comparable securities with which the
Remarketing Agent is involved or of which it is aware and prevailing financial
market conditions) to produce as nearly as practical a par bid for the Refunding
Bonds on the Interest Rate Determination Date or (b) in the event that the
Remarketing Agent has been removed or has resigned and no successor has been
appointed or the Remarketing Agent has failed to determine the Five Year
Interest Rate for whatever reason, or the Five Year Interest Rate cannot be
determined pursuant to clause (a) for whatever reason, the interest rate then in
effect with respect to the Refunding Bonds, without adjustment; provided that in
no event shall the Five Year Interest Rate exceed the Maximum Rate.
"Fixed Interest Rate" means (a) the fixed rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Period Reset Date, to be the
interest rate necessary, from the Interest Period Reset Date to the final
maturity date of the Refunding Bonds, in the judgment of the Remarketing Agent
(taking into consideration current transactions and comparable securities with
which the Remarketing Agent is involved or of which it is aware and prevailing
financial market conditions) to produce as nearly as practical a par bid for the
Refunding Bonds on the Interest Rate Determination Date or (b) in the event that
the Remarketing Agent has been removed or has resigned and no successor has been
appointed or the Remarketing Agent has failed to determine the Fixed Interest
Rate for whatever reason, or the Fixed Interest Rate cannot be determined
pursuant to clause (a) for whatever reason, the interest rate then in effect
with respect to the Refunding Bonds, without adjustment; provided that in no
event shall the Fixed Interest Rate exceed the Maximum Rate.
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"Fixed Interest Rate Commencement Date" means the Interest Period Reset
Date from and after which the Refunding Bonds shall bear interest at the Fixed
Interest Rate, as that date shall be established as provided in Section 2.03
hereof.
"Government Obligations" means (a) direct obligations of the United States
of America for the payment of which the full faith and credit of the United
States of America is pledged, (b) obligations issued by a person controlled or
supervised by and acting as an instrumentality of the United States of America,
the payment of the principal of, premium, if any, and interest on which is fully
guaranteed as a full faith and credit obligation of the United States of America
(including any securities described in (a) or (b) issued or held in book-entry
form on the books of the Department of Treasury of the United States of America
or Federal Reserve Bank), and (c) money market funds (including those of the
Trustee or its affiliates), rated in the highest rating category by Moody's,
which invest solely in the obligations described in (a) and (b) above.
"Holder" or "Holder of a Bond" or "Bondholder" means the Person in whose
name a Bond is registered on the Register.
"Indenture" means this Trust Indenture, as amended or supplemented from
time to time.
"Indirect Participant" means a person utilizing the Book Entry System of
the Depository by directly or indirectly clearing through or maintaining a
custodial relationship with a Direct Participant.
"Instructions to Sell" means the Notice of Exercise of Tender Option --
Instructions to Sell, the form of which is attached to the forms of Series 1996
Bonds attached hereto as Exhibits A and B.
"Interest Payment Date" or "Interest Payment Dates" means, (a) as to the
Refunding Bonds, (i) while the Refunding Bonds bear interest at the Six Month
Interest Rate, the One Year Interest Rate, the Five Year Interest Rate or the
Fixed Interest Rate, the first day of each April and October, and (ii) while the
Refunding Bonds bear interest at the Weekly Interest Rate, the One Month
Interest Rate, or the Three Month Interest Rate, the first Business Day of each
month commencing the first Business Day of May, 1996, and (b) as to Additional
Bonds, each date or dates designated as an Interest Payment Date or Dates in the
applicable Supplemental Indenture or Bond Legislation.
"Interest Period Reset Date" means the date on which the interest rate on
the Refunding Bonds converts from the Interest Rate Mode applicable to the
Refunding Bonds prior to such date to a new Interest Rate Mode. An Interest
Period Reset Date shall be the first Business Day of a month; provided that upon
conversion from a Six Month, One Year or Five Year Interest Rate Mode, an
Interest Period Reset Date shall be the first day of a month; and provided
further, that except when converting from a Weekly Interest Rate Mode, an
Interest Period Reset Date may not occur prior to the end of the preceding
Interest Rate Period.
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"Interest Rate Adjustment Date" means any date on which the interest rate
on the Refunding Bonds may be adjusted, either as the result of the conversion
of the interest rate on the Refunding Bonds to a different Interest Rate Mode,
or by adjustment of the interest rate on the Refunding Bonds within the
applicable Interest Rate Mode. Except as otherwise provided with respect to an
Interest Rate Adjustment Date which is also an Interest Period Reset Date, an
Interest Rate Adjustment Date shall be the first day of the first month of the
Interest Rate Period if the Refunding Bonds bear interest at the Six Month, One
Year or Five Year Interest Rates; the first Business Day of a month if the
Refunding Bonds bear interest at the One Month or Three Month Interest Rates;
and if the Refunding Bonds bear interest at the Weekly Interest Rate, then the
Interest Rate Adjustment Date shall be Thursday of each week.
"Interest Rate Determination Date" means (i) with respect to the Three
Month Interest Rate, the Six Month Interest Rate, the One Year Interest Rate,
the Five Year Interest Rate and the Fixed Interest Rate, the tenth Business Day
preceding an Interest Rate Adjustment Date, (ii) with respect to the One Month
Interest Rate, the seventh Business Day preceding an Interest Rate Adjustment
Date, and (iii) with respect to the Weekly Interest Rate, not later than 2:00
p.m. according to local time at the principal corporate trust office of the
Registrar on Wednesday of each week, or the next preceding Business Day if such
Wednesday is not a Business Day; provided that upon any conversion to the Weekly
Interest Rate from a different Interest Rate Mode, the first Interest Rate
Determination Date shall mean not later than 2:00 p.m. according to the local
time at the principal corporate trust office of the Registrar on the Business
Day next preceding the Interest Period Reset Date.
"Interest Rate for Advances" means a rate per annum which is equal to two
percent (2.00%) per annum plus the Prime Rate.
"Interest Rate Mode" means any of those modes of interest with respect to
the Refunding Bonds permitted by this Indenture, specifically, the Weekly
Interest Rate, the One Month Interest Rate, the Three Month Interest Rate, the
Six Month Interest Rate, the One Year Interest Rate, the Five Year Interest Rate
and the Fixed Interest Rate.
"Interest Rate Period" means that period of time for which the interest
rate with respect to the Refunding Bonds has been determined by the Remarketing
Agent or otherwise as provided in the definition of the applicable Interest Rate
Mode, commencing on the applicable Interest Rate Adjustment Date, and
terminating on the day immediately preceding the following Interest Rate
Adjustment Date.
"Issuer" means the City of Gary, Indiana, a municipality and political
subdivision of the State of Indiana.
"Issuing Authority" or "Legislative Authority" means the Common Council of
the Issuer.
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"Letter of Credit" means (A) the irrevocable letter of credit to be issued
by the Bank and delivered to the Trustee on the same date as the initial
delivery of the Refunding Bonds and being an irrevocable obligation to make
payment to the Trustee of up to the amounts therein specified with respect to
(a) the principal amount of the Refunding Bonds outstanding to enable the
Trustee to pay (i) the principal amount of the Refunding Bonds when due at
maturity or upon redemption or acceleration, and (ii) an amount equal to the
principal portion of the purchase price of any Refunding Bonds or Beneficial
Ownership Interests tendered for purchase by the Holders or Beneficial Owners
thereof, plus (b) the amount of interest due on the Refunding Bonds but not to
exceed 56 days' accrued interest at 12% per annum to enable the Trustee to pay
(i) interest on the Refunding Bonds when due and (ii) an amount equal to the
interest portion, if any, of the purchase price of any Refunding Bonds or
Beneficial Ownership Interests tendered for purchase by the Holder or Beneficial
Owner thereof; as the same may be transferred, reissued, extended, amended to
change the interest coverage period as contemplated in Section 2.03 hereof, or
replaced in accordance with this Indenture and the Letter of Credit and (B) upon
the issuance and effectiveness thereof, any Alternate Letter of Credit.
"Letter of Credit Termination Date" means the expiration date of the Letter
of Credit (presently April 15, 2001) or of any Alternate Letter of Credit.
"Letter of Representations" means the Letter of Representations from the
Issuer, the Trustee, the Registrar, the Paying Agent and the Remarketing Agent
to the Depository in connection with the issuance of the Refunding Bonds in a
book entry system, as supplemented and amended from time to time.
"Loan" means the loan by the Issuer to the Borrower of the proceeds
received from the sale of the Bonds.
"Loan Payments" means the amounts required to be paid by the Borrower in
repayment of the Loan pursuant to the provisions of the Notes and Article IV of
the Agreement.
"Maximum Rate" means the lesser of twelve percent (12%) per annum or the
maximum rate permitted by law.
"Moody's" means Moody's Investors Service, Inc., a Delaware corporation,
and its successors and assigns.
"Notes" means the Refunding Notes and any Additional Notes.
"One Month Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary, during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date to and including the day preceding the
first Business Day of the next month, in the judgment of the Remarketing Agent
(taking into
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consideration current transactions and comparable securities with which the
Remarketing Agent is involved or of which it is aware and prevailing financial
market conditions) to produce as nearly as practical a par bid for the Refunding
Bonds on the Interest Rate Determination Date or (b) in the event that the
Remarketing Agent has been removed or has resigned and no successor has been
appointed, or the Remarketing Agent has failed to determine the One Month
Interest Rate for whatever reason, or the One Month Interest Rate cannot be
determined pursuant to clause (a) for whatever reason, the interest rate then in
effect with respect to the Refunding Bonds, without adjustment; provided that in
no event shall the One Month Interest Rate exceed the Maximum Rate.
"One Year Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary, during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date and ending on the March 31 or September
30 nearest to but not later than the date which is one year from the Interest
Rate Adjustment Date, in the judgment of the Remarketing Agent (taking into
consideration current transactions and comparable securities with which the
Remarketing Agent is involved in of which it is aware and prevailing financial
market conditions) to produce as nearly as practical a par bid for the Refunding
Bonds on the Interest Rate Determination Date or (b) in the event that the
Remarketing Agent has been removed or has resigned and no successor has been
appointed, or the Remarketing Agent has failed to determine the One Year
Interest Rate for whatever reason, or the One Year Interest Rate cannot be
determined pursuant to clause (a) for whatever reason, the interest rate then in
effect with respect to the Refunding Bonds, without adjustment; provided that in
no event shall the One Year Interest Rate exceed the Maximum Rate.
"Ordinary Services" and "Ordinary Expenses" means those services normally
rendered, and those expenses normally incurred, by a trustee, paying agent,
authenticating agent or registrar under instruments similar to this Indenture.
"Outstanding Bonds" or "Bonds outstanding" means, as of the applicable
date, all Bonds which have been authenticated and delivered, or which are being
delivered by the Registrar under this Indenture, except:
(a) Bonds canceled upon surrender, exchange or transfer, or canceled
because of payment or redemption on or prior to that date;
(b) Bonds, or the portion thereof, the payment, redemption or purchase for
cancellation of which sufficient money has been deposited and credited with the
Trustee or any Paying Agents pursuant to this Indenture on or prior to that date
for that purpose (whether upon or prior to the maturity or redemption date of
those Bonds); provided, that if any of those Bonds are to be redeemed prior to
their maturity, notice of that redemption shall have been given or arrangements
satisfactory to the Trustee shall have been made for giving notice of that
redemption, or waiver
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by the affected Holders of that notice satisfactory in form to the Trustee shall
have been filed with the Trustee;
(c) Bonds, or the portion thereof, which are deemed to have been paid and
discharged or caused to have been paid and discharged pursuant to the provisions
of this Indenture;
(d) Bonds in lieu of which others have been authenticated under Section
3.07 of this Indenture; and
(e) Bonds which are tendered or deemed to have been tendered pursuant to
Sections 2.04, 2.05 or 2.06 hereof;
provided that, in determining whether the Holders of the requisite percentage of
Bonds have concurred in any demand, direction, request, notice, consent, waiver
or other action under this Indenture, Bonds that are owned by the Borrower or
any Person directly or indirectly controlling or controlled by or under direct
or indirect common control with the Borrower shall be regarded and deemed not to
be outstanding for the purpose of any such determination; provided that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, consent or waiver, only such Bonds which the Trustee knows are
so owned shall be disregarded. Bonds so owned that have been pledged in good
faith may be regarded as Outstanding for such purpose, if the pledgee shall
establish to the satisfaction of the Trustee the pledgee's right to vote such
Bonds and the pledgee is not a Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Borrower. 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.
"Paying Agent" means, initially, The Fifth Third Bank of Central Indiana,
located in Cincinnati, Ohio, any bank or trust company designated as a Paying
Agent by or in accordance with Section 6.12 of this Indenture.
"Person" or words importing persons means firms, associations,
corporations, partnerships (including without limitation, general and limited
partnerships), joint ventures, societies, estates, trusts, limited liability
companies, public or governmental bodies, other legal entities and natural
persons.
"Pledged Bonds" means Refunding Bonds or Beneficial Ownership Interests
registered or recorded in the name of the Bank and securing obligations of the
Borrower under the Reimbursement Agreement as provided in Section 6.20 hereof.
"Predecessor Bond" of any particular Bond means every previous Bond
evidencing all or a portion of the same debt as that evidenced by the particular
Bond. For the purposes of this definition, any Bond authenticated and delivered
under Section 3.07 of this Indenture in lieu of
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a lost, stolen or destroyed Bond shall, except as otherwise provided in Section
3.07, be deemed to evidence the same debt as the lost, stolen or destroyed Bond.
"Prior Bonds" means collectively the Series 1991 A Bonds, the Series 1991 B
Bonds, the Series 1993 A Bonds and the Series 1993 B Bonds.
"Prior Bonds Trustee" means LaSalle National Bank, Chicago, Illinois, as
trustee under the Prior Indenture.
"Prior Indenture" means, collectively, the Trust Indenture dated as of
April 1, 1991, as supplemented by the First Supplemental Trust Indenture dated
as of September 1, 1993, among the Issuer, LaSalle National Bank, as Trustee and
Mercantile National Bank of Indiana, as Co-Trustee, pursuant to which the Prior
Bonds were issued.
"Prime Rate" means a variable per annum rate of interest equal at all times
to the rate of interest established and quoted by the Bank as its "Prime Rate,"
such rate to change contemporaneously with each change in such established and
quoted rate, provided that it is understood that the Prime Rate shall not
necessarily be representative of the rate of interest actually charged by the
Bank on any loan or class of loans.
"Project" means the Project as defined in the Loan Agreement.
"Rating Service" means either Moody's or S & P.
"Rebate Fund" means the Rebate Fund created pursuant to Section 5.11
hereof.
"Refunding Bonds" means, collectively, the Series 1996 A Bonds and the
Series 1996 B Bonds, in the aggregate principal amount of $22,220,000 authorized
in the Bond Legislation and Section 2.02 hereof.
"Refunding Fund" means the Refunding Fund created pursuant to Section 5.01
hereof.
"Refunding Notes" means, collectively, the Note, Series 1996 A in the
principal amount of $20,540,00 and the Note, Series 1996 B in the principal
amount of $1,680,000 of the Borrower, dated as of even date with the Refunding
Bonds initially issued, in the forms attached to the Agreement as Exhibit A
evidencing the obligation of the Borrower to make Loan Payments.
"Register" means the books kept and maintained by the Registrar for
registration and transfer of Bonds pursuant to Section 3.06 hereof.
"Registrar" means The Fifth Third Bank, located in Cincinnati, Ohio, until
a successor Registrar shall have become such pursuant to applicable provisions
of this Indenture.
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"Regular Record Date" means, with respect to any Bond, the fifth Business
Day next preceding an Interest Payment Date applicable to that Bond; provided,
however, that so long as the Bonds bear interest at the Fixed Interest Rate,
"Regular Record Date" means the fifteenth day next preceding an Interest Payment
Date applicable to that Bond.
"Reimbursement Agreement" means the Reimbursement Agreement dated as of
March 1, 1996, by and among the Bank, the Borrower and CenterPoint, as amended
and supplemented from time to time. Upon the issuance of any Alternate Letter
of Credit, "Reimbursement Agreement" shall mean the reimbursement or similar
agreement relating to such Alternate Letter of Credit, entered into between the
Borrower and the issuer of such Alternate Letter of Credit.
"Remarketing Agent" means, initially, Everen Securities, Inc. and any
Person meeting the qualifications of Section 6.18 hereof and designated from
time to time to act as Remarketing Agent under Section 6.17 hereof.
"Remarketing Reimbursement Fund" means the Remarketing Reimbursement Fund
created in Section 5.04 hereof.
"Revenues" means (a) the Loan Payments, (b) all of the moneys received or
to be received by the Issuer or the Trustee in respect of repayment of the Loan,
(c) all moneys and investments in the Bond Fund, including without limitation
moneys received by the Trustee under or pursuant to the Letter of Credit, (d)
any moneys and investments in the Refunding Fund, and (e) all income and profit
from the investment of the foregoing moneys.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill and
its successors and assigns.
"Series 1991 A Bonds" means the City of Gary, Indiana Economic Development
Revenue Bonds, Series 1991 A (The Miller Partnership, L.P. Project) issued in
the original principal amount of $14,500,000.
"Series 1991 B Bonds" means the City of Gary, Indiana Taxable Economic
Development Revenue Bonds, Series 1991 B (The Miller Partnership, L.P. Project)
issued in the original principal amount of $1,000,000.
"Series 1993 A Bonds" means the City of Gary, Indiana Economic Development
Revenue Bonds, Series 1993 A (The Miller Partnership, L.P. Project) issued in
the original principal amount of $6,040,000.
"Series 1993 B Bonds" means the City of Gary, Indiana Taxable Economic
Development Revenue Bonds, Series 1993 B (The Miller Partnership, L.P. Project)
issued in the original principal amount of $1,460,000.
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"Series 1996 A Bonds" means the City of Gary, Indiana Adjustable Rate
Economic Development Revenue Refunding Bonds, Series 1996 A (The Miller
Partnership, L.P. Project) issued in the original principal amount of
$20,540,000, which are being issued to refund the Series 1991 A Bonds and the
Series 1993 A Bonds.
"Series 1996 B Bonds" means the City of Gary, Indiana Taxable Adjustable
Rate Economic Development Revenue Refunding Bonds, Series 1996 B (The Miller
Partnership, L.P. Project) issued in the original principal amount of
$1,680,000, which are being issued to refund the Series 1991 B Bonds and the
Series 1993 B Bonds.
"Six Month Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary, during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date and ending on the March 31 or September
30 nearest to but not later than the date which is six months from the Interest
Rate Adjustment Date, in the judgment of the Remarketing Agent (taking into
consideration current transactions and comparable securities with which the
Remarketing Agent is involved or of which it is aware and prevailing financial
market conditions) to produce as nearly as practical a par bid for the Refunding
Bonds on the Interest Rate Determination Date or (b) in the event that the
Remarketing Agent has been removed or has resigned and no successor has been
appointed, or the Remarketing Agent has failed to determine the Six Month
Interest Rate for whatever reason, or the Six Month Interest Rate cannot be
determined pursuant to clause (a) for whatever reason, the interest rate then in
effect with respect to the Refunding Bonds, without adjustment; provided that in
no event shall the Six Month Interest Rate exceed the Maximum Rate.
"Special Record Date" means, with respect to any Bond, the dated
established by the Trustee in connection with the payment of overdue interest on
that Bond pursuant to Section 3.05 hereof.
"State" means the State of Indiana.
"Supplemental Credit Facility" means a credit facility, agreement or
arrangement in addition to the Letter of Credit, including, without limitation,
a bond insurance policy, collateral arrangement, surety bond, standby placement
agreement or similar arrangement the purpose of which is to enhance the credit
of the Refunding Bonds in order to obtain or maintain a rating on the Refunding
Bonds.
"Supplemental Indenture" means any indenture supplemental to this Indenture
entered into between the Issuer and the Trustee in accordance with Article VIII
hereof.
"Three Month Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary, during the Interest Rate Period
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commencing on the applicable Interest Rate Adjustment Date to and including the
day preceding the first Business Day of the January, April, July or October,
nearest to but not later than the date which is three months from the Interest
Rate Adjustment Date, in the judgment of the Remarketing Agent (taking into
consideration current transactions and comparable securities with which the
Remarketing Agent is involved or of which it is aware and prevailing financial
market conditions) to produce as nearly as practical a par bid for the Refunding
Bonds on the Interest Rate Determination Date or (b) in the event that the
Remarketing Agent has been removed or has resigned and no successor has been
appointed, or the Remarketing Agent has failed to determine the Three Month
Interest Rate for whatever reason, or the Three Month Interest Rate cannot be
determined pursuant to clause (a) for whatever reason, the interest rate then in
effect with respect to the Refunding Bonds, without adjustment; provided that in
no event shall the Three Month Interest Rate exceed the Maximum Rate.
"Trustee" means the Trustee at the time acting as such under this
Indenture, originally Fifth Third Bank of Central Indiana, as Trustee,
Indianapolis, Indiana, and any successor Trustee as determined or designated
under or pursuant to this Indenture.
"Unassigned Issuer's Rights" means the Unassigned Issuer's Rights as
defined in the Agreement.
"Underwriter" means Everen Securities, Inc.
"Weekly Interest Rate" means (a) the rate of interest per annum determined
by the Remarketing Agent on the Interest Rate Determination Date immediately
preceding the applicable Interest Rate Adjustment Date, to be the interest rate
necessary during the Interest Rate Period of one week (or less in the case of
any such Interest Rate Period commencing on an Interest Period Reset Date which
is not a Thursday or ending on the day preceding an Interest Period Reset Date)
commencing on the applicable Interest Rate Adjustment Date, in the judgment of
the Remarketing Agent (taking into consideration current transactions and
comparable securities with which the Remarketing Agent is involved or of which
it is aware and prevailing financial market conditions) to produce as nearly as
practical a par bid (plus accrued interest, if any) for the Refunding Bonds on
the Interest Rate Determination Date or (b) in the event that the Remarketing
Agent has been removed or has resigned and no successor has been appointed, or
the Remarketing Agent has failed to determine the Weekly Interest Rate for
whatever reason, or the Weekly Interest Rate cannot be determined pursuant to
clause (a) for whatever reason, the interest rate then in effect with respect to
the Refunding Bonds, without adjustment; provided that in no event shall the
Weekly Interest Rate exceed the Maximum Rate.
Section 1.02. INTERPRETATION. Any reference herein to the Issuer or to
any officer, employee or official thereof includes entities, officers, employees
or officials succeeding to their respective functions, duties or
responsibilities pursuant to or by operation of law or who are lawfully
performing their functions.
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Any reference to a section or provision of the Indiana Constitution or the
Act, or to a section, provision or chapter of the Indiana Code, or to any
statute of the United States of America, includes that section, provision or
chapter as amended, modified, revised, supplemented or superseded from time to
time; provided, that no amendment, modification, revision, supplement or
superseding section, provision or chapter shall be applicable solely by reason
of this paragraph, if it constitutes in any way an impairment of rights or
obligations of the Issuer, the Holders, the Trustee, the Registrar, the Bank,
the Remarketing Agent, any Paying Agent, any Authenticating Agent or the
Borrower under this Indenture, the Bond Legislation, the Bonds, the Letter of
Credit, the Reimbursement Agreement, the Bond Purchase Agreement, the Notes or
any other instrument or document entered into in connection with any of the
foregoing, including without limitation, any alteration of the obligation to pay
Bond Service Charges in the amount and manner, at the times, and from the
sources provided in the Bond Legislation and this Indenture, except as permitted
herein.
Unless the context indicates otherwise, words importing the singular number
include the plural number, and vice versa. The terms "hereof," "hereby,"
"herein," "hereto," "hereunder," "hereinafter" and similar terms refer to this
Indenture; and the term "hereafter" means after, and the term "heretofore" means
before, the date of delivery of this Indenture. Words of any gender include the
correlative words of the other genders, unless the sense indicates otherwise.
Section 1.03. CAPTIONS AND HEADINGS. The captions and headings in this
Indenture are solely for convenience of reference and in no way define, limit or
describe the scope or intent of any Articles, Sections, subsections, paragraphs,
subparagraphs or clauses hereof.
(End of Article I)
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ARTICLE II.
AUTHORIZATION AND TERMS OF REFUNDING BONDS;
ADDITIONAL BONDS
Section 2.01. AUTHORIZED AMOUNT OF BONDS. No Bonds may be issued under
the provisions of this Indenture except in accordance with this Article. The
total authorized principal amount of Refunding Bonds which shall be issued under
the provisions of this Indenture is $22,500,000. The Issuer may issue, sell and
deliver one or more series of Additional Bonds for the purposes, upon
satisfaction of the conditions and in the manner provided herein..
Section 2.02. ISSUANCE OF REFUNDING BONDS. It is determined to be
necessary to, and the Issuer shall, issue, sell and deliver $22,220,000
principal amount of Refunding Bonds to provide funds to refinance the costs of
the Project and to refinance certain costs of issuance of the Prior Bonds. The
Refunding Bonds shall be designated the "City of Gary, Indiana Adjustable Rate
Economic Development Revenue Refunding Bonds, Series 1996 A (The Miller
Partnership, L.P. Project)", in the principal amount of $20,540,000 to refinance
the costs of the Project, and the "City of Gary, Indiana Taxable Adjustable Rate
Economic Development Revenue Refunding Bonds, Series 1996 B (The Miller
Partnership, L.P. Project)", in the principal amount of $1,680,000 to refinance
the costs of issuance of the Prior Bonds and a portion of the costs of the
Project. The Refunding Bonds shall be issuable, unless a Supplemental Indenture
shall have been executed and delivered pursuant to Section 8.02(g) hereof, only
in fully registered form, substantially as set forth in Exhibit A to this
Indenture; shall be numbered A-1 and upward (with respect to the Series 1996 A
Bonds) and B-1 and upward (with respect to the Series 1996 B Bonds); shall be in
the denominations of $100,000 and integral multiples of $5,000 in excess
thereof; shall be subject to optional and mandatory redemption in the amounts,
upon the conditions, and at the times and prices set forth herein; and shall be
dated as of the date of their initial delivery. Upon any exchange or transfer
and surrender of any Refunding Bond in accordance with the provisions hereof,
the Issuer shall execute and the Authenticating Agent shall authenticate and
deliver one or more new Refunding Bonds in exchange therefor as provided herein.
The Refunding Bonds shall be originally issued only to a Depository to be
held in a book entry system and: (i) the Refunding Bonds shall be registered in
the name of the Depository or its nominee, as Bondholder, and immobilized in the
custody of the Depository; (ii) unless otherwise requested by the Depository,
there shall be a single Bond certificate for each Bond maturity; and (iii) the
Refunding Bonds shall not be transferable or exchangeable, except for transfer
to another Depository or another nominee of a Depository, without further action
by the Issuer. The owners of beneficial interests in the Refunding Bonds shall
not have any right to receive Refunding Bonds in the form of physical
certificates.
So long as a Book Entry System is in effect for the Refunding Bonds, except
as 71
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hereinafter provided with respect to Beneficial Ownership Interests, the Issuer,
the Trustee, the Registrar and the Paying Agent shall recognize and treat the
Depository, or its nominee, as the Holder of the Refunding Bonds for all
purposes, including payment of Bond Service Charges, giving of notices, and
enforcement of remedies. The crediting of payments of Bond Service Charges on
the Refunding Bonds and the transmittal of notices and other communications by
the Depository to Beneficial Owners or to the Direct Participants in whose
depository account the interests of such Beneficial Owners are recorded and such
credit and transmittal by the Direct Participants to Indirect Participants and
by Indirect Participants to Beneficial Owners shall be the responsibility of the
Depository or the respective Indirect Participant or Direct Participant and are
not the responsibility of the Issuer, the Paying Agent or the Trustee; provided,
however, that the Issuer, the Paying Agent, the Registrar and the Trustee
understand that neither the Depository or its nominee shall provide any consent
requested of Holders of Refunding Bonds pursuant to this Indenture, and that the
Depository will mail an omnibus proxy (including a list identifying the Direct
Participants of the book entry interests in the Refunding Bonds) to the Issuer
which assigns the Depository's, or its nominee's, voting rights to the Direct
Participants of the book entry interests in the Refunding Bonds (as credited to
the accounts at the Depository as of the record date for mailing of requests for
such consents). Upon receipt of such omnibus proxy, the Issuer shall promptly
provide such omnibus proxy (including the list identifying the Direct
Participants of the interests in the Refunding Bonds attached thereto) to the
Registrar, who shall then treat such Direct Participants as Holders of the
Refunding Bonds for purposes of obtaining any consents pursuant to the terms of
this Indenture.
As long as the Refunding Bonds are registered in the name of a Depository,
or its nominee, the Trustee, the Registrar and the Paying Agent agree to comply
with the terms and provisions of the Letter of Representations including the
provisions of the Letter of Representations with respect to any delivery of the
Refunding Bonds to the Trustee, which provisions shall supersede the provisions
of this Indenture with respect thereto.
If any Depository determines not to continue to act as a Depository for the
Refunding Bonds held in a book entry system, the Issuer may attempt to have
established a securities depository/book entry system relationship with another
Depository under this Indenture. If the Issuer does not or is unable to do so,
the Issuer and the Trustee, after the Trustee has made provision for
notification of the owners of book entry interests by appropriate notice to the
then Depository, shall permit withdrawal of the Refunding Bonds from the
Depository and shall cause to be authenticated and delivered Refunding Bond
certificates in fully registered form to the assignees of the Depository or its
nominee. Such withdrawal, authentication and delivery shall be at the cost and
expense (including costs of printing or otherwise preparing and delivering such
replacement Refunding Bonds) of the Borrower. Such replacement Refunding Bonds
shall be in the denominations specified in the first paragraph of this Section
2.02, with a minimum denomination of $100,000.
Section 2.03. MATURITY AND INTEREST. The Refunding Bonds shall bear
interest from the most recent date to which interest has been paid or duly
provided for or, if no interest has been.
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paid or provided for, from their date of initial delivery, payable on the first
Business Day of May, 1996 and thereafter on each Interest Payment Date. The
Refunding Bonds shall bear interest at an Adjustable Rate or the Fixed Rate all
as more specifically set forth hereinafter. The Refunding Bonds shall mature on
March 1, 2031, subject to prior redemption as set forth in Section 4.01 hereof,
unless converted to the Fixed Interest Rate in which case the principal amount
thereof shall mature pursuant to either mandatory sinking fund provisions or
serial maturity requirements which would cause the outstanding principal amount
thereof to be reduced as nearly as possible in level principal amounts on April
1 of each year over the remaining term of the Refunding Bonds in increments of
$100,000 or more.
From the date of their initial delivery through April 3, 1996, the interest
rate on the Refunding Bonds shall be that rate per annum, not to exceed the
Maximum Rate, as shall be established in the Bond Purchase Agreement.
Thereafter, except as provided in this Section 2.03, the Refunding Bonds shall
bear interest at the Weekly Interest Rate and, for each succeeding Weekly
Interest Rate Period, the interest rate on the Refunding Bonds shall be the
Weekly Interest Rate for such Weekly Interest Rate Period as established on the
Interest Rate Determination Date immediately preceding the commencement of such
Weekly Interest Rate Period.
On June 1, 1996, and on any Interest Period Reset Date thereafter, the
interest rate on the Refunding Bonds may be converted to a different Interest
Rate Mode upon receipt by the Trustee, the Paying Agent, the Registrar and the
Remarketing Agent of a written direction from the Borrower, approved in writing
by the Bank, given on behalf of the Issuer, not less than 45 days prior to such
Interest Period Reset Date, to convert the interest rate on the Refunding Bonds
to an Interest Rate Mode other than the Interest Rate Mode then in effect.
Except when converting from the Weekly Interest Rate Mode, no Interest Period
Reset Date shall be earlier than the day after the end of the last Interest Rate
Period for the Interest Rate Mode in effect on the date of such direction from
the Borrower, the end of such Interest Rate Period to be determined as if such
direction had not been given. Such direction to convert the interest rate on
the Refunding Bonds to a different Interest Rate Mode shall be accompanied by
(a) an opinion of Bond Counsel selected by the Borrower delivered to the Issuer,
the Trustee, the Registrar, the Bank and the Remarketing Agent, stating that
such conversion to the specified Interest Rate Mode will not adversely affect
the exclusion of the interest on the Series 1996 A Bonds from gross income for
federal income tax purposes, and (b) a written certificate of the Remarketing
Agent stating that the interest coverage period provided by the Letter of Credit
is appropriate for the Interest Rate Mode directed to be in effect and that the
Letter of Credit Termination Date is no earlier than 15 days after the end of
the new Interest Rate Period, or if the conversion is to the Fixed Interest
Rate, that the termination date of the Letter of Credit is no earlier than 15
days after the First Optional Redemption Date (or 15 days after the final
maturity date of the Refunding Bonds, if earlier). If the Refunding Bonds bear
interest at the Weekly Interest Rate, the One Month Interest Rate or the Three
Month Interest Rate, the interest coverage period for the Letter of Credit shall
be at least 56 days of interest at the Maximum Rate. If the Refunding Bonds
bear interest at the Six Month Interest Rate, the One Year Interest Rate, the
Five Year Interest Rate or the Fixed Interest Rate, then the interest coverage
period for the Letter of Credit shall be at least 195 days of interest at
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the Maximum Rate. The Borrower shall be required to provide a Letter of Credit
or an Alternate Letter of Credit which will provide the appropriate interest
coverage. Notwithstanding any provision of this paragraph, no conversion shall
be effective (i) if the proposed conversion is to a One Year Interest Rate, Five
Year Interest Rate or Fixed Interest Rate and the Borrower makes an election on
or prior to the day immediately succeeding any Interest Rate Determination Date
not to proceed with the proposed conversion or (ii) the Trustee and the
Registrar have not received on the effective date of such conversion an opinion
of Bond Counsel to the same effect as described in clause (a) of this paragraph
above. In either such event, the Interest Rate Mode for the Refunding Bonds
will remain as the Interest Rate Mode then in effect for the Refunding Bonds
without regard to any proposed conversion. The Refunding Bonds will continue to
be subject to tender for purchase on the scheduled effective date of the
proposed conversion without regard to the failure of such proposed conversion.
If the Registrar shall have sent any notice to Holders regarding the proposed
conversion then in the event of a failure of such conversion, as specified
above, the Registrar shall promptly notify all Holders of such failure, of the
reason for such failure, and of the continuation of the Interest Rate Mode then
in effect.
On each Interest Rate Determination Date, the Remarketing Agent shall give
the Trustee, the Borrower, the Registrar and Paying Agent telephonic notice
(immediately confirmed in writing) of the interest rate to be borne by the
Refunding Bonds for the following Interest Rate Period; provided that if the
interest rate is determined pursuant to clause (b) of the definition of the
applicable Interest Rate Mode, on the Interest Rate Determination Date, the
Paying Agent shall give notice to the Borrower and the Bank as above provided.
Nothing contained in this Indenture shall be deemed or construed to require the
Trustee to determine any interest rate pursuant to clause (a) of the definition
of the applicable Interest Rate.
If the interest rate on the Refunding Bonds is converted to a different
Interest Rate Mode, at least 30 days prior to the Interest Period Reset Date the
Registrar shall use its best efforts to notify the Holders of all outstanding
Refunding Bonds by telephone (to the extent their telephone numbers have been
provided in writing to the Registrar), immediately confirmed by first class mail
to all Holders, that upon such Interest Period Reset Date the Refunding Bonds
shall be converted to a different Interest Rate Mode, which Interest Rate Mode
shall be specified, and that all Refunding Bonds shall be subject to a mandatory
tender pursuant to Section 2.05 hereof, subject to the right of the Holders to
affirmatively elect to waive the mandatory tender and retain their Refunding
Bonds.
Interest shall be calculated on the basis of a 360-day year of twelve 30-
day months so long as interest is payable at the Six Month Interest Rate, the
One Year Interest Rate, the Five Year Interest Rate or the Fixed Interest Rate.
Interest shall be calculated on the basis of a year of 365 or 366 days, as
applicable, for the number of days actually elapsed so long as interest is
payable at the Weekly Interest Rate, the One Month Interest Rate or the Three
Month Interest Rate. Interest shall be payable on each Interest Payment Date
for the period commencing on the immediately preceding Interest Payment Date and
to and including the day immediately preceding such payment date. Any
calculation of the interest rate to be borne by the Refunding Bonds shall
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be rounded to the nearest one-hundredth of one percent (0.01%). The computation
of the interest rate on the Refunding Bonds by the Remarketing Agent shall be
binding and conclusive upon the Borrower, the Bank and the Holders of the
Refunding Bonds.
Notwithstanding anything to the contrary in this Indenture, nothing in this
Indenture shall require the Bank to extend the expiry date of the Letter of
Credit provided at the Closing Date or to increase the interest component of the
amount of the Letter of Credit.
Section 2.04. TENDER OPTIONS.
(a) While the Refunding Bonds bear interest at the One Month Interest
Rate, the Three Month Interest Rate, the Six Month Interest Rate, the One Year
Interest Rate or the Five Year Interest Rate, on each Interest Rate Adjustment
Date (each a "Bond Purchase Date") each Holder and each Beneficial Owner shall
have the option to tender for purchase at 100% of the principal amount thereof
plus accrued interest to the Bond Purchase Date, all of the Refunding Bonds
owned by such Holder, or all Beneficial Ownership Interests owned by such
Beneficial Owner, as applicable, or (in either case) such lesser principal
amount thereof (in denominations of $100,000 or integral multiples of $5,000 in
excess thereof, provided that the untendered portion of any Refunding Bond or
Beneficial Ownership Interest shall be $100,000 or more in principal amount) as
such Holder or Beneficial Owner, as applicable, may specify in accordance with
the terms, conditions and limitations hereinafter set forth. The purchase price
for each such Refunding Bond or Beneficial Ownership Interest, or portion
thereof, shall be payable in lawful money of the United States of America by
check or draft, shall equal the principal amount, or such portion thereof, to be
purchased, plus accrued interest to the Bond Purchase Date, and shall be paid in
full on the applicable Bond Purchase Date.
(b) While the Refunding Bonds bear interest at the Weekly Interest Rate,
each Holder and each Beneficial Owner shall have the option to tender for
purchase, at 100% of the principal amount thereof plus accrued interest to the
purchase date (a "Bond Purchase Date"), all of the Refunding Bonds owned by such
Holder, or all Beneficial Ownership Interests owned by such Beneficial Owner, as
applicable, or (in either case) such lesser principal amount thereof (in
denominations of $100,000 or integral multiples of $5,000 in excess thereof,
provided that the untendered portion of any Refunding Bond or Beneficial
Ownership Interest shall be $100,000 or more in principal amount) as such Holder
of Beneficial Owner, as applicable, may specify in accordance with the terms,
conditions and limitations hereafter set forth. The purchase price of each such
Refunding Bond or Beneficial Ownership Interest shall be payable in lawful money
of the United States of America, and shall be paid in full on the applicable
Bond Purchase Date.
(c) To exercise the option granted in Section 2.04(a) hereof, the Holder
or Beneficial Owner, as applicable, shall (l) no earlier than fifteen days
before the Bond Purchase Date and no later than 11:00 a.m. according to the
local time at the principal corporate trust office of the Registrar on the
eighth Business Day prior to the Bond Purchase Date, or in the event the
Refunding Bonds bear interest at the One Month Interest Rate, the fifth Business
Day prior to the
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Bond Purchase Date, give notice to the Registrar by telecopy or in writing which
states (i) the name and address of the Holder or Beneficial Owner, as
applicable, (ii) the principal amount, CUSIP number and Bond numbers of the
Refunding Bonds or Beneficial Ownership Interests to be purchased, (iii) that
such Refunding Bonds or Beneficial Ownership Interests are to be purchased on
such Bond Purchase Date pursuant to the terms hereof, and (iv) that such notice
is irrevocable; and (2) in the case of a Beneficial Owner, provide the Registrar
with evidence satisfactory to the Registrar of such Beneficial Owner's
Beneficial Ownership Interest; (3) in the case of a Holder no later than 10:00
a.m. according to the local time at the principal corporate trust office of the
Registrar on the seventh day preceding such Bond Purchase Date (or the next
preceding Business Day if such seventh day is not a Business Day), or in the
event the Refunding Bonds bear interest at the One Month Interest Rate, the
fourth day preceding such Bond Purchase Date (or the next preceding Business Day
if such fourth day is not a Business Day), deliver to the principal corporate
trust office of the Registrar the Refunding Bonds to be purchased in proper
form, accompanied by fully completed and executed Instructions to Sell, the form
of which shall be printed on the Refunding Bonds; and (4) in the case of a
Beneficial Owner no later than 10:00 a.m. (according to the local time at the
principal corporate trust office of the Registrar) on the Bond Purchase Date
cause the transfer of the Beneficial Owner's Beneficial Ownership Interest on
the records of the Depository, in accordance with the instructions of the
Trustee.
To exercise the option granted in Section 2.04(b) hereof, the Holder or
Beneficial Owner, as applicable shall (1) give notice to the Registrar and the
Trustee by telecopy or in writing which states (i) the name and address of the
Holder or Beneficial Owner, as applicable, (ii) the principal amount, CUSIP
number and Bond numbers of the Refunding Bonds or Beneficial Ownership Interests
to be purchased, (iii) the date on which such Refunding Bonds or Beneficial
Ownership Interests are to be purchased, which Bond Purchase Date shall be a
Business Day not prior to the seventh (7th) day and not later than the fifteenth
(15th) day next succeeding the date of giving of such notice to the Registrar
and, if the interest rate on the Refunding Bonds is to be converted from the
Weekly Interest Rate to a new Interest Rate Mode, is a date prior to the
Interest Period Reset Date with respect to the new Interest Rate Mode, and (iv)
that such notice is irrevocable; (2) in the case of a Beneficial Owner, provide
the Registrar with evidence satisfactory to the Registrar of such Beneficial
Owner's Beneficial Ownership Interest; (3) in the case of a Holder, no later
than 10:00 a.m. according to the local time at the principal corporate trust
office of the Registrar on the second Business Day immediately preceding the
applicable Bond Purchase Date, deliver to the principal corporate trust office
of the Registrar the Refunding Bonds to be purchased in proper form, accompanied
by fully completed and executed Instructions to Sell, the form of which shall be
printed on the Refunding Bonds; and (4) in the case of a Beneficial Owner, no
later than 10:00 a.m. (according to the local time at the principal corporate
trust office of the Registrar) on the Bond Purchase Date, cause the transfer of
the Beneficial Owner's Beneficial Ownership Interest on the records of the
Depository in accordance with the instructions of the Trustee. In the case of a
Refunding Bond or Beneficial Ownership Interest or portion thereof to be
purchased prior to an Interest Payment Date and after the Record Date in respect
thereof, the Holder or Beneficial Owner, as applicable, shall deliver a due-bill
check, in form satisfactory to the Registrar, for interest due on such Interest
Payment Date.
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Any Refunding Bonds or Beneficial Ownership Interests for which a notice of
tender has been given by the Holder or Beneficial Owner, as the case may be,
shall be deemed to be tendered for remarketing notwithstanding, in the case of
Refunding Bonds, any failure of delivery of such Refunding Bonds to the
Registrar and notwithstanding, in the case of Beneficial Ownership Interests,
failure of a Beneficial Owner to cause the transfer of the Beneficial Owner's
Beneficial Ownership Interests on the records of the Depository. Subject to the
right of such Holders or Beneficial Owners to receive the purchase price of such
Refunding Bonds or Beneficial Ownership Interests and interest accrued thereon
to the day preceding the applicable Bond Purchase Date subject to the conditions
set forth in Section 3.07 hereof, such Refunding Bonds or Beneficial Ownership
Interests shall be null and void and the Trustee shall cause to be authenticated
and delivered new Refunding Bonds (or new Beneficial Ownership Interests shall
be created) in replacement thereof pursuant to the remarketing of such Refunding
Bonds or Beneficial Ownership Interests or the pledge of such Refunding Bonds or
Beneficial Ownership Interests to the Bank in lieu of remarketing such Refunding
Bonds or Beneficial Ownership Interests as described in Section 6.20 hereof.
(d) Upon the giving of the notice pursuant to Section 2.04(c) hereof with
respect to Refunding Bonds or Beneficial Ownership Interests or portions of
either, the Holder's tender of such Refunding Bonds or portions thereof or the
Beneficial Owner's tender of Beneficial Ownership Interests or portions thereof
shall be irrevocable. Upon receipt of the Refunding Bonds, the Registrar shall
determine whether Instructions to Sell have been properly submitted and its
determination shall be binding. If less than all of a Refunding Bond so
delivered or deemed tendered is to be purchased, the Trustee shall, pursuant to
this Indenture, cause to be authenticated one or more Refunding Bonds in
exchange therefor, registered in the name of such Holder, having the aggregate
principal amount being retained by such Holder, and shall deliver such
authenticated Refunding Bond or Refunding Bonds to such Holder.
(e) While tendered Refunding Bonds are in the custody of the Registrar
pending purchase pursuant hereto, the tendering Holders thereof shall be deemed
the owners thereof for all purposes, and interest accruing on tendered Refunding
Bonds through the day preceding the applicable Bond Purchase Date is to be paid
from the Bond Fund as if such Refunding Bonds had not been tendered for
purchase.
(f) Notwithstanding anything herein to the contrary, any Bond or
Beneficial Ownership Interest or portion thereof tendered under Sections 2.04,
2.05 or 2.06 hereof will not be purchased if such Bond or portion thereof
matures or is redeemed on or prior to the applicable Bond Purchase Date.
Section 2.05. MANDATORY TENDER UPON CONVERSION TO A NEW INTEREST RATE
MODE. If at any time the Issuer at the direction of the Borrower shall convert
the interest rate on the Refunding Bonds to a different Interest Rate Mode in
accordance with the provisions of Section 2.03 hereof, on the Interest Period
Reset Date upon which such conversion is effective, all Refunding Bonds and
Beneficial Ownership Interests shall be subject to mandatory tender by the
Holders thereof
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for purchase on the Interest Period Reset Date (a "Bond Purchase Date") at the
applicable purchase price provided for in Section 2.04 hereof. Notwithstanding
such mandatory tender, any Holder or Beneficial Owner may elect to retain its
Refunding Bonds or Beneficial Ownership Interests by delivering to the Registrar
a written notice no later than 11:00 a.m. according to the local time at the
principal corporate trust office of the Registrar on the eighth Business Day
prior to such Interest Period Reset Date or by 11:00 a.m. according to the local
time at the principal corporate trust office of the Registrar on the fifth
Business Day prior to such Interest Period Reset Date if the Interest Rate Mode
is to be converted to the One Month Interest Rate, which notice shall state that
(a) such Holder or Beneficial Owner realizes that the Refunding Bonds are being
converted to bear interest at the applicable Interest Rate Mode, (b) unless the
interest rate on the Refunding Bonds or Beneficial Ownership Interests is being
converted to the Weekly Interest Rate, such Holder or Beneficial Owner realizes
that the next Bond Purchase Date upon which the Refunding Bonds or Beneficial
Ownership Interests may be tendered for purchase is the next Interest Rate
Adjustment Date or, if such Refunding Bonds are being converted to the Fixed
Interest Rate, that such Refunding Bonds or Beneficial Ownership Interests may
no longer be tendered for purchase, (c) such Holder or Beneficial Owner realizes
that any securities rating on the Refunding Bonds may be withdrawn or lowered as
a result of the conversion to a different Interest Rate Mode, and (d) such
Holder or Beneficial Owner affirmatively elects to hold his Refunding Bonds or
Beneficial Ownership Interests and receive interest at the applicable Interest
Rate Mode.
Refunding Bonds or Beneficial Ownership Interests with respect to which the
Registrar shall not have received the election required by the preceding
paragraph shall be deemed to have been tendered for purposes of this Section
2.05 whether or not the Holders thereof shall have delivered such Refunding
Bonds to the Registrar and whether or not the Beneficial Owners shall have
caused the transfer of such Beneficial Ownership Interests on the records of the
Depository according to the instructions of the Trustee, and subject to the
right of the Holders or Beneficial Owners of such Refunding Bonds or Beneficial
Ownership Interests to receive the purchase price of such Refunding Bonds or
Beneficial Ownership Interests and interest accrued thereon to the Interest
Period Reset Date (subject to the conditions set forth in Section 3.07 hereof),
such Refunding Bonds or Beneficial Ownership Interests shall be null and void
and the Trustee shall cause to be authenticated and delivered new Refunding
Bonds in replacement thereof or new Beneficial Ownership Interests shall be
created pursuant to the remarketing of such Refunding Bonds or Beneficial
Ownership Interests or the pledge of such Refunding Bonds or Beneficial
Ownership Interests to the Bank in lieu of remarketing such Refunding Bonds or
Beneficial Ownership Interests as described in Section 6.20 hereof.
Section 2.06. MANDATORY TENDER UPON DELIVERY OF AN ALTERNATE LETTER OF
CREDIT. If at any time the Borrower shall provide for the delivery to the
Trustee of an Alternate Letter of Credit in accordance with the provisions of
Section 5.09 hereof, on the date that precedes the Replacement Date (as defined
in Section 5.09 hereof) by at least five Business Days (a "Bond Purchase Date"),
all Refunding Bonds or Beneficial Ownership Interests shall be subject to
mandatory tender by the Holders or Beneficial Owners, as applicable, for
purchase at the
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applicable purchase price provided for in Section 2.04 hereof. At least 30 days
prior to the Bond Purchase Date the Registrar shall use its best efforts to
notify the Holders of all outstanding Refunding Bonds by telephone (to the
extent their telephone numbers have been provided in writing to the Registrar),
immediately confirmed by first class mail to all Holders, that an Alternate
Letter of Credit is to be delivered by the Borrower to the Trustee. Such notice
shall advise the Holders of the financial institution providing the Alternate
Letter of Credit and shall advise the Holders of the requirements of Section
5.09 and confirm that such requirements of Section 5.09 have been met, and that
all Refunding Bonds and Beneficial Ownership Interests shall be subject to
mandatory tender pursuant to this Section 2.06, subject to the right of the
Holders and Beneficial Owners to affirmatively elect to waive the mandatory
tender and retain the Refunding Bonds or Beneficial Ownership Interests.
Notwithstanding such mandatory tender, any Holder or Beneficial Owner may
elect to retain its Refunding Bonds or Beneficial Ownership Interests by
delivering to the Registrar a written notice no later than 11:00 a.m. according
to the local time at the principal corporate trust office of the Registrar on
the eighth Business Day prior to such Replacement Date which notice shall state
that (a) such Holder or Beneficial Owner has received notice of and realizes
that the Borrower is delivering an Alternate Letter of Credit to the Trustee
pursuant to Section 5.09, (b) such Holder or Beneficial Owner realizes that any
securities rating on the Refunding Bonds may be withdrawn or lowered as a result
of the delivery of the Alternate Letter of Credit, and (c) such Holder or
Beneficial Owner affirmatively elects to retain its Refunding Bonds or
Beneficial Ownership Interests.
Refunding Bonds or Beneficial Ownership Interests with respect to which the
Registrar shall not have received the election required by the preceding
paragraph shall be deemed to have been tendered for purposes of this Section
2.06 whether or not the Holders thereof shall have delivered such Refunding
Bonds to the Registrar and whether or not the Beneficial Owners shall have
caused the transfer of such Beneficial Ownership Interests on the records of the
Depository according to the instructions of the Trustee, and subject to the
right of the Holders or Beneficial Owners of such Refunding Bonds or Beneficial
Ownership Interests to receive the purchase price of such Refunding Bonds or
Beneficial Ownership Interests and interest accrued thereon to the Replacement
Date (subject to the conditions set forth in Section 3.07 hereof), such
Refunding Bonds or Beneficial Ownership Interests shall be null and void and the
Trustee shall cause to be authenticated and delivered new Refunding Bonds in
replacement thereof, or new Beneficial Ownership Interests shall be created,
pursuant to the remarketing of such Refunding Bonds or Beneficial Ownership
Interests or the pledge of such Refunding Bonds or Beneficial Ownership
Interests to the Bank in lieu of remarketing such Refunding Bonds or Beneficial
Ownership Interests as described in Section 6.20 hereof.
Section 2.07. DELIVERY OF THE REFUNDING BONDS. Upon the execution and
delivery of this Indenture, and satisfaction of the conditions established by
the Issuer in the Bond Legislation and in the Bond Purchase Agreement for
delivery of the Refunding Bonds, the Issuer shall execute the Refunding Bonds
and deliver them to the Authenticating Agent. Thereupon, the Authenticating
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Agent shall authenticate the Refunding Bonds and deliver them to the Depository,
as directed by the Issuer in accordance with this Section 2.07.
Before the Authenticating Agent delivers any Refunding Bonds, the Trustee
shall have received a request and authorization to the Trustee on behalf of the
Issuer, signed by the Executive or Fiscal Officer, to cause to be authenticated
and delivered the Refunding Bonds to the Depository, upon payment to the Trustee
of the amount specified therein, which amount shall be deposited as provided in
Sections 5.01 and 5.03 hereof.
Section 2.08. ISSUANCE AND DELIVERY OF ADDITIONAL BONDS. At the request
of the Borrower, and subject to the prior written consent of the Bank, the
Issuer may issue Additional Bonds from time to time for any purpose permitted by
the Act.
Any Additional Bonds shall be secured by an Alternate Letter of Credit and
shall be on a parity with the Refunding Bonds (except with respect to any moneys
drawn by the Trustee on the Letter of Credit) and any Additional Bonds
theretofore or thereafter issued and outstanding as to the assignment to the
Trustee of the Issuer's right, title and interest in the Revenues, the Agreement
and the Refunding Notes to provide for payment of Bond Service Charges on the
Bonds; provided, that nothing herein shall prevent payment of Bond Service
Charges on any series of Additional Bonds from (i) being otherwise secured and
protected from sources or by property or instruments not applicable to the
Refunding Bonds and any one or more series of Additional Bonds, or (ii) not
being secured or protected from sources or by property or instruments applicable
to the Refunding Bonds or one or more series of Additional Bonds.
Before the Authenticating Agent shall authenticate and deliver any
Additional Bonds, the Trustee shall receive the following items:
(a) Original executed counterparts of any amendments or supplements to the
Agreement and the Indenture entered into in connection with the issuance of the
Additional Bonds, which are necessary or advisable, in the opinion of Bond
Counsel, to provide that the Additional Bonds will be issued in compliance with
the provisions of this Indenture.
(b) One or more Additional Notes, as required by the Agreement, in an
aggregate principal amount equal to the aggregate principal amount of the
Additional Bonds.
(c) A copy of the written request from the Borrower to the Issuer for
issuance of the Additional Bonds.
(d) A copy of the Bond Ordinance, certified by the Fiscal Officer of the
Issuing Authority.
(e) A request and authorization to the Authenticating Agent on behalf of
the Issuer, signed by the Executive, to authenticate and deliver the Additional
Bonds to, or on the order of,
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the purchaser thereof upon payment to the Trustee of the amount specified
therein (including without limitation, any accrued interest), which amount shall
be deposited as provided in the applicable Bond Legislation or Supplemental
Indenture.
(f) The written opinion of counsel, who may be counsel for the Issuer,
reasonably satisfactory to the Trustee, to the effect that: (i) the documents
submitted to the Trustee in connection with the request then being made comply
with the requirements of this Indenture; (ii) the issuance of the Additional
Bonds has been duly authorized; (iii) all filings required to be made under
Section 10.01 of this Indenture have been made; and (iv) all conditions
precedent to the delivery of the Additional Bonds have been fulfilled.
(g) A written opinion of Bond Counsel (who also may be the counsel to
which reference is made in paragraph f), to the effect that: (i) when executed
for and in the name and on behalf of the Issuer and when authenticated and
delivered by the Authenticating Agent, those Additional Bonds will be valid and
legal limited obligations of the Issuer in accordance with their terms and will
be secured hereunder equally and on a parity (except with respect to any moneys
drawn by the Trustee under the Letter of Credit) with all other Bonds at the
time outstanding hereunder as to the assignment to the Trustee of the Issuer's
right, title and interest in the Revenues, the Agreement, the Refunding Fund and
the Bond Fund (except as to and any provision made by or pursuant to Sections
4.05, 5.06 or 5.07 hereof) and the moneys and investments therein to provide for
payment of Bond Service Charges on the Bonds; and (ii) the issuance of the
Additional Bonds will not result in the interest on the Series 1996 A Bonds
outstanding immediately prior to that issuance becoming includable in gross
income for purposes of federal income taxation.
(h) A written opinion of counsel to the Borrower, reasonably satisfactory
to the Trustee, to the effect that the amendments or supplements to each of the
Agreement and any Additional Notes have been duly authorized, executed and
delivered by the Borrower, and that the Agreement, as amended or supplemented,
and any Additional Notes constitute legal, valid and binding obligations of the
Borrower, in accordance with their respective terms, subject to exceptions
reasonably satisfactory to the Trustee for bankruptcy, insolvency and similar
laws and the application of equitable principles.
(i) The written approval of the Bank to the issuance and delivery of the
Additional Bonds.
(j) An Alternate Letter of Credit in form, substance and amount acceptable
to the Trustee.
When (i) the documents listed above have been received by the Trustee, and
(ii) the Additional Bonds have been executed and authenticated, the
Authenticating Agent shall deliver the Additional Bonds to or on the order of
the purchaser thereof but only upon payment to the
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Trustee of the specified amount (including without limitation, any accrued
interest) set forth in the request and authorization to which reference is made
in paragraph (e) above.
(End of Article II)
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ARTICLE III.
TERMS OF BONDS GENERALLY
Section 3.01. FORM OF BONDS. The Bonds, the certificate of
authentication, the form of assignment and the Instructions to Sell shall be
substantially in the respective forms thereof set forth in Exhibit A to this
Indenture with, in the case of Additional Bonds, any omissions, insertions and
variations which may be authorized or permitted by the Bond Legislation
authorizing, or the Supplemental Indenture entered into in connection with,
those Additional Bonds, all consistent with this Indenture.
All Bonds, unless a Supplemental Indenture shall have been executed and
delivered pursuant to Section 8.02(g) hereof, shall be in fully registered form,
and, except as provided in Section 3.05 hereof and as provided in Sections 2.02,
2.04, 2.05, 2.06, 6.19 and 6.20 with respect to Beneficial Ownership Interests,
the Holder of a Bond shall be regarded as the absolute owner thereof for all
purposes of this Indenture.
The Bonds of one series shall bear any designations which may be necessary
or advisable to distinguish them from Bonds of any other series. The Bonds
shall be negotiable instruments in accordance with the Act, and shall express
the purpose for which they are issued and any other statements or legends which
may be required by law. Each Bond of the same series shall be of a single
maturity.
Bonds of any maturity may be initially issued in temporary form
exchangeable for definitive Bonds of the same maturity when ready for delivery.
The temporary Bonds shall be of such denomination or denominations, without
coupons, as may be determined by the Issuer, 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 Issuer and be authenticated by the Authenticating
Agent upon the same conditions and in substantially the same manner as the
definitive Bonds. If the Issuer issues temporary Bonds it will execute and
furnish definitive Bonds at the Borrower's expense (and without cost to the
owners of such temporary Bonds), and thereupon the temporary Bonds may be
surrendered for cancellation in exchange therefor at the principal corporate
trust office of the Registrar, and the Authenticating Agent shall authenticate
and deliver in exchange for such temporary Bonds an equal aggregate principal
amount of definitive registered Bonds, without coupons, of the same series and
maturity of authorized denominations. Until so exchanged, the temporary Bonds
shall be entitled to the same benefits under this Indenture as definitive Bonds
authenticated and delivered hereunder.
Section 3.02. VARIABLE TERMS. Subject to the provisions of this
Indenture, each series of Bonds shall be dated, shall mature in the years and
the amounts, shall bear interest at the rate or rates per annum, shall be
payable on the dates, shall have the Registrar, Paying Agents and Authenticating
Agents, shall be of the denominations, shall be subject to redemption on the
terms
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<PAGE>
and conditions and shall have any other terms which are set forth or provided
for in this Indenture in the case of the Refunding Bonds, and in this Indenture,
the applicable Bond Legislation and the Supplemental Indenture, in the case of
any issue of Additional Bonds.
Section 3.03. EXECUTION AND AUTHENTICATION OF BONDS. Unless otherwise
provided in the applicable Bond Legislation, each Bond shall be signed by the
Executive of the Issuing Authority (provided that such signature may be
facsimile), attested to by the Fiscal Officer of the Issuing Authority and may
bear the seal of the Issuer (or the Fiscal Officer) or a facsimile thereof. In
case any officer whose signature or a facsimile of whose signature appears on
any Bond shall cease to be that officer before the issuance of the Bond, the
officer's signature or the facsimile thereof nevertheless shall be valid and
sufficient for all purposes, the same as if he or she had remained in office
until that time. Any Bond may be executed on behalf of the Issuer by an officer
who, on the date of execution is the proper officer, although on the date of the
Bond that person was not the proper officer.
No Bond shall be valid or become obligatory for any purpose or shall be
entitled to any security or benefit under this Indenture unless and until a
certificate of authentication, substantially in the form set forth in Exhibit A
to this Indenture, has been signed by the Authenticating Agent for that series
on behalf of the Trustee. The authentication by an Authenticating Agent upon
any Bond shall be conclusive evidence that the Bond so authenticated has been
duly authenticated and delivered hereunder and is entitled to the security and
benefit of this Indenture. The certificate of an Authenticating Agent may be
executed by any person authorized by the Authenticating Agent, but it shall not
be necessary that the same authorized person sign the certificates of
authentication on all of the Bonds of a series.
Section 3.04. SOURCE OF PAYMENT OF BONDS. To the extent provided in and
except as otherwise permitted by this Indenture, (i) the Bonds shall be limited
obligations of the Issuer and the Bond Service Charges thereon shall be payable
equally and ratably solely from the Revenues, (ii) the payment of Bond Service
Charges on the Bonds shall be secured by the assignment of Revenues hereunder
and by this Indenture, and (iii) payments due on the Bonds also shall be secured
by the assignment of the Notes, provided, however, that payment of Bond Service
Charges on any series of Additional Bonds may be otherwise secured and protected
from sources or by property or instruments not applicable to the Refunding Bonds
and any one or more series of Additional Bonds, or not secured and protected
from sources or by property or instruments applicable to the Refunding Bonds or
one or more series of Additional Bonds. The Bonds and the interest payable
thereon do not constitute a debt or liability of the Issuer, the State or any
political subdivision thereof within the meaning of the provisions of the
Constitution or the statutes of the State, or a pledge of the faith and credit
or the taxing power of the Issuer, the State or any political subdivision
thereof, but shall be payable solely from the funds pledged therefor in
accordance with this Indenture.
Section 3.05. PAYMENT AND OWNERSHIP OF BONDS. The principal of and any
premium on any Bond shall be payable when due to a Holder upon presentation and
surrender of such Bond
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at the principal corporate trust office of the Paying Agent. Interest on any
Bond shall be paid on each Interest Payment Date by check or draft which the
Paying Agent shall cause to be mailed on that date to the person in whose name
the Bond (or one or more Predecessor Bonds) is registered at the close of
business on the Regular Record Date applicable to that Interest Payment Date on
the Register at the address appearing therein. Notwithstanding the foregoing
and while the Bonds are held by a Depository interest on any Bond in the
denomination of $100,000 or more shall be paid by wire transfer in immediately
available funds to the bank account number and address filed in writing with the
Registrar by such Holder, which account number and address shall be filed with
the Registrar at least two (2) Business Days prior to that Interest Payment
Date. If and to the extent, however, that the Issuer shall fail to make payment
or provision for payment of interest on any Bond on any Interest Payment Date,
that interest shall cease to be payable to the Person who was the Holder of that
Bond (or of one or more Predecessor Bonds) as of the applicable Regular Record
Date; when moneys become available for payment of the interest, (a) the Paying
Agent shall, pursuant to Section 7.06(d) hereof, establish a Special Record Date
for the payment of that interest which shall be not more than 15 nor fewer than
10 days prior to the date of the proposed payment, and (b) the Registrar shall
cause notice of the proposed payment and of the Special Record Date to be mailed
by first class mail, postage prepaid, to such Holder at its address as it
appears on the Register no fewer than 10 days prior to the Special Record Date
and, thereafter, the interest shall be payable to the Persons who are the
Holders of such Bonds (or their respective Predecessor Bonds) at the close of
business on the Special Record Date. Bond Service Charges shall be payable in
lawful money of the United States of America without deduction for the services
of the Trustee or any Paying Agent.
Notwithstanding anything herein to the contrary, when any Bond is
registered in the name of a Depository or its nominee, the principal and
redemption price of and interest on such Bond shall be payable in federal funds
delivered or transmitted to the Depository or its nominee.
Subject to the foregoing, each Bond delivered under this Indenture upon
transfer thereof, or in exchange for or in replacement of any other Bond, shall
carry the rights to interest accrued and unpaid, and to accrue on that Bond, or
which were carried by that Bond.
Except as provided in (i) Sections 2.02, 2.04, 2.05, 2.06, 6.19 and 6.20
with respect to Beneficial Ownership Interests and (ii) this Section 3.05 and
the first paragraph of Section 3.07 hereof, (x) the Holder of any Bond shall be
deemed and regarded as the absolute owner thereof for all purposes of this
Indenture, (y) payment of or on account of the Bond Service Charges on any Bond
shall be made only to or upon the order of that Holder or its duly authorized
attorney in the manner permitted by this Indenture, and (z) neither the Issuer,
the Trustee, the Registrar nor any Paying Agent or Authenticating Agent shall,
to the extent permitted by law, be affected by notice to the contrary. All of
those payments shall be valid and effective to satisfy and discharge the
liability upon that Bond, including without limitation, the interest thereon, to
the extent of the amount or amounts so paid.
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Section 3.06. TRANSFER AND EXCHANGE OF BONDS. So long as any of the Bonds
remain outstanding, the Issuer will cause books for the registration and
transfer of Bonds, as provided in this Indenture, to be maintained and kept at
the designated office of the Registrar.
Subject to the provisions of Section 2.02 hereof, unless otherwise provided
in the applicable Bond Legislation or Supplemental Indenture, Bonds may be
exchanged, at the option of their Holder, for Bonds of the same series and in
denominations of $100,000 and integral multiples of $5,000 in excess thereof,
and bearing interest at the same rate and maturing on the same date or dates as,
the Bonds being exchanged. The exchange shall be made upon presentation and
surrender of the Bonds being exchanged at the designated office of the Registrar
or at the designated office of any Authenticating Agent for that series of
Bonds, together with an assignment duly executed by the Holder or its duly
authorized attorney in any form which shall be satisfactory to the Registrar or
the Authenticating Agent, as the case may be.
Subject to the provisions of Section 2.02 hereof, any Bond may be
transferred upon the Register, upon presentation and surrender thereof at the
designated office of the Registrar or the designated office of any
Authenticating Agent for the series thereof together with an assignment duly
executed by the Holder or its duly authorized attorney in any form which shall
be satisfactory to the Registrar or the Authenticating Agent, as the case may
be. Upon transfer of any Bond and on request of the Registrar or the
Authenticating Agent, the Issuer shall execute in the name of the transferee,
and the Registrar or the Authenticating Agent, as the case may be, shall
authenticate and deliver, a new Bond or Bonds of the same series, in
denominations of $100,000 and integral multiples of $5,000 in excess thereof in
an aggregate principal amount equal to the unmatured and unredeemed principal
amount of, and bearing interest at the same rate and maturing on the same date
or dates as, the Bonds presented and surrendered for transfer.
In all cases in which Bonds shall be exchanged or transferred hereunder,
the Registrar or any Authenticating Agent, as the case may be, shall
authenticate and deliver Bonds in accordance with the provisions of this
Indenture. The exchange or transfer shall be made without charge; provided that
the Issuer and the Registrar or the Authenticating Agent, as the case may be,
may make a charge for every exchange or transfer of Bonds sufficient to
reimburse them for any tax or excise required to be paid with respect to the
exchange or transfer. The charge shall be paid before a new Bond is delivered.
All Bonds issued upon any transfer or exchange of Bonds shall be the valid
obligations of the Issuer, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Bonds surrendered upon transfer or
exchange. None of the Issuer, the Registrar or any Authenticating Agent, as the
case may be, shall be required to make any exchange or transfer of a Bond during
a period beginning at the opening of business 15 days before the day of the
mailing of a notice of redemption of Bonds of such series and ending at the
close of business on the day of such mailing or to transfer or exchange any
Bonds selected for redemption, in whole or in part; PROVIDED, HOWEVER, the
foregoing provisions shall not preclude an exchange or transfer of a Bond in the
case of an optional or mandatory tender under Sections 2.04, 2.05 or 2.06
hereof.
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In case any Bond is redeemed in part only, on or after the redemption date
and upon presentation and surrender of the Bond, the Issuer shall cause
execution of, and the Registrar or any Authenticating Agent for the series of
that Bond shall authenticate and deliver, a new Bond or Bonds of the same series
in denominations of $100,000 and integral multiples of $5,000 in excess thereof
in an aggregate principal amount equal to the unmatured and unredeemed portion
of, and bearing interest at the same rate and maturing on the same date or dates
as, the Bond redeemed in part. Notwithstanding the foregoing, however, if a
Depository is the sole Bondholder, a notation of partial redemption of Bonds
shall be made by the Depository on the Bond certificates partially redeemed in
such manner as is mutually agreed upon by the Registrar and the Depository.
Section 3.07. MUTILATED, LOST, WRONGFULLY TAKEN OR DESTROYED BONDS. If
any Bond is mutilated, lost, wrongfully taken or destroyed, in the absence of
written notice to the Issuer and the Registrar that a lost, wrongfully taken or
destroyed Bond has been acquired by a bona fide purchaser, the Registrar shall
authenticate and deliver a new Bond of like date, maturity and denomination and
of the same series as the Bond mutilated, lost, wrongfully taken or destroyed;
provided, that (i) in the case of any mutilated Bond, the mutilated Bond first
shall be surrendered to the Registrar, and (ii) in the case of any lost,
wrongfully taken or destroyed Bond, there first shall be furnished to the
Registrar evidence of the loss, wrongful taking or destruction satisfactory to
the Registrar, together with indemnity satisfactory to the Borrower, Bank,
Issuer and Trustee.
If any lost, wrongfully taken or destroyed Bond shall have matured, instead
of issuing a new Bond, the Authorized Borrower Representative may direct the
Paying Agent to pay that Bond without surrender thereof upon the furnishing of
satisfactory evidence and indemnity as in the case of issuance of a new Bond.
The Issuer, the Registrar and the Trustee may charge the Holder of a mutilated,
lost, wrongfully taken or destroyed Bond their reasonable fees and expenses in
connection with their actions pursuant to this Section.
Every new Bond issued pursuant to this Section by reason of any Bond being
lost, wrongfully taken or destroyed (i) shall constitute, to the extent of the
outstanding principal amount of the Bond lost, taken or destroyed, an additional
contractual obligation of the Issuer, regardless of whether the lost, wrongfully
taken or destroyed Bond shall be enforceable at any time by anyone and
(ii) shall be entitled to all of the benefits of this Indenture equally and
proportionately with any and all other Bonds issued and outstanding hereunder.
All Bonds shall be held and owned on the express condition that the
foregoing provisions of this Section are exclusive with respect to the
replacement or payment of mutilated, lost, wrongfully taken or destroyed Bonds
and, to the extent permitted by law, shall preclude any and all other rights and
remedies with respect to the replacement or payment of negotiable instruments or
other investment securities without their surrender, notwithstanding any law or
statute to the contrary now existing or enacted hereafter.
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<PAGE>
Section 3.08. CANCELLATION OF BONDS. Except as provided in Section 3.06
hereof, any Bonds surrendered pursuant to this Article for the purpose of
payment or retirement or for exchange, replacement or transfer shall be canceled
upon presentation and surrender thereof to the Registrar, the Trustee or any
Paying Agent or Authenticating Agent. Any Bond canceled by the Trustee or a
Paying Agent or Authenticating Agent shall be transmitted promptly to the
Registrar by the Trustee, Paying Agent, or Authenticating Agent.
The Issuer, or the Borrower on behalf of the Issuer, may deliver at any
time to the Registrar for cancellation any Bonds previously authenticated and
delivered hereunder, which the Issuer or the Borrower may have acquired in any
manner whatsoever. All Bonds so delivered shall be canceled promptly by the
Registrar. Certification of the surrender and cancellation shall be made to the
Issuer, the Bank and the Trustee by the Registrar at least once each calendar
year. Those canceled bonds shall be destroyed by the Registrar by shredding or
incineration. The Registrar shall provide certificates describing the
destruction of canceled Bonds to the Issuer, the Trustee, the Borrower and the
Bank.
(End of Article III)
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ARTICLE IV.
REDEMPTION OF BONDS
Section 4.01. TERMS OF REDEMPTION OF REFUNDING BONDS. The Refunding Bonds
are subject to redemption prior to stated maturity as follows:.
(a) MANDATORY REDEMPTION UPON A DETERMINATION OF TAXABILITY. Upon the
occurrence of a Determination of Taxability with respect to the Series 1996 A
Bonds, the Refunding Bonds are subject to mandatory redemption in whole at a
redemption price equal to 100% of the outstanding principal amount thereof, plus
interest accrued to the redemption date, at the earliest practicable date
selected by the Trustee, after consultation with the Borrower, but in no event
later than 45 days following receipt by the Trustee and Registrar of notice of
the Determination of Taxability. The occurrence of a Determination of
Taxability with respect to the Series 1996 A Bonds will not constitute an Event
of Default under this Indenture. No increase in the interest payable with
respect to the Series 1996 A Bonds will occur in the event a Determination of
Taxability occurs.
Within five Business Days after receipt by the Trustee of written notice of
a Determination of Taxability, the Registrar shall give written notice thereof
to the Holders of all Series 1996 A Bonds then outstanding, as shown by the
Register, and shall also give written notice to the Borrower, the Issuer and the
Bank.
(b) MANDATORY REDEMPTION UPON EXPIRATION OF LETTER OF CREDIT. The
Refunding Bonds are subject to mandatory redemption in whole on the Interest
Payment Date which next precedes the date which is five (5) days prior to the
Letter of Credit Termination Date, at a redemption price of 100% of the
outstanding principal amount thereof plus accrued interest to the redemption
date unless, at least 45 days prior to any such Interest Payment Date, (a) the
Bank shall have agreed in writing to an extension or further extension of the
Letter of Credit Termination Date to a date not earlier than one year from the
Letter of Credit Termination Date being extended or (b) pursuant to Section 5.09
hereof, the Borrower shall have obtained and delivered to the Trustee an
Alternate Letter of Credit with a termination date not earlier than one year
from the Letter of Credit Termination Date of the Letter of Credit it replaces.
(c) OPTIONAL REDEMPTION. Unless previously redeemed, the Refunding Bonds
are subject to redemption at the option of the Issuer, upon the written
direction of the Borrower with the written consent of the Bank (subject to
compliance with Section 4.03 hereof), (1) if the Refunding Bonds do not bear
interest at the Fixed Interest Rate, in whole or in part (in integral multiples
of $5,000, provided that the unredeemed portion of any Bond redeemed in part
shall be $100,000 or more) on any Interest Rate Adjustment Date at the
redemption price of 100% of the principal amount redeemed plus accrued interest
thereon to the redemption date, or (2) after the Fixed Interest Rate
Commencement Date and on or after the First Optional Redemption Date, in whole
or in part (in integral multiples of $5,000, provided that the unredeemed
portion of any
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Bond redeemed in part shall be $100,000 or more) at any time at a redemption
price equal to the following percentages of the principal amount redeemed, plus
in each case accrued interest to the date fixed for redemption.
Redemption Date Optional Redemption Price
--------------- -------------------------
First Optional Redemption
Date, through the following
last day of March 103%
First Anniversary of the First
Optional Redemption Date,
through the following
last day of March 102%
Second Anniversary of the
First Optional Redemption
Date, through the following
last day of March 101%
Third Anniversary of the First
Optional Redemption Date and
thereafter 100%
(d) EXTRAORDINARY OPTIONAL REDEMPTION. The Refunding Bonds are also
subject to redemption by the Issuer in the event of the exercise by the Borrower
of its option (subject to compliance with Section 4.03 hereof) with the written
consent of the Bank (except for an extraordinary optional redemption pursuant to
Section 6.2(c) of the Agreement) to direct that redemption upon occurrence of
any of the events described in Section 6.2 of the Agreement, (a) at any time in
whole, or (b) at any time in part upon the occurrence of the events permitting
such partial redemption, as provided in Section 6.2 of the Agreement, in each
case at a redemption price of 100% of the principal amount redeemed, plus
interest accrued to the redemption date. Neither the Issuer nor the Trustee
shall have any duty or authority to verify or determine the occurrence of any of
the events described in clauses (a) through (d) of Section 6.2 of the Agreement,
but shall rely conclusively on the Borrower's representations and determinations
with respect to such occurrences.
(e) USE OF CERTAIN FUNDS TO REDEEM REFUNDING BONDS. Except as provided in
Section 9.02 hereof, the Paying Agent shall pay the redemption price on all
Refunding Bonds redeemed under this Section 4.01 in the same manner and from the
same sources as provided in Section 5.03 hereof for the payment of Bond Service
Charges.
Section 4.02. PARTIAL REDEMPTION. If fewer than all of the outstanding
Bonds of a series that are stated to mature on different dates are called for
redemption at one time, those Bonds.
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which are called shall be called in inverse order of the maturities of the Bonds
of that series to be redeemed. If fewer than all of the Bonds of a single
maturity are to be redeemed, the selection of Bonds to be redeemed, or portions
thereof, in amounts equal to $5,000 or integral multiples thereof shall be made
by lot by the Trustee in any manner which the Trustee may determine; provided
that the Trustee shall select Refunding Bonds for redemption so as to assure
that after such redemption no Holder shall retain Bonds in an aggregate amount
less than $100,000 and that any aggregate partial redemption shall be $100,000
or more; and provided further that, if less than all of an outstanding Bond of
one maturity in a book entry system is to be called for redemption, the Trustee
shall give notice to the Depository or the nominee of the Depository that is the
Holder of such Bond, and the selection of the beneficial interests in that Bond
to be redeemed shall be at the sole discretion of the Depository and its
participants. In the case of a partial redemption of Bonds by lot, each unit of
face value of principal thereof equal to $5,000 (each such $5,000 unit is
hereinafter referred to as a "Unit") shall be treated as though it were a
separate Bond in the amount of such Unit. If it is determined that one or more,
but not all of the Units represented by a Bond are to be called for redemption,
then upon notice of redemption of a Unit or Units of Bonds, the Holder of that
Bond shall surrender the Bond to the Registrar (a) for payment of the redemption
price of the Unit or Units of Bonds called for redemption (including without
limitation, the interest accrued to the date fixed for redemption and any
premium), and (b) for issuance, without charge to the Holder thereof, of a new
Bond or Bonds of the same series, in denominations of $100,000 and integral
multiples of $5,000 in excess thereof, aggregating a principal amount equal to
the unmatured and unredeemed portion of, and bearing interest at the same rate
and maturing on the same date as, the Bond surrendered.
Notwithstanding anything in this Section 4.02 to the contrary, any Pledged
Bonds (or Beneficial Ownership Interests therein) shall be selected for
redemption pursuant to this Section 4.02 prior to the selection of any other
Refunding Bonds.
Section 4.03. ISSUER'S ELECTION TO REDEEM. Except in the case of
redemption pursuant to any mandatory redemption provisions hereof, Bonds shall
be redeemed only by written notice from the Issuer to the Trustee and the Bank,
given at the direction of the Borrower, or by written notice from the Borrower
to the Trustee and the Bank on behalf of the Issuer. That notice shall specify
the redemption date and the principal amount of each maturity of Bonds to be
redeemed, and shall be given at least 45 days prior to the redemption date.. In
the case of any optional redemption of Refunding Bonds pursuant to Section
4.01(c) or (d) hereof, prior to the giving of the notice required by Section
4.04 hereof, there shall be (i) except with the prior written consent of the
Bank, Eligible Funds on deposit with the Trustee in an amount which will be
sufficient to redeem at the redemption price thereof, plus interest accrued to
the redemption date, all of the Refunding Bonds for which notice of redemption
is to be given and (ii) delivered to the Trustee the written consent of the Bank
to such redemption.
Section 4.04. NOTICE OF REDEMPTION. Unless waived by any Holder of Bonds
to be redeemed, official notice of any such redemption shall be given by the
Registrar on behalf of the Issuer by mailing a copy of an official redemption
notice by telecopy or first class mail at least.
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30 days and not more than 60 days prior to the date fixed for redemption (except
in the case of a Section 4.01(a) redemption, in which case such notice shall be
given at least 5 days and not more than 15 days prior to the date fixed for
redemption) to the registered owner of the Bond or Bonds to be redeemed at the
address shown on the Register or at such other address as is furnished in
writing by such registered owner to the Registrar.
All official notices of redemption shall be dated and shall state:
(1) the redemption date,
(2) the redemption price,
(3) if less than all outstanding Bonds are to be redeemed, the
identification by designation, letters, numbers or other distinguishing marks
(and, in the case of partial redemption, the respective principal amounts) of
the Bonds to be redeemed,
(4) that on the redemption date the redemption price will become due and
payable upon each such Bond or portion thereof called for redemption, and that
interest thereon shall cease to accrue from and after said date, and
(5) the place where such Bonds are to be surrendered for payment of the
redemption price, which place of payment shall be the principal corporate trust
office of the Registrar.
In addition to the foregoing notice, further notice shall be given by the
Registrar as set out below, but no defect in said further notice nor any failure
to give all or any portion of such further notice shall in any manner defeat the
effectiveness of a call for redemption if notice thereof is given as above
prescribed.
1. Each further notice of redemption given hereunder shall contain the
information required above for an official notice of redemption plus (i) the
CUSIP numbers of all Bonds being redeemed; (ii) the date of issue of the Bonds
as originally issued; (iii) the rate of interest borne by each Bond being
redeemed; (iv) the maturity date of each Bond being redeemed; and (v) any other
descriptive information needed to identify accurately the Bonds being redeemed.
2. Each further notice of redemption shall be sent at least 30 days
before the redemption date by telecopy, registered or certified mail or
overnight delivery service to all registered securities depositories then in the
business of holding substantial amounts of obligations of types comprising the
Bonds (such depositories now being The Depository Trust Company of New York, New
York, Pacific Securities Depository Trust Company of San Francisco, California
and Philadelphia Depository Trust Company of Philadelphia, Pennsylvania) and to
one or more national information services that disseminate notices of redemption
of obligations such as the Bonds.
3. Upon the payment of the redemption price of Bonds being redeemed, each
check or other transfer of funds issued for such purpose shall bear the CUSIP
number (if any) identifying, by issue and maturity, the Bonds being redeemed
with the proceeds of such check or other transfer.
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Failure to receive notice by mailing or any defect in that notice regarding
any Bond, however, shall not affect the validity of the proceedings for the
redemption of any other Bond.
Notice of any redemption hereunder with respect to Bonds held under a book
entry system shall be given by the Registrar only to the Depository, or its
nominee, as the Holder of such Bonds. Selection of book entry interests in the
Bonds called for redemption is the responsibility of the Depository and any
failure of any Direct Participant, Indirect Participant, or Beneficial Owner to
receive such notice and its contents or effect will not affect the validity or
such notice or any proceedings for the redemption of such Bonds.
Section 4.05. PAYMENT OF REDEEMED BONDS. Notice having been sent to the
registered owner of the Bond or Bonds to be redeemed in the manner provided in
Section 4.04 hereof, and, in the event of optional redemption pursuant to
Section 4.01(c) or (d) hereof, upon money being deposited as and if required by
Section 4.03 hereof, the Bonds and portions thereof called for redemption shall
become due and payable on the redemption date, and upon presentation and
surrender thereof at the place or places specified in that notice, shall be paid
at the redemption price, including interest accrued to the redemption date. The
Trustee shall use Eligible Funds which have been deposited with the Trustee
pursuant to Section 4.03 hereof or shall make a drawing under the Letter of
Credit, to pay the principal of and interest due on the Bonds being redeemed.
Any moneys received by the Trustee from the Borrower which are available to be
applied toward the payment of such principal and interest, shall be paid to the
Bank to reimburse the Bank for any drawing made under the Letter of Credit to
pay such principal and interest.
Subject to the provisions of Section 13.05 hereof, if money for the
redemption of all of the Bonds and portions thereof to be redeemed, together
with interest accrued thereon to the redemption date, is held by the Trustee or
any Paying Agent on the redemption date, so as to be available therefor on that
date and if notice of redemption has been sent to the registered owner of the
Bond or Bonds to be redeemed as aforesaid, then from and after the redemption
date those Bonds and portions thereof called for redemption shall cease to bear
interest and no longer shall be considered to be outstanding hereunder. If
those moneys shall not be so available on the redemption date, or that notice
shall not have been sent as aforesaid, those Bonds and portions thereof shall
continue to bear interest, until they are paid, at the same rate or rates as
they would have borne had they not been called for redemption.
All moneys deposited in the Bond Fund and held by the Trustee or a Paying
Agent for the redemption of particular Bonds shall be held in trust for the
account of the Holders thereof and shall be paid to them, respectively, upon
presentation and surrender of those Bonds, except as provided in Section 3.06
hereof.
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Section 4.06. VARIATION OF REDEMPTION PROVISIONS. The provisions of this
Article IV, insofar as they apply to issuance of any series of Additional Bonds,
may be varied by the Supplemental Indenture providing for that series.
(End of Article IV)
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ARTICLE V.
PROVISIONS AS TO FUNDS,
PAYMENTS, PROJECT AND AGREEMENT
Section 5.01. CREATION OF REFUNDING FUND. There is created by the Issuer
and ordered maintained as a separate fund (except when invested as provided
hereinafter) in the custody of the Trustee, a trust fund designated "City of
Gary, Indiana - The Miller Partnership, L.P. Refunding Fund." There is hereby
created within the Refunding Fund separate accounts to be designated the "Series
1996 A Bonds Refunding Account" and the "Series 1996 B Bonds Refunding Account."
The proceeds of the Series 1996 A Bonds shall be deposited in immediately
available funds in the Series 1996 A Bonds Refunding Account and the proceeds of
the Series 1996 B Bonds shall be deposited in immediately available funds in the
Series 1996 B Bonds Refunding Account; provided, however, any proceeds
representing accrued interest on the Refunding Bonds shall be deposited in the
Bond Fund. Unless otherwise set forth in the applicable Bond Legislation or
Supplemental Indenture relating to the issuance of a series of Additional Bonds,
there shall be deposited in appropriate accounts established in the Refunding
Fund the proceeds of the sale of any Additional Bonds, other than any proceeds
representing accrued interest which shall he deposited in the Bond Fund pursuant
to Section 5.03 hereof..
If the unexpended proceeds of a prior issue of Bonds remain in the
Refunding Fund upon the issuance of any Additional Bonds, the Trustee shall
establish a separate subaccount within the Refunding Fund, for accounting
purposes, for the deposit of the proceeds of the issue of Additional Bonds in
accordance with this Section.
Pending disbursement pursuant to the Agreement, the moneys and Eligible
Investments to the credit of the Refunding Fund shall constitute a part of the
Revenues assigned to the Trustee as security for the payment of the Bond Service
Charges.
Section 5.02. DISBURSEMENTS FROM AND RECORDS OF REFUNDING FUND. Moneys
deposited in the Series 1996 A Bonds Refunding Account and the Series 1996 B
Bonds Refunding Account of the Refunding Fund shall be transferred immediately
to the Prior Bonds Trustee for deposit in the Bond Fund established pursuant to
the Prior Indenture. Such moneys shall be disbursed in accordance with the
terms of the Loan Agreement and this Indenture in connection with the refunding
of the Prior Bonds. The Trustee shall have no responsibility to see to any
disbursements of such moneys by the Prior Bonds Trustee..
The Trustee shall cause to be kept and maintained adequate records
pertaining to the Refunding Fund and all disbursements therefrom. If requested
by the Bank, the Issuer or the Borrower, the Trustee shall file copies of the
records pertaining to the Refunding Fund and all disbursements from such fund
with the Bank, the Issuer and the Borrower.
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<PAGE>
Upon the occurrence and continuance of an Event of Default hereunder
because of which the principal amount of the Bonds has been declared to be due
and payable immediately pursuant to Section 7.03 hereof, any moneys remaining in
the Refunding Fund shall be promptly transferred by the Trustee to the Bond
Fund.
Section 5.03. CREATION OF BOND FUND; LETTER OF CREDIT. There is created
by the Issuer and ordered maintained as a separate fund in the custody of the
Trustee a trust fund to be designated "City of Gary, Indiana - The Miller
Partnership, L.P. Bond Fund." Unless otherwise set forth in the applicable Bond
Legislation or Supplemental Indenture relating to the issuance of a series of
Additional Bonds, there shall be deposited in the Bond Fund (and credited, if
required by this Indenture or the Agreement to appropriate accounts therein),
from the proceeds of the sale of the Bonds, any accrued interest paid by the
purchasers of the Bonds..
Except as otherwise provided herein, the Trustee shall deposit in the Bond
Fund upon receipt all Revenues, including all moneys received upon drawings made
under the Letter of Credit (except as otherwise provided in Section 6.19 hereof)
and any other amounts which, under the terms of this Indenture, the Notes, the
Agreement, the Reimbursement Agreement, or the Letter of Credit are to be
applied to the payment of Bond Service Charges. Except as provided herein, the
Bond Fund (and accounts therein for which provision is made herein or in the
Agreement) and the moneys and Eligible Investments therein shall be used solely
and exclusively for the payment of Bond Service Charges as they fall due at
stated maturity, or by redemption or pursuant to any mandatory sinking fund
requirements or upon acceleration, all as provided herein and in the Agreement.
Except as provided in Section 5.08 hereof, neither the Issuer nor the Borrower
shall have any interest in the Bond Fund, its accounts or subaccounts or the
moneys and Eligible Investments therein, all of which shall be held in trust by
the Trustee for the sole benefit of the Holders.
The Trustee shall establish separate accounts within the Bond Fund for each
separate series of Bonds. The Trustee shall establish separate subaccounts
within each separate series account in the Bond Fund for each source of deposit
(including any investment income thereon) made into the Bond Fund so that the
Trustee may at all times ascertain the date of deposit, the amounts, and the
source of the funds in each subaccount. Moneys received for the payment of the
principal of and interest on the Bonds from drawings upon the Letter of Credit
and any investment earnings thereon shall be separate from and never commingled
with moneys from any other source.
Moneys in the Bond Fund shall be used to pay Bond Service Charges with
respect to the Refunding Bonds and for the redemption of Refunding Bonds prior
to maturity and as otherwise provided in this Indenture only in the following
order:
FIRST: Amounts drawn by the Trustee under the Letter of Credit and
deposited into a separate account in the Bond Fund;
SECOND: Any Eligible Funds on deposit in the Bond Fund;
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THIRD: Any other amounts available in the Bond Fund.
The Issuer hereby authorizes and directs the Trustee to draw on the Letter
of Credit pursuant to its terms, in the amounts and at the times necessary to
pay Bond Service Charges on the Refunding Bonds (excluding any premium) pursuant
to this Section 5.03.
The Trustee shall draw upon the Letter of Credit in accordance with the
terms thereof under the following circumstances:
(a) On or before 11:00 a.m., local time at the principal office of the
Bank, on the Business Day prior to any Interest Payment Date (or the maturity
date or any date set for a redemption of Refunding Bonds which is not an
Interest Payment Date), and on or before 10:30 a.m. local time at the principal
office of the Bank, on each Bond Purchase Date, the Trustee shall determine the
amount necessary to make all required payments of principal and interest on the
Refunding Bonds or purchase price payments on the next succeeding Interest
Payment Date, maturity date, other redemption date or such Bond Purchase Date,
and shall present (which presentation may be by tested Telex) a sight draft to
the Bank (together with the required certificates under the Letter of Credit) in
such amount, so as to permit the timely transfer of funds from the Bank to the
Trustee for payment of interest on the Bonds on each Interest Payment Date, for
payment of the principal and interest on the Refunding Bonds when due, whether
at maturity or upon prior redemption, or the payment of the purchase price of
Refunding Bonds when due on the applicable Bond Purchase Date.
(b) Upon acceleration of the Refunding Bonds upon the occurrence of an
Event of Default under Section 7.01 hereof, the Trustee, on or before 11:00
a.m., local time at the principal office of the Bank, on the Business Day prior
to the date on which principal and interest shall be due and payable pursuant to
the declaration of the acceleration of the Refunding Bonds pursuant to Section
7.03 hereof, shall present (which presentation may be by tested Telex) a sight
draft to the Bank (together with required certificates under the Letter of
Credit) for payment of the entire amount due pursuant to Section 7.03 hereof
with respect to the Refunding Bonds.
In no circumstances shall the Trustee use moneys drawn on the Letter of
Credit to pay Bond Service Charges on any Additional Bonds or Pledged Bonds, or
to pay the premium, if any, on Refunding Bonds.
The Trustee shall promptly notify the Borrower by oral or telephonic
communication confirmed in writing if the Bank has not transferred funds in
accordance with the Letter of Credit upon the presentment of any such draft.
In calculating the amount to be drawn on the Letter of Credit for the
payment of principal of and interest on the Refunding Bonds, whether on an
Interest Payment Date, at maturity or upon redemption or acceleration, the
Trustee shall not take into account the receipt or potential receipt of funds
from the Borrower under the Agreement, or the existence of any other moneys in
the
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Refunding Fund or Bond Fund (other than accrued interest, if any received at the
time of the issuance and delivery of the Refunding Bonds), but shall draw on the
Letter of Credit for the full amount of principal and interest coming due on the
Refunding Bonds. If sufficient moneys are available in the Remarketing
Reimbursement Fund to pay the purchase price of the Refunding Bonds and
Beneficial Ownership Interests tendered for purchase, the Trustee shall not draw
on the Letter of Credit but shall forward such amounts directly to the tendering
Holder or Beneficial Owner. The Trustee shall draw on the Letter of Credit to
pay the purchase price of Refunding Bonds and Beneficial Ownership Interests
tendered for purchase only to the extent that moneys in the Remarketing
Reimbursement Fund are insufficient to purchase the Refunding Bonds so tendered.
In calculating the amount, if any, to be drawn on the Letter of Credit for the
purchase of Refunding Bonds and Beneficial Ownership Interests, the Trustee
shall take into account funds received from the purchasers of tendered Refunding
Bonds and Beneficial Ownership Interests or from the Remarketing Agent by 10:00
a.m. local time at the principal office of the Bank on such Bond Purchase Date
with respect to the remarketing of such Refunding Bonds and Beneficial Ownership
Interests or otherwise, and by 10:30 a.m. local time at the principal office of
the Bank on the applicable Bond Purchase Date shall draw on the Letter of Credit
only such amounts as may be necessary to purchase such Refunding Bonds and
Beneficial Ownership Interests after taking into account all funds received by
10:00 a.m. local time at the principal office of the Bank on such date which are
attributable to the remarketing of such Refunding Bonds and Beneficial Ownership
Interests. The Trustee shall give the Bank telephonic notice that the Trustee
expects to draw on the Letter of Credit by 10:00 a.m. local time at the
principal office of the Bank on such Bond Purchase Date. Upon receipt of such
moneys from the Bank, the Trustee shall deposit the amount representing a draw
on the Letter of Credit for the payment of principal and interest on the
Refunding Bonds in a separate account in the Bond Fund and apply the same only
to the payment of such principal and interest when due on the Refunding Bonds,
shall deposit the amount representing a draw on the Letter of Credit for the
purchase of Refunding Bonds in the Remarketing Reimbursement Fund and disburse
said amount only to the tendering Holders and Beneficial Owners of Refunding
Bonds and Beneficial Ownership Interests being purchased and, so long as there
does not exist an Event of Default described in Section 7.01(g) herein, and
subject to the prior satisfaction of all Bond Service Charges then due or on
account of which funds shall have been paid to the Trustee by the Borrower or
shall have been obtained by the Trustee by a drawing or drawings on the Letter
of Credit, by wire transfer shall pay, on behalf of the Borrower, but only from
and to the extent of Loan Payments or any other moneys available in the
Refunding Fund, the Bond Fund or the Remarketing Reimbursement Fund any amounts
due and payable to the Bank under the Reimbursement Agreement for any drawing
made on the Letter of Credit.
The Trustee shall transmit to any Paying Agent, as appropriate, from moneys
in the Bond Fund applicable thereto, amounts sufficient to make timely payments
of principal of, interest and any premium on the Refunding Bonds to be made by
the Paying Agent then due and payable. The Issuer authorizes and directs the
Trustee to cause withdrawal of moneys from the Bond Fund which are available for
the purpose of paying, and are sufficient to pay, the principal of, interest and
any premium on the Refunding Bonds as they become due and payable (whether at
stated
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maturity or by redemption), for the purposes of paying or transferring moneys to
the Paying Agent which are necessary to pay such principal, interest and
premium.
The provisions of this Section are subject to the provisions of Section
9.02 hereof.
Section 5.04. CREATION OF REMARKETING REIMBURSEMENT FUND. There is
created by the Issuer and ordered maintained as a separate fund in the custody
of the Trustee a trust fund to be designated "City of Gary, Indiana - The Miller
Partnership, L.P. Remarketing Reimbursement Fund." The Remarketing
Reimbursement Fund shall not be considered a part of the Revenues but shall be
used solely in connection with the remarketing of Refunding Bonds as set forth
in Section 6.19 hereof. Certain provisions regarding the Remarketing
Reimbursement Fund are set forth in Section 5.03..
Section 5.05. INVESTMENT OF BOND FUND, REFUNDING FUND, REBATE FUND AND
REMARKETING REIMBURSEMENT FUND. Except as hereinafter provided, moneys in the
Bond Fund, the Refunding Fund, the Rebate Fund and the Remarketing Reimbursement
Fund shall be invested and reinvested by the Trustee in Eligible Investments at
the oral or written direction of the Authorized Borrower Representative, but if
oral, confirmed promptly in writing. Investment of moneys in the Bond Fund
shall mature or be redeemable without penalty at the times and in the amounts
necessary to provide moneys to pay Bond Service Charges as they become due at
stated maturity, by redemption or pursuant to any mandatory sinking fund
requirements. Each investment of moneys in the Refunding Fund, the Bond Fund,
the Rebate Fund, and the Remarketing Reimbursement Fund shall mature or be
redeemable without penalty at such time as may be necessary to make payments
when necessary from such fund. In the absence of adequate direction from the
Authorized Borrower Representative, the Trustee shall invest such moneys in a
money market fund for Government Obligations maintained by the Trustee or an
affiliate of the Trustee.
Subject to any written directions from the Authorized Borrower
Representative with respect thereto, and any restrictions contained in Section
5.11 hereof relating to the Rebate Fund, from time to time, the Trustee may sell
Refunding Fund, Remarketing Reimbursement Fund, Rebate Fund and Bond Fund
investments and reinvest the proceeds therefrom in Eligible Investments maturing
or redeemable as aforesaid. Any of those investments may be purchased from or
sold to the Trustee, the Registrar, an Authenticating Agent, a Paying Agent, a
Remarketing Agent or any bank, trust company or savings and loan association
affiliated with any of the foregoing. The Trustee shall sell or redeem
investments credited to the Bond Fund to produce sufficient moneys applicable
hereunder to and at the times required for the purposes of paying Bond Service
Charges or reimbursing the Bank for a drawing on the Letter of Credit when due
as aforesaid, and shall do so without necessity for any order on behalf of the
Issuer and without restriction by reason of any order. An investment made from
moneys credited to the Bond Fund, the Refunding Fund, the Rebate Fund, or the
Remarketing Reimbursement Fund shall constitute part of that respective fund,
and each respective fund shall be credited with all proceeds of sale and income
from investment of moneys credited thereto. For purposes of this Indenture,
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those investments shall be valued at face amount or market value, whichever is
less. The Trustee shall not be liable for any losses sustained as a result of
any investments.
Moneys drawn on the Letter of Credit and deposited in the Bond Fund shall
be deposited in a separate account in the Bond Fund, shall be invested at the
written direction of the Borrower in Eligible Investments approved in writing by
the Bank and shall be held in such account pending application pursuant to the
terms of Section 5.03 or Section 6.19 hereof. Notwithstanding any inconsistent
or contrary provision hereof, such funds shall be applied only to the
satisfaction of the specific Bond Service Charges for which they were drawn and
any funds not so applied together with any earnings derived from the investment
of any funds drawn under the Letter of Credit shall be paid to the Bank.
Section 5.06. MONEYS TO BE HELD IN TRUST. Except where moneys have been
deposited with or paid to the Trustee pursuant to an instrument restricting
their application to particular Bonds, all moneys required or permitted to be
deposited with or paid to the Trustee or any Paying Agent under any provision of
this Indenture, the Agreement or the Letter of Credit, and to be used to pay
Bond Service Charges, or the Notes, and any investments thereof, shall be held
by the Trustee or that Paying Agent in trust. Except (i) for moneys deposited
with or paid to the Trustee or any Paying Agent for the redemption of Bonds,
notice of the redemption of which shall have been duly given, (ii) for moneys
held by the Trustee pursuant to Section 5.07 hereof, (iii) for moneys in the
Remarketing Reimbursement Fund, and (iv) for moneys held in the Rebate Fund, all
moneys described in the preceding sentence held by the Trustee or any Paying
Agent shall be subject to the lien hereof while so held..
Section 5.07. NONPRESENTMENT OF BONDS. In the event that any Bond shall
not be presented for payment when the principal thereof becomes due in whole or
in part, either at stated maturity, by redemption or pursuant to any mandatory
sinking fund requirements, or a check or draft for interest is uncashed, if
moneys sufficient to pay the principal and premium, if any, then due on that
Bond or to pay such check or draft shall have been made available to the Trustee
for the benefit of its Holder, all liability of the Issuer to that Holder for
such payment of the principal and premium, if any, then due on the Bond or
interest on such Bond represented by such check or draft thereupon shall cease
and be discharged completely. Thereupon, it shall be the duty of the Trustee to
hold those moneys, without liability for interest thereon, in a separate account
for the exclusive benefit of the Holder, who shall be restricted thereafter
exclusively to those moneys for any claim of whatever nature on its part under
this indenture or on, or with respect to, the principal and premium, if any,
then due on that Bond or interest on such Bond represented by such check or
draft..
Any of those moneys which shall be so held by the Trustee, and which remain
unclaimed by the Holder of a Bond not presented for payment or check or draft
not cashed for a period of four years after the due date thereof, shall be paid
to the Bank free of any trust or lien unless the Bank shall have confirmed to
the Trustee in writing that no moneys are then due under the Reimbursement
Agreement in which case such moneys shall be paid to the Borrower. Thereafter,
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the Holder of that Bond shall look only to the Borrower for payment and then
only to the amounts so received by the Borrower or paid to or on behalf of the
Borrower (including to the Bank pursuant to this paragraph), without any
interest thereon, and the Trustee shall not have any responsibility with respect
to those moneys.
Section 5.08. REPAYMENT TO THE BANK OR THE BORROWER FROM THE BOND FUND.
Except as provided in Section 5.07 hereof, any amounts remaining in the Bond
Fund (i) after all of the outstanding Bonds shall be deemed paid and discharged
under the provision of this Indenture, and (ii) after payment of all fees,
charges and expenses of the Trustee, the Registrar and any Paying Agent or
Authenticating Agent and of all other amounts required to be paid under this
Indenture, the Agreement and the Notes, shall be paid to the Bank unless the
Bank shall have confirmed to the Trustee in writing that no moneys are then due
under the Reimbursement Agreement in which case such moneys shall be paid to the
Borrower, to the extent that those amounts are in excess of those necessary to
effect the payment and discharge of the outstanding Bonds..
Section 5.09. EXTENSION OF LETTER OF CREDIT; ALTERNATE LETTER OF CREDIT.
The Letter of Credit expires April 15, 2001, or earlier as provided therein,
unless extended from time to time in accordance with the terms thereof..
If the Refunding Bonds are bearing interest at other than the Fixed
Interest Rate, the Borrower may, at its option, provide for the delivery to the
Trustee of an Alternate Letter of Credit to take effect on a date selected by
the Borrower (the "Replacement Date"). If the Refunding Bonds are bearing
interest at the Weekly Interest Rate, the Replacement Date may be any date
selected by the Borrower. If the Refunding Bonds are bearing interest at the
One Month Interest Rate, Three Month Interest Rate, Six Month Interest Rate, One
Year Interest Rate or Five Year Interest Rate, the Replacement Date shall be the
Interest Rate Adjustment Date or the Fixed Interest Rate Commencement Date if
the Bonds are to bear interest at the Fixed Interest Rate. If the Borrower is
providing an Alternate Letter of Credit in connection with the conversion of the
interest rate on the Refunding Bonds to the Fixed Interest Rate, the expiration
date on the Alternate Letter of Credit shall be not earlier than the earlier of
fifteen (15) days after the First Optional Redemption Date or ten (10) years and
fifteen (15) days after the date of issuance of the Alternate Letter of Credit.
Prior to the replacement of a Letter of Credit with an Alternate Letter of
Credit, the Trustee shall give notice to the Holders and, if the Refunding Bonds
are then rated by a Rating Service, to each Rating Service which then has a
rating on the Refunding Bonds of such event, and shall have received the
following, not less than forty-five (45) days prior to the Replacement Date:
(A) an opinion of counsel for the issuer of the Alternate Letter of
Credit that it constitutes a legal, valid and binding obligation of the
issuer in accordance with its terms;
(B) an opinion of counsel acceptable to the Trustee to the effect
that payments under the Alternate Letter of Credit will not constitute
voidable preferences in the event of a bankruptcy of the Borrower;
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(C) an opinion of Bond Counsel that such replacement will not cause
interest on the Series 1996 A Bonds to become includable in gross income
for federal income tax purposes; and
(D) the Alternate Letter of Credit.
If the Refunding Bonds are bearing interest at the Fixed Interest Rate, the
Borrower shall provide for the delivery to the Trustee of an Alternate Letter of
Credit to take effect on a date selected by the Borrower (the "Replacement
Date"). Prior to such replacement, the Trustee shall give notice to the Holders
of such event, and shall have received the following, not less than forty-five
(45) days prior to the Replacement Date:
(A) An opinion of counsel for the issuer of the Alternate Letter of
Credit that it constitutes a legal, valid and binding obligation of the
issuer in accordance with its terms;
(B) An opinion of counsel acceptable to the Trustee to the effect
that payments under the Alternate Letter of Credit will not constitute
voidable preferences in the event of a bankruptcy of the Borrower;
(C) an opinion of Bond Counsel that such replacement will not cause
interest on the Series 1996 A Bonds to become includable in gross income
for federal income tax purposes; and
(D) the Alternate Letter of Credit.
Section 5.10. COMPLIANCE WITH SECTION 148 OF THE CODE. The Trustee shall
cause to be kept and maintained adequate records pertaining to investment of all
proceeds of the Bonds sufficient to permit the Borrower, on behalf of the
Issuer, to determine the amount of rebate, if any, required to be paid to the
United States of America pursuant to Section 148 of the Code..
Section 5.11. REBATE FUND.
(a) The Trustee shall establish and maintain so long as any Series 1996 A
Bonds are Outstanding and are subject to a requirement of the Code that
arbitrage profits be rebated to the United States of America, a rebate fund
designated "City of Gary, Indiana - The Miller Partnership, L.P. Rebate Fund."
The Trustee shall make information regarding the Bonds and investments hereunder
available to the Borrower. The Trustee shall make deposits and disbursements
from the Rebate Fund in accordance with the written instructions received from
the Borrower, shall invest the amounts held in the Rebate Fund pursuant to
written instructions from the Borrower and shall deposit income from such
investments immediately upon receipt thereof in the Rebate Fund. Anything in
this Indenture to the contrary notwithstanding, the immediately preceding
sentence of this Indenture and Subsections (b) and (c) hereof may be superseded
or
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amended by new instructions delivered by the Borrower and accompanied by an
opinion of Bond Counsel addressed to the Trustee to the effect that the use of
the new instructions will not cause interest on the Series 1996 A Bonds to be
included in gross income for federal income tax purposes.
(b) If a deposit to the Rebate Fund is required as a result of the
computations made or caused to be made by the Borrower, the Trustee shall upon
receipt of written direction from the Borrower accept such payment for the
benefit of the Borrower. If amounts in excess of that required to be rebated to
the United States of America accumulate in the Rebate Fund, the Trustee shall
upon written direction from the Borrower transfer such amount to the Borrower.
Records of the determinations required by this Section and the instructions must
be retained by the Trustee until six (6) years after the Series 1996 A Bonds are
no longer outstanding.
(c) Not later than thirty (30) days after March 1, 2001 (or such other
date as the Borrower may choose, provided the Borrower receives an opinion of
Bond Counsel that such change will not cause interest on the Series 1996 A Bonds
to be included in gross income for federal income tax purposes) and every five
(5) years thereafter until final retirement of the Series 1996 A Bonds, upon
written direction from the Borrower, the Trustee shall pay to the United States
of America ninety percent (90%) of the amount required to be on deposit in the
Rebate Fund as of such payment date. Not later than thirty (30) days after the
final retirement of the Series 1996 A Bonds, upon written direction from the
Borrower the Trustee shall pay to the United States of America one hundred
percent (100%) of the balance of the amount required to be on deposit in the
Rebate Fund or such lesser amount as the Borrower shall direct.
(End of Article V)
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ARTICLE VI.
THE TRUSTEE, REGISTRAR, PAYING AGENTS
AUTHENTICATING AGENTS AND REMARKETING AGENT
Section 6.01. TRUSTEE'S ACCEPTANCE AND RESPONSIBILITIES. The Trustee
accepts the trusts imposed upon it by this Indenture, and agrees to observe and
perform those trusts, but only upon and subject to the terms and conditions set
forth in this Article, to all of which the parties hereto and the Holders
agree:.
(a) Prior to the occurrence of a default or an Event of Default (as
defined in section 7.01 hereof) of which the Trustee has been notified, as
provided in paragraph (f) of Section 6.02 hereof, or of which by that paragraph
the Trustee is deemed to have notice, and after the cure or waiver of all
defaults or Events of Default which may have occurred,
(i) the Trustee undertakes to perform only those duties and
obligations which are set forth specifically in this Indenture, and no
duties or obligations shall be implied to the Trustee;
(ii) in the absence of bad faith on its part, the Trustee may rely
conclusively, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in the
case of any such certificates or opinions which by any provision hereof are
required specifically to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not they conform
to the requirements of this Indenture.
(b) In case a default or an Event of Default has occurred and is
continuing hereunder (of which the Trustee has been notified, or is deemed to
have notice), and subject to Section 7.05 herein, the Trustee shall exercise
those rights and powers vested in it by this Indenture and shall use the same
degree of care and skill in their exercise, as a prudent person acting as a
fiduciary would exercise or use under the circumstances.
(c) No provisions of this Indenture shall be construed to relieve the
Trustee from liability for its own grossly negligent action, its own grossly
negligent failure to act, or its own willful misconduct, except that:
(i) this Subsection shall not be construed to affect the limitation
of the Trustee's duties and obligations provided in subparagraph (a)(i) of
this Section or the Trustee's right to rely on the truth of statements and
the correctness of opinions as provided in subparagraph (a)(ii) of this
Section;
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(ii) the Trustee shall not be liable for any error of judgment made
in good faith by any one of its officers, unless it shall be established
that the Trustee was grossly negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Bank or the Holders of at least a majority in aggregate
principal amount of the Bonds then 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, as provided in Sections 7.04 and 7.05 hereof; and
(iv) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers if it shall have reasonable grounds for believing
that payment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section
6.01.
Section 6.02. CERTAIN RIGHTS AND OBLIGATIONS OF THE TRUSTEE. Except as
otherwise provided in Section 6.01 hereof:.
(a) The Trustee (i) may execute any of the trusts or powers hereof and
perform any of its duties by or through attorneys, agents, receivers or
employees (but shall be answerable therefor only in accordance with the standard
specified above), (ii) shall be entitled to the advice of counsel concerning all
matters of trusts hereof and duties hereunder, and (iii) may pay reasonable
compensation in all cases to all of those attorneys, agents, receivers and
employees reasonably employed by it in connection with the trusts hereof. The
Trustee may act upon the opinion or advice of any attorney (who may be the
attorney or attorneys for the Issuer or the Borrower) approved by the Trustee in
the exercise of reasonable care. The Trustee shall not be responsible for any
loss or damage resulting from any action taken or omitted to be taken in good
faith in reliance upon that opinion or advice.
(b) Except for its certificate of authentication, as Authenticating Agent,
on the Bonds, the Trustee shall not be responsible for:
(i) any recital in this Indenture or in the Bonds,
(ii) the validity, priority, recording, rerecording, filing or re-
filing of this Indenture or any Supplemental Indenture,
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(iii) any instrument or document of further assurance or collateral
assignment,
(iv) any financing statements or amendments thereto,
(v) insurance of the Project or collection of insurance moneys,
(vi) the validity of the execution by the Issuer of this Indenture,
any Supplemental Indenture or instruments or documents of further
assurance,
(vii) the sufficiency of the security for the Bonds issued hereunder
or intended to be secured hereby,
(viii) the value of or title to the Project, or
(ix) the maintenance of the security hereof,
except that, in the event that the Trustee enters into possession of any
property pursuant to any provision of any instrument or document, the Trustee
shall use due diligence in preserving that property. The Trustee shall not be
bound to ascertain or inquire as to the observance or performance of any
covenants, agreements, or obligations on the part of the Issuer or the Borrower
under the Agreement except as set forth herein; but the Trustee may require of
the Issuer or the Borrower full information and advice as to the observance or
performance of those covenants, agreements any obligations. Except as otherwise
provided in Section 7.04 hereof, the Trustee shall have no obligation to observe
or perform any of the duties of the Issuer under the Agreement.
(c) The Trustee shall not be accountable for the application by the
Borrower, the Prior Bonds Trustee or any other Person of the proceeds of any
Bonds authenticated or delivered hereunder.
(d) The Trustee shall be protected, in the absence of bad faith on its
part, in acting upon any notice, request, consent, certificate, order,
affidavit, letter, telegram, or other paper or document reasonably believed by
it to be genuine and correct and to have been signed or sent by the proper
Person or Persons. Any action taken by the Trustee pursuant to this Indenture
upon the request or authority or consent of the Bank or any Person who is the
Holder of any Bonds at the time of making the request or giving the authority or
consent, shall be conclusive and binding upon all future Holders of the same
Bond and of Bonds issued in exchange therefor or in place thereof.
(e) As to the existence or nonexistence of any fact for which the Issuer,
the Borrower or the Bank may be responsible or as to the sufficiency or validity
of any instrument, document, report, paper or proceeding, the Trustee, in the
absence of bad faith on its part, shall be entitled to rely upon a certificate
signed on behalf of the Issuer, the Bank or the Borrower by an officer
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or representative thereof as sufficient evidence of the facts recited therein.
Prior to the occurrence of a default or Event of Default hereunder of which the
Trustee has been notified, as provided in paragraph (f) of this Section, or of
which by that paragraph the Trustee is deemed to have notice, the Trustee may
accept a similar certificate to the effect that any particular dealing,
transaction or action is necessary or expedient; provided, that the Trustee in
its discretion may require and obtain any further evidence which it deems to be
necessary or advisable; and, provided further, that the Trustee shall not he
bound to secure any further evidence. The Trustee may accept a certificate of
the officer, or an assistant thereto, having charge of the appropriate records,
to the effect that legislation has been enacted or adopted by the Issuer in the
form recited in that certificate, as conclusive evidence that the legislation
has been duly enacted or adopted and is in full force and effect.
(f) The Trustee shall not be required to take notice, and shall not be
deemed to have notice, of any default or Event of Default hereunder, except
Events of Default described in paragraphs (a), (b), (c) and (g) of Section 7.01
hereof, unless the Trustee shall be notified specifically of the default or
Event of Default in a written instrument or document delivered to it by the
Issuer, the Bank, or by the Holders of at least twelve percent (12%) of the
aggregate principal amount of the Bonds then outstanding. In the absence of
delivery of a notice satisfying those requirements, the Trustee may assume
conclusively that there is no default or Event of Default, except as noted
above.
(g) At any reasonable time, the Trustee and its duly authorized agents,
attorneys, experts, engineers, accountants and representatives (i) may inspect
and copy fully all books, papers and records of the Issuer pertaining to the
Project, the Letter of Credit and the Bonds, and (ii) may take any memoranda
from and in regard thereto as the Trustee may desire.
(h) The Trustee shall not be required to give any bond or surety with
respect to the execution of these trusts and powers or otherwise in respect of
the premises.
(i) Notwithstanding anything contained elsewhere in this Indenture, the
Trustee may demand any showings, certificates, reports, opinions, appraisals and
other information, and any corporate, limited liability company or partnership
action and evidence thereof, in addition to that required by the terms hereof,
as a condition to the authentication of any Bonds or the taking of any action
whatsoever within the purview of this Indenture, if the Trustee deems it to be
desirable for the purpose of establishing the right of the Issuer to the
authentication of any Bonds or the right of any Person to the taking of any
other action by the Trustee; provided, that the Trustee shall not be required to
make that demand.
(j) Before taking action hereunder pursuant to Section 6.04 or Article VII
hereof (with the exception of any action required to be taken under Sections
7.02 or 7.03 hereof, with respect to drawings made under the Letter of Credit,
and with the declaration of a mandatory tender or mandatory redemption), the
Trustee may require that a satisfactory indemnity bond be furnished to it for
the reimbursement of all expenses which it may incur and to protect it against
all liability
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by reason of any action so taken, except liability which is adjudicated to have
resulted from its negligence or willful misconduct. The Trustee may take action
without that indemnity, and in that case, the Borrower shall reimburse the
Trustee for all of the Trustee's expenses pursuant to Section 6.03 hereof.
(k) Unless otherwise provided herein, all moneys received by the Trustee
under this Indenture shall be held in trust for the purpose for which those
moneys were received, until those moneys are used, applied or invested as
provided herein; provided, that those moneys need not be segregated from other
moneys, except to the extent required by this Indenture or by law. The Trustee
shall not have any liability for interest on any moneys received hereunder,
except to the extent expressly provided herein.
(l) Any legislation enacted or adopted by the Issuer, and any opinions,
certificates and other instruments and documents for which provision is made in
this Indenture, may be accepted by the Trustee, in the absence of bad faith on
its part, as conclusive evidence of the facts and conclusions stated therein and
shall be full warrant, protection and authority to the Trustee for its actions
taken hereunder.
(m) The Trustee shall be entitled conclusively to rely upon the
determination of the interest rates made and delivered to the Trustee by the
Remarketing Agent.
Section 6.03. FEES, CHARGES AND EXPENSES OF TRUSTEE, REGISTRAR, PAYING
AGENTS AND AUTHENTICATING AGENTS. The Trustee, the Registrar and any Paying
Agent or Authenticating Agent shall be entitled to payment or reimbursement by
the Borrower, as provided in the Agreement, for customary fees for their
respective Ordinary Services rendered hereunder and for all advances, counsel
fees and other Ordinary Expenses reasonably and necessarily paid or incurred by
them in connection with the provision of Ordinary Services. For purposes
hereof, fees for Ordinary Services provided for by their respective standard fee
schedules shall be considered customary. In the event that it should become
necessary for any of them to perform Extraordinary Services, they shall be
entitled to customary extra compensation therefor and to reimbursement for
reasonable and necessary Extraordinary Expenses incurred in connection
therewith.
Without creating a default or an Event of Default hereunder, however, the
Borrower may contest in good faith the necessity for any Extraordinary Service
and Extraordinary Expense and the amount of any fee, charge or expense.
The Trustee, the Registrar and any Paying Agent or Authenticating Agent
shall not be entitled to compensation or reimbursement for Extraordinary
Services or Extraordinary Expenses occasioned by their neglect or willful
misconduct. The payment to which the Trustee, the Registrar and any Paying
Agent and Authenticating Agent are entitled hereunder shall be made only from
(i) the Additional Payments made by the Borrower pursuant to the Agreement, or
(ii) from other moneys available therefor. Any amounts payable to the Trustee,
the Registrar or any
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Paying Agent or Authenticating Agent pursuant to this Section 6.03 shall be
payable upon demand and shall bear interest from the date of demand therefor at
the Interest Rate for Advances.
Section 6.04. INTERVENTION BY TRUSTEE. The Trustee may intervene on
behalf of the Holders, and shall intervene if requested to do so in writing by
the Holders of at least twenty-five percent (25%) of the aggregate principal
amount of Bonds then outstanding, in any judicial proceeding to which the
Issuer, the Bank or the Borrower is a party and which in the opinion of the
Trustee and its counsel has a substantial bearing on the interests of Holders of
the Bonds. The rights and obligations of the Trustee under this Section are
subject to the approval of that intervention by a court of competent
jurisdiction. The Trustee may require that a satisfactory indemnity bond be
provided to it in accordance with Sections 6.01 and 6.02 hereof before it takes
action under this Section..
Section 6.05. SUCCESSOR TRUSTEE. Anything herein to the contrary
notwithstanding,.
(a) any corporation or association (i) into which the Trustee may be
converted or merged, (ii) with which the Trustee or any successor to it may be
consolidated or (iii) to which it may sell or transfer its assets and trust
business as a whole or substantially as a whole, or any corporation or
association resulting from any such conversion, merger, consolidation, sale or
transfer, IPSO FACTO, shall be and become successor Trustee hereunder and shall
be vested with all of the title to the whole property or trust estate hereunder;
and
(b) that corporation or association shall be vested further, as was its
predecessor, with each and every trust, property, remedy, power, right, duty,
obligation, discretion, privilege, claim, demand, cause of action, immunity,
estate, title, interest and lien expressed or intended by this Indenture to be
exercised by, vested in or conveyed to the Trustee, without the execution or
filing of any instrument or document or any further act on the part of any of
the parties hereto.
Any successor Trustee, however, shall be a trust company or a commercial bank
having the powers of a trust company authorized to exercise trust powers in the
State, and shall have a reported capital and surplus of not less than
$50,000,000.
Section 6.06. APPOINTMENT OF CO-TRUSTEE. It is the purpose of this
Indenture that there shall be no violation of any law of any jurisdiction
(including without limitation, the laws of the State) denying or restricting the
right of banks or trust companies to transact business as trustees in that
jurisdiction, it is recognized that, (a) if there is litigation under this
Indenture or other instruments or documents relating to the Bonds and the
Project, and in particular, in case of the enforcement hereof or thereof upon a
default or an Event of Default, or (b) if the Trustee should deem that, by
reason of any present or future law of any jurisdiction, it may not (i) exercise
any of the powers, rights or remedies granted herein to the Trustee, (ii) hold
title to the properties, in trust, as granted herein, or (iii) take any action
which may be desirable or necessary in connection therewith, it may be necessary
that the Trustee appoint an individual or additional
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institution as a co-Trustee. The following provisions of this Section are
adopted to these ends.
In the event that the Trustee appoints an individual or additional
institution as a co-Trustee, each and every trust, property, remedy, power,
right, duty, obligation, discretion, privilege, claim, demand, cause of action,
immunity, estate, title, interest and lien expressed or intended by this
Indenture to be exercised by, vested in or conveyed to the Trustee shall be
exercisable by, vest in and be conveyed to that co-Trustee, but only to the
extent necessary for it to be so vested and conveyed and to enable that co-
Trustee to exercise it. Every covenant, agreement and obligation necessary to
the exercise thereof by that co-Trustee shall run to and be enforceable by it.
Should any instrument or document in writing from the Issuer reasonably be
required by the co-Trustee so appointed by the Trustee for vesting and conveying
more fully and certainly in and to that co-Trustee those trusts, properties,
remedies, powers, rights, duties, obligations, discretions, privileges, claims,
demands, causes of action, immunities, estates, titles, interests and liens,
that instrument or document shall be executed, acknowledged and delivered, but
not prepared, by the Issuer. In case any co-Trustee or a successor to it shall
die, become incapable of acting, resign or be removed, all of the trusts,
properties, remedies, powers, rights, duties, obligations, discretions,
privileges, claims, demands, causes of action, immunities, estates, titles,
interests and liens of the co-Trustee shall be exercised by, vest in and be
conveyed to the Trustee, to the extent permitted by law, until the appointment
of a successor to the co-Trustee.
Section 6.07. RESIGNATION BY THE TRUSTEE. The Trustee may resign at any
time from the trusts created hereby by giving written notice of the resignation
to the Issuer, the Borrower, the Bank, the Remarketing Agent, the Registrar, any
Paying Agent and any Authenticating Agent and the Underwriter of the Bonds then
outstanding and by mailing written notice of the resignation to the Holders as
their names and addresses appear on the Register at the close of business
fifteen (15) days prior to the mailing. The resignation shall take effect upon
the appointment of, and acceptance by, a successor Trustee.
Section 6.08. REMOVAL OF THE TRUSTEE. The Trustee may be removed at any
time by an instrument or document or concurrent instruments or documents in
writing delivered to the Trustee, with copies thereof mailed to the Issuer, the
Registrar, the Bank, the Remarketing Agent, any Paying Agent, any Authenticating
Agent and the Borrower, and signed by or on behalf of the Bank or the Holders of
at least a majority in aggregate principal amount of the Bonds then outstanding.
The Trustee also may be removed at any time for any breach of trust or for
acting or proceeding in violation of, or for failing to act or proceed in
accordance with, any provision of this Indenture with respect to the duties and
obligations of the Trustee by any court of competent jurisdiction upon the
application of the Issuer, the Bank or the Holders of not less than twenty
percent (20%) in aggregate principal amount of the Bonds then outstanding under
this Indenture.
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Any removal of the Trustee shall take effect upon the appointment of a
successor Trustee.
Section 6.09. APPOINTMENT OF SUCCESSOR TRUSTEE. If (i) the Trustee shall
resign, shall be removed, shall be dissolved, or shall become otherwise
incapable of acting hereunder, (ii) the Trustee shall be taken under the control
of any public officer or officers, or (iii) a receiver shall be appointed for
the Trustee by a court, then a successor Trustee shall be appointed by the
Issuer, with the written consent of the Bank and the Borrower; provided, that if
a successor Trustee is not so appointed within ten (10) days after (a) a notice
of resignation or an instrument or document of removal is received by the
Issuer, as provided in Section 6.07 and 6.08 hereof, respectively, or (b) the
Trustee is dissolved, taken under control, becomes otherwise incapable of acting
or a receiver is appointed, in each case, as provided above, then, so long as
the Issuer shall not have appointed a successor Trustee, the Bank and the
Holders of at least a majority in aggregate principal amount of Bonds then
outstanding may designate a successor Trustee by an instrument or document or
concurrent instruments or documents in writing signed by or on behalf of those
Holders. If no appointment of a successor Trustee shall be made pursuant to the
foregoing provisions of this Section, the Holder of any Bond outstanding
hereunder, the Bank or any retiring Trustee may apply to any court of competent
jurisdiction to appoint a successor Trustee. Such court may thereupon, after
such notice, if any, as such court may deem proper and prescribe, appoint a
successor Trustee.
Every successor Trustee and Co-Trustee appointed pursuant to this Section
shall be a trust company or a bank having the powers of a trust company in the
State and shall have a reported capital and surplus of not less than
$50,000,000, shall be willing to accept the trusteeship under the terms and
conditions of this Indenture, and shall be reasonably acceptable to the Bank.
Every successor Trustee and Co-Trustee appointed hereunder shall execute
and acknowledge, and shall deliver to its predecessor, the Issuer, the Bank, the
Remarketing Agent and the Borrower, an instrument or document in writing
accepting the appointment. Thereupon, without any further act, the successor
shall become vested with all of the trusts, properties, remedies, powers,
rights, duties, obligations, discretions, privileges, claims, demands, causes of
action, immunities, estates, titles, interests and liens of its predecessor.
Upon the written request of its successor, the Issuer, the Bank or the Borrower
and payment of all fees and expenses owed to it, the predecessor Trustee (i)
shall execute and deliver an instrument or document transferring to its
successor all of the trusts, properties, remedies, powers, rights, duties,
obligations, discretions, privileges, claims, demands, causes of action,
immunities, estates, titles, interests and liens of the predecessor Trustee
hereunder, and (ii) shall take any other action necessary to duly assign,
transfer and deliver to its successor all property (including without
limitation, all securities and moneys) held by it as Trustee. Should any
instrument or document in writing from the Issuer be requested by any successor
Trustee for vesting and conveying more fully and certainly in and to that
successor the trusts, properties, remedies, powers, rights, duties, obligations,
discretions, privileges, claims, demands, causes of action, immunities, estates,
titles, interests and liens vested or conveyed or intended to be vested or
conveyed hereby in or to the predecessor Trustee, the Issuer shall execute,
acknowledge and deliver that instrument or document.
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Prior to the acceptance by a successor trustee of the trusts hereunder, the
Letter of Credit shall be transferred to the successor trustee in accordance
with the terms of the Letter of Credit.
In the event of a change in the Trustee, the predecessor Trustee shall
cease to be custodian of any moneys which it may hold pursuant to this Indenture
and shall cease to be Registrar, Authenticating Agent and a Paying Agent for any
of the Bonds, to the extent it served in any of those capacities. The successor
Trustee shall become custodian and, if applicable, Registrar, Authenticating
Agent and a Paying Agent.
Section 6.10. ADOPTION OF AUTHENTICATION. In case any of the Bonds shall
have been authenticated, but shall not have been delivered, any successor
Trustee, Registrar or Authenticating Agent may adopt the certificate of
authentication of any predecessor Trustee, Registrar or Authenticating Agent and
may deliver those Bonds so authenticated as provided herein. In case any Bonds
shall not have been authenticated, any successor Trustee, Registrar or
Authenticating Agent may authenticate those Bonds either in the name of any
predecessor or in its own name. In all cases, the certificate of authentication
shall have the same force and effect as provided in the Bonds or in this
Indenture with respect to the certificate of authentication of the predecessor
Trustee, Registrar or Authenticating Agent.
Section 6.11. REGISTRARS.
(a) INITIAL APPOINTMENT AND SUCCESSION. The Fifth Third Bank, is hereby
appointed Registrar under this Indenture. Anything herein to the contrary
notwithstanding, any corporation or association (i) into which a Registrar may
be converted or merged, (ii) with which a Registrar or any successor to it may
be consolidated, or (iii) to which it may sell or transfer its assets as a whole
or substantially as a whole, or any corporation or association resulting from
any such conversion, merger, consolidation, sale or transfer, IPSO FACTO, shall
be and become successor Registrar to that Registrar hereunder and shall be
vested with each and every power, right, duty, obligation, discretion and
privilege expressed or intended by this Indenture to be exercised by or vested
in the predecessor Registrar, without the execution or filing of any instrument
or document or any further act on the part of any of the parties hereto.
(b) RESIGNATION. A Registrar may resign at any time by giving written
notice of its resignation to the Issuer, the Borrower, the Trustee, the Bank,
the Remarketing Agent, and to each Paying Agent and Authenticating Agent for
those series of Bonds for which it is Registrar, at least sixty (60) days before
the resignation is to take effect. The resignation shall take effect
immediately, however, upon the appointment of a successor Registrar, if the
successor Registrar is appointed and accepts that appointment before the time
stated in the notice.
(c) REMOVAL. The Registrar may be removed at any time by the Trustee or
by an instrument or document or concurrent instruments or documents in writing
delivered to the Registrar, with copies thereof mailed to the Issuer, the
Trustee, the Bank, the Remarketing Agent,
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and the Borrower, and signed by or on behalf of the Holders of at least a
majority in aggregate principal amount of the Bonds then outstanding for which
it is Registrar.
(d) APPOINTMENT OF SUCCESSORS. If (i) a Registrar shall resign, shall
be removed, shall be dissolved, or shall become otherwise incapable of acting
hereunder, (ii) a Registrar shall be taken under the control of any public
officer or officers, (iii) a receiver shall be appointed for a Registrar by a
court, or (iv) a Registrar shall have an order for relief entered in any case
commenced by or against it under the federal bankruptcy laws or commence a
proceeding under any federal or state bankruptcy, insolvency, reorganization or
similar law, or have such a proceeding commenced against it and either have an
order of insolvency or reorganization entered against it or have the proceeding
remain undismissed and unstayed for ninety (90) days, then a successor Registrar
shall be appointed by the Executive of the Issuer with the written consent of
the Bank, the Borrower and the Trustee; provided, that if a successor Registrar
is-not so appointed within ten (10) days after (a) a notice of resignation or an
instrument or document of removal is received by the Issuer, as provided above,
or (b) the Registrar is dissolved, taken under control, becomes incapable of
acting or a receiver is appointed, in each case, as provided above, then, if the
Executive of the Issuer shall not have appointed a successor Registrar, the
Trustee or the Holders of at least a majority in aggregate principal amount of
the Bonds then outstanding for which it is Registrar may designate a successor
Registrar by an instrument or document or concurrent instruments or documents in
writing signed by the Trustee, or in the case of the Holders, by or on behalf of
those Holders.
Every successor Registrar appointed hereunder shall execute and acknowledge
and shall deliver to its predecessor, the Issuer, the Bank, the Trustee, the
Remarketing Agent, any Authenticating Agents, any Paying Agents and the
Borrower, an instrument or document in writing accepting the appointment.
Thereupon, without any further act, the successor shall become vested with all
of the properties, remedies, powers, rights, duties, obligations, discretions,
privileges, claims, demands, causes of action, immunities, titles and interests
of its predecessor. Upon the written request of its successor, the Issuer, the
Bank or the Borrower, a predecessor Registrar (i) shall execute and deliver an
instrument or document transferring to its successor all of the properties,
remedies, powers, rights, duties, obligations, provisions, privileges, claims,
demands, causes of action, immunities, titles and interests of it as predecessor
Registrar hereunder, and (ii) shall take any other action necessary to duly
assign, transfer and deliver to its successor all property and records
(including without limitation, the Register and any canceled Bonds) held by it
as Registrar. Should any instrument or document in writing from the Issuer be
requested by any successor Registrar for vesting and conveying more fully and
certainly in and to that successor the properties, remedies, powers, rights,
duties, obligations, discretions, privileges, claims, demands, causes of action,
immunities, titles and interests vested or conveyed or intended to be vested or
conveyed hereby in or to a predecessor Registrar, the Issuer shall execute,
acknowledge and deliver that instrument or document.
The Borrower shall pay to any Registrar from time to time customary
compensation as authorized in Section 6.03 hereof for its services.
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The provisions of Section 3.05 and Subsection 6.02(d) hereof shall be
applicable to any Registrar.
Section 6.12. DESIGNATION AND SUCCESSION OF PAYING AGENTS. The Fifth
Third Bank is hereby appointed Paying Agent under this Indenture. With the
consent of the Issuer, the Trustee may appoint an additional Paying Agent or
Agents with power to act on its behalf and subject to its direction in the
payment of Bond Service Charges on the Bonds. It is the responsibility of the
Trustee to establish the duties and responsibilities of any Paying Agent for the
purposes of this Indenture, to the extent not specified herein.
Any corporation or association with or into which any Paying Agent may be
merged or converted or with which it may be consolidated, or any corporation or
association resulting from any merger, consolidation or conversion to which any
Paying Agent shall be a party, or any corporation or association succeeding to
the trust business of any Paying Agent, shall be the successor of that Paying
Agent hereunder, if that successor corporation or association is otherwise
eligible hereunder, without the execution or filing of any paper or any further
act on the part of the parties hereto or the Paying Agent or that successor
corporation or association.
Any Paying Agent may at any time resign by giving written notice of
resignation to the Trustee, to the Registrar, to the Bank and to the Borrower.
The Trustee may at any time terminate the agency of any Paying Agent by giving
written notice of termination to such Paying Agent, to the Registrar, to the
Bank and to the Borrower. Upon receiving such a notice of resignation or upon
such termination, or in case at any time any Paying Agent shall cease to be
eligible under this Section, the Trustee may appoint a successor Paying Agent.
The Trustee shall give written notice of appointment of a successor Paying Agent
to the Borrower, the Issuer, the Bank and the Registrar and shall mail, within
ten (10) days after that appointment, notice thereof to the Holders of such
Bonds for which such successor is Paying Agent as their names and addresses
appear on the Register on the date of that appointment.
Any successor Paying Agent shall be a trust company or a commercial bank
authorized to conduct business in the State, and shall have a reported capital
and surplus of not less than $50,000,000.
The Borrower shall pay to any Paying Agent from time to time customary
compensation as authorized in Section 6.03 hereof for its services.
The provisions of Section 3.05 and 3.06 and Subsection 6.02(d) hereof shall
be applicable to any Paying Agent.
Section 6.13. DESIGNATION AND SUCCESSION OF AUTHENTICATING AGENTS. The
Fifth Third Bank is hereby appointed Authenticating Agent for purposes of this
Indenture. With the consent of the Issuer, the Trustee may appoint an
Authenticating Agent or Agents, in addition to the Registrar, with power to act
on its behalf and subject to its direction in the authentication and delivery of
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Bonds in connection with transfers and exchanges under Sections 3.06 and 4.02
hereof. For all purposes of this Indenture, the authentication and delivery of
Bonds by an Authenticating Agent pursuant to this Section shall be deemed to be
authentication and delivery of those Bonds by the Trustee.
Any corporation or association with or into which any Authenticating Agent
may be merged or converted or with which it may be consolidated, or any
corporation or association resulting from any merger, consolidation or
conversion to which any Authenticating Agent shall be a party, or any
corporation or association succeeding to the trust business of any
Authenticating Agent, shall be the successor of that Authenticating Agent
hereunder, if that successor corporation or association is otherwise eligible
hereunder, without the execution or filing of any paper or any further act on
the part of the parties hereto or the Authenticating Agent or such successor
corporation or association.
Any Authenticating Agent may at any time resign by giving written notice of
resignation to the Trustee, to the Registrar, to the Bank, to the Issuer and to
the Borrower. The Trustee may at any time terminate the agency of any
Authenticating Agent, by giving written notice of termination to such
Authenticating Agent, to the Issuer, to the Registrar, to the Bank and to the
Borrower. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible under this Section, the Trustee may appoint a successor Authenticating
Agent. The Trustee shall give written notice of appointment of a successor
Authenticating Agent to the Borrower, the Issuer, the Bank and the Registrar and
shall mail, within ten (10) days after that appointment, notice thereof to the
Holders of such Bonds for which such successor is Authenticating Agent as their
names and addresses appear on the Register on the date of that appointment.
The Borrower shall pay to any Authenticating Agent from time to time
customary compensation for its services.
The provisions of Section 3.05 and 3.06 and Subsections 6.02(b), (c), (d),
(h) and (i) hereof shall be applicable to any Authenticating Agent.
Section 6.14. DEALING IN BONDS. The Trustee, the Bank, a Registrar, a
Paying Agent and an Authenticating Agent, their affiliates, and any directors,
officers, partners, employees or agents thereof, in good faith, may become the
owners of Bonds secured hereby with the same rights which it or they would have
hereunder if the Trustee, the Registrar, the Bank, a Paying Agent or an
Authenticating Agent did not serve in those capacities.
Section 6.15. REPRESENTATIONS, AGREEMENTS AND COVENANTS OF TRUSTEE. The
Trustee hereby represents that it is an Indiana banking corporation duly
organized and validly existing under the laws of the State of Indiana and duly
authorized to exercise corporate trust powers in the State, and that it has an
unimpaired reported capital and surplus of not less than $50,000,000. The
Trustee covenants that it will take such action, if any, as is necessary to
remain duly authorized
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to exercise corporate trust powers in the State and that it will maintain an
unimpaired reported capital and surplus of not less than $50,000,000. The
Trustee accepts and agrees to observe and perform the duties and obligations of
the Trustee to which reference is made in any instrument or document providing
security for any of the Bonds.
Section 6.16. INTERPLEADER. In the event of a dispute between any of the
parties hereto with respect to the disposition of any funds held by the Trustee
hereunder, or the Trustee received conflicting demands made upon the Trustee
with respect to the Trustee's duties hereunder or any other document related to
the Bonds, the Trustee shall be entitled to file a suit in interpleader in a
court of competent jurisdiction seeking to require the parties to interplead and
litigate in such court their several claims and rights among themselves. Upon
the filing of such a suit and the deposit of the applicable funds to such court,
the Trustee will IPSO FACTO be fully released and discharged from all
obligations to further perform any and all duties imposed hereunder or any other
document related to the Bonds regarding such matter and/or such funds that are
the subject of such interpleader suit. In the event that the Trustee remains as
Trustee under this Indenture and receives a court order, directive or other
request regarding the interpleader order, the Trustee shall be entitled to rely
upon such instruction without incurring any obligation or liability and the
parties hereto release, hold harmless and indemnify the Trustee for any
obligation or liability for so relying on such court instruction.
Section 6.17. CONCERNING THE REMARKETING AGENT. Everen Securities, Inc.
is hereby appointed the Remarketing Agent by the Issuer. Any subsequent
Remarketing Agent shall be appointed by the Issuer, with the approval of the
Borrower and the Bank and shall meet the qualifications set forth in this
Section and Section 6.18 hereof and shall act as the agent of the Issuer
pursuant to the provisions hereof. The Remarketing Agent shall designate to the
Trustee its principal office and signify its acceptance of the duties and
obligations imposed upon it hereunder by a written instrument of acceptance
delivered to the Issuer, the Bank, the Borrower and the Trustee. In addition,
the Remarketing Agent will agree particularly to:
(a) compute the Weekly Interest Rate, the One Month Interest Rate, the
Three Month Interest Rate, the Six Month Interest Rate, the One Year Interest
Rate, the Five Year Interest Rate and the Fixed Interest Rate, as applicable,
and give notices of such computations to the Trustee on each applicable Interest
Rate Determination Date, all in accordance with this Indenture; and
(b) keep such records relating to its computations of interest rates for
the Refunding Bonds as shall be consistent with prudent industry practice and to
make such records available for inspection by the Issuer, the Trustee, the Bank
and the Borrower at all reasonable times.
The Remarketing Agent shall be entitled to advice of legal counsel on any
matter relating to the Remarketing Agent's obligations hereunder and shall be
entitled to act upon the opinion of such counsel in the exercise of reasonable
care in fulfilling such obligations.
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The Remarketing Agent shall, with the consent of the Borrower, be entitled
to appoint additional co-Remarketing Agents to assist in the performance of the
Remarketing Agent's obligations under this Indenture, and any such appointment
shall be effective without any action by the Issuer or the Bank being necessary;
provided that any such co-Remarketing Agent, shall have a capitalization of at
least $5,000,000, or shall have a line of credit with a commercial bank in the
amount of at least $5,000,000, shall be in conformity with all standards and
requirements of the Municipal Securities Rulemaking Board and the Securities and
Exchange Commission, and shall be authorized by law to perform all the duties
imposed upon it by this Indenture. Gates Capital Corporation is hereby
appointed as an initial co-Remarketing Agent.
Section 6.18. QUALIFICATIONS OF REMARKETING AGENT. The Remarketing Agent
shall have a capitalization of at least $5,000,000, or have a line of credit
with a commercial bank in the amount of at least $5,000,000, and shall be
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 the duties and
obligations created by this Indenture by giving at least thirty (30) days'
notice of such resignation to the Issuer, the Borrower, the Bank and the
Trustee. The Remarketing Agent may be removed at any time by the Issuer (on its
own or with the approval of the Borrower) and the written consent of the Bank.
To effect such removal, the Issuer shall give at least thirty (30) days' notice
of such removal to the Remarketing Agent, the Borrower, the Bank and the
Trustee.
Upon any resignation of the Remarketing Agent, the departing Remarketing
Agent shall pay over, assign and deliver any moneys and Refunding Bonds held by
it in such capacity to its successor or, if there be no successor, to the
Trustee.
In the event that the Remarketing Agent shall resign, or be removed or
dissolved, or if the property or affairs of the Remarketing Agent shall be taken
under the control of any state or federal court or administrative body because
of bankruptcy or insolvency, or for any other reason, and the Issuer shall not
have appointed a successor Remarketing Agent, the Trustee shall implement the
purchase of Refunding Bonds, tendered pursuant to the provisions of this
Indenture, pursuant to a draw on the Letter of Credit as provided for in Section
5.03 hereof.
The Trustee, within thirty (30) days of the resignation or removal of the
Remarketing Agent or the appointment of a successor Remarketing Agent, shall
give notice thereof by registered or certified mail to the applicable Rating
Service (if the Refunding Bonds have been rated) and to the registered Holders
of the Refunding Bonds.
Section 6.19. REMARKETING OF REFUNDING BONDS. No later than 3:00 p.m.
local time at the principal corporate trust office of the Registrar (a) on the
eighth Business Day prior to each Bond Purchase Date while the Refunding Bonds
bear interest at the Three Month Interest Rate, the Six Month Interest Rate, the
One Year Interest Rate or the Five Year Interest Rate, or (b) the sixth calendar
day prior to each Bond Purchase Date or the next succeeding Business Day if such
sixth day is not a Business Day while the Refunding Bonds bear interest at the
Weekly Interest Rate,
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or (c) the fifth Business Day prior to each Bond Purchase Date while the
Refunding Bonds bear interest at the One Month Interest Rate, the Trustee shall
give notice to the Remarketing Agent by telephone or telecopy, confirmed on the
same day in writing, which states (i) the name and address of each Holder or
Beneficial Owner which has given notice of exercise of an option with respect to
such Bond Purchase Date as provided in paragraph (c) of Section 2.04 hereof, and
the principal amount of Refunding Bonds or Beneficial Ownership Interests to be
tendered by such Holder or Beneficial Owner or deemed tendered by such Holder or
Beneficial Owner, and (ii) the aggregate principal amount of Refunding Bonds or
Beneficial Ownership Interests which are deemed to be tendered pursuant to
Sections 2.05 or 2.06 hereof. Additionally, no later than 1:00 p.m. local time
at the principal corporate trust office of the Registrar on the eighth Business
Day or the fifth Business Day, whichever is applicable, prior to each Bond
Purchase Date upon which there is a mandatory tender of Refunding Bonds or
Beneficial Ownership Interests pursuant to Sections 2.05 or 2.06 hereof, the
Trustee shall give notice to the Remarketing Agent by telephone, telecopy or in
writing, which states the aggregate principal amount of Refunding Bonds or
Beneficial Ownership Interests with respect to which the Trustee has not
received an election to retain pursuant to Sections 2.05 or 2.06 hereof.
Based upon such notices from the Trustee, the Remarketing Agent shall use
its best efforts to sell all Refunding Bonds or Beneficial Ownership Interests,
as applicable, tendered pursuant to Sections 2.04, 2.05 and 2.06 hereof for
settlement on the applicable Bond Purchase Date, except if an Event of Default
has occurred and is continuing under this Indenture. Except as hereinafter
provided, any such sale shall be at such rate of discount or premium as, in the
judgment of the Remarketing Agent, having due regard to prevailing financial
market conditions, shall be necessary.
The Remarketing Agent shall have the right to remarket any Refunding Bonds
or Beneficial Ownership Interests (or portion thereof) tendered pursuant to
Sections 2.04, 2.05 or 2.06 hereof; provided, however, that no such Refunding
Bond or Beneficial Ownership Interest shall be remarketed at a price less than
100% of the principal thereof plus accrued interest (if any) without the prior
written consent of the Borrower and the Bank. The Remarketing Agent shall have
the right to purchase any Refunding Bond or Beneficial Ownership Interest
tendered or deemed tendered pursuant to Sections 2.04, 2.05 or 2.06 hereof at
100% of the principal amount thereof, and to thereafter sell such Refunding Bond
or Beneficial Ownership Interest. Any such purchase shall constitute a
remarketing hereunder.
The Remarketing Agent shall not remarket any Refunding Bond or Beneficial
Ownership Interest to the Issuer, the Borrower, any guarantor of the Bonds
(excluding the Bank) or any person which is an "insider" of the Borrower or any
such guarantor within the meaning of the United States Bankruptcy Code.
No later than 10:00 a.m. according to the local time at the principal
office of the Bank on each Bond Purchase Date, the Remarketing Agent shall pay
to the Trustee, in immediately available funds, the proceeds theretofore
received by the Remarketing Agent from the remarketing
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of Refunding Bonds and the Beneficial Ownership Interests tendered for purchase
on such Bond Purchase Date; provided, that the Remarketing Agent may use its
best efforts to cause the purchasers of the remarketed Refunding Bonds and the
Beneficial Ownership Interests to pay the purchase price plus accrued interest
(if any) to the Trustee in immediately available funds no later than 10:00 a.m.
according to the local time at the principal office of the Bank on each Bond
Purchase Date. The proceeds from the remarketing of the Refunding Bonds and
Beneficial Ownership Interests shall be segregated from any funds of the
Borrower or the Issuer and shall in no case be considered to be, or be, assets
of the Borrower or the Issuer.
There shall be deposited in the Remarketing Reimbursement Fund, on each
Bond Purchase Date, the remarketing proceeds received by the Trustee pursuant to
this Section plus, if necessary, any moneys from a draw on the Letter of Credit
to be used to pay the purchase price of tendered Refunding Bonds and Beneficial
Ownership Interests. The Trustee shall use the amounts deposited in the
Remarketing Reimbursement Fund to pay the purchase price of tendered Refunding
Bonds and Beneficial Ownership Interests. If the Trustee fails to receive
moneys pursuant to a draw properly made on the Letter of Credit to pay the
purchase price of tendered Refunding Bonds or Beneficial Ownership Interests,
(a) any amount paid by the Bank on such draw shall be deposited in the Bond Fund
and (b) pursuant to Section 7.03 hereof, the Trustee shall declare all of the
outstanding the Bonds to be due and payable.
Section 6.20. DELIVERY OF PURCHASED REFUNDING BONDS AND REMARKETING OF
PLEDGED BONDS. No later than 11:00 a.m. or before the Business Day next
preceding each Bond Purchase Date, the Remarketing Agent, by telephonic advice,
shall notify the Trustee and the Bank of (i) the principal amount of Refunding
Bonds or Beneficial Ownership Interests to be sold by the Remarketing Agent
pursuant to Section 6.19 hereof and the purchase price, names, addresses and
social security numbers or other tax identification numbers of the proposed
purchasers thereof and (ii) the principal amount of Refunding Bonds or
Beneficial Ownership Interests tendered for purchase on such Bond Purchase Date
which will not be sold by the Remarketing Agent pursuant to Section 6.19 hereof.
Such telephonic advice shall be confirmed by written notice delivered or mailed
on the same date as the telephonic advice.
Refunding Bonds and Beneficial Ownership Interests purchased by the Trustee
on a Bond Purchase Date shall be delivered as follows:
(a) Refunding Bonds sold by the Remarketing Agent pursuant to Section
6.19 hereof shall be delivered to the purchasers thereof. With respect to
Beneficial Ownership Interests sold by the Remarketing Agent pursuant to Section
6.19 hereof, the Remarketing Agent and the Trustee shall take such actions as
may be necessary to reflect the transfer of such Beneficial Ownership Interests
to the purchasers thereof in the book entry system maintained by the Depository.
(b) Refunding Bonds and Beneficial Ownership Interests not sold by the
Remarketing Agent pursuant to Section 6.19 hereof which are purchased with the
proceeds of a drawing under
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the Letter of Credit pursuant to Section 5.03 hereof shall be held as Pledged
Bonds, by the Trustee, as agent for the Bank, subject to any instructions from
the Bank to deliver the Pledged Bonds to the Bank and to the pledge in favor of
the Bank created pursuant to the provisions of the Reimbursement Agreement.
Pledged Bonds shall serve as collateral for the Borrower's obligations to the
Bank under the Reimbursement Agreement. Any Pledged Bonds held by the Trustee
shall not be released or transferred except to the Bank or to the Remarketing
Agent at the written direction of the Bank as provided in the last paragraph of
this Section.
Refunding Bonds or Beneficial Ownership Interests (other than Pledged
Bonds) delivered as provided in this Section shall be registered (or recorded
through the Depository) in the manner directed by the recipient thereof.
Pledged Bonds or Beneficial Ownership Interests shall be registered (or recorded
through the Depository) in the name of the Bank or its designee, as requested by
the Bank. In addition to the delivery of the Refunding Bonds or Beneficial
Ownership Interests to the recipients thereof as herein provided, the Trustee
shall deliver the due-bill checks, if any, received pursuant to Section 2.04
hereof, to the recipients of the Refunding Bonds or Beneficial Ownership
Interests.
The Trustee shall not release Pledged Bonds to the Remarketing Agent for
remarketing unless the Letter of Credit will be in an amount sufficient to pay
the principal of and the required days of interest for the applicable Interest
Rate Period at the Maximum Rate for all outstanding Refunding Bonds, including
the Pledged Bonds to be remarketed. The Remarketing Agent shall use its best
efforts to remarket Pledged Bonds, except if an Event of Default has occurred
and is continuing under this Indenture. Upon the remarketing of the Pledged
Bonds, the Remarketing Agent shall notify the Bank, the Trustee and the Borrower
of such remarketing, the name, address and social security or other tax
identification number of the purchaser, and the date (the "Placement Date") that
the purchaser shall deliver the purchase price to the Trustee or the Remarketing
Agent by 11:00 a.m. local time at the principal corporate trust office of the
Trustee. The Placement Date shall be at least two Business Days after the date
the notice of the purchase is given by the Remarketing Agent.
No later than 11:00 a.m. according to the local time at the principal
corporate trust office of the Registrar on each Placement Date, the Remarketing
Agent shall pay to the Trustee, in immediately available funds, the proceeds
theretofore received by the Remarketing Agent from the remarketing of Pledged
Bonds on such Placement Date; provided, that the Remarketing Agent may use its
best efforts to cause the purchasers of the remarketed Pledged Bonds to pay the
purchase price plus accrued interest (if any) directly to the Trustee in
immediately available funds no later than 11:00 a.m. according to the local time
at the principal corporate trust office of the Registrar on each Placement Date.
The proceeds from the remarketing of the Pledged Bonds shall be segregated from
any funds of the Borrower or the Issuer and shall in no case be considered to
be, or be, assets of the Borrower or the Issuer. The Trustee shall deposit such
funds in the Remarketing Reimbursement Fund and shall pay the Bank such funds by
wire transfer on the Placement Date. The Bank shall deliver any Pledged Bonds
held by the Bank which have been so remarketed to the Trustee against payment on
the Placement Date. With respect to any Pledged
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Bonds not so held by the Bank, the Bank shall direct the Trustee to release such
Pledged Bonds which have been so remarketed to the Remarketing Agent against
payment therefor on the Placement Date. On the Placement Date, the Trustee
shall authenticate and deliver, if applicable, new Refunding Bonds in
replacement of the remarketed Pledged Bonds to the purchasers thereof.
Section 6.21. SURVIVAL OF CERTAIN PROVISIONS. The provisions of Sections
6.01 through 6.17 of this Indenture shall survive the release, discharge and
satisfaction of this Indenture.
Section 6.22. DELEGATION OF DUTIES. The Trustee shall have the authority
to delegate any duties, obligations or responsibilities hereunder to The Fifth
Third Bank.
(End of Article VI)
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ARTICLE VII.
DEFAULT PROVISIONS AND REMEDIES
OF TRUSTEE AND HOLDERS
Section 7.01. DEFAULTS; EVENTS OF DEFAULT. The occurrence of any of the
following events is defined as and declared to be and to constitute an Event of
Default hereunder:.
(a) Failure to pay when due any interest on any Bond;
(b) Payment of the principal of or any premium on any Bond shall not be
made when and as that principal or premium shall become due and payable, whether
at stated maturity, by redemption, pursuant to any mandatory sinking fund
requirements, by acceleration or otherwise;
(c) Failure to pay on the Bond Purchase Date amounts due to the Holder
of any Refunding Bonds or the Beneficial Owner of any Beneficial Ownership
Interests tendered or deemed tendered to the Trustee pursuant to Section 2.04
hereof or deemed to be tendered to the Trustee pursuant to Section 2.05 or
Section 2.06 hereof;
(d) Failure by the Issuer to observe or perform any other covenant,
agreement or obligation on its part to be observed or performed contained in
this Indenture or in the Bonds, which failure shall have continued for a period
of 30 days after written notice, by registered or certified mail, to the Issuer,
the Bank and the Borrower specifying the failure and requiring that it be
remedied, which notice may be given by the Trustee in its discretion and shall
be given by the Trustee at the written request of the Bank or the Holders of not
less than 25 percent in aggregate principal amount of Bonds then outstanding;
(e) The occurrence and continuation of an Event of Default as defined in
Section 7.1 of the Agreement;
(f) Receipt by the Trustee of a written notice from the Bank that an
Event of Default has occurred and is continuing under the Reimbursement
Agreement and directing the Trustee to accelerate the maturity of the Refunding
Bonds;
(g) Failure of the Bank to honor any drawing in accordance with the
terms of the Letter of Credit;
(h) The Bank shall: (i) commence a proceeding under any Federal or
state insolvency, reorganization or similar law, or have such a proceeding
commenced against it and either have an order of insolvency or reorganization
entered against it or have the proceeding remain undismissed and unstayed for 90
days; or (ii) have a receiver, conservator, liquidator or trustee appointed for
it or for the whole or any substantial part of its property; and
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(i) Receipt by the Trustee of written notice from the Bank by the
fifteenth day following the honoring of an interest drawing on the Letter of
Credit (including the interest portion of a drawing to pay the purchase price of
tendered Refunding Bonds) that the amount available to be drawn by the Trustee
under the Letter of Credit has not been reinstated to an amount not less than
100% of the outstanding principal of, plus 56 days' interest on the Refunding
Bonds (or 195 days' interest on the Refunding Bonds if the Interest Rate Mode on
the Refunding Bonds is six months or longer) computed at the Maximum Rate.
The term "default" or "failure" as used in this Article means (i) a default
or failure by the Issuer in the observance or performance of any of the
covenants, agreements or obligations on its part to be observed or performed
contained in this Indenture or in the Bonds, or (ii) a default or failure by the
Borrower under the Agreement, in either case, exclusive of any period of grace
or notice required to constitute a default or failure an Event of Default, as
provided above or in the Agreement.
The provisions of paragraph (h) above are subject to the conditions that
(l) none of the acts or circumstances specified therein shall constitute an
Event of Default if the Borrower, within sixty (60) days thereafter, provides an
Alternate Letter of Credit meeting the requirements of Section 5.09 hereof and
(2) the declaration of an Event of Default due to any of the acts or
circumstances specified therein, and the exercise of remedies upon any such
declaration, shall be subject to any applicable limitations of bankruptcy,
insolvency or receivership laws applicable to the Bank affecting or precluding
such declaration or exercise during the pendency of or immediately following any
bankruptcy, insolvency, receivership, liquidation or reorganization proceedings.
Section 7.02. NOTICE OF DEFAULT. If an Event of Default shall occur,
within five (5) days of obtaining notice of such Event of Default pursuant to
the terms of the Indenture, the Trustee shall give written notice of the Event
of Default, by registered or certified mail, to the Issuer, the Borrower, the
Bank, the Registrar, any Paying Agent and Authenticating Agent and the
Remarketing Agent for the Bonds..
Section 7.03. ACCELERATION. Upon the occurrence of an Event of Default as
specified in paragraphs (a), (b), (c), (f), (g), or (i) of Section 7.01 hereof,
the Trustee shall declare, by a notice in writing delivered to the Issuer and
the Borrower, the principal of all Bonds then outstanding (if not then due and
payable), together with interest accrued thereon, to be due and payable
immediately. Upon the occurrence of any other Event of Default (except an Event
of Default as specified in paragraph (h) of Section 7.01 hereof), the Trustee
shall, upon the written direction of the Bank so long as an Event of Default as
specified in paragraphs (g) or (h) of Section 7.01 hereof has not occurred and
is continuing, declare by a notice in writing delivered to the Issuer and the
Borrower the principal of all Bonds then outstanding (if not then due and
payable), together with interest accrued thereon, to be due and payable
immediately. Upon the occurrence of an Event of Default described in paragraph
(h) of Section 7.01 hereof, if there is
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not then existing an Event of Default described in paragraphs (a), (b), (c),
(f), (g) or (i) of Section 7.01 hereof, then the Trustee, without the consent of
the Bank, may, and upon the written request of the Holders of not less than 25%
in aggregate principal amount of Bonds then outstanding shall, declare the
principal of all Bonds then outstanding, together with the interest accrued
thereon, to be due and payable immediately.
Any such declaration shall be by telephonic notice, immediately confirmed
by notice in writing, to the Issuer, the Holders (to the extent their telephone
numbers have been provided in writing to the Trustee), the Bank, the Remarketing
Agent and the Borrower, and, upon said declaration, principal and interest on
all Bonds shall become and be immediately due and payable. The Trustee
immediately upon such declaration shall give notice thereof in the same manner
as provided in Section 4.04 hereof with respect to the redemption of the Bonds.
Such notice shall specify the date on which payment of principal and interest
shall be tendered to the Holders of the Bonds. Interest shall accrue to the
payment date determined by the Trustee (which date shall be on or before seven
(7) days following the date the Trustee obtains knowledge of the Event of
Default, the occurrence of which led to the acceleration of the Bonds) pursuant
to such declaration. Upon any declaration of acceleration hereunder, the
Trustee shall immediately exercise such rights as it may have under the
Agreement and the Notes to declare all payments thereunder to be immediately due
and payable and, pursuant to paragraph (b) in Section 5.03 hereof, shall draw
upon the Letter of Credit to the full extent permitted by the terms thereof.
Section 7.04. OTHER REMEDIES; RIGHTS OF HOLDERS. With or without taking
action under Section 7.03 hereof, upon the occurrence and continuance of an
Event of Default, the Trustee may pursue any other available remedy to enforce
the payment of Bond Service Charges or the observance and performance of any
other covenant, agreement or obligation under this Indenture, the Agreement, the
Notes or any other instrument providing security, directly or indirectly, for
the Bonds, provided that the Trustee shall not pursue any such remedy without
the prior written consent of the Bank so long as no Event of Default described
in Section 7.01(g) or (h) has occurred and is continuing.
If, upon the occurrence and continuance of an Event of Default, the Trustee
is required so to do by the Holders of at least a majority in aggregate
principal amount of Bonds outstanding or by the Bank (if no Event of Default
under Section 7.01(g) or (h) has occurred and is continuing), the Trustee
(subject to the provisions of Sections 6.01 and 6.02 hereof and particularly
subparagraph 6.01(c)(iv) and Subsection 6.02(j) of those Sections) shall
exercise any rights and powers conferred by this Section and by Section 7.03
hereof. Anything in this or the next succeeding paragraph to the contrary
notwithstanding, so long as no Event of Default under Section 7.01(g) or (h)
hereof has occurred and is continuing, the Bank shall have the exclusive right
to give any such directions to the Trustee.
No remedy conferred upon or reserved to the Trustee (or to the Holders) by
this Indenture is intended to be exclusive of any other remedy. Each remedy
shall be cumulative and shall be
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in addition to every other remedy given hereunder or otherwise to the Trustee or
to the Holders now or hereafter existing.
No delay in exercising or omission to exercise any remedy, right or power
accruing upon any default or Event of Default shall impair that remedy, right or
power or shall be construed to be a waiver of any default or Event of Default or
acquiescence therein. Every remedy, right and power may be exercised from time
to time and as often as may be deemed to be expedient.
No waiver of any default or Event of Default hereunder, whether by the
Trustee or by the Holders, shall extend to or shall affect any subsequent
default or Event of Default or shall impair any remedy, right or power
consequent thereon.
As the assignee of all right, title and interest of the Issuer in and to
the Agreement (except for the Unassigned Issuer's Rights), the Trustee is
empowered to enforce each remedy, right and power granted to the Issuer under
the Agreement. In exercising any remedy, right or power thereunder or
hereunder, the Trustee shall take any action which would best serve the
interests of the Holders in the judgment of the Trustee, applying the standards
described in Sections 6.01 and 6.02 hereof.
Section 7.05. RIGHT OF HOLDERS TO DIRECT PROCEEDINGS. Anything to the
contrary in this Indenture (other than clause (iv) below) notwithstanding, the
Holders of at least a majority in aggregate principal amount of Bonds then
outstanding shall have the right at any time to direct, by an instrument or
document or instruments or documents in writing executed and delivered to the
Trustee, the method and place of conducting all proceedings to be taken in
connection with the enforcement of the terms and conditions of this Indenture or
any other proceedings hereunder; provided, that (i) any direction shall not be
other than in accordance with the provisions of law and of this Indenture, (ii)
the Trustee shall be indemnified as provided in Sections 6.01 and 6.02 hereof,
(iii) the Trustee may take any other action which it deems to be proper and
which is not inconsistent with the direction, and (iv) anything in the foregoing
to the contrary notwithstanding, so long as no Event of Default under Section
7.01(g) or (h) hereof has occurred and is continuing, the Bank shall have the
exclusive right to give any such directions to the Trustee.
Section 7.06. APPLICATION OF MONEYS. All moneys received by the Trustee
after acceleration of the maturity of the Bonds and derived from any drawing
made upon the Letter of Credit or from the remarketing of Bonds, shall be
applied by the Trustee to and only to the payment of principal of or interest on
the Refunding Bonds. Subject to the foregoing, after payment of any costs,
expenses, liabilities and advances paid, incurred or made by the Trustee in the
collection of moneys pursuant to any right given or action taken under the
provisions of this Article or the provision of the Agreement or the Notes
(including without limitation, reasonable attorneys' fees and expenses, except
as limited by law or judicial order or decision entered in any action taken
under this Article VII) and all fees owing to the Trustee for Ordinary or
Extraordinary Services, all moneys received by the Trustee, shall be applied as
follows, subject to any provision made pursuant to Sections 4.05, 5.06 or 5.07
hereof:.
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(a) Unless the principal of all of the Bonds shall have become, or shall
have been declared to be, due and payable, all of those moneys shall be
deposited in the Bond Fund and shall be applied:
First -- To the payment to the Holders entitled thereto of all installments
of interest then due on the Bonds, in the order of the dates of maturity of the
installments of that interest, beginning with the earliest date of maturity and
if the amount available is not sufficient to pay in full any particular
installment, then to the payment thereof ratably, according to the amounts due
on that installment, to the Holders entitled thereto, without any discrimination
or privilege, except as to any difference in the respective rates of interest
specified in the Bonds; and
Second -- To the payment to the Holders entitled thereto of the unpaid
principal of any of the Bonds which shall have become due (other than Bonds
previously called for redemption for the payment of which moneys are held
pursuant to the provisions of this Indenture), whether at stated maturity or
pursuant to any mandatory sinking fund requirements, in the order of their due
dates, beginning with the earliest due date, with interest on those Bonds from
the respective dates upon which they become due at the rates specified in those
Bonds, and if the amount available is not sufficient to pay in full all Bonds
due on any particular date, together with that interest, then to the payment
thereof ratably, according to the amounts of principal due on that date, to the
Holders entitled thereto, without any discrimination or privilege, except as to
any difference in the respective rates of interest specified in the Bonds.
(b) If the principal of all of the Bonds shall have become due or shall
have been declared to be due and payable pursuant to this Article, all of those
moneys shall be deposited into the Bond Fund and shall be applied to the payment
of the principal and interest then due and unpaid upon the Bonds, without
preference or priority of principal over interest, of interest over principal,
of any installment of interest over any other installment of interest, or of any
Bond over any other Bond, ratably, according to the amounts due respectively for
principal and interest, to the Holders entitled thereto, without any
discrimination or privilege, except as to any difference in the respective rates
of interest specified in the Bonds.
(c) If the principal of all of the Bonds shall have been declared to be
due and payable pursuant to this Article, and if that declaration thereafter
shall have been rescinded and annulled under the provisions of Section 7.10
hereof, subject to the provisions of paragraph (b) of this Section in the event
that the principal of all of the Bonds shall become due and payable later, the
moneys shall be deposited in the Bond Fund and shall be applied in accordance
with the provisions of Article V hereof.
(d) Whenever moneys are to be applied pursuant to the provisions of this
Section, those moneys shall be applied at such times, and from time to time, as
the Trustee shall determine, having due regard to the amount of moneys available
for application and the likelihood of additional moneys becoming available for
application in the future. Whenever the Trustee shall
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direct the application of those moneys, it shall fix the date upon which the
application is to be made, and upon that date, interest shall cease to accrue on
the amounts of principal, if any, to be paid on that date, provided the moneys
are available therefor. The Trustee shall give notice of the deposit with it of
any moneys and of the fixing of that date, all consistent with the requirements
of Section 3.05 hereof for the establishment of, and for giving notice with
respect to, a Special Record Date for the payment of overdue interest. The
Trustee shall not be required to make payment of principal of and any premium on
a Bond to the Holder thereof, until the Bond shall be presented to the Trustee
for appropriate endorsement or for cancellation if it is paid fully, subject to
the provisions of Section 3.06 hereof.
Section 7.07. REMEDIES VESTED IN TRUSTEE. All rights of action (including
without limitation, the right to file proof of claims) under this Indenture or
under any of the Bonds may be enforced by the Trustee without the possession of
any of the Bonds or the production thereof in any trial or other proceeding
relating thereto. Any suit or proceeding instituted by the Trustee shall be
brought in its name as Trustee without the necessity of joining any Holders as
plaintiffs or defendants. Any recovery of judgment shall be for the benefit of
the Holders of the outstanding Bonds, subject to the provisions of this
Indenture.
Section 7.08. RIGHTS AND REMEDIES OF HOLDERS. A Holder shall not have any
right to institute any suit, action or proceeding for the enforcement of this
Indenture, for the execution of any trust hereof, or for the exercise of any
other remedy hereunder, unless:.
(a) there has occurred and be continuing an Event of Default of which
the Trustee has been notified, as provided in paragraph (f) of Section 6.02
hereof, or of which it is deemed to have notice under that paragraph,
(b) the Holders of at least twenty-five percent (25%) in aggregate
principal amount of Bonds then outstanding shall have made written request to
the Trustee and shall have afforded the Trustee reasonable opportunity to
proceed to exercise the remedies, rights and powers granted herein or to
institute the suit, action or proceeding in its own name, and shall have offered
indemnity to the Trustee as provided in Sections 6.01 and 6.02 hereof, and
(c) the Trustee thereafter shall have failed or refused to exercise the
remedies, rights and powers granted herein or to institute the suit, action or
proceeding in its own name.
At the option of the Trustee, that notification (or notice), request,
opportunity and offer of indemnity are conditions precedent in every case, to
the institution of any suit, action or proceeding described above. Anything in
the foregoing to the contrary notwithstanding, no Holder of any Bond shall have
any right to institute any suit, action or proceeding at law or in equity for
the enforcement of this Indenture or for the execution of any trust hereof or
for the appointment of a receiver or any other remedy hereunder unless an Event
of Default under Section 7.01(g) or (h) hereof shall have occurred and be
continuing.
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No one or more Holders of the Bonds shall have any right to affect, disturb
or prejudice in any manner whatsoever the security or benefit of this Indenture
by its or their action, or to enforce, except in the manner provided herein, any
remedy, right or power hereunder. Any suit, action or proceedings shall be
instituted, had and maintained in the manner provided herein for the benefit of
the Holders of all Bonds then outstanding. Nothing in this Indenture shall
affect or impair, however, the right of any Holder to enforce the payment of the
Bond Service Charges on any Bond owned by that Holder at and after the maturity
thereof, at the place, from the sources and in the manner expressed in that
Bond.
Section 7.09. TERMINATION OF PROCEEDINGS. In case the Trustee shall have
proceeded to enforce any remedy, right or power under this Indenture in any
suit, action or proceedings, and the suit, action or proceedings shall have been
discontinued or abandoned for any reason, or shall have been determined
adversely to the Trustee; the Issuer, the Trustee, the Bank and the Holders
shall be restored to their former positions and rights hereunder, respectively,
and all rights, remedies and powers of the Trustee shall continue as if no suit,
action or proceedings had been taken.
Section 7.10. WAIVERS OF EVENTS OF DEFAULT. Except as hereinafter
provided, at any time, in its discretion, the Trustee, but only with the express
written consent of the Bank, other than in the case of an Event of Default
described in Section 7.01(a), (b), (c), (g) or (h) hereof, may waive any Event
of Default hereunder and its consequences and may rescind and annul any
declaration of maturity of principal of the Bonds. The Trustee shall do so upon
the written request of the Bank (other than in the case of an Event of Default
described in Section 7.01 (a), (b), (c), (g) or (h) hereof). Notwithstanding
the foregoing, prior to waiving any Event of Default described in Section
7.01(f) or (i) hereof, the Trustee shall have received written confirmation from
the Bank that (i) the Bank has annulled the declaration of maturity of principal
of the Bonds and (ii) the Letter of Credit has been reinstated to an amount not
less than 100% of the outstanding principal of, plus 56 days interest (or 195
days interest if the Interest Rate Mode on the Refunding Bonds is six months or
longer) on, the Refunding Bonds computed at the Maximum Rate. .
There shall not be so waived, however, any Event of Default described in
paragraphs (a), (b), (c), (g) or (h) of Section 7.01 hereof or any declaration
of acceleration in connection therewith rescinded or annulled except (i) if such
Event of Default shall have been cured and (ii) with the written consent of the
Holders of a majority in aggregate principal amount of all Bonds then
outstanding and of the Bank. In the case of the waiver or rescission and
annulment, or in case any suit, action or proceedings taken by the Trustee on
account of any Event of Default shall have been discontinued, abandoned or
determined adversely to it; the Issuer, the Trustee, the Bank and the Holders
shall be restored to their former positions and rights hereunder, respectively.
No
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waiver or rescission shall extend to any subsequent or other Event of Default or
impair any right consequent thereon.
Section 7.11. EXPENSES AND SERVICES AFTER AN EVENT OF DEFAULT. When the
Trustee incurs expenses or renders services after the occurrence of an Event of
Default described in this Article VII, the expenses and compensation for
services are intended to constitute expenses of administration under any
bankruptcy law.
(End of Article VII)
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ARTICLE VIII.
SUPPLEMENTAL INDENTURES
SECTION 8.01. SUPPLEMENTAL INDENTURES GENERALLY. The Issuer and the
Trustee may enter into indentures supplemental to this Indenture, as provided in
this Article and pursuant to the other provisions therefor in this Indenture.
Section 8.02. SUPPLEMENTAL INDENTURES NOT REQUIRING CONSENT OF HOLDERS.
Without the consent of, or notice to, any of the Holders, the Issuer and the
Trustee, but with the prior consent of the Borrower and the Bank (except if an
Event of Default as specified in paragraphs (g) or (h) of Section 7.01 hereof
shall have occurred and is continuing), may enter into indentures supplemental
to this Indenture which shall not, in the opinion of the Trustee, be
inconsistent with the terms and provisions hereof for any one or more of the
following purposes:.
(a) To cure any ambiguity, inconsistency or formal defect or omission in
this Indenture;
(b) To grant to or confer upon the Trustee for the benefit of the
Holders any additional rights, remedies, powers or authority that lawfully may
be granted to or conferred upon the Holders or the Trustee;
(c) To assign additional revenues under this Indenture;
(d) To accept additional security and instruments and documents of
further assurance with respect to the Project;
(e) To add to the covenants, agreements and obligations of the Issuer
under this Indenture, other covenants, agreements and obligations to be observed
for the protection of the Holders, or to surrender or limit any right, power or
authority reserved to or conferred upon the Issuer in this Indenture including,
without limitation, the limitation of rights of redemption so that in certain
instances Bonds of different series will be redeemed in some prescribed
relationship to one another for the protection of the Holders of a particular
series of Bonds;
(f) To evidence any succession to the Issuer and the assumption by its
successor of the covenants, agreements and obligations of the Issuer under this
Indenture, the Agreement and the Bonds;
(g) To permit the exchange of Bonds, at the option of the Holder or
Holders thereof, for coupon Bonds of the same series payable to bearer, in an
aggregate principal amount not exceeding the unmatured and unredeemed principal
amount of the Predecessor Bonds, bearing interest at the same rate or rates and
maturing on the same date or dates, with coupons attached
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representing all unpaid interest due or to become due thereon if, in the opinion
of Bond Counsel selected by the Borrower and acceptable to the Trustee, that
exchange would not result in the interest on any of the Bonds outstanding
becoming subject to federal income taxation;
(h) To permit the Trustee to comply with any obligations imposed upon it
by law;
(i) To specify further the duties and responsibilities of, and to define
further the relationship among, the Trustee, the Registrar, the Remarketing
Agent and any Authenticating Agent or Paying Agent;
(j) To achieve compliance of this Indenture with any applicable federal
securities or tax law;
(k) To evidence the appointment of a new Remarketing Agent;
(l) To make necessary or advisable amendments or additions in connection
with the issuance of Additional Bonds in accordance with Section 2.08 hereof as
do not adversely affect the Holders of outstanding Bonds;
(m) To permit any other amendment which, in the judgment of the Trustee,
is not to the prejudice of the Trustee or the Holders including, but not limited
to, changes required in order to obtain or maintain a rating on any series of
Bonds from a Rating Service; and
(n) To accept a Supplemental Credit Facility as provided in Section 8.04
hereof.
The Trustee may also accept, without the consent of or notice to any of the
Holders, an Alternate Letter of Credit or any amendments to the Letter of Credit
necessary to continue the effectiveness of the Letter of Credit as originally
intended or which in the judgment of the Trustee are not to the prejudice of the
Holders.
The provisions of Subsections 8.02(h) and (j) hereof shall not be deemed to
constitute a waiver by the Trustee, the Registrar, the Issuer or any Holder of
any right which it may have in the absence of those provisions to contest the
application of any change in law to this Indenture or the Bonds.
Section 8.03. SUPPLEMENTAL INDENTURES REQUIRING CONSENT OF HOLDERS.
Exclusive of Supplemental Indentures to which reference is made in Section 8.02
hereof and subject to the terms, provisions and limitations contained in this
Section, and not otherwise, with the consent of the Holders of not less than a
majority in aggregate principal amount of the Bonds at the time outstanding,
evidenced as provided in this Indenture, with the consent of the Borrower and
the Bank (except if an Event of Default as specified in paragraphs (g) or (h) of
Section 7.01 hereof shall have occurred and is continuing), the Issuer and the
Trustee may execute and deliver Supplemental Indentures adding any provisions
to, changing in any manner or eliminating any of
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the provisions of this Indenture or any Supplemental Indenture or restricting in
any manner the rights of the Holders. Nothing in this Section or Section 8.02
hereof shall permit, or be construed as permitting:
(a) without the consent of the Holder of each Bond so affected and the
consent of the Bank (except if an Event of Default as specified in paragraphs
(g) or (h) of Section 7.01 hereof shall have occurred and is continuing), (i) an
extension of the maturity of the principal of or the interest on any Bond, (ii)
a reduction in the principal amount of any Bond or the rate of interest or
premium thereon, or (iii) a reduction in the amount or extension of the time of
paying of any mandatory sinking fund requirements, or
(b) without the consent of the Holders of all Bonds then outstanding and
the consent of the Bank (except if an Event of Default as specified in
paragraphs (g) or (h) of Section 7.01 hereof shall have occurred and is
continuing), (i) the creation of a privilege or priority of any Bond or Bonds
over any other Bond or Bonds, or (ii) a reduction in the aggregate principal
amount of the Bonds required for consent to a Supplemental Indenture.
If the Issuer shall request that the Trustee execute and deliver any
Supplemental Indenture for any of the purposes of this Section, upon (i) being
satisfactorily indemnified with respect to its fees and expenses in connection
therewith, and (ii) receipt of the Borrower's and Bank's consent to the proposed
execution and delivery of the Supplemental Indenture, the Trustee shall cause
notice of the proposed execution and delivery of the Supplemental Indenture to
be mailed by first class mail, postage prepaid, to all Holders of Bonds then
outstanding at their addresses as they appear on the Register at the close of
business on the fifteenth day preceding that mailing.
The Trustee shall not be subject to any liability to any Holder by reason
of the Trustee's failure to mail, or the failure of any Holder to receive, the
notice required by this Section. Any failure of that nature shall not affect
the validity of the Supplemental Indenture when there has been consent thereto
as provided in this Section. The notice shall set forth briefly the nature of
the proposed Supplemental Indenture and shall state that copies thereof are on
file at the principal corporate trust office of the Trustee for inspection by
all Holders.
If the Trustee shall receive, within a period prescribed by the Issuer, of
not less than sixty (60) days, but not exceeding one year, following the mailing
of the notice, an instrument or document or instruments or documents, in form to
which the Trustee does not reasonably object, purporting to be executed by the
Holders of the required percentage in aggregate principal amount of the Bonds
then outstanding (which instrument or document or instruments or documents shall
refer to the proposed Supplemental Indenture in the form described in the notice
and specifically shall consent to the Supplemental Indenture in substantially
that form), the Trustee shall, but shall not otherwise, execute and deliver the
Supplemental Indenture in substantially the form to which reference is made in
the notice as being on file with the Trustee, without liability or
responsibility to any Holder, regardless of whether that Holder shall have
consented thereto.
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Any consent shall be binding upon the Holder of the Bond giving the consent
and, anything herein to the contrary notwithstanding, upon any subsequent Holder
of that Bond and of any Bond issued in exchange therefor (regardless of whether
the subsequent Holder has notice of the consent to the Supplemental Indenture).
A consent may be revoked in writing, however, by the Holder who gave the consent
or by a subsequent Holder of the Bond by a revocation of such consent received
by the Trustee prior to the execution and delivery by the Trustee of the
Supplemental Indenture. At any time after the Holders of the required
percentage of Bonds shall have filed their consents to the Supplemental
Indenture, the Trustee shall make and file with the Issuer a written statement
that the Holders of the required percentage of Bonds have filed those consents.
That written statement shall be conclusive evidence that the consents have been
so filed.
If the Holders of the required percentage in aggregate principal amount of
Bonds outstanding shall have consented to the Supplemental Indenture, as
provided in this Section, no Holder shall have any right (a) to object to (i)
the execution or delivery of the Supplemental Indenture, (ii) any of the terms
and provisions contained therein, or (iii) the operation thereof, (b)to question
the propriety of the execution and delivery thereof, or (c) to enjoin or
restrain the Trustee or the Issuer from that execution or delivery or from
taking any action pursuant to the provisions thereof.
So long as an Event of Default as specified in paragraphs (g) or (h) of
Section 7.01 hereof shall not have occurred and is continuing, and the Bank
consents in writing to such Supplemental Indenture, consent of the Holders of
the Bonds will not be required under this Section 8.03 except for the consent
required under paragraphs (a) or (b) of this Section 8.03.
Section 8.04. ACCEPTANCE OF SUPPLEMENTAL CREDIT FACILITY. Upon the
request of the Borrower, the Trustee will accept a Supplemental Credit Facility
presented by the Borrower in order to obtain or maintain a rating on the Bonds,
provided the Trustee is provided with the following:.
(a) An opinion of Bond Counsel selected by the Borrower and acceptable
to the Trustee to the effect that acceptance of the proposed Supplemental Credit
Facility will not impair the exemption of interest on the Bonds from Federal
income taxation;
(b) Written evidence reasonably satisfactory to the Trustee, that upon
issuance and delivery of the Supplemental Credit Facility, the Bonds will be
rated by a Rating Agency in one of its three highest rating categories; and
(c) The written consent of the entity which will be the Bank after the
acceptance of such Supplemental Credit Facility.
Section 8.05. CONSENT OF BORROWER AND BANK. Anything contained herein to
the contrary notwithstanding, a Supplemental Indenture executed and delivered in
accordance with this Article VIII shall not become effective unless and until
the Borrower and the Bank (except if an Event
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of Default as specified in paragraphs (g) or (h) of Section 7.01 hereof shall
have occurred and is continuing) shall consent in writing to the execution and
delivery of that Supplemental Indenture.
Section 8.06. AUTHORIZATION TO TRUSTEE; EFFECT OF SUPPLEMENT. The Trustee
is authorized to join with the Issuer in the execution and delivery of any
Supplemental Indenture in accordance with this Article and to make the further
agreements and stipulations which may be contained therein. Thereafter,.
(a) that Supplemental Indenture shall form a part of this Indenture;
(b) all terms and conditions contained in that Supplemental Indenture as
to any provision authorized to be contained therein shall be deemed to be a part
of the terms and conditions of this Indenture for any and all purposes;
(c) this Indenture shall be deemed to be modified and amended in
accordance with the Supplemental Indenture; and
(d) the respective rights, duties and obligations under this Indenture
of the Issuer, the Borrower, the Trustee, the Bank, the Registrar, any Paying
Agent, any Authenticating Agent, the Remarketing Agent and all Holders of Bonds
then outstanding shall be determined, exercised and enforced hereunder in a
manner which is subject in all respects to those modifications and amendments
made by the Supplemental Indenture.
Express reference to any executed and delivered Supplemental Indenture may
be made in the text of any Bonds issued thereafter, if that reference is deemed
necessary or desirable by the Trustee or the Issuer. A copy of any Supplemental
Indenture for which provision is made in this Article, shall be mailed by the
Trustee to the Registrar, the Bank, the Remarketing Agent, each Authenticating
Agent and Paying Agent. The Trustee shall not be required to execute any
Supplemental Indenture containing provisions adverse to the Trustee.
Section 8.07. OPINION OF COUNSEL. The Trustee shall be entitled to
receive, and shall be fully protected in relying upon, the opinion of any
counsel approved by it as conclusive evidence that (i) any proposed Supplemental
Indenture complies with the provisions of this Indenture, and (ii) it is proper
for the Trustee to join in the execution of that Supplemental Indenture under
the provisions of this Article. That counsel may be counsel for the Issuer or
the Borrower.
Section 8.08. MODIFICATION BY UNANIMOUS CONSENT. Notwithstanding anything
contained elsewhere in this Indenture, the rights and obligations of the Issuer
and of the Holders, and the terms and provisions of the Bonds and this Indenture
or any Supplemental Indenture, may be modified or altered in any respect with
the consent of (i) the Issuer, (ii) the Holders of all of the Bonds then
outstanding, (iii) the Bank (except if an Event of Default as specified in
paragraphs
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(g) or (h) of Section 7.01 hereof shall have occurred and is continuing), (iv)
the Borrower, and (v) if such modifications or alterations contain provisions
adverse to the Trustee, the Trustee.
(End of Article VIII)
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ARTICLE IX.
DEFEASANCE
Section 9.01. RELEASE OF INDENTURE. If (i) the Issuer shall pay all of
the outstanding Bonds, or shall cause them to be paid and discharged, or if
there otherwise shall be paid to the Holders of the outstanding Bonds all Bond
Service Charges due or to become due thereon, and (ii) provision also shall be
made for the payment of all other sums payable hereunder or under the Agreement
and the Notes, then this Indenture shall cease, determine and become null and
void (except for those provisions surviving by reason of Section 9.03 hereof in
the event the Bonds are deemed paid and discharged pursuant to Section 9.02
hereof), and the covenants, agreements and obligations of the Issuer hereunder
shall be released, discharged and satisfied..
Thereupon, and subject to the provisions of Section 9.03 hereof, if
applicable,
(i) the Trustee shall release this Indenture (except for those
provisions surviving by reason of Section 9.03 hereof), and shall execute
and deliver to the Issuer any instruments or documents in writing as shall
be requisite to evidence that release and discharge or as reasonably may be
requested by the Issuer, and
(ii) the Trustee and any other Paying Agents shall assign and
deliver to the Borrower any property subject at the time to the lien of
this Indenture which then may be in their possession, except amounts in the
Bond Fund required (a) to be paid to the Bank under Section 5.08 hereof, or
(b) to be held by the Trustee and the Paying Agents under Section 5.07
hereof or otherwise for the payment of Bond Service Charges.
Section 9.02. PAYMENT AND DISCHARGE OF BONDS. All or any part of the
Bonds shall be deemed to have been paid and discharged within the meaning of
this Indenture, including without limitation, Section 9.01 hereof, if:.
(a) the Trustee as paying agent and any Paying Agents shall have
received, in trust for and irrevocably committed thereto, sufficient moneys
which are Eligible Funds or the proceeds of drawings under the Letter of Credit
used to make such payment, or other moneys if accompanied by an opinion of
bankruptcy counsel in a form acceptable to the Trustee and the Rating Service
(if any) for the Bonds, or
(b) the Trustee shall have received, in trust for and irrevocably
committed thereto, noncallable Government Obligations (purchased with Eligible
Funds or the proceeds of drawings under the Letter of Credit, or other moneys if
accompanied by an opinion of bankruptcy counsel in a form acceptable to the
Trustee and the Rating Service (if any) for the Bonds) which are certified by an
independent public accounting firm of national reputation to be of such
maturities or redemption dates and interest payment dates, and to bear such
interest, as will be sufficient
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together with any moneys to which reference is made in subparagraph (a) above,
without further investment or reinvestment of either the principal amount
thereof or the interest earnings therefrom (which earnings are to be held
likewise in trust and so committed, except as provided herein), for the payment
of all Bond Service Charges on those Bonds, on and to the next Interest Rate
Adjustment Date, maturity date or prior redemption date, as the case may be;
provided, if any of those Bonds are to be redeemed prior to the maturity
thereof, notice of that redemption shall have been duly given or irrevocable
provision satisfactory to the Trustee shall have been duly made for the giving
of that notice; and further provided that no Bonds, or any part thereof, shall
be deemed to have been paid and discharged within the meaning of this Section
9.02 (i) if the Interest Rate Mode of such Bonds is other than the Fixed
Interest Rate or the Weekly Interest Rate, unless such Bonds are to be redeemed
on or prior to the next Interest Rate Adjustment Date for such Bonds and notice
of that redemption shall have been duly given or irrevocable provision
satisfactory to the Trustee shall have been duly made for the giving of that
notice, or (ii) if the Interest Rate Mode of such Bonds is a Weekly Interest
Rate.
Notwithstanding anything herein to the contrary, if any Bonds are then
rated by a Rating Service, no such Bonds shall be deemed to have been paid and
discharged by reason of any deposit pursuant to paragraphs (a) and/or (b) above
(other than any deposit of moneys, or Government Obligations purchased with
moneys, which are the proceeds of drawings under the Letter of Credit) unless
each such Rating Service shall have confirmed in writing to the Trustee that its
rating will not be withdrawn or lowered as the result of any such deposit.
Any moneys held by the Trustee in accordance with the provisions of this
Section may be invested by the Trustee at the written direction of the Borrower
only in noncallable Government Obligations having maturity dates, or having
redemption dates which, at the option of the Holder of those obligations, shall
be not later than the date or dates at which moneys will be required for the
purposes described above. To the extent that any income or interest earned by,
or increment to, the investments held under this Section is determined from time
to time by an independent public accounting firm of national reputation to be in
excess of the amount required to be held by the Trustee for the purposes of this
Section, that income interest or increment shall be transferred at the time of
that determination in the manner provided in Section 5.08 hereof for transfers
of amounts remaining in the Bond Fund.
If any Bonds shall be deemed paid and discharged pursuant to this Section
9.02, then within fifteen (15) days after such Bonds are so deemed paid and
discharged the Trustee shall cause a written notice to be given to each Holder
thereof as shown on the Register on the date on which such Bonds are deemed paid
and discharged. Such notice shall state the numbers of the Bonds deemed paid
and discharged or state that all Bonds of a particular series are deemed paid
and discharged, set forth a description of the obligations held pursuant to
subparagraph (b) of the first paragraph of this Section 9.02 and specify any
date or dates on which any of the Bonds are to be called for redemption pursuant
to notice of redemption given or irrevocable provisions made for such notice
pursuant to the first paragraph of this Section 9.02.
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Section 9.03. SURVIVAL OF CERTAIN PROVISIONS. Notwithstanding the
foregoing, any provisions of the Bond Legislation and this Indenture which
relate to the maturity of Bonds, interest payments and dates thereof, optional
and mandatory redemption provisions, credit against mandatory sinking fund
requirements, exchange, transfer and registration of Bonds, replacement of
mutilated, destroyed, lost or stolen Bonds, the safekeeping and cancellation of
Bonds, non-presentment of Bonds, the holding of moneys in trust, the Rebate
Fund, and repayments to the Bank from the Bond Fund, and the rights and duties
of the Trustee, the Remarketing Agent, the Registrar, any Authenticating Agents
and any Paying Agents, in connection with all of the foregoing, shall remain in
effect and be binding upon the Trustee, the Remarketing Agent, the Registrar,
the Authenticating Agents, any Paying Agents and the Holders notwithstanding the
release and discharge of this Indenture. The provisions of this Article shall
survive the release, discharge and satisfaction of this Indenture..
(End of Article IX)
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ARTICLE X.
COVENANTS AND AGREEMENTS OF THE ISSUER
Section 10.01. COVENANTS AND AGREEMENTS OF THE ISSUER. In addition to any
other covenants and agreements of the Issuer contained in this Indenture or the
Bond Ordinance, the Issuer further covenants and agrees with the Holders and the
Trustee as follows:.
(a) PAYMENT OF BOND SERVICE CHARGES. The Issuer will pay all Bond
Service Charges, or cause them to be paid, solely from the sources provided
herein, on the dates, at the places and in the manner provided in this
Indenture.
(b) REVENUES AND ASSIGNMENT OF REVENUES. The Issuer will not assign the
Revenues or create or authorize to be created any debt, lien or charge thereon,
other than the assignment thereof under this Indenture.
(c) RECORDINGS AND FILINGS. At the direction and expense of the
Borrower, the Issuer will cause this Indenture, and any related instrument or
documents relating to the assignment made by it under this Indenture to secure
the Bonds, to be recorded and filed in the manner and in the places (if any)
which may be required by law in order to preserve and protect fully the security
of the Holders and the rights of the Trustee hereunder.
Not more than once every five (5) years the Trustee may reasonably request
an opinion of counsel, addressed to the Issuer and the Trustee stating that
based upon the law in effect on the date of such opinion no filing, registration
or recording and no refiling, reregistration or rerecording of any agreement or
instrument, including any financing statement or amendments thereto, or any
continuation statements or instruments of a similar character relating to the
pledges and assignments made by the Issuer or the Borrower to secure the Bonds,
is required by law, in order to fully preserve and protect the security of the
Trustee and the rights of the Trustee under the Indenture, or if such filing,
registration, recording, refiling, reregistration or rerecording is necessary,
setting forth the requirements in respect thereto. The Borrower, with such
assistance and cooperation from the Issuer as the Borrower may reasonably
request, shall take or cause to be taken all actions necessary to satisfy any
such requirements. Promptly after any filing, registration, recording,
refiling, reregistration or rerecording of any such agreement or instrument, the
Trustee may request an opinion of counsel on behalf of the Issuer and the
Trustee to the effect that such filing, registration, recording, refiling,
reregistration or rerecording has been duly accomplished and setting forth the
particulars thereof. The Borrower shall pay for the reasonable fees incurred in
connection with such opinions of counsel.
(d) INSPECTION OF BOOKS. All books, instruments and documents in the
Issuer's possession relating to the Project and the Revenues shall be open to
inspection and copying (at the expense of the Person making such copies) at all
times during the Issuer's regular business hours
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by any accountants or other agents of the Trustee, the Borrower or the Bank
which the Trustee, the Borrower or the Bank may designate from time to time.
(e) REGISTER. At reasonable times and under reasonable regulations
established by the Registrar, the Register may be inspected and copied (at the
expense of the Person making such copies) by the Borrower, the Bank, the
Trustee, by Holders of twenty-five percent (25%) or more in aggregate principal
amount of the Bonds then outstanding, or a designated representative thereof.
(f) RIGHTS AND ENFORCEMENT OF THE AGREEMENT. The Trustee may enforce,
in its name or in the name of the Issuer, all rights for and on behalf of the
Holders, except for Unassigned Issuer's Rights, and may enforce all covenants,
agreements and obligations of the Borrower under and pursuant to the Agreement,
regardless of whether the Issuer is in default in the pursuit or enforcement of
those rights, covenants, agreements or obligations. The Issuer, however, will
do all things and take all actions on its part necessary to comply with
covenants, agreements, obligations, duties and responsibilities on its part to
be observed or performed under the Agreement, and will take all actions within
its authority to keep the Agreement in effect in accordance with the terms
thereof.
(g) FEDERAL TAX EXEMPTION. The Issuer will do all things necessary, to
the extent permitted by law and at the expense of the Borrower, to maintain the
exclusion from gross income from federal income taxation of interest on the
Series 1996 A Bonds.
Section 10.02. OBSERVANCE AND PERFORMANCE OF COVENANTS, AGREEMENTS,
AUTHORITY AND ACTIONS. The Issuer will observe and perform faithfully at all
times all covenants, agreements, authority, actions, undertakings, stipulations
and provisions to be observed or performed on its part under the Agreement, the
Indenture, the Bond Legislation and the Bonds which are executed, authenticated
and delivered under this Indenture, and under all proceedings of the Issuer
pertaining thereto.
The Issuer represents and warrants that:
(a) It is duly authorized by the laws of the State of Indiana,
particularly and without limitation the Act, to issue the Refunding Bonds, to
execute and deliver this Indenture, the Agreement and the Bond Purchase
Agreement and to provide the security for payment of the Bond Service Charges in
the manner and to the extent set forth in this Indenture.
(b) All actions required on its part to be performed for the issuance,
sale and delivery of the Refunding Bonds and for the execution and delivery by
the Issuer of this Indenture, the Agreement and the Bond Purchase Agreement have
been or will be taken duly and effectively.
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(c) The Refunding Bonds will be valid and enforceable limited
obligations of the Issuer according to their terms.
(End of Article X)
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ARTICLE XI.
AMENDMENTS TO THE AGREEMENT,
THE NOTE AND THE LETTER OF CREDIT
Section 11.01. AMENDMENTS NOT REQUIRING CONSENT OF HOLDERS. Without the
consent of or notice to the Holders, the Issuer and the Trustee, with the
written consent of the Bank, may consent to any amendment, change or
modification of the Agreement, a Note, or the Letter of Credit as may be
required (i) by the provisions of the Agreement, a Note, the Letter of Credit or
this Indenture, (ii) in connection with the issuance of any Additional Bonds
under this Indenture, (iii) for the purpose of curing any ambiguity,
inconsistency or formal defect or omission in the Agreement, a Note, the Letter
of Credit or the Indenture, (iv) in connection with an amendment or to effect
any purpose for which there could be an amendment of this Indenture pursuant to
Section 8.02 hereof, or (v) in connection with any other change therein which is
not to the prejudice of the Trustee or the Holders of the Bonds, in the judgment
of the Trustee; provided that if the Refunding Bonds are then rated by a Rating
Service, no amendment, change or modification of the Letter of Credit shall be
consented to by the Issuer or the Trustee unless such Rating Service shall have
confirmed in writing that such rating will not be reduced or withdrawn if such
amendment, change or modification is made.
Section 11.02. AMENDMENTS REQUIRING CONSENT OF HOLDERS. Except for the
amendments, changes or modifications contemplated by Section 11.01 hereof,
neither the Issuer nor the Trustee shall consent to:
(a) any amendment, change or modification of the Agreement, a Note, or
the Letter of Credit which would change the amount or times as of which Loan
Payments or drawings on the Letter of Credit are required to be paid, without
the giving of notice as provided in this Section of the proposed amendment,
change or modification and receipt of the written consent thereto of the Bank
and the Holders of all of the then outstanding Bonds affected by such amendment,
change or modification, or
(b) any other amendment, change or modification of the Agreement, a Note
or the Letter of Credit without the giving of notice as provided in this Section
of the proposed amendment, change or modification and receipt or the written
consent thereto of the Bank and the Holders of at least a majority in aggregate
principal amount of Bonds then outstanding affected by such amendment, change or
modification.
The consent of such Holders shall be obtained as provided in Section 8.03
hereof with respect to Supplemental Indentures.
If the Issuer and the Borrower shall request at any time the consent of the
Trustee to any proposed amendment, change or modification of the Agreement, a
Note or the Letter of Credit
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contemplated in subparagraph (a) or (b), upon receipt of the written consent of
the Bank thereto and upon being indemnified satisfactorily with respect to
expenses, the Trustee shall cause notice of the proposed amendment, change or
modification to be provided in the manner which is required by Section 8.03
hereof with respect to notice of Supplemental Indentures. This notice shall set
forth briefly the nature of the proposed amendment, change or modification and
shall state that copies of the instrument or document embodying it are on file
at the principal corporate trust office of the Trustee for inspection by all
Holders.
(End of Article XI)
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ARTICLE XII.
MEETINGS OF HOLDERS
Section 12.01. PURPOSES OF MEETINGS. A meeting of the Holders of Bonds
may be called at any time and from time to time pursuant to the provisions of
this Article XII, to the extent relevant to the Holders of all of the Bonds or
of Bonds of that series, as the case may be, to take any action (i) authorized
to be taken by or on behalf of the Holders of any specified aggregate principal
amount of the Bonds, or of that series, (ii) under any provision of this
Indenture or (iii) authorized or permitted by law.
Section 12.02. CALL OF MEETINGS. The Trustee may call at any time a
meeting of Holders pursuant to Section 12.01 hereof to be held at any reasonable
time and place the Trustee shall determine. Notice of such meeting, setting
forth the time, place and generally the subject thereof, shall be mailed by
first class mail, postage prepaid, not fewer than fifteen (15) nor more than
ninety (90) days prior to the date of the meeting to the Holders at their
addresses as they appear on the Register on the fifteenth day preceding such
mailing, which fifteenth day preceding the mailing shall be the record date for
the meeting.
If at any time the Issuer, the Borrower, the Bank or the Holders of at
least twenty-five percent (25%) in aggregate principal amount of the Bonds, or
if applicable, the affected series of Bonds, then outstanding, shall have
requested the Trustee to call a meeting of Holders, by written request setting
forth the purpose of the meeting, and the Trustee, after having received
indemnity to its satisfaction with respect to its fees and expenses shall not
have mailed the notice of the meeting within twenty (20) days after receipt of
the request, then the Issuer, the Borrower, the Bank or the Holders of Bonds in
the amount above specified making such request may determine the time and the
place of the meeting and may call the meeting to take any action authorized in
Section 12.01 hereof by mailing notice thereof as provided above.
Any meetings of Holders of Bonds affected by a particular matter shall be
valid without notice if the Holders of all Bonds, or if applicable, the affected
series of Bonds, then outstanding are present in person or by proxy, or if
notice is waived in writing before or after the meeting by the Holders of all
Bonds, or if applicable, the affected series of Bonds, outstanding who were not
so present at the meeting, and if the Issuer, the Borrower, the Bank and the
Trustee are either present by duly authorized representatives or have waived
notice, before or after the meeting.
Section 12.03. VOTING. To be entitled to vote at any meeting of Holders,
a Person shall (a) be a Holder of one or more outstanding Bonds, or if
applicable, of the affected series of Bonds, as of the record date for the
meeting as determined above, or (b) be a person appointed by an instrument or
document in writing as proxy by a person who is a Holder as of the record date
for the meeting, of one or more outstanding Bonds, or, if applicable, of the
affected series of Bonds.
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Each Holder or proxy shall be entitled to one vote for each $5,000 principal
amount of Bonds held or represented by it.
The vote upon any resolution submitted to any meeting of Holders shall be
by written ballots on which shall be subscribed the signatures of the Holders of
Bonds or of their representatives by proxy and the identifying number or numbers
of the Bonds held or represented by them.
Section 12.04. MEETINGS. Notwithstanding any other provision of this
Indenture, the Trustee may make any reasonable regulations which it may deem to
be advisable for meetings of Holders, with regard to:
(a) proof of the holding of Bonds and of the appointment of proxies,
(b) the appointment and duties of inspectors of votes,
(c) recordation of the proceedings of those meetings,
(d) the execution, submission and examination of proxies and other
evidence of the right to vote, and
(e) any other matters concerning the conduct, adjournment or reconvening
of meetings which it may think fit.
The Trustee shall appoint a temporary chair of the meeting by an instrument
or document in writing, unless the meeting shall have been called by the Issuer,
the Borrower, the Bank or by the Holders, as provided in Section 12.02 hereof,
in which case the Issuer, the Bank, the Borrower or the Holders calling the
meeting, as the case may be, shall appoint a temporary chair in like manner. A
permanent chair and a permanent secretary of the meeting shall be elected by
vote of the Holders of at least a majority in principal amount of the Bonds
represented at the meeting and entitled to vote.
The only Persons who shall be entitled to be present or to speak at any
meeting of Holders shall be the Persons entitled to vote at the meeting and
their counsel, any representatives of the Trustee or Registrar and their
counsel, any representatives of the Issuer and its counsel, any representatives
of the Borrower and its counsel, any representatives of the Bank and its counsel
and any representatives of the Remarketing Agent and its counsel.
Section 12.05. MISCELLANEOUS. Nothing contained in this Article XII shall
be deemed or construed to authorize or permit any hindrance or delay in the
exercise of any right or rights conferred upon or reserved to the Trustee or to
the Holders under any of the provisions of this Indenture or of the Bonds by
reason of any call of a meeting of Holders or any right conferred expressly or
impliedly hereunder to make a call. Nothing contained in this Article XII shall
be
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deemed or construed to require the Trustee to call, attend, participate in, or
take any action during or as a result of, any meeting of Holders unless the
Trustee shall have first received indemnity to its satisfaction with respect to
its fees and expenses (including reasonable attorney fees) in connection with
such meeting.
(End of Article XII)
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ARTICLE XIII.
MISCELLANEOUS
Section 13.01. LIMITATION OF RIGHTS. With the exception of rights
conferred expressly in this Indenture, nothing expressed or mentioned in or to
be implied from this Indenture or the Bonds is intended or shall be construed to
give to any Person other than the parties hereto, the Registrar, the
Authenticating Agents, the Paying Agents, the Borrower, the Remarketing Agent,
the Bank and the Holders of the Bonds any legal or equitable right, remedy,
power or claim under or with respect to this Indenture or any covenants,
agreements, conditions and provisions contained herein. This Indenture and all
of those covenants, agreements, conditions and provisions are intended to be,
and are, for the sole and exclusive benefit of the parties hereto, the Borrower,
the Bank, the Remarketing Agent, the Registrar, the Authenticating Agents, the
Paying Agents and the Holders of the Bonds, as provided herein. Notwithstanding
any provisions hereof to the contrary, the Bank shall not have any rights
hereunder, including, without any limitation, any right to give any direction or
to give or withhold consent, unless (i) the Letter of Credit is in full force
and effect and no Event of Default has occurred and is continuing under
paragraphs (g) or (h) of Section 7.01 hereof or (ii) amounts are owed to the
Bank for reimbursement of drawings under the Letter of Credit.
Section 13.02. SEVERABILITY. In case any section or provision of this
Indenture, or any covenant, agreement, stipulation, obligation, act or action,
or part thereof, made, assumed, entered into or taken under this Indenture, or
any application thereof, is held to be illegal or invalid for any reason, or is
inoperable at any time, that illegality, invalidity or inoperability shall not
affect the remainder thereof or any other section or provision of this Indenture
or any other covenant, agreement stipulation, obligation, act or action, or part
thereof, made, assumed, entered into or taken under this Indenture, all of which
shall be construed and enforced at the time as if the illegal, invalid or
inoperable portion were not contained therein.
Any illegality, invalidity or inoperability shall not affect any legal,
valid or operable section, provision, covenant, agreement, stipulation,
obligation, act, action, part or application, all of which shall be deemed to be
effective, operative, made, assumed, entered into or taken in the manner and to
the full extent permitted by law from time to time.
Section 13.03. NOTICES. Except as provided in Section 7.02 hereof or
elsewhere herein, it shall be sufficient service or giving of any notice,
request, complaint, demand or other instrument or document, effective three days
after mailing if it is duly mailed by certified mail, return receipt requested,
or effective upon delivery if delivered by courier. Notices to the Issuer, the
Bank, the Borrower, the Remarketing Agent and the Trustee shall be addressed as
follows:
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(a) If to the Issuer, at: City of Gary, Indiana
City Building
Gary, Indiana 46402
Attention: Clerk
(b) If to the Borrower, at: The Miller Partnership, L.P.
401 N. Michigan Avenue, Suite 3000
Chicago, Illinois 60611
Attention: Paul Fisher
(c) If to the Trustee, at: Fifth Third Bank of Central Indiana
251 N. Illinois Street, Suite 1000
Indianapolis, Indiana 46204
Attention: Corporate Trust Department
(d) If to the Bank, at: The Royal Bank of Scotland plc.
acting through its New York Branch
Wall Street Plaza, 26th Floor
88 Pine Street
New York, New York 10005-1801
Attention: Derek I. Bonnar
(e) If to the Remarketing
Agent, at: Everen Securities, Inc.
77 W. Wacker Drive, 28th Floor
Chicago, Illinois 60601-1994
Attention: Felicia Flowers-Smith
(f) If to the Co-Remarketing
Agent, at: Gates Capital Corporation
100 Park Avenue
New York, New York 10017
Attention: Ameilia A. Recio
(g) If to the Paying Agent,
Authenticating Agent or
Registrar, at: The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attention: Corporate Trust Department
Duplicate copies of each notice, request, complaint, demand or other instrument
or document given hereunder to any of such parties also shall be given to the
others. The foregoing parties
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may designate, by written notice given hereunder, any further or different
addresses to which any subsequent notice, request, complaint, demand or other
instrument or document shall be sent. The Trustee shall designate, by notice to
the Issuer, the Borrower, the Remarketing Agent and the Bank the addresses to
which notices or copies thereof shall be sent to the Registrar, the
Authenticating Agents and the Paying Agents.
In connection with any notice mailed pursuant to the provisions of this
Indenture, a certificate of the Trustee, the Issuer, the Registrar, the
Authenticating Agents, the Paying Agents, the Bank, the Borrower, the
Remarketing Agent or the Holders of the Bonds, whichever or whoever mailed that
notice, that the notice was so mailed shall be conclusive evidence of the proper
mailing of the notice.
The Trustee shall provide notice of the following events to Moody's
Investors Service: change in Trustee or Remarketing Agent; any change in the
terms of the Letter of Credit or Indenture; expiration, extension, termination
or substitution of the Letter of Credit; and mode conversion, redemption,
mandatory tender or acceleration of the Bonds. Such notice shall be by first-
class mail to: Moody's Investors Service, 99 Church Street, New York, New York
10007, Attention: Structured Finance.
Section 13.04. SUSPENSION OF MAIL. If because of the suspension of
delivery of first class mail, or for any other reason, the Trustee or any other
Person shall be unable to mail by the required class of mail any notice required
to be mailed by the provisions of this Indenture, the Trustee or any other
Person shall give such notice in such other manner as in the judgment of the
Trustee or such Person shall most effectively approximate mailing thereof, and
the giving of the notice in that manner for all purposes of this Indenture shall
be deemed to be in compliance with the requirement for the mailing thereof.
Except as otherwise provided herein the mailing of any notice shall be deemed
complete upon deposit of that notice in the mail and giving of any notice by any
other means of delivery shall be deemed complete upon receipt of the notice by
the delivery service.
Section 13.05. PAYMENTS DUE ON SATURDAYS, SUNDAYS AND HOLIDAYS. If any
Interest Payment Date, Bond Purchase Date, date of maturity of the principal of
any Bonds, or date fixed for the redemption of any Bonds is not a Business Day,
then payment of interest, principal and any redemption premium or purchase price
payment need not be made by the Trustee or any Paying Agent on that date, but
that payment may be made on the next succeeding Business Day with the same force
and effect as if that payment were made on the Interest Payment Date, Bond
Purchase Date, date of maturity or date fixed for redemption, and no interest
shall accrue for the period after that date; provided, however, if the Refunding
Bonds bear interest at any of the Weekly Interest Rate, the One Month Interest
Rate or the Three Month Interest Rate, interest shall accrue from the scheduled
date of any maturity or redemption due date of the Refunding Bonds until the
Business Day on which such payment is made.
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Section 13.06. INSTRUMENTS OF HOLDERS. Any writing, including without
limitation, any consent, request, direction, approval, objection or other
instrument or document, required under this Indenture to be executed by any
Holder may be in any number of concurrent writings of similar tenor and may be
executed by that Holder in person or by an agent or attorney appointed in
writing. Proof of (i) the execution of any writing, including without
limitation, any consent, request, direction, approval, objection or other
instrument or document, (ii) the execution of any writing appointing any agent
or attorney, and (iii) the ownership of Bonds, shall be sufficient for any of
the purposes of this Indenture, if made on the following manner, and if so made,
shall be conclusive in favor of the Trustee with regard to any action taken
thereunder, namely:
(a) The fact and date of the execution by any person of any writing may
be proved by the certificate of any officer in any jurisdiction, who has power
by law to take acknowledgments within the jurisdiction, that the person signing
the writing acknowledged that execution before that officer, or by affidavit of
any witness to that execution;
(b) The fact of ownership of Bonds shall be proved by the Register
maintained by the Registrar.
Nothing contained herein shall be construed to limit the Trustee to the
foregoing proof, and the Trustee may accept any other evidence of the matters
stated therein which it deems to be sufficient. Any writing, including without
limitation, any consent, request, direction, approval, objection or other
instrument or document, of the Holder of any Bond shall bind every further
Holder of the same Bond, with respect to anything done or suffered to be done by
the Issuer, the Trustee, the Bank, the Borrower, the Remarketing Agent, the
Registrar or any Paying Agent or Authenticating Agent pursuant to that writing.
Section 13.07. PRIORITY OF THIS INDENTURE. The Indenture shall be
superior to any liens which may be placed upon the Revenues or any other funds
or accounts created pursuant to this Indenture.
Section 13.08. EXTENT OF COVENANTS; NO PERSONAL LIABILITY. All covenants,
stipulations, obligations and agreements of the Issuer contained in this
Indenture are and shall be deemed to be covenants, obligations and agreements of
the Issuer to the full extent authorized by the Act and permitted by the
Constitution of the State. No covenant, stipulation, obligation or agreement of
any present or future member, officer, agent or employee of the Issuer or the
Issuing Authority shall be enforceable against such member, officer, agent or
employee of the Issuer or the Issuing Authority in anything other than that
person's official capacity. Neither the members nor any official of the Issuer
or the Issuing Authority executing the Bonds, this Indenture, the Agreement or
any amendment or supplement hereto or thereto shall be liable personally on the
Bonds or subject to any personal liability or accountability by reason of the
issuance or execution hereof or thereof.
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No recourse shall be had for the payment of the principal of or premium or
interest on any of the Bonds or for any claim based thereon or upon any
obligation, covenant or agreement in this Indenture contained against any past,
present or future officer, member, employee or agent of the Issuer or the
Issuing Authority, as such, either directly or through the Issuer or the Issuing
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 officers, members, employees or agents as such is hereby expressly
waived and released as a condition of and consideration for the execution of
this Indenture and the issuance of such Bonds.
Section 13.09. RATING CATEGORIES. Except as otherwise expressly provided
herein, any reference herein to a rating category established by a Rating
Service shall mean such category without regard to any modification thereof by
the addition of a plus or minus sign or a number indicating relative standing
within such category.
Section 13.10. BINDING EFFECT. This Indenture shall inure to the benefit
of and shall be binding upon the Issuer and the Trustee and their respective
successors and assigns, subject, however, to the limitations contained herein..
Section 13.11. COUNTERPARTS. This Indenture may be executed in any number
of counterparts, each of which shall be regarded as an original and all of which
shall constitute but one and the same instrument.
Section 13.12. GOVERNING LAW. This Indenture and the Bonds shall be
deemed to be contracts made under the laws of the State and for all purposes
shall be governed by and construed in accordance with the laws of the State.
(End of Article XIII)
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IN WITNESS WHEREOF, the Issuer and the Trustee have executed this Trust
Indenture all as of the date first above written.
CITY OF GARY, INDIANA
By: ________________________________
Scott L. King, Mayor
ATTEST:
___________________________________
Katie Hall, Clerk
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FIFTH THIRD BANK OF CENTRAL INDIANA, as
Trustee
By: ___________________________________
ATTEST:
___________________________________
The undersigned, officers of The Fifth Third Bank, acknowledge on behalf of
said bank that they have reviewed the foregoing Trust Indenture and agree to
perform the duties and responsibilities assigned to the Registrar, Paying Agent
and Authenticating Agent.
THE FIFTH THIRD BANK
By: ___________________________________
ATTEST:
___________________________________
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<PAGE>
EXHIBIT A
FORM OF SERIES 1996 A BOND
UNITED STATES OF AMERICA
STATE OF INDIANA
CITY OF GARY, INDIANA
ADJUSTABLE RATE ECONOMIC DEVELOPMENT
REVENUE REFUNDING BOND, SERIES 1996 A
(THE MILLER PARTNERSHIP, L.P. PROJECT)
NO. A-1
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
Maturity Date Cusip Number Date of Authentication
March 1, 2031 April 1, 1996
Date of Initial Delivery: April 1, 1996
Registered Owner: CEDE & CO.
Principal Amount:
The City of Gary, Indiana (the "Issuer"), a municipal corporation and
political subdivision validly existing under the laws of the State of Indiana,
for value received, promises to pay to the registered owner specified above or
registered assigns, but solely from the sources and in the manner referred to
herein, the principal amount specified above on the aforesaid Maturity Date,
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unless this Bond is called for earlier redemption, and to pay from those sources
interest thereon at the rate per annum determined as described herein. Initial
interest on this Bond shall accrue from the Date of Initial Delivery of this
Bond. Interest on this Bond is payable on the first Business Day, as
hereinafter defined, of each month, as long as the interest rate hereon is
calculated pursuant to the Weekly Interest Rate, the One Month Interest Rate or
the Three Month Interest Rate (as such terms are hereinafter defined),
commencing the first Business Day of May, 1996, until the principal amount is
paid or duly provided for. For any period of time during which this Bond bears
interest at the Six Month Interest Rate, the One Year Interest Rate, the Five
Year Interest Rate or the Fixed Interest Rate (as such terms are hereinafter
defined) interest hereon shall be payable on the first day of each April and
October. Any date established for the payment of interest as described above is
hereinafter referred to as an "Interest Payment Date". The interest payable
hereon on each Interest Payment Date shall be for the period commencing on the
next preceding Interest Payment Date (or the Date of Initial Delivery of this
Bond with respect to the first Interest Payment Date) to and including the day
immediately preceding the Interest Payment Date on which payment is made.
Interest shall be calculated on the basis of a year of 365 days or 366 days, as
applicable, for the number of days actually elapsed, while the interest hereon
is payable at the Weekly Interest Rate, the One Month Interest Rate or the Three
Month Interest Rate. Otherwise, interest shall be calculated on the basis of a
360-day year consisting of twelve 30-day months.
The term "Business Day", as used herein, means any day, other than a
Saturday or Sunday, on which commercial banks located in the cities in which the
principal corporate trust office of the Paying Agent, the principal corporate
trust office of the Registrar, the principal office of the Remarketing Agent,
and the principal office of the Bank, as hereafter defined, are located are not
required or authorized to remain closed and on which the New York Stock Exchange
is not closed. This Bond will bear interest from the most recent date to which
interest has been paid or duly provided for or, if no interest has been paid or
duly provided for, from its date of initial delivery. If any Interest Payment
Date, date of maturity of this Bond, Bond Purchase Date (as hereinafter defined)
or date fixed for redemption of this Bond, is not a Business Day, then payment
of the applicable interest, principal, purchase price or redemption price may be
made on the next succeeding Business Day with the same force and effect as if
such payment were made on such Interest Payment Date, date of maturity, Bond
Purchase Date or date fixed for redemption and no interest shall accrue for the
period after such date; provided, however, if this Bond bears interest at any of
the Weekly Interest Rate, the One Month Interest Rate or the Three Month
Interest Rate, interest shall accrue from the scheduled date of any maturity or
redemption due date of this Bond until the Business Day on which such payment is
made.
The principal of and premium, if any, on this Bond is payable upon
presentation and surrender hereof at the principal corporate trust office of the
Paying Agent, presently The Fifth Third Bank (the "Paying Agent"), located in
Cincinnati, Ohio. Interest is payable on each Interest Payment Date by check or
draft mailed to the person in whose name this Bond (or one or more predecessor
bonds) is registered (the "Holder") at the close of business on the fifth
Business Day preceding such Interest Payment Date (the "Regular Record Date") on
the registration books for
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this issue maintained by The Fifth Third Bank, located in Cincinnati, Ohio, as
Registrar, at the address appearing therein. Notwithstanding the foregoing,
interest on any Bond in the denomination of $100,000 or more shall be paid by
wire transfer in immediately available funds to the bank account number and
address filed in writing with the Registrar by such Holder, which account number
and address shall be filed with the Registrar at least two (2) Business Days
prior to that Interest Payment Date. Any interest which is not timely paid or
duly provided for shall cease to be payable to the Holder hereof (or of one or
more predecessor bonds) as of the Regular Record Date, and shall be payable to
the Holder hereof (or of one or more predecessor bonds) at the close of business
on a Special Record Date to be fixed by the Trustee for the payment of that
overdue interest. Notice of the Special Record Date shall be mailed to Holders
not less than ten days prior thereto. The principal and redemption price of and
interest on this Bond are payable in lawful money of the United States of
America, without deduction for the services of the Paying Agent.
Notwithstanding anything herein to the contrary, when this Bond is registered in
the name of a Depository (as defined in the Indenture hereinafter defined) or
its nominee, the principal and redemption price of and interest on this Bond
shall be payable in federal funds delivered or transmitted to the Depository or
its nominee.
THIS BOND DOES NOT REPRESENT OR CONSTITUTE A DEBT OR PLEDGE OF THE FAITH
AND CREDIT OF THE ISSUER, THE STATE OF INDIANA OR ANY POLITICAL SUBDIVISION
THEREOF. THE HOLDERS OR OWNERS OF THIS BOND HAVE NO RIGHT TO HAVE TAXES LEVIED
BY THE ISSUER, THE STATE OF INDIANA OR ANY POLITICAL SUBDIVISION THEREOF FOR THE
PAYMENT OF THE PRINCIPAL OF OR PREMIUM (IF ANY) OR INTEREST ON THIS BOND.
PRINCIPAL OF AND PREMIUM (IF ANY) AND INTEREST ON THIS BOND ARE PAYABLE SOLELY
FROM THE REVENUES PLEDGED PURSUANT TO THE INDENTURE (AS HEREINAFTER DEFINED).
This Bond shall not constitute the personal obligation, either jointly or
severally, of the members of the Common Council of the Issuer (the "Issuing
Authority"), its Economic Development Commission, or of any officer, employee or
official of the Issuer.
This Bond shall not be entitled to any security or benefit under the
Indenture or be valid or become obligatory for any purpose until the certificate
of authentication hereon shall have been duly signed.
GENERAL PROVISIONS
This Bond is one of a duly authorized issue the City of Gary, Indiana
Adjustable Rate Economic Development Revenue Refunding Bonds, Series 1996 A (The
Miller Partnership, L.P. Project) (the "Bonds"), issuable under the Trust
Indenture, dated as of March 1, 1996 (the "Indenture"), between the Issuer and
Fifth Third Bank of Central Indiana, as Trustee, aggregating in the principal
amount of $20,540,000 and issued for the purpose of making a loan (the "Loan")
to The Miller Partnership, L.P., an Illinois limited partnership (the
"Borrower"), to refund the
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City of Gary, Indiana Economic Development Revenue Bonds, Series 1991 A (The
Miller Partnership, L.P. Project) and the City of Gary, Indiana Economic
Development Revenue Bonds, Series 1993 A (The Miller Partnership, L.P. Project),
which were issued for the purpose of financing of the Project, as defined in the
Loan Agreement, dated as of even date with the Indenture (the "Agreement"),
between the Issuer and the Borrower. The Bonds, together with any Additional
Bonds which may be issued on a parity therewith under the Indenture, are special
obligations of the Issuer, issued or to be issued under and are to be secured
and entitled equally and ratably to the protection given by the Indenture. The
Bonds are issued pursuant to Indiana Code 36-7-11.9 and 12, and Indiana Code 5-
1-5 (collectively, the "Act") and pursuant to an Ordinance duly adopted by the
Issuing Authority. The Bonds are issued on a parity with the City of Gary,
Indiana Taxable Adjustable Rate Economic Development Revenue Bonds, Series 1996
B (The Miller Partnership, L.P. Project).
Reference is made to the Indenture and the Agreement for a more complete
description of the Project, the provisions, among others, with respect to the
nature and extent of the security for the Bonds, the rights, duties and
obligations of the Issuer, the Trustee and the Holders of the Bonds and the
terms and conditions upon which the Bonds are issued and secured. All terms
used herein with initial capitalization where the rules of grammar or context do
not otherwise require shall have the meanings as set forth in the Indenture.
Each Holder assents, by its acceptance hereof, to all of the provisions of the
Indenture.
Pursuant to the Agreement, the Borrower has executed and delivered to the
Trustee the Borrower's Note, Series 1996 A dated as of even date with the Bonds
(the "Series 1996 A Note"), in the principal amount of $20,540,000. The
Borrower is required by the Agreement and the Note, Series 1996 A to make
payments to the Trustee in amounts and at times necessary to pay the principal
of and premium (if any) and interest on the Bonds (the "Bond Service Charges").
In the Indenture, the Issuer has assigned to the Trustee, to provide for the
payment of the Bond Service Charges on the Bonds and any Additional Bonds, the
Issuer's right, title and interest in and to the Series 1996 A Note and the
Agreement, except for Unassigned Issuer's Rights, as defined in the Agreement.
Pursuant to the Agreement, the Borrower has caused to be issued and
delivered to the Trustee by The Royal Bank of Scotland plc, acting through its
New York Branch (the "Bank") an irrevocable letter of credit (the "Letter of
Credit"), pursuant to which the Trustee is entitled to draw up to (a) the
principal amount of the Bonds outstanding to enable the Trustee to pay (i) the
principal amount of the Bonds when due at maturity or upon redemption or
acceleration on the occurrence of an event of default, and (ii) an amount equal
to the principal portion of the purchase price of any Bonds or Beneficial
Ownership Interests duly tendered by the Holders or Beneficial Owners thereof
for purchase pursuant to the Indenture, plus (b) the amount of interest accruing
on the Bonds, but not to exceed 56 days' accrued interest at the maximum rate of
12% per annum (the "Maximum Rate") to enable the Trustee to pay interest when
due on the Bonds and the interest portion (if any) of the purchase price of any
Bonds or Beneficial Ownership Interests duly tendered by the Holders or
Beneficial Owners thereof for purchase pursuant to the Indenture. In
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<PAGE>
connection with the issuance of the Letter of Credit, the Bank has entered into
a Reimbursement Agreement (the "Reimbursement Agreement") with the Borrower
pursuant to which the Borrower is obligated to reimburse the Bank for all draws
made under Letter of Credit. The Letter of Credit shall expire, subject to
provisions for earlier termination or extension, on April 15, 2001.
Subject to the provisions of the Indenture and the Agreement, the Letter of
Credit may be replaced from time to time by another letter of credit (an
"Alternate Letter of Credit"), in which case the term "Bank" shall mean the
financial institution issuing the Alternate Letter of Credit and the term
"Letter of Credit" shall mean the Alternate Letter of Credit.
Copies of the Indenture, the Agreement, the Letter of Credit, and the
Series 1996 A Note are on file in the principal corporate trust office of the
Trustee.
The Bond Service Charges on the Bonds are payable solely from the Revenues,
as defined and as provided for in the Indenture (being, generally, the amounts
payable under the Agreement in repayment of the Loan, any unexpended proceeds of
the Bonds and amounts deposited in the Refunding Fund and the Bond Fund as
defined and provided for in the Indenture, including amounts drawn pursuant to
the Letter of Credit), and are an obligation of the Issuer only to the extent of
the Revenues. The Bonds are not secured by a pledge of the faith and credit or
the taxing power of the Issuer, the State of Indiana or any political
subdivision thereof.
No recourse under or upon any obligation, covenant, acceptance or agreement
contained in the Indenture, or in any of the Bonds, or under any judgment
obtained against the Issuer, its Economic Development Commission or the Issuing
Authority, or by the enforcement of any assessment or by any legal or equitable
proceeding by virtue of any constitution or statute or otherwise, or under any
circumstances, shall be had against any member or officer, as such, past,
present, or future, of the Issuer, its Economic Development Commission or the
Issuing Authority, whether directly or through the Issuer, or otherwise, for the
payment for or to the Issuer or any receiver thereof, or for or to any Holder of
any Bond, or otherwise, of any sum that may be due and unpaid by the Issuer upon
any of the Bonds. Any and all personal liability of every nature, whether at
common law or in equity, or by statute or by constitution or otherwise, of any
such member or officer, as such, to respond by reason of any act or omission on
his or her part, or otherwise, for, directly or indirectly, the payment for or
to the Issuer or any receiver thereof, or for or to the owner or any Holder of
any Bond, or otherwise, of any sum that may remain due and unpaid upon any Bond,
shall be deemed to be and is hereby expressly waived and released as a condition
of and consideration for the execution and delivery of the Indenture and the
issuance of the Bonds.
The Bonds are issuable only as fully registered bonds in the denominations
of $100,000 or $5,000 multiples in excess thereof and shall be originally issued
only to a Depository to be held in a book entry system and: (i) the Bonds shall
be registered in the name of the Depository or its nominee, as Bondholder, and
immobilized in the custody of the Depository; (ii) unless otherwise requested by
the Depository, there shall be a single Bond certificate; and (iii) the Bonds
shall not
A-5
<PAGE>
be transferable or exchangeable, except for transfer to another Depository or
another nominee of a Depository, without further action by the Issuer. While
the Bonds are in book entry only form, Bonds in the form of physical
certificates shall only be deposited with the Depository. The owners of
beneficial interests in the Bonds shall not have any right to receive Bonds in
the form of physical certificates. If any Depository determines not to continue
to act as a Depository for the Bonds for use in a book entry system, the Issuer
may attempt to have established a securities depository/book entry system
relationship with another qualified Depository under the Indenture. If the
Issuer does not or is unable to do so, the Issuer and the Trustee, after the
Trustee has made provision for notification to the owners of book entry
interests by the then Depository, shall permit withdrawal of the Bonds from the
Depository, and authenticate and deliver, or cause to be authenticated and
delivered, Bond certificates in fully registered form (in denominations of
$100,000 or $5,000 multiples in excess thereof) to the assignees of the
Depository or its nominee.
While a Depository is the sole holder of the Bonds, delivery or notation of
partial redemption or tender for purchase of Bonds shall be effected in
accordance with the provisions of the Letter of Representations, as defined in
the Indenture.
In addition to the words and terms defined elsewhere in this Bond, the
following terms shall have the following meanings:
"Beneficial Owner" means with respect to the Bonds, a person owning a
Beneficial Ownership Interest therein, as evidenced to the satisfaction of the
Trustee.
"Beneficial Ownership Interest" means the beneficial right to receive
payments and notices with respect to the Bonds which are held by the Depository
under a book entry system.
"book entry form" or "book entry system" means, with respect to the Bonds,
a form or system, as applicable, under which (i) the ownership of beneficial
interests in Bonds and Bond Service Charges may be transferred only through a
book entry and (ii) physical Bond certificates in fully registered form are
registered only in the name of a Depository or its nominee as Holder, with the
physical Bond certificates "immobilized" in the custody of the Depository. The
book entry system maintained by and the responsibility of the Depository and not
maintained by or the responsibility of the Issuer or the Trustee is the record
that identifies, and records the transfer of the interests of, the owners of
beneficial (book entry) interests in the Bonds.
"Depository" means any securities depository that is a clearing agency
under federal law operating and maintaining, with its participants or otherwise,
a book entry system to record ownership of book entry interests in Bonds, and to
effect transfers of book entry interests in Bonds, and includes and means
initially The Depository Trust Company (a limited purpose trust company), New
York, New York.
The Indenture permits certain amendments or supplements to the Agreement,
the Indenture, the Letter of Credit and the Series 1996 A Note not prejudicial
to the Holders to be
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made with the consent of the Bank but without the consent of or notice to the
Holders, and other amendments or supplements thereto to be made with the consent
of the Bank and the Holders of at least a majority in aggregate principal amount
of the Bonds and any Additional Bonds then outstanding. So long as the Bank is
not in default under the Letter of Credit, and the Bank consents in writing to
such amendments, the consent of the Holders is not required for those amendments
to the Indenture, Agreement, Letter of Credit or Series 1996 A Note which
otherwise require the consent of only a majority in aggregate principal amount
of the Bonds and any Additional Bonds then outstanding.
DETERMINATION OF INTEREST RATE
The initial interest rate on this Bond shall be established and be in
effect until the first Interest Rate Adjustment Date. Thereafter, except as
provided below, for each succeeding period the interest rate on the Bonds shall
be the Weekly Interest Rate for such weekly period as established on the
Interest Rate Determination Date immediately preceding the commencement of such
weekly period.
On June 1, 1996, and on any Interest Period Reset Date thereafter, subject
to the conditions set forth in the Indenture, the interest rate on the Bonds may
be converted to a different Interest Rate Mode upon receipt by the Trustee, the
Paying Agent, the Registrar and the Remarketing Agent of a written direction
from the Borrower, given on behalf of the Issuer, not less than 45 days prior to
the Interest Period Reset Date, to convert the interest rate on the Bonds to an
Interest Rate Mode other than the Interest Rate Mode then in effect.
On each Interest Rate Determination Date, the Remarketing Agent shall give
the Trustee, the Registrar and Paying Agent telephonic notice (immediately
confirmed in writing) of the interest rate to be borne by the Bonds for the
following Interest Rate Period; provided that if the interest rate is determined
pursuant to clause (b) of the definition of the applicable Interest Rate Mode,
on the Interest Rate Determination Date, the Trustee shall give notice to the
Borrower and the Bank as above provided.
If the interest rate on the Bonds is converted to a different Interest Rate
Mode, at least 30 days prior to the Interest Period Reset Date the Registrar
shall use its best efforts to notify the Holders of all outstanding Bonds by
telephone (to the extent their telephone numbers have been provided in writing
to the Registrar), immediately confirmed by first class mail to all Holders,
that upon such Interest Period Reset Date the Bonds shall be converted to a
different Interest Rate Mode, which Interest Rate Mode shall be specified, and
that all Bonds shall be subject to a mandatory tender, subject to the right of
the Holders to affirmatively elect to waive the mandatory tender and retain
their Bonds.
Any calculation of the interest rate to be borne by the Bonds shall be
rounded to the nearest one-hundredth of one percent (0.01%). The computation of
the interest rate on the Bonds by the Remarketing Agent shall be binding and
conclusive upon the Holders of the Bonds.
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"Five Year Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary, during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date and ending on March 31 or September 30
nearest to but not later than the date which is five years from the Interest
Rate Adjustment Date, in the judgment of the Remarketing Agent (taking into
consideration current transactions and comparable securities with which the
Remarketing Agent is involved or of which it is aware and prevailing financial
market conditions) to produce as nearly as practical a par bid for the Bonds on
the Interest Rate Determination Date or (b) in the event that the Remarketing
Agent has been removed or has resigned and no successor has been appointed or
the Remarketing Agent has failed to determine the Five Year Interest Rate for
whatever reason, or the Five Year Interest Rate cannot be determined pursuant to
clause (a) for whatever reason, the interest rate then in effect with respect to
the Bonds, without adjustment; provided that in no event shall the Five Year
Interest Rate exceed the lesser of 12% per annum or the maximum rate permitted
by law (the "Maximum Rate").
"Fixed Interest Rate" means (a) the fixed rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Period Reset Date, to be the
interest rate necessary, from the Interest Period Reset Date to the final
maturity date of the Bonds, in the judgment of the Remarketing Agent (taking
into consideration current transactions and comparable securities with which the
Remarketing Agent is involved or of which it is aware and prevailing financial
market conditions) to produce as nearly as practical a par bid for the Bonds on
the Interest Rate Determination Date or (b) in the event that the Remarketing
Agent has been removed or has resigned and no successor has been appointed or
the Remarketing Agent has failed to determine the Fixed Interest Rate for
whatever reason, or the Fixed Interest Rate cannot be determined pursuant to
clause (a) for whatever reason, the interest rate then in effect with respect to
the Bonds, without adjustment; provided that in no event shall the Fixed
Interest Rate exceed the Maximum Rate.
"Interest Period Reset Date" means the date on which the interest rate on
the Bonds converts from the Interest Rate Mode applicable to the Bonds prior to
such date to a new Interest Rate Mode. An Interest Period Reset Date shall be
the first Business Day of a month; provided that, upon conversion from a Six
Month, One Year or Five Year Interest Rate Mode, an Interest Period Reset Date
shall be the first day of a month; and provided further that, except when
converting from a Weekly Interest Rate Mode, an Interest Period Reset Date may
not occur prior to the end of the preceding Interest Rate Period.
"Interest Rate Adjustment Date" means any date on which the interest rate
on the Bonds is adjusted, either as the result of the conversion of the interest
rate on the Bonds to a different Interest Rate Mode or by adjustment of the
interest rate on the Bonds within the applicable Interest Rate Mode. Except as
otherwise provided with respect to an Interest Rate Adjustment Date which is
also an Interest Period Reset Date, an Interest Rate Adjustment Date shall be
the first day of the first month of the Interest Rate Period if the Bonds bear
interest at the Six Month, One Year
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or Five Year Interest Rate; the first Business Day of the month if the Bonds
bear interest at the One Month or Three Month Interest Rate; and if the Bonds
bear interest at the Weekly Interest Rate, then the Interest Rate Adjustment
Date shall be Thursday of each week.
"Interest Rate Determination Date" means (i) with respect to the Three
Month Interest Rate, the Six Month Interest Rate, the One Year Interest Rate,
the Five Year Interest Rate and the Fixed Interest Rate, the tenth Business Day
preceding an Interest Rate Adjustment Date, (ii) with respect to the One Month
Interest Rate, the seventh Business Day preceding an Interest Rate Adjustment
Date, and (iii) with respect to the Weekly Interest Rate, not later than 2:00
p.m. according to local time at the principal corporate trust office of the
Registrar on Wednesday of each week, or the next preceding Business Day if such
Wednesday is not a Business Day; provided that upon any conversion to the Weekly
Interest Rate from a different Interest Rate Mode, the first Interest Rate
Determination Date shall mean not later than 2:00 p.m. according to the local
time at the principal corporate trust office of the Registrar on the Business
Day next preceding the Interest Period Reset Date.
"Interest Rate Mode" means any of those modes of interest with respect to
the Bonds permitted by the Indenture, specifically, the Weekly Interest Rate,
the One Month Interest Rate, the Three Month Interest Rate, the Six Month
Interest Rate, the One Year Interest Rate, the Five Year Interest Rate and the
Fixed Interest Rate.
"Interest Rate Period" means that period of time during which the interest
rate with respect to the Bonds has been determined by the Remarketing Agent or
otherwise as provided in the definition of the applicable Interest Rate Mode,
commencing on the applicable Interest Rate Adjustment Date, and terminating on
the day immediately preceding the following Interest Rate Adjustment Date.
"One Month Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary, during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date to and including the day preceding the
first Business Day of the next month, in the judgment of the Remarketing Agent
(taking into consideration current transactions and comparable securities with
which the Remarketing Agent is involved or of which it is aware and prevailing
financial market conditions) to produce as nearly as practical a par bid for the
Bonds on the Interest Rate Determination Date or (b) in the event that the
Remarketing Agent has been removed or has resigned and no successor has been
appointed, or the Remarketing Agent has failed to determine the One Month
Interest Rate for whatever reason, or the One Month Interest Rate cannot be
determined pursuant to clause (a) for whatever reason, the interest rate then in
effect with respect to the Bonds, without adjustment; provided that in no event
shall the One Month Interest Rate exceed the Maximum Rate.
"One Year Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable
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Interest Rate Adjustment Date, to be the interest rate necessary, during the
Interest Rate Period commencing on the applicable Interest Rate Adjustment Date,
and ending on the March 31 or September 30 nearest to but not later than the
date which is one year from the Interest Rate Adjustment Date, in the judgment
of the Remarketing Agent (taking into consideration current transactions and
comparable securities with which the Remarketing Agent is involved or of which
it is aware and prevailing financial market conditions) to produce as nearly as
practical a par bid for the Bonds on the Interest Rate Determination Date or (b)
in the event that the Remarketing Agent has been removed or has resigned and no
successor has been appointed, or the Remarketing Agent has failed to determine
the One Year Interest Rate for whatever reason, or the One Year Interest Rate
cannot be determined pursuant to clause (a) for whatever reason, the interest
rate then in effect with respect to the Bonds, without adjustment; provided that
in no event shall the One Year Interest Rate exceed the Maximum Rate.
"Remarketing Agent" means, initially, Everen Securities, Inc. and any
successor Remarketing Agent appointed pursuant to the Indenture.
"Six Month Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date and ending on the March 31 or September
30 nearest to but not later than the date which is six months from the Interest
Rate Adjustment Date, in the judgment of the Remarketing Agent (taking into
consideration current transactions and comparable securities with which the
Remarketing Agent is involved or of which it is aware and prevailing financial
market conditions) to produce as nearly as practical a par bid for the Bonds on
the Interest Rate Determination Date or (b) in the event that the Remarketing
Agent has been removed or has resigned and no successor has been appointed, or
the Remarketing Agent has failed to determine the Six Month Interest Rate for
whatever reason, or the Six Month Interest Rate cannot be determined pursuant to
clause (a) for whatever reason, the interest rate then in effect with respect to
the Bonds, without adjustment; provided that in no event shall the Six Month
Interest Rate exceed the Maximum Rate.
"Three Month Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date to and including the day preceding the
first Business Day of the January, April, July or October, nearest to but not
later than the date which is three months from the Interest Rate Adjustment
Date, in the judgment of the Remarketing Agent (taking into consideration
current transactions and comparable securities with which the Remarketing Agent
is involved or of which it is aware and prevailing financial market conditions)
to produce as nearly as practical a par bid for the Bonds on the Interest Rate
Determination Date or (b) in the event that the Remarketing Agent has been
removed or has resigned and no successor has been appointed, or the Remarketing
Agent has failed to determine the Three Month Interest Rate for whatever reason,
or the Three Month Interest Rate cannot be determined pursuant to
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clause (a) for whatever reason, the interest rate then in effect with respect to
the Bonds, without adjustment; provided that in no event shall the Three Month
Interest Rate exceed the Maximum Rate.
"Weekly Interest Rate" means (a) the rate of interest per annum determined
by the Remarketing Agent, on the Interest Rate Determination Date immediately
preceding the applicable Interest Rate Adjustment Date, to be the interest rate
necessary during the Interest Rate Period of one week (or less in the case of
any such Interest Rate Period commencing on an Interest Period Reset Date which
is not a Thursday, or ending on the day preceding an Interest Period Reset Date)
commencing on the applicable Interest Rate Adjustment Date, in the judgment of
the Remarketing Agent (taking into consideration current transactions and
comparable securities with which the Remarketing Agent is involved or of which
it is aware and prevailing financial market conditions) to produce as nearly as
practical a par bid for the Bonds on the Interest Rate Determination Date or (b)
in the event that the Remarketing Agent has been removed or has resigned and no
successor has been appointed, or the Remarketing Agent has failed to determine
the Weekly Interest Rate for whatever reason, or the Weekly Interest Rate cannot
be determined pursuant to clause (a) for whatever reason, the interest rate then
in effect with respect to the Bonds, without adjustment; provided that in no
event shall the Weekly Interest Rate exceed the Maximum Rate.
TENDER OPTION
A.1. TENDER OPTION WHILE BONDS BEAR INTEREST IN AN INTEREST RATE MODE
OTHER THAN THE WEEKLY INTEREST RATE. While the Bonds bear interest at the One
Month Interest Rate, the Three Month Interest Rate, the Six Month Interest Rate,
the One Year Interest Rate or the Five Year Interest Rate, on each Interest Rate
Adjustment Date (each a "Bond Purchase Date"), each Holder or Beneficial Owner,
as applicable, shall have the option to tender for purchase, at 100% of the
principal amount thereof, all of the Bonds owned by such Holder (or all
Beneficial Ownership Interests owned by such Beneficial Owner), or such lesser
principal amount thereof (in denominations of $5,000 or any integral multiple
thereof, provided that such Holder or Beneficial Owner tenders $100,000 or more
in principal amount and provided that the untendered portion of any Bond or
Beneficial Ownership Interest shall be $100,000 or more in principal amount) as
such Holder or Beneficial Owner may specify in accordance with the terms,
conditions and limitations hereinafter set forth. The purchase price for each
such Bond or Beneficial Ownership Interest shall be payable in lawful money of
the United States of America, shall equal the principal amount, or such portion
thereof, to be purchased and shall be paid in full on the applicable Bond
Purchase Date.
A.2. TENDER OPTION WHILE BONDS BEAR INTEREST AT THE WEEKLY INTEREST RATE.
While the Bonds bear interest at the Weekly Interest Rate, each Holder or
Beneficial Owner, as applicable, has the option to tender for purchase, at 100%
of the principal amount thereof plus accrued interest to the purchase date (a
"Bond Purchase Date"), all of the Bonds owned by such Holder (or all Beneficial
Ownership Interests owned by such Beneficial Owner), or such lesser principal
amount thereof (in denominations of $5,000 or any integral multiple thereof,
provided that such
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Holder or Beneficial Owner tenders $100,000 or more in principal amount and
provided that the untendered portion of any Bond or Beneficial Ownership
Interest shall be $100,000 or more in principal amount) as such Holder or
Beneficial Owner may specify in accordance with the terms, conditions and
limitations hereafter set forth. The purchase price for each such Bond or
Beneficial Ownership Interest shall be payable in lawful money of the United
States of America and shall be paid in full on the applicable Bond Purchase
Date.
To exercise the option granted in paragraph A.1. above, the Holder or
Beneficial Owner, as applicable, shall (1) no earlier than 15 days prior to the
Bond Purchase Date and no later than 11:00 a.m. according to the local time at
the principal corporate trust office of the Registrar on the eighth Business Day
prior to the Bond Purchase Date, unless the Bonds bear interest at the One Month
Interest Rate, then on the fifth Business Day prior to the Bond Purchase Date,
give notice to the Registrar by telecopy or in writing which states (i) the name
and address of the Holder or Beneficial Owner, as applicable, (ii) the principal
amount, CUSIP number and bond numbers of the Bonds or Beneficial Ownership
Interests to be purchased, (iii) that such Bonds or Beneficial Ownership
Interests are to be purchased on such Bond Purchase Date pursuant to the terms
of the Indenture, and (iv) that such notice is irrevocable; (2) in the case of a
Beneficial Owner, provide the Registrar with evidence satisfactory to the
Registrar of such Beneficial Owner's Beneficial Ownership Interest; (3) in the
case of a Holder, no later than 10:00 a.m. according to the local time at the
principal corporate trust office of the Registrar on the seventh day preceding
such Bond Purchase Date, or the next preceding Business Day if such seventh day
is not a Business Day, unless the Bonds bear interest at the One Month Interest
Rate, then on the fourth day preceding such Bond Purchase Date, or the next
preceding Business Day if such fourth day is not a Business Day, deliver to the
principal corporate trust office of the Registrar the Bonds to be purchased in
proper form, accompanied by fully completed and executed Instructions to Sell,
the form of which is printed hereon; and (4) in the case of a Beneficial Owner,
no later than 10:00 a.m. (according to the local time at the principal corporate
trust office of the Registrar) on the Bond Purchase Date, cause the transfer of
the Beneficial Owner's Beneficial Ownership on the records of the Depository.
To exercise the option granted in paragraph A.2. above, the Holder or
Beneficial Owner, as applicable, shall (1) give notice to the Registrar by
telecopy or in writing, which states (i) the name and address of the Holder or
Beneficial Owner, (ii) the principal amount, CUSIP number and Bond numbers of
the Bonds or Beneficial Ownership Interests to be purchased, (iii) the date on
which such Bonds or Beneficial Ownership Interests are to be purchased, which
Bond Purchase Date shall be a Business Day not prior to the seventh day and not
later than the fifteenth day next succeeding the date of giving of such notice
to the Registrar and, if the interest rate on the Bonds is to be converted from
the Weekly Interest Rate to a new Interest Rate Mode, is a date no later than
the Interest Period Reset Date with respect to the new Interest Rate Mode, and
(iv) that such notice is irrevocable; (2) in the case of a Beneficial Owner,
provide the Trustee with evidence satisfactory to the Registrar of such
Beneficial Owner's Beneficial Ownership Interest; (3) in the case of a Holder,
no later than 10:00 a.m. according to the local time at the principal corporate
trust office of the Registrar on the second Business Day immediately preceding
the applicable
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Bond Purchase Date, deliver to the principal corporate trust office of the
Registrar the Bonds to be purchased in proper form, accompanied by fully
completed and executed Instructions to Sell; and (4) in the case of a Beneficial
Owner, no later than 10:00 a.m. (according to the local time at the principal
corporate trust office of the Registrar) on the Bond Purchase Date cause the
transfer of the Beneficial Owner's Beneficial Ownership on the records of the
Depository. In the case of a Bond or Beneficial Ownership Interest or portion
thereof to be purchased prior to an Interest Payment Date and after the Record
Date in respect thereof, the Holder or Beneficial Owner, as applicable, shall
deliver a due-bill check, in form satisfactory to the Registrar, for interest
due on such Interest Payment Date.
Any Bonds not delivered by Holders following the giving of notice of tender
shall nevertheless be deemed tendered for remarketing. Subject to the right of
such nondelivering Holders to receive the purchase price of such Bonds and
accrued interest to the Bond Purchase Date, such Bonds shall be null and void,
and the Trustee shall cause to be authenticated and delivered new Bonds in
replacement thereof pursuant to the remarketing of such Bonds. After the giving
of a notice of tender Beneficial Owners shall be obligated to transfer their
Beneficial Ownership Interests on the records of the Depository in accordance
with the instructions of the Registrar.
The tender options granted to the Holders or Beneficial Owners and all
mandatory tenders of Bonds or Beneficial Ownership Interests are subject to the
additional condition that any tendered Bonds or Beneficial Ownership Interests
(or the applicable portions thereof) will not be purchased if such Bonds (or
applicable portions thereof) mature or are redeemed on or prior to the
applicable Bond Purchase Date.
MANDATORY TENDER
(a) If at any time the Issuer at the direction of the Borrower shall
convert the interest rate on the Bonds to a different Interest Rate Mode, on the
Interest Period Reset Date upon which such conversion is effective, all Bonds
and Beneficial Ownership Interests shall be subject to mandatory tender by the
Holders or Beneficial Owners thereof for purchase on the Interest Period Reset
Date (a "Bond Purchase Date") at the applicable purchase price provided for
above. Notwithstanding such mandatory tender, any Holder or Beneficial Owner
may elect to retain his or her Bonds or Beneficial Ownership Interests by
delivering to the Registrar a written notice no later than 11:00 a.m. according
to the local time at the principal corporate trust office of the Registrar on
the eighth Business Day prior to such Interest Period Reset Date or by 11:00
a.m. according to the local time at the principal corporate trust office of the
Registrar on the fifth Business Day prior to such Interest Period Reset Date if
the Interest Rate Mode is to be converted to the One Month Interest Rate, which
notice shall state that (a) such Holder or Beneficial Owner realizes that the
Bonds or Beneficial Ownership Interests are being converted to bear interest at
the applicable Interest Rate Mode, (b) unless the interest rate on the Bonds is
being converted to the Weekly Interest Rate, such Holder or Beneficial Owner
realizes that the next Bond Purchase Date upon which the Bonds or Beneficial
Ownership Interests may be tendered for purchase is the
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next Interest Rate Adjustment Date or, if such Bonds are being converted to the
Fixed Interest Rate, that such Bonds may no longer be tendered for purchase, (c)
such Holder or Beneficial Owner realizes that any securities rating on the Bonds
may be withdrawn or lowered as a result of the conversion to a different
Interest Rate Mode, and (d) such Holder or Beneficial Owner affirmatively elects
to hold his or her Bonds and receive interest at the applicable Interest Rate
Mode.
Bonds or Beneficial Ownership Interests with respect to which the Registrar
shall not have received the election required by the preceding paragraph shall
be deemed to have been tendered whether or not the Holders thereof shall have
delivered such Bonds to the Registrar and without the need for further action of
the Beneficial Owners. Subject to the right of the Holders of such Bonds or
Beneficial Owners of such Beneficial Ownership Interests to receive the purchase
price of such Bonds or Beneficial Ownership Interests and to receive interest
accrued thereon to the Interest Period Reset Date, such Bonds or Beneficial
Ownership Interests shall be null and void and the Trustee shall cause to be
authenticated and delivered new Bonds in replacement thereof, or new Beneficial
Ownership Interests shall be created, pursuant to the remarketing of such Bonds
or Beneficial Ownership Interests.
(b) If at any time the Borrower shall provide for the delivery to the
Trustee of an Alternate Letter of Credit in accordance with the provisions of
Section 5.09 of the Indenture, on the date that precedes the Replacement Date by
at least five Business Days (a "Bond Purchase Date"), as defined in the
Indenture, all Bonds and Beneficial Ownership Interests shall be subject to
mandatory tender by the Holders or Beneficial Owners, as the case may be,
thereof for purchase at the applicable purchase price provided for above. At
least 30 days prior to the Bond Purchase Date the Registrar shall use its best
efforts to notify the Holders of all outstanding Bonds by telephone (to the
extent their telephone numbers have been provided in writing to the Registrar),
immediately confirmed by first class mail to all Holders, that such an Alternate
Letter of Credit is to be delivered by the Borrower to the Trustee. The notice
shall advise the Holders of the requirements of Section 5.09 of the Indenture
and confirm that such requirements have been met, and that all Bonds shall be
subject to mandatory tender pursuant to Section 2.06 of the Indenture, subject
to the right of the Holders or Beneficial Owners to affirmatively elect to waive
the mandatory tender and retain the Bonds or Beneficial Ownership Interests.
Notwithstanding such mandatory tender, any Holder or Beneficial Owner, as
applicable, may elect to retain its Bonds or Beneficial Ownership Interests by
delivering to the Registrar a written notice no later than 11:00 a.m. according
to the local time at the principal corporate trust office of the Registrar on
the eighth Business Day prior to such Replacement date which notice shall state
that (a) such Holder or Beneficial Owner realizes that the Borrower is
delivering an Alternate Letter of Credit to the Trustee pursuant to Section 5.09
of the Indenture, (b) such Holder or Beneficial Owner has received the notice
required by Section 2.06 of the Indenture, and (c) such Holder or Beneficial
Owner affirmatively elects to hold its Bonds or Beneficial Ownership Interests.
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Bonds or Beneficial Ownership Interests with respect to which the Registrar
shall not have received the election required by the preceding paragraph shall
be deemed to have been tendered for purposes of Section 2.06 of the Indenture
whether or not the Holders thereof shall have delivered such Bonds to the
Registrar and without the need for further action by the Beneficial Owners.
Subject to the right of the Holders of such Bonds or Beneficial Owners of such
Beneficial Ownership Interests to receive the purchase price of such Bonds or
Beneficial Ownership Interests and interest accrued thereon to the Replacement
Date, such Bonds or Beneficial Ownership Interests shall be null and void and
the Trustee shall cause to be authenticated and delivered new Bonds in
replacement thereof or new Beneficial Ownership Interests shall be created
pursuant to the remarketing of such Bonds or Beneficial Ownership Interests or
the pledge of such Bonds or Beneficial Ownership Interests to the Bank in lieu
or remarketing such Bonds or Beneficial Ownership Interests as described in
Section 6.20 of the Indenture.
REDEMPTION
(a) MANDATORY REDEMPTION UPON A DETERMINATION OF TAXABILITY. Upon the
occurrence of a Determination of Taxability, as defined in the Indenture, the
Bonds are subject to mandatory redemption in whole at a redemption price equal
to 100% of the outstanding principal amount thereof, plus interest accrued to
the redemption date, at the earliest practicable date selected by the Trustee,
after consultation with the Borrower, but in no event later than 45 days
following the Trustee's notification of the Determination of Taxability. The
occurrence of a Determination of Taxability with respect to the Bonds will not
constitute an Event of Default under the Indenture. No increase in the interest
payable with respect to the Bonds will occur in the event a Determination of
Taxability occurs.
(b) MANDATORY REDEMPTION UPON EXPIRATION OF LETTER OF CREDIT. The Bonds
are subject to mandatory redemption in whole on the Interest Payment Date which
next precedes the Letter of Credit Termination Date, at a redemption price of
100% of the outstanding principal amount thereof plus accrued interest to the
redemption date unless, at least 45 days prior to any such Interest Payment
Date, (a) the Bank shall have agreed in writing to an extension or further
extension of the Letter of Credit Termination Date to a date not less earlier
than one year from the Letter of Credit Termination Date being extended or (b)
pursuant to Section 5.09 of the Indenture, the Borrower shall have obtained and
delivered to the Trustee an Alternate Letter of Credit with a termination date
not earlier than one year from the Letter of Credit Termination Date for the
Letter of Credit it replaces, in which case the Bonds will be subject to the
mandatory tender provisions set forth above.
(c) OPTIONAL REDEMPTION. Unless previously redeemed, the Bonds are
subject to redemption at the option of the Issuer, upon the written direction of
the Borrower (subject to compliance with Section 4.03 of the Indenture), (1) if
the Bonds do not bear interest at the Fixed Interest Rate, in whole or in part
(in integral multiples of $5,000, provided that the unredeemed portion of any
Bond redeemed in part shall be $100,000 or more) on any Interest Rate Adjustment
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Date at the redemption price of 100% of the principal amount redeemed plus
accrued interest thereon to the redemption date, or (2) if the Bonds bear
interest at the Fixed Rate after the Fixed Interest Rate Commencement Date and
on or after the First Optional Redemption Date, in whole or in part (in integral
multiples of $5,000, provided that the unredeemed portion of any Bond redeemed
in part shall be $100,000 or more) at any time at a redemption price equal to
the following percentages of the principal amount redeemed, plus in each case
accrued interest to the date fixed for redemption:
Redemption Date Optional Redemption Price
--------------- -------------------------
First Optional Redemption
Date, through the following
last day of March 103%
First Anniversary of the First
Optional Redemption Date,
through the following
last day of March 102%
Second Anniversary of the
First Optional Redemption
Date, through the following
last day of March 101%
Third Anniversary of the First
Optional Redemption Date and
thereafter 100%
"First Optional Redemption Date" means the earlier to occur of the April 1
occurring in the year which is (i) at least ten (10) full years after the Fixed
Interest Rate Commencement Date or (ii) a number of years after the Fixed
Interest Rate Commencement Date equal to the number of full years between the
Fixed Interest Rate Commencement Date and the maturity date of the Bonds,
multiplied by 1/2 and rounded up to the nearest whole number.
"Fixed Interest Rate Commencement Date" means the Interest Period Reset
Date from and after which the Bonds shall bear interest at the Fixed Interest
Rate, as that date shall be established as provided in the Indenture.
(d) EXTRAORDINARY OPTIONAL REDEMPTION. The Bonds are also subject to
redemption by the Issuer in the event of the exercise by the Borrower of its
option to direct that redemption upon occurrence of any of the events described
in Section 6.2 of the Agreement (generally, substantial damage to, or
destruction or condemnation of the Project or changes in law causing the
Agreement to become void, unenforceable or impossible of performance or the
imposition of
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unreasonable burdens or excessive liabilities with respect to the Project or its
operation), (1) at any time in whole, or (2) at any time in part in the event of
condemnation of part of the Project, as provided in Section 6.2 of the
Agreement, in each case at a redemption price of 100% of the principal amount
redeemed, plus interest accrued to the redemption date.
If less than all Bonds are to be redeemed at one time, the selection of
Bonds, or portions thereof (in integral multiples of $5,000) to be redeemed
shall be made by lot by the Trustee; provided, however, Bonds (or book entry
interests in Bonds) pledged to the Bank pursuant to the Reimbursement Agreement
shall be selected for redemption prior to the selection of any other Bonds. If
Bonds or portions thereof are called for redemption and if on the redemption
date moneys for the redemption thereof are held by the Trustee, thereafter those
Bonds or portions thereof to be redeemed shall cease to bear interest, and shall
cease to be secured by, and shall not be deemed to be outstanding under, the
Indenture.
Unless waived in writing by any Holder of Bonds to be redeemed, official
notice of any such redemption shall be given by the Registrar on behalf of the
Issuer by mailing a copy of an official redemption notice by first class mail at
least 30 days and not more than 60 days prior to the date fixed for redemption
(except in the case of a redemption under Section 4.01(a) of the Indenture, in
which case such notice shall be given at least 5 days and not more than 15 days
prior to the date fixed for redemption) to the registered owner of the Bond or
Bonds to be redeemed at the address shown on the Register or at such other
address as is furnished in writing by such registered owner to the Registrar.
It is certified and recited that there have been performed and have
happened in regular and due form, as required by law, all acts and conditions
necessary to be done or performed by the Issuer or to have happened (i)
precedent to and in the issuing of the Bonds in order to make them legal, valid
and binding special obligations of the Issuer, and (ii) precedent to and in the
execution and delivery of the Indenture and the Agreement; that payment in full
for the Bonds has been received; and that the Bonds do not exceed or violate any
constitutional or statutory limitation.
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<PAGE>
IN WITNESS OF THE ABOVE, the Issuer has caused this Bond to be executed in
the name of the Issuer by the manual or facsimile signatures of its duly
authorized officers, as of the date shown above.
CITY OF GARY, INDIANA
By: ___________________________________
Mayor
(Seal)
Attest:
___________________________________
Clerk
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds described in the within mentioned Indenture.
THE FIFTH THIRD BANK, as Authenticating
Agent
By: ___________________________________
Authorized Representative
ASSIGNMENT
For value received, the undersigned sells, assigns and transfers unto
______________ _______________________________ the within Bond and irrevocably
constitutes and appoints __________________________ attorney to transfer that
Bond on the books kept for registration thereof, with full power of substitution
in the premises.
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<PAGE>
Dated: ____________________________ _______________________________________
Signature
Signature Guaranteed:
___________________________________
NOTICE: Signature(s) must be NOTICE: The assignor's signature to
guaranteed by an eligible guarantor this assignment must correspond with the
institution participating in a name as it appears upon the face of the
Securities Transfer Association within Bond in every particular, without
recognized signature guarantee alteration or any change whatever.
program.
A-19
<PAGE>
NOTICE OF EXERCISE OF TENDER OPTION
INSTRUCTIONS TO SELL
To: _______________________
Attention: Corporate Trust Department
RE: City of Gary, Indiana Adjustable Rate Economic Development
Revenue Refunding Bonds, Series 1996 A (The Miller
Partnership, L.P. Project)
Gentlemen:
The undersigned, as the Holder of the Bond annexed hereto ("Bond"), hereby
elects the option available to the undersigned pursuant to the Trust Indenture
relating to the above-captioned bond issue. In accordance with such option, the
undersigned hereby tenders:
check the appropriate box / / the entire Bond
/ / (increments of $5,000 with a minimum
tender of $100,000)
for purchase on the first Bond Purchase Date (as defined in the Bond) after the
date hereof, pursuant to the referenced Trust Indenture. In accordance with
such tender, the undersigned hereby irrevocably sells, assigns and transfers
such Bond or portion thereof at the purchase price set forth in the Trust
Indenture, and does hereby irrevocably constitute and appoint the Registrar as
attorney to transfer such Bond or portion thereof on the books of the Registrar,
with full power of substitution in the premises.
Dated: ____________________________ _______________________________________
Signature
_______________________________________
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed
by an eligible guarantor institution
participating in a Securities Transfer
Association recognized signature
guarantee program.
NOTICE: To exercise the option available to the Holder pursuant to the
referenced Trust Indenture, the Holder must notify the Registrar of
such exercise and deliver this Bond to the Registrar at the times and
in the manner set forth in this Bond. The signature to these
Instructions to Sell must correspond with the name as written upon the
face of this Bond in every particular, without alteration or
enlargement, or any change whatsoever.
<PAGE>
FORM OF SERIES 1996 B BOND
UNITED STATES OF AMERICA
STATE OF INDIANA
CITY OF GARY, INDIANA
TAXABLE ADJUSTABLE RATE ECONOMIC DEVELOPMENT
REVENUE REFUNDING BOND, SERIES 1996 B
(THE MILLER PARTNERSHIP, L.P. PROJECT)
NO. B-1
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
Maturity Date Cusip Number Date of Authentication
March 1, 2031 April 1, 1996
Date of Initial Delivery: April 1, 1996
Registered Owner: CEDE & CO.
Principal Amount:
The City of Gary, Indiana (the "Issuer"), a municipal corporation and
political subdivision validly existing under the laws of the State of Indiana,
for value received, promises to pay to the registered owner specified above or
registered assigns, but solely from the sources and in the manner referred to
herein, the principal amount specified above on the aforesaid Maturity Date,
unless this Bond is called for earlier redemption, and to pay from those sources
interest thereon at the rate per annum determined as described herein. Initial
interest on this Bond shall accrue
B-1
<PAGE>
from the Date of Initial Delivery of this Bond. Interest on this Bond is
payable on the first Business Day, as hereinafter defined, of each month, as
long as the interest rate hereon is calculated pursuant to the Weekly Interest
Rate, the One Month Interest Rate or the Three Month Interest Rate (as such
terms are hereinafter defined), commencing the first Business Day of May, 1996,
until the principal amount is paid or duly provided for. For any period of time
during which this Bond bears interest at the Six Month Interest Rate, the One
Year Interest Rate, the Five Year Interest Rate or the Fixed Interest Rate (as
such terms are hereinafter defined) interest hereon shall be payable on the
first day of each April and October. Any date established for the payment of
interest as described above is hereinafter referred to as an "Interest Payment
Date". The interest payable hereon on each Interest Payment Date shall be for
the period commencing on the next preceding Interest Payment Date (or the Date
of Initial Delivery of this Bond with respect to the first Interest Payment
Date) to and including the day immediately preceding the Interest Payment Date
on which payment is made. Interest shall be calculated on the basis of a year
of 365 days or 366 days, as applicable, for the number of days actually elapsed,
while the interest hereon is payable at the Weekly Interest Rate, the One Month
Interest Rate or the Three Month Interest Rate. Otherwise, interest shall be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
The term "Business Day", as used herein, means any day, other than a
Saturday or Sunday, on which commercial banks located in the cities in which the
principal corporate trust office of the Paying Agent, the principal corporate
trust office of the Registrar, the principal office of the Remarketing Agent,
and the principal office of the Bank, as hereafter defined, are located are not
required or authorized to remain closed and on which the New York Stock Exchange
is not closed. This Bond will bear interest from the most recent date to which
interest has been paid or duly provided for or, if no interest has been paid or
duly provided for, from its date of initial delivery. If any Interest Payment
Date, date of maturity of this Bond, Bond Purchase Date (as hereinafter defined)
or date fixed for redemption of this Bond, is not a Business Day, then payment
of the applicable interest, principal, purchase price or redemption price may be
made on the next succeeding Business Day with the same force and effect as if
such payment were made on such Interest Payment Date, date of maturity, Bond
Purchase Date or date fixed for redemption and no interest shall accrue for the
period after such date; provided, however, if this Bond bears interest at any of
the Weekly Interest Rate, the One Month Interest Rate or the Three Month
Interest Rate, interest shall accrue from the scheduled date of any maturity or
redemption due date of this Bond until the Business Day on which such payment is
made.
The principal of and premium, if any, on this Bond is payable upon
presentation and surrender hereof at the principal corporate trust office of the
Paying Agent, presently The Fifth Third Bank (the "Paying Agent"), located in
Cincinnati, Ohio. Interest is payable on each Interest Payment Date by check or
draft mailed to the person in whose name this Bond (or one or more predecessor
bonds) is registered (the "Holder") at the close of business on the fifth
Business Day preceding such Interest Payment Date (the "Regular Record Date") on
the registration books for this issue maintained by The Fifth Third Bank,
located in Cincinnati, Ohio, as Registrar, at the address appearing therein.
Notwithstanding the foregoing, interest on any Bond in the
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denomination of $100,000 or more shall be paid by wire transfer in immediately
available funds to the bank account number and address filed in writing with the
Registrar by such Holder, which account number and address shall be filed with
the Registrar at least two (2) Business Days prior to that Interest Payment
Date. Any interest which is not timely paid or duly provided for shall cease to
be payable to the Holder hereof (or of one or more predecessor bonds) as of the
Regular Record Date, and shall be payable to the Holder hereof (or of one or
more predecessor bonds) at the close of business on a Special Record Date to be
fixed by the Trustee for the payment of that overdue interest. Notice of the
Special Record Date shall be mailed to Holders not less than ten days prior
thereto. The principal and redemption price of and interest on this Bond are
payable in lawful money of the United States of America, without deduction for
the services of the Paying Agent. Notwithstanding anything herein to the
contrary, when this Bond is registered in the name of a Depository (as defined
in the Indenture hereinafter defined) or its nominee, the principal and
redemption price of and interest on this Bond shall be payable in federal funds
delivered or transmitted to the Depository or its nominee.
THIS BOND DOES NOT REPRESENT OR CONSTITUTE A DEBT OR PLEDGE OF THE FAITH
AND CREDIT OF THE ISSUER, THE STATE OF INDIANA OR ANY POLITICAL SUBDIVISION
THEREOF. THE HOLDERS OR OWNERS OF THIS BOND HAVE NO RIGHT TO HAVE TAXES LEVIED
BY THE ISSUER, THE STATE OF INDIANA OR ANY POLITICAL SUBDIVISION THEREOF FOR THE
PAYMENT OF THE PRINCIPAL OF OR PREMIUM (IF ANY) OR INTEREST ON THIS BOND.
PRINCIPAL OF AND PREMIUM (IF ANY) AND INTEREST ON THIS BOND ARE PAYABLE SOLELY
FROM THE REVENUES PLEDGED PURSUANT TO THE INDENTURE (AS HEREINAFTER DEFINED).
This Bond shall not constitute the personal obligation, either jointly or
severally, of the members of the Common Council of the Issuer (the "Issuing
Authority"), its Economic Development Commission, or of any officer, employee or
official of the Issuer.
This Bond shall not be entitled to any security or benefit under the
Indenture or be valid or become obligatory for any purpose until the certificate
of authentication hereon shall have been duly signed.
GENERAL PROVISIONS
This Bond is one of a duly authorized issue the City of Gary, Indiana
Taxable Adjustable Rate Economic Development Revenue Refunding Bonds, Series
1996 B (The Miller Partnership, L.P. Project) (the "Bonds"), issuable under the
Trust Indenture, dated as of March 1, 1996 (the "Indenture"), between the Issuer
and Fifth Third Bank of Central Indiana, as Trustee, aggregating in the
principal amount of $1,680,000 and issued for the purpose of the Issuer making a
loan (the "Loan") to The Miller Partnership, L.P., an Illinois limited
partnership (the "Borrower") pursuant to the Loan Agreement, dated as of even
date with the Indenture (the "Agreement"), to refund the City of Gary, Indiana
Economic Development Revenue Bonds, Series 1991 B (The Miller
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Partnership, L.P. Project) and the City of Gary, Indiana Economic Development
Revenue Bonds, Series 1993 B (The Miller Partnership, L.P. Project), which were
issued for the purpose of financing of the costs of issuance of such bonds. The
Bonds, together with any Additional Bonds which may be issued on a parity
therewith under the Indenture, are special obligations of the Issuer, issued or
to be issued under and are to be secured and entitled equally and ratably to the
protection given by the Indenture. The Bonds are issued pursuant to Indiana
Code 36-7-11.9 and 12, and Indiana Code 5-1-5 (collectively, the "Act") and
pursuant to an Ordinance duly adopted by the Issuing Authority. The Bonds are
issued on a parity with the City of Gary, Indiana Adjustable Rate Economic
Development Revenue Bonds, Series 1996 A (The Miller Partnership, L.P. Project)
(the "Series 1996 A Bonds").
Reference is made to the Indenture and the Agreement for a more complete
description of the Project, the provisions, among others, with respect to the
nature and extent of the security for the Bonds, the rights, duties and
obligations of the Issuer, the Trustee and the Holders of the Bonds and the
terms and conditions upon which the Bonds are issued and secured. All terms
used herein with initial capitalization where the rules of grammar or context do
not otherwise require shall have the meanings as set forth in the Indenture.
Each Holder assents, by its acceptance hereof, to all of the provisions of the
Indenture.
Pursuant to the Agreement, the Borrower has executed and delivered to the
Trustee the Borrower's Note, Series 1996 B dated as of even date with the Bonds
(the "Series 1996 B Note"), in the principal amount of $1,680,000. The Borrower
is required by the Agreement and the Series 1996 B Note to make payments to the
Trustee in amounts and at times necessary to pay the principal of and premium
(if any) and interest on the Bonds (the "Bond Service Charges"). In the
Indenture, the Issuer has assigned to the Trustee, to provide for the payment of
the Bond Service Charges on the Bonds and any Additional Bonds, the Issuer's
right, title and interest in and to the Series 1996 B Note and the Agreement,
except for Unassigned Issuer's Rights, as defined in the Agreement.
Pursuant to the Agreement, the Borrower has caused to be issued and
delivered to the Trustee by The Royal Bank of Scotland plc, acting through its
New York Branch (the "Bank") an irrevocable letter of credit (the "Letter of
Credit"), pursuant to which the Trustee is entitled to draw up to (a) the
principal amount of the Bonds outstanding to enable the Trustee to pay (i) the
principal amount of the Bonds when due at maturity or upon redemption or
acceleration on the occurrence of an event of default, and (ii) an amount equal
to the principal portion of the purchase price of any Bonds or Beneficial
Ownership Interests duly tendered by the Holders or Beneficial Owners thereof
for purchase pursuant to the Indenture, plus (b) the amount of interest accruing
on the Bonds, but not to exceed 56 days' accrued interest at the maximum rate of
12% per annum (the "Maximum Rate") to enable the Trustee to pay interest when
due on the Bonds and the interest portion (if any) of the purchase price of any
Bonds or Beneficial Ownership Interests duly tendered by the Holders or
Beneficial Owners thereof for purchase pursuant to the Indenture. In connection
with the issuance of the Letter of Credit, the Bank has entered into a
Reimbursement Agreement (the "Reimbursement Agreement") with the Borrower
pursuant to which the Borrower
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is obligated to reimburse the Bank for all draws made under Letter of Credit.
The Letter of Credit shall expire, subject to provisions for earlier termination
or extension, on April 15, 2001.
Subject to the provisions of the Indenture and the Agreement, the Letter of
Credit may be replaced from time to time by another letter of credit (an
"Alternate Letter of Credit"), in which case the term "Bank" shall mean the
financial institution issuing the Alternate Letter of Credit and the term
"Letter of Credit" shall mean the Alternate Letter of Credit.
Copies of the Indenture, the Agreement, the Letter of Credit, and the
Series 1996 A Note are on file in the principal corporate trust office of the
Trustee.
The Bond Service Charges on the Bonds are payable solely from the Revenues,
as defined and as provided for in the Indenture (being, generally, the amounts
payable under the Agreement in repayment of the Loan, any unexpended proceeds of
the Bonds and amounts deposited in the Refunding Fund and the Bond Fund as
defined and provided for in the Indenture, including amounts drawn pursuant to
the Letter of Credit), and are an obligation of the Issuer only to the extent of
the Revenues. The Bonds are not secured by a pledge of the faith and credit or
the taxing power of the Issuer, the State of Indiana or any political
subdivision thereof.
No recourse under or upon any obligation, covenant, acceptance or agreement
contained in the Indenture, or in any of the Bonds, or under any judgment
obtained against the Issuer, its Economic Development Commission or the Issuing
Authority, or by the enforcement of any assessment or by any legal or equitable
proceeding by virtue of any constitution or statute or otherwise, or under any
circumstances, shall be had against any member or officer, as such, past,
present, or future, of the Issuer, its Economic Development Commission or the
Issuing Authority, whether directly or through the Issuer, or otherwise, for the
payment for or to the Issuer or any receiver thereof, or for or to any Holder of
any Bond, or otherwise, of any sum that may be due and unpaid by the Issuer upon
any of the Bonds. Any and all personal liability of every nature, whether at
common law or in equity, or by statute or by constitution or otherwise, of any
such member or officer, as such, to respond by reason of any act or omission on
his or her part, or otherwise, for, directly or indirectly, the payment for or
to the Issuer or any receiver thereof, or for or to the owner or any Holder of
any Bond, or otherwise, of any sum that may remain due and unpaid upon any Bond,
shall be deemed to be and is hereby expressly waived and released as a condition
of and consideration for the execution and delivery of the Indenture and the
issuance of the Bonds.
The Bonds are issuable only as fully registered bonds in the denominations
of $100,000 or $5,000 multiples in excess thereof and shall be originally issued
only to a Depository to be held in a book entry system and: (i) the Bonds shall
be registered in the name of the Depository or its nominee, as Bondholder, and
immobilized in the custody of the Depository; (ii) unless otherwise requested by
the Depository, there shall be a single Bond certificate; and (iii) the Bonds
shall not be transferable or exchangeable, except for transfer to another
Depository or another nominee of a Depository, without further action by the
Issuer. While the Bonds are in book entry only form,
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Bonds in the form of physical certificates shall only be deposited with the
Depository. The owners of beneficial interests in the Bonds shall not have any
right to receive Bonds in the form of physical certificates. If any Depository
determines not to continue to act as a Depository for the Bonds for use in a
book entry system, the Issuer may attempt to have established a securities
depository/book entry system relationship with another qualified Depository
under the Indenture. If the Issuer does not or is unable to do so, the Issuer
and the Trustee, after the Trustee has made provision for notification to the
owners of book entry interests by the then Depository, shall permit withdrawal
of the Bonds from the Depository, and authenticate and deliver, or cause to be
authenticated and delivered, Bond certificates in fully registered form (in
denominations of $100,000 or $5,000 multiples in excess thereof) to the
assignees of the Depository or its nominee.
While a Depository is the sole holder of the Bonds, delivery or notation of
partial redemption or tender for purchase of Bonds shall be effected in
accordance with the provisions of the Letter of Representations, as defined in
the Indenture.
In addition to the words and terms defined elsewhere in this Bond, the
following terms shall have the following meanings:
"Beneficial Owner" means with respect to the Bonds, a person owning a
Beneficial Ownership Interest therein, as evidenced to the satisfaction of the
Trustee.
"Beneficial Ownership Interest" means the beneficial right to receive
payments and notices with respect to the Bonds which are held by the Depository
under a book entry system.
"book entry form" or "book entry system" means, with respect to the Bonds,
a form or system, as applicable, under which (i) the ownership of beneficial
interests in Bonds and Bond Service Charges may be transferred only through a
book entry and (ii) physical Bond certificates in fully registered form are
registered only in the name of a Depository or its nominee as Holder, with the
physical Bond certificates "immobilized" in the custody of the Depository. The
book entry system maintained by and the responsibility of the Depository and not
maintained by or the responsibility of the Issuer or the Trustee is the record
that identifies, and records the transfer of the interests of, the owners of
beneficial (book entry) interests in the Bonds.
"Depository" means any securities depository that is a clearing agency
under federal law operating and maintaining, with its participants or otherwise,
a book entry system to record ownership of book entry interests in Bonds, and to
effect transfers of book entry interests in Bonds, and includes and means
initially The Depository Trust Company (a limited purpose trust company), New
York, New York.
The Indenture permits certain amendments or supplements to the Agreement,
the Indenture, the Letter of Credit and the Series 1996 A Note not prejudicial
to the Holders to be made with the consent of the Bank but without the consent
of or notice to the Holders, and other amendments or supplements thereto to be
made with the consent of the Bank and the Holders of
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at least a majority in aggregate principal amount of the Bonds and any
Additional Bonds then outstanding. So long as the Bank is not in default under
the Letter of Credit, and the Bank consents in writing to such amendments, the
consent of the Holders is not required for those amendments to the Indenture,
Agreement, Letter of Credit or Series 1996 A Note which otherwise require the
consent of only a majority in aggregate principal amount of the Bonds and any
Additional Bonds then outstanding.
DETERMINATION OF INTEREST RATE
The initial interest rate on this Bond shall be established and be in
effect until the first Interest Rate Adjustment Date. Thereafter, except as
provided below, for each succeeding period the interest rate on the Bonds shall
be the Weekly Interest Rate for such weekly period as established on the
Interest Rate Determination Date immediately preceding the commencement of such
weekly period.
On June 1, 1996, and on any Interest Period Reset Date thereafter, subject
to the conditions set forth in the Indenture, the interest rate on the Bonds may
be converted to a different Interest Rate Mode upon receipt by the Trustee, the
Paying Agent, the Registrar and the Remarketing Agent of a written direction
from the Borrower, given on behalf of the Issuer, not less than 45 days prior to
the Interest Period Reset Date, to convert the interest rate on the Bonds to an
Interest Rate Mode other than the Interest Rate Mode then in effect.
On each Interest Rate Determination Date, the Remarketing Agent shall give
the Trustee, the Registrar and Paying Agent telephonic notice (immediately
confirmed in writing) of the interest rate to be borne by the Bonds for the
following Interest Rate Period; provided that if the interest rate is determined
pursuant to clause (b) of the definition of the applicable Interest Rate Mode,
on the Interest Rate Determination Date, the Trustee shall give notice to the
Borrower and the Bank as above provided.
If the interest rate on the Bonds is converted to a different Interest Rate
Mode, at least 30 days prior to the Interest Period Reset Date the Registrar
shall use its best efforts to notify the Holders of all outstanding Bonds by
telephone (to the extent their telephone numbers have been provided in writing
to the Registrar), immediately confirmed by first class mail to all Holders,
that upon such Interest Period Reset Date the Bonds shall be converted to a
different Interest Rate Mode, which Interest Rate Mode shall be specified, and
that all Bonds shall be subject to a mandatory tender, subject to the right of
the Holders to affirmatively elect to waive the mandatory tender and retain
their Bonds.
Any calculation of the interest rate to be borne by the Bonds shall be
rounded to the nearest one-hundredth of one percent (0.01%). The computation of
the interest rate on the Bonds by the Remarketing Agent shall be binding and
conclusive upon the Holders of the Bonds.
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"Five Year Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary, during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date and ending on March 31 or September 30
nearest to but not later than the date which is five years from the Interest
Rate Adjustment Date, in the judgment of the Remarketing Agent (taking into
consideration current transactions and comparable securities with which the
Remarketing Agent is involved or of which it is aware and prevailing financial
market conditions) to produce as nearly as practical a par bid for the Bonds on
the Interest Rate Determination Date or (b) in the event that the Remarketing
Agent has been removed or has resigned and no successor has been appointed or
the Remarketing Agent has failed to determine the Five Year Interest Rate for
whatever reason, or the Five Year Interest Rate cannot be determined pursuant to
clause (a) for whatever reason, the interest rate then in effect with respect to
the Bonds, without adjustment; provided that in no event shall the Five Year
Interest Rate exceed the lesser of 12% per annum or the maximum rate permitted
by law (the "Maximum Rate").
"Fixed Interest Rate" means (a) the fixed rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Period Reset Date, to be the
interest rate necessary, from the Interest Period Reset Date to the final
maturity date of the Bonds, in the judgment of the Remarketing Agent (taking
into consideration current transactions and comparable securities with which the
Remarketing Agent is involved or of which it is aware and prevailing financial
market conditions) to produce as nearly as practical a par bid for the Bonds on
the Interest Rate Determination Date or (b) in the event that the Remarketing
Agent has been removed or has resigned and no successor has been appointed or
the Remarketing Agent has failed to determine the Fixed Interest Rate for
whatever reason, or the Fixed Interest Rate cannot be determined pursuant to
clause (a) for whatever reason, the interest rate then in effect with respect to
the Bonds, without adjustment; provided that in no event shall the Fixed
Interest Rate exceed the Maximum Rate.
"Interest Period Reset Date" means the date on which the interest rate on
the Bonds converts from the Interest Rate Mode applicable to the Bonds prior to
such date to a new Interest Rate Mode. An Interest Period Reset Date shall be
the first Business Day of a month; provided that, upon conversion from a Six
Month, One Year or Five Year Interest Rate Mode, an Interest Period Reset Date
shall be the first day of a month; and provided further that, except when
converting from a Weekly Interest Rate Mode, an Interest Period Reset Date may
not occur prior to the end of the preceding Interest Rate Period.
"Interest Rate Adjustment Date" means any date on which the interest rate
on the Bonds is adjusted, either as the result of the conversion of the interest
rate on the Bonds to a different Interest Rate Mode or by adjustment of the
interest rate on the Bonds within the applicable Interest Rate Mode. Except as
otherwise provided with respect to an Interest Rate Adjustment Date which is
also an Interest Period Reset Date, an Interest Rate Adjustment Date shall be
the first day of the first month of the Interest Rate Period if the Bonds bear
interest at the Six Month, One Year
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or Five Year Interest Rate; the first Business Day of the month if the Bonds
bear interest at the One Month or Three Month Interest Rate; and if the Bonds
bear interest at the Weekly Interest Rate, then the Interest Rate Adjustment
Date shall be Thursday of each week.
"Interest Rate Determination Date" means (i) with respect to the Three
Month Interest Rate, the Six Month Interest Rate, the One Year Interest Rate,
the Five Year Interest Rate and the Fixed Interest Rate, the tenth Business Day
preceding an Interest Rate Adjustment Date, (ii) with respect to the One Month
Interest Rate, the seventh Business Day preceding an Interest Rate Adjustment
Date, and (iii) with respect to the Weekly Interest Rate, not later than 2:00
p.m. according to local time at the principal corporate trust office of the
Registrar on Wednesday of each week, or the next preceding Business Day if such
Wednesday is not a Business Day; provided that upon any conversion to the Weekly
Interest Rate from a different Interest Rate Mode, the first Interest Rate
Determination Date shall mean not later than 2:00 p.m. according to the local
time at the principal corporate trust office of the Registrar on the Business
Day next preceding the Interest Period Reset Date.
"Interest Rate Mode" means any of those modes of interest with respect to
the Bonds permitted by the Indenture, specifically, the Weekly Interest Rate,
the One Month Interest Rate, the Three Month Interest Rate, the Six Month
Interest Rate, the One Year Interest Rate, the Five Year Interest Rate and the
Fixed Interest Rate.
"Interest Rate Period" means that period of time during which the interest
rate with respect to the Bonds has been determined by the Remarketing Agent or
otherwise as provided in the definition of the applicable Interest Rate Mode,
commencing on the applicable Interest Rate Adjustment Date, and terminating on
the day immediately preceding the following Interest Rate Adjustment Date.
"One Month Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary, during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date to and including the day preceding the
first Business Day of the next month, in the judgment of the Remarketing Agent
(taking into consideration current transactions and comparable securities with
which the Remarketing Agent is involved or of which it is aware and prevailing
financial market conditions) to produce as nearly as practical a par bid for the
Bonds on the Interest Rate Determination Date or (b) in the event that the
Remarketing Agent has been removed or has resigned and no successor has been
appointed, or the Remarketing Agent has failed to determine the One Month
Interest Rate for whatever reason, or the One Month Interest Rate cannot be
determined pursuant to clause (a) for whatever reason, the interest rate then in
effect with respect to the Bonds, without adjustment; provided that in no event
shall the One Month Interest Rate exceed the Maximum Rate.
"One Year Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable
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Interest Rate Adjustment Date, to be the interest rate necessary, during the
Interest Rate Period commencing on the applicable Interest Rate Adjustment Date,
and ending on the March 31 or September 30 nearest to but not later than the
date which is one year from the Interest Rate Adjustment Date, in the judgment
of the Remarketing Agent (taking into consideration current transactions and
comparable securities with which the Remarketing Agent is involved or of which
it is aware and prevailing financial market conditions) to produce as nearly as
practical a par bid for the Bonds on the Interest Rate Determination Date or (b)
in the event that the Remarketing Agent has been removed or has resigned and no
successor has been appointed, or the Remarketing Agent has failed to determine
the One Year Interest Rate for whatever reason, or the One Year Interest Rate
cannot be determined pursuant to clause (a) for whatever reason, the interest
rate then in effect with respect to the Bonds, without adjustment; provided that
in no event shall the One Year Interest Rate exceed the Maximum Rate.
"Remarketing Agent" means, initially, Everen Securities, Inc., and any
successor Remarketing Agent appointed pursuant to the Indenture.
"Six Month Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date and ending on the March 31 or September
30 nearest to but not later than the date which is six months from the Interest
Rate Adjustment Date, in the judgment of the Remarketing Agent (taking into
consideration current transactions and comparable securities with which the
Remarketing Agent is involved or of which it is aware and prevailing financial
market conditions) to produce as nearly as practical a par bid for the Bonds on
the Interest Rate Determination Date or (b) in the event that the Remarketing
Agent has been removed or has resigned and no successor has been appointed, or
the Remarketing Agent has failed to determine the Six Month Interest Rate for
whatever reason, or the Six Month Interest Rate cannot be determined pursuant to
clause (a) for whatever reason, the interest rate then in effect with respect to
the Bonds, without adjustment; provided that in no event shall the Six Month
Interest Rate exceed the Maximum Rate.
"Three Month Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date to and including the day preceding the
first Business Day of the January, April, July or October, nearest to but not
later than the date which is three months from the Interest Rate Adjustment
Date, in the judgment of the Remarketing Agent (taking into consideration
current transactions and comparable securities with which the Remarketing Agent
is involved or of which it is aware and prevailing financial market conditions)
to produce as nearly as practical a par bid for the Bonds on the Interest Rate
Determination Date or (b) in the event that the Remarketing Agent has been
removed or has resigned and no successor has been appointed, or the Remarketing
Agent has failed to determine the Three Month Interest Rate for whatever reason,
or the Three Month Interest Rate cannot be determined pursuant to
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clause (a) for whatever reason, the interest rate then in effect with respect to
the Bonds, without adjustment; provided that in no event shall the Three Month
Interest Rate exceed the Maximum Rate.
"Weekly Interest Rate" means (a) the rate of interest per annum determined
by the Remarketing Agent, on the Interest Rate Determination Date immediately
preceding the applicable Interest Rate Adjustment Date, to be the interest rate
necessary during the Interest Rate Period of one week (or less in the case of
any such Interest Rate Period commencing on an Interest Period Reset Date which
is not a Thursday, or ending on the day preceding an Interest Period Reset Date)
commencing on the applicable Interest Rate Adjustment Date, in the judgment of
the Remarketing Agent (taking into consideration current transactions and
comparable securities with which the Remarketing Agent is involved or of which
it is aware and prevailing financial market conditions) to produce as nearly as
practical a par bid for the Bonds on the Interest Rate Determination Date or (b)
in the event that the Remarketing Agent has been removed or has resigned and no
successor has been appointed, or the Remarketing Agent has failed to determine
the Weekly Interest Rate for whatever reason, or the Weekly Interest Rate cannot
be determined pursuant to clause (a) for whatever reason, the interest rate then
in effect with respect to the Bonds, without adjustment; provided that in no
event shall the Weekly Interest Rate exceed the Maximum Rate.
TENDER OPTION
A.1. TENDER OPTION WHILE BONDS BEAR INTEREST IN AN INTEREST RATE MODE
OTHER THAN THE WEEKLY INTEREST RATE. While the Bonds bear interest at the One
Month Interest Rate, the Three Month Interest Rate, the Six Month Interest Rate,
the One Year Interest Rate or the Five Year Interest Rate, on each Interest Rate
Adjustment Date (each a "Bond Purchase Date"), each Holder or Beneficial Owner,
as applicable, shall have the option to tender for purchase, at 100% of the
principal amount thereof, all of the Bonds owned by such Holder (or all
Beneficial Ownership Interests owned by such Beneficial Owner), or such lesser
principal amount thereof (in denominations of $5,000 or any integral multiple
thereof, provided that such Holder or Beneficial Owner tenders $100,000 or more
in principal amount and provided that the untendered portion of any Bond or
Beneficial Ownership Interest shall be $100,000 or more in principal amount) as
such Holder or Beneficial Owner may specify in accordance with the terms,
conditions and limitations hereinafter set forth. The purchase price for each
such Bond or Beneficial Ownership Interest shall be payable in lawful money of
the United States of America, shall equal the principal amount, or such portion
thereof, to be purchased and shall be paid in full on the applicable Bond
Purchase Date.
A.2. TENDER OPTION WHILE BONDS BEAR INTEREST AT THE WEEKLY INTEREST RATE.
While the Bonds bear interest at the Weekly Interest Rate, each Holder or
Beneficial Owner, as applicable, has the option to tender for purchase, at 100%
of the principal amount thereof plus accrued interest to the purchase date (a
"Bond Purchase Date"), all of the Bonds owned by such Holder (or all Beneficial
Ownership Interests owned by such Beneficial Owner), or such lesser principal
amount thereof (in denominations of $5,000 or any integral multiple thereof,
provided that such
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Holder or Beneficial Owner tenders $100,000 or more in principal amount and
provided that the untendered portion of any Bond or Beneficial Ownership
Interest shall be $100,000 or more in principal amount) as such Holder or
Beneficial Owner may specify in accordance with the terms, conditions and
limitations hereafter set forth. The purchase price for each such Bond or
Beneficial Ownership Interest shall be payable in lawful money of the United
States of America and shall be paid in full on the applicable Bond Purchase
Date.
To exercise the option granted in paragraph A.1. above, the Holder or
Beneficial Owner, as applicable, shall (1) no earlier than 15 days prior to the
Bond Purchase Date and no later than 11:00 a.m. according to the local time at
the principal corporate trust office of the Registrar on the eighth Business Day
prior to the Bond Purchase Date, unless the Bonds bear interest at the One Month
Interest Rate, then on the fifth Business Day prior to the Bond Purchase Date,
give notice to the Registrar by telecopy or in writing which states (i) the name
and address of the Holder or Beneficial Owner, as applicable, (ii) the principal
amount, CUSIP number and bond numbers of the Bonds or Beneficial Ownership
Interests to be purchased, (iii) that such Bonds or Beneficial Ownership
Interests are to be purchased on such Bond Purchase Date pursuant to the terms
of the Indenture, and (iv) that such notice is irrevocable; (2) in the case of a
Beneficial Owner, provide the Registrar with evidence satisfactory to the
Registrar of such Beneficial Owner's Beneficial Ownership Interest; (3) in the
case of a Holder, no later than 10:00 a.m. according to the local time at the
principal corporate trust office of the Registrar on the seventh day preceding
such Bond Purchase Date, or the next preceding Business Day if such seventh day
is not a Business Day, unless the Bonds bear interest at the One Month Interest
Rate, then on the fourth day preceding such Bond Purchase Date, or the next
preceding Business Day if such fourth day is not a Business Day, deliver to the
principal corporate trust office of the Registrar the Bonds to be purchased in
proper form, accompanied by fully completed and executed Instructions to Sell,
the form of which is printed hereon; and (4) in the case of a Beneficial Owner,
no later than 10:00 a.m. (according to the local time at the principal corporate
trust office of the Registrar) on the Bond Purchase Date, cause the transfer of
the Beneficial Owner's Beneficial Ownership on the records of the Depository.
To exercise the option granted in paragraph A.2. above, the Holder or
Beneficial Owner, as applicable, shall (1) give notice to the Registrar by
telecopy or in writing, which states (i) the name and address of the Holder or
Beneficial Owner, (ii) the principal amount, CUSIP number and Bond numbers of
the Bonds or Beneficial Ownership Interests to be purchased, (iii) the date on
which such Bonds or Beneficial Ownership Interests are to be purchased, which
Bond Purchase Date shall be a Business Day not prior to the seventh day and not
later than the fifteenth day next succeeding the date of giving of such notice
to the Registrar and, if the interest rate on the Bonds is to be converted from
the Weekly Interest Rate to a new Interest Rate Mode, is a date no later than
the Interest Period Reset Date with respect to the new Interest Rate Mode, and
(iv) that such notice is irrevocable; (2) in the case of a Beneficial Owner,
provide the Trustee with evidence satisfactory to the Registrar of such
Beneficial Owner's Beneficial Ownership Interest; (3) in the case of a Holder,
no later than 10:00 a.m. according to the local time at the principal corporate
trust office of the Registrar on the second Business Day immediately preceding
the applicable
B-12
<PAGE>
Bond Purchase Date, deliver to the principal corporate trust office of the
Registrar the Bonds to be purchased in proper form, accompanied by fully
completed and executed Instructions to Sell; and (4) in the case of a Beneficial
Owner, no later than 10:00 a.m. (according to the local time at the principal
corporate trust office of the Registrar) on the Bond Purchase Date cause the
transfer of the Beneficial Owner's Beneficial Ownership on the records of the
Depository. In the case of a Bond or Beneficial Ownership Interest or portion
thereof to be purchased prior to an Interest Payment Date and after the Record
Date in respect thereof, the Holder or Beneficial Owner, as applicable, shall
deliver a due-bill check, in form satisfactory to the Registrar, for interest
due on such Interest Payment Date.
Any Bonds not delivered by Holders following the giving of notice of tender
shall nevertheless be deemed tendered for remarketing. Subject to the right of
such nondelivering Holders to receive the purchase price of such Bonds and
accrued interest to the Bond Purchase Date, such Bonds shall be null and void,
and the Trustee shall cause to be authenticated and delivered new Bonds in
replacement thereof pursuant to the remarketing of such Bonds. After the giving
of a notice of tender Beneficial Owners shall be obligated to transfer their
Beneficial Ownership Interests on the records of the Depository in accordance
with the instructions of the Registrar.
The tender options granted to the Holders or Beneficial Owners and all
mandatory tenders of Bonds or Beneficial Ownership Interests are subject to the
additional condition that any tendered Bonds or Beneficial Ownership Interests
(or the applicable portions thereof) will not be purchased if such Bonds (or
applicable portions thereof) mature or are redeemed on or prior to the
applicable Bond Purchase Date.
MANDATORY TENDER
(a) If at any time the Issuer at the direction of the Borrower shall
convert the interest rate on the Bonds to a different Interest Rate Mode, on the
Interest Period Reset Date upon which such conversion is effective, all Bonds
and Beneficial Ownership Interests shall be subject to mandatory tender by the
Holders or Beneficial Owners thereof for purchase on the Interest Period Reset
Date (a "Bond Purchase Date") at the applicable purchase price provided for
above. Notwithstanding such mandatory tender, any Holder or Beneficial Owner
may elect to retain his or her Bonds or Beneficial Ownership Interests by
delivering to the Registrar a written notice no later than 11:00 a.m. according
to the local time at the principal corporate trust office of the Registrar on
the eighth Business Day prior to such Interest Period Reset Date or by 11:00
a.m. according to the local time at the principal corporate trust office of the
Registrar on the fifth Business Day prior to such Interest Period Reset Date if
the Interest Rate Mode is to be converted to the One Month Interest Rate, which
notice shall state that (a) such Holder or Beneficial Owner realizes that the
Bonds or Beneficial Ownership Interests are being converted to bear interest at
the applicable Interest Rate Mode, (b) unless the interest rate on the Bonds is
being converted to the Weekly Interest Rate, such Holder or Beneficial Owner
realizes that the next Bond Purchase Date upon which the Bonds or Beneficial
Ownership Interests may be tendered for purchase is the
B-13
<PAGE>
next Interest Rate Adjustment Date or, if such Bonds are being converted to the
Fixed Interest Rate, that such Bonds may no longer be tendered for purchase, (c)
such Holder or Beneficial Owner realizes that any securities rating on the Bonds
may be withdrawn or lowered as a result of the conversion to a different
Interest Rate Mode, and (d) such Holder or Beneficial Owner affirmatively elects
to hold his or her Bonds and receive interest at the applicable Interest Rate
Mode.
Bonds or Beneficial Ownership Interests with respect to which the Registrar
shall not have received the election required by the preceding paragraph shall
be deemed to have been tendered whether or not the Holders thereof shall have
delivered such Bonds to the Registrar and without the need for further action of
the Beneficial Owners. Subject to the right of the Holders of such Bonds or
Beneficial Owners of such Beneficial Ownership Interests to receive the purchase
price of such Bonds or Beneficial Ownership Interests and to receive interest
accrued thereon to the Interest Period Reset Date, such Bonds or Beneficial
Ownership Interests shall be null and void and the Trustee shall cause to be
authenticated and delivered new Bonds in replacement thereof, or new Beneficial
Ownership Interests shall be created, pursuant to the remarketing of such Bonds
or Beneficial Ownership Interests.
(b) If at any time the Borrower shall provide for the delivery to the
Trustee of an Alternate Letter of Credit in accordance with the provisions of
Section 5.09 of the Indenture, on the date that precedes the Replacement Date by
at least five Business Days (a "Bond Purchase Date"), as defined in the
Indenture, all Bonds and Beneficial Ownership Interests shall be subject to
mandatory tender by the Holders or Beneficial Owners, as the case may be,
thereof for purchase at the applicable purchase price provided for above. At
least 30 days prior to the Bond Purchase Date the Registrar shall use its best
efforts to notify the Holders of all outstanding Bonds by telephone (to the
extent their telephone numbers have been provided in writing to the Registrar),
immediately confirmed by first class mail to all Holders, that such an Alternate
Letter of Credit is to be delivered by the Borrower to the Trustee. The notice
shall advise the Holders of the requirements of Section 5.09 of the Indenture
and confirm that such requirements have been met, and that all Bonds shall be
subject to mandatory tender pursuant to Section 2.06 of the Indenture, subject
to the right of the Holders or Beneficial Owners to affirmatively elect to waive
the mandatory tender and retain the Bonds or Beneficial Ownership Interests.
Notwithstanding such mandatory tender, any Holder or Beneficial Owner, as
applicable, may elect to retain its Bonds or Beneficial Ownership Interests by
delivering to the Registrar a written notice no later than 11:00 a.m. according
to the local time at the principal corporate trust office of the Registrar on
the eighth Business Day prior to such Replacement date which notice shall state
that (a) such Holder or Beneficial Owner realizes that the Borrower is
delivering an Alternate Letter of Credit to the Trustee pursuant to Section 5.09
of the Indenture, (b) such Holder or Beneficial Owner has received the notice
required by Section 2.06 of the Indenture, and (c) such Holder or Beneficial
Owner affirmatively elects to hold its Bonds or Beneficial Ownership Interests.
B-14
<PAGE>
Bonds or Beneficial Ownership Interests with respect to which the Registrar
shall not have received the election required by the preceding paragraph shall
be deemed to have been tendered for purposes of Section 2.06 of the Indenture
whether or not the Holders thereof shall have delivered such Bonds to the
Registrar and without the need for further action by the Beneficial Owners.
Subject to the right of the Holders of such Bonds or Beneficial Owners of such
Beneficial Ownership Interests to receive the purchase price of such Bonds or
Beneficial Ownership Interests and interest accrued thereon to the Replacement
Date, such Bonds or Beneficial Ownership Interests shall be null and void and
the Trustee shall cause to be authenticated and delivered new Bonds in
replacement thereof or new Beneficial Ownership Interests shall be created
pursuant to the remarketing of such Bonds or Beneficial Ownership Interests or
the pledge of such Bonds or Beneficial Ownership Interests to the Bank in lieu
or remarketing such Bonds or Beneficial Ownership Interests as described in
Section 6.20 of the Indenture.
REDEMPTION
(a) MANDATORY REDEMPTION UPON A DETERMINATION OF TAXABILITY. Upon the
occurrence of a Determination of Taxability, as defined in the Indenture, with
respect to the Series 1996 A Bonds, the Bonds are subject to mandatory
redemption in whole at a redemption price equal to 100% of the outstanding
principal amount thereof, plus interest accrued to the redemption date, at the
earliest practicable date selected by the Trustee, after consultation with the
Borrower, but in no event later than 45 days following the Trustee's
notification of the Determination of Taxability. The occurrence of a
Determination of Taxability with respect to the Bonds will not constitute an
Event of Default under the Indenture. No increase in the interest payable with
respect to the Bonds will occur in the event a Determination of Taxability
occurs.
(b) MANDATORY REDEMPTION UPON EXPIRATION OF LETTER OF CREDIT. The Bonds
are subject to mandatory redemption in whole on the Interest Payment Date which
next precedes the Letter of Credit Termination Date, at a redemption price of
100% of the outstanding principal amount thereof plus accrued interest to the
redemption date unless, at least 45 days prior to any such Interest Payment
Date, (a) the Bank shall have agreed in writing to an extension or further
extension of the Letter of Credit Termination Date to a date not less earlier
than one year from the Letter of Credit Termination Date being extended or (b)
pursuant to Section 5.09 of the Indenture, the Borrower shall have obtained and
delivered to the Trustee an Alternate Letter of Credit with a termination date
not earlier than one year from the Letter of Credit Termination Date for the
Letter of Credit it replaces, in which case the Bonds will be subject to the
mandatory tender provisions set forth above.
(c) OPTIONAL REDEMPTION. Unless previously redeemed, the Bonds are
subject to redemption at the option of the Issuer, upon the written direction of
the Borrower (subject to compliance with Section 4.03 of the Indenture), (1) if
the Bonds do not bear interest at the Fixed Interest Rate, in whole or in part
(in integral multiples of $5,000, provided that the unredeemed portion of any
Bond redeemed in part shall be $100,000 or more) on any Interest Rate Adjustment
B-15
<PAGE>
Date at the redemption price of 100% of the principal amount redeemed plus
accrued interest thereon to the redemption date, or (2) if the Bonds bear
interest at the Fixed Rate after the Fixed Interest Rate Commencement Date and
on or after the First Optional Redemption Date, in whole or in part (in integral
multiples of $5,000, provided that the unredeemed portion of any Bond redeemed
in part shall be $100,000 or more) at any time at a redemption price equal to
the following percentages of the principal amount redeemed, plus in each case
accrued interest to the date fixed for redemption:
Redemption Date Optional Redemption Price
--------------- -------------------------
First Optional Redemption
Date, through the following
last day of March 103%
First Anniversary of the First
Optional Redemption Date,
through the following
last day of March 102%
Second Anniversary of the
First Optional Redemption
Date, through the following
last day of March 101%
Third Anniversary of the First
Optional Redemption Date and
thereafter 100%
"First Optional Redemption Date" means the earlier to occur of the April 1
occurring in the year which is (i) at least ten (10) full years after the Fixed
Interest Rate Commencement Date or (ii) a number of years after the Fixed
Interest Rate Commencement Date equal to the number of full years between the
Fixed Interest Rate Commencement Date and the maturity date of the Bonds,
multiplied by 1/2 and rounded up to the nearest whole number.
"Fixed Interest Rate Commencement Date" means the Interest Period Reset
Date from and after which the Bonds shall bear interest at the Fixed Interest
Rate, as that date shall be established as provided in the Indenture.
(d) Extraordinary Optional Redemption. The Bonds are also subject to
redemption by the Issuer in the event of the exercise by the Borrower of its
option to direct that redemption upon occurrence of any of the events described
in Section 6.2 of the Agreement (generally, substantial damage to, or
destruction or condemnation of the Project or changes in law causing the
Agreement to become void, unenforceable or impossible of performance or the
imposition of
B-16
<PAGE>
unreasonable burdens or excessive liabilities with respect to the Project or its
operation), (1) at any time in whole, or (2) at any time in part in the event of
condemnation of part of the Project, as provided in Section 6.2 of the
Agreement, in each case at a redemption price of 100% of the principal amount
redeemed, plus interest accrued to the redemption date.
If less than all Bonds are to be redeemed at one time, the selection of
Bonds, or portions thereof (in integral multiples of $5,000) to be redeemed
shall be made by lot by the Trustee; provided, however, Bonds (or book entry
interests in Bonds) pledged to the Bank pursuant to the Reimbursement Agreement
shall be selected for redemption prior to the selection of any other Bonds. If
Bonds or portions thereof are called for redemption and if on the redemption
date moneys for the redemption thereof are held by the Trustee, thereafter those
Bonds or portions thereof to be redeemed shall cease to bear interest, and shall
cease to be secured by, and shall not be deemed to be outstanding under, the
Indenture.
Unless waived in writing by any Holder of Bonds to be redeemed, official
notice of any such redemption shall be given by the Registrar on behalf of the
Issuer by mailing a copy of an official redemption notice by first class mail at
least 30 days and not more than 60 days prior to the date fixed for redemption
(except in the case of a redemption under Section 4.01(a) of the Indenture, in
which case such notice shall be given at least 5 days and not more than 15 days
prior to the date fixed for redemption) to the registered owner of the Bond or
Bonds to be redeemed at the address shown on the Register or at such other
address as is furnished in writing by such registered owner to the Registrar.
It is certified and recited that there have been performed and have
happened in regular and due form, as required by law, all acts and conditions
necessary to be done or performed by the Issuer or to have happened (i)
precedent to and in the issuing of the Bonds in order to make them legal, valid
and binding special obligations of the Issuer, and (ii) precedent to and in the
execution and delivery of the Indenture and the Agreement; that payment in full
for the Bonds has been received; and that the Bonds do not exceed or violate any
constitutional or statutory limitation.
B-17
<PAGE>
IN WITNESS OF THE ABOVE, the Issuer has caused this Bond to be executed in
the name of the Issuer by the manual or facsimile signatures of its duly
authorized officers, as of the date shown above.
CITY OF GARY, INDIANA
By: ___________________________________
Mayor
(Seal)
Attest:
___________________________________
Clerk
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds described in the within mentioned Indenture.
THE FIFTH THIRD BANK, as Authenticating
Agent
By: ___________________________________
Authorized Representative
ASSIGNMENT
For value received, the undersigned sells, assigns and transfers unto
_____________________________________________ the within Bond and irrevocably
constitutes and appoints
B-18
<PAGE>
__________________________ attorney to transfer that Bond on the books kept for
registration thereof, with full power of substitution in the premises.
Dated: ____________________________ _______________________________________
Signature
Signature Guaranteed:
___________________________________
NOTICE: Signature(s) must be NOTICE: The assignor's signature to
guaranteed by an eligible guarantor this assignment must correspond with the
institution participating in a name as it appears upon the face of the
Securities Transfer Association within Bond in every particular, without
recognized signature guarantee alteration or any change whatever.
program.
B-19
<PAGE>
NOTICE OF EXERCISE OF TENDER OPTION
INSTRUCTIONS TO SELL
To: _______________________
Attention: Corporate Trust Department
RE: City of Gary, Indiana Adjustable Rate Economic Development
Revenue Refunding Bonds, Series 1996 B (The Miller
Partnership, L.P. Project)
Gentlemen:
The undersigned, as the Holder of the Bond annexed hereto ("Bond"), hereby
elects the option available to the undersigned pursuant to the Trust Indenture
relating to the above-captioned bond issue. In accordance with such option, the
undersigned hereby tenders:
check the appropriate box / / the entire Bond
/ / (increments of $5,000 with a minimum
tender of $100,000)
for purchase on the first Bond Purchase Date (as defined in the Bond) after the
date hereof, pursuant to the referenced Trust Indenture. In accordance with
such tender, the undersigned hereby irrevocably sells, assigns and transfers
such Bond or portion thereof at the purchase price set forth in the Trust
Indenture, and does hereby irrevocably constitute and appoint the Registrar as
attorney to transfer such Bond or portion thereof on the books of the Registrar,
with full power of substitution in the premises.
Dated: ____________________________ _______________________________________
Signature
_______________________________________
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed
by an eligible guarantor institution
participating in a Securities Transfer
Association recognized signature
guarantee program.
NOTICE: To exercise the option available to the Holder pursuant to the
referenced Trust Indenture, the Holder must notify the Registrar of
such exercise and deliver this Bond to the Registrar at the times and
in the manner set forth in this Bond. The signature to these
Instructions to Sell must correspond with the name as written upon the
face of this Bond in every particular, without alteration or
enlargement, or any change whatsoever.
B-20
<PAGE>
BOND PURCHASE AGREEMENT
RELATING TO
$20,540,000
CITY OF GARY, INDIANA
ADJUSTABLE RATE ECONOMIC DEVELOPMENT
REVENUE REFUNDING BONDS, SERIES 1996 A
(THE MILLER PARTNERSHIP, L.P.
PROJECT)
AND
$1,680,000
CITY OF GARY, INDIANA
TAXABLE ADJUSTABLE RATE ECONOMIC DEVELOPMENT
REVENUE REFUNDING BONDS, SERIES 1996 B
(THE MILLER PARTNERSHIP, L.P.
PROJECT)
DATED AS OF
MARCH 1, 1996
<PAGE>
CITY OF GARY, INDIANA
ADJUSTABLE RATE ECONOMIC DEVELOPMENT
REVENUE REFUNDING BONDS, SERIES 1996 A
AND TAXABLE ADJUSTABLE RATE ECONOMIC DEVELOPMENT
REVENUE REFUNDING BONDS, SERIES 1996 B
(THE MILLER PARTNERSHIP, L.P. PROJECT)
BOND PURCHASE AGREEMENT
March 28, 1996
City of Gary
Gary, Indiana
The undersigned, EVEREN Securities, Inc. (the "Underwriter"), offers
to enter into this Bond Purchase Agreement (the "Agreement") by and among the
Underwriter, the City of Gary, Indiana (the "Issuer"),and The Miller
Partnership, L.P. (the "Borrower"), which upon the acceptance of this offer by
the Issuer on or before 5:00 p.m., Central Standard Time on the 29th day of
March, 1996, will be binding upon the Issuer, the Borrower and the Underwriter.
Terms not otherwise defined herein shall have the same meanings assigned to such
terms in the Trust Indenture by and between the Issuer and NBD Bank, N.A.,
Indianapolis, Indiana, as Trustee (the "Trustee"), dated as of March 1, 1996
(the "Indenture").
Section 1. BACKGROUND.
(a) The Issuer proposes to issue $20,540,000 City of Gary,
Indiana Adjustable Rate Economic Development Revenue Refunding Bonds,
Series 1996 A (The Miller Partnership, L. P. Project) (the "Series
1996 A Bonds") and $1,680,000 City of Gary, Indiana Taxable Adjustable
Rate Economic Development Revenue Refunding Bonds, Series 1996 B (The
Miller Partnership, L. P. Project) (the "Series 1996 B Bonds") (the
Series 1996 A Bonds and the Series 1996 B Bonds being sometimes
collectively referred to herein as the "Series 1996 Bonds") and to
loan the proceeds of the Series 1996 Bonds to the Borrower to finance
the cost of refunding, when combined with other funds of the Borrower
or CenterPoint Properties Corporation, a Maryland corporation and
general partner of the Borrower ("CenterPoint") (the "Refunding"), the
$14,500,000 City of Gary, Indiana, Economic Development Revenue Bonds,
Series 1991 A (The Miller Partnership L.P. Project) and the $1,000,000
City of Gary, Indiana, Taxable Economic Development Revenue Bonds,
Series 1991 B (The Milller Partnership
<PAGE>
L. P. Project) issued by the Issuer in 1991 and the $6,400,000 City of
Gary, Indiana, Economic Development Revenue Bonds, Series 1993 A (The
Miller Partnership L.P. Project) and the $1,460,000 City of Gary,
Indiana, Taxable Economic Development Revenue Bonds, Series 1993 B (The
Miller Partnership L.P. Project) (collectively, the "Prior Bonds"). The
proceeds of the Prior Bonds were loaned by Issuer to The Miller Partnership
L.P., a previously organized Illinois limited partnership, for the purpose
of financing the acquisition, renovation and redevelopment of a multi-
family rental housing project (the "Project").
(b) The Series 1996 Bonds will mature on March 1, 2031, subject
to the optional redemptions and other provisions as described in the
Official Statement (as hereinafter defined). The Series 1996 Bonds
will be issued pursuant to an ordinance (the "Bond Ordinance") adopted
on March 5, 1996, by the City Council of the Issuer (the "Issuing
Authority"), and will be secured under the Indenture for the holders
of the Series 1996 Bonds. The Series 1996 Bonds will be payable from
the Revenues. The Issuer will loan the proceeds of the Series 1996
Bonds to the Borrower for the purposes of financing the costs of the
Refunding pursuant to the Loan Agreement (the "Loan Agreement"), dated
as of March 1, 1996, between the Issuer and the Borrower. The loan to
the Borrower will be evidenced by the execution and delivery by the
Borrower to the Trustee of a promissory note in the amount of
$20,540,000 and a promissory note in the amount of $1,680,000
(collectively, the "Notes"). The proceeds of the Series 1996 Bonds
will be applied as provided in the Indenture and the Loan Agreement.
The principal of and up to 56 days interest (at the maximum interest
rate of 12%) on the Series 1996 Bonds also will be secured by an
irrevocable letter of credit (the "Letter of Credit"), dated as of the
date of initial delivery of the Series 1996 Bonds, to be issued by The
Royal Bank of Scotland plc, (the "Bank"), in favor of the Trustee.
Pursuant to a Reimbursement Agreement dated as of March 1, 1996, (the
"Reimbursement Agreement") between the Borrower and the Bank, the
Borrower will agree to reimburse the Bank for amounts drawn on the
Letter of Credit. The Borrower's obligations under the Reimbursement
Agreement will be secured by a mortgage and certain other collateral
documents from the Borrower to the Bank (collectively, the
"Mortgage"). Pursuant to the Indenture, holders of the Series 1996
Bonds initially will have certain options to tender Series 1996 Bonds
for purchase, which tendered Series 1996 Bonds will be purchased with
funds from the remarketing of the Series 1996 Bonds or drawings on the
Letter of Credit, as provided in the Indenture.
(c) It is intended that the Project and the Series 1996 Bonds
will conform with the provisions of Indiana Code 36-7-11.9 and 12 and
I.C. 5-1-5, as amended (collectively, the "Act"), that the proceeds of
the Series 1996 A Bonds will be expended so that the interest on the
Series 1996 A Bonds will not be
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<PAGE>
includable in gross income for the purposes of federal income taxation, and
that the Series 1996 Bonds may be purchased by the original purchasers
without registration of any security under the Securities Act of 1933, as
amended, or qualification of any indenture under the Trust Indenture Act of
1939.
(d) To induce the Issuer to enter into this Agreement and to
issue and deliver the Series 1996 Bonds, the Borrower has entered into
this Agreement.
(e) To provide for the remarketing of the Series 1996 Bonds
pursuant to the terms of the Indenture, the Issuer, the Borrower, and
EVEREN Securities, Inc., and Gates Capital Corporation as Co-
Remarketing Agents, will enter into a Remarketing Agreement dated as
of March 1, 1996 (the "Remarketing Agreement").
(f) Pursuant to the Indenture and the Letter of Representations
as defined therein, the Series 1996 Bonds are being issued in book-
entry only form, and the parties acknowledge that, where appropriate,
references herein to Series 1996 Bonds shall mean Beneficial Ownership
Interests.
Section 2. SALE AND PURCHASE OF BONDS. Upon the terms and conditions
and upon the basis of the respective representations, warranties and covenants
herein, the Underwriter hereby agrees to purchase from the Issuer, and the
Issuer hereby agrees to sell to the Underwriter all, but not less than all, of
the Series 1996 Bonds. The purchase price of the Series 1996 A Bonds shall be
$20,540,000 (representing the par amount of the Series 1996 A Bonds), and the
purchase price for the Series 1996 B Bonds shall be $1,680,000 (representing the
par amount of the Series 1996 B Bonds). The Underwriter shall be paid by the
Borrower on behalf of the Issuer a commission of $154,050 for the Series 1996 A
Bonds and a commission of $12,600 for the Series 1996 B Bonds.
Section 3. OFFICIAL STATEMENT. A Preliminary Official Statement
dated March 26, 1996, has been prepared on behalf of the Issuer relating to the
Series 1996 Bonds. A final Official Statement will be prepared on behalf of the
Issuer and delivered to the Underwriter within seven business days after the
execution of this Agreement (the Preliminary Official Statement and final
Official Statement are herein referred to as the "Official Statement").
The Series 1996 Bonds are more fully described in the Official
Statement.
Section 4. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer
represents and warrants to the Underwriter that:
(a) The Issuer is a municipal corporation and political
subdivision of the State of Indiana and has full power and authority
under the Act, among other
-3-
<PAGE>
things, (i) to issue revenue bonds, such as the Series 1996 Bonds, and to
make the proceeds of such Series 1996 Bonds available to persons such as
the Borrower for the purposes described in the Indenture and the Loan
Agreement, payable from and secured by a pledge of the Revenues, and
(ii) to secure such Series 1996 Bonds in the manner contemplated by the
Indenture.
(b) The Issuer has full legal right, power and authority (i) to
pass the Bond Ordinance and enter into this Agreement, the Indenture,
the Letter of Representations (as defined in the Indenture) and the
Loan Agreement, (ii) to issue, sell and deliver the Series 1996 Bonds
as provided herein, and (iii) to carry out and consummate all other
transactions contemplated by each of the aforesaid documents, and the
Issuer has complied with all provisions of applicable law, including
the Act, in all matters relating to such transactions.
(c) The Issuer has duly authorized (i) the issuance, sale and
delivery of the Series 1996 Bonds upon the terms set forth herein and
in the Indenture, (ii) the execution, delivery and due performance of
this Agreement, the Series 1996 Bonds, the Indenture, the Letter of
Representations and the Loan Agreement, and (iii) the taking of any
and all such actions as may be required on the part of the Issuer to
carry out, give effect to and consummate the transactions contemplated
by such instruments.
(d) The Bond Ordinance has been duly passed by the Issuing
Authority and is in full force and effect. This Agreement when
executed and delivered constitutes, and the Indenture, the Letter of
Representations and the Loan Agreement, when executed and delivered,
will constitute legal, valid and binding obligations of the Issuer,
enforceable in accordance with their respective terms, except that
enforceability may be limited by laws relating to bankruptcy,
reorganization or other similar laws affecting the rights of
creditors, by the exercise of judicial discretion in accordance with
general principles of equity, and by matters of public policy.
(e) When duly authenticated by the Trustee, delivered to the
Depository (as defined in the Indenture) and paid for as provided
herein, the Series 1996 Bonds will have been duly authorized,
executed, issued and delivered and will constitute legal, valid and
binding special obligations of the Issuer in conformity with the laws
of the State of Indiana, including the Act, will be entitled to the
benefit and security of the Loan Agreement and the Indenture, and will
be enforceable in accordance with their terms, except that
enforceability may be limited by laws relating to bankruptcy,
reorganization or other similar laws affecting the rights of
creditors.
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<PAGE>
(f) To the best of the Issuer's knowledge neither the adoption
of the Bond Ordinance, the execution and delivery of this Agreement,
the Series 1996 Bonds, the Indenture, the Letter of Representations or
the Loan Agreement, nor the consummation of the transactions
contemplated therein or the compliance with the provisions thereof,
will conflict with, or constitute on the part of the Issuer a
violation of, or a breach of or default under, any statute, indenture,
mortgage, commitment, note or other agreement or instrument to which
the Issuer is a party or by which it is bound, or under any provision
of the Indiana Constitution or under any existing law, rule,
regulation, resolution, charter, judgment, order or decree to which
the Issuer is subject.
(g) Other than the Indenture and the Loan Agreement, the Issuer
has not entered into any contract or arrangement of any kind which
might give rise to any lien or encumbrance on the Revenues.
(h) To the best of the Issuer's knowledge, there is no action,
suit, proceeding, inquiry or investigation, at law or in equity,
before or by any court, public board or body, pending or threatened
against the Issuer, which in any way questions the powers of the
Issuer referred to in paragraph (a) above, or the validity of any
proceedings taken by the Issuer in connection with the issuance of the
Series 1996 Bonds, or wherein an unfavorable decision, ruling or
finding would materially adversely affect the transactions
contemplated by, or the validity or enforceability of, the Bond
Ordinance, the Indenture, the Loan Agreement, the Series 1996 Bonds,
the Letter of Representations or this Agreement.
(i) The Issuer hereby ratifies and authorizes the distribution
and use of the Preliminary Official Statement and the Official
Statement. The information contained in the Preliminary Official
Statement, and the Official Statement under the caption "THE ISSUER"
was or will be, as of their respective dates, and as of the Closing
Date will be, true, correct and complete in all material respects, and
such information in the Preliminary Official Statement and the
Official Statement does not and will not contain any untrue or
misleading statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(j) Any certificate relating to the Series 1996 Bonds signed by
the Issuer and delivered to Ice Miller Donadio & Ryan, Karen Freeman-
Wilson, and Meyer, Lyles & Godshalk (collectively "Co-Bond Counsel")
or the Underwriter at or before the Closing Date shall be deemed a
representation and warranty by the Issuer to Co-Bond Counsel, and the
Underwriter, as to the truth of the statements therein contained.
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Section 5. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The
Borrower represents and warrants:
(a) The Borrower is an Illinois limited partnership, duly
organized and validly existing in good standing under the laws of the
State of Illinois, and has full legal right, power and authority to
own the Borrower's properties and conduct the Borrower's business.
The Borrower has full legal right, power and authority to execute and
deliver this Agreement, the Notes, the Mortgage, the Loan Agreement,
the Reimbursement Agreement and the Remarketing Agreement, to
authorize the distribution and use of the Preliminary Official
Statement and the Official Statement, to provide for the operation and
management of the Project, and to take any and all such action as may
be required on its part to carry out, give effect to and consummate
the transactions contemplated by this Agreement, the Loan Agreement,
the Remarketing Agreement and the Reimbursement Agreement.
(b) The Borrower has duly authorized, executed and delivered
this Agreement, and on the Closing Date will have duly authorized,
executed and delivered the Notes, the Loan Agreement, the Mortgage,
the Remarketing Agreement and the Reimbursement Agreement, and has
taken or will take all such action as may be required on the part of
the Borrower to carry out, give effect to and consummate the
transactions contemplated by each of such documents. This Agreement
constitutes, and the Notes, the Mortgage, the Loan Agreement, the
Remarketing Agreement and the Reimbursement Agreement, when executed
and delivered, will constitute legal, valid and binding obligations of
the Borrower, enforceable in accordance with their respective terms,
except that enforceability may be limited by laws relating to
bankruptcy, reorganization or other similar laws affecting the rights
of creditors or by equitable principles which may affect the
availability of specific performance or other equitable remedies.
(c) Neither the execution and delivery of this Agreement, the
Notes, the Loan Agreement, the Mortgage, the Remarketing Agreement or
the Reimbursement Agreement, nor the consummation of the transactions
contemplated therein or the compliance with the provisions thereof,
will conflict with, or constitute on the part of the Borrower a
violation of, or a breach of or default under, the Borrower's
Agreement of Limited Partnership or any material indenture, mortgage,
commitment, note or other agreement or instrument to which the
Borrower is a party or by which the Borrower is bound, or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Borrower or any of its activities or properties.
All consents, approvals, authorizations and orders of governmental or
regulatory authorities which are required for the Borrower's execution
and delivery of, consummation of the transactions contemplated by and
compliance with the provisions of this
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Agreement, the Notes, the Mortgage, the Loan Agreement, the Remarketing
Agreement and the Reimbursement Agreement have been obtained.
(d) There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, public
board or body, pending or, to the best of the knowledge of the
Borrower, threatened, against the Borrower, or the actions taken or
contemplated to be taken by the Borrower, nor, to the best of the
knowledge of the Borrower, is there any basis therefor, which
reasonably would be expected to materially adversely affect the
business, financial condition or operations of the Borrower, or the
transactions contemplated by, or the validity or enforceability of,
this Agreement, the Notes, the Mortgage, the Loan Agreement, the
Remarketing Agreement or the Reimbursement Agreement, or which would
in any way jeopardize the tax-exempt status of the interest on the
Series 1996 A Bonds.
(e) No event has occurred and no condition exists which, upon
issuance of the Series 1996 Bonds, would constitute (or with the
giving of notice or lapse of time, or both, would constitute) an Event
of Default under the Loan Agreement or the Reimbursement Agreement.
(f) The Borrower is not in violation of any provisions of, or in
default under, its Agreement of Limited Partnership or any statute,
indenture, mortgage, commitment, note or other agreement or instrument
to which it is a party or by which it is bound, or any order, rule,
regulation or decision of any court or governmental agency or body
having jurisdiction over it or any of its activities or properties,
which violation would materially and adversely affect its business or
financial condition.
(g) The Borrower hereby ratifies and authorizes the distribution
and use of the Preliminary Official Statement and the Official
Statement. The information contained in the Preliminary Official
Statement and the Official Statement (except for the information and
statements under the captions "THE ISSUER" and "UNDERWRITING" and in
Appendix B and Appendix D thereto, as to which the Borrower makes no
representations) was or will be, as of their respective dates, and as
of the Closing Date will be, true, correct and complete in all
material respects, and the Preliminary Official Statement and the
Official Statement do not and will not contain any untrue or
misleading statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(h) The Borrower will furnish such information, execute such
instruments, and cooperate with the Underwriter as the Underwriter may
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reasonably request in order for the Underwriter (i) to qualify the Series 1996
Bonds, or perfect an exemption from registration, for offer and sale of the
Series 1996 Bonds under the Blue Sky or other securities laws and regulations of
such states and other jurisdictions of the United States as the Underwriter may
designate, and (ii) to determine the eligibility of the Series 1996 Bonds for
investment under the laws of such states and other jurisdictions, and the
Borrower will use its best effort to continue such exemption or qualification in
effect so long as required for distribution of the Series 1996 Bonds.
(i) Any certificate signed by any officer of the Borrower and
delivered to the Issuer, Co-Bond Counsel, the original purchasers of
the Series 1996 Bonds, the Underwriter or the Bank at or before the
Closing Date shall be deemed a representation and warranty by the
Borrower to the Issuer, Co-Bond Counsel, the original purchasers of
the Series 1996 Bonds, the Underwriter and the Bank as to the truth of
the statements therein contained.
Section 6. COVENANTS OF THE ISSUER. The Issuer covenants that it
will observe all covenants of the Issuer in the Indenture and the Loan Agreement
and will not issue or sell any bonds or obligations other than the Series 1996
Bonds (or any Additional Bonds issued pursuant to the Indenture), the principal
of, premium, if any, and interest on which are payable in whole or in part from
the Revenues or are to be secured by any lien on, or pledge of, the Revenues.
Section 7. COVENANTS OF THE BORROWER. The Borrower covenants as
follows:
(a) The Borrower will apply the proceeds of the Series 1996
Bonds as provided in and subject to all of the terms and provisions of
the Loan Agreement and will observe all covenants of the Borrower in
such instrument.
(b) The Borrower will take such action as may be reasonably
requested to facilitate the timely consummation of the transactions
contemplated by this Agreement.
(c) The Borrower will notify the Issuer, the Underwriter and the
Bank of any material adverse change in the business, properties or
financial condition of the Borrower occurring before the Closing Date.
(d) The Borrower will not take any action or permit any action
to be taken on its behalf or cause or permit any circumstance within
its control to arise or continue, if such action would adversely
affect the excludability from gross income for federal income tax
purposes of the interest on the Series 1996 A Bonds.
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Section 8. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITER. The
obligations of the Underwriter hereunder shall be subject to the accuracy in all
material respects of the representations and warranties on the part of the
Issuer and the Borrower contained herein as of the date hereof and as of the
Closing Date, to the accuracy in all material respects of the statements of the
Issuer, the Bank, and the Borrower made in any certificates or other documents
furnished pursuant to the provisions hereof, to the performance by the Issuer
and the Borrower of their respective obligations to be performed hereunder at or
prior to the Closing Date and to the following additional conditions:
(a) At the Closing Date, the Indenture, the Letter of
Representations, the Loan Agreement, the Notes, the Mortgage, the
Reimbursement Agreement and the Letter of Credit shall have been duly
authorized, executed and delivered by the respective parties thereto,
and the Official Statement shall have been delivered to the
Underwriter, and none of the foregoing agreements shall have been
amended, modified or supplemented so as to materially affect the
content thereof, except as may have been agreed to in writing by the
Underwriter, and there shall have been taken in connection therewith,
with the issuance of the Series 1996 Bonds, and with the transactions
contemplated thereby and by this Agreement, all such actions as Baker
& Daniels, counsel to the Underwriter ("Underwriter's Counsel"),
reasonably shall deem to be necessary and appropriate;
(b) At the Closing Date, the Official Statement shall not have
been amended, modified or supplemented, except as may have been agreed
to in writing by the Underwriter;
(c) At or prior to the Closing Date, no event shall have
occurred or information become known which, in the reasonable judgment
of the Underwriter, makes untrue in any material respect any statement
or information contained in the Official Statement or has the effect
that the Official Statement contains any untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(d) At or prior to the Closing Date, the Underwriter shall have
received an original or copies, where appropriate, of the following
documents, in each case satisfactory in form and substance to the
Underwriter and in each case conforming in all material respects with
any description thereof contained in the Official Statement:
(i) The Indenture, the Letter of Representations,
the Loan Agreement, the Series 1996 Bonds, the Reimbursement
Agreement, the Letter of Credit, the Mortgage, the
Remarketing
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Agreement and the Notes, each duly executed and delivered by the
respective parties thereto, with such amendments, modifications or
supplements as may have been agreed to in writing by the Underwriter;
(ii) The opinion of Coffield Ungaretti & Harris,
counsel to the Borrower, dated the Closing Date, in
substantially the form attached hereto as Exhibit A;
(iii) The opinion of Seyfarth, Shaw, Fairweather &
Geraldson, counsel to the Bank, dated the Closing Date, in
substantially the form attached hereto as Exhibit B;
(iv) The opinions of Ice Miller Donadio & Ryan, Karen
Freeman-Wilson and Meyer, Lyles and Godshalk, Co-Bond
Counsel, dated the Closing Date, in substantially the form
attached hereto as Exhibit C;
(v) The opinion of Baker & Daniels, Underwriter's
Counsel, dated the Closing Date, in substantially the form
attached hereto as Exhibit D;
(vi) A certificate, dated the Closing Date, signed by
a duly authorized officer of the Bank, in substantially the
form attached hereto as Exhibit E;
(vii) A certificate, dated the Closing Date, signed by
a duly authorized official of the Issuer, in form
satisfactory to the Underwriter and the Underwriter's
Counsel, to the effect that the representations and
warranties of the Issuer set forth in Section 4 hereof are
true, correct and complete on the date thereof;
(viii) A certificate, dated the Closing Date, signed by
a duly authorized officer of the general partner of the
Borrower, in form satisfactory to the Underwriter and the
Underwriter's Counsel, to the effect that the
representations and warranties of the Borrower set forth in
Section 5 hereof are true, correct and complete on the date
thereof;
(ix) The Preliminary Official Statement and the
Official Statement signed by the Borrower;
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(x) Such additional legal opinions, certificates,
proceedings, instruments and other documents as the
Underwriter or Underwriter's Counsel may reasonably request
to evidence compliance by the Bank, the Trustee or the
Borrower with legal requirements of closing, and to certify
the truth and accuracy, as of the Closing Date, of the
representations of the Issuer and the Borrower contained
herein and the due performance or satisfaction by the Issuer
and the Borrower at or prior to such time of all agreements
then to be performed and all conditions then to be satisfied
by each of them; and
(e) Upon the Closing Date, the Underwriter shall have been paid
by the Borrower on behalf of the Issuer, the commissions referred to
in Section 2 hereof for the Series 1996 Bonds.
If the Issuer and the Borrower shall be unable to satisfy the
conditions to the obligations of the Underwriter contained in this Agreement, or
if the obligations of the Underwriter to purchase and accept delivery of the
Series 1996 Bonds shall be terminated for any reason permitted by this
Agreement, this Agreement shall terminate and neither the Underwriter, the
Issuer nor the Borrower shall be under further obligation hereunder; except that
the respective obligations to pay expenses, as provided in Section 15 hereof,
shall continue in full force and effect.
Section 9. NO PECUNIARY LIABILITY OF ISSUER. No provision, covenant,
or agreement contained in this Agreement, and no obligation herein imposed upon
the Issuer, or the breach thereof, shall constitute an indebtedness of the
Issuer or the State of Indiana or any political subdivision thereof within the
meaning of any Indiana constitutional provision or statutory limitation or shall
constitute or give rise to a pecuniary liability of the Issuer or the State of
Indiana or any political subdivision thereof or a charge against its general
credit or taxing powers. In making the agreements, provisions and covenants set
forth in this Agreement, the Issuer has not obligated itself, except to the
extent that the Issuer is authorized to act pursuant to Indiana law and except
with respect to the Revenues. The Issuer and any of its officials, officers or
employees shall have no monetary liability arising out of the obligations of the
Issuer hereunder or in connection with any covenant, representation or warranty
made by the Issuer herein, and neither the Issuer nor its officials shall be
obligated to pay any amounts in connection with the transactions contemplated
hereby other than from the Revenues or other moneys received from the Borrower.
Section 10. CLOSING. The Series 1996 Bonds shall be delivered by the
Issuer to The Depository Trust Company in New York, New York, on behalf of the
Underwriter, at least twenty-four (24) hours in advance of April 1, 1996 (the
"Closing Date"). At such time on the Closing Date as it shall be confirmed that
all conditions to the obligations of the Underwriter
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under Section 8 hereof have been satisfied or waived and the purchase price
specified in Section 2 has been tendered at the offices of the Trustee in funds
immediately available in Gary, Indiana, by wire transfer of such funds to or for
the account of the Issuer as directed by it, the Series 1996 Bonds shall be
released to the purchasers thereof.
Section 11. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
UNDERWRITER. The Underwriter represents, warrants and covenants that the Series
1996 Bonds will be offered and sold by the Underwriter in accordance with all
applicable laws.
Section 12. PERFORMANCE BY UNDERWRITER. The obligations of the
Issuer and the Borrower hereunder are subject to the performance by the
Underwriter of its obligations hereunder.
Section 13. THE UNDERWRITER'S RIGHT TO CANCEL. The Underwriter shall
have the right to cancel its obligations hereunder with respect to the Series
1996 Bonds (which cancellation shall not constitute a default hereunder) by
notifying the Issuer and Borrower in writing or by telegram of its election to
make such cancellation prior to the Closing if at any time between the date of
this Agreement and the Closing:
(a) A committee of the House of Representatives or the Senate of
the Congress of the United States (collectively, the "House" and the
"Senate") shall begin active consideration of legislation, or a
tentative decision with respect to legislation shall be reached by
such a committee, or legislation shall be favorably reported by such a
committee or be introduced, by amendment or otherwise, in or be passed
by the House or the Senate, or be recommended to the Congress of the
United States for passage by the President of the United States, or be
enacted by the Congress of the United States, which would have the
purpose or effect of imposing Federal income taxation upon revenues or
other income of the general character to be derived by the Issuer or
by any similar body or upon interest received on the Series 1996 A
Bonds or on obligations of the general character of the Series 1996 A
Bonds which, in the Underwriter's opinion, materially adversely
affects the market price of the Series 1996 A Bonds;
(b) A decision by a court established under Article III of the
Constitution of the United States or the Tax Court of the United
States shall be rendered, or a ruling, regulation or order of the
Treasury Department of the United States or the Internal Revenue
Service shall be made or proposed, or any other event shall have
occurred, which has the purpose or effect of imposing Federal income
taxation upon revenues or other income of the general character to be
derived by the Issuer or by any similar body or upon interest received
on the Series 1996 A Bonds or on obligations of the general character
of the Series 1996 A
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<PAGE>
Bonds which, in the Underwriter's opinion, materially adversely affects the
market price of the Series 1996 A Bonds;
(c) Any legislation, ordinance, rule or regulation shall be
introduced in or be enacted by the General Assembly of the State or by
any other governmental body, department or agency of the State, or a
decision by any court of competent jurisdiction within the State shall
be rendered which, in the Underwriter's opinion, materially adversely
affects the market price of the Series 1996 Bonds, or litigation
challenging the Act under which the Series 1996 Bonds are to be issued
shall be filed in any court in the State;
(d) A stop order, ruling, regulation or official statement by,
or on behalf of, the Securities and Exchange Commission or any other
governmental agency having jurisdiction of the subject matter shall be
issued or made to the effect that the issuance, offering or sale of
obligations of the general character of the Series 1996 Bonds, or the
issuance, offering or sale of the Series 1996 Bonds, including all
underlying obligations, as contemplated hereby or by the Official
Statement, is in violation or would be in violation of any provision
of the Federal securities laws, the Securities Act of 1933, as amended
and as then in effect, or the registration provisions of the
Securities Exchange Act of 1934, as amended and as then if effect, or
the qualification provisions of the Trust Indenture Act of 1939, as
amended and as then in effect;
(e) Legislation shall be enacted by the Congress of the United
States of America, or a decision by a court of the United State of
America shall be rendered, to the effect that obligations of the
general character of the Series 1996 Bonds, or Bonds, including all
the underlying obligations, are not exempt from registration under or
from other requirements of the Securities Act of 1933, as amended and
as then in effect, or the Securities Exchange Act of 1934, as amended
and as then in effect;
(f) Additional material restrictions not in force as of the date
hereof shall have been imposed upon trading in securities generally by
any governmental authority or by any national securities exchange;
(g) The New York Stock Exchange or any other national securities
exchange, or any governmental authority, shall impose, as to the
Series 1996 Bonds or obligations of the general character of the
Series 1996 Bonds, any material restrictions not now force, or
increase materially those now in force, with respect to the extension
of credit by, or the charge to the net capital requirements of, the
Underwriter;
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(h) Any general banking moratorium shall have been established
by Federal, New York or Indiana authorities;
(i) A material default has occurred with respect to the
obligations of, or proceedings have been instituted under the Federal
bankruptcy laws or any similar state laws by or against, any state of
the United States or any city located in the United States having a
population in excess of one million persons or any entity issuing
obligations on behalf of such city or state which, in the
Underwriter's opinion, materially adversely affects the market price
of the Series 1996 Bonds;
(j) Any rating of any class of security of the Issuer shall have
been downgraded or withdrawn by a national rating service which, in
the Underwriter's opinion, materially adversely affects the market
price of the Series 1996 Bonds; or trading in any securities of the
Issuer shall have been suspended on any national securities exchange;
or any proceeding shall be pending or threatened by the Securities and
Exchange Commission against the Issuer;
(k) Any event shall have occurred, or information become known,
which, in the Underwriter's opinion, makes untrue in any material
respect any statement or information contained in the Official
Statement, or has the effect that the Official Statement contains an
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements made therein, in the light
of the circumstances under which they were made, not misleading;
(l) A war involving the United States shall have been declared,
or any conflict involving the armed forces of the United State shall
have escalated, or any other national emergency relating to the
effective operation of government or the financial community shall
have occurred, which, in the Underwriter's opinion, materially
adversely affects the market price of the Series 1996 Bonds;
(m) Any litigation shall be instituted, pending or threatened to
retain or enjoin the issuance or sale of the Series 1996 Bonds or in
any way contesting or affecting any authority for or the validity of
the Series 1996 Bonds, or the existence or powers of the Issuer; or
(n) Any proceeding shall be pending or threatened by the
Securities and Exchange Commission against the Issuer.
If the Underwriter terminates its obligations to purchase the Series
1996 Bonds because of any of the conditions specified in this Section or because
any of the conditions specified
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in Section 8 shall have not been fulfilled at or before the Closing, such
termination shall not result in any liability on the part of the Underwriter.
Section 14. SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS,
AGREEMENTS AND INDEMNITIES. All representations, warranties, covenants,
agreements and indemnities contained in this Agreement, or contained in the
certificates of members, officials, partners or officers of the Issuer or of the
Borrower submitted pursuant hereto, shall remain operative and in full force and
effect, regardless of any investigation by or on behalf of the Underwriter and
shall survive the closing.
Section 15. EXPENSES. All reasonable costs and expenses incident to
the performance of the Issuer's, the Underwriter's, and the Borrower's
obligations in connection with the authorization, issuance and sale of the
Series 1996 Bonds shall be paid by the Borrower, including the costs for
printing or reproducing the Preliminary Official Statement, the Official
Statement and the Series 1996 Bonds, The Depository Trust Company and CUSIP
Service Bureau charges (if any), fees and expenses of the Issuer, including
reasonable fees and expenses of its counsel, fees and expenses of the Bank,
including reasonable fees and expenses of its counsel, fees and expenses of the
Trustee, reasonable fees and expenses of Co-Bond Counsel, and reasonable fees
and expenses of the Underwriter and the Underwriter's Counsel. All such costs
and expenses shall be paid by the Borrower whether or not the Series 1996 Bonds
are actually issued and sold. To the extent statements for such costs and
expenses are available on the Closing Date, the Borrower shall pay such costs
and expenses on the Closing Date.
Section 16. INDEMNIFICATION.
(a) GENERAL. The Underwriter and the Borrower (each, an
"Indemnifying Party") each covenants and agrees to indemnify the other
parties hereto and their respective directors, officers, partners,
trustees, representatives and employees and each person, if any, who
controls any of such persons within the meaning of Section 15 of the
Securities Act of 1993 (collectively, the "Indemnified Parties") for,
and to hold each Indemnified Party harmless against, all liabilities,
claims, costs, losses and expenses (including without limitation, to
the extent permitted by law, reasonable attorneys' fees and expenses),
imposed upon or asserted against the Indemnified Parties:
(i) Under any statute or regulation, at law, in
equity or otherwise, insofar as those liabilities, claims,
costs, losses and expenses arise out of or are based upon
any untrue statement or alleged untrue statement of a
material fact with reference to the information referred to in
Section 11(c) hereof contained in the Preliminary Official Statement,
the Official Statement, or any amendment thereof or supplement
thereto, or which arise out of or
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are based upon any omission or alleged omission to state
therein with reference to such information a material fact
which is required to be stated therein or which is
necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading;
(ii) Pursuant to any action, claim or proceeding
brought in connection with any of the foregoing; and
(iii) To the extent of the aggregate amount paid in
settlement of any actions, claims or proceedings, commenced
or threatened, based upon any untrue statement, alleged
untrue statement, omission or alleged omission described
above, if the settlement is effected with the written
consent of the Indemnifying Party;
and (unless the Indemnifying Party assumes the defense of the
applicable claim, suit, action or proceeding pursuant to paragraph (b)
below) shall reimburse any legal or other expenses incurred reasonably
by any Indemnified Party in connection with investigating and
defending any liability, claim, cost, loss, expense, action or
proceeding described above; provided, nothing herein shall require the
Indemnifying Party to pay for any losses, claims, damages, liabilities
or expenses resulting from the negligence or the willful misconduct of
an Indemnified Party. At the request and the expense of the
Indemnifying Party, each Indemnified Party shall cooperate in making
any investigation and defense of any action, claim or proceeding and
shall assert appropriately the rights, privileges and defenses which
are available to the Indemnified Party in connection therewith.
(b) PROCEDURE. The Indemnified Party shall, in the event of any
claim, suit, action or proceeding against it in respect of which
indemnity may be sought on account of any indemnity agreement by the
Indemnifying Parties contained herein, promptly give written notice
thereof to the appropriate Indemnifying Parties. When such notice is
given, the Indemnifying Party shall be entitled to participate at its
own expense in the defense of, or if it so elects, to assume the
defense of, such claim, suit, action or proceeding, in which event
such defense shall be conducted by counsel chosen by the Indemnifying
Party, but if the Indemnifying Party shall elect not to assume such
defense, it shall reimburse such Indemnified Party or Parties for the
reasonable fees and expenses of any counsel retained by them. The
foregoing notwithstanding, in the event that the Indemnifying Party
shall assume such defense and any Indemnified Party or Parties shall
be advised by independent legal counsel that counsel selected by the
Indemnifying Party is not fully and adequately protecting such party
or parties and
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representing the interests of such party or parties, any such Indemnified
Party or Parties shall have the right to conduct its or their own defense
against any such claim, suit, action or proceeding in addition to or in
lieu of any defense conducted by the Indemnifying Party, and the
Indemnifying Party shall indemnify and hold harmless such Indemnified Party
or Parties against and from any and all suits, claims, damages, liabilities
or expenses whatsoever (including reasonable fees and expenses of counsel
selected by such Indemnified Party or Parties) incurred by and arising out
of or in connection with any such claim, suit, action or proceeding. An
Indemnifying Party shall not be liable for the settlement of any claim,
suit, action or proceeding effected without its consent, which consent
shall not be withheld unreasonably.
(c) INDEMNIFIED INFORMATION. The information as to which each
Indemnifying Party hereto indemnities the Indemnified Parties is as
follows:
(i) The Borrower as Indemnifying Party: the entire
Preliminary Official Statement and the entire Official
Statement, with the exception of the Appendix to each and
the information set forth in (ii) below; and
(ii) The Underwriter as Indemnifying Party:
information in the section of the Preliminary Official
Statement and the Official Statement captioned
"UNDERWRITING."
Section 17. PARTIES IN INTEREST. This Agreement is made solely for
the benefit of the Issuer, the Borrower and the Underwriter, their respective
successors and assigns and no other person, partnership, association or
corporation including any purchase of the Series 1996 Bonds shall acquire or
have any rights under or by virtue of this Agreement.
Section 18. NOTICES. Any notice or other communication to be given
to any party to this Agreement may be given by delivering the same in writing
and shall be deemed sufficiently given when personally delivered or when
deposited in the United States Mail, postage prepaid, certified or registered,
or when delivered to a nationally recognized overnight courier service with
guaranteed next business day delivery at the respective addresses set forth
below:
Issuer: CITY OF GARY
504 Broadway, Suite 625
Gary, Indiana 46402
Attn: Kennard B. Sloan
Borrower: THE MILLER PARTNERSHIP, L.P.
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401 North Michigan Avenue, Suite 3000
Chicago, IL 60611
Attn: Paul Fisher
Underwriter: EVEREN SECURITIES, INC.
77 West Wacker Drive, 28th Floor
Chicago, IL 60601-1994
Attn: Felicia O. Flowers-Smith
Any notices required to be provided under this Agreement as provided herein
shall also be provided to:
THE ROYAL BANK OF SCOTLAND plc
Wall Street Plaza
88 Pine Street, 26th Floor
New York, New York 10005-1801
Attn: Derek I. Bonnar
Section 19. SEVERABILITY. If any provisions of this Agreement shall
be held or deemed to be or shall, in fact, be inoperative, invalid or
unenforceable as applied in any particular case in any jurisdiction or
jurisdictions or in all jurisdictions because it conflicts with any provisions
of any constitution, statute, rule or public policy, or any other reason, such
circumstance shall not have the effect of rendering the provision in question
inoperative or unenforceable in any other case or circumstance, or of rendering
any other provision or provisions of this Agreement invalid, inoperative or
unenforceable to any extent whatever.
Section 20. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana.
Section 21. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Very truly yours,
UNDERWRITER:
EVEREN SECURITIES, INC.
-18-
<PAGE>
By:
--------------------------
Its:
--------------------------
-19-
<PAGE>
Accepted: , 1996
---------------
ISSUER:
CITY OF GARY, INDIANA
By:
---------------------------
Printed:
----------------------
Its:
--------------------------
Attest:
By:
-----------------------
Printed:
------------------
Its:
-----------------------
BORROWER:
THE MILLER PARTNERSHIP, L.P.
By: CenterPoint Properties Corporation
Its General Partner
By:
---------------------------
Printed:
----------------------
Its:
--------------------------
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<PAGE>
APPENDIX A
THE MILLER PARTNERSHIP, L.P.
The Project is currently owned by The Miller Partnership, L.P., a
limited partnership organized and existing under the laws of the State of
Illinois (the "Borrower"). As of the date hereof, the following parties have
the following respective ownership interests in the Borrower:
OWNERSHIP
PARTY INTEREST HOLDING
----- -------- -------
CenterPoint Properties Corporation 99% General Partner
CenterPoint Realty Services Corporation 1% Limited Partner
The Borrower presently owns no real estate other than the Project.
The General Partner is CenterPoint Properties Corporation, a Maryland
corporation ("CenterPoint"), which was founded in 1984. CenterPoint is a self-
administered and self-managed real estate investment trust ("REIT") focused on
the acquisition, development, redevelopment, management and ownership of
warehouse/industrial property located in the metropolitan Chicago area (defined
as the area within a 100-mile radius of Chicago), which is the largest
warehouse/industrial market in the United States. As of December 31, 1995, in
addition to the Project, CenterPoint owned and managed a portfolio of 63
warehouse/industrial properties, containing approximately 9.8 million square
feet of space and believes it is the largest owner and operator of
warehouse/industrial property in the metropolitan Chicago area. CenterPoint
also owns and manages four retail properties. As of December 31, 1995,
CenterPoint's properties were 98% leased, with the warehouse/industrial
properties occupied by 120 tenants in diverse industries, with no tenant
accounting for the lease of more than 8% of the total square footage of
CenterPoint's warehouse/industrial portfolio. Substantially all of
CenterPoint's properties have been constructed or renovated during the past ten
years. CenterPoint's REIT election was filed with its 1994 federal income tax
return, and was effective January 1, 1994.
The Limited Partner is CenterPoint Realty Services Corporation (the
"Limited Partner"), an Illinois corporation, which was formed in 1995. The
Limited Partner is a non-consolidated subsidiary of the General Partner, which
has two classes of common stock, voting and non-voting. The General Partner
owns 1% of the voting common stock, and 100% of the non-voting common stock,
resulting in an aggregate equity interest of 99.01%. The remaining voting
common stock, representing a 0.99% equity interest, is owned by three officers
of the General Partner. The Limited Partner was formed to engage in certain
activities generating income in excess of amounts from such activities that the
General Partner, as a REIT, could earn directly.
The Project is comprised of 14 low to midrise apartment buildings
containing 682 units and one former one-story commercial building, each located
at 415 North Lake Street, located in Miller, a neighborhood in the City of Gary,
Indiana, known as Lakeshore Dunes Apartments. The Borrower presently owns no
real estate other than the Project.
<PAGE>
APPENDIX B
THE ROYAL BANK OF SCOTLAND PLC
The Group is a diversified financial services group engaged in a wide
range of banking, financial and finance-related activities in the UK and
internationally. The Group's operations are principally centered in the UK.
At, and for the year ending September 30, 1995, based on domicile of customer,
no country outside the UK or the United States accounted for more than 10% of
total assets or net income available for ordinary shares of the Group. See
"Notes 47 and 50 in Consolidated Financial Statements." At September 30, 1995
the Group had total assets of L51.0 billion (1994 - L45.3 billion), total
deposits of L37.6 billion (1994 - L33.4 billion) and shareholders' equity of
L2,164 million (1994 - L1,896 million). At September 30, 1995 the Group
employed approximately 25,870 staff. The Group's audited financial statements
for the year ended September 30, 1995, are included on the Group's Annual Report
on Form 20-F filed with the Securities and Exchange Commission.
The Bank is the company's sole direct operating subsidiary and it
controls, directs and promotes the operations of the subsidiary companies. The
Bank is a major UK clearing bank, whose predecessors date back to 1727. At
September 30, 1995, the Bank had 369 branches in Scotland and 318 branches in
England and Wales. The Bank was created by the merger in 1985 of the former The
Royal Bank of Scotland plc, the largest of the Scottish clearing banks, and
Williams & Glyn's Bank plc, a wholly-owned English clearing bank subsidiary of
the company.
The Group has five operating divisions, each focusing on a key market
segment. These are the Branch Banking Division, which provides banking,
insurance and other related financial services to individuals and small to
medium-sized corporate clients through the Bank's branch network, certain
centralized banking services and various subsidiary companies; the Corporate and
Institutional Banking Division, which provides commercial banking services and
other financial services to the Bank's larger corporate and institutional
clients in the UK and internationally; the Direct Line Group, which provides
automobile and household insurance and to a more limited extent, other financial
services; Citizens Financial Group, Inc. ("CFG"), which constitutes the Bank's
North American Division; and the Operations Division, which provides central
administration, property and personnel services, information processing and
internal consultancy to the other divisions and certain of the Bank's money
transmission services. Operations Division is also responsible for all aspects
of credit and debit card services, including Style Financial Services. The UK
banking operating divisions are supported by central functions dealing with
finance, strategy, legal and regulatory matters, and external affairs.
On December 18, 1995, it was announced that the Group and Bank of
Ireland had agreed, subject to regulatory consents, to combine their US banking
operations in New England. This will be achieved through the merger of CFG and
Bank of Ireland First Holdings, the holding company of First NH Bank. The
merger will create a banking and financial services group with total assets in
excess of $14 billion. The business will be carried on under the CFG name.
The merger will make CFG the third largest commercial bank holding
company in New England as measured by total assets and will combine two
community banks which focus on consumer banking and lending to small and medium
size businesses.
Following the merger, the Bank will hold 76.5% of CFG's enlarged share
capital. The remaining 23.5% will be held by Bank of Ireland. These shares
will be issued in exchange for the entire issued share capital of Bank of
Ireland First Holdings. On the basis of an estimated value for the enlarged CFG
of $1.85 billion, the transaction values Bank of Ireland's 23.5% holding at
around $435 million.
As part of the transaction, it is expected that the Bank and Bank of
Ireland will receive cash or loan notes from CFG. CFG will return approximately
$50 million of capital to the Bank prior to completion, whilst Bank of Ireland
is expected to receive around $220 million in cash and loan notes from CFG at
completion. This $220 million principally represents surplus capital within
Bank of Ireland First Holdings and the value of certain tax losses which will be
available to CFG. Bank of Ireland will retain ownership of BancIreland/First
Financial, a small leasing subsidiary which will be transferred prior to closing
at a book value of around $24 million. In addition, Bank of
<PAGE>
Ireland may receive up to $26 million if and when certain tax losses are
realized in the future. The actual amount and composition of all payments will
be determined at completion which is expected to take place in approximately six
months.
Central items include the Group associated undertakings, head office
department costs (excluding those recharged to other divisions) and income from
surplus capital less central financing costs.
At September 30, 1995, the Group employed approximately 25,870 people.
Certain of the Group's full-time employees in the United Kingdom are members of
a trade union recognized by the Group as representing the interests of such
employees. The Group considers its relations with its employees to be
satisfactory.
In November 1992, it was announced that investment in new technology
and changes to working practices in the Branch Banking Division network would
lead to a reduction of approximately 3,500 jobs over the next five years. The
company believes that this reduction will be achieved by 1997. The annual cost
of such a level of staff terminations has not been and is not expected to be
material in the context of the Group's total staff costs.
The following discussion is based on the Consolidated
Financial Statements prepared in accordance with UK GAAP,
which differ in certain significant respects from US GAAP.
The Group's income on ordinary activities before tax for the year
ended September 30, 1995 increased by 13% from L532 million to L602 million.
The increase was largely the result of lower loan loss provisions, which were at
a five year low, and from the effect of the acquisitions made by CFG. The
substantial fall in provisions for loan losses resulted from an improvement in
the quality of the Group's loan portfolio and from continuing economic recovery
in the UK. Profit before provisions for loan losses increased by 7% from L667
million to L716 million but excluding a non-recurring director's contract
variation payment of L21 million in the prior year ended September 30, 1994, the
underlying increase was 4%.
Group operating profit for the year ended September 30, 1995, amounted
to L602 million. This represented a 25% increase on the L480 million Group
operating profit achieved in the prior year. Growth in total income from the
Group's core banking and insurance activities arose from the generation of
increased business by all of the divisions and from the acquisitions by CFG in
1994 and 1995. Net interest income increased by 11% from L969 million to L1,076
million, principally due to the effect of the CFG acquisitions and loan volume
growth in the UK. There was a 16.8% increase in average interest earning
assets, reflecting growth in loans to banks, home mortgage loans and debt
securities. Non-interest income, less general insurance claims, increased by 4%
from L862 million to L899 million, principally due to a 3% increase in fees and
commissions receivable and a L22 million increase in dealing profits. Operating
expenses increased by 10% at Group level. The CFG acquisitions, further
expansion in Direct Line, plus the start up costs of new businesses led to the
increase in expenses. Higher costs in the UK banking divisions added 8% to
Group operating expenses. Operating expenses included an increase in staff
profit sharing from L25 million to L30 million. The rate of growth of operating
expenses slowed during the year with an increase of 14% in the first half of the
year dropping to 7% in the second half. Provisions for loan losses fell to L112
million compared with L182 million for the year ended September 30, 1994. The
cost:income ratio (operating expenses, excluding general insurance claims,
expressed as a percentage of local income, including general insurance premiums)
for the Group improved from 53.2% to 52.2%. The cost:income ratio for the UK
banking divisions was 64.9% compared with 63.4% for the year ended September 30,
1994. The Group's return on average ordinary shareholders' equity improved from
24.1% to 24.3%. Total assets increased by approximately L6 billion, or 13%,
compared with the prior year. This was largely the result of increases in loans
to other banks reflecting growth in treasury operations from new business and an
increase in capacity which produced growth in both foreign exchange and money
market volumes. There was also growth in loans to customers, principally
domestic home mortgage loans, which increased 11% from L5.6 billion at September
30, 1994 to L6.2 billion as the Bank offered a range of fixed rate
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<PAGE>
and capped rate products. There was also growth in the debt securities
portfolio. Average total assets grew by 16% to L45.8 billion.
-3-
<PAGE>
APPENDIX C
FORM OF BOND COUNSEL OPINION
April 1, 1996
City of Gary, Indiana
Gary, Indiana
Fifth Third Bank of Central Indiana, as trustee
Indianapolis, Indiana
EVEREN Securities, Inc., as
Underwriter
Chicago, Illinois
Moody's Investors Service
New York, New York
Re: City of Gary, Indiana Adjustable Rate Economic Development Revenue
Refunding Bonds, Series 1996 A (The Miller Partnership, L.P. Project)
in the aggregate principal amount of $20,540,000 (the "Series A
Bonds"), and the City of Gary, Indiana Taxable Adjustable Rate
Economic Development Revenue Refunding Bonds, Series 1996 B (The
Miller Partnership, L.P. Project) in the aggregate principal amount of
$1,680,000 (the "Series B Bonds", and together with the Series A
Bonds, the "Bonds"), issued pursuant to the Trust Indenture, dated as
of March 1, 1996 (the "Indenture") between the City of Gary, Indiana
(the "Issuer") and NBD Bank, N.A., as Trustee (the "Trustee"), which
Indenture contains an assignment of the Issuer's rights under the Loan
Agreement, dated as of March 1, 1996 (the "Loan Agreement") between
the Issuer and The Miller Partnership L.P. (the "Borrower"), and the
Series 1996 A Note and Series 1996 B Note of the Borrower (the
"Notes")
Ladies and Gentlemen:
We have examined a certified transcript of proceedings relating to the (a)
creation and organization of the Issuer; (b) authorization, issuance and sale of
the Bonds; (c) authorization and execution of the Indenture, the Loan Agreement
and the Notes; (d) an opinion of Hamilton Carmouche, Esq., Gary, Indiana,
counsel for the Issuer; (e) an opinion of Coffield Ungaretti & Harris, Chicago,
Illinois, counsel for the Borrower; (f) executed counterparts of the Loan
Agreement and the Indenture; (g) a certificate of officers of the Issuer of even
date herewith,
<PAGE>
City of Gary, Indiana
NBD Bank, N.A.
EVEREN Securities, Inc.
Moody's Investors Service
April, 1, 1996
Page 2
regarding the execution of the Bonds and showing no litigation pending or
threatened; (h) the Tax Regulatory Agreement (the "Tax Regulatory Agreement")
dated as of March 1, 1996 between the Borrower and the Issuer; (i) the executed
Notes; and (j) certificates of the Borrower, of even date herewith; and (k)
Internal Revenue Service Form 8038.
We have also examined Indiana Code 36-7-11.9 and -12, and Indiana Code 5-1-
5, as amended, and such other provisions of the constitution and laws of the
State of Indiana (the "State") as we have deemed relevant and necessary as a
basis for the opinions set forth herein.
In delivering our opinion, we have relied upon a certified transcript of
proceedings and other certificates and representations of the Borrower and the
Issuer, including the tax covenants and representations of the Borrower and the
Issuer (the "Tax Covenants"), and have not undertaken to verify any facts by
independent investigation.
Based on the foregoing and our review of such other information, papers and
documents as we believe necessary or advisable, we are of the opinion that:
1. The Loan Agreement has been duly authorized, executed and delivered by
the Issuer, and, assuming due authorization, execution and delivery thereof by
the Borrower, is a valid and binding agreement of the Issuer.
2. The Indenture has been duly authorized, executed and delivered by the
Issuer, and, assuming due authorization, execution and delivery thereof by the
Trustee, is a valid and binding agreement of the Issuer.
3. The Bonds have been duly authorized, executed and issued and are valid
and binding limited obligations of the Issuer.
4. Under existing laws, regulations, judicial decisions and rulings, the
interest on the Bonds is exempt from income taxation in the State. This opinion
relates only to the tax exemption of interest on the Bonds from State income
taxes.
5. Under federal statutes, decisions, regulations and rulings existing on
this date, the interest on the Series A Bonds is excludable from gross income
for purposes of federal income taxation pursuant to Section 103 of the Internal
Revenue Code of 1986 (the "Code"). Under Section 147(a) of the Code, the
interest on any Series A Bond will not be excluded from gross income for federal
income tax purposes during the time such Series A Bond is held by a person
<PAGE>
City of Gary, Indiana
NBD Bank, N.A.
EVEREN Securities, Inc.
Moody's Investors Service
April, 1, 1996
Page 3
who is a "substantial user" of the facilities financed by the Bonds or a
"related person" thereto within the meaning of Section 147(a) of the Code and
the regulations applicable thereto. This opinion relates only to the exclusion
from gross income of interest on the Series A Bonds for federal income tax
purposes under Section 103 of the Code and is conditioned on continuing
compliance by the Borrower and the Issuer with the Tax Covenants. Failure to
comply with the Tax Covenants could cause interest on the Series A Bonds to lose
the exclusion from gross income for purposes of federal income taxation
retroactive to the Bonds' date of issue.
By the terms of the Indenture, the Loan Agreement and other relevant
documents, the interest rate mode as set forth in the Indenture for the Bonds
may be changed and certain actions may be taken under the circumstances and
subject to the terms and conditions set forth in such documents subject to
receipt of an approving opinion of nationally recognized bond counsel. No
opinion is expressed herein as to the effect upon any Series A Bond or the
excludability of the interest thereon for federal income taxation purposes
resulting from any such change or action.
The interest rate on the Series B Bonds is not excludable from gross income
for purposes of federal income taxation.
It is to be understood that the rights of the owners of the Bonds, the
Issuer, the Trustee and the Borrower and the enforceability of the Bonds, the
Indenture and the Loan Agreement may be subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors' rights
heretofore and hereafter enacted to the extent constitutionally applicable and
that their enforcement may be subject to the exercise of judicial discretion in
accordance with general principles of equity. It is to be understood that the
rights of the owners of the Bonds, the Issuer, the Trustee and the Borrower and
the enforceability of the Bonds, the Indenture and the Loan Agreement may be
subject to the valid exercise of the constitutional powers of the State and the
United States of America.
We have not been retained to pass upon the validity, creditworthiness or
enforceability of the Letter of Credit issued by The Royal Bank of Scotland plc,
acting through its New York Branch, or any Substitute Letter of Credit, and we
bear no responsibility therefor.
Very truly yours,
<PAGE>
APPENDIX D
DEFINITIONS AND SUMMARY OF
CERTAIN LEGAL DOCUMENTS
DEFINITIONS
"Act" means, collectively, Title 36, Article 7, Chapters 11.9 and 12 and
Title 5, Article 1, Chapter 5 of the Indiana Code, as supplemented and amended.
"Additional Bonds" means additional parity bonds secured by an Alternate
Letter of Credit which may be issued under the Indenture.
"Adjustable Rate" means any interest rate to be borne on the Refunding
Bonds other than the Fixed Interest Rate.
"Agreement" or "Loan Agreement" means the Loan Agreement dated as of March
1, 1996, between the Issuer and the Borrower, as amended or supplemented from
time to time.
"Alternate Letter of Credit" means an irrevocable letter of credit
authorizing drawings thereunder by the Trustee issued by a bank, a trust company
or other financial institution and meeting the requirements of the Indenture.
"Authenticating Agent" means the Registrar for the Bonds and any bank,
trust company or other Person designated as an Authenticating Agent for the
Bonds by or in accordance with the Indenture, each of which shall be a transfer
agent registered in accordance with Section 17(A) of the Securities Exchange Act
of 1934, as amended.
"Bank" means The Royal Bank of Scotland plc, acting through its New York
Branch, and its successors and assigns. Upon issuance and effectiveness of any
Alternative Letter of Credit, "Bank" shall mean the issuer thereof and its
successors and assigns.
"Beneficial Owner" means with respect to a Refunding Bond, a Person owning
the Beneficial Ownership Interest therein, as evidenced to the satisfaction of
the Trustee.
"Beneficial Ownership Interest" means the right to receive payments and
notices with respect to the Refunding Bonds which are held by the Depository
under the book entry system.
"Bond Counsel" means an attorney-at-law or firm of attorneys (other than an
employee of the Borrower but including any law firm serving as counsel to the
Borrower) satisfactory to the Trustee, the Bank and the Issuer and nationally
recognized as experienced in matters relating to the tax exemption of interest
on bonds of states and political subdivision.
"Bond Fund" means the Bond Fund created in the Indenture.
"Bond Purchase Agreement" means, as to the Refunding Bonds, the Bond
Purchase Agreement dated as of or after the date hereof but on or prior to the
date of initial delivery of the Refunding Bonds, among the Issuer, the
Underwriter and the Borrower and, as to any Additional Bonds, the bond placement
agreement provided for in the Bond Legislation providing for the issuance of the
Additional Bonds.
"Bond Purchase Date" means any Bond Purchase Date as defined and provided
for in the Indenture.
"Bond Legislation" or "Bond Ordinance" means (a) when used with reference
to the Refunding Bonds, the ordinance providing for their issuance and approving
the Agreement, this Indenture, the Bond Purchase Agreement
<PAGE>
and related matters; (b) when used with reference to an issue of Additional
Bonds, the ordinance providing for the issuance of the Refunding Bonds, to the
extent applicable, and the legislation providing for the issuance of the
Additional Bonds and approving any amendment or supplement to the Agreement, any
Supplemental Indenture and related matters; and (c) when used with reference to
Bonds when Additional Bonds are outstanding, the ordinance providing for the
issuance of the Refunding Bonds and the ordinance providing for the issuance of
then outstanding and the then to be issued Additional Bonds; in each case as
amended or supplemented from time to time.
"Bond Service Charges" means, for any series of bonds, the principal of,
premium, if any, and interest on such Bonds for any period or payable at any
time, whether due on an Interest Payment Date, at maturity or upon acceleration,
redemption or upon tender for purchase.
"Bonds" means the Refunding Bonds and any Additional Bonds.
"Book entry form" or Book entry system" means, with respect to the
Refunding Bonds, a form or system, as applicable, under which (i) the Beneficial
Ownership Interests may be transferred only through a book entry and
(ii) physical Refunding Bond certificates in fully registered form are
registered only in the name of a Depository or its nominee as Holder, with the
physical Refunding Bond certificates "immobilized" in the custody of the
Depository. The book entry system maintained by and the responsibility of the
Depository and not maintained by or the responsibility of the Issuer or the
Trustee is the record that identifies, and records the transfer of the interests
of, the owners of book entry interests in the Refunding Bonds.
"Borrower" means The Miller Partnership, L.P., an Illinois limited
partnership, and its successors and assigns.
"Business Day" means a day of the year, other than a Saturday or Sunday, on
which commercial banks located in the city or cities in which the principal
corporate trust office of the Paying Agent, the principal corporate trust office
of the Registrar, the principal office of the Remarketing Agent, and the
principal office of the Bank are located, are not required or authorized to
remain closed and on which The New York Stock Exchange is not closed.
"CenterPoint" means CenterPoint Properties Corporation, a Maryland
corporation and general partner of the Borrower.
"Closing Date" means, with respect to the Refunding Bonds, the date of
delivery of and payment for the Refunding Bonds.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time. Reference to the Code and Sections of the Code include relevant
applicable regulations and proposed regulations thereunder (and under the
related provisions of the Internal Revenue Code of 1954, as amended) and any
successor provisions to those Sections, regulations or proposed regulations.
"Depository" means any securities depository that is a clearing agency
under federal law operating and maintaining, with its participants or otherwise,
a book entry system to record ownership of book entry interests in bonds, and to
effect transfers of book entry interests in bonds in book entry form, and
includes and means initially The Depository Trust Company (a limited purpose
trust company), New York, New York.
"Determination of Taxability" means and shall occur when, (i) the Trustee
receives written notice from the Borrower, supported by an opinion of Bond
Counsel, that interest on the Series 1996 A Bonds is includable in the gross
income of Holders of the Series 1996 A Bonds for federal income tax purposes or
(ii) the Internal Revenue Service shall claim in writing that interest on the
Series 1996 A Bonds is includable in the gross income of Holders of the Series
1996 A Bonds for federal income tax purpose; provided, that such a claim shall
not be deemed a Determination of Taxability unless the Borrower is afforded
reasonable opportunity (at the Borrower's sole expense
-2-
<PAGE>
and for a period not to exceed 2 years) to pursue any judicial or administrative
remedy available to the Borrower with respect to such claim.
"Direct Participant" means a Participant as defined in the Letter of
Representations.
"Eligible Funds" means amounts on deposit in the Bond Fund (other than
funds derived from a draw on the Letter of Credit) for a continuous period of
(i) 91 days or (ii) such shorter period if an opinion of counsel acceptable to
the Bank and the Trustee is delivered to the Issuer, the Bank and the Trustee
stating that such shorter period will not result in voidable preferences, during
which period there shall not have occurred the filing of a voluntary or
involuntary petition in bankruptcy under the United States Bankruptcy Code, 11
U.S.C. Sections 101 ET. SEQ., or the commencement of a proceeding under any
other applicable laws concerning insolvency, reorganization or bankruptcy, by or
against the Borrower or the Issuer.
"Event of Default" means an Event of Default as described in the Indenture.
"First Optional Redemption Date" means the earlier to occur of the April 1
occurring in the first year which is (i) at least ten (10) full years after the
Fixed Interest Rate Commencement Date or (ii) a number of years after the Fixed
Interest Rate Commencement Date equal to the number of full years between the
Fixed Interest Rate Commencement Date and the maturity date of the Refunding
Bonds, multiplied by 1/2 and rounded up to the nearest whole number.
"Five Year Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary, during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date and ending on the March 31 or September
30 nearest to but not later than the date which is five years from the Interest
Rate Adjustment Date, in the judgment of the Remarketing Agent (taking into
consideration current transactions and comparable securities with which the
Remarketing Agent is involved or of which it is aware and prevailing financial
market conditions) to produce as nearly as practical a par bid for the Refunding
Bonds on the Interest Rate Determination Date or (b) in the event that the
Remarketing Agent has been removed or has resigned and no successor has been
appointed or the Remarketing Agent has failed to determine the Five Year
Interest Rate for whatever reason, or the Five Year Interest Rate cannot be
determined pursuant to clause (a) for whatever reason, the interest rate then in
effect with respect to the Refunding Bonds, without adjustment; provided that in
no event shall the Five Year Interest Rate exceed the Maximum Rate.
"Fixed Interest Rate" means (a) the fixed rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Period Reset Date, to be the
interest rate necessary, from the Interest Period Reset Date to the final
maturity date of the Refunding Bonds, in the judgment of the Remarketing Agent
(taking into consideration current transactions and comparable securities with
which the Remarketing Agent is involved or of which it is aware and prevailing
financial market conditions) to produce as nearly as practical a par bid for the
Refunding Bonds on the Interest Rate Determination Date or (b) in the event that
the Remarketing Agent has been removed or has resigned and no successor has been
appointed or the Remarketing Agent has failed to determine the Fixed Interest
Rate for whatever reason, or the Fixed Interest Rate cannot be determined
pursuant to clause (a) for whatever reason, the interest rate then in effect
with respect to the Refunding Bonds, without adjustment; provided that in no
event shall the Fixed Interest Rate exceed the Maximum Rate.
"Fixed Interest Rate Commencement Date" means the Interest Period Reset
Date from and after which the Refunding Bonds shall bear interest at the Fixed
Interest Rate, as that date shall be established as provided in the Indenture.
"Government Obligations" means (a) direct obligations of the United States
of America for the payment of which the full faith and credit of the United
States of America is pledged, (b) obligations issued by a person controlled
-3-
<PAGE>
or supervised by and acting as an instrumentality of the United States of
America, the payment of the principal of, premium, if any, and interest on which
is fully guaranteed as a full faith and credit obligation of the United States
of America (including any securities described in (a) or (b) issued or held in
book-entry form on the books of the Department of Treasury of the United States
of America or Federal Reserve Bank), and (c) money market funds (including those
of the Trustee or its affiliates), rated in the highest rating category by
Moody's, which invest solely in the obligations described in (a) and (b) above.
"Holder" or "Holder of a Bond" or "Bondholder" means the Person in whose
name a Bond is registered on the Register.
"Indenture" means the Trust Indenture dated as of March 1, 1996, between
the Issuer and the Borrower, as amended or supplemented from time to time.
"Indirect Participant" means a person utilizing the Book Entry System of
the Depository by directly or indirectly clearing through or maintaining a
custodial relationship with a Direct Participant.
"Interest Payment Date" or "Interest Payment Dates" means, (a) as to the
Refunding Bonds, (i) while the Refunding Bonds bear interest at the Six Month
Interest Rate, the One Year Interest Rate, the Five Year Interest Rate or the
Fixed Interest Rate, the first day of each April and October, and (ii) while the
Refunding Bonds bear interest at the Weekly Interest Rate, the One Month
Interest Rate, or the Three Month Interest Rate, the first Business Day of each
month commencing the first Business Day of May, 1996, and (b) as to Additional
Bonds, each date or dates designated as an Interest Payment Date or Dates in the
applicable Supplemental Indenture or Bond Legislation.
"Interest Period Reset Date" means the date on which the interest rate on
the Refunding Bonds converts from the Interest Rate Mode applicable to the
Refunding Bonds prior to such date to a new Interest Rate Mode. An Interest
Period Reset Date shall be the first Business Day of a month; provided that upon
conversion from a Six Month, One Year or Five Year Interest Rate Mode, an
Interest Reset Date shall be the first day of a month; and provided further,
that except when converting from Weekly Interest Rate Mode, an Interest Period
Reset Date may not occur prior to the end of the preceding Interest Rate Period.
"Interest Rate Adjustment Date" means any date on which the interest rate
on the Refunding Bonds may be adjusted, either as the result of the conversion
of the interest rate on the Refunding Bonds to a different Interest Rate Mode,
or by adjustment of the interest rate on the Refunding Bonds within the
applicable Interest Rate Mode. Except as otherwise provided with respect to an
Interest Rate Adjustment Date which is also an Interest Period Reset Date, an
Interest rate Adjustment Date shall be the first day of the first month of the
Interest Rate Period if the Refunding Bonds bear interest at the Six Month, One
Year or Five Year Interest Rates; the first Business day of a month if the
Refunding Bonds bear interest at the One Month or Three Month Interest Rates;
and if the Refunding Bonds bear interest at the Weekly Interest Rate, then
Interest Rate Adjustment shall be Thursday of each week.
"Interest Rate Determination Date" means (i) with respect to the Three
Month Interest Rate, the Six Month Interest Rate, the One Year Interest Rate,
the Five Year Interest Rate and the Fixed Interest Rate, the tenth Business Day
preceding an Interest Rate Adjustment Date, (ii) with respect to the One Month
Interest Rate, the seventh Business Day preceding an Interest Rate Adjustment
Date, and (iii) with respect to the Weekly Interest Rate, not later than 2:00
p.m. according to local time at the principal corporate trust office of the
Registrar on Wednesday of each week, or the next preceding Business Day if such
Wednesday is not a Business Day; provided that upon any conversion to the Weekly
Interest Rate from a different Interest Rate Mode, the first Interest Rate
Determination Date shall mean not later than 2:00 p.m. according to the local
time at the principal corporate trust office of the Registrar on the Business
Day next preceding the Interest Period Reset Date.
"Interest Rate Mode" means any of those modes of interest with respect to
the Refunding Bonds permitted by this Indenture, specifically, the Weekly
Interest Rate, the One Month Interest Rate, the Three Month Interest Rate, the
Six Month Interest Rate, the One Year Interest Rate, the Five Year Interest Rate
and the Fixed Interest Rate.
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"Interest Rate Period" means that period of time for which the interest
rate with respect to the Refunding Bonds has been determined by the Remarketing
Agent or otherwise as provided in the definition of the applicable Interest Rate
Mode, commencing on the applicable Interest Rate Adjustment Date, and
terminating on the day immediately preceding the following Interest Rate
Adjustment Date.
"Issuer" means the City of Gary, Indiana, a municipality and political
subdivision of the State of Indiana.
"Letter of Credit" means (A) the irrevocable letter of credit to be issued
by the Bank and delivered to the Trustee on the same date as the initial
delivery of the Refunding Bonds and being an irrevocable obligation to make
payment to the Trustee of up to the amounts therein specified with respect to
(a) the principal amount of the Refunding Bonds outstanding to enable the
Trustee to pay (i) the principal amount of the Refunding Bonds when due at
maturity or upon redemption or acceleration, and (ii) an amount equal to the
principal portion of the purchase price of any Refunding Bonds or Beneficial
Ownership Interests tendered for purchase by the Holders or Beneficial Owners
thereof, plus (b) the amount of interest due on the Refunding Bonds but not to
exceed 56 days' accrued interest at 12% per annum to enable the Trustee to pay
(i) interest on the Refunding Bonds when due and (ii) an amount equal to the
interest portion, if any, of the purchase price of any Refunding Bonds or
Beneficial Ownership Interests tendered for purchase by the Holder or Beneficial
Owner thereof; as the same may be transferred, reissued, extended, amended to
change the interest coverage period as contemplated in the Indenture, or
replaced in accordance with the Indenture and the Letter of Credit and (B) upon
the issuance and effectiveness thereof, any Alternate Letter of Credit.
"Letter of Credit Termination Date" means the expiration date of the Letter
of Credit (presently April 15, 2001) or of any Alternate Letter of Credit.
"Letter of Representations" means the Letter of Representations from the
Issuer, the Trustee, the Registrar, the Paying Agent and the Remarketing Agent
to the Depository in connection with the issuance of the Refunding Bonds in a
book entry system, as supplemented and amended from time to time.
"Loan" means the loan by the Issuer to the Borrower of the proceeds
received from the sale of the Bonds.
"Loan Payments" means the amounts required to be paid by the Borrower in
repayment of the Loan pursuant to the provisions of the Notes and the Agreement.
"Maximum Rate" means the lesser of twelve percent (12%) per annum or the
maximum rate permitted by law.
"Moody's" means Moody's Investors Service, Inc., a Delaware corporation,
and its successors and assigns.
"Notes" means the Refunding Notes and any Additional Notes.
"Obligors" means, collectively, the Borrower and CenterPoint.
"One Month Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary, during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date to and including the day preceding the
first Business Day of the next month, in the judgment of the Remarketing Agent
(taking into consideration current transactions and comparable securities with
which the Remarketing Agent is involved or of which it is aware and prevailing
financial market conditions) to produce as nearly as practical a par bid for the
Refunding Bonds on the Interest Rate Determination Date or (b) in the event that
the Remarketing Agent has been removed or has resigned and no successor has been
appointed, or the Remarketing Agent has failed to determine the One Month
Interest Rate for whatever reason, or the One Month Interest Rate cannot be
determined pursuant to clause (a) for whatever reason, the interest rate than in
effect with respect to the Refunding Bonds, without adjustment; provided that in
no event shall the One Month Interest Rate exceed the Maximum Rate.
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"One Year Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary, during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date and ending on the March 31 or September
30 nearest to but not later than the date which is one year from the Interest
Rate Adjustment Date, in the judgment of the Remarketing Agent (taking into
consideration current transactions and comparable securities with which the
Remarketing Agent is involved in of which it is aware and prevailing financial
market conditions) to produce as nearly as practical a par bid for the Refunding
Bonds on the Interest Rate Determination Date or (b) in the event that the
Remarketing Agent has been removed or has resigned and no successor has been
appointed, or the Remarketing Agent has failed to determine the One Year
Interest Rate for whatever reason, or the One Year Interest Rate cannot be
determined pursuant to clause (a) for whatever reason, the interest rate then in
effect with respect to the Refunding Bonds, without adjustment; provided that in
no event shall the One Year Interest Rate exceed the Maximum Rate.
"Outstanding Bonds" or "Bonds outstanding" means, as of the applicable
date, all Bonds which have been authenticated and delivered, or which are being
delivered by the Registrar under the Indenture, except:
a. Bonds canceled upon surrender, exchange or transfer, or canceled
because of payment or redemption on or prior to that date;
b. Bonds, or the portion thereof, the payment, redemption or purchase for
cancellation of which sufficient money has been deposited and credited
with the Trustee or any Paying Agents pursuant to the Indenture on or
prior to that date for that purpose (whether upon or prior to the
maturity or redemption date of those Bonds); provided, that if any of
those bonds are to be redeemed prior to their maturity, notice of that
redemption shall have been given or arrangements satisfactory to the
Trustee shall have been made for giving notice of that redemption, or
waiver by the affected Holders of that notice satisfactory in form to
the Trustee shall have been filed with the Trustee;
c. Bonds, or the portion thereof, which are deemed to have been paid and
discharged or caused to have been paid and discharged pursuant to the
provisions of the Indenture;
d. Bonds in lieu of which others have been authenticated under the
Indenture; and
e. Bonds which are tendered or deemed to have been tendered pursuant to
the Indenture;
provided that, in determining whether the Holders of the requisite percentage of
Bonds have concurred in any demand, direction, request, notice, consent, waiver
or other action under the Indenture, Bonds that are owned by the Borrower or any
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Borrower shall be regarded and deemed not to be
outstanding for the purpose of any such determination; provided that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, consent or waiver, only such Bonds which the Trustee knows are
so owned shall be disregarded. Bonds so owned that have been pledged in good
faith may be regarded as Outstanding for such purpose, if the pledgee shall
establish to the satisfaction of the Trustee the pledgee's right to vote such
Bonds and the pledgee is not a Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Borrower. 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.
"Paying Agent" means, initially, The Fifth Third Bank, located in
Cincinnati, Ohio, and any bank or trust company designated as a Paying Agent by
or in accordance with the Indenture.
"Person" or words importing persons means firms, associations,
corporations, partnerships (including without limitation, general and limited
partnerships), joint ventures, societies, estates, trusts, limited liability
companies, public or governmental bodies, other legal entities and natural
persons.
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"Prior Bonds" means collectively the Series 1991 A Bonds, the Series 1991 B
Bonds, the Series 1993 A Bonds and the Series 1993 B Bonds.
"Prior Bonds Trustee" means LaSalle National Bank, Chicago, Illinois, as
trustee under the Prior Indenture.
"Prior Indenture" means, collectively, the Trust Indenture dated as of
April 1, 1991, as supplemented by the First Supplemental Trust Indenture dated
as of September 1, 1993, among the Issuer, LaSalle National Bank, as Trustee and
Mercantile National Bank of Indiana, as Co-Trustee, pursuant to which the Prior
Bonds were issued.
"Project" means the 14-building, 682 unit multi-family housing project,
located at 415 North Lake Street, in the City of Gary, Indiana.
"Rating Service" means either Moody's or S & P.
"Refunding Bonds" means, collectively, the Series 1996 A Bonds and the
Series 1996 B Bonds, in the aggregate principal amount of $22,220,000 authorized
in the Bond Legislation and the Indenture.
"Refunding Fund" means the Refunding Fund created pursuant to the
Indenture.
"Refunding Notes" means, collectively the Note, Series 1996 A in the
principal amount of $20,540,000 and the Note, Series 1996 B in the principal
amount of $1,680,000 of the Borrower, dated as of even date with the Refunding
Bonds, evidencing the obligation of the Borrower to make Loan Payments.
"Register" means the books kept and maintained by the Registrar for
registration and transfer of Bonds pursuant to the Indenture.
"Registrar" means The Fifth Third Bank, located in Cincinnati, Ohio, until
a successor Registrar shall have become such pursuant to applicable provisions
of this Indenture.
"Regular Record Date" means, with respect to any Bond, the fifth business
Day next preceding an Interest Payment Date applicable to the Bond; provided,
however, that so long as the Bonds bear interest at the Fixed Interest Rate,
"Regular Record Date" means the fifteen day next preceding an Interest Payment
Date applicable to that Bond.
"Reimbursement Agreement" means the Reimbursement Agreement dated as of
March 1, 1996, by and among the Bank, the Borrower and CenterPoint, as amended
and supplemented from time to time. Upon the issuance of any Alternate Letter
of Credit, "Reimbursement Agreement" shall mean the reimbursement or similar
agreement relating to such Alternate Letter of Credit, entered into between the
Borrower and the issuer of such Alternate Letter of Credit.
"Remarketing Agent" means, initially, Everen Securities, Inc. and Gates
Capital Corporation, serving jointly, as the Remarketing Agent, and any Person
meeting the qualifications set forth in the Indenture and designated from time
to time to act as Remarketing Agent under the Indenture.
"Remarketing Reimbursement Fund" means the Remarketing Reimbursement Fund
created in the Indenture.
"Revenues" means (a) the Loan Payments, (b) all of the moneys received or
to be received by the Issuer or the Trustee in respect of repayment of the Loan,
(c) all moneys and investment in the Bond Fund, including without limitation
moneys received by the Trustee under or pursuant to the Letter of Credit, (d)
any moneys and investments in the Refunding Fund, and (e) all income and profit
from the investment of the foregoing moneys.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill and
its successors and assigns.
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"Series 1991 A Bonds" means the City of Gary, Indiana Economic Development
Revenue Bonds, Series 1991 A (The Miller Partnership L.P. Project) issued in the
original principal amount of $14,500,000.
"Series 1991 B Bonds" means the City of Gary, Indiana Taxable Economic
Development Revenue Bonds, Series 1991 B (The Miller Partnership L.P. Project)
issued in the original principal amount of $1,000,000.
"Series 1993 A Bonds" means the City of Gary, Indiana Economic Development
Revenue Bonds, Series 1993 A (The Miller Partnership L.P. Project) issued in the
original principal amount of $6,040,000.
"Series 1993 B Bonds" means the City of Gary, Indiana Taxable Economic
Development Revenue Bonds, Series 1993 B (The Miller Partnership L.P. Project)
issued in the original principal amount of $1,460,000.
"Series 1996 A Bonds" means the City of Gary, Indiana Adjustable Rate
Economic Development Revenue Refunding Bonds, Series 1996 A (The Miller
Partnership, L.P. Project) issued in the original principal amount of
$20,540,000, which are being issued to refund the Series 1991 A Bonds and the
Series 1993 A Bonds.
"Series 1996 B Bonds" means the City of Gary, Indiana Taxable Adjustable
Rate Economic Development Revenue Refunding Bonds, Series 1996 B (The Miller
Partnership, L.P. Project) issued in the original principal amount of
$1,680,000, which are being issued to refund a portion of the Series 1991 B
Bonds and the Series 1993 B Bonds.
"Six Month Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary, during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date and ending on the March 31 or September
30 nearest to but not later than the date which is six months from the Interest
Rate Adjustment Date, in the judgment of the Remarketing Agent (taking into
consideration current transactions and comparable securities with which the
Remarketing Agent is involved or of which it is aware and prevailing financial
market conditions) to produce as nearly as practical a par bid for the Refunding
Bonds on the Interest Rate Determination Date or (b) in the event that the
Remarketing Agent has been removed or has resigned and no successor has been
appointed, or the Remarketing Agent has failed to determine the Six Month
Interest Rate for whatever reason, or the Six Month Interest Rate cannot be
determined pursuant to clause (a) for whatever reason, the interest rate then in
effect with respect to the Refunding Bonds, without adjustment; provided that in
no event shall the Six Month Interest Rate exceed the Maximum Rate.
"Supplemental Indenture" means any indenture supplemental to the Indenture
entered into between the Issuer and the Trustee in accordance with the
provisions of the Indenture.
"Three Month Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary, during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date to and including the day preceding the
first Business Day of the January, April, July or October, nearest to but not
later than the date which is three months from the Interest Rate Adjustment
Date, in the judgment of the Remarketing Agent (taking into consideration
current transactions and comparable securities with which the Remarketing Agent
is involved or of which it is aware and prevailing financial market conditions)
to produce as nearly as practical a par bid for the Refunding Bonds on the
Interest Rate Determination Date or (b) in the event that the Remarketing Agent
has been removed or has resigned and no successor has been appointed, or the
Remarketing Agent has failed to determine the Three Month Interest Rate for
whatever reason, or the Three Month Interest Rate cannot be determined pursuant
to clause (a) for whatever reason, the interest rate then in effect with respect
to the Refunding Bonds, without adjustment; provided that in no event shall the
Three Month Interest Rate exceed the Maximum Rate.
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"Trustee" means the Trustee at the time acting as such under the Indenture,
originally Fifth Third Bank of Central Indiana, as Trustee, Indianapolis,
Indiana, and any successor Trustee as determined or designated under or pursuant
to this Indenture.
"Weekly Interest Rate" means (a) the rate of interest per annum determined
by the Remarketing Agent on the Interest Rate Determination Date immediately
preceding the applicable Interest Rate Adjustment Date, to be the interest rate
necessary during the Interest Rate Period of one week (or less in the case of
any such Interest Rate Period commencing on an Interest Period Reset Date which
is not a Thursday or ending on the day preceding an Interest Period Reset Date)
commencing on the applicable Interest Rate Adjustment Date, in the judgment of
the Remarketing Agent (taking into consideration current transactions and
comparable securities with which the Remarketing Agent is involved or of which
it is aware and prevailing financial market conditions) to produce as nearly as
practical a par bid (plus accrued interest, if any) for the Refunding Bonds on
the Interest Rate Determination Date or (b) in the event that the Remarketing
Agent has been removed or has resigned and no successor has been appointed, or
the Remarketing Agent has failed to determine the Weekly Interest Rate for
whatever reason, or the Weekly Interest Rate cannot be determined pursuant to
clause (a) for whatever reason, the interest rate then in effect with respect to
the Refunding Bonds, without adjustment; provided that in no event shall the
Weekly Interest Rate exceed the Maximum Rate.
THE LETTER OF CREDIT
THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS CONTAINED IN THE
LETTER OF CREDIT. THIS SUMMARY DOES NOT PURPORT TO BE A COMPREHENSIVE
DESCRIPTION AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
LETTER OF CREDIT.
The Letter of Credit is an irrevocable obligation of the Bank to pay
to the Trustee up $22,634,774 upon the terms and conditions set forth in the
Letter of Credit which represents the principal amount of the Series 1996 A
Bonds ($20,540,000), plus 56 days' interest thereon at a maximum interest rate
of 12% per annum, plus the principal amount of the Series 1996 B Bonds
($1,680,000), plus 56 days' interest thereon at a maximum interest rate of 12%
per annum, in each case calculated on the basis of a 360-day year consisting of
twelve 30-day months.
Pursuant to the Indenture, the Trustee is required to draw upon the
Letter of Credit in the following circumstances:
(a) to make timely payment of the principal of and interest on
the Bonds;
(b) to make timely payment of the redemption price (excluding
any premium) of Bonds called for mandatory or optional redemption; and
(c) to make timely payment of the purchase price of Bonds or
Beneficial Ownership Interests required to be purchased, as the result of
an optional or mandatory tender, pursuant to the provisions of the
Indenture, but only to the extent of a shortfall in remarketing proceeds.
The Letter of Credit will terminate upon the earliest to occur of the
following (the "Termination Date"): (i) the Trustee's making of the final
drawing available to be made thereunder; (ii) surrender of the Letter of Credit
to the Bank for cancellation, as a result of (A) the payment in full of the
Bonds pursuant to the provision of the Indenture, or (B) the acceptance by the
Trustee of an Alternate Letter of Credit (as herein defined), as certified by a
duly authorized officer of the Trustee; (iii) April 15, 2001; (iv) the fifth
calendar day following the Fixed Interest Rate Commencement Date unless waived
in writing by the Bank prior to the Fixed Interest Rate Commencement Date;
(v) the fifth calendar day following the Interest Period Reset Date (as defined
in the Indenture) from and after which any of the Bonds bear interest at the Six
Month Interest Rate, the One Year Interest Rate or the Five Year Interest
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Rate; or (vi) the fifteenth calendar day following delivery by the Bank to the
Trustee of a direction pursuant to the Indenture to declare the Bonds
immediately due and payable which has not been rescinded.
The Letter of Credit and the amounts available thereunder to be drawn
to pay principal of Bonds or to pay the principal portion of the purchase price
for any Bonds or Beneficial Ownership Interests will be reduced automatically
without notice by amounts drawn under the Letter of Credit for the payment of
principal when due on Bonds or to pay the principal portion of the purchase
price of any Bonds or Beneficial Ownership Interests. The amounts available
under the Letter of Credit will be reinstated with respect to a drawing for the
principal portion of the purchase price of Bonds and Beneficial Ownership
Interests upon the receipt by the Bank of remarketing proceeds with respect to
such Bonds or Beneficial Ownership Interests, or of Bonds or Beneficial
Ownership Interests tendered and not remarketed by the Remarketing Agent. The
amounts available under the Letter Credit to be drawn for the payment of
interest will be reduced automatically, without notice, by the amount of any
draw on the Letter of Credit for the payment of interest. Such amount with
respect to interest will be reinstated in an amount sufficient to provide total
interest coverage equal to 56 days interest at the Maximum Rate on the then
outstanding principal amount of the Bonds on the 16th calendar day after the
date of such reduction, unless within 15 calendar days after the date of such
reduction the Bank sends written notice to the Trustee to declare the Bonds
immediately due and payable; provided that such reinstatement of interest
coverage will occur immediately in the case of any drawing for the interest
portion of the purchase price of any Bonds and Beneficial Ownership Interests
that have been remarketed and for which the Trustee is holding proceeds.
THE REIMBURSEMENT AGREEMENT
THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS CONTAINED IN THE
REIMBURSEMENT AGREEMENT. THIS SUMMARY DOES NOT PURPORT TO BE A
COMPREHENSIVE DESCRIPTION AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE REIMBURSEMENT AGREEMENT.
ISSUANCE OF LETTER OF CREDIT AND REIMBURSEMENT
Under the Reimbursement Agreement, the Bank will agree to issue its
Letter of Credit to the Trustee concurrently with the issuance and delivery of
the Bonds. The issuance of the Letter of Credit is subject to the satisfaction
of certain conditions set forth in the Reimbursement Agreement, including the
receipt by the Bank of various certifications or documents from the Obligors,
the Issuer and the Trustee, among other parties, and the delivery of certain
legal opinions.
Under the Reimbursement Agreement, the Obligors will agree to pay to
the Bank all amounts that are drawn under the Letter of Credit and any and all
reasonable charges and expenses which the Bank may pay or incur relative to the
Letter of Credit, together with interest, if any, on such amounts at the rate or
rates specified in the Reimbursement Agreement.
COLLATERAL UNDER REIMBURSEMENT AGREEMENT
In order to secure the Obligors' reimbursement obligation with respect
to the Letter of Credit and other obligations of the Obligors to the Bank under
the Reimbursement Agreement, the Obligors have granted and will grant mortgages
and security interests to the Bank. Neither the Trustee nor any Holder will
have any right to any collateral security granted to the Bank pursuant to the
Reimbursement Agreement.
FEES AND EXPENSES
Under the Reimbursement Agreement, the Obligors will agree to pay to
the Bank for the issuance of the Letter of Credit certain fees, and to pay all
reasonable charges and expenses of the Bank incurred relative to
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the issuance, transfer, drawing upon or other actions with respect to the Letter
of Credit or under the Reimbursement Agreement.
CERTAIN COVENANTS OF THE OBLIGORS
The Obligors, subject to specific provisions in the Reimbursement
Agreement, will covenant in the Reimbursement Agreement, among other things,
that each are duly created, validly existing and in good standing under the laws
of their respective states of organization and incorporation; to pay applicable
taxes; to maintain its existence; to maintain certain insurance on the Project;
to keep proper books of record and account; to maintain the Project in good
condition; to furnish financial and other reports and information within the
timeframes and of the kind specified in the Reimbursement Agreement; and to
comply with certain financial and other covenants. NO ASSURANCE CAN BE GIVEN AS
TO THE ABILITY OF THE OBLIGORS TO COMPLY WITH SUCH COVENANTS. FAILURE TO SO
COMPLY COULD, AT THE OPTION OF THE BANK, RESULT IN ACCELERATION OF THE MATURITY
OF THE BONDS.
EVENTS OF DEFAULT AND REMEDIES
The Reimbursement Agreement specifies numerous other Events of
Default, including failure by the Obligors to timely pay amounts payable to the
Bank thereunder or to the Bank or others under certain other obligations of the
Obligors to the Bank or others, the Obligors' failure to comply with other
covenants or conditions of the Reimbursement Agreement, including any breach of
representations or warranties, or the occurrence of certain acts of insolvency
or bankruptcy, or the occurrence of a default under any of certain other
agreements relating to the issuance of the Bonds.
The Obligors' obligations under the Reimbursement Agreement will be
secured by a mortgage and certain other collateral security documents which will
be for the sole benefit and security of the Bank and will not be for the benefit
or security of the Trustee or the Holders.
If an Event of Default under the Reimbursement Agreement has occurred,
the Bank may direct the Trustee to accelerate the Bonds under the Indenture and
take any other remedial action available to it.
AMENDMENT
The Reimbursement Agreement may be amended by the Borrower and the
Bank without the consent of the Issuer or the Trustee.
THE LOAN AGREEMENT
THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS CONTAINED IN THE LOAN
AGREEMENT. THIS SUMMARY DOES NOT PURPORT TO BE A COMPREHENSIVE
DESCRIPTION AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE LOAN
AGREEMENT.
ISSUANCE OF THE BONDS AND USE OF BOND PROCEEDS
Under the Loan Agreement, the Issuer agrees to issue the Series 1996
Bonds and to loan the proceeds thereof to the Borrower to assist the Borrower in
refunding the Prior Bonds. Such proceeds will be deposited in the Refunding
Fund and transferred immediately to the Prior Bonds Trustee for deposit in the
Bond Fund established pursuant to the Prior Indenture and disbursed in
connection with the refunding of the Prior Bonds.
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PAYMENTS BY THE BORROWER
The Borrower agrees to make payments corresponding, as to amount, to
debt service payments on the Series 1996 Bonds and to make such payments at the
times required by the Loan Agreement and the Refunding Notes delivered to the
Trustee in connection with issuance of the Series 1996 Bonds or any additional
notes delivered by the Borrower to the Trustee in connection with the issuance
of Additional Bonds. The Borrower's obligation to make such payments will be
absolute and unconditional.
PREPAYMENT UNDER THE LOAN AGREEMENT
OPTIONAL PREPAYMENT. The Borrower is given options in the Loan
Agreement to prepay the amounts payable thereunder. Such prepayment options
correspond to the optional redemption provisions applicable to the Bonds.
EXTRAORDINARY OPTIONAL REDEMPTION. The Bonds are also subject to
redemption by the Issuer in the event of the exercise by the Borrower of its
option to direct redemption with the written consent of the Bank upon the
occurrence of certain events provided in the Loan Agreement relating to damage
to or destruction of the Project, or the Project being subject to eminent domain
proceedings or changes in the law which render the Loan Agreement unenforceable
or imposing unreasonable or excessive liabilities with respect to the Project
or the operation thereof.
MANDATORY PREPAYMENT. The Borrower is obligated under the Loan
Agreement to prepay the amounts payable thereunder in full upon the occurrence
of certain conditions. Such prepayment obligations correspond to the mandatory
redemption provisions applicable to the Series 1996 Bonds in such cases.
TAX-EXEMPT STATUS OF BONDS
The Borrower makes various representations, warranties and covenants
designed to ensure that interest on the Series 1996 A Bonds will be and remain
excluded from the gross income of the Holders for federal income tax purposes.
EVENTS OF DEFAULT
The Loan Agreement provides that each of the following shall be an
"Event of Default":
(a) The Borrower's failure to pay when due any payment under any
Note;
(b) The Borrower's failure to observe and perform any
agreement, term or condition contained in the Loan Agreement, which failure
shall have continued for a period of 30 days after notice shall have been
provided, to the Borrower by the Issuer, or the Trustee, or such longer
period as the Issuer and the Trustee may agree to in writing; provided,
that if the failure is other than the payment of money and is of such
nature that it can be corrected but not within the applicable period, that
failure shall not constitute an Event of Default so long as the Borrower
institutes curative action within the applicable period and diligently
pursues that action to completion; and provided further that no such
failure shall constitute an Event of Default solely because it results in a
Determination of Taxability;
(c) Action by the Borrower to: (i) admit in writing its
inability to pay its debts generally as they become due; (ii) have an order
for relief entered in any case commenced by or against it under the federal
bankruptcy laws, as now or hereafter in effect; (iii) commence a proceeding
under any other federal or state bankruptcy, insolvency, reorganization or
similar law, or have such a proceeding commenced against it and either have
an order of insolvency or reorganization entered against it or have the
proceeding remain undismissed and unstayed for 90 days; (iv) make an
assignment for the benefit of
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creditors; or (v) have a receiver or trustee appointed for it or for the
whole or any substantial part of its property; and
(d) The occurrence of any Event of Default under the Indenture;
Notwithstanding the foregoing, if, by reason of Force Majeure, the
Borrower is unable to perform or observe any agreement, term or condition hereof
which would give rise to an Event of Default under paragraph (b) hereof, other
than the payment of money, the Borrower shall not be deemed in default during
the continuance of such inability. However, the Borrower is required to
promptly give notice to the Trustee and the Issuer of the existence of an event
of Force Majeure and is required to use its best efforts to remove the effects
thereof; provided that the settlement of strikes or other industrial
disturbances shall be entirely within the Borrower's discretion.
The term Force Majeure means, without limitation, the following:
(i) acts of God; strikes; lockouts or other industrial
disturbances; acts of public enemies; orders or restraints of any kind
of the government of the United States of America or the State or any
of their departments, agencies, political subdivisions or officials,
or any civil or military authority; insurrections; civil disturbances;
riots; epidemics; landslides; lightning; earthquakes; fires;
hurricanes; tornados; storms; droughts; floods; arrests; restraint of
government and people; explosions; breakage, malfunction or accident
to facilities, machinery, transmission pipes or canals; partial or
entire failure of utilities; shortages of labor, materials, supplies
or transportation; or
(ii) any cause, circumstance or event not reasonably within
the control of the Borrower.
The declaration of an Event of Default under paragraph (c) above,
and the exercise of remedies upon any such declaration, shall be subject to
any applicable limitations of federal bankruptcy law affecting or
precluding that declaration or exercise during the pendency of or
immediately following any bankruptcy, liquidation or organization
proceedings.
REMEDIES
Whenever an Event of Default shall have happened and be continuing,
any one or more of the following remedial steps may be taken:
(a) If and only if acceleration of the principal amount of the
Bonds has been declared pursuant to the Indenture, the Trustee shall
declare all Loan Payments and Notes to be immediately due and payable,
whereupon the same shall become immediately due and payable;
(b) The Bank and the Trustee may have access to, inspect,
examine and make copies of the books, records, accounts and financial data
of the Borrower pertaining to the Project; and
(c) The Issuer or the Trustee may pursue all remedies now or
hereafter existing at law or in equity to collect all amounts then due and
thereafter to become due under the Loan Agreement, the Letter of Credit or
the Notes or to enforce the performance and observance of any other
obligation or agreement of the Borrower under those instruments.
Notwithstanding the foregoing, the Issuer shall not be obligated to
take any step which in its opinion will or might cause it to expend time or
money or otherwise incur liability unless and until a satisfactory indemnity
bond has been furnished to the Issuer at no cost or expense to the Issuer. Any
amounts collected as Loan Payments or applicable to Loan Payments and any other
amounts which would be applicable to payment of Bond Service
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Charges collected pursuant to action taken under the provisions of the Loan
Agreement summarized in this paragraph shall be paid into the Bond Fund and
applied in accordance with the provisions of the Indenture or, if the
outstanding Bonds have been paid and discharged in accordance with the
provisions of the Indenture, shall be paid as provided in the Indenture for
transfers of remaining amounts in the Bond Fund.
The provisions described hereinabove are subject to the further
limitation that the rescission by the Trustee of its declaration that all of the
Bonds are immediately due and payable also shall constitute an annulment of any
corresponding declaration made pursuant to paragraph (a) above and a waiver and
rescission of the consequences of that declaration and of the Event of Default
with respect to which that declaration has been made, provided that no such
waiver or rescission shall extend to or affect any subsequent or other default
or impair any right consequent thereon.
THE INDENTURE
THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS CONTAINED IN THE
INDENTURE. THIS SUMMARY DOES NOT PURPORT TO BE A COMPREHENSIVE
DESCRIPTION AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
INDENTURE.
ASSIGNMENT AND SECURITY
In the Indenture, the Issuer will assign to the Trustee its right,
title and interest in and to the Revenues, including without limitation, all
Loan Payments and other amounts receivable by or on behalf of the Issuer under
the Agreement in respect of repayment of the Loan; the Agreement, executed for
the Unassigned Issuer's Rights; and the Notes.
APPLICATION OF REFUNDING FUND
All moneys received from the sale of the Bonds will be deposited in
the Refunding Fund created by the Indenture and disbursed immediately from the
Refunding Fund to the Prior Bonds Trustee for deposit in the Bond Fund
established pursuant to the Prior Indenture in connection with the refunding of
the Prior Bonds.
REVENUES AND BOND FUND
Any amounts which are to be applied to the payment of Bond Service
Charges on the Bonds, including all Revenues and all moneys received upon
drawings for such purpose made under the Letter of Credit, will be deposited in
the Bond Fund created by the Indenture and maintained with the Trustee. Moneys
in the Bond Fund are to be used for the payment of Bond Service Charges on the
Bonds and for redemption of Bonds prior to maturity in the following order:
1. Amounts drawn by the Trustee under the Letter of Credit
(provided that no amount drawn on the Letter of Credit may be used to
pay Bond Service Charges on any Additional Bonds, or to pay any
premium on the Bonds);
2. Any Eligible Funds on deposit in the Bond Fund; and
3. Any other amounts available in the Bond Fund.
"Eligible Funds" means amounts on deposit in the Bond Fund (other than
funds derived from a draw on the Letter of Credit) for a continuous period of
(i) 91 days, or (ii) such shorter period if an opinion of counsel acceptable to
the Bank and the Trustee is delivered to the Issuer, the Bank and the Trustee
stating that such shorter period will not result in voidable preferences, during
which there shall not have occurred the filing of a voluntary or
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involuntary petition in bankruptcy under the United States Bankruptcy Code, or
the commencement of a proceeding under any other applicable laws concerning
insolvency, reorganization or bankruptcy, by or against the Borrower or the
Issuer.
Amounts remaining in the Bond Fund after payment or provision for
payment of all Bond Service Charges are to be paid to the Bank or, if no amounts
are then due under the Reimbursement Agreement, to the Borrower.
REMARKETING REIMBURSEMENT FUND
The Indenture creates the Remarketing Reimbursement Fund, to be held
by the Trustee and administered in accordance with the terms of the Indenture
for the deposit of amounts derived from the remarketing of Bonds or Beneficial
Ownership Interests or from the payment of the purchase price of Bonds or
Beneficial Ownership Interests by the Bank under the Letter of Credit. While
the Bonds are outstanding, moneys in the Remarketing Reimbursement Fund will be
used solely for the payment of the purchase price of Bonds or Beneficial
Ownership Interests upon their optional or mandatory tender for purchase, and
are not subject to the lien of the Indenture.
REBATE FUND
The Indenture creates the Rebate Fund to be held by the Trustee for
the deposit of amounts required to make payments to the United States federal
government in satisfaction of the arbitrage rebate requirements under
Section 148 of the Code. Although moneys deposited with or paid to the Trustee
for the account of the Rebate Fund are required to be held by the Trustee in
trust, such moneys are not subject to the lien of the Indenture.
The amounts on deposit in the Rebate Fund will not be part of the
Revenues assigned under the Indenture to the Trustee.
INVESTMENT OF FUNDS
Moneys held in the above described Funds are to be invested by the
Trustee at the written direction of the Borrower, in Eligible Investments.
"Eligible Investments" means
(i) Government obligations, which are defined to mean
(a) direct obligations of the United States of America for the payment
of which the full faith and credit of the United States of America is
pledged, (b) obligations issued by a person controlled or supervised
by and acting as an instrumentality of the United States of America,
the payment of the principal of, premium, if any, and interest on
which is fully guaranteed as a full faith and credit obligation of the
United States of America (including any securities described in (a)
or (b) issued or held in book-entry form on the books of the
Department of Treasury of the United States of America or Federal
Reserve Bank), and (c) money market funds (including those of the
Trustee or its affiliates), rated in the highest rating category by
Moody's, which invest solely in the obligations described in (a) and
(b) above.
(ii) Federal Home Loan Mortgage Corporation (FHLMC) and
Farm Credit Banks (Federal Land Banks, Federal Intermediate Credit
Banks and Banks for Cooperatives) participation certificates and
senior debt obligations which bear interest at a fixed rate and are
fully amortizing;
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(iii) Federal National Mortgage Association's (FNMA)
mortgage backed securities and senior debt obligations which bear
interest at a fixed rate and are fully amortizing;
(iv) Student Loan Marketing Association (Sallie Mae)
letter of credit backed issues and senior debt obligations;
(v) Federal funds, certificates of deposit, time deposits
and bankers' acceptances (having original maturities of not more than
365 days) of any bank (including the Trustee and any of its
affiliates), the unsecured, uninsured and unguaranteed debt
obligations of which (or, in the case of a bank subsidiary in a bank
holding company, debt obligations of the bank holding company) have
been rated "AA" or "A-1" or its equivalent by either Rating Service;
(vi) commercial paper (having original maturities of not
more than 270 days) rated "A-1" or its equivalent by either Rating
Service;
(vii) obligations rated "AA" or "A-1" or its equivalent by
either Rating Service, or unrated general obligations of any Person
which has outstanding other unsecured, uninsured and unguaranteed
obligations which are so rated by either Rating Service;
(viii) repurchase agreements with any institution the
unsecured, uninsured and unguaranteed debt obligations of which (or,
in the case of a bank subsidiary in a bank holding company, debt
obligations of the bank holding company) are rated "AA" or its
equivalent by either Rating Service;
(ix) tax-exempt obligations of any state of the United
States of America or any political subdivision or other
instrumentality of any such state and such obligations are rated in
either of the two highest rating categories (i.e., "AA" or higher) of
either Rating Service and are not "specified private activity bonds"
as defined in Section 57(a)(5)(C) of the Code;
(x) tax-exempt money market funds (including those of the
Trustee or any of its affiliates) which are "qualified regulated
investment companies" within the meaning of IRS Notice 87-22, dated
October 25, 1987, and which meet the other requirements of IRS
Notice 87-22 and any subsequent regulations necessary to exempt
investments in such funds from the definition of "investment property"
under Section 148 of the Code whose assets are solely invested in
obligations rated in either of the two highest rating categories by
either Rating Service;
(xi) money market funds (including those of the Trustee or
any of its affiliates) the assets of which are obligations of or
guaranteed by the United States and which funds are rated "Am" or
"Am-G" or higher by Standard & Poor's Corporation; and
(xii) obligations approved in writing by the Bank;
provided, however, that "Eligible Investments" with respect to any proceeds
from a draw under the Letter of Credit shall mean only Government
Obligations maturing as needed to pay principal of and interest on the
Bonds on a timely basis, and in no event more than thirty days after
purchase. In addition, moneys in the Remarketing Reimbursement Fund may be
invested only in Government Obligations which mature no later than the Bond
Purchase Date next following the date of such investment. Any investments
may be purchased from or sold to the Trustee, the Remarketing Agent, or any
bank, trust company or savings and loan association affiliated with either
of them.
The Trustee shall hold and control all investments of moneys in the
Rebate Fund, the Remarketing Reimbursement Fund, the Refunding Fund or the Bond
Fund and interest accruing thereon and any profit realized
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from such investments will be credited, and any loss will be charged, to the
particular fund from which the investment was made.
ALTERNATE LETTER OF CREDIT
The Borrower at its option may cause to be delivered to the Trustee,
as a replacement for the Letter of Credit, an Alternate Letter of Credit
("Alternate Letter of Credit"). Any such Alternate Letter of Credit must be
issued by a financial institution, must require such financial institution to
pay when due, to and upon request of the Trustee, the same amounts as are
payable under the initial Letter of Credit, must have an expiration date which
is no earlier than the expiration date of the Letter of Credit being replaced
and must have an effective date (the "Replacement Date") as set forth below.
If the Refunding Bonds are bearing interest at other than the Fixed
Interest Rate, the Borrower may, at its option, provide for the delivery to the
Trustee of an Alternate Letter of Credit to take effect on a date selected by
the Borrower (the "Replacement Date"). If the Refunding Bonds are bearing
interest at the Weekly Interest Rate, the Replacement Date may be any date
selected by the Borrower. If the Refunding Bonds are bearing interest at the
One Month Interest Rate, Three Month Interest Rate, Six Month Interest Rate, One
Year Interest Rate or Five Year Interest Rate, the Replacement Date shall be the
Interest Rate Adjustment Date or the Fixed Interest Rate Commencement Date if
the Bonds are to bear interest at the Fixed Interest Rate. If the Borrower is
providing an Alternate Letter of Credit in connection with the conversion of the
interest rate on the Refunding Bonds to the Fixed Interest Rate, the expiration
date on the Alternate Letter of Credit shall not be earlier than the earlier of
fifteen (15) days after the First Optional Redemption Date or ten (10) years and
fifteen (15) days after the date of issuance of the Alternate Letter of Credit.
Prior to the replacement of a Letter of Credit with an Alternate Letter of
Credit, the Trustee shall give notice to the Holders and, if the Refunding Bonds
are then rated by a Rating Service, to each Rating Service which then has a
rating on the Refunding Bonds of such event and shall have received the
following not less than forty-five (45) days prior to the Replacement Date:
(A) an opinion of counsel for the issuer of the Alternate Letter of
Credit that it constitutes a legal, valid and binding obligation of the
issuer in accordance with its terms;
(B) an opinion of counsel acceptable to the Trustee to the effect
that payments under the Alternate Letter of Credit will not constitute
voidable preferences in the event of a bankruptcy of the Borrower;
(C) an opinion of Bond Counsel that such replacement will not cause
interest on the Series 1996 A Bonds to become includable in gross income
for federal income tax purposes; and
(D) the Alternate Letter of Credit.
If the Refunding Bonds are bearing interest at the Fixed Interest
Rate, the Borrower shall provide for the delivery to the Trustee of an Alternate
Letter of Credit to take effect on a date selected by the Borrower (the
"Replacement Date"). Prior to such replacement, the Trustee shall give notice
to the Holders of such event and shall have received the following not less than
forty-five (45) days prior to the Replacement Date:
(A) An opinion of counsel for the issuer of the Alternate Letter of
Credit that it constitutes a legal, valid and binding obligation of the
issuer in accordance with its terms;
(B) An opinion of counsel acceptable to the Trustee to the effect
that payments under the Alternate Letter of Credit will not constitute
voidable preferences in the event of a bankruptcy of the Borrower;
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(C) an opinion of Bond Counsel that such replacement will not cause
interest on the Series 1996 A Bonds to become includable in gross income
for federal income tax purposes; and
(D) the Alternate Letter of Credit.
Each of the terms "Rating Service" and "Rating Agency" as used herein
means either Moody's Investors Service, Inc., and its successors and assigns, or
Standard & Poor's Ratings Group, and its successors and assigns.
ADDITIONAL BONDS
At the request of the Borrower, and with the prior written consent of
the Bank, the Issuer may issue additional bonds (the "Additional Bonds") for any
purpose permitted under the Act. Any Additional Bonds shall be secured by an
Alternate Letter of Credit and shall be on a parity with the Bonds (except with
respect to any moneys drawn by the Trustee on the Letter of Credit) and any
Additional Bonds theretofore or thereafter issued and outstanding as to the
assignment to the Trustee of the Issuer's right, title and interest in the
Revenues, the Loan Agreement and the Refunding Notes to provide for payment of
Bond Service Charges; provided, however, that nothing herein shall prevent
payment of Bond Service Charges on any series of Additional Bonds from (i) being
otherwise secured and protected from sources or by property or instruments not
applicable to the Refunding Bonds and any one or more series of Additional
Bonds, or (ii) not being secured or protected from sources or by property or
instruments applicable to the Refunding Bonds or one or more series of
Additional Bonds.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following shall be an "Event
of Default":
(a) Failure to pay when due any interest on any Bond.
(b) Payment of the principal of or any premium on any Bond shall
not be made when and as that principal or premium shall become due and
payable whether at stated maturity, by redemption, pursuant to any
mandatory sinking fund requirements, by acceleration or otherwise.
(c) Failure to pay on the Bond Purchase Date amounts due to the
Holder of any Bonds, or to the Beneficial Owner of any Beneficial Ownership
Interests, tendered or deemed tendered to the Trustee pursuant to the
Indenture.
(d) Failure by the Issuer to observe or perform any other
covenant, agreement or obligation on its part to be observed or performed
contained in the Indenture or in the Bonds, which failure shall have
continued for a period of thirty (30) days after written notice, by
registered or certified mail, to the Issuer, the Bank and the Borrower
specifying the failure and requiring it be remedied, which notice may be
given by the Trustee in its discretion and shall be given by the Trustee at
the written request of the Bank or the Holders of not less than twenty-five
percent (25%) in the aggregate principal amount of Bonds then outstanding.
(e) The occurrence and continuation of an Event of Default under
the Loan Agreement.
(f) Receipt by the Trustee of a written notice from the Bank
which states that an Event of Default under the Reimbursement Agreement has
occurred and is continuing and directing the Trustee to accelerate the
Refunding Bonds.
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(g) Failure of the Bank to honor any drawing in accordance with
the terms of the Letter of Credit.
(h) Certain events of insolvency relating to the Bank.
(i) Receipt by the Trustee of written notice from the Bank by
the end of the fifteenth Business Day following the honoring of an interest
drawing on the Letter of Credit (including the interest portion of a
drawing to pay the purchase price of tendered Refunding Bonds) that the
amount available to be drawn by the Trustee under the Letter of Credit has
not been reinstated to an amount not less than 100% of the outstanding
principal, of plus 56 days' interest on the Refunding Bonds (or 195 days'
interest on the Refunding Bonds if the Interest Rate Mode on the Refunding
Bonds is six months or longer) computed at the maximum rate of 12% per
annum.
Upon the occurrence of an Event of Default under items (a), (b), (c),
(f), (g) or (i), described above, the Trustee shall declare, by a notice in
writing delivered to the Issuer and the Borrower, the principal of and accrued
interest on all then outstanding Bonds (if not then due and payable), together
with interest accrued thereon, to be immediately due and payable. Upon the
occurrence of any other Event of Default (except an Event of Default specified
in (h) described above), the Trustee shall, upon the written direction of the
Bank so long as an Event of Default as specified in paragraphs (g) or (h)
described above has not occurred and is continuing, declare by a notice in
writing delivered to the Issuer and the Borrower the principal of Bonds then
outstanding (if not then due and payable), together with interest accrued
thereon, to be immediately due and payable. Upon the occurrence of an Event of
Default under item (h) described above, and if there is not then existing an
Event of Default described in (a), (b), (c), (f), (g) or (i), described above,
the Trustee, without the consent of the Bank, may, and upon the written request
of the Holders of not less than 25% in aggregate principal amount of Series 1996
Bonds outstanding shall, declare the principal of and accrued interest on all
Series 1996 Bonds then outstanding, together with interest accrued thereon, to
be immediately due and payable. If such a declaration is made, the Trustee is
required to draw upon the Letter of Credit to the extent permitted by the terms
thereof and to give notice to Holders of such acceleration.
In addition, upon the happening and continuance of an Event of
Default, the Trustee may pursue any available remedy to remedy any Event of
Default or to enforce the observance and performance of any other covenant,
agreement or obligation of the Indenture, the Loan Agreement, the Note or any
other instrument providing security for the Bonds and any Additional Bonds;
provided, however, that the Trustee shall not pursue any such remedy without the
prior written consent of the Bank so long as no Event of Default described
in (g) or (h) above has occurred and is continuing.
The Trustee will also be empowered to enforce each and every right
granted to it under the Loan Agreement as assigned to it and in the Note.
RIGHT OF HOLDERS TO DIRECT PROCEEDINGS
The Holders of at least a majority in aggregate principal amount of
Bonds then outstanding will have the right at any time, by an instrument or
instruments in writing executed and delivered to the Trustee, to direct the
method and place of conducting all proceedings to be taken in connection with
the enforcement of the terms and conditions of the Indenture or any other
proceedings under the Indenture, provided, that (i) any direction shall not be
otherwise than in accordance with the provisions of law and the Indenture;
(ii) the Trustee shall be indemnified as provided in the Indenture; (iii) the
Trustee may take any other action which it deems to be proper and which is not
inconsistent with the direction; and (iv) provided, however, that so long as no
Event of Default described in (g) or (h) above has occurred and is continuing,
the Bank shall have the exclusive right to give such directions to the Trustee.
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WAIVERS OF EVENTS OF DEFAULT
The Trustee, but only with the express written consent of the Bank
(other than in the case of an Event of Default described in items (a), (b), (c),
(g) or (h) above), may waive an Event of Default and its consequences and may
rescind and annul any declaration of maturity of principal and interest of the
Bonds. The Trustee shall do so upon the written request of the Bank (other than
in the case of an Event of Default described in items (a), (b), (c), (g) or
(h) above). Notwithstanding the foregoing, prior to waiving any Event of
Default described in item (f) or (i) above, the Trustee shall have received
written confirmation from the Bank that (i) the Bank has annulled the
declaration of maturity of principal of the Bonds and (ii) that the Letter of
Credit has been reinstated to an amount not less than 100% of the outstanding
principal of, plus 56 days' interest (or 195 days' interest if the Interest Rate
Mode on the Bonds is six months or longer) on, the Bonds at the maximum rate of
12% per annum.
There shall not be so waived, however, any Event of Default described
in items (a), (b), (c), (g) or (h) above or any declaration of acceleration in
connection therewith rescinded or annulled except (i) if such Event of Default
shall have been cured and (ii) with the written consent of the Holders of a
majority in aggregate principal amount of all Bonds then outstanding and of the
Bank. In the case of such waiver or rescission and annulment, or in case any
suit, action or proceedings taken by the Trustee on account of any Event of
Default shall have been discontinued, abandoned, or determined adversely to it,
the Issuer, the Trustee, the Bank and the Holders shall be restored to their
former positions and rights under the Indenture. No waiver or rescission shall
extend to any subsequent or other Event of Default or impair any right
consequent thereon.
APPLICATIONS OF MONEYS RECEIVED PURSUANT TO RIGHT OF ACTION TAKEN
All moneys received by the Trustee after acceleration of the maturity
of the Bonds and derived from any drawing made upon the Letter of Credit will be
applied by the Trustee only to the payment of principal of or interest on the
Bonds. Subject to the foregoing, after payment of any costs, expenses,
liabilities and advances paid, incurred or made by the Trustee in the collection
of moneys pursuant to any right given or action taken under the Indenture, or
the provision of the Agreement or the Refunding Notes (including without
limitation, reasonable attorney's fees and expenses, except as limited by law or
judicial order or decision entered in any action taken under the Indenture) and
all fees owing to the Trustee for ordinary or extraordinary services, all moneys
received by the Trustee, shall be applied in the manner and in order of priority
set forth in the Indenture.
RIGHTS AND REMEDIES OF HOLDERS
No Holder of any Bond will have any right to institute any suit,
action or proceeding for the enforcement of the Indenture or for the execution
of any trust under the Indenture or any remedy under the Indenture, unless
(i) an Event of Default has occurred and is continuing of which the Trustee has
been notified or of which it is deemed to have notice, and (ii) the Holders of
not less than 25% in aggregate principal amount of the Bonds then outstanding
have made written request to the Trustee and have afforded the Trustee
reasonable opportunity to proceed to exercise the powers provided in the
Indenture or to institute such action, suit or proceeding and have offered to
the Trustee indemnity as provided for in the Indenture, and (iii) the Trustee
thereafter has failed or refused to exercise its powers under the Indenture or
to institute such action, suit or proceeding in its own name; provided, however,
no Holder may institute any suit, action or proceeding at law or in equity for
the enforcement of the Indenture or the enforcement of any remedy thereunder
unless an Event of Default described in (g) or (h) above has occurred and is
continuing.
SUPPLEMENTAL INDENTURES
The Issuer and the Trustee, with the consent of the Borrower and the
Bank, may enter into supplemental indentures, without the consent of or notice
to any of the Holders, for any one or more of the following purposes: (a) to
cure any ambiguity, inconsistency or formal defect or omission in the Indenture;
(b) to grant to the Trustee additional rights, remedies, powers or authority for
the benefit of the Holders; (c) to assign additional
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revenues under the Indenture; (d) to accept additional security and instruments
of further assurance with respect to the Project; (e) to add to the covenants,
agreements and obligations of the Issuer contained in the Indenture other
covenants, agreements and obligations thereafter to be observed for the
protection of the Holders, or to surrender or limit any right, power or
authority reserved to or conferred upon the Issuer in the Indenture; (f) to
evidence any succession to the Issuer and the assumption by such successor of
the covenants, agreements and obligations of the Issuer contained in the
Indenture, the Loan Agreement and the Bonds; (g) to permit the exchange of Bonds
for coupon Bonds in an aggregate principal amount not exceeding the unmatured
and unredeemed principal amount of the Predecessor Bonds (as defined in the
Indenture), bearing interest at the same rates and maturing on the same date or
dates, if that exchange would not result in the interest on any of the Series
1996 A Bonds outstanding becoming included in the gross income of the Holders
for federal income tax purposes; (h) to permit the Trustee to comply with any
obligations imposed upon it by law; (i) to specify further the duties and
responsibilities of, and to define further the relationship among, the Trustee,
the Registrar, the Remarketing Agent and any Paying Agents or Authenticating
Agents; (j) to achieve compliance of the Indenture with any applicable federal
securities or tax law; (k) to evidence the appointment of a new Remarketing
Agent; (l) to make necessary or advisable amendments or additions in connection
with the issuance of Additional Bonds as do not adversely affect the Holders of
the outstanding Bonds; (m) to permit any other amendment which, in the judgment
of the Trustee, is not to the prejudice of the Trustee or the Holders,
including, but not limited to, changes required in order to obtain or maintain a
rating on the Bonds or any Additional Bonds from a Rating Service; and, (n) to
accept a Supplemental Credit Facility as described in the Indenture.
Exclusive of supplemental indentures for the purposes above
summarized, the consent of the Borrower, the Bank and the Holders of not less
than a majority in aggregate principal amount of the Bonds then outstanding will
be required to approve any indenture supplementing the Indenture provided that:
(i) without the consent of the Holder of each Bond so affected and the consent
of the Bank as provided in the Indenture, no supplemental indenture shall permit
an extension of the maturity of the principal of or the interest on any Bond, or
a reduction in principal amount of any Bond or the rate of interest or
redemption premium on any Bond, or a reduction in the amount or extension of the
time of paying of any mandatory sinking fund requirements and (ii) without the
consent of the Holders of all Bonds then outstanding and the consent of the Bank
as provided in the Indenture, no supplemental indenture shall permit a privilege
or priority of any Bond over any other Bond, or a reduction in the aggregate
principal amount of Bonds required for consent to such supplemental indenture.
DISCHARGE OF LIEN
The lien of the Indenture will be discharged if the Issuer shall pay
or cause to be paid and discharged all the outstanding Bonds or there shall
otherwise be paid to the Holders of the outstanding Bonds all Bond Service
Charges due or to become due thereon, and provisions shall also be made for
paying all other amounts payable under the Indenture, the Loan Agreement and the
Notes.
Any Bond shall be deemed to be paid and discharged for all purposes of
the Indenture when payment of the principal of and premium, if any, on such
Bond, plus interest thereon to the due date thereof (whether such due date is by
reason of maturity or upon redemption as provided in the Indenture) shall have
been made or caused to be made with funds available therefor on deposit in the
Bond Fund (as defined in the Indenture) in accordance with the terms thereof.
All the outstanding Bonds will be deemed to have been paid and discharged within
the meaning of the Indenture if (a) the Trustee and any Paying Agents shall have
received and hold in trust and irrevocably committed for such payment,
sufficient moneys which are Eligible Funds or the proceeds of drawings under the
Letter of Credit used to make such payment, or other moneys if accompanied by an
opinion of bankruptcy counsel in a form acceptable to the Trustee and the Rating
Service, if any, for the Bonds, or (b) the Trustee shall hold in trust,
irrevocably committed for such payment, direct noncallable Government
Obligations (purchased with Eligible Funds or the proceeds of drawings under the
Letter of Credit or other moneys if accompanied by an opinion of bankruptcy
counsel in a form acceptable to the Trustee and the Rating Service if any, for
the Bonds), which are certified by an independent public accounting firm of
national reputation to be of such maturities and interest payment dates and to
bear such interest as will, without further investment or reinvestment of either
the principal amount thereof or the
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interest earnings therefrom, be sufficient together with moneys referred to in
(a) above, for the payment, at their maturities or redemption dates, of the
payment of all Bond Service Charges on the Bonds on and to the next Interest
Rate Adjustment Date, maturity date, or prior redemption date, as the case may
be; provided that if any Bonds are to be redeemed prior to the maturity thereof,
notice of such redemption shall have been duly given or irrevocable provision
satisfactory to the Trustee shall have been duly made for the giving of such
notice; and further provided that the Bonds shall not be deemed to be paid and
discharged within the meaning of this paragraph (i) if the Interest Rate Mode of
such Bonds is other than the Fixed Interest Rate, unless such Bonds are to be
redeemed on or prior to the next Interest Rate Adjustment Date for such Bonds
and notice of that redemption shall have been duly given or irrevocable
provision satisfactory to the Trustee shall have been duly made for the giving
of that notice, or (ii) if they bear interest at the Weekly Interest Rate. Any
moneys so held by the Trustee may be invested by the Trustee, but only in
Government Obligations, the maturities or redemption dates of which, at the
option of the Holder, shall be not later than the date or dates at which said
moneys will be required for the aforesaid purposes.
Notwithstanding anything herein to the contrary, if any Bonds are then
rated by a Rating Service, no such Bonds shall be deemed to have been paid and
discharged by reason of any deposit pursuant to paragraphs (a) and/or (b) above
(other than any deposit of moneys, or Government Obligations purchased with
moneys, which are the proceeds of drawings under the Letter of Credit) unless
each such Rating Service shall have confirmed in writing to the Trustee that its
rating will not be withdrawn or lowered as the result of any such deposit.
UNCLAIMED MONEYS
In the event that any Bond shall not be presented for payment when the
principal thereof becomes due in whole or in part, either at stated maturity, by
redemption or pursuant to any mandatory sinking fund requirements, or a check or
draft for interest is uncashed, if moneys sufficient to pay the principal and
premium, if any, then due on that Bond or to pay such check or draft shall have
been made available to the Trustee for the benefit of its Holder, all liability
of the Issuer to that Holder for such payment of the principal and premium, if
any, then due on the Bond or interest on such Bond represented by such check or
dafter thereupon shall cease and be discharged completely. Thereupon, it shall
be the duty of the Trustee to hold those moneys, without liability for interest
thereon, in a separate account in the Bond Fund for the exclusive benefit of the
Holder, who shall be restricted thereafter exclusively those moneys for any
claim or whatever nature on its part under the Indenture or on, or with respect
to, the principal and premium, if any, then due on that Bond or interest on such
Bond represented by such check or draft.
Any of those moneys which shall be so held by the Trustee, and which
remain unclaimed by the Holder of a Bond not presented for payment or check or
draft not cashed for a period of four years after the due date thereof, shall be
paid to the Bank free of any trust or lien unless the Bank shall have confirmed
to the Trustee in writing that no moneys are then due under the Reimbursement
Agreement in which case such moneys shall be paid to the Borrower. Thereafter,
the Holder of that Bond shall look only to the Borrower for payment and then
only to the amounts so received by the Borrower or paid to or on behalf of the
Borrower (including to the Bank pursuant to this paragraph), without any
interest thereon, and the Trustee shall not have any responsibility with respect
to those moneys.
THE TRUSTEE
The Trustee is Fifth Third Bank of Central Indiana, Indianapolis,
Indiana, an Indiana banking corporation.
The Trustee will undertake to perform such duties as are specifically
set forth in the Indenture. In case a default or Event of Default has occurred
and is continuing under the Indenture, the Trustee shall exercise such of the
rights and powers vested in it by the Indenture, and shall use the same degree
of care and skill in their exercise, as a prudent person acting as a fiduciary
would exercise under the circumstances.
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The Indenture will provide that the Trustee shall be entitled to act
upon opinions of counsel as specified in the Indenture and shall not be
responsible for any loss or damage resulting from reliance thereon in good
faith. In addition, the Indenture will provide that the Trustee shall be
entitled to rely on certain other instruments and it shall not be liable for any
action reasonably taken or omitted to be taken by it in good faith and
reasonably believed by it to be within the discretion or power conferred upon it
in the Indenture.
EXTENT OF ISSUER'S COVENANTS; NO PERSONAL LIABILITY
All agreements of the Issuer contained in the Indenture shall be
effective to the extent authorized and permitted by applicable law and they
shall not be deemed to be a covenant, stipulation, obligation or agreement of
any present or future member, officer, agent or employee of the Issuer or the
Issuing Authority. No official of the Issuer executing the Bonds shall be liable
personally on the Bonds or be subject to any personal liability or
accountability by reason of the issuance thereof.
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UNITED STATES OF AMERICA
STATE OF INDIANA
CITY OF GARY, INDIANA
ADJUSTABLE RATE ECONOMIC DEVELOPMENT
REVENUE REFUNDING BOND, SERIES 1996 A
(THE MILLER PARTNERSHIP, L.P. PROJECT)
NO. A-1
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
Maturity Date CUSIP Number Date of Authentication
- ------------- ------------ ----------------------
March 1, 2031 April 1, 1996
Date of Initial Delivery: April 1, 1996
Registered Owner: CEDE & CO.
Principal Amount: $20,540,000
The City of Gary, Indiana (the "Issuer"), a municipal corporation and
political subdivision validly existing under the laws of the State of Indiana,
for value received, promises to pay to the registered owner specified above or
registered assigns, but solely from the sources and in the manner referred to
herein, the principal amount specified above on the aforesaid Maturity Date,
unless this Bond is called for earlier redemption, and to pay from those sources
interest thereon at the rate per annum determined as described herein. Initial
interest on this Bond shall accrue from the Date of Initial Delivery of this
Bond. Interest on this Bond is payable on the first Business Day, as
hereinafter defined, of each month, as long as the interest rate hereon is
calculated pursuant to the Weekly Interest Rate, the One Month Interest Rate or
the Three Month Interest Rate (as such terms are hereinafter defined),
commencing the first Business Day of May, 1996, until the principal amount is
paid or duly provided for. For any period of time during which this Bond bears
interest at the Six Month Interest Rate, the One Year Interest Rate, the Five
Year Interest Rate or the Fixed Interest Rate (as such terms are hereinafter
defined) interest hereon shall be payable on the first day of each April and
October. Any date established for the payment
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A-1
of interest as described above is hereinafter referred to as an "Interest
Payment Date". The interest payable hereon on each Interest Payment Date shall
be for the period commencing on the next preceding Interest Payment Date (or the
Date of Initial Delivery of this Bond with respect to the first Interest Payment
Date) to and including the day immediately preceding the Interest Payment Date
on which payment is made. Interest shall be calculated on the basis of a year
of 365 days or 366 days, as applicable, for the number of days actually elapsed,
while the interest hereon is payable at the Weekly Interest Rate, the One Month
Interest Rate or the Three Month Interest Rate. Otherwise, interest shall be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
The term "Business Day", as used herein, means any day, other than a
Saturday or Sunday, on which commercial banks located in the cities in which the
principal corporate trust office of the Paying Agent, the principal corporate
trust office of the Registrar, the principal office of the Remarketing Agent,
and the principal office of the Bank, as hereafter defined, are located are not
required or authorized to remain closed and on which the New York Stock Exchange
is not closed. This Bond will bear interest from the most recent date to which
interest has been paid or duly provided for or, if no interest has been paid or
duly provided for, from its date of initial delivery. If any Interest Payment
Date, date of maturity of this Bond, Bond Purchase Date (as hereinafter defined)
or date fixed for redemption of this Bond, is not a Business Day, then payment
of the applicable interest, principal, purchase price or redemption price may be
made on the next succeeding Business Day with the same force and effect as if
such payment were made on such Interest Payment Date, date of maturity, Bond
Purchase Date or date fixed for redemption and no interest shall accrue for the
period after such date; provided, however, if this Bond bears interest at any of
the Weekly Interest Rate, the One Month Interest Rate or the Three Month
Interest Rate, interest shall accrue from the scheduled date of any maturity or
redemption due date of this Bond until the Business Day on which such payment is
made.
The principal of and premium, if any, on this Bond is payable upon
presentation and surrender hereof at the principal corporate trust office of the
Paying Agent, presently The Fifth Third Bank (the "Paying Agent"), located in
Cincinnati, Ohio. Interest is payable on each Interest Payment Date by check or
draft mailed to the person in whose name this Bond (or one or more predecessor
bonds) is registered (the "Holder") at the close of business on the fifth
Business Day preceding such Interest Payment Date (the "Regular Record Date") on
the registration books for this issue maintained by The Fifth Third Bank,
located in Cincinnati, Ohio, as Registrar, at the address appearing therein.
Notwithstanding the foregoing, interest on any Bond in the denomination of
$100,000 or more shall be paid by wire transfer in immediately available funds
to the bank account number and address filed in writing with the Registrar by
such Holder, which account number and address shall be filed with the Registrar
at least two (2) Business Days prior to that Interest Payment Date. Any
interest which is not timely paid or duly provided for shall cease to be payable
to the Holder hereof (or of one or more predecessor bonds) as of the Regular
Record Date, and shall be payable to the Holder hereof (or of one or more
predecessor bonds) at the close of business on a Special Record Date to be fixed
by the Trustee for the payment of that overdue interest. Notice of the Special
Record Date shall be mailed to Holders not less than ten days prior thereto.
The principal and redemption price of and interest on this Bond are payable in
lawful money of the United States of America, without deduction for the services
of the Paying Agent. Notwithstanding anything herein to the contrary, when this
Bond is registered in the name of a Depository (as defined in the Indenture
hereinafter defined) or its nominee, the principal and redemption price of and
interest on this Bond shall be payable in federal funds delivered or transmitted
to the Depository or its nominee.
THIS BOND DOES NOT REPRESENT OR CONSTITUTE A DEBT OR PLEDGE OF THE FAITH
AND CREDIT OF THE ISSUER, THE STATE OF INDIANA OR ANY POLITICAL SUBDIVISION
THEREOF. THE HOLDERS OR OWNERS OF THIS BOND
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HAVE NO RIGHT TO HAVE TAXES LEVIED BY THE ISSUER, THE STATE OF INDIANA OR ANY
POLITICAL SUBDIVISION THEREOF FOR THE PAYMENT OF THE PRINCIPAL OF OR PREMIUM (IF
ANY) OR INTEREST ON THIS BOND. PRINCIPAL OF AND PREMIUM (IF ANY) AND INTEREST
ON THIS BOND ARE PAYABLE SOLELY FROM THE REVENUES PLEDGED PURSUANT TO THE
INDENTURE (AS HEREINAFTER DEFINED).
This Bond shall not constitute the personal obligation, either jointly or
severally, of the members of the Common Council of the Issuer (the "Issuing
Authority"), its Economic Development Commission, or of any officer, employee or
official of the Issuer.
This Bond shall not be entitled to any security or benefit under the
Indenture or be valid or become obligatory for any purpose until the certificate
of authentication hereon shall have been duly signed.
GENERAL PROVISIONS
This Bond is one of a duly authorized issue the City of Gary, Indiana
Adjustable Rate Economic Development Revenue Refunding Bonds, Series 1996 A (The
Miller Partnership, L.P. Project) (the "Bonds"), issuable under the Trust
Indenture, dated as of March 1, 1996 (the "Indenture"), between the Issuer and
Fifth Third Bank of Central Indiana, as Trustee, aggregating in the principal
amount of $20,540,000 and issued for the purpose of making a loan (the "Loan")
to The Miller Partnership, L.P., an Illinois limited partnership (the
"Borrower"), to refund the City of Gary, Indiana Economic Development Revenue
Bonds, Series 1991 A (The Miller Partnership, L.P. Project) and the City of
Gary, Indiana Economic Development Revenue Bonds, Series 1993 A (The Miller
Partnership, L.P. Project), which were issued for the purpose of financing of
the Project, as defined in the Loan Agreement, dated as of even date with the
Indenture (the "Agreement"), between the Issuer and the Borrower. The Bonds,
together with any Additional Bonds which may be issued on a parity therewith
under the Indenture, are special obligations of the Issuer, issued or to be
issued under and are to be secured and entitled equally and ratably to the
protection given by the Indenture. The Bonds are issued pursuant to Indiana
Code 36-7-11.9 and 12, and Indiana Code 5-1-5 (collectively, the "Act") and
pursuant to an Ordinance duly adopted by the Issuing Authority. The Bonds are
issued on a parity with the City of Gary, Indiana Taxable Adjustable Rate
Economic Development Revenue Bonds, Series 1996 B (The Miller Partnership, L.P.
Project).
Reference is made to the Indenture and the Agreement for a more complete
description of the Project, the provisions, among others, with respect to the
nature and extent of the security for the Bonds, the rights, duties and
obligations of the Issuer, the Trustee and the Holders of the Bonds and the
terms and conditions upon which the Bonds are issued and secured. All terms
used herein with initial capitalization where the rules of grammar or context do
not otherwise require shall have the meanings as set forth in the Indenture.
Each Holder assents, by its acceptance hereof, to all of the provisions of the
Indenture.
Pursuant to the Agreement, the Borrower has executed and delivered to the
Trustee the Borrower's Note, Series 1996 A dated as of even date with the Bonds
(the "Series 1996 A Note"), in the principal amount of $20,540,000. The
Borrower is required by the Agreement and the Note, Series 1996 A to make
payments to the Trustee in amounts and at times necessary to pay the principal
of and premium (if any) and interest on the Bonds (the "Bond Service Charges").
In the Indenture, the Issuer has assigned to the Trustee, to provide for the
payment of the Bond Service Charges on the Bonds and any Additional Bonds, the
Issuer's right, title and interest in and to the Series 1996 A Note and the
Agreement, except for Unassigned Issuer's Rights, as defined in the Agreement.
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A-1
Pursuant to the Agreement, the Borrower has caused to be issued and
delivered to the Trustee by The Royal Bank of Scotland plc, acting through its
New York Branch (the "Bank") an irrevocable letter of credit (the "Letter of
Credit"), pursuant to which the Trustee is entitled to draw up to (a) the
principal amount of the Bonds outstanding to enable the Trustee to pay (i) the
principal amount of the Bonds when due at maturity or upon redemption or
acceleration on the occurrence of an event of default, and (ii) an amount equal
to the principal portion of the purchase price of any Bonds or Beneficial
Ownership Interests duly tendered by the Holders or Beneficial Owners thereof
for purchase pursuant to the Indenture, plus (b) the amount of interest accruing
on the Bonds, but not to exceed 56 days' accrued interest at the maximum rate of
12% per annum (the "Maximum Rate") to enable the Trustee to pay interest when
due on the Bonds and the interest portion (if any) of the purchase price of any
Bonds or Beneficial Ownership Interests duly tendered by the Holders or
Beneficial Owners thereof for purchase pursuant to the Indenture. In connection
with the issuance of the Letter of Credit, the Bank has entered into a
Reimbursement Agreement (the "Reimbursement Agreement") with the Borrower
pursuant to which the Borrower is obligated to reimburse the Bank for all draws
made under Letter of Credit. The Letter of Credit shall expire, subject to
provisions for earlier termination or extension, on April 15, 2001.
Subject to the provisions of the Indenture and the Agreement, the Letter of
Credit may be replaced from time to time by another letter of credit (an
"Alternate Letter of Credit"), in which case the term "Bank" shall mean the
financial institution issuing the Alternate Letter of Credit and the term
"Letter of Credit" shall mean the Alternate Letter of Credit.
Copies of the Indenture, the Agreement, the Letter of Credit, and the
Series 1996 A Note are on file in the principal corporate trust office of the
Trustee.
The Bond Service Charges on the Bonds are payable solely from the Revenues,
as defined and as provided for in the Indenture (being, generally, the amounts
payable under the Agreement in repayment of the Loan, any unexpended proceeds of
the Bonds and amounts deposited in the Refunding Fund and the Bond Fund as
defined and provided for in the Indenture, including amounts drawn pursuant to
the Letter of Credit), and are an obligation of the Issuer only to the extent of
the Revenues. The Bonds are not secured by a pledge of the faith and credit or
the taxing power of the Issuer, the State of Indiana or any political
subdivision thereof.
No recourse under or upon any obligation, covenant, acceptance or agreement
contained in the Indenture, or in any of the Bonds, or under any judgment
obtained against the Issuer, its Economic Development Commission or the Issuing
Authority, or by the enforcement of any assessment or by any legal or equitable
proceeding by virtue of any constitution or statute or otherwise, or under any
circumstances, shall be had against any member or officer, as such, past,
present, or future, of the Issuer, its Economic Development Commission or the
Issuing Authority, whether directly or through the Issuer, or otherwise, for the
payment for or to the Issuer or any receiver thereof, or for or to any Holder of
any Bond, or otherwise, of any sum that may be due and unpaid by the Issuer upon
any of the Bonds. Any and all personal liability of every nature, whether at
common law or in equity, or by statute or by constitution or otherwise, of any
such member or officer, as such, to respond by reason of any act or omission on
his or her part, or otherwise, for, directly or indirectly, the payment for or
to the Issuer or any receiver thereof, or for or to the owner or any Holder of
any Bond, or otherwise, of any sum that may remain due and unpaid upon any Bond,
shall be deemed to be and is hereby expressly waived and released as a condition
of and consideration for the execution and delivery of the Indenture and the
issuance of the Bonds.
The Bonds are issuable only as fully registered bonds in the denominations
of $100,000 or $5,000 multiples in excess thereof and shall be originally issued
only to a Depository to be held in a book entry system and: (i) the Bonds shall
be registered in the name of the Depository or its
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A-1
nominee, as Bondholder, and immobilized in the custody of the Depository; (ii)
unless otherwise requested by the Depository, there shall be a single Bond
certificate; and (iii) the Bonds shall not be transferable or exchangeable,
except for transfer to another Depository or another nominee of a Depository,
without further action by the Issuer. While the Bonds are in book entry only
form, Bonds in the form of physical certificates shall only be deposited with
the Depository. The owners of beneficial interests in the Bonds shall not have
any right to receive Bonds in the form of physical certificates. If any
Depository determines not to continue to act as a Depository for the Bonds for
use in a book entry system, the Issuer may attempt to have established a
securities depository/book entry system relationship with another qualified
Depository under the Indenture. If the Issuer does not or is unable to do so,
the Issuer and the Trustee, after the Trustee has made provision for
notification to the owners of book entry interests by the then Depository, shall
permit withdrawal of the Bonds from the Depository, and authenticate and
deliver, or cause to be authenticated and delivered, Bond certificates in fully
registered form (in denominations of $100,000 or $5,000 multiples in excess
thereof) to the assignees of the Depository or its nominee.
While a Depository is the sole holder of the Bonds, delivery or notation of
partial redemption or tender for purchase of Bonds shall be effected in
accordance with the provisions of the Letter of Representations, as defined in
the Indenture.
In addition to the words and terms defined elsewhere in this Bond, the
following terms shall have the following meanings:
"Beneficial Owner" means with respect to the Bonds, a person owning a
Beneficial Ownership Interest therein, as evidenced to the satisfaction of the
Trustee.
"Beneficial Ownership Interest" means the beneficial right to receive
payments and notices with respect to the Bonds which are held by the Depository
under a book entry system.
"book entry form" or "book entry system" means, with respect to the Bonds,
a form or system, as applicable, under which (i) the ownership of beneficial
interests in Bonds and Bond Service Charges may be transferred only through a
book entry and (ii) physical Bond certificates in fully registered form are
registered only in the name of a Depository or its nominee as Holder, with the
physical Bond certificates "immobilized" in the custody of the Depository. The
book entry system maintained by and the responsibility of the Depository and not
maintained by or the responsibility of the Issuer or the Trustee is the record
that identifies, and records the transfer of the interests of, the owners of
beneficial (book entry) interests in the Bonds.
"Depository" means any securities depository that is a clearing agency
under federal law operating and maintaining, with its participants or otherwise,
a book entry system to record ownership of book entry interests in Bonds, and to
effect transfers of book entry interests in Bonds, and includes and means
initially The Depository Trust Company (a limited purpose trust company), New
York, New York.
The Indenture permits certain amendments or supplements to the Agreement,
the Indenture, the Letter of Credit and the Series 1996 A Note not prejudicial
to the Holders to be made with the consent of the Bank but without the consent
of or notice to the Holders, and other amendments or supplements thereto to be
made with the consent of the Bank and the Holders of at least a majority in
aggregate principal amount of the Bonds and any Additional Bonds then
outstanding. So long as the Bank is not in default under the Letter of Credit,
and the Bank consents in writing to such amendments, the consent of the Holders
is not required for those amendments to the Indenture, Agreement, Letter of
Credit or Series 1996 A Note which otherwise require the consent of only a
majority in aggregate principal amount of the Bonds and any Additional Bonds
then outstanding.
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A-1
DETERMINATION OF INTEREST RATE
The initial interest rate on this Bond shall be established and be in
effect until the first Interest Rate Adjustment Date. Thereafter, except as
provided below, for each succeeding period the interest rate on the Bonds shall
be the Weekly Interest Rate for such weekly period as established on the
Interest Rate Determination Date immediately preceding the commencement of such
weekly period.
On June 1, 1996, and on any Interest Period Reset Date thereafter, subject
to the conditions set forth in the Indenture, the interest rate on the Bonds may
be converted to a different Interest Rate Mode upon receipt by the Trustee, the
Paying Agent, the Registrar and the Remarketing Agent of a written direction
from the Borrower, given on behalf of the Issuer, not less than 45 days prior to
the Interest Period Reset Date, to convert the interest rate on the Bonds to an
Interest Rate Mode other than the Interest Rate Mode then in effect.
On each Interest Rate Determination Date, the Remarketing Agent shall give
the Trustee, the Registrar and Paying Agent telephonic notice (immediately
confirmed in writing) of the interest rate to be borne by the Bonds for the
following Interest Rate Period; provided that if the interest rate is determined
pursuant to clause (b) of the definition of the applicable Interest Rate Mode,
on the Interest Rate Determination Date, the Trustee shall give notice to the
Borrower and the Bank as above provided.
If the interest rate on the Bonds is converted to a different Interest Rate
Mode, at least 30 days prior to the Interest Period Reset Date the Registrar
shall use its best efforts to notify the Holders of all outstanding Bonds by
telephone (to the extent their telephone numbers have been provided in writing
to the Registrar), immediately confirmed by first class mail to all Holders,
that upon such Interest Period Reset Date the Bonds shall be converted to a
different Interest Rate Mode, which Interest Rate Mode shall be specified, and
that all Bonds shall be subject to a mandatory tender, subject to the right of
the Holders to affirmatively elect to waive the mandatory tender and retain
their Bonds.
Any calculation of the interest rate to be borne by the Bonds shall be
rounded to the nearest one-hundredth of one percent (0.01%). The computation of
the interest rate on the Bonds by the Remarketing Agent shall be binding and
conclusive upon the Holders of the Bonds.
"Five Year Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary, during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date and ending on March 31 or September 30
nearest to but not later than the date which is five years from the Interest
Rate Adjustment Date, in the judgment of the Remarketing Agent (taking into
consideration current transactions and comparable securities with which the
Remarketing Agent is involved or of which it is aware and prevailing financial
market conditions) to produce as nearly as practical a par bid for the Bonds on
the Interest Rate Determination Date or (b) in the event that the Remarketing
Agent has been removed or has resigned and no successor has been appointed or
the Remarketing Agent has failed to determine the Five Year Interest Rate for
whatever reason, or the Five Year Interest Rate cannot be determined pursuant to
clause (a) for whatever reason, the interest rate then in effect with respect to
the Bonds, without adjustment; provided that in no event shall the Five Year
Interest Rate exceed the lesser of 12% per annum or the maximum rate permitted
by law (the "Maximum Rate").
"Fixed Interest Rate" means (a) the fixed rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable
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Interest Period Reset Date, to be the interest rate necessary, from the Interest
Period Reset Date to the final maturity date of the Bonds, in the judgment of
the Remarketing Agent (taking into consideration current transactions and
comparable securities with which the Remarketing Agent is involved or of which
it is aware and prevailing financial market conditions) to produce as nearly as
practical a par bid for the Bonds on the Interest Rate Determination Date or (b)
in the event that the Remarketing Agent has been removed or has resigned and no
successor has been appointed or the Remarketing Agent has failed to determine
the Fixed Interest Rate for whatever reason, or the Fixed Interest Rate cannot
be determined pursuant to clause (a) for whatever reason, the interest rate then
in effect with respect to the Bonds, without adjustment; provided that in no
event shall the Fixed Interest Rate exceed the Maximum Rate.
"Interest Period Reset Date" means the date on which the interest rate on
the Bonds converts from the Interest Rate Mode applicable to the Bonds prior to
such date to a new Interest Rate Mode. An Interest Period Reset Date shall be
the first Business Day of a month; provided that, upon conversion from a Six
Month, One Year or Five Year Interest Rate Mode, an Interest Period Reset Date
shall be the first day of a month; and provided further that, except when
converting from a Weekly Interest Rate Mode, an Interest Period Reset Date may
not occur prior to the end of the preceding Interest Rate Period.
"Interest Rate Adjustment Date" means any date on which the interest rate
on the Bonds is adjusted, either as the result of the conversion of the interest
rate on the Bonds to a different Interest Rate Mode or by adjustment of the
interest rate on the Bonds within the applicable Interest Rate Mode. Except as
otherwise provided with respect to an Interest Rate Adjustment Date which is
also an Interest Period Reset Date, an Interest Rate Adjustment Date shall be
the first day of the first month of the Interest Rate Period if the Bonds bear
interest at the Six Month, One Year or Five Year Interest Rate; the first
Business Day of the month if the Bonds bear interest at the One Month or Three
Month Interest Rate; and if the Bonds bear interest at the Weekly Interest Rate,
then the Interest Rate Adjustment Date shall be Thursday of each week.
"Interest Rate Determination Date" means (i) with respect to the Three
Month Interest Rate, the Six Month Interest Rate, the One Year Interest Rate,
the Five Year Interest Rate and the Fixed Interest Rate, the tenth Business Day
preceding an Interest Rate Adjustment Date, (ii) with respect to the One Month
Interest Rate, the seventh Business Day preceding an Interest Rate Adjustment
Date, and (iii) with respect to the Weekly Interest Rate, not later than 2:00
p.m. according to local time at the principal corporate trust office of the
Registrar on Wednesday of each week, or the next preceding Business Day if such
Wednesday is not a Business Day; provided that upon any conversion to the Weekly
Interest Rate from a different Interest Rate Mode, the first Interest Rate
Determination Date shall mean not later than 2:00 p.m. according to the local
time at the principal corporate trust office of the Registrar on the Business
Day next preceding the Interest Period Reset Date.
"Interest Rate Mode" means any of those modes of interest with respect to
the Bonds permitted by the Indenture, specifically, the Weekly Interest Rate,
the One Month Interest Rate, the Three Month Interest Rate, the Six Month
Interest Rate, the One Year Interest Rate, the Five Year Interest Rate and the
Fixed Interest Rate.
"Interest Rate Period" means that period of time during which the interest
rate with respect to the Bonds has been determined by the Remarketing Agent or
otherwise as provided in the definition of the applicable Interest Rate Mode,
commencing on the applicable Interest Rate Adjustment Date, and terminating on
the day immediately preceding the following Interest Rate Adjustment Date.
-7-
<PAGE>
A-1
"One Month Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary, during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date to and including the day preceding the
first Business Day of the next month, in the judgment of the Remarketing Agent
(taking into consideration current transactions and comparable securities with
which the Remarketing Agent is involved or of which it is aware and prevailing
financial market conditions) to produce as nearly as practical a par bid for the
Bonds on the Interest Rate Determination Date or (b) in the event that the
Remarketing Agent has been removed or has resigned and no successor has been
appointed, or the Remarketing Agent has failed to determine the One Month
Interest Rate for whatever reason, or the One Month Interest Rate cannot be
determined pursuant to clause (a) for whatever reason, the interest rate then in
effect with respect to the Bonds, without adjustment; provided that in no event
shall the One Month Interest Rate exceed the Maximum Rate.
"One Year Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary, during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date, and ending on the March 31 or
September 30 nearest to but not later than the date which is one year from the
Interest Rate Adjustment Date, in the judgment of the Remarketing Agent (taking
into consideration current transactions and comparable securities with which the
Remarketing Agent is involved or of which it is aware and prevailing financial
market conditions) to produce as nearly as practical a par bid for the Bonds on
the Interest Rate Determination Date or (b) in the event that the Remarketing
Agent has been removed or has resigned and no successor has been appointed, or
the Remarketing Agent has failed to determine the One Year Interest Rate for
whatever reason, or the One Year Interest Rate cannot be determined pursuant to
clause (a) for whatever reason, the interest rate then in effect with respect to
the Bonds, without adjustment; provided that in no event shall the One Year
Interest Rate exceed the Maximum Rate.
"Remarketing Agent" means, initially, Everen Securities, Inc. and any
successor Remarketing Agent appointed pursuant to the Indenture.
"Six Month Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date and ending on the March 31 or September
30 nearest to but not later than the date which is six months from the Interest
Rate Adjustment Date, in the judgment of the Remarketing Agent (taking into
consideration current transactions and comparable securities with which the
Remarketing Agent is involved or of which it is aware and prevailing financial
market conditions) to produce as nearly as practical a par bid for the Bonds on
the Interest Rate Determination Date or (b) in the event that the Remarketing
Agent has been removed or has resigned and no successor has been appointed, or
the Remarketing Agent has failed to determine the Six Month Interest Rate for
whatever reason, or the Six Month Interest Rate cannot be determined pursuant to
clause (a) for whatever reason, the interest rate then in effect with respect to
the Bonds, without adjustment; provided that in no event shall the Six Month
Interest Rate exceed the Maximum Rate.
"Three Month Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date to and including the day preceding the
first Business Day of the January, April, July or October, nearest to but not
later than the date which is three months from the Interest Rate Adjustment
Date, in the judgment of the Remarketing
-8-
<PAGE>
A-1
Agent (taking into consideration current transactions and comparable securities
with which the Remarketing Agent is involved or of which it is aware and
prevailing financial market conditions) to produce as nearly as practical a par
bid for the Bonds on the Interest Rate Determination Date or (b) in the event
that the Remarketing Agent has been removed or has resigned and no successor has
been appointed, or the Remarketing Agent has failed to determine the Three Month
Interest Rate for whatever reason, or the Three Month Interest Rate cannot be
determined pursuant to clause (a) for whatever reason, the interest rate then in
effect with respect to the Bonds, without adjustment; provided that in no event
shall the Three Month Interest Rate exceed the Maximum Rate.
"Weekly Interest Rate" means (a) the rate of interest per annum determined
by the Remarketing Agent, on the Interest Rate Determination Date immediately
preceding the applicable Interest Rate Adjustment Date, to be the interest rate
necessary during the Interest Rate Period of one week (or less in the case of
any such Interest Rate Period commencing on an Interest Period Reset Date which
is not a Thursday, or ending on the day preceding an Interest Period Reset Date)
commencing on the applicable Interest Rate Adjustment Date, in the judgment of
the Remarketing Agent (taking into consideration current transactions and
comparable securities with which the Remarketing Agent is involved or of which
it is aware and prevailing financial market conditions) to produce as nearly as
practical a par bid for the Bonds on the Interest Rate Determination Date or (b)
in the event that the Remarketing Agent has been removed or has resigned and no
successor has been appointed, or the Remarketing Agent has failed to determine
the Weekly Interest Rate for whatever reason, or the Weekly Interest Rate cannot
be determined pursuant to clause (a) for whatever reason, the interest rate then
in effect with respect to the Bonds, without adjustment; provided that in no
event shall the Weekly Interest Rate exceed the Maximum Rate.
TENDER OPTION
A.1. TENDER OPTION WHILE BONDS BEAR INTEREST IN AN INTEREST RATE MODE OTHER
THAN THE WEEKLY INTEREST RATE. While the Bonds bear interest at the One Month
Interest Rate, the Three Month Interest Rate, the Six Month Interest Rate, the
One Year Interest Rate or the Five Year Interest Rate, on each Interest Rate
Adjustment Date (each a "Bond Purchase Date"), each Holder or Beneficial Owner,
as applicable, shall have the option to tender for purchase, at 100% of the
principal amount thereof, all of the Bonds owned by such Holder (or all
Beneficial Ownership Interests owned by such Beneficial Owner), or such lesser
principal amount thereof (in denominations of $5,000 or any integral multiple
thereof, provided that such Holder or Beneficial Owner tenders $100,000 or more
in principal amount and provided that the untendered portion of any Bond or
Beneficial Ownership Interest shall be $100,000 or more in principal amount) as
such Holder or Beneficial Owner may specify in accordance with the terms,
conditions and limitations hereinafter set forth. The purchase price for each
such Bond or Beneficial Ownership Interest shall be payable in lawful money of
the United States of America, shall equal the principal amount, or such portion
thereof, to be purchased and shall be paid in full on the applicable Bond
Purchase Date.
A.2. TENDER OPTION WHILE BONDS BEAR INTEREST AT THE WEEKLY INTEREST RATE.
While the Bonds bear interest at the Weekly Interest Rate, each Holder or
Beneficial Owner, as applicable, has the option to tender for purchase, at 100%
of the principal amount thereof plus accrued interest to the purchase date (a
"Bond Purchase Date"), all of the Bonds owned by such Holder (or all Beneficial
Ownership Interests owned by such Beneficial Owner), or such lesser principal
amount thereof (in denominations of $5,000 or any integral multiple thereof,
provided that such Holder or Beneficial Owner tenders $100,000 or more in
principal amount and provided that the untendered portion of any Bond or
Beneficial Ownership Interest shall be $100,000 or more in principal amount) as
such Holder or Beneficial Owner may specify in accordance with the terms,
conditions and limitations hereafter set forth. The purchase price for each such
Bond or Beneficial
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<PAGE>
A-1
Ownership Interest shall be payable in lawful money of the United States of
America and shall be paid in full on the applicable Bond Purchase Date.
To exercise the option granted in paragraph A.1. above, the Holder or
Beneficial Owner, as applicable, shall (1) no earlier than 15 days prior to the
Bond Purchase Date and no later than 11:00 a.m. according to the local time at
the principal corporate trust office of the Registrar on the eighth Business Day
prior to the Bond Purchase Date, unless the Bonds bear interest at the One Month
Interest Rate, then on the fifth Business Day prior to the Bond Purchase Date,
give notice to the Registrar by telecopy or in writing which states (i) the name
and address of the Holder or Beneficial Owner, as applicable, (ii) the principal
amount, CUSIP number and bond numbers of the Bonds or Beneficial Ownership
Interests to be purchased, (iii) that such Bonds or Beneficial Ownership
Interests are to be purchased on such Bond Purchase Date pursuant to the terms
of the Indenture, and (iv) that such notice is irrevocable; (2) in the case of a
Beneficial Owner, provide the Registrar with evidence satisfactory to the
Registrar of such Beneficial Owner's Beneficial Ownership Interest; (3) in the
case of a Holder, no later than 10:00 a.m. according to the local time at the
principal corporate trust office of the Registrar on the seventh day preceding
such Bond Purchase Date, or the next preceding Business Day if such seventh day
is not a Business Day, unless the Bonds bear interest at the One Month Interest
Rate, then on the fourth day preceding such Bond Purchase Date, or the next
preceding Business Day if such fourth day is not a Business Day, deliver to the
principal corporate trust office of the Registrar the Bonds to be purchased in
proper form, accompanied by fully completed and executed Instructions to Sell,
the form of which is printed hereon; and (4) in the case of a Beneficial Owner,
no later than 10:00 a.m. (according to the local time at the principal corporate
trust office of the Registrar) on the Bond Purchase Date, cause the transfer of
the Beneficial Owner's Beneficial Ownership on the records of the Depository.
To exercise the option granted in paragraph A.2. above, the Holder or
Beneficial Owner, as applicable, shall (1) give notice to the Registrar by
telecopy or in writing, which states (i) the name and address of the Holder or
Beneficial Owner, (ii) the principal amount, CUSIP number and Bond numbers of
the Bonds or Beneficial Ownership Interests to be purchased, (iii) the date on
which such Bonds or Beneficial Ownership Interests are to be purchased, which
Bond Purchase Date shall be a Business Day not prior to the seventh day and not
later than the fifteenth day next succeeding the date of giving of such notice
to the Registrar and, if the interest rate on the Bonds is to be converted from
the Weekly Interest Rate to a new Interest Rate Mode, is a date no later than
the Interest Period Reset Date with respect to the new Interest Rate Mode, and
(iv) that such notice is irrevocable; (2) in the case of a Beneficial Owner,
provide the Trustee with evidence satisfactory to the Registrar of such
Beneficial Owner's Beneficial Ownership Interest; (3) in the case of a Holder,
no later than 10:00 a.m. according to the local time at the principal corporate
trust office of the Registrar on the second Business Day immediately preceding
the applicable Bond Purchase Date, deliver to the principal corporate trust
office of the Registrar the Bonds to be purchased in proper form, accompanied by
fully completed and executed Instructions to Sell; and (4) in the case of a
Beneficial Owner, no later than 10:00 a.m. (according to the local time at the
principal corporate trust office of the Registrar) on the Bond Purchase Date
cause the transfer of the Beneficial Owner's Beneficial Ownership on the records
of the Depository. In the case of a Bond or Beneficial Ownership Interest or
portion thereof to be purchased prior to an Interest Payment Date and after the
Record Date in respect thereof, the Holder or Beneficial Owner, as applicable,
shall deliver a due-bill check, in form satisfactory to the Registrar, for
interest due on such Interest Payment Date.
Any Bonds not delivered by Holders following the giving of notice of tender
shall nevertheless be deemed tendered for remarketing. Subject to the right of
such nondelivering Holders to receive the purchase price of such Bonds and
accrued interest to the Bond Purchase Date, such Bonds shall be null and void,
and the Trustee shall cause to be authenticated and
-10-
<PAGE>
A-1
delivered new Bonds in replacement thereof pursuant to the remarketing of such
Bonds. After the giving of a notice of tender Beneficial Owners shall be
obligated to transfer their Beneficial Ownership Interests on the records of the
Depository in accordance with the instructions of the Registrar.
The tender options granted to the Holders or Beneficial Owners and all
mandatory tenders of Bonds or Beneficial Ownership Interests are subject to the
additional condition that any tendered Bonds or Beneficial Ownership Interests
(or the applicable portions thereof) will not be purchased if such Bonds (or
applicable portions thereof) mature or are redeemed on or prior to the
applicable Bond Purchase Date.
MANDATORY TENDER
(a) If at any time the Issuer at the direction of the Borrower shall
convert the interest rate on the Bonds to a different Interest Rate Mode, on the
Interest Period Reset Date upon which such conversion is effective, all Bonds
and Beneficial Ownership Interests shall be subject to mandatory tender by the
Holders or Beneficial Owners thereof for purchase on the Interest Period Reset
Date (a "Bond Purchase Date") at the applicable purchase price provided for
above. Notwithstanding such mandatory tender, any Holder or Beneficial Owner
may elect to retain his or her Bonds or Beneficial Ownership Interests by
delivering to the Registrar a written notice no later than 11:00 a.m. according
to the local time at the principal corporate trust office of the Registrar on
the eighth Business Day prior to such Interest Period Reset Date or by 11:00
a.m. according to the local time at the principal corporate trust office of the
Registrar on the fifth Business Day prior to such Interest Period Reset Date if
the Interest Rate Mode is to be converted to the One Month Interest Rate, which
notice shall state that (a) such Holder or Beneficial Owner realizes that the
Bonds or Beneficial Ownership Interests are being converted to bear interest at
the applicable Interest Rate Mode, (b) unless the interest rate on the Bonds is
being converted to the Weekly Interest Rate, such Holder or Beneficial Owner
realizes that the next Bond Purchase Date upon which the Bonds or Beneficial
Ownership Interests may be tendered for purchase is the next Interest Rate
Adjustment Date or, if such Bonds are being converted to the Fixed Interest
Rate, that such Bonds may no longer be tendered for purchase, (c) such Holder or
Beneficial Owner realizes that any securities rating on the Bonds may be
withdrawn or lowered as a result of the conversion to a different Interest Rate
Mode, and (d) such Holder or Beneficial Owner affirmatively elects to hold his
or her Bonds and receive interest at the applicable Interest Rate Mode.
Bonds or Beneficial Ownership Interests with respect to which the Registrar
shall not have received the election required by the preceding paragraph shall
be deemed to have been tendered whether or not the Holders thereof shall have
delivered such Bonds to the Registrar and without the need for further action of
the Beneficial Owners. Subject to the right of the Holders of such Bonds or
Beneficial Owners of such Beneficial Ownership Interests to receive the purchase
price of such Bonds or Beneficial Ownership Interests and to receive interest
accrued thereon to the Interest Period Reset Date, such Bonds or Beneficial
Ownership Interests shall be null and void and the Trustee shall cause to be
authenticated and delivered new Bonds in replacement thereof, or new Beneficial
Ownership Interests shall be created, pursuant to the remarketing of such Bonds
or Beneficial Ownership Interests.
(b) If at any time the Borrower shall provide for the delivery to the
Trustee of an Alternate Letter of Credit in accordance with the provisions of
Section 5.09 of the Indenture, on the date that precedes the Replacement Date by
at least five Business Days (a "Bond Purchase Date"), as defined in the
Indenture, all Bonds and Beneficial Ownership Interests shall be subject to
mandatory tender by the Holders or Beneficial Owners, as the case may be,
thereof for purchase at the applicable purchase price provided for above. At
least 30 days prior to the Bond
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<PAGE>
A-1
Purchase Date the Registrar shall use its best efforts to notify the Holders of
all outstanding Bonds by telephone (to the extent their telephone numbers have
been provided in writing to the Registrar), immediately confirmed by first class
mail to all Holders, that such an Alternate Letter of Credit is to be delivered
by the Borrower to the Trustee. The notice shall advise the Holders of the
requirements of Section 5.09 of the Indenture and confirm that such requirements
have been met, and that all Bonds shall be subject to mandatory tender pursuant
to Section 2.06 of the Indenture, subject to the right of the Holders or
Beneficial Owners to affirmatively elect to waive the mandatory tender and
retain the Bonds or Beneficial Ownership Interests.
Notwithstanding such mandatory tender, any Holder or Beneficial Owner, as
applicable, may elect to retain its Bonds or Beneficial Ownership Interests by
delivering to the Registrar a written notice no later than 11:00 a.m. according
to the local time at the principal corporate trust office of the Registrar on
the eighth Business Day prior to such Replacement date which notice shall state
that (a) such Holder or Beneficial Owner realizes that the Borrower is
delivering an Alternate Letter of Credit to the Trustee pursuant to Section 5.09
of the Indenture, (b) such Holder or Beneficial Owner has received the notice
required by Section 2.06 of the Indenture, and (c) such Holder or Beneficial
Owner affirmatively elects to hold its Bonds or Beneficial Ownership Interests.
Bonds or Beneficial Ownership Interests with respect to which the Registrar
shall not have received the election required by the preceding paragraph shall
be deemed to have been tendered for purposes of Section 2.06 of the Indenture
whether or not the Holders thereof shall have delivered such Bonds to the
Registrar and without the need for further action by the Beneficial Owners.
Subject to the right of the Holders of such Bonds or Beneficial Owners of such
Beneficial Ownership Interests to receive the purchase price of such Bonds or
Beneficial Ownership Interests and interest accrued thereon to the Replacement
Date, such Bonds or Beneficial Ownership Interests shall be null and void and
the Trustee shall cause to be authenticated and delivered new Bonds in
replacement thereof or new Beneficial Ownership Interests shall be created
pursuant to the remarketing of such Bonds or Beneficial Ownership Interests or
the pledge of such Bonds or Beneficial Ownership Interests to the Bank in lieu
or remarketing such Bonds or Beneficial Ownership Interests as described in
Section 6.20 of the Indenture.
REDEMPTION
(a) MANDATORY REDEMPTION UPON A DETERMINATION OF TAXABILITY. Upon the
occurrence of a Determination of Taxability, as defined in the Indenture, the
Bonds are subject to mandatory redemption in whole at a redemption price equal
to 100% of the outstanding principal amount thereof, plus interest accrued to
the redemption date, at the earliest practicable date selected by the Trustee,
after consultation with the Borrower, but in no event later than 45 days
following the Trustee's notification of the Determination of Taxability. The
occurrence of a Determination of Taxability with respect to the Bonds will not
constitute an Event of Default under the Indenture. No increase in the interest
payable with respect to the Bonds will occur in the event a Determination of
Taxability occurs.
(b) MANDATORY REDEMPTION UPON EXPIRATION OF LETTER OF CREDIT. The Bonds
are subject to mandatory redemption in whole on the Interest Payment Date which
next precedes the Letter of Credit Termination Date, at a redemption price of
100% of the outstanding principal amount thereof plus accrued interest to the
redemption date unless, at least 45 days prior to any such Interest Payment
Date, (a) the Bank shall have agreed in writing to an extension or further
extension of the Letter of Credit Termination Date to a date not less earlier
than one year from the Letter of Credit Termination Date being extended or (b)
pursuant to Section 5.09 of the Indenture, the Borrower shall have obtained and
delivered to the Trustee an Alternate Letter of
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<PAGE>
Credit with a termination date not earlier than one year from the Letter of
Credit Termination Date for the Letter of Credit it replaces, in which case the
Bonds will be subject to the mandatory tender provisions set forth above.
(c) OPTIONAL REDEMPTION. Unless previously redeemed, the Bonds are
subject to redemption at the option of the Issuer, upon the written direction of
the Borrower (subject to compliance with Section 4.03 of the Indenture), (1) if
the Bonds do not bear interest at the Fixed Interest Rate, in whole or in part
(in integral multiples of $5,000, provided that the unredeemed portion of any
Bond redeemed in part shall be $100,000 or more) on any Interest Rate Adjustment
Date at the redemption price of 100% of the principal amount redeemed plus
accrued interest thereon to the redemption date, or (2) if the Bonds bear
interest at the Fixed Rate after the Fixed Interest Rate Commencement Date and
on or after the First Optional Redemption Date, in whole or in part (in integral
multiples of $5,000, provided that the unredeemed portion of any Bond redeemed
in part shall be $100,000 or more) at any time at a redemption price equal to
the following percentages of the principal amount redeemed, plus in each case
accrued interest to the date fixed for redemption:
Redemption Date Optional Redemption Price
--------------- -------------------------
First Optional Redemption
Date, through the following
last day of March 103%
First Anniversary of the First
Optional Redemption Date,
through the following
last day of March 102%
Second Anniversary of the
First Optional Redemption
Date, through the following
last day of March 101%
Third Anniversary of the First
Optional Redemption Date and
thereafter 100%
"First Optional Redemption Date" means the earlier to occur of the April 1
occurring in the year which is (i) at least ten (10) full years after the Fixed
Interest Rate Commencement Date or (ii) a number of years after the Fixed
Interest Rate Commencement Date equal to the number of full years between the
Fixed Interest Rate Commencement Date and the maturity date of the Bonds,
multiplied by 1/2 and rounded up to the nearest whole number.
"Fixed Interest Rate Commencement Date" means the Interest Period Reset
Date from and after which the Bonds shall bear interest at the Fixed Interest
Rate, as that date shall be established as provided in the Indenture.
(d) EXTRAORDINARY OPTIONAL REDEMPTION. The Bonds are also subject to
redemption by the Issuer in the event of the exercise by the Borrower of its
option to direct that redemption upon occurrence of any of the events described
in Section 6.2 of the Agreement (generally, substantial damage to, or
destruction or condemnation of the Project or changes in law causing the
Agreement to become void, unenforceable or impossible of performance or the
imposition of unreasonable burdens or excessive liabilities with respect to the
Project or its operation), (1) at
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<PAGE>
any time in whole, or (2) at any time in part in the event of condemnation of
part of the Project, as provided in Section 6.2 of the Agreement, in each case
at a redemption price of 100% of the principal amount redeemed, plus interest
accrued to the redemption date.
If less than all Bonds are to be redeemed at one time, the selection of
Bonds, or portions thereof (in integral multiples of $5,000) to be redeemed
shall be made by lot by the Trustee; provided, however, Bonds (or book entry
interests in Bonds) pledged to the Bank pursuant to the Reimbursement Agreement
shall be selected for redemption prior to the selection of any other Bonds. If
Bonds or portions thereof are called for redemption and if on the redemption
date moneys for the redemption thereof are held by the Trustee, thereafter those
Bonds or portions thereof to be redeemed shall cease to bear interest, and shall
cease to be secured by, and shall not be deemed to be outstanding under, the
Indenture.
Unless waived in writing by any Holder of Bonds to be redeemed, official
notice of any such redemption shall be given by the Registrar on behalf of the
Issuer by mailing a copy of an official redemption notice by first class mail at
least 30 days and not more than 60 days prior to the date fixed for redemption
(except in the case of a redemption under Section 4.01(a) of the Indenture, in
which case such notice shall be given at least 5 days and not more than 15 days
prior to the date fixed for redemption) to the registered owner of the Bond or
Bonds to be redeemed at the address shown on the Register or at such other
address as is furnished in writing by such registered owner to the Registrar.
It is certified and recited that there have been performed and have
happened in regular and due form, as required by law, all acts and conditions
necessary to be done or performed by the Issuer or to have happened (i)
precedent to and in the issuing of the Bonds in order to make them legal, valid
and binding special obligations of the Issuer, and (ii) precedent to and in the
execution and delivery of the Indenture and the Agreement; that payment in full
for the Bonds has been received; and that the Bonds do not exceed or violate any
constitutional or statutory limitation.
IN WITNESS OF THE ABOVE, the Issuer has caused this Bond to be executed in
the name of the Issuer by the manual or facsimile signatures of its duly
authorized officers, as of the date shown above.
CITY OF GARY, INDIANA
By:
-----------------------------------
Mayor
(Seal)
Attest:
- -------------------------------
Clerk
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<PAGE>
A-1
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds described in the within mentioned Indenture.
THE FIFTH THIRD BANK, as Authenticating
Agent
By:
-------------------------------------
Authorized Representative
ASSIGNMENT
For value received, the undersigned sells, assigns and transfers unto
______________ _______________________________ the within Bond and irrevocably
constitutes and appoints __________________________ attorney to transfer that
Bond on the books kept for registration thereof, with full power of substitution
in the premises.
Dated:
------------------------------ ---------------------------------------
Signature
Signature Guaranteed:
- ---------------------------------------- -----------------------------------
NOTICE: Signature(s) must be guaranteed NOTICE: The assignor's signature
by an eligible guarantor institution to this assignment must correspond
participating in a Securities Transfer with the name as it appears upon
Association recognized signature guarantee the face of the within Bond in
program. every particular, without
alteration or any change whatever.
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<PAGE>
A-1
NOTICE OF EXERCISE OF TENDER OPTION
INSTRUCTIONS TO SELL
To:
-----------------------
Attention: Corporate Trust Department
RE: City of Gary, Indiana Adjustable Rate Economic Development
Revenue Refunding Bonds, Series 1996 A (The Miller
Partnership, L.P. Project)
Gentlemen:
The undersigned, as the Holder of the Bond annexed hereto ("Bond"), hereby
elects the option available to the undersigned pursuant to the Trust Indenture
relating to the above-captioned bond issue. In accordance with such option, the
undersigned hereby tenders:
check the appropriate box / / the entire Bond
/ / (increments of $5,000 with a minimum
tender of $100,000)
for purchase on the first Bond Purchase Date (as defined in the Bond) after the
date hereof, pursuant to the referenced Trust Indenture. In accordance with
such tender, the undersigned hereby irrevocably sells, assigns and transfers
such Bond or portion thereof at the purchase price set forth in the Trust
Indenture, and does hereby irrevocably constitute and appoint the Registrar as
attorney to transfer such Bond or portion thereof on the books of the Registrar,
with full power of substitution in the premises.
Dated:
------------------------------- --------------------------------------
Signature
--------------------------------------
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed
by an eligible guarantor institution
participating in a Securities Transfer
Association recognized signature
guarantee program.
NOTICE: To exercise the option available to the Holder pursuant to the
referenced Trust Indenture, the Holder must notify the Registrar of
such exercise and deliver this Bond to the Registrar at the times and
in the manner set forth in this Bond. The signature to these
Instructions to Sell must correspond with the name as written upon the
face of this Bond in every particular, without alteration or
enlargement, or any change whatsoever.
<PAGE>
B-1
UNITED STATES OF AMERICA
STATE OF INDIANA
CITY OF GARY, INDIANA
TAXABLE ADJUSTABLE RATE ECONOMIC DEVELOPMENT
REVENUE REFUNDING BOND, SERIES 1996 B
(THE MILLER PARTNERSHIP, L.P. PROJECT)
NO. B-1
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
Maturity Date CUSIP Number Date of Authentication
- ------------- ------------ ----------------------
March 1, 2031 April 1, 1996
Date of Initial Delivery: April 1, 1996
Registered Owner: CEDE & CO.
Principal Amount: $1,680,000
The City of Gary, Indiana (the "Issuer"), a municipal corporation and
political subdivision validly existing under the laws of the State of Indiana,
for value received, promises to pay to the registered owner specified above or
registered assigns, but solely from the sources and in the manner referred to
herein, the principal amount specified above on the aforesaid Maturity Date,
unless this Bond is called for earlier redemption, and to pay from those sources
interest thereon at the rate per annum determined as described herein. Initial
interest on this Bond shall accrue from the Date of Initial Delivery of this
Bond. Interest on this Bond is payable on the first Business Day, as
hereinafter defined, of each month, as long as the interest rate hereon is
calculated pursuant to the Weekly Interest Rate, the One Month Interest Rate or
the Three Month Interest Rate (as such terms are hereinafter defined),
commencing the first Business Day of May, 1996, until the principal amount is
paid or duly provided for. For any period of time during which this Bond bears
interest at the Six Month Interest Rate, the One Year Interest Rate, the Five
Year Interest Rate or the Fixed Interest Rate (as such terms are hereinafter
defined) interest hereon shall be payable on the first day of each April and
October. Any date established for the payment
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B-1
of interest as described above is hereinafter referred to as an "Interest
Payment Date". The interest payable hereon on each Interest Payment Date shall
be for the period commencing on the next preceding Interest Payment Date (or the
Date of Initial Delivery of this Bond with respect to the first Interest Payment
Date) to and including the day immediately preceding the Interest Payment Date
on which payment is made. Interest shall be calculated on the basis of a year
of 365 days or 366 days, as applicable, for the number of days actually elapsed,
while the interest hereon is payable at the Weekly Interest Rate, the One Month
Interest Rate or the Three Month Interest Rate. Otherwise, interest shall be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
The term "Business Day", as used herein, means any day, other than a
Saturday or Sunday, on which commercial banks located in the cities in which the
principal corporate trust office of the Paying Agent, the principal corporate
trust office of the Registrar, the principal office of the Remarketing Agent,
and the principal office of the Bank, as hereafter defined, are located are not
required or authorized to remain closed and on which the New York Stock Exchange
is not closed. This Bond will bear interest from the most recent date to which
interest has been paid or duly provided for or, if no interest has been paid or
duly provided for, from its date of initial delivery. If any Interest Payment
Date, date of maturity of this Bond, Bond Purchase Date (as hereinafter defined)
or date fixed for redemption of this Bond, is not a Business Day, then payment
of the applicable interest, principal, purchase price or redemption price may be
made on the next succeeding Business Day with the same force and effect as if
such payment were made on such Interest Payment Date, date of maturity, Bond
Purchase Date or date fixed for redemption and no interest shall accrue for the
period after such date; provided, however, if this Bond bears interest at any of
the Weekly Interest Rate, the One Month Interest Rate or the Three Month
Interest Rate, interest shall accrue from the scheduled date of any maturity or
redemption due date of this Bond until the Business Day on which such payment is
made.
The principal of and premium, if any, on this Bond is payable upon
presentation and surrender hereof at the principal corporate trust office of the
Paying Agent, presently The Fifth Third Bank (the "Paying Agent"), located in
Cincinnati, Ohio. Interest is payable on each Interest Payment Date by check or
draft mailed to the person in whose name this Bond (or one or more predecessor
bonds) is registered (the "Holder") at the close of business on the fifth
Business Day preceding such Interest Payment Date (the "Regular Record Date") on
the registration books for this issue maintained by The Fifth Third Bank,
located in Cincinnati, Ohio, as Registrar, at the address appearing therein.
Notwithstanding the foregoing, interest on any Bond in the denomination of
$100,000 or more shall be paid by wire transfer in immediately available funds
to the bank account number and address filed in writing with the Registrar by
such Holder, which account number and address shall be filed with the Registrar
at least two (2) Business Days prior to that Interest Payment Date. Any
interest which is not timely paid or duly provided for shall cease to be payable
to the Holder hereof (or of one or more predecessor bonds) as of the Regular
Record Date, and shall be payable to the Holder hereof (or of one or more
predecessor bonds) at the close of business on a Special Record Date to be fixed
by the Trustee for the payment of that overdue interest. Notice of the Special
Record Date shall be mailed to Holders not less than ten days prior thereto.
The principal and redemption price of and interest on this Bond are payable in
lawful money of the United States of America, without deduction for the services
of the Paying Agent. Notwithstanding anything herein to the contrary, when this
Bond is registered in the name of a Depository (as defined in the Indenture
hereinafter defined) or its nominee, the principal and redemption price of and
interest on this Bond shall be payable in federal funds delivered or transmitted
to the Depository or its nominee.
THIS BOND DOES NOT REPRESENT OR CONSTITUTE A DEBT OR PLEDGE OF THE FAITH
AND CREDIT OF THE ISSUER, THE STATE OF INDIANA OR ANY POLITICAL SUBDIVISION
THEREOF. THE HOLDERS OR OWNERS OF THIS BOND
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HAVE NO RIGHT TO HAVE TAXES LEVIED BY THE ISSUER, THE STATE OF INDIANA OR ANY
POLITICAL SUBDIVISION THEREOF FOR THE PAYMENT OF THE PRINCIPAL OF OR PREMIUM (IF
ANY) OR INTEREST ON THIS BOND. PRINCIPAL OF AND PREMIUM (IF ANY) AND INTEREST
ON THIS BOND ARE PAYABLE SOLELY FROM THE REVENUES PLEDGED PURSUANT TO THE
INDENTURE (AS HEREINAFTER DEFINED).
This Bond shall not constitute the personal obligation, either jointly or
severally, of the members of the Common Council of the Issuer (the "Issuing
Authority"), its Economic Development Commission, or of any officer, employee or
official of the Issuer.
This Bond shall not be entitled to any security or benefit under the
Indenture or be valid or become obligatory for any purpose until the certificate
of authentication hereon shall have been duly signed.
GENERAL PROVISIONS
This Bond is one of a duly authorized issue the City of Gary, Indiana
Taxable Adjustable Rate Economic Development Revenue Refunding Bonds, Series
1996 B (The Miller Partnership, L.P. Project) (the "Bonds"), issuable under the
Trust Indenture, dated as of March 1, 1996 (the "Indenture"), between the Issuer
and Fifth Third Bank of Central Indiana, as Trustee, aggregating in the
principal amount of $1,680,000 and issued for the purpose of the Issuer making a
loan (the "Loan") to The Miller Partnership, L.P., an Illinois limited
partnership (the "Borrower") pursuant to the Loan Agreement, dated as of even
date with the Indenture (the "Agreement"), to refund the City of Gary, Indiana
Economic Development Revenue Bonds, Series 1991 B (The Miller Partnership, L.P.
Project) and the City of Gary, Indiana Economic Development Revenue Bonds,
Series 1993 B (The Miller Partnership, L.P. Project), which were issued for the
purpose of financing of the costs of issuance of such bonds. The Bonds,
together with any Additional Bonds which may be issued on a parity therewith
under the Indenture, are special obligations of the Issuer, issued or to be
issued under and are to be secured and entitled equally and ratably to the
protection given by the Indenture. The Bonds are issued pursuant to Indiana
Code 36-7-11.9 and 12, and Indiana Code 5-1-5 (collectively, the "Act") and
pursuant to an Ordinance duly adopted by the Issuing Authority. The Bonds are
issued on a parity with the City of Gary, Indiana Adjustable Rate Economic
Development Revenue Bonds, Series 1996 A (The Miller Partnership, L.P. Project)
(the "Series 1996 A Bonds").
Reference is made to the Indenture and the Agreement for a more complete
description of the Project, the provisions, among others, with respect to the
nature and extent of the security for the Bonds, the rights, duties and
obligations of the Issuer, the Trustee and the Holders of the Bonds and the
terms and conditions upon which the Bonds are issued and secured. All terms
used herein with initial capitalization where the rules of grammar or context do
not otherwise require shall have the meanings as set forth in the Indenture.
Each Holder assents, by its acceptance hereof, to all of the provisions of the
Indenture.
Pursuant to the Agreement, the Borrower has executed and delivered to the
Trustee the Borrower's Note, Series 1996 B dated as of even date with the Bonds
(the "Series 1996 B Note"), in the principal amount of $1,680,000. The Borrower
is required by the Agreement and the Series 1996 B Note to make payments to the
Trustee in amounts and at times necessary to pay the principal of and premium
(if any) and interest on the Bonds (the "Bond Service Charges"). In the
Indenture, the Issuer has assigned to the Trustee, to provide for the payment of
the Bond Service Charges on the Bonds and any Additional Bonds, the Issuer's
right, title and interest in and to the Series 1996 B Note and the Agreement,
except for Unassigned Issuer's Rights, as defined in the Agreement.
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Pursuant to the Agreement, the Borrower has caused to be issued and
delivered to the Trustee by The Royal Bank of Scotland plc, acting through its
New York Branch (the "Bank") an irrevocable letter of credit (the "Letter of
Credit"), pursuant to which the Trustee is entitled to draw up to (a) the
principal amount of the Bonds outstanding to enable the Trustee to pay (i) the
principal amount of the Bonds when due at maturity or upon redemption or
acceleration on the occurrence of an event of default, and (ii) an amount equal
to the principal portion of the purchase price of any Bonds or Beneficial
Ownership Interests duly tendered by the Holders or Beneficial Owners thereof
for purchase pursuant to the Indenture, plus (b) the amount of interest accruing
on the Bonds, but not to exceed 56 days' accrued interest at the maximum rate of
12% per annum (the "Maximum Rate") to enable the Trustee to pay interest when
due on the Bonds and the interest portion (if any) of the purchase price of any
Bonds or Beneficial Ownership Interests duly tendered by the Holders or
Beneficial Owners thereof for purchase pursuant to the Indenture. In connection
with the issuance of the Letter of Credit, the Bank has entered into a
Reimbursement Agreement (the "Reimbursement Agreement") with the Borrower
pursuant to which the Borrower is obligated to reimburse the Bank for all draws
made under Letter of Credit. The Letter of Credit shall expire, subject to
provisions for earlier termination or extension, on April 15, 2001.
Subject to the provisions of the Indenture and the Agreement, the Letter of
Credit may be replaced from time to time by another letter of credit (an
"Alternate Letter of Credit"), in which case the term "Bank" shall mean the
financial institution issuing the Alternate Letter of Credit and the term
"Letter of Credit" shall mean the Alternate Letter of Credit.
Copies of the Indenture, the Agreement, the Letter of Credit, and the
Series 1996 A Note are on file in the principal corporate trust office of the
Trustee.
The Bond Service Charges on the Bonds are payable solely from the Revenues,
as defined and as provided for in the Indenture (being, generally, the amounts
payable under the Agreement in repayment of the Loan, any unexpended proceeds of
the Bonds and amounts deposited in the Refunding Fund and the Bond Fund as
defined and provided for in the Indenture, including amounts drawn pursuant to
the Letter of Credit), and are an obligation of the Issuer only to the extent of
the Revenues. The Bonds are not secured by a pledge of the faith and credit or
the taxing power of the Issuer, the State of Indiana or any political
subdivision thereof.
No recourse under or upon any obligation, covenant, acceptance or agreement
contained in the Indenture, or in any of the Bonds, or under any judgment
obtained against the Issuer, its Economic Development Commission or the Issuing
Authority, or by the enforcement of any assessment or by any legal or equitable
proceeding by virtue of any constitution or statute or otherwise, or under any
circumstances, shall be had against any member or officer, as such, past,
present, or future, of the Issuer, its Economic Development Commission or the
Issuing Authority, whether directly or through the Issuer, or otherwise, for the
payment for or to the Issuer or any receiver thereof, or for or to any Holder of
any Bond, or otherwise, of any sum that may be due and unpaid by the Issuer upon
any of the Bonds. Any and all personal liability of every nature, whether at
common law or in equity, or by statute or by constitution or otherwise, of any
such member or officer, as such, to respond by reason of any act or omission on
his or her part, or otherwise, for, directly or indirectly, the payment for or
to the Issuer or any receiver thereof, or for or to the owner or any Holder of
any Bond, or otherwise, of any sum that may remain due and unpaid upon any Bond,
shall be deemed to be and is hereby expressly waived and released as a condition
of and consideration for the execution and delivery of the Indenture and the
issuance of the Bonds.
The Bonds are issuable only as fully registered bonds in the denominations
of $100,000 or $5,000 multiples in excess thereof and shall be originally issued
only to a Depository to be held in a book entry system and: (i) the Bonds shall
be registered in the name of the Depository or its
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B-1
nominee, as Bondholder, and immobilized in the custody of the Depository; (ii)
unless otherwise requested by the Depository, there shall be a single Bond
certificate; and (iii) the Bonds shall not be transferable or exchangeable,
except for transfer to another Depository or another nominee of a Depository,
without further action by the Issuer. While the Bonds are in book entry only
form, Bonds in the form of physical certificates shall only be deposited with
the Depository. The owners of beneficial interests in the Bonds shall not have
any right to receive Bonds in the form of physical certificates. If any
Depository determines not to continue to act as a Depository for the Bonds for
use in a book entry system, the Issuer may attempt to have established a
securities depository/book entry system relationship with another qualified
Depository under the Indenture. If the Issuer does not or is unable to do so,
the Issuer and the Trustee, after the Trustee has made provision for
notification to the owners of book entry interests by the then Depository, shall
permit withdrawal of the Bonds from the Depository, and authenticate and
deliver, or cause to be authenticated and delivered, Bond certificates in fully
registered form (in denominations of $100,000 or $5,000 multiples in excess
thereof) to the assignees of the Depository or its nominee.
While a Depository is the sole holder of the Bonds, delivery or notation of
partial redemption or tender for purchase of Bonds shall be effected in
accordance with the provisions of the Letter of Representations, as defined in
the Indenture.
In addition to the words and terms defined elsewhere in this Bond, the
following terms shall have the following meanings:
"Beneficial Owner" means with respect to the Bonds, a person owning a
Beneficial Ownership Interest therein, as evidenced to the satisfaction of the
Trustee.
"Beneficial Ownership Interest" means the beneficial right to receive
payments and notices with respect to the Bonds which are held by the Depository
under a book entry system.
"book entry form" or "book entry system" means, with respect to the Bonds,
a form or system, as applicable, under which (i) the ownership of beneficial
interests in Bonds and Bond Service Charges may be transferred only through a
book entry and (ii) physical Bond certificates in fully registered form are
registered only in the name of a Depository or its nominee as Holder, with the
physical Bond certificates "immobilized" in the custody of the Depository. The
book entry system maintained by and the responsibility of the Depository and not
maintained by or the responsibility of the Issuer or the Trustee is the record
that identifies, and records the transfer of the interests of, the owners of
beneficial (book entry) interests in the Bonds.
"Depository" means any securities depository that is a clearing agency
under federal law operating and maintaining, with its participants or otherwise,
a book entry system to record ownership of book entry interests in Bonds, and to
effect transfers of book entry interests in Bonds, and includes and means
initially The Depository Trust Company (a limited purpose trust company), New
York, New York.
The Indenture permits certain amendments or supplements to the Agreement,
the Indenture, the Letter of Credit and the Series 1996 A Note not prejudicial
to the Holders to be made with the consent of the Bank but without the consent
of or notice to the Holders, and other amendments or supplements thereto to be
made with the consent of the Bank and the Holders of at least a majority in
aggregate principal amount of the Bonds and any Additional Bonds then
outstanding. So long as the Bank is not in default under the Letter of Credit,
and the Bank consents in writing to such amendments, the consent of the Holders
is not required for those amendments to the Indenture, Agreement, Letter of
Credit or Series 1996 A Note which otherwise require the consent of only a
majority in aggregate principal amount of the Bonds and any Additional Bonds
then outstanding.
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DETERMINATION OF INTEREST RATE
The initial interest rate on this Bond shall be established and be in
effect until the first Interest Rate Adjustment Date. Thereafter, except as
provided below, for each succeeding period the interest rate on the Bonds shall
be the Weekly Interest Rate for such weekly period as established on the
Interest Rate Determination Date immediately preceding the commencement of such
weekly period.
On June 1, 1996, and on any Interest Period Reset Date thereafter, subject
to the conditions set forth in the Indenture, the interest rate on the Bonds may
be converted to a different Interest Rate Mode upon receipt by the Trustee, the
Paying Agent, the Registrar and the Remarketing Agent of a written direction
from the Borrower, given on behalf of the Issuer, not less than 45 days prior to
the Interest Period Reset Date, to convert the interest rate on the Bonds to an
Interest Rate Mode other than the Interest Rate Mode then in effect.
On each Interest Rate Determination Date, the Remarketing Agent shall give
the Trustee, the Registrar and Paying Agent telephonic notice (immediately
confirmed in writing) of the interest rate to be borne by the Bonds for the
following Interest Rate Period; provided that if the interest rate is determined
pursuant to clause (b) of the definition of the applicable Interest Rate Mode,
on the Interest Rate Determination Date, the Trustee shall give notice to the
Borrower and the Bank as above provided.
If the interest rate on the Bonds is converted to a different Interest Rate
Mode, at least 30 days prior to the Interest Period Reset Date the Registrar
shall use its best efforts to notify the Holders of all outstanding Bonds by
telephone (to the extent their telephone numbers have been provided in writing
to the Registrar), immediately confirmed by first class mail to all Holders,
that upon such Interest Period Reset Date the Bonds shall be converted to a
different Interest Rate Mode, which Interest Rate Mode shall be specified, and
that all Bonds shall be subject to a mandatory tender, subject to the right of
the Holders to affirmatively elect to waive the mandatory tender and retain
their Bonds.
Any calculation of the interest rate to be borne by the Bonds shall be
rounded to the nearest one-hundredth of one percent (0.01%). The computation of
the interest rate on the Bonds by the Remarketing Agent shall be binding and
conclusive upon the Holders of the Bonds.
"Five Year Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary, during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date and ending on March 31 or September 30
nearest to but not later than the date which is five years from the Interest
Rate Adjustment Date, in the judgment of the Remarketing Agent (taking into
consideration current transactions and comparable securities with which the
Remarketing Agent is involved or of which it is aware and prevailing financial
market conditions) to produce as nearly as practical a par bid for the Bonds on
the Interest Rate Determination Date or (b) in the event that the Remarketing
Agent has been removed or has resigned and no successor has been appointed or
the Remarketing Agent has failed to determine the Five Year Interest Rate for
whatever reason, or the Five Year Interest Rate cannot be determined pursuant to
clause (a) for whatever reason, the interest rate then in effect with respect to
the Bonds, without adjustment; provided that in no event shall the Five Year
Interest Rate exceed the lesser of 12% per annum or the maximum rate permitted
by law (the "Maximum Rate").
"Fixed Interest Rate" means (a) the fixed rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable
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Interest Period Reset Date, to be the interest rate necessary, from the Interest
Period Reset Date to the final maturity date of the Bonds, in the judgment of
the Remarketing Agent (taking into consideration current transactions and
comparable securities with which the Remarketing Agent is involved or of which
it is aware and prevailing financial market conditions) to produce as nearly as
practical a par bid for the Bonds on the Interest Rate Determination Date or (b)
in the event that the Remarketing Agent has been removed or has resigned and no
successor has been appointed or the Remarketing Agent has failed to determine
the Fixed Interest Rate for whatever reason, or the Fixed Interest Rate cannot
be determined pursuant to clause (a) for whatever reason, the interest rate then
in effect with respect to the Bonds, without adjustment; provided that in no
event shall the Fixed Interest Rate exceed the Maximum Rate.
"Interest Period Reset Date" means the date on which the interest rate on
the Bonds converts from the Interest Rate Mode applicable to the Bonds prior to
such date to a new Interest Rate Mode. An Interest Period Reset Date shall be
the first Business Day of a month; provided that, upon conversion from a Six
Month, One Year or Five Year Interest Rate Mode, an Interest Period Reset Date
shall be the first day of a month; and provided further that, except when
converting from a Weekly Interest Rate Mode, an Interest Period Reset Date may
not occur prior to the end of the preceding Interest Rate Period.
"Interest Rate Adjustment Date" means any date on which the interest rate
on the Bonds is adjusted, either as the result of the conversion of the interest
rate on the Bonds to a different Interest Rate Mode or by adjustment of the
interest rate on the Bonds within the applicable Interest Rate Mode. Except as
otherwise provided with respect to an Interest Rate Adjustment Date which is
also an Interest Period Reset Date, an Interest Rate Adjustment Date shall be
the first day of the first month of the Interest Rate Period if the Bonds bear
interest at the Six Month, One Year or Five Year Interest Rate; the first
Business Day of the month if the Bonds bear interest at the One Month or Three
Month Interest Rate; and if the Bonds bear interest at the Weekly Interest Rate,
then the Interest Rate Adjustment Date shall be Thursday of each week.
"Interest Rate Determination Date" means (i) with respect to the Three
Month Interest Rate, the Six Month Interest Rate, the One Year Interest Rate,
the Five Year Interest Rate and the Fixed Interest Rate, the tenth Business Day
preceding an Interest Rate Adjustment Date, (ii) with respect to the One Month
Interest Rate, the seventh Business Day preceding an Interest Rate Adjustment
Date, and (iii) with respect to the Weekly Interest Rate, not later than 2:00
p.m. according to local time at the principal corporate trust office of the
Registrar on Wednesday of each week, or the next preceding Business Day if such
Wednesday is not a Business Day; provided that upon any conversion to the Weekly
Interest Rate from a different Interest Rate Mode, the first Interest Rate
Determination Date shall mean not later than 2:00 p.m. according to the local
time at the principal corporate trust office of the Registrar on the Business
Day next preceding the Interest Period Reset Date.
"Interest Rate Mode" means any of those modes of interest with respect to
the Bonds permitted by the Indenture, specifically, the Weekly Interest Rate,
the One Month Interest Rate, the Three Month Interest Rate, the Six Month
Interest Rate, the One Year Interest Rate, the Five Year Interest Rate and the
Fixed Interest Rate.
"Interest Rate Period" means that period of time during which the interest
rate with respect to the Bonds has been determined by the Remarketing Agent or
otherwise as provided in the definition of the applicable Interest Rate Mode,
commencing on the applicable Interest Rate Adjustment Date, and terminating on
the day immediately preceding the following Interest Rate Adjustment Date.
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"One Month Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary, during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date to and including the day preceding the
first Business Day of the next month, in the judgment of the Remarketing Agent
(taking into consideration current transactions and comparable securities with
which the Remarketing Agent is involved or of which it is aware and prevailing
financial market conditions) to produce as nearly as practical a par bid for the
Bonds on the Interest Rate Determination Date or (b) in the event that the
Remarketing Agent has been removed or has resigned and no successor has been
appointed, or the Remarketing Agent has failed to determine the One Month
Interest Rate for whatever reason, or the One Month Interest Rate cannot be
determined pursuant to clause (a) for whatever reason, the interest rate then in
effect with respect to the Bonds, without adjustment; provided that in no event
shall the One Month Interest Rate exceed the Maximum Rate.
"One Year Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary, during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date, and ending on the March 31 or
September 30 nearest to but not later than the date which is one year from the
Interest Rate Adjustment Date, in the judgment of the Remarketing Agent (taking
into consideration current transactions and comparable securities with which the
Remarketing Agent is involved or of which it is aware and prevailing financial
market conditions) to produce as nearly as practical a par bid for the Bonds on
the Interest Rate Determination Date or (b) in the event that the Remarketing
Agent has been removed or has resigned and no successor has been appointed, or
the Remarketing Agent has failed to determine the One Year Interest Rate for
whatever reason, or the One Year Interest Rate cannot be determined pursuant to
clause (a) for whatever reason, the interest rate then in effect with respect to
the Bonds, without adjustment; provided that in no event shall the One Year
Interest Rate exceed the Maximum Rate.
"Remarketing Agent" means, initially, Everen Securities, Inc., and any
successor Remarketing Agent appointed pursuant to the Indenture.
"Six Month Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date and ending on the March 31 or September
30 nearest to but not later than the date which is six months from the Interest
Rate Adjustment Date, in the judgment of the Remarketing Agent (taking into
consideration current transactions and comparable securities with which the
Remarketing Agent is involved or of which it is aware and prevailing financial
market conditions) to produce as nearly as practical a par bid for the Bonds on
the Interest Rate Determination Date or (b) in the event that the Remarketing
Agent has been removed or has resigned and no successor has been appointed, or
the Remarketing Agent has failed to determine the Six Month Interest Rate for
whatever reason, or the Six Month Interest Rate cannot be determined pursuant to
clause (a) for whatever reason, the interest rate then in effect with respect to
the Bonds, without adjustment; provided that in no event shall the Six Month
Interest Rate exceed the Maximum Rate.
"Three Month Interest Rate" means (a) the rate of interest per annum
determined by the Remarketing Agent, on the Interest Rate Determination Date
immediately preceding the applicable Interest Rate Adjustment Date, to be the
interest rate necessary during the Interest Rate Period commencing on the
applicable Interest Rate Adjustment Date to and including the day preceding the
first Business Day of the January, April, July or October, nearest to but not
later than the date which is three months from the Interest Rate Adjustment
Date, in the judgment of the Remarketing
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Agent (taking into consideration current transactions and comparable securities
with which the Remarketing Agent is involved or of which it is aware and
prevailing financial market conditions) to produce as nearly as practical a par
bid for the Bonds on the Interest Rate Determination Date or (b) in the event
that the Remarketing Agent has been removed or has resigned and no successor has
been appointed, or the Remarketing Agent has failed to determine the Three Month
Interest Rate for whatever reason, or the Three Month Interest Rate cannot be
determined pursuant to clause (a) for whatever reason, the interest rate then in
effect with respect to the Bonds, without adjustment; provided that in no event
shall the Three Month Interest Rate exceed the Maximum Rate.
"Weekly Interest Rate" means (a) the rate of interest per annum determined
by the Remarketing Agent, on the Interest Rate Determination Date immediately
preceding the applicable Interest Rate Adjustment Date, to be the interest rate
necessary during the Interest Rate Period of one week (or less in the case of
any such Interest Rate Period commencing on an Interest Period Reset Date which
is not a Thursday, or ending on the day preceding an Interest Period Reset Date)
commencing on the applicable Interest Rate Adjustment Date, in the judgment of
the Remarketing Agent (taking into consideration current transactions and
comparable securities with which the Remarketing Agent is involved or of which
it is aware and prevailing financial market conditions) to produce as nearly as
practical a par bid for the Bonds on the Interest Rate Determination Date or (b)
in the event that the Remarketing Agent has been removed or has resigned and no
successor has been appointed, or the Remarketing Agent has failed to determine
the Weekly Interest Rate for whatever reason, or the Weekly Interest Rate cannot
be determined pursuant to clause (a) for whatever reason, the interest rate then
in effect with respect to the Bonds, without adjustment; provided that in no
event shall the Weekly Interest Rate exceed the Maximum Rate.
TENDER OPTION
A.1. TENDER OPTION WHILE BONDS BEAR INTEREST IN AN INTEREST RATE MODE OTHER
THAN THE WEEKLY INTEREST RATE. While the Bonds bear interest at the One Month
Interest Rate, the Three Month Interest Rate, the Six Month Interest Rate, the
One Year Interest Rate or the Five Year Interest Rate, on each Interest Rate
Adjustment Date (each a "Bond Purchase Date"), each Holder or Beneficial Owner,
as applicable, shall have the option to tender for purchase, at 100% of the
principal amount thereof, all of the Bonds owned by such Holder (or all
Beneficial Ownership Interests owned by such Beneficial Owner), or such lesser
principal amount thereof (in denominations of $5,000 or any integral multiple
thereof, provided that such Holder or Beneficial Owner tenders $100,000 or more
in principal amount and provided that the untendered portion of any Bond or
Beneficial Ownership Interest shall be $100,000 or more in principal amount) as
such Holder or Beneficial Owner may specify in accordance with the terms,
conditions and limitations hereinafter set forth. The purchase price for each
such Bond or Beneficial Ownership Interest shall be payable in lawful money of
the United States of America, shall equal the principal amount, or such portion
thereof, to be purchased and shall be paid in full on the applicable Bond
Purchase Date.
A.2. TENDER OPTION WHILE BONDS BEAR INTEREST AT THE WEEKLY INTEREST RATE.
While the Bonds bear interest at the Weekly Interest Rate, each Holder or
Beneficial Owner, as applicable, has the option to tender for purchase, at 100%
of the principal amount thereof plus accrued interest to the purchase date (a
"Bond Purchase Date"), all of the Bonds owned by such Holder (or all Beneficial
Ownership Interests owned by such Beneficial Owner), or such lesser principal
amount thereof (in denominations of $5,000 or any integral multiple thereof,
provided that such Holder or Beneficial Owner tenders $100,000 or more in
principal amount and provided that the untendered portion of any Bond or
Beneficial Ownership Interest shall be $100,000 or more in principal amount) as
such Holder or Beneficial Owner may specify in accordance with the terms,
conditions and limitations hereafter set forth. The purchase price for each such
Bond or Beneficial
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<PAGE>
B-1
Ownership Interest shall be payable in lawful money of the United States of
America and shall be paid in full on the applicable Bond Purchase Date.
To exercise the option granted in paragraph A.1. above, the Holder or
Beneficial Owner, as applicable, shall (1) no earlier than 15 days prior to the
Bond Purchase Date and no later than 11:00 a.m. according to the local time at
the principal corporate trust office of the Registrar on the eighth Business Day
prior to the Bond Purchase Date, unless the Bonds bear interest at the One Month
Interest Rate, then on the fifth Business Day prior to the Bond Purchase Date,
give notice to the Registrar by telecopy or in writing which states (i) the name
and address of the Holder or Beneficial Owner, as applicable, (ii) the principal
amount, CUSIP number and bond numbers of the Bonds or Beneficial Ownership
Interests to be purchased, (iii) that such Bonds or Beneficial Ownership
Interests are to be purchased on such Bond Purchase Date pursuant to the terms
of the Indenture, and (iv) that such notice is irrevocable; (2) in the case of a
Beneficial Owner, provide the Registrar with evidence satisfactory to the
Registrar of such Beneficial Owner's Beneficial Ownership Interest; (3) in the
case of a Holder, no later than 10:00 a.m. according to the local time at the
principal corporate trust office of the Registrar on the seventh day preceding
such Bond Purchase Date, or the next preceding Business Day if such seventh day
is not a Business Day, unless the Bonds bear interest at the One Month Interest
Rate, then on the fourth day preceding such Bond Purchase Date, or the next
preceding Business Day if such fourth day is not a Business Day, deliver to the
principal corporate trust office of the Registrar the Bonds to be purchased in
proper form, accompanied by fully completed and executed Instructions to Sell,
the form of which is printed hereon; and (4) in the case of a Beneficial Owner,
no later than 10:00 a.m. (according to the local time at the principal corporate
trust office of the Registrar) on the Bond Purchase Date, cause the transfer of
the Beneficial Owner's Beneficial Ownership on the records of the Depository.
To exercise the option granted in paragraph A.2. above, the Holder or
Beneficial Owner, as applicable, shall (1) give notice to the Registrar by
telecopy or in writing, which states (i) the name and address of the Holder or
Beneficial Owner, (ii) the principal amount, CUSIP number and Bond numbers of
the Bonds or Beneficial Ownership Interests to be purchased, (iii) the date on
which such Bonds or Beneficial Ownership Interests are to be purchased, which
Bond Purchase Date shall be a Business Day not prior to the seventh day and not
later than the fifteenth day next succeeding the date of giving of such notice
to the Registrar and, if the interest rate on the Bonds is to be converted from
the Weekly Interest Rate to a new Interest Rate Mode, is a date no later than
the Interest Period Reset Date with respect to the new Interest Rate Mode, and
(iv) that such notice is irrevocable; (2) in the case of a Beneficial Owner,
provide the Trustee with evidence satisfactory to the Registrar of such
Beneficial Owner's Beneficial Ownership Interest; (3) in the case of a Holder,
no later than 10:00 a.m. according to the local time at the principal corporate
trust office of the Registrar on the second Business Day immediately preceding
the applicable Bond Purchase Date, deliver to the principal corporate trust
office of the Registrar the Bonds to be purchased in proper form, accompanied by
fully completed and executed Instructions to Sell; and (4) in the case of a
Beneficial Owner, no later than 10:00 a.m. (according to the local time at the
principal corporate trust office of the Registrar) on the Bond Purchase Date
cause the transfer of the Beneficial Owner's Beneficial Ownership on the records
of the Depository. In the case of a Bond or Beneficial Ownership Interest or
portion thereof to be purchased prior to an Interest Payment Date and after the
Record Date in respect thereof, the Holder or Beneficial Owner, as applicable,
shall deliver a due-bill check, in form satisfactory to the Registrar, for
interest due on such Interest Payment Date.
Any Bonds not delivered by Holders following the giving of notice of tender
shall nevertheless be deemed tendered for remarketing. Subject to the right of
such nondelivering Holders to receive the purchase price of such Bonds and
accrued interest to the Bond Purchase Date, such Bonds shall be null and void,
and the Trustee shall cause to be authenticated and
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<PAGE>
B-1
delivered new Bonds in replacement thereof pursuant to the remarketing of such
Bonds. After the giving of a notice of tender Beneficial Owners shall be
obligated to transfer their Beneficial Ownership Interests on the records of the
Depository in accordance with the instructions of the Registrar.
The tender options granted to the Holders or Beneficial Owners and all
mandatory tenders of Bonds or Beneficial Ownership Interests are subject to the
additional condition that any tendered Bonds or Beneficial Ownership Interests
(or the applicable portions thereof) will not be purchased if such Bonds (or
applicable portions thereof) mature or are redeemed on or prior to the
applicable Bond Purchase Date.
MANDATORY TENDER
(a) If at any time the Issuer at the direction of the Borrower shall
convert the interest rate on the Bonds to a different Interest Rate Mode, on the
Interest Period Reset Date upon which such conversion is effective, all Bonds
and Beneficial Ownership Interests shall be subject to mandatory tender by the
Holders or Beneficial Owners thereof for purchase on the Interest Period Reset
Date (a "Bond Purchase Date") at the applicable purchase price provided for
above. Notwithstanding such mandatory tender, any Holder or Beneficial Owner
may elect to retain his or her Bonds or Beneficial Ownership Interests by
delivering to the Registrar a written notice no later than 11:00 a.m. according
to the local time at the principal corporate trust office of the Registrar on
the eighth Business Day prior to such Interest Period Reset Date or by 11:00
a.m. according to the local time at the principal corporate trust office of the
Registrar on the fifth Business Day prior to such Interest Period Reset Date if
the Interest Rate Mode is to be converted to the One Month Interest Rate, which
notice shall state that (a) such Holder or Beneficial Owner realizes that the
Bonds or Beneficial Ownership Interests are being converted to bear interest at
the applicable Interest Rate Mode, (b) unless the interest rate on the Bonds is
being converted to the Weekly Interest Rate, such Holder or Beneficial Owner
realizes that the next Bond Purchase Date upon which the Bonds or Beneficial
Ownership Interests may be tendered for purchase is the next Interest Rate
Adjustment Date or, if such Bonds are being converted to the Fixed Interest
Rate, that such Bonds may no longer be tendered for purchase, (c) such Holder or
Beneficial Owner realizes that any securities rating on the Bonds may be
withdrawn or lowered as a result of the conversion to a different Interest Rate
Mode, and (d) such Holder or Beneficial Owner affirmatively elects to hold his
or her Bonds and receive interest at the applicable Interest Rate Mode.
Bonds or Beneficial Ownership Interests with respect to which the Registrar
shall not have received the election required by the preceding paragraph shall
be deemed to have been tendered whether or not the Holders thereof shall have
delivered such Bonds to the Registrar and without the need for further action of
the Beneficial Owners. Subject to the right of the Holders of such Bonds or
Beneficial Owners of such Beneficial Ownership Interests to receive the purchase
price of such Bonds or Beneficial Ownership Interests and to receive interest
accrued thereon to the Interest Period Reset Date, such Bonds or Beneficial
Ownership Interests shall be null and void and the Trustee shall cause to be
authenticated and delivered new Bonds in replacement thereof, or new Beneficial
Ownership Interests shall be created, pursuant to the remarketing of such Bonds
or Beneficial Ownership Interests.
(b) If at any time the Borrower shall provide for the delivery to the
Trustee of an Alternate Letter of Credit in accordance with the provisions of
Section 5.09 of the Indenture, on the date that precedes the Replacement Date by
at least five Business Days (a "Bond Purchase Date"), as defined in the
Indenture, all Bonds and Beneficial Ownership Interests shall be subject to
mandatory tender by the Holders or Beneficial Owners, as the case may be,
thereof for purchase at the applicable purchase price provided for above. At
least 30 days prior to the Bond
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<PAGE>
Purchase Date the Registrar shall use its best efforts to notify the Holders of
all outstanding Bonds by telephone (to the extent their telephone numbers have
been provided in writing to the Registrar), immediately confirmed by first class
mail to all Holders, that such an Alternate Letter of Credit is to be delivered
by the Borrower to the Trustee. The notice shall advise the Holders of the
requirements of Section 5.09 of the Indenture and confirm that such requirements
have been met, and that all Bonds shall be subject to mandatory tender pursuant
to Section 2.06 of the Indenture, subject to the right of the Holders or
Beneficial Owners to affirmatively elect to waive the mandatory tender and
retain the Bonds or Beneficial Ownership Interests.
Notwithstanding such mandatory tender, any Holder or Beneficial Owner, as
applicable, may elect to retain its Bonds or Beneficial Ownership Interests by
delivering to the Registrar a written notice no later than 11:00 a.m. according
to the local time at the principal corporate trust office of the Registrar on
the eighth Business Day prior to such Replacement date which notice shall state
that (a) such Holder or Beneficial Owner realizes that the Borrower is
delivering an Alternate Letter of Credit to the Trustee pursuant to Section 5.09
of the Indenture, (b) such Holder or Beneficial Owner has received the notice
required by Section 2.06 of the Indenture, and (c) such Holder or Beneficial
Owner affirmatively elects to hold its Bonds or Beneficial Ownership Interests.
Bonds or Beneficial Ownership Interests with respect to which the Registrar
shall not have received the election required by the preceding paragraph shall
be deemed to have been tendered for purposes of Section 2.06 of the Indenture
whether or not the Holders thereof shall have delivered such Bonds to the
Registrar and without the need for further action by the Beneficial Owners.
Subject to the right of the Holders of such Bonds or Beneficial Owners of such
Beneficial Ownership Interests to receive the purchase price of such Bonds or
Beneficial Ownership Interests and interest accrued thereon to the Replacement
Date, such Bonds or Beneficial Ownership Interests shall be null and void and
the Trustee shall cause to be authenticated and delivered new Bonds in
replacement thereof or new Beneficial Ownership Interests shall be created
pursuant to the remarketing of such Bonds or Beneficial Ownership Interests or
the pledge of such Bonds or Beneficial Ownership Interests to the Bank in lieu
or remarketing such Bonds or Beneficial Ownership Interests as described in
Section 6.20 of the Indenture.
REDEMPTION
(a) MANDATORY REDEMPTION UPON A DETERMINATION OF TAXABILITY. Upon the
occurrence of a Determination of Taxability, as defined in the Indenture, with
respect to the Series 1996 A Bonds, the Bonds are subject to mandatory
redemption in whole at a redemption price equal to 100% of the outstanding
principal amount thereof, plus interest accrued to the redemption date, at the
earliest practicable date selected by the Trustee, after consultation with the
Borrower, but in no event later than 45 days following the Trustee's
notification of the Determination of Taxability. The occurrence of a
Determination of Taxability with respect to the Bonds will not constitute an
Event of Default under the Indenture. No increase in the interest payable with
respect to the Bonds will occur in the event a Determination of Taxability
occurs.
(b) MANDATORY REDEMPTION UPON EXPIRATION OF LETTER OF CREDIT. The Bonds
are subject to mandatory redemption in whole on the Interest Payment Date which
next precedes the Letter of Credit Termination Date, at a redemption price of
100% of the outstanding principal amount thereof plus accrued interest to the
redemption date unless, at least 45 days prior to any such Interest Payment
Date, (a) the Bank shall have agreed in writing to an extension or further
extension of the Letter of Credit Termination Date to a date not less earlier
than one year from the Letter of Credit Termination Date being extended or (b)
pursuant to Section 5.09 of the Indenture, the Borrower shall have obtained and
delivered to the Trustee an Alternate Letter of
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<PAGE>
B-1
Credit with a termination date not earlier than one year from the Letter of
Credit Termination Date for the Letter of Credit it replaces, in which case the
Bonds will be subject to the mandatory tender provisions set forth above.
(c) OPTIONAL REDEMPTION. Unless previously redeemed, the Bonds are
subject to redemption at the option of the Issuer, upon the written direction of
the Borrower (subject to compliance with Section 4.03 of the Indenture), (1) if
the Bonds do not bear interest at the Fixed Interest Rate, in whole or in part
(in integral multiples of $5,000, provided that the unredeemed portion of any
Bond redeemed in part shall be $100,000 or more) on any Interest Rate Adjustment
Date at the redemption price of 100% of the principal amount redeemed plus
accrued interest thereon to the redemption date, or (2) if the Bonds bear
interest at the Fixed Rate after the Fixed Interest Rate Commencement Date and
on or after the First Optional Redemption Date, in whole or in part (in integral
multiples of $5,000, provided that the unredeemed portion of any Bond redeemed
in part shall be $100,000 or more) at any time at a redemption price equal to
the following percentages of the principal amount redeemed, plus in each case
accrued interest to the date fixed for redemption:
REDEMPTION DATE OPTIONAL REDEMPTION PRICE
First Optional Redemption
Date, through the following
last day of March 103%
First Anniversary of the First
Optional Redemption Date,
through the following
last day of March 102%
Second Anniversary of the
First Optional Redemption
Date, through the following
last day of March 101%
Third Anniversary of the First
Optional Redemption Date and
thereafter 100%
"First Optional Redemption Date" means the earlier to occur of the April 1
occurring in the year which is (i) at least ten (10) full years after the Fixed
Interest Rate Commencement Date or (ii) a number of years after the Fixed
Interest Rate Commencement Date equal to the number of full years between the
Fixed Interest Rate Commencement Date and the maturity date of the Bonds,
multiplied by 1/2 and rounded up to the nearest whole number.
"Fixed Interest Rate Commencement Date" means the Interest Period Reset
Date from and after which the Bonds shall bear interest at the Fixed Interest
Rate, as that date shall be established as provided in the Indenture.
(d) EXTRAORDINARY OPTIONAL REDEMPTION. The Bonds are also subject to
redemption by the Issuer in the event of the exercise by the Borrower of its
option to direct that redemption upon occurrence of any of the events described
in Section 6.2 of the Agreement (generally, substantial damage to, or
destruction or condemnation of the Project or changes in law causing the
Agreement to become void, unenforceable or impossible of performance or the
imposition of unreasonable burdens or excessive liabilities with respect to the
Project or its operation), (1) at
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<PAGE>
B-1
any time in whole, or (2) at any time in part in the event of condemnation of
part of the Project, as provided in Section 6.2 of the Agreement, in each case
at a redemption price of 100% of the principal amount redeemed, plus interest
accrued to the redemption date.
If less than all Bonds are to be redeemed at one time, the selection of
Bonds, or portions thereof (in integral multiples of $5,000) to be redeemed
shall be made by lot by the Trustee; provided, however, Bonds (or book entry
interests in Bonds) pledged to the Bank pursuant to the Reimbursement Agreement
shall be selected for redemption prior to the selection of any other Bonds. If
Bonds or portions thereof are called for redemption and if on the redemption
date moneys for the redemption thereof are held by the Trustee, thereafter those
Bonds or portions thereof to be redeemed shall cease to bear interest, and shall
cease to be secured by, and shall not be deemed to be outstanding under, the
Indenture.
Unless waived in writing by any Holder of Bonds to be redeemed, official
notice of any such redemption shall be given by the Registrar on behalf of the
Issuer by mailing a copy of an official redemption notice by first class mail at
least 30 days and not more than 60 days prior to the date fixed for redemption
(except in the case of a redemption under Section 4.01(a) of the Indenture, in
which case such notice shall be given at least 5 days and not more than 15 days
prior to the date fixed for redemption) to the registered owner of the Bond or
Bonds to be redeemed at the address shown on the Register or at such other
address as is furnished in writing by such registered owner to the Registrar.
It is certified and recited that there have been performed and have
happened in regular and due form, as required by law, all acts and conditions
necessary to be done or performed by the Issuer or to have happened (i)
precedent to and in the issuing of the Bonds in order to make them legal, valid
and binding special obligations of the Issuer, and (ii) precedent to and in the
execution and delivery of the Indenture and the Agreement; that payment in full
for the Bonds has been received; and that the Bonds do not exceed or violate any
constitutional or statutory limitation.
IN WITNESS OF THE ABOVE, the Issuer has caused this Bond to be executed in
the name of the Issuer by the manual or facsimile signatures of its duly
authorized officers, as of the date shown above.
CITY OF GARY, INDIANA
By:
-----------------------------------
Mayor
(Seal)
Attest:
- ------------------------------------
Clerk
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<PAGE>
B-1
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds described in the within mentioned Indenture.
THE FIFTH THIRD BANK, as Authenticating
Agent
By:
------------------------------------
Authorized Representative
ASSIGNMENT
For value received, the undersigned sells, assigns and transfers unto
______________ _______________________________ the within Bond and irrevocably
constitutes and appoints __________________________ attorney to transfer that
Bond on the books kept for registration thereof, with full power of substitution
in the premises.
Dated:
----------------------------- -----------------------------------
Signature
Signature Guaranteed:
- -----------------------------------------
NOTICE: Signature(s) must be guaranteed NOTICE: The assignor's to this
by an eligible guarantor institution assignment must correspond with the
participating in a Securities Transfer name as it appears upon the face of
Association recognized signature guarantee the within Bond in every
program. particular, without alteration or
any change whatever.
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<PAGE>
B-1
NOTICE OF EXERCISE OF TENDER OPTION
INSTRUCTIONS TO SELL
To:
-----------------------
Attention: Corporate Trust Department
RE: City of Gary, Indiana Adjustable Rate Economic Development
Revenue Refunding Bonds, Series 1996 B (The Miller Partnership,
L.P. Project)
Gentlemen:
The undersigned, as the Holder of the Bond annexed hereto ("Bond"), hereby
elects the option available to the undersigned pursuant to the Trust Indenture
relating to the above-captioned bond issue. In accordance with such option, the
undersigned hereby tenders:
check the appropriate box / / the entire Bond
/ / (increments of $5,000 with a minimum
tender of $100,000)
for purchase on the first Bond Purchase Date (as defined in the Bond) after the
date hereof, pursuant to the referenced Trust Indenture. In accordance with
such tender, the undersigned hereby irrevocably sells, assigns and transfers
such Bond or portion thereof at the purchase price set forth in the Trust
Indenture, and does hereby irrevocably constitute and appoint the Registrar as
attorney to transfer such Bond or portion thereof on the books of the Registrar,
with full power of substitution in the premises.
Dated:
------------------------------- ---------------------------------
Signature
---------------------------------
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed
by an eligible guarantor institution
participating in a Securities Transfer
Association recognized signature
guarantee program.
NOTICE: To exercise the option available to the Holder pursuant to the
referenced Trust Indenture, the Holder must notify the Registrar of
such exercise and deliver this Bond to the Registrar at the times and
in the manner set forth in this Bond. The signature to these
Instructions to Sell must correspond with the name as written upon the
face of this Bond in every particular, without alteration or
enlargement, or any change whatsoever.
<PAGE>
3053952.3
05-04-96
REIMBURSEMENT AGREEMENT
THIS REIMBURSEMENT AGREEMENT, dated as of March 1, 1996 (the "Reimbursement
Agreement"), by and among THE MILLER PARTNERSHIP, L.P., an Illinois limited
partnership ("Miller"), CENTERPOINT PROPERTIES CORPORATION, a Maryland
corporation ("CenterPoint", and collectively with Miller, the "Obligors"), and
THE ROYAL BANK OF SCOTLAND plc, acting through its New York Branch (the "Bank");
W I T N E S S E T H:
WHEREAS, the City of Gary, Indiana, a municipal corporation duly organized
and validly existing under the laws of the State of Indiana (the "Issuer"),
proposes to issue its tax exempt Adjustable Rate Economic Development Revenue
Refunding Bonds, Series 1996 A (The Miller Partnership, L.P. Project) in the
aggregate principal amount of $20,540,000 (the "Series 1996 A Bonds") and its
Taxable Adjustable Rate Economic Development Revenue Refunding Bonds, Series
1996 B (The Miller Partnership, L.P. Project) in the aggregate principal amount
of $1,680,000 (the "Series 1996 B Bonds" and collectively with the Series 1996 A
Bonds the "Series 1996 Bonds") pursuant to a Trust Indenture dated as of
March 1, 1996 (said Trust Indenture, together with any indentures supplemental
thereto are referred to collectively herein as the "Indenture"), by and between
the Issuer and Fifth Third Bank of Central Indiana, as Trustee; and
WHEREAS, the Series 1996 Bonds are being issued in order to obtain funds to
lend to Miller, pursuant to a Loan Agreement dated as of March 1, 1996 (said
Loan Agreement, as supplemented and amended from time to time, is referred to
herein as the "Loan Agreement"), between the Issuer and Miller for the purpose
of refunding the Issuer's outstanding Economic Development Revenue Bonds, Series
1991 A (The Miller Partnership L.P. Project)(the "Series 1991 A Bonds"), Taxable
Economic Development Revenue Bonds, Series 1991 B (The Miller Partnership L.P.
Project) (the "Series 1991 B Bonds", and collectively with the Series 1991 A
Bonds, the "Series 1991 Bonds"), Economic Development Revenue Bonds, Series 1993
A (The Miller Partnership L.P. Project)(the "Series 1993 A Bonds"), and Taxable
Economic Development Revenue Bonds, Series 1993 B (The Miller Partnership L.P.
Project) (the "Series 1993 B Bonds", and collectively with the Series 1993 A
Bonds, the "Series 1993 Bonds") (the Series 1991 Bonds and the Series 1993 Bonds
are referred to collectively herein as the "Prior Bonds"); and
WHEREAS, in order to support the payment when due of the principal of and
interest on the Series 1996 Bonds (with interest calculated at an assumed rate
of 12% per annum, based on a year of 360 days, for a 56 day period), the
Obligors have requested that the Bank issue its irrevocable direct pay
transferable letter of credit in the form of Annex I hereto (said Letter of
Credit, and any letter of credit or letters of credit hereinafter issued by the
Bank in substitution therefor or replacement thereof are hereinafter referred to
as the "Letter of Credit"), in favor of the Trustee, in the initial stated
amount of $22,634,774, of which initial stated amount, up to
<PAGE>
$22,220,000 in the aggregate may be drawn upon in respect of principal of the
Series 1996 Bonds, and $414,774 may be drawn upon in respect of interest on the
Series 1996 Bonds; and
WHEREAS, CenterPoint is the sole general partner of Miller, and will
realize a direct financial benefit from the issuance by the Bank of the Letter
of Credit;
NOW, THEREFORE, in consideration of the premises and in order to induce
the Bank to issue the Letter of Credit, the Obligors and the Bank hereby agree
as follows:
Section l. CERTAIN DEFINED TERMS. As used in this Agreement and unless
otherwise expressly indicated, or unless the context clearly requires otherwise,
the following terms shall have the following meanings (such meaning to be
equally applicable to both the singular and plural forms of the terms defined):
"Affiliate" means, as to any Person, (i) any other Person that directly or
indirectly through one or more intermediaries controls is controlled by or is
under common control with, such Person, or (ii) any trade or business (whether
or not incorporated) which is a member of a group of which such Person is a
member and which is under common control.
"Agreement" means this Reimbursement Agreement, as the same may be from
time to time supplemented, modified and amended from time to time hereafter.
"Applicable Law" means (i) all applicable provisions of all constitutions,
statutes, rules, regulations and orders of all governmental bodies, including,
without limitation, any statute, rule, regulation or order pertaining to
environmental, health and safety matters or to the Employee Retirement Income
Security Act of 1974 (as amended from time to time) and any other welfare or
other employee benefit or fringe benefit plan, program or arrangement, (ii) all
Governmental Approvals and (iii) all orders, judgments and decrees of all courts
and arbitrators.
"Authorized Denominations" has the meaning assigned to that term in the
Indenture.
"Bank" means The Royal Bank of Scotland plc, acting through its New York
Branch.
"Bondholder" has the meaning assigned to that term in the Indenture.
"Bond Purchase Draft" means a demand for payment under the Letter of Credit
accompanied by a completed and executed document in the form of Annex C thereto.
"Bonds" means the Series 1996 Bonds.
"Bond Purchase Agreement" means the Bond Purchase Agreement dated as of
March ___, 1996, by and among the Issuer, Miller and the Underwriter.
"Business Day" means any day other than (i) a Saturday, Sunday, (ii) a day
on which commercial banks in New York, New York or Chicago, Illinois, or the
city or cities in which are
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<PAGE>
located the principal corporate trust office of the Trustee and the office of
the Bank at which demands for payment under the Letter of Credit are to be
presented, are authorized by law to close, or (iii) a day on which the New York
Stock Exchange is closed.
"Capitalized Lease" means the lease of any property (real, personal or
mixed) which, in accordance with GAAP, should be capitalized on the lessee's
balance sheet or for which the amount of the asset and liability thereunder, if
so capitalized, should be disclosed in a note to such balance sheet.
"CenterPoint" means CenterPoint Properties Corporation, a Maryland
corporation.
"Date of Issuance" means April 1, 1996.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee under
Capitalized Leases, (v) all obligations referred to in the foregoing clauses
(i) to (iv) of others secured by a Lien on any asset of such Person, whether or
not any such obligation is assumed by such Person, and (vi) all obligations
referred to in the foregoing clauses (i) to (iv) of others Guaranteed by such
Person.
"Default" means any event or condition which with the giving of notice or
the lapse of time or both would, unless cured or waived, become an Event of
Default.
"Environmental Laws" has the meaning assigned to that term in Section 5(o)
of this Agreement.
"Event of Default" has the meaning assigned to that term in Section 7 of
this Agreement.
"Final Draft" means a draft for payment under the Letter of Credit
accompanied by a completed and executed document in the form of Annex D thereto.
"GAAP" means the generally accepted accounting principles applied in the
preparation of the audited financial statements of CenterPoint at December 31,
1994, with such changes thereto as (i) shall be consistent with the
then-effective principles promulgated or adopted by the Financial Accounting
Standards Board and its predecessors and successors and (ii) shall be concurred
in by the independent certified public accountants of recognized standing
certifying any financial statements of CenterPoint.
"Governmental Approval" means an authorization, permit, consent, approval,
license or exemption from, registration or filing with, or report to, any
governmental or regulatory unit.
- 3 -
<PAGE>
"Hazardous Materials" has the meaning assigned to that term in Section 5(o)
of this Agreement.
"Indemnity Agreement" means the Indemnity Agreement dated as of March 1,
1996, from the Obligors to the Bank, relating to the Project and the
Supplemental Property.
"Indenture" has the meaning assigned to that term in the first recital
clause of this Agreement.
"Interest Draft" means a demand for payment under the Letter of Credit
accompanied by a completed and executed document in the form of Annex A thereto.
"Issuer" has the meaning assigned to that term in the first recital clause
of this Agreement.
"LaSalle" means LaSalle National Bank, a national banking association.
"Letter of Credit" means the Irrevocable Letter of Credit No. LCA
02229600417NY in the initial stated amount of $22,634,774 dated April 1, 1996,
in the form of Annex I hereto, and any substitute letter of credit therefor of
the Bank issued from time to time hereafter.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, the Obligors or any of their respective
partners or their affiliates 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, Capitalized Lease or other title retention
agreement relating to such asset.
"Loan Agreement" has the meaning assigned to that term in the second
recital clause of this Agreement.
"Miller" means The Miller Partnership, L.P., an Illinois limited
partnership.
"Moody's" means Moody's Investor Services, a Delaware corporation, and its
successors and assigns.
"Mortgaged Property" means, collectively, the property conveyed or upon
which a lien in favor of the Bank is granted pursuant to any of the Related
Documents.
"Notes" has the meaning assigned to that term in the Indenture.
"Obligor" means, individually, Miller or CenterPoint.
"Obligors" means, collectively, Miller and CenterPoint.
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"Official Statement" means the Official Statement dated March 29, 1996
relating to the issuance of the Bonds, including any amendments or any
supplement thereto and any documents incorporated therein by reference.
"Outstanding" has the meaning assigned to that term in the Indenture.
"Participation Agreement" means the Participation Agreement dated as of
March 1, 1996, between the Bank and LaSalle.
"Permitted Encumbrances" with respect to the Project has the meaning
assigned to that term in the Project Mortgage, and with respect to the
Supplemental Property has the meaning assigned to that term in the Supplemental
Property Mortgage.
"Person" means an individual, a corporation, a partnership, an association,
a trust or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Pledged Bonds" has the meaning assigned to that term in the Section 2(d)
of this Agreement.
"Preliminary Official Statement" means the Preliminary Official Statement
dated March __, 1996 relating to the issuance of the Bonds, including any
amendments or any supplement thereto and any documents incorporated therein by
reference.
"Prime Rate" has the meaning assigned to that term in Section 2(a) of this
Agreement.
"Principal Draft" means a demand for payment under the Letter of Credit
accompanied by a completed and executed document in the form of Annex B thereto.
"Prior Bonds" means, collectively, the Series 1991 Bonds and the Series
1993 Bonds.
"Prior Borrower" means The Miller Partnership L.P., an Illinois limited
partnership.
"Prior Loan Agreement" means the Loan Agreement, Mortgage, Security
Agreement, Assignment of Rents and Leases and Financing Statement dated as of
April 1, 1991, by and among the Prior Borrower, the Issuer and the Bank, as
amended, relating to the Prior Bonds.
"Prior Reimbursement Agreement" means the Reimbursement Agreement dated as
of April 1, 1991, as amended, between the Prior Borrower and the Bank.
"Project" means a 14-building, 682 unit multi-family housing project,
located at 415 North Lake Street, in the City of Gary, Indiana, which is located
on the Project Site.
"Project Assignment of Rents" means the Assignment of Rents and Leases
dated as of March 1, 1996, from Miller to the Bank, relating to the Project.
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"Project Mortgage" means the Mortgage and Security Agreement dated as of
March 1, 1996, from Miller to the Bank relating to the Project.
"Project Site" means the real estate described in Exhibit A hereto.
"Reimbursement Agreement" means this Reimbursement Agreement dated as of
March 1, 1996, as supplemented, modified and amended from time to time
hereafter.
"Reimbursement Documents" means the Letter of Credit, this Reimbursement
Agreement, the Project Mortgage, the Project Assignment of Rents, the
Supplemental Property Mortgage, the Supplemental Property Assignment of Rents,
the Indemnity Agreement and any other agreement, certificate or instrument
relating thereto or from time to time evidencing or securing the obligations of
the Obligors hereunder.
"Related Documents" means the Bonds, the Notes, the Indenture, the Loan
Agreement, the Bond Purchase Agreement, the Official Statement, the Remarketing
Agreement, the Tax Regulatory Agreement, the Reimbursement Documents and any
other agreement, certificate or instrument relating thereto.
"Remarketing Agent" means Everen Securities, Inc., and Gates Capital
Corporation, and any successor remarketing agent appointed in accordance with
the provisions of the Indenture and/or the Remarketing Agreement.
"Remarketing Agreement" means the Remarketing Agreement dated April 1,
1996, by and among Miller, Everen Securities, Inc. and Gates Capital
Corporation.
"Series 1991 A Bonds" has the meaning assigned to that term in the second
recital clause hereof.
"Series 1991 B Bonds" has the meaning assigned to that term in the second
recital clause hereof.
"Series 1991 Bonds" means, collectively, the Series 1991 A Bonds and the
Series 1991 B Bonds.
"Series 1993 A Bonds" has the meaning assigned to that term in the second
recital clause hereof.
"Series 1993 B Bonds" has the meaning assigned to that term in the second
recital clause hereof.
"Series 1993 Bonds" means, collectively, the Series 1993 A Bonds and the
Series 1993 B Bonds.
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"Stated Amount" means, at any time, the aggregate amount that at such time
may be demanded under the Letter of Credit, subject to increase (reinstatement)
or reduction as provided therein.
"Stated Expiration Date" has the meaning assigned to that term in Section
3(a) of this Agreement.
"Supplemental Property" means the real estate described in Exhibit B
hereto, and all improvements now and hereafter thereon, and all other property,
rights and interests described in the granting clauses of the Supplemental
Property Mortgage.
"Supplemental Property Assignment of Rents" means the Assignment of Rents
and Leases dated as of March 1, 1996, from CenterPoint to the Bank, relating to
the Supplemental Property.
"Supplemental Property Mortgage" means the Mortgage and Security Agreement
dated as March 1, 1996, from CenterPoint to the Bank, relating to the
Supplemental Property.
"Tax Agreement" means the Tax Regulatory Agreement dated as of March 1,
1996, by and between the Issuer and Miller.
"Termination Date" has the meaning assigned to that term in Section 2(b) of
this Agreement.
"Title Company" means Chicago Title Insurance Company.
"Trustee" means NBD Bank, N.A., and any successor trustee under the
Indenture.
"Underwriter" means Everen Securities, Inc.
Section 2. REIMBURSEMENT AND OTHER PAYMENTS.
(a) REIMBURSEMENT. The Obligors, jointly and severally agree to pay to
the Bank (i) without demand, on or prior to the date that is five (5) days after
the date any amount is drawn under the Letter of Credit a sum equal to the
amount so drawn (plus interest on such amount from the date of drawing of such
amount under the Letter of Credit until payment has been made in full at the
rate provided in clause (iii) below); (ii) on demand any and all reasonable
charges and expenses which the Bank may pay or incur relative to the Letter of
Credit; and (iii) interest on any and all amounts unpaid by the Obligors when
due under this Agreement from the date such amounts become payable until payment
has been made in full, such interest shall be payable on demand, at a
fluctuating interest rate per annum equal to 2.0% plus the rate of interest
announced by the Bank in New York, New York from time to time as its prime rate
(the "Prime Rate"), such rate of interest to change on the effective date of any
change in such Prime Rate.
(b) COMMISSIONS AND FEES. On or before the Date of Issuance, and as a
condition precedent to the issuance of the Letter of Credit, the Obligors shall
pay to the Bank a one time
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commitment fee equal to $67,905, and no portion of such fee shall be refundable
under any circumstances. The Obligors jointly and severally agree that they
will pay to the Bank (i) an annual fee, computed at the rate of 1.35% per annum
on the Stated Amount from time to time available to be drawn under the Letter of
Credit (plus the amount of any Interest Draft which is automatically
reinstatable under the Letter of Credit but which has not been reinstated, plus
the amount of any Bond Purchase Draft which is reinstatable under the Letter of
Credit but which has not been reinstated), from and including the Date of
Issuance (of the Letter of Credit) until the last day a drawing is available
under the Letter of Credit (the "Termination Date"), payable quarterly in
advance and calculated on the basis of the Stated Amount available to be drawn
(plus the amount of any Interest Draft which is automatically reinstatible but
which has not been reinstated, plus the amount of any Bond Purchase Draft which
is reinstatable under the Letter of Credit but which has not been reinstated) on
the date payment is due, commencing on July 15, 1996, and on each October 15,
January 15, April 15, and July 15, thereafter (or the next succeeding Business
Day if any such day is not a Business Day); provided, however, that the Bank and
the Obligors acknowledge and agree that the per annum fee for the period
commencing on the Date of Issuance and ending on July 15, 1996, shall be paid in
advance on the Date of Issuance, (ii) a drawing fee of $250 upon each date of
payment of any Principal Draft, a drawing fee of $100 upon each date of payment
of any Interest Draft and a drawing fee of $1,000 upon the date of payment of
any Bond Purchase Draft or Final Draft, and (iii) a sum equal to $1,000 upon
each transfer to a successor trustee of the Letter of Credit in accordance with
its terms. Annual Fees shall be deemed earned in full on the quarterly payment
date when due and no portion thereof shall be refundable upon redemption of the
Bonds, or otherwise.
(c) INCREASED COSTS. If the Bank reasonably determines that the
introduction of, change in, or change in the interpretation or application of,
any law, rule, regulation, directive or request by any court or administrative
or governmental authority charged with the administration thereof (whether or
not having the force of law) shall either (i) impose, modify or deem applicable
any taxation, reserve, assessment, special deposit or other requirement (other
than any income taxation requirement imposed, modified or deemed applicable by
any court, administrative or governmental authority of the United Kingdom or any
political subdivision thereof) with respect to letters of credit issued by, or
with respect to any other extension of credit by, or assets held by, or deposits
in or other liabilities for the account of, the Bank or (ii) impose on the Bank
any other condition regarding this Agreement, its Letter of Credit, or any
collateral therefor, or any of the transactions in the preceding clause (i) or
(ii), or (iii) affect the amount of any deduction that the Bank may take for
purposes of federal, state or local income taxes (other than any income taxes
imposed or deemed applicable by any court, administrative or governmental
authority of the United Kingdom or any political subdivision thereof) in respect
of the cost, including, but not limited to, interest, costs of maintaining its
Letter of Credit or the reimbursement obligations of the Obligors hereunder, and
the result of any event referred to in clause (i), (ii) or (iii) above shall be
to increase the cost, or diminish the anticipated return, to the Bank of issuing
or maintaining its Letter of Credit or the reimbursement obligations of the
Obligors hereunder, or reduce the amounts receivable by the Bank hereunder or
thereunder (which increase in cost, diminution in return or reduction of
amounts, shall be determined by the Bank's reasonable allocation of the
aggregate of such costs, increases, diminution in return, or reductions
resulting from such event) or reduce the rate of return on all or any part of
the Bank's capital as described in the next
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succeeding sentence, then, upon demand by the Bank, the Obligors will pay to the
Bank on demand from time to time as specified by the Bank additional amounts
which shall be sufficient to compensate the Bank on an adjusted after-tax basis
for such increased cost, diminution in return, reduction or loss of
profitability from the date of compliance with such event together with interest
on such amount from the date demanded until payment in full at the rate set
forth in clause (iii) of Section 2(a) above. If after the date hereof, the Bank
reasonably determines that the introduction of, implementation of, change in, or
change in the interpretation or application of, any law, rule, regulation,
guideline or directive (whether or not having the force of law) by any
governmental authority, central bank or other comparable agency charged with the
interpretation or administration thereof, imposes, modifies or deems applicable
any capital adequacy or similar requirement (including without limitation a
request or requirement which affects the manner in which the Bank allocates
capital resources to its commitments, including its obligations hereunder) and
as a result thereof, in the reasonable discretion of the Bank, the rate of
return on the Bank's capital as a consequence of its obligations hereunder is
reduced to a level below that which the Bank could have achieved but for such
circumstances, then, upon demand by the Bank, the Obligors shall pay to the
Bank, in the manner described in the preceding sentence, such additional amount
as will compensate the Bank for such reduction in rate of return. A certificate
setting forth such increased cost, diminution in return, or reduction of amounts
or in rate of return incurred by the Bank as a result of any event mentioned
above and giving a reasonable explanation thereof, submitted by the Bank to the
Obligors (absent manifest error), shall be conclusive and binding for all
purposes. The provisions of this Section 2(c) shall survive termination of this
Agreement.
(d) PLEDGE OF BONDS. As security for the payment of the obligations of
the Obligors pursuant to Section 2(a), Miller hereby pledges, assigns,
hypothecates, transfers and delivers to the Bank all its right, title and
interest to, and hereby grants to the Bank a first lien on, and security
interest in, all of its right, title and interest in and to Bonds delivered to
the Bank or held by the Trustee for the benefit of the Bank and in Beneficial
Ownership Interests (as defined in the Indenture) and/or registered in the name
of the Bank by the Depository or a Direct Participant (each as defined in the
Indenture) in connection with Bond Purchase Drawings under the Letter of Credit
for the purchase of Bonds that are not remarketed, (herein called "Pledged
Bonds"), and the interest thereon and all proceeds thereof. This Agreement
shall constitute a security agreement under the provisions of the Uniform
Commercial Code of the State of Illinois (the "UCC") from Miller as debtor to
the Bank as secured party.
(e) PAYMENTS ON THE PLEDGED BONDS. If, while this Agreement is in effect,
Miller shall become entitled to receive or shall receive any payment in respect
of the Pledged Bonds, Miller agrees to accept the same as the Bank's agent and
to hold the same in trust on behalf of the Bank and to deliver the same
forthwith to the Bank. All sums of money so paid in respect of the Pledged
Bonds which are received by Miller, and paid to the Bank shall be credited
against the obligation of the Obligors to pay the Bank set forth in Section 2(a)
of this Agreement.
(f) RELEASE OF PLEDGED BONDS. Upon reimbursement of any drawing described
in Section 2(d) above in accordance with clause (i) of Section 2(a) above,
together with accrued interest to the date of such payment on the amount to be
paid, the outstanding obligations of the
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Obligors under Section 2(a) above shall be reduced by the amount of such
payment, interest shall cease to accrue on the amount paid and the Bank shall
release to Miller from the pledge hereunder, a principal amount of Pledged Bonds
(but only in Authorized Denominations) held hereunder corresponding and equal to
the principal amount of such Pledged Bonds included in the drawings reimbursed
by such payment.
(g) RIGHTS OF THE BANK CONCERNING PLEDGED BONDS. The Bank shall not be
liable for failure to collect or realize upon the obligations of the Obligors
hereunder or any collateral security or guarantee therefor, or any part thereof,
or for any delay in so doing, nor shall it be under any obligation to take any
action whatsoever with regard thereto. If an Event of Default has occurred and
is continuing, the Bank may thereafter, without notice, exercise all rights,
privileges or options pertaining to any Pledged Bonds as if it were the absolute
owner thereof, upon such terms and conditions as it may determine, all without
liability except to account for property actually received by it, but the Bank
shall have no duty to exercise any of the aforesaid rights, privileges or
options and shall not be responsible for any failure to do so or delay in doing
so.
(h) REMEDIES IN RESPECT OF PLEDGED BONDS. In the event that any portion
of the obligations of the Obligors hereunder become due and payable, the Bank,
without demand of performance or other demand, advertisement or notice of any
kind (except the notice specified below of time and place of public or private
sale) to or upon Miller or any other Person (all and each of which demands,
advertisements and/or notices are hereby expressly waived), may forthwith
collect, receive, appropriate and realize upon the Pledged Bonds, or any part
thereof, and/or may forthwith sell, assign, give option or options to purchase,
contract to sell or otherwise dispose of and deliver the Pledged Bonds, or any
pert thereof, in one or more parcels at public or private sale or sales, at any
exchange, broker's board or at any of the Bank's offices or elsewhere upon such
terms and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any
credit risk, with the right of the Bank upon any such sale or sales, public or
private, to purchase the whole or any part of said collateral so sold, free of
any right or equity of redemption in Miller, which right or equity is hereby
expressly waived or released. The Bank shall pay over the net proceeds of any
such obligation, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred therein or
incidental to the care, safekeeping or otherwise of any and all of the Pledged
Bonds or in any way relating to the rights of the Bank hereunder, including
reasonable attorney's fees and legal expenses, and the payment in whole or in
part of the obligations of the Obligors hereunder in such order as the Bank may
elect, the Obligors remaining liable for any deficiency remaining unpaid after
such application, and only after so paying over such net proceeds and after the
payment by the Bank of any other amount required by any provision of law,
including, without limitation, Section 9-504(l)(c) of the Uniform Commercial
Code, need the Bank account for the surplus, if any, to Miller. Miller agrees
that the Bank shall give at least 10 days' notice of the time and place of any
public sale or of the time after which a private sale or other intended
disposition is to take place and that such notice is reasonable notification of
such matters. No notification need be given to Miller if it has signed after
default a statement renouncing or modifying any right to notification of sale or
other intended disposition. In addition to the other rights and remedies
granted to it in this Agreement and in any
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other instrument or agreement securing, evidencing or relating to any of the
obligations of the Obligors hereunder, the Bank shall have all the rights and
remedies of a secured party under the UCC. The Obligors further agree to waive
and agree not to assert any rights or privileges which it may acquire under
Section 9-112 of the UCC and the Obligors shall be liable for the deficiency if
the proceeds of any sale or other disposition of the Pledged Bonds are
insufficient to pay all amounts to which the Bank is entitled, and the
reasonable fees of any attorneys employed by the Bank to collect such
deficiency.
(i) REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING PLEDGED BONDS.
The Obligors represent and warrant that: (a) on the date of delivery to the
Bank or the Trustee for the benefit of the Bank or the date of registration of
any Beneficial Ownership Interests in the name of the Bank of any Pledged Bonds
described herein (each a "Delivery Date"), neither the Issuer nor the Trustee
will have any right, title or interest in and to the Pledged Bonds; (b) Miller
has, and on the Delivery Date will have, full power, authority and legal right
to pledge all of its right, title and interest in and to the Pledged Bonds
pursuant to this Agreement; (c) this Agreement has been duly authorized,
executed and delivered by the Obligors and constitutes a legal, valid and
binding obligation of the Obligors enforceable in accordance with its terms; (d)
no consent of any other party (including, without limitation, any creditors of
either of the Obligors) and no consent, license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with, any governmental authority, domestic or foreign, is required
to be obtained by either of the Obligors in connection with the execution,
delivery or performance of this Agreement; (e) the execution, delivery and
performance of this Agreement will not violate any provision of any applicable
law or regulation or of any order, judgment, writ, award or decree of any court,
arbitrator or governmental authority, domestic or foreign, or of any securities
issued by either of the Obligors or of any mortgage, indenture, lease, contract
or other agreement, instrument or undertaking to which either of the Obligors is
a party or which purports to be binding upon either of the Obligors or upon any
of their assets and will not result in the creation or imposition of any lien,
charge or encumbrance on or security interest in any of the assets of either of
the Obligors except as contemplated by this Agreement; and (f) the pledge,
assignment and delivery of such Pledged Bonds pursuant to this Agreement will
create a valid first lien on and a first perfected security interest in, all
right, title or interest of Miller in or to such Pledged Bonds, and the proceeds
thereof, subject to no prior pledge, lien, mortgage, hypothecation, security
interest, charge, option or encumbrance or to any agreement purporting to grant
to any third party a security interest in the property or assets of Miller which
would include the Pledged Bonds. Miller covenants and agrees that it will
defend the Bank's right, title and security interest in and to the Pledged Bonds
and the proceeds thereof against the claims and demands of all Persons
whomsoever.
(j) NO DISPOSITIONS, ETC. Without the prior written consent of the Bank,
Miller agrees that it will not sell, assign, transfer, exchange or otherwise
dispose of, or grant any option with respect to, the Pledged Bonds, nor will it
create, incur or permit to exist any pledge, lien, mortgage, hypothecation,
security interest, charge, option or any other encumbrance with respect to any
of the Pledged Bonds, or any interest therein, or any proceeds thereof, except
for the lien and security interest provided for by this Agreement.
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(k) SALE OF PLEDGED BONDS. (i) The Obligors recognize that the Bank may
be unable to effect a public sale of any or all of the Pledged Bonds by reason
of certain prohibitions contained in the Securities Act of 1933, as amended, and
applicable state securities laws, but may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers who will be obligated
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. The
Obligors acknowledge and agree that any such private sale may result in prices
and other terms less favorable to the seller than if such sale were a public
sale and, notwithstanding such circumstances, agree that such private sale shall
be deemed to have been made in a commercially reasonable manner. The Bank shall
be under no obligation to delay a sale of any of the Pledged Bonds for the
period of time necessary to permit the Issuer to register such securities for
public sale under the Securities Act of 1933, or under applicable state
securities laws, even if the Issuer would agree to do so.
(ii) The Obligors further agree to do or cause to be done all such
other acts and things as may be necessary to make such sale or sales of any
portion or all of the Pledged Bonds valid and binding and in compliance
with any and all applicable laws, regulations, orders, writs, injunctions,
decrees or awards of any and all courts, arbitrators or governmental
instrumentalities, domestic or foreign, having jurisdiction over any such
sale or sales, all at the Obligors' expense. The Obligors further agree
that a breach of any of the covenants contained in this Section 2(k)(ii)
will cause irreparable injury to the Bank, that the Bank has no adequate
remedy at law in respect of such breach and, as a consequence, agrees that
each and every covenant contained in this Section 2(k)(ii) shall be
specifically enforceable against the Obligors, and the Obligors hereby
waive and agree not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default
has occurred under this Agreement. The Obligors further acknowledge the
impossibility of ascertaining the amount of damages which would be suffered
by the Bank by reason of a breach of any of such covenants and,
consequently, agrees that, if the Bank shall sue for damages for breach, it
shall pay, as liquidated damages and not as a penalty, an amount equal to
the par value of the Pledged Bonds plus accrued interest under this
Agreement on the date the Bank shall demand compliance with this Section
2(k)(ii).
(l) PAYMENTS AND COMPUTATION OF PAYMENTS AND INTEREST. All payments by
the Obligors to the Bank hereunder shall be made in lawful currency of the
United States and in immediately available funds at the Bank's office at 88 Pine
Street, 26th Floor, New York, New York, or at such other place as it may
designate in writing without any withholding, deduction or set-off. Funds
received after 2:00 p.m., New York time, shall be deemed to have been received
by the Bank on the following Business Day, and if any amount payable to be paid
hereunder shall fall due on a day that is not a Business Day, then such date
shall be extended to the next succeeding Business Day. In each such case,
interest and/or fees provided hereunder shall continue to accrue during such
extension. If any payment by the Bank under the Letter of Credit with respect
to a demand for payment by the Trustee thereunder shall be reimbursed by the
Obligors to the Bank on or before 2:00 p.m. at the Bank's Address on the same
date such payment is made by the Bank, no interest shall be payable on the
reimbursed amount. Interest and annual
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fees payable hereunder shall be computed on the basis of a year of 360 days.
All payments and other recoveries of money received by the Bank hereunder shall
be applied: FIRST, to the payment of fees, costs, expenses, taxes and
indemnification amounts required to be paid hereunder; SECOND, to the payment of
interest as provided herein; and THIRD, to the reimbursement of amounts drawn
under the Letter of Credit.
Section 3. ISSUANCE OF THE LETTER OF CREDIT; CONDITIONS PRECEDENT TO
ISSUANCE OF THE LETTER OF CREDIT.
(a) ISSUANCE OF THE LETTER OF CREDIT; SUBSTITUTE LETTERS OF CREDIT.
(i) Subject to the terms and conditions of this Agreement,
the Bank agrees to issue the Letter of Credit on the date of
issuance of the Series 1996 Bonds in the form of Annex I hereto,
to expire initially on April 15, 2001 (such date, as it may be
extended pursuant to clause (iii) of this Section 3(a), the
"Stated Expiration Date").
(ii) The Obligors by written notice to the Bank not less
than 90 days prior to April 15, 1999 (and not less than 90 days
prior to each succeeding April 15), may request that the Bank
extend the Stated Expiration Date of the Letter of Credit by
issuing an Extension Certificate in the form of Annex G to the
Letter of Credit (an "Extension Certificate"), to be delivered to
the Trustee not less than forty-five (45) days prior to the
expiration date of the then current Letter of Credit extending
the then Stated Expiration Date (without regard to any extension
thereof not evidenced by prior delivery of an Extension
Certificate or substitute Letter of Credit) for a period of not
less than twelve months, or a substitute Letter of Credit in
substantially the form of Annex I, but expiring not less than
twelve months following the date on which the Letter of Credit is
to expire.
(iii) The Bank shall not be required to issue an Extension
Certificate or substitute Letter of Credit to extend the then
Stated Expiration Date of the Letter of Credit, and only an
appropriate writing signed by the Bank and received by the
beneficiary of the Letter of Credit shall constitute such an
Extension Certificate or substitute Letter of Credit. In the
event the Bank in its discretion issues an Extension Certificate
or a substitute Letter of Credit, the Extension Certificate will
be effective, and the substitute Letter of Credit shall be issued
to be effective, on the ensuing April 15, or the ensuing
anniversary of the date of issuance of a substitute Letter of
Credit, and the terms and conditions, fees and commission, as
provided in this Agreement shall apply to the Letter of Credit as
extended or substitute Letter of Credit, except as then otherwise
agreed in writing by the Obligors and Bank. In no event shall
the Bank be obligated to deliver such Extension Certificate or
substitute Letter of Credit to the Trustee, the Obligors or any
other Person more than fifty (50) days prior to the then
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current expiration date (without regard to any extension thereof not
evidenced by prior delivery of an Extension Certificate or substitute
Letter of Credit) of the Letter of Credit. Notwithstanding anything
to the contrary herein or in the other Related Documents, if the Bank
has agreed to extend the term of the Letter of Credit or any portion
thereof to a date beyond the fifth calendar day following any Fixed
Interest Rate Commencement Date (as defined in the Indenture) or the
fifth calendar day following the Interest Rate Reset Date (as defined
in the Indenture) from and after which any of the Bonds bear interest
at the Six Month Interest Rate, the One Year Interest Rate or the Five
Year Interest Rate (each as defined in the Indenture), the Bank shall
nonetheless have no obligation to deliver any Extension Certificate or
substitute Letter of Credit if the Stated Amount of the Letter of
Credit or any portion thereof attributable to any Bonds or series of
Bonds which are intended to remain outstanding following such Fixed
Interest Rate Commencement Date or Interest Rate Reset Date would be
required to be increased for any reason, including, without
limitation, due to an increase in the interest rate on any Bonds or an
increase in the number of days' interest required to be covered by the
Letter of Credit, unless the Obligors shall cash collateralize the
amount of any such increase in a manner satisfactory to the Bank in
its sole discretion. In the event the Bank determines not to extend
the Letter of Credit or issue a substitute Letter of Credit, as
requested by the Obligors, the Bank will give the Obligors written
notice that the Stated Expiration Date of the Letter of Credit will
not be extended or substitute Letter of Credit will not be issued, as
the case may be, no later than 30 days prior to the April 15 next
succeeding such request.
(b) CONDITIONS PRECEDENT TO THE ISSUANCE OF THE LETTER OF CREDIT.
The agreement of the Bank to issue the Letter of Credit is subject to the
following conditions precedent:
(i) The Bank shall have received on or before the Date of
Issuance, the following each dated (unless otherwise indicated) the
Date of Issuance, in form and substance satisfactory to the Bank and
its counsel:
(A) this Agreement, duly executed by the Obligors;
(B) the Project Mortgage, duly executed by Miller and in
recordable form;
(C) the Project Assignment of Rents, duly executed by
Miller and in recordable form;
(D) the Indemnity Agreement, duly executed by the
Obligors;
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(E) UCC Financing Statements pertaining to the Project
Mortgage and the Project Assignment of Rents for filing with the
Secretary of State of Indiana and Recorder of Lake County,
Indiana, duly executed by Miller;
(F) the Supplemental Property Mortgage, duly executed by
CenterPoint and in recordable form;
(G) the Supplemental Property Assignment of Rents, duly
executed by CenterPoint and in recordable form;
(H) UCC Financing Statements pertaining to the
Supplemental Property Mortgage and the Supplemental Property
Assignment of Rents for filing with the Secretary of State of
Illinois and Recorder of Cook County, Illinois, duly executed by
CenterPoint;
(I) an American Land Title Association Loan Policy of
title insurance (ALTA Form 1990) issued by the Title Company,
dated the Date of Issuance, in the amount of $22,634,774 naming
the Bank as the insured party, showing Miller as being vested
with fee simple title to the land described therein, being the
same as the land described in Exhibit A to the Project Mortgage,
showing the Project Mortgage as the insured mortgage thereunder,
showing in Schedule B thereto no exceptions other than Permitted
Encumbrances, and containing as a part of said policy the
following described endorsements thereto (each in form and
substance acceptable to the Bank): (i) comprehensive
endorsement no. 1, (ii) a 3.1 zoning endorsement, including
parking requirements, (iii) a usury endorsement, (iv) a letter of
credit/future advance endorsement, (v) a variable rate
endorsement, (vi) a survey endorsement assuring that the plat of
survey previously delivered to the Bank or the plat of survey
referred to herein, accurately depicts the land described in
Schedule A of the Policy, and improvements thereon, (vii) an
access endorsement, (viii) a restriction endorsement, (ix) a
contiguity endorsement, (x) an encroachment endorsement, and (xi)
an endorsement deleting exclusions 3(e) and 7 (creditors'
rights);
(J) an American Land Title Association Loan Policy of
title insurance (ALTA Form 1990) issued by the Title Company,
dated the Date of Issuance, in the amount of $4,700,000 naming
the Bank as the insured party, showing CenterPoint as being
vested with fee simple title to the land described therein, being
the same as the land described in Exhibit A to the Supplemental
Property Mortgage, showing the Supplemental Property Mortgage as
the insured mortgage thereunder, showing in Schedule B thereto no
exceptions other than Permitted Encumbrances, and containing as a
part of said policy the following described endorsements thereto
(each
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in form and substance acceptable to the Bank): (i)
comprehensive endorsement no. 1, (ii) a location endorsement no.
1, (iii) a 3.1 zoning endorsement, including parking
requirements, (iv) a usury endorsement, (v) a letter of
credit/future advance endorsement, (vi) a variable rate
endorsement, (vii) a survey endorsement assuring that the plat of
survey previously delivered to the Bank or the plat of survey
referred to herein, accurately depicts the land described in
Schedule A of the Policy, and improvements thereon, (viii) an
access endorsement, (ix) a restriction endorsement, (x) a
contiguity endorsement, (xi) a P.I.N. endorsement, and (xii) an
endorsement deleting exclusions 3(e) and 7 (creditors' rights);
(K) current corporate documents for Obligors, including,
in the case of Miller, a Certificate of Limited Partnership and a
Certificate of Good Standing, each issued by the Illinois
Secretary of State within 30 days prior to the Date of Issuance,
a Certificate of Existence and/or Authority to Transact Business,
issued by the Indiana Secretary of State within 30 days prior to
the Date of Issuance, and the Agreement of Limited Partnership
and all Amendments thereto, and partnership resolution
authorizing the transactions contemplated hereby, each certified
by CenterPoint in its capacity as general partner, and, in the
case of CenterPoint, Articles of Incorporation certified by the
Secretary of State of the State of Maryland, Certificate of Good
Standing issued by the Department of Assessments and Taxation of
the State of Maryland, Certificate of Corporate Secretary
certifying By-Laws, Resolutions and Officers' Signatures and
Incumbency, Certificate of Authority to Transact Business and
Good Standing in Illinois issued by the Illinois Secretary of
State within 30 days prior to the Date of Issuance, and
Certificate of Authority to Transact Business and Good Standing
in Indiana, issued by the Indiana Secretary of State within 30
days prior to the Date of Issuance;
(L) a current survey of each of the Project and the
Supplemental Property showing all buildings and improvements
located thereon, all easements and all encroachments onto or from
any adjoining property, and access to a dedicated public highway,
certified as having been prepared in accordance with "Minimum
Standard Detail Requirements for ALTA/ACSM Land Title Surveys"
jointly established and adopted by ALTA and ACSM and meeting the
accuracy requirements of a Class A Survey, as defined therein,
and including items 1-13 and 15 of Table 3 thereof, and certified
in favor of the Bank, and the Title Company and disclosing no
matter which is not acceptable to the Bank, or a certificate of
no change pertaining to the survey previously delivered to the
Bank in form sufficient to permit the title insurance company
issuing the policy and/or endorsements required hereby to issue
the required survey coverage;
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<PAGE>
(M) a copy of each lease affecting any of the Supplemental
Properties or any portion thereof, a tenant estoppel letter with
respect to each such lease; provided, however, that the Obligor
may deliver tenant estoppel letters on or before July 1, 1996,
but if all tenant estoppel letters (except from tenants who have
refused to deliver an estoppel letter after having received at
least three written requests therefor) are not delivered to the
Bank on or before July 1, 1996, a fee of $5,000 shall be
immediately due and payable to the Bank;
(N) a disclosure document under any applicable Indiana
environmental disclosure law, or representation and warranty of
inapplicability executed by Miller and/or any other party
required by law for the Project;
(O) a disclosure document under the Illinois Responsible
Property Transfer Act or representation and warranty of
inapplicability executed by CenterPoint and/or any other party
required by law for the Supplemental Property;
(P) evidence of recording and filing with all appropriate
governmental bodies of any disclosure document delivered pursuant
to subsections (N) or (O) above;
(Q) original policies of insurance or certificates thereof
with respect to the Project and the Supplemental Property, each
in form and substance satisfactory to the Bank in its sole
discretion, naming the Bank as mortgagee, loss payee and
additional insured, and conforming to the requirements of the
Project Mortgage and the Supplemental Property Mortgage, and
otherwise in such amounts and insuring such risks as the Bank
shall require;
(R) copies of duly executed deeds, bills of sale and other
instruments of transfer evidencing transfer of ownership of the
Project from CenterPoint to Miller;
(S) fully executed counterpoints of all release documents
and UCC Termination Statements necessary to release the documents
securing the Prior Bonds;
(T) an irrevocable direction to LaSalle National Bank, as
trustee for the Prior Bonds directing it to apply the proceeds of
the Bonds deposited with it to reimburse the Bank for the drawing
on the Bank's outstanding letter of credit securing the Prior
Bonds (the "Prior Bonds Letter of Credit") for the redemption of
the Prior Bonds;
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<PAGE>
(U) an irrevocable direction to LaSalle and the Bank,
executed by the Obligors, authorizing and directing the
application of any amounts on deposit with LaSalle in the
"Collateral Account" held pursuant to that certain Investment
Agreement dated as of April 1, 1991, from the Prior Borrower to
the Bank, as amended, and as assigned to and assumed by
CenterPoint pursuant to that certain Assignment and Assumption
Agreement dated as of December 10, 1993, by and among the Prior
Borrower, CenterPoint and the Bank, to reimburse the Bank for the
drawing on the Prior Bonds Letter of Credit for the redemption of
the Prior Bonds, and to pay any additional sums necessary to
secure the release of the documents securing the Prior Bonds;
(V) opinions of Coffield Ungaretti & Harris, counsel to
the Obligors, as to such matters as the Bank may reasonably
request, which opinions shall be satisfactory to the Bank in form
and substance;
(W) opinions of Ice, Miller, Donadio & Ryan, Bond Counsel,
as to such matters as the Bank shall reasonably request, which
opinions shall be satisfactory to the Bank in form and substance;
(X) the Participation Agreement, duly executed by LaSalle;
(Y) an appraisal of the Project and the Supplemental
Property prepared by an independent appraiser appointed or
approved by the Bank, dated a date not more than 90 days prior to
the Date of Issuance;
(Z) an executed copy of the Loan Agreement;
(AA) an executed copy of the Indenture;
(BB) an executed copy of the Bond Purchase Agreement;
(CC) each of the documents required to be delivered
pursuant to the Bond Purchase Agreement, which in the case of
opinions of counsel shall also be addressed or confirmed to the
Bank;
(DD) evidence of rating of the Bonds by Moody's;
(EE) certificates of authorized officers of the Trustee
dated the Date of Issuance, certifying the names and true
signatures of the officers of the Trustee authorized to execute
the Indenture and such other matters as the Bank may reasonably
request;
(FF) a copy of Preliminary Official Statement and an
executed copy of the Official Statement;
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<PAGE>
(GG) a flood hazard certification pertaining to each of the
Project and the Supplemental Property in form and substance
satisfactory to the Bank; and
(HH) such other documents, instruments, approvals (and, if
requested by the Bank, certified duplicates of executed copies
thereof) or opinions as the Bank may reasonably request;
(ii) The following statements shall be true and correct on the Date of
Issuance, and the Bank shall have received a certificate signed by on
behalf of Miller and CenterPoint by a duly authorized officer of
CenterPoint, dated the Date of Issuance stating that:
(A) the representations and warranties contained in
Sections 2 and 5 of this Agreement, and Section 2.2 of the Loan
Agreement are correct on and as of the Date of Issuance as though
made on and as of such date; and
(B) no Default or Event of Default has occurred and is
continuing under this Agreement or any of the other Related
Documents, or would result from the execution and delivery of
this Agreement, or any of the other Reimbursement Documents, or
the consummation of the transactions contemplated hereby and
thereby.
(iii) On or before the Date of Issuance:
(A) this Agreement and the Related Documents shall be in
full force and effect;
(B) all conditions precedent to the issuance of the Bonds
shall have been satisfied or waived in a manner acceptable to the
Bank in its sole discretion; and
(C) the Issuer shall have duly executed, issued and
delivered all of the Bonds pursuant to the Indenture and all of
the Bonds shall have been purchased pursuant to the Bond Purchase
Agreement;
(iv) The Obligors shall have paid to the Bank the accrued fees
provided for in Sections 2(b) and 17 hereof.
Section 4. OBLIGATIONS ABSOLUTE. Except as hereinafter provided, the
obligations of the Obligors under this Agreement and the other Reimbursement
Documents shall be absolute, unconditional and irrevocable and shall be paid and
performed strictly in accordance with the terms of this Agreement and the other
Reimbursement Documents under all circumstances whatsoever, including, without
limitation, the following circumstances:
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<PAGE>
(a) any lack of validity or enforceability of the Letter of Credit, or any
of the other Related Documents.
(b) any amendment or waiver of, or any consent to or departure from all or
any of the Related Documents which is not consented to in writing by the Bank;
(c) the existence of any claim, setoff, defense or other rights which the
Obligors or either of them may have at any time against the Trustee, any
beneficiary or any transferee of the Letter of Credit (or any persons or
entities for whom the Trustee, any such beneficiary or any such transferee may
be acting), the Bank or any other person or entity, whether in connection with
this Agreement, the Related Documents or any unrelated transaction, except to
the extent of the Bank's gross negligence or willful misconduct;
(d) any statement or any other document presented under the Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect whatsoever;
(e) payment by the Bank under the Letter of Credit against presentation of
a draft or certificate which does not comply with the terms of the Letter of
Credit except if such payment constitutes the gross negligence or willful
misconduct of the Bank; or
(f) any other circumstance or happening whatsoever, whether or not similar
to any of the foregoing, provided, however, that such circumstance or happening
shall not constitute the gross negligence or willful misconduct of the Bank.
Section 5. REPRESENTATIONS AND WARRANTIES. The Obligors represent and
warrant as follows:
(a) ORGANIZATION. Miller is a limited partnership duly created, validly
existing and in good standing under the laws of the State of Illinois. Miller
has all requisite power and authority as a limited partnership to own and
operate its properties, to carry on its business as now conducted and as
proposed to be conducted, to enter into such of this Agreement the other
Reimbursement Documents and the other Related Documents to which it is a party
and to carry out the transactions contemplated hereby and thereby. CenterPoint
is a corporation duly created, validly existing and in good standing under the
laws of the State of Maryland. CenterPoint has all requisite power and
authority as a corporation to own and operate its properties, to carry on its
business as now conducted and as proposed to be conducted, to enter into such of
this Agreement, the other Reimbursement Documents and the other Related
Documents to which it is a party or which it has executed in its capacity as
general partner on behalf of Miller, and to carry out the transactions
contemplated hereby and thereby. CenterPoint is the sole general Partner of
Miller.
(b) GOOD STANDING. Miller exists as a foreign limited partnership
authorized to transact business in the State of Indiana and exists as a limited
partnership in the State of Illinois. CenterPoint is duly qualified to do
business as a corporation and is in good standing wherever
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<PAGE>
necessary to carry on its present business and operations including, without
limitation, the States of Indiana and Illinois, except in jurisdictions in which
the failure to be so qualified and in good standing has not had and will not
have a material adverse effect on the conduct of the business of CenterPoint or
its ability to perform fully any obligation it has under this Agreement, the
other Reimbursement Documents or any other Related Document.
(c) AUTHORIZATION. The execution, delivery and performance by each of
Miller and CenterPoint of such of this Agreement, the other Reimbursement
Documents and the other Related Documents to which it is a party (or which it
has executed in its capacity as general partner) have been duly authorized by
all necessary partnership or corporate action.
(d) NO CONFLICT. The execution, delivery and performance by each of
Miller and CenterPoint of such of this Agreement, the other Reimbursement
Documents and any of the other Related Documents to which it is a party (or
which it has executed in its capacity as general partner) do not and will not
(i) contravene Miller's Agreement of Limited Partnership or CenterPoint's
Articles of Incorporation or By-Laws, (ii) conflict with, or result in the
violation of, any Applicable Law or any order, writ, rule or regulation of any
court or governmental agency or instrumentality binding upon or applicable to
either of the Obligors which conflict or violation would have a material adverse
effect on the conduct of business or either of the Obligors or its ability to
perform fully any obligations it has under this Agreement, the other
Reimbursement Documents or any other Related Document, (iii) contravene,
conflict with, or result in a violation of any other contract or agreement to
which either of the Obligors is a party or by which it is bound which conflict
or violation would have a material adverse effect on the conduct of business of
either of the Obligors or its ability to perform fully any obligations it has
under this Agreement, the other Reimbursement Documents or any other Related
Document, or (iv) result in or require the creation or imposition of any Lien,
security interest or other charge or encumbrance upon or with respect to any of
its properties, except as contemplated by this Agreement, the Indenture, the
Loan Agreement, the other Reimbursement Documents and the other Related
Documents.
(e) APPROVALS. No further approval, authorization, consent or order of
any public board or body (other than in connection or in compliance with the
provisions of the securities or "Blue Sky" laws of any jurisdiction) is legally
required with respect to the Obligors' participation in the issuance of the
Bonds, including the entering into and performance by either of the Obligors of
this Agreement, the other Reimbursement Documents and the other Related
Documents to which either of them is a party (or which CenterPoint has executed
in its capacity as general partner).
(f) VALIDITY. This Agreement, the other Reimbursement Documents and the
other Related Documents to which either of the Obligors is a party (or which
CenterPoint has executed in its capacity as general partner) are valid and
legally binding obligations of such Obligor, enforceable against such Obligor in
accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws or
equitable principles relating to or limiting creditors' rights generally.
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<PAGE>
(g) FINANCIAL INFORMATION. CenterPoint has delivered to the Bank its
audited financial statements for the fiscal year ended December 31, 1994, and
its Form 10Q dated September, 1995. Such financial statements were prepared in
conformity with GAAP consistently applied. Such financial statements present
fairly in all material respects the financial position of CenterPoint as of the
date thereof and, if available, the results of operations and cash flows of
CenterPoint for each of the periods covered thereby, subject, in the case of any
unaudited interim financial statements to changes resulting from normal year-end
adjustments. To its knowledge CenterPoint has no material contingent
obligations, liabilities or unusual forward or long-term commitments not
disclosed in said financial statements, and there are no material unrealized or
anticipated losses from any commitments of CenterPoint which have not been
disclosed to the Bank in writing.
(h) NO MATERIAL ADVERSE CHANGE. Since the date of the most recent
financial statements referred to in Section 5(g) hereof, there has been no
material adverse change in the financial condition, business, operations,
properties or assets of CenterPoint and no event has occurred which materially
adversely affects the financial condition, business, operations, properties or
assets of CenterPoint or the ability of CenterPoint to perform fully any
obligations it has under this Agreement or any other Related Document.
(i) LEGAL PROCEEDINGS. There are no actions, suits or proceedings, and no
proceedings before any arbitrator or by or before any governmental commission,
board, bureau or other administrative agency, pending, or, to the knowledge of
the Obligors, threatened against or affecting either of the Obligors or their
respective properties which, if adversely determined, would have a material
adverse effect on either Obligor's ability to perform fully any obligations it
has under this Agreement, the other Reimbursement Documents or any other Related
Document on a timely basis or would have a material adverse effect on the
financial condition, business, operations, property or assets of such Obligor.
(j) OFFICIAL STATEMENT. The statements and information contained in
Preliminary Official Statement and in the Official Statement (other than the
statements and information contained in the Official Statement with respect to
the Bank in Appendix B thereof) were as of the date thereof, and as of the date
of issuance of the Bonds are, to the Obligors' knowledge, true, correct and
complete in all material respects, and do not, and at the date of issuance of
the Bonds did not, omit any statement or information necessary to make the
statements and information therein not misleading in any material respect.
(k) REGULATION. Neither of the Obligors is subject to regulation under
the Investment Company Act of 1940 or any other federal or state statute or
regulation such that its ability to consummate the transactions contemplated in
this Agreement or any Related Document is materially impaired.
(l) MARGIN STOCK. Neither of the Obligors has engaged principally or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any margin stock (as such term is defined in
Regulations G and U of the Board of Governors of the Federal Reserve System).
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<PAGE>
(m) COMPLIANCE WITH APPLICABLE LAW. Each of the Obligors and their
respective properties are in compliance with all Applicable Laws, including all
Governmental Approvals, except where the necessity or compliance therewith, or
of such Governmental Approvals, is being contested in good faith by appropriate
proceedings diligently pursued and the failure to comply therewith would not
have a material adverse effect on the conduct of the business of the Obligors or
their ability to perform fully any obligation they have under this Agreement or
any Related Document.
(n) INTEREST RATE. The rate of interest established and payable hereunder
does not exceed the maximum rate of interest allowed by Applicable Law.
(o) ENVIRONMENTAL MATTERS.
(i) Each of the Obligors and the Project and the Supplemental
Property are currently in compliance with all applicable Environmental Laws
(as defined below), and the Obligors have obtained and presently have in
force all permits, licenses, registrations and other authorizations and
approvals ("Permits") needed under Environmental Laws to maintain and
occupy the Project and the Supplemental Property, and have not and to the
best of each Obligor's knowledge, none of its predecessors with respect to
the Project or the Supplemental Property have, violated any applicable
Environmental Law.
(ii) The Obligors are unaware of any present requirement of any
applicable Environmental Law which is due to be imposed upon either of them
which will increase the cost of complying with the Environmental Laws with
respect to the Project, except as disclosed in that certain Environmental
Assessment of Marina Dunes Apartments, Gary, Indiana, September 17, 1990,
prepared by Environmental Resources Management - North Central, Inc. and in
that certain Phase I Environmental Assessment, Site No. 30, 440 N. Lake
Street, Gary, Indiana, Project No. 8652, dated August 21, 1993, prepared by
Carlson Environmental, Inc. (collectively, the "Audit Report").
(iii) All past use, handling, generation, treatment, storage and
disposal of "Hazardous Materials" (as described below) on, from or at the
Project and the Supplemental Property by either of the Obligors and to the
best of each Obligor's knowledge, its predecessors, has been done in
compliance with then applicable Environmental Laws, except as disclosed in
the Audit Report.
(iv) The Obligors have not, and to the best of each Obligor's
knowledge, except as described in the Audit Report, none of its
predecessors have, generated, treated, spilled, discharged, emitted,
disposed of or released any Hazardous Materials on or from the Project or
the Supplemental Property except to the extent the same was permitted by,
or remediated in accordance with, applicable Environmental Laws and, to the
best of each Obligor's knowledge, there are no Hazardous Materials on the
Project or the Supplemental Property that are not stored or contained in
accordance with applicable Environmental Laws, except as disclosed in the
Audit Report and/or described in the Supplemental
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<PAGE>
Property Mortgage, and there are no underground storage tanks on the
Project or the Supplemental Property.
(v) All past off-Site handling, treatment, recycling,
transportation, storage and disposal of Hazardous Materials originating on
the Project and the Supplemental Property by either of the Obligors and to
the best of each Obligor's knowledge, except as described in the Audit
Report, its predecessors, have been in compliance with applicable
Environmental Laws.
(vi) Obligors have used and will continue to use the level of care
that a reasonable and prudent operator would use in ensuring that its (and
its tenants') use and occupation of the Project and its (and its Tenants')
use and occupation of the Supplemental Property are in compliance with all
Environmental Laws.
(vii) As used in this Agreement, the terms (I) "Environmental Laws"
shall mean and include, but not be limited to any federal, state or local
law, statute, charter or ordinance (including without limitation,
applicable safety/environmental laws such as the Resource Conservation and
Recovery Act of 1976, Comprehensive Environmental Response Compensation and
Liability Act, as amended, Federal Emergency Planning and Community
Right-to-Know Law, the OSHA Hazardous Communication Standard, the Clean Air
Act, The Clean Water Act, the Hazardous Materials Transportation Act, and
the Toxic Substances Control Act), as any of the same have been amended,
and any rule, regulation, binding interpretation, binding policy, permit,
order, court order or consent decree promulgated or issued pursuant to any
of the foregoing, which pertains to, governs or otherwise regulates the
protection of health, worker safety or the environment, now, hereafter or
heretofore in effect, including, but not limited to any of the following
activities: (a) the emission, discharge, release, threatened release,
spilling or dumping of any Hazardous Material into the air, surface water,
groundwater, soil or substrata; (b) the use, generation, processing, sale,
recycling, treatment, handling, storage, disposal, transportation, labeling
or other management of any Hazardous Material, and (II) "Hazardous
Materials" shall mean and include any quantity required to be reported by
any applicable Environmental Law of any pollutant, contaminant, or
hazardous substances, hazardous materials, toxic substances, regulated
substances and wastes, radioactive materials, polychlorinated biphenyls,
asbestos and petroleum, including crude oil or any fraction thereof, as now
or hereafter defined or regulated as such by any applicable Environmental
Law.
(p) RELATED DOCUMENTS. The Obligors each make the representations and
warranties made by either of the Obligors contained in the Related Documents, to
which either of the Obligors is or is to be a party, to and for the benefit of
the Bank as if the same were set forth in full herein and such representations
and warranties shall speak as of the date hereof, except to the extent such
representations and warranties have been specifically superseded by this
Agreement, and except that any reference to financial statements bearing a
specific date contained in such representations and warranties shall be deemed a
reference to the financial statements of the Obligors most recently delivered to
the Bank.
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<PAGE>
(q) BORROWER'S UNDERTAKING. The Obligors have completed or caused to be
completed the Borrower's Undertaking (as defined in the Prior Loan Agreement) in
all material respects in accordance with the Plans, the Prior Reimbursement
Agreement and the Prior Loan Agreement, and the Project as of the date hereof is
free and clear of all liens or claims for liens for materials supplied or labor
or services furnished in connection with the Borrower's Undertaking other than
Permitted Encumbrances, and otherwise complies and has been operated and leased
in all material respects with the requirements of the Prior Reimbursement
Agreement, the Prior Loan Agreement and this Agreement.
Section 6. COVENANTS OF THE OBLIGORS. So long as the Termination Date
has not occurred or any amount is due or owing to the Bank hereunder, the
Obligors agree that unless the Bank shall otherwise consent in writing, they
will comply with the following covenants:
(a) FINANCIAL STATEMENTS AND OTHER INFORMATION. The Obligors will deliver
to the Bank:
(i) a true and complete copy of each Form 10K, Form 8K and Form 10Q
required to be filed by CenterPoint with the United States Securities and
Exchange Commission within five days following the date on which such
filing is required;
(ii) simultaneously with the delivery of each set of financial
statements referred to in clauses (i) and (vi) of this Section 6(a), a
certificate of the chief financial officer or the chief accounting officer
of the CenterPoint stating whether there exists on the date of such
certificate any Default or Event of Default hereunder or, to its best
knowledge, with respect to any of the Related Documents and, if any such
Default or Event of Default then exists, setting forth the details thereof
and the action which CenterPoint is taking or proposes to take with respect
thereto;
(iii) forthwith upon the occurrence of any Default or Event of
Default, a certificate of the chief financial officer or the chief
accounting officer of CenterPoint setting forth the details thereof and the
action which CenterPoint is taking or proposes to take with respect
thereto;
(iv) within ten (10) days after obtaining knowledge of the
commencement thereof, written notice of any action, suit or proceeding
before any arbitrator or by or before any governmental commission, board,
bureau or other administrative agency, pending or, to the knowledge of
either of the Obligors, threatened in writing against or affecting either
of the Obligors or their respective properties which, if adversely
determined, may have a material adverse effect on the financial condition,
business, operations, properties or assets of either of the Obligors or
their ability to perform fully any obligations under this Agreement or any
Related Document;
(v) from time to time such additional information regarding the
financial condition, business, operations, properties or assets of each of
the Obligors as the Bank may reasonably request; and
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<PAGE>
(vi) as soon as available and in any event within 60 days after the
end of each quarter of each fiscal year of Miller, an unaudited operating
statement for the Project, as of the end of such quarter, including the
related statements of income and retained earnings and statements of cash
flows for such quarter and for the portion of the Miller's fiscal year
ended at the end of such quarter, setting forth in each case in comparative
form the figures for the corresponding portion of the Miller's previous
fiscal year, all certified as to fairness of presentation, GAAP and
consistency by the chief financial officer or the chief accounting officer
of Miller and a rent roll as of the end of each such quarter certified by
the chief financial officer or the chief accounting officer of Miller.
(b) CONSOLIDATIONS, MERGERS. Neither of Miller or CenterPoint will
consolidate with or merge into any other Person.
(c) CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Miller will
continue to engage in business of the same general type as now conducted by it
and will do or cause to be done all things necessary to preserve, renew and keep
in full force and effect, its partnership existence, rights, privileges and
franchises necessary or desirable in the normal conduct of its business and to
qualify, and remain qualified, as a limited partnership existing and authorized
to transact business in each jurisdiction in which such qualification is
necessary under Applicable Law to enable it to perform fully all obligations it
has under any of this Agreement, the other Reimbursement Documents and any other
Related Document. CenterPoint will continue to engage in business of the same
general type as now conducted by it and will do or cause to be done all things
necessary to preserve, renew and keep in full force and effect, its corporate
existence, rights, privileges and franchises necessary or desirable in the
normal conduct of its business and to qualify, and remain qualified, as a
corporation in good standing and authorized to transact business in each
jurisdiction in which such qualification is necessary under Applicable Law to
enable it to perform fully all obligations it has under any of this Agreement,
the other Reimbursement Documents and any other Related Document.
(d) INTENTIONALLY DELETED.
(e) COMPLIANCE WITH LAWS. The Obligors will comply with all Applicable
Laws, except where the necessity of compliance therewith is being contested in
good faith by appropriate proceedings diligently pursued and the failure to
comply therewith would not have a material adverse effect on the conduct of the
business of the Obligors or their ability to perform fully all obligations
either of them has under any of this Agreement, the other Reimbursement
Documents and any other Related Document.
(f) INSPECTION OF PROPERTY, BOOKS AND RECORDS. The Obligors will keep
proper books of record and account consistent with the requirements of the
United States Securities and Exchange Commission and as required by Section
6(a)(vi) hereof, the Loan Agreement, Section 2.11 of the Project Mortgage and
Section 2.11 of the Supplemental Property Mortgage; and will permit
representatives of the Bank to inspect the properties and operations of the
Obligors all upon such reasonable prior notice and at such reasonable times and
as often as may reasonably be desired.
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(g) AMENDMENT OF RELATED DOCUMENTS. The Obligors will not enter into or
consent to any amendment of any of the Related Documents, or require or consent
to the replacement of the Trustee or the Remarketing Agent, permit any Bonds
(other than Pledged Bonds) not to be secured by the Letter of Credit, or deliver
or permit the delivery of a Supplemental Credit Facility (as defined in the
Indenture) without the Bank's prior written consent.
(h) REGISTRATION OF BONDS. The Obligors will cause all Pledged Bonds to
be registered in the name of Miller as pledgor or the Bank as pledgee, pursuant
to this Agreement, in each case as the Bank shall request.
(i) LIENS. Except for Permitted Encumbrances, the Obligors will not
create, incur, assume or suffer or permit to exist any Lien on the Project, the
Supplemental Property or any portion of either of them.
(j) REQUIRED VALUE OF COLLATERAL; APPRAISAL. The Obligors covenant and
agree that the aggregate fair market value of the Project and the Supplemental
Property shall at all times during the term of this Agreement be not less than
133% of the Stated Amount of the Letter of Credit. The Obligors shall notify
the Bank in writing within 10 days after either of them become aware of any
likely decrease in the aggregate fair market value of the Project and the
Supplemental Property which would cause such fair market value to be less than
133% of the then current Stated Amount of the Letter of Credit. The Bank may
obtain an updated appraisal of the Project and the Supplemental Property at any
time. If such appraisal discloses that the aggregate fair market value of the
Project and the Supplemental Property is less than 133% of the then current
Stated Amount of the Letter of Credit, the cost of the appraisal shall be paid
by the Obligors immediately upon demand, and the Obligors shall deposit
additional collateral acceptable to the Bank in its sole discretion, and having
a cash or fair market value equal to the difference between the appraised
aggregate fair market value of the Project and the Supplemental Property and
133% of the Stated Amount of the Letter of Credit, within 60 days following
demand therefor. If such appraisal discloses that the aggregate fair market
value of the Project and the Supplemental Property is equal to or greater than
133% of the then current Stated Amount of the Letter of Credit, and provided no
Event of Default shall have occurred, the cost of the appraisal shall be paid by
the Bank. Notwithstanding the foregoing provisions of this Section 6(j), the
Obligors shall pay the cost of any appraisal obtained by the Bank following the
occurrence of a Default or an Event of Default, and all appraisals (not
exceeding one per calendar year) which are required by applicable law or
regulation.
(k) ENVIRONMENTAL MATTERS. Obligors shall comply with any and all
Environmental Laws, settlements, agreements, consent orders, decrees, judgments,
injunctions or directives heretofore, now or hereafter affecting the Project,
the Supplemental Property or any portion thereof or the construction,
installation and rehabilitation of the Project, or any requirement of any
insurer of the Project or any portion thereof, or the Supplemental Property or
any portion thereof, and shall timely perform, or cause to be performed, any
investigation, testing, monitoring, repair, cleanup, detoxification, preparation
of any closure or other required plans, or other removal, response or remedial
action relating to (i) the presence, management, disposal, release or threatened
release, escape, seepage or leakage of any Hazardous Materials at, on, in,
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from or under all or a portion of the Project and/or the Supplemental Property;
or (ii) the migration of Hazardous Materials from the Project and/or the
Supplemental Property to any other property, or onto the Project Site from any
property or area adjacent to the Project Site and/or the Supplemental Property;
or (iii) the generation, transportation, storage or disposal of Hazardous
Materials onto or from the Project and/or the Supplemental Property; or (iv)
waste water from the Project and/or the Supplemental Property; or (v) the
incorporation, whether prior or future, of any Hazardous Materials into the
Project and/or the Supplemental Property. Nothing herein shall prohibit the
Obligors from contesting the validity or application of any Environmental Law,
settlement, agreement, consent order, decree, judgment, injunction or directive,
in good faith in any appropriate manner, in accordance with Applicable Law, and
while so contesting the Obligors may defer such compliance and/or performance;
PROVIDED, HOWEVER, that no such deferral shall be permitted if a Default or
Event of Default shall have occurred and be continuing; such contest or deferral
imposes a material obligation, burden or risk on the Trustee or the Bank; there
exists as a result of such contest or deferral any risk of the sale, forfeiture
or loss of the Project, the Supplemental Property or any part thereof, or the
creation of any Lien (other than a Lien permitted by this Agreement), or any
risk of criminal liability for the Trustee or the Bank; the Bank shall not have
received an indemnity from the Obligors satisfactory to the Bank, in its sole
discretion, against losses or liabilities to the Bank arising from such contest
or deferral, including, at the request of the Bank, a satisfactory undertaking
to inform or consult with the Bank periodically during any such deferral; or any
bond or security required to be posted or filed in connection with such contest
shall not have been so posted or filed.
(l) SALE, SUBSTITUTION, OR LEASE OF MORTGAGED PROPERTY.
(i) Except for Permitted Encumbrances CenterPoint will not sell,
lease, mortgage, transfer, otherwise dispose of, or grant a security
interest in, all or any part of its interests in the Supplemental Property.
Except for Permitted Encumbrances and as herein specifically provided in
this Section 6(l) or in Sections 6(m) or 6(n) or otherwise in this
Agreement, the Obligors will not sell, lease, mortgage, transfer, otherwise
dispose of, or grant a security interest in, all or any part of their
interests in the Project.
(ii) The Obligors may at any time request the Bank to enter into an
amendment to the Project Mortgage in form and substance satisfactory to the
Bank, for the purpose of effecting the release therefrom of any portion of
the Project Site which is not necessary to the operating integrity and
unity of the Project and the release of which will not adversely and
materially affect the ability of Miller to operate and maintain the Project
as provided in the Loan Agreement. The Obligors' request shall be in
writing and shall be accompanied by the following, each of which shall be
satisfactory to the Bank in its sole discretion:
(A) A certificate of the Obligors (1) stating that Miller is not
in default under the Loan Agreement and neither of the Obligors is in
default under any of the other Related Documents, (2) giving an
adequate legal description of that portion of the Project Site to be
released, (3) stating the purpose for which the
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release is desired, (4) requesting the release and (5) approving any
necessary amendment to the Project Mortgage;
(B) an opinion of independent counsel stating that execution and
delivery of such amendment by Miller will not conflict with or result
in a breach of or default under the Loan Agreement or any of the other
Related Documents;
(C) a copy of the amendment as proposed, and evidence of the
authority of the officers of the signators to execute and deliver the
amendment;
(D) a certificate of an independent architect acceptable to the
Bank, dated not more than sixty (60) days prior to the date of the
amendment and stating that, in his opinion, (1) the part of such
Project Site proposed to be released is not required for the
operation of the Project for the purposes hereinabove stated, and is
not necessary to the operating integrity and unity of the Project and
(2) the release will not destroy the means of ingress thereto and
egress therefrom; provided that such architect may consider any
property to be added to the Project Site in consideration of such
release;
(E) an ALTA survey of the Project which depicts the portion of
the Project Site to be released and the portion thereof remaining
subject to the lien of the Project Mortgage and which contains a
separate legal description for each of the portion of the Project Site
to be released and the portion remaining subject to the lien of the
Project Mortgage;
(F) a commitment from the Title Company to issue an endorsement
to the Bank's title insurance policy dating down said policy and all
endorsements thereto to the date of recording of the amendment,
reflecting recording of the amendment and no encumbrances other than
Permitted Encumbrances, and reciting that the lien of the Project
Mortgage as to the portion of the Project Site remaining subject
thereto is not impaired by such release and that the title insurance
policy and endorsements thereto previously delivered to the Bank are
not impaired, nor the insurance provided thereunder diminished, by
virtue of such amendment;
(G) if required by the Bank, either (1) a deposit of an amount
of money equal to the value of such portion of the Project Site as
determined by an appraisal furnished to the Trustee and the Bank and
prepared by an appraiser satisfactory to the Bank, which amount shall
be held by the Bank and used to purchase additional real property or
equipment to be subjected to the terms and liens of the Project
Mortgage; or (2) with the written consent of the Bank, the Obligors
may, in said amendment, subject to the lien of the Project Mortgage
real property equal in value to the portion of Project Site to be
released, the value of such real property to be determined by an
appraisal furnished to the Trustee and the Bank and prepared by an
appraiser satisfactory to the Bank; and
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(H) an opinion of recognized bond counsel that the amendment to
the sale of a portion of the Project and application of the proceeds
of sale will not affect the tax exempt status of the Series 1996 A
Bonds.
Upon satisfaction of all conditions set forth in clause (ii) of this
Section 6(l), and after due execution and delivery of such amendment to the
Project Mortgage by all other parties thereto, the Bank shall execute such
amendment and shall deliver such executed amendment to the Title Company in
exchange for an endorsement to the Bank's title insurance policy in the
form described above. No release effected under the provisions of this
Section 6(l) shall entitle Miller to any abatement or diminution of the
payments to be made under the Loan Agreement or hereunder.
(m) SUBSTITUTION AND REMOVAL OF EQUIPMENT.
(i) Except as provided in this Section 6(m) and Section 6(l) hereof,
equipment comprising part of the Mortgaged Property shall remain in or near
the buildings comprising the Mortgaged Property and on the site thereof.
The Obligors may from time to time substitute equipment in the Mortgaged
Property if the equipment so substituted shall be of equivalent value and
utility to that replaced. Any such substituted equipment with an aggregate
fair market value in excess of $25,000 shall be identified in writing by
the Obligors to the Bank and shall become a part of the Mortgaged Property
and be included under the terms of the Project Mortgage.
(ii) The Bank at the request of the Obligors shall release from the
lien of the Project Mortgage (but only to the extent of its interest), any
equipment comprising part of the Mortgaged Property without substitution
therefor so long as in the opinion of the Obligors, such property is no
longer useful to the Obligors in their operations conducted on or in the
Project (whether by reason of changed techniques, obsolescence,
depreciation or otherwise), and if so required by the Bank, the Obligors
shall segregate the proceeds of such sale and either (i) the proceeds from
the sale of the equipment or (ii) the fair market value of the equipment or
(iii) an amount equal to the original cost of the equipment to either of
the Obligors (or their predecessor) less depreciation calculated on a
straight-line basis on the lesser of the "average life" of the Bonds or the
useful life of the equipment, whichever amount is highest and use such
amount to purchase additional equipment or real property to be subjected to
the lien of the Project Mortgage and the terms of the Loan Agreement.
(iii) This provision shall not entitle the Obligors to any abatement
or diminution of the payments payable under the Loan Agreement or
hereunder.
(iv) The Obligors agree to execute and deliver such documents (if
any) as the Bank may reasonably request in connection with any action taken
by the Issuer, Trustee or Obligors under this Section 6(m).
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(n) GRANTING OF EASEMENTS. The Obligors may at any time or times grant
easements, licenses, rights-of-way (including the dedication of public highways)
and other rights or privileges in the nature of easements with respect to any
property subject to the lien of the Project Mortgage and/or the Supplemental
Property Mortgage, free from the lien of the Project Mortgage and/or the
Supplemental Property Mortgage, the Indenture, or Obligors may release existing
easements, licenses, rights-of-way and other rights or privileges, whether with
or without consideration for such grant or release, but only with the prior
written consent of the Bank, and provided such are within the definition of
Permitted Encumbrances. The Bank agrees that it shall execute and deliver any
instrument necessary or appropriate to confirm and grant or release any such
easement, license, right-of-way or other right or privilege permitted under the
provisions hereof.
(o) INSPECTIONS. The Obligors shall forthwith upon completion of any
construction at the Project or the Supplemental Property cause the same to be
inspected by each governmental or regulatory unit having jurisdiction thereof,
shall correct any defects and deficiencies which may be disclosed by any such
inspection and shall cause to be duly issued all occupancy certificates and
other licenses, permits and authorizations, if any, necessary for the operation
and occupancy of the Project and/or the Supplemental Property and each portion
thereof (and in any event the Obligors shall do and perform all of the foregoing
acts and things) and cause to be issued and executed all such occupancy permits,
licenses and authorizations.
(p) CORRECTIONS. The Obligors shall, upon demand by the Bank, correct any
defect or condition in the Project and/or the Supplemental Property which could
materially diminish the value of the Project or the Supplemental Property or
violate any requirements of any governmental or regulatory unit having
jurisdiction and upon demand by any such governmental or regulatory unit shall
correct any defect or condition in the Project and/or the Supplemental Property.
The Bank's previous authorization of disbursement of proceeds of the Series 1991
Bonds or the Series 1993 Bonds for the Project shall not constitute a waiver of
the Bank's right to require compliance with this covenant with respect to any
such defects or conditions not theretofore objected to by the Bank. The
Obligors shall obtain or cause to be obtained all required permits, licenses or
other approvals of any governmental or regulatory unit to be obtained prior to
the time any work for which such permit or approval is required is commenced.
(q) LEASES. The Obligors shall comply with the terms and conditions of
the Project Mortgage, the Project Assignment of Rents, the Supplemental Property
Mortgage and the Supplemental Property Assignment of Rents as they pertain to
leases of the Project and/or the Supplemental Property or any portion thereof.
(r) AGREEMENT CONCERNING SUPPLEMENTAL PROPERTY MORTGAGE. CenterPoint is
delivering the Supplemental Property Mortgage to induce the Bank to enter into
this Agreement and issue the Letter of Credit. The Obligors acknowledge and
agree that upon the occurrence of an event of default under the Supplemental
Property Mortgage, the Supplemental Property Assignment of Rents or the
Indemnity Agreement (as it relates to the Supplemental Property), and provided
the Bank has not exercised its right to give notice of termination of the Letter
of Credit and demand payment of the amount available to be drawn on the Letter
of Credit as provided in Section 7 hereof, the Obligors shall be obligated to
make a cash deposit with the Bank (the "Cash Deposit")
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in the amount of $3,525,000, which Cash Deposit shall secure the obligations of
the Obligors hereunder and under the other Related Documents, and shall be held
by and pledged to the Bank in a manner acceptable to the Bank in its sole
discretion. The Cash Deposit shall be due and payable within 30 days following
demand, provided that demand shall be deemed to have been made on earlier of (i)
the date of notice to the Obligors of any default under the Supplemental
Property Mortgage, the Supplemental Property Assignment of Rents or the
Indemnity Agreement and (ii) the date of occurrence of any event which
constitutes an event of default under the Supplemental Property Mortgage, the
Supplemental Property Assignment of Rents or the Indemnity Agreement without the
necessity of notice thereof to the Obligors. In connection with the Cash
Deposit hereunder, the Bank shall be entitled to obtain the advice of and an
opinion of Bond Counsel (as defined in the Indenture) in structuring the pledge
or security documents to assure that such pledge will not adversely affect the
tax exempt status of interest on the Bonds. The fees and expenses of Bond
Counsel shall be paid by the Obligors upon demand. The Bank agrees to release
the Supplemental Property Mortgage and the Supplemental Property Assignment of
Rents upon delivery of the Cash Deposit as provided herein and perfection of a
bankruptcy preference-proof security interest therein. Following delivery of
the Cash Deposit, the Bank shall release the Supplemental Property Mortgage and
the Supplemental Property Assignment of Rents upon either (i) the receipt of an
opinion of Bond Counsel that the delivery of the Cash Deposit does not
constitute a transfer avoidable under 11 USC Section 101 ET SEQ. (the
"Bankruptcy Laws") or (ii) the 91st day after delivery of the Cash Deposit,
provided that during the 91-day period no filing under the Bankruptcy Laws shall
have been made by or against CenterPoint. If, during the 91-day period, a
filing under the Bankruptcy Laws shall have been made, the Bank shall return the
Cash Deposit to CenterPoint on demand. In no event shall the Bank be entitled
to retain both the Cash Deposit AND the Supplemental Property Mortgage and the
Supplemental Property Assignment of Rents as collateral, it being understood
that the Bank shall be entitled to either, but not both, forms of collateral.
If an event of default shall have occurred as described above, upon return of
the Cash Deposit to CenterPoint or as directed by the Bankruptcy Court, the Bank
shall again be entitled to exercise all of its remedies available in consequence
of such event of default, without further notice, subject to any applicable
Bankruptcy Laws.
Section 7. EVENTS OF DEFAULT. The occurrence of any of the following
events shall constitute an "Event of Default" hereunder, unless waived by the
Bank pursuant to Section 8 hereof:
(a) the Obligors shall fail to pay when due any amount payable by the
Obligors under this Agreement; or
(b) any representation or warranty made by the Obligors or either of them
herein, in any Related Document or in any certificate, financial or other
statement furnished by either of the Obligors pursuant to this Agreement or any
other Related Document, shall prove to have been untrue or incomplete in any
material respect when made; or
(c) if, for any reason (other than release by the Bank) this Agreement,
the Project Mortgage, the Project Assignment of Rents, the Indemnity Agreement,
the Supplemental Property Mortgage, the Supplemental Property Assignment of
Rents or any of the other Related Documents
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to which either of the Obligors is a party shall cease to be valid, binding and
enforceable in accordance with its terms or if either of the Obligors shall
assert that it is not liable under this Agreement, the Project Mortgage, the
Project Assignment of Rents, the Indemnity Agreement, the Supplemental Property
Mortgage, the Supplemental Property Assignment of Rents or any of the other
Related Documents to which it is a party; or
(d) the Obligors or either of them shall fail to perform or observe any
other term, covenant or agreement deemed by the Bank in its sole judgment to be
material and to be performed or observed by the Obligors or either of them under
this Agreement, the Loan Agreement, the Project Mortgage, the Project Assignment
of Rents, the Indemnity Agreement, the Supplemental Property Mortgage, the
Supplemental Property Assignment of Rents or any other Related Document, and any
such failure shall remain unremedied for 30 days, or, to the extent that such
failure is susceptible of cure but cannot be cured within 30 days, and the
Obligors undertake and diligently pursue appropriate actions to remedy such
failure, not more than 60 days, after written notice thereof shall have been
given to the Obligors, by the Bank; or
(e) an "Event of Default" under and as defined in Section 7.1 of the Loan
Agreement or Section 7.01 of the Indenture shall have occurred and be
continuing; or
(f) either of the Obligors shall (i) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian or the like of
itself or of its property, (ii) admit in writing its inability to pay its debts
generally as they become due, (iii) make a general assignment for the benefit of
creditors, (iv) be adjudicated a bankrupt or insolvent, or (v) commence a
voluntary case under the federal bankruptcy laws of the United States of America
or file a voluntary petition or answer seeking reorganization, an arrangement
with creditors or an order for relief or seeking to take advantage of any
insolvency law or file an answer admitting the material allegations of a
petition filed against it in any bankruptcy, reorganization or insolvency
proceeding; or corporate or other action shall be taken by it for the purpose of
effecting any of the foregoing; or
(g) if without the application, approval or consent of the affected
Obligor, a proceeding shall be instituted in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency, reorganization,
or relief of debtors seeking in respect of such Obligor an order for relief or
an adjudication in bankruptcy, reorganization, dissolution, winding up,
liquidation, a composition or arrangement with creditors, a readjustment of
debts, the appointment of a trustee, receiver, liquidator or custodian or the
like of such Obligor of all or any substantial part of its assets, or other like
relief in respect thereof under any bankruptcy or insolvency law, and, if such
proceeding is being contested by such Obligor in good faith, the same shall (i)
nevertheless result in the entry of an order for relief or in any such
adjudication or appointment or (ii) continue undismissed, or pending and
unstayed, for any period of sixty (60) consecutive days; or
(h) either of the Obligors shall fail to make any payment in the amount of
$2,000,000 or more in respect of any Debt when due or within any applicable
grace period, or any event or condition shall occur which results in the
acceleration of the maturity of any Debt in the amount of $2,000,000 or more of
either of the Obligors or enables (or, with the giving of notice or lapse of
time or both, would enable) the holder of such Debt to accelerate the maturity
thereof (except
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only to the extent that such event or condition which results in such
acceleration is being contested by the affected Obligor in good faith by
appropriate proceedings, diligently pursued); or
(i) the entry against the either of Obligors of one or more judgments,
orders or decrees involving an aggregate liability of $2,000,000 or more, which
has or have become nonappealable and shall remain undischarged, unsatisfied by
insurance and unstayed for more than 30 days, whether or not consecutive; or the
issuance or levy of a writ of attachment or garnishment against the property of
either of the Obligors in an action claiming $2,000,000 or more, and which is
not released or appealed and bonded in a manner reasonably satisfactory to the
Bank.
Upon the occurrence of any Event of Default, the Bank may, (i) by written notice
to the Obligors, declare the obligations of the Obligors under Section 2 hereof
to be forthwith due and payable, whereupon the same shall become due and payable
without demand, presentment, protest or further notice of any kind, all of which
are hereby expressly waived; (ii) decline to reinstate any amount available
under the Letter of Credit, including sending notice to the Obligors and the
beneficiary of the Letter of Credit as provided in the Letter of Credit that the
Bank will not reinstate the amount of any Interest Draft thereunder; (iii)
notify the Obligors and the beneficiary of the Letter of Credit pursuant to the
Letter of Credit that the Letter of Credit shall terminate fifteen (15) days
following delivery of such notice to the addressees thereof; (iv) by written
notice to the Obligors demand payment forthwith of the amount available to be
drawn under the Letter of Credit on the date of such demand, provided that
notice of termination of the Letter of Credit shall have been given pursuant to
clause (iii) immediately preceding, whereupon the Obligors shall be obligated
hereunder to immediately deposit such amount with the Bank; (v) demand that the
Obligors procure the issuance of a substitute letter of credit from another
financial institution or otherwise arrange to purchase or defease the Bonds or
otherwise arrange for the prompt release of the Bank's obligations under the
Letter of Credit; (vi) exercise any right provided in the Indenture to cause an
event of default thereunder to be declared; and/or (vii) pursue any other remedy
available to it under this Agreement, under the Related Documents or otherwise.
Section 8. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Agreement nor consent to any departure by the Obligors therefrom shall in
any event be effective unless the same shall be in writing and signed by the
Obligors and the Bank, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
Section 9. NOTICES. Except as expressly provided for herein, all
notices and other communications provided for hereunder shall be in writing to
the addressed listed below or such other address as shall be designated by such
party in a written notice to the other party, except that communications with
the Bank with respect to drawings under the Letter of Credit shall be made as
provided in the Letter of Credit.
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If to the Bank: The Royal Bank of Scotland plc
Wall Street Plaza
88 Pine Street, 26th Floor
New York, NY 10005-1801
Attention: Derek Bonnar
Telephone: 212/269-1718
Telecopier: 212/269-8929
If to the Obligors: CenterPoint Properties Corporation
401 North Michigan Avenue, 30th Floor
Chicago, IL 60611
Attention: John S. Gates and Paul Fisher
Telephone: 312/346-5600
Telecopier: 312/456-7696
All such notices and other communications shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified
above and the appropriate answerback is received, (ii) if given by mail five
days after the date of deposit in the United States mails, registered or
certified, with return receipt requested with postage prepaid, addressed as
aforesaid; or (iii) when delivered if delivered personally or by commercial
courier.
Section 10. NO WAIVER; REMEDIES. No failure on the part of the Bank to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other further exercise thereof or the exercise of any other right.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
Section 11. RIGHT OF SETOFF. Upon the occurrence and during the
continuance of any Default or Event of Default, the Bank is hereby authorized at
any time and from time to time, without notice to the Obligors (any such notice
being expressly waived by the Obligors), to set-off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by the Bank to or for the credit
or the account of the Obligors against any and all of the obligations of the
Obligors now or hereafter existing under this Agreement, irrespective of whether
or not the Bank shall have made any demand under this Agreement and although
such obligations may be contingent and unmatured.
Section 12. INDEMNIFICATION. The Obligors hereby indemnify and hold
harmless the Bank (and its directors, officers, employees, attorneys and agents)
from and against any and all claims, damages, losses, liabilities, reasonable
costs or expenses whatsoever which the Bank may incur (or which may be claimed
against the Bank by any Person) by reason of, or in connection with: (a) the
execution and delivery or transfer of, or payment or failure to pay under, the
Letter of Credit (including, without limitation, actions commenced by any Person
including the Obligors or either of them for wrongful dishonor or to enjoin the
Bank from honoring the Letter of Credit), (b) the issuance and sale of the
Bonds, including without limitation any of the foregoing resulting
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from any misstatement or omission in the Official Statement (other than in
Appendix B to such Official Statement), or (c) the pledge of any of the Pledged
Bonds pursuant to this Agreement; provided that the Obligors shall not be
required to indemnify the Bank for any claims, damages, losses, liabilities,
costs or expenses to the extent, but only to the extent, caused by the willful
misconduct or gross negligence of the Bank in failing to observe general banking
usage or to examine with care the form of the documents presented to the Bank
under the Letter of Credit. Nothing in this Section 12 is intended to limit the
reimbursement obligation of the Obligors contained in Section 2(a) hereof. If
any action shall be brought against the Bank in respect of which indemnity may
be sought against the Obligors, the Bank shall promptly notify the Obligors in
writing, and the Obligors shall promptly assume the defense thereof, including
the employment of counsel able to represent the interests of the Bank, the
payment of all expenses and the right to negotiate settlement. If the Bank
determines, in its sole judgment, that its interests are not being diligently
and capably represented by such counsel, the Bank shall have the right to employ
separate counsel in any such action and to participate in the defense thereof,
and the fees and expenses of such counsel shall be at the expense of the
Obligors. The Obligors shall not be liable for any settlement of any such
action effected without their consent by the Bank, but if settled with the
consent of the Obligors or if there shall be a final judgment for the plaintiff
in any such action against the Obligors or the Bank, with or without the consent
of the Obligors, the Obligors agree to indemnify and hold harmless the Bank to
the extent provided herein. Notwithstanding anything to the contrary contained
in this Agreement, the Bank shall not be bound by any settlement agreement
entered into without its express written consent.
Section 13. ENVIRONMENTAL INDEMNIFICATION. Without limiting the
generality of the indemnity contained in Section 12, the Obligors
unconditionally agrees to indemnify and hold harmless the Bank, its directors,
officers, employees, agents, successors and assigns from and against any and all
losses, claims, damages, penalties, liabilities, costs and expenses (including
attorneys' fees and court costs), fines, injuries, penalties, response costs
(including without limitation, the cost of any required or necessary
investigation, testing, monitoring, repair, cleanup, detoxification, preparation
of any closure or other required plans, or other removal, response or remedial
action at or relating to the Project or the Supplemental Property (collectively,
the "Claims and Costs"), with respect to, as a direct or indirect result of, or
arising out of any of the following: (A) any Environmental Law, requirement of
any insurer of the Project or any portion thereof or the Supplemental Property
or any portion thereof, lawsuit (brought or threatened), settlement, agreement,
consent order or judgment, injunction, or restraining order, relating to the
generation, presence, storage, management, disposal, release (or threatened
release), escape, seepage, leakage or clean-up of any Hazardous materials at,
on, in, from or under all or a portion of the Project or the Supplemental
Property or any portion thereof; (B) any necessary or desirable removal,
response or remedial action with respect to the presence of Hazardous Materials
at, on, in, from or under the Project Site or the Supplemental Property or any
portion thereof; (C) the migration of Hazardous Materials from the Project Site
or the Supplemental Property or any portion thereof to any other property or
onto the Project Site or the Supplemental Property or any portion thereof from
any property or area adjacent to the Project Site or the Supplemental Property
or any portion thereof; (D) the past generation, treatment, disposal or storage
of Hazardous Materials or the transportation of Hazardous materials at, onto or
from the Project or the Supplemental Property or any portion thereof; (E) the
incorporation,
- 36 -
<PAGE>
whether prior or future, of any Hazardous Materials into the Project or the
Supplemental Property; (F) any breach of Section 5(o) or Section 6(k) contained
herein; or (g) the discharge, treatment, storage or disposal of deionization or
waste water from the Project or the Supplemental Property regardless of whether
such discharge, treatment, storage or disposal occurred or occurs prior to, on
or subsequent to the date hereof. The provisions of this Section 13 shall
survive the expiration or termination of this Agreement and the Related
Documents.
Section 14. CONTINUING OBLIGATION. This Agreement is a continuing
obligation, shall survive the termination of the Letter of Credit and shall (a)
be binding upon the Obligors, their respective successors and assigns, and (b)
inure to the benefit of and be enforceable by the Bank and its successors,
participants and assigns; provided that, except as otherwise expressly permitted
herein, none of the parties to this Agreement may assign all or any part of this
Agreement without the prior written consent of the other parties. The Bank may
sell participations herein in whole or in part to another bank or financial
institution with the consent of the Obligors, such consent not to be
unreasonably withheld, in which case the participant shall have the same rights
and benefits as the Bank hereunder, including the Bank's rights under Section
2(c) herein. The Obligors specifically acknowledge and consent to the sale of a
fifty percent (50%) participation to LaSalle, and acknowledge and agree that the
participation agreement between the Bank and LaSalle requires or may require the
Bank to obtain the consent of LaSalle to certain matters, including, without
limitation, the transfer or sale of the Project and/or the Supplemental
Property, and the Obligors agree to be bound by such requirements.
Section 15. TRANSFER OF LETTER OF CREDIT; REDUCTION OF STATED AMOUNT.
The Letter of Credit may be transferred in accordance with the provisions set
forth therein and the Stated Amount of the Letter of Credit may be reduced in
accordance with the provisions set forth therein.
Section 16. LIMITATIONS ON BANK LIABILITY. The Obligors assume all
risks of, and the Bank shall not be liable or responsible for, the acts or
omissions of the Trustee and any beneficiary or transferee of the Letter of
Credit with respect to its use of the Letter of Credit and whether any demand
under the Letter of Credit is inconsistent with any other demand or with any
Related Document. As between the Obligors and the Bank, neither the Bank nor
any of its officers or directors shall be liable or responsible for any claim,
damage, loss, liability, cost or expense which the Obligors or either or them
may incur (or which may be claimed by any Person) by reason of or in connection
with the execution and delivery or transfer of the Letter of Credit or under any
Related Document or any circumstance or event referred to in Section 4 of this
Agreement, except only that the Obligors shall have a claim against the Bank,
and the Bank shall be liable to the Obligors, to the extent, but only to the
extent, of any direct, as opposed to consequential, damages suffered by the
Obligors which the Obligors prove were caused by the Bank's gross negligence or
willful misconduct (and also except to the extent applicable law may preclude
the Obligors from waiving in advance a claim or defense involving the Bank's
failure to observe banking usage or examine with care the face of demands under
the Letter of credit). In furtherance and not in limitation of the foregoing,
the Bank may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary. In addition, the Obligors acknowledge that they
have
- 37 -
<PAGE>
specifically requested that the Letter of Credit provide for honor within a
period of time significantly shorter than the three day period for examining
documents provided for under applicable law and banking usage, and that this
feature of the Letter of Credit is not consistent with bank usage and increases
the risk that purported demands under the Letter of Credit may not receive the
same examination (and the bank may not be able to obtain the opinion of its
counsel or the Obligors with respect to such demand) had such three day period
been available to the Bank, and the Obligors accept and agree not to hold the
Bank responsible for such variance from bank usage. Any claim or demand by the
Obligors for gross negligence, willful misconduct or otherwise against the Bank
shall require that the Obligors establish that the Bank's conduct was not
occasioned or the result of such shortened examination period. The Obligors
acknowledge and agree that the Bank also shall be relieved from responsibility
for (and its right to reimbursement hereunder shall not be impaired by) any act
or omission for which banks are relieved of responsibility under the Uniform
Customs and Practice for Documentary Credits, 1993 revision, ICC Publication No.
500.
Section 17. COSTS, EXPENSES AND TAXES. The Obligors agree to pay on
demand all reasonable costs and expenses of the Bank in connection with the
preparation, execution, delivery and administration of this Agreement and any
other documents which may be delivered in connection with this Agreement,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Bank with respect thereto, with respect to any opinions rendered
by such counsel, and with respect to advising the Bank as to its rights and
responsibilities under this Agreement, and all reasonable costs and expenses in
connection with the appraisals required by Section 6(j) hereof or the
enforcement or any renegotiation of this Agreement, any Related Document and
such other documents which may be delivered in connection with this Agreement.
The Obligors shall pay or discharge or cause to be paid and discharged promptly
all stamp and other taxes, assessments and governmental charges or levies
payable, determined to be payable, or imposed upon either party in connection
with the execution and delivery of this Agreement and the documents to be
delivered by the Obligors hereunder and under any Related Document or upon the
income or profits of the Obligors before the same shall become in default;
provided, however, that the Obligors shall not be required to pay and discharge
or cause to be paid and discharged any such tax, assessment, charge, levy or
claim so long as the validity thereof shall be contested in good faith by
appropriate proceedings. The Obligors agree to hold the Bank harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes, assessments, charges and levies other than
such delays solely attributable to the gross negligence or willful misconduct of
the Bank.
Section 18. SEVERABILITY. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or nonauthorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 19. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the State of Illinois applicable to
contracts to be performed in said state.
- 38 -
<PAGE>
Section 20. SUBSTITUTE LETTER OF CREDIT ISSUING OFFICE. In the event
that the Bank determines, in its complete discretion, that the banking office of
the Bank, as set forth in the Letter of Credit shall be changed to another
banking office within the United States of America, (a) in order to avoid any
increased cost or amount referred to in Section 2(c), or (b) in the event the
adoption of any applicable law, rule or regulation, or any change therein, 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 compliance by the Bank with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency, shall make it unlawful for the Bank to maintain the Letter of
Credit at such bank's aforesaid address, then the Bank shall notify the Trustee
and the Obligors not less than 10 Business Days prior to such change and (with
the written consent of the Obligors only in the case of avoiding an increased
cost or amount as referred to in clause (a) above) upon receipt of such notice
the Letter of Credit shall be deemed issued by such other banking office in the
United States on the effective date that the Bank specifies in its notice.
[INTENTIONALLY LEFT BLANK]
- 39 -
<PAGE>
Section 21. HEADINGS. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
Section 22. ACCOUNTING TERMS AND DEFINITIONS. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with GAAP as
in effect from time to time, applied on a basis consistent (except for changes
approved by the Obligors' independent public accountants) with the most recent
audited financial statements of each Obligor delivered to the Bank.
Section 23. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
THE MILLER PARTNERSHIP, L.P., an Illinois limited
partnership
By CenterPoint Properties Corporation, a
Maryland corporation, its general partner
By
--------------------------------------
Title:
CENTERPOINT PROPERTIES CORPORATION, a Maryland
corporation
By
------------------------------------------
Title:
THE ROYAL BANK OF SCOTLAND plc, ACTING THROUGH ITS
NEW YORK BRANCH
By
------------------------------------------
Title:
- 40 -
<PAGE>
ANNEX I
LETTER OF CREDIT
<PAGE>
EXHIBIT A
Legal Description of the Project Site
<PAGE>
EXHIBIT B
Legal Description of Supplemental Property
LOCATION 1:
Parcel 1:
LOTS 1 AND 2 IN TACO BELL RESUBDIVISION, BEING A RESUBDIVISION OF
SECTION 34, TOWNSHIP 41 NORTH, RANGE 11 EAST OF THE THIRD PRINCIPAL
MERIDIAN, IN COOK COUNTY, ILLINOIS.
Parcel 2:
EASEMENT FOR THE BENEFIT OF PARCEL 1 FOR INGRESS AND EGRESS AS CREATED
BY EASEMENT AND LICENSE AGREEMENT DATED APRIL 30, 1987 AND RECORDED
MAY 8, 1987 AS DOCUMENT 87250925 AND AMENDED BY FIRST AMENDMENT
RECORDED NOVEMBER 15, 1988 AS DOCUMENT 88526155 MADE BY BOULEVARD BANK
NATIONAL ASSOCIATION, AS TRUSTEE UNDER TRUST AGREEMENT DATED OCTOBER
10, 1986 AND KNOWN AS TRUST NUMBER 8365 AND BETWEEN MCDONALD'S
CORPORATION OVER THE FOLLOWING DESCRIBED PROPERTY:
THE EAST 193.53 FEET (AS MEASURED ALONG THE EAST LINE) OF LOT 285 IN
CENTEX INDUSTRIAL PARK UNIT 165, BEING A SUBDIVISION OF THE EAST 1/2
OF THE NORTHEAST 1/4 OF SECTION 34, TOWNSHIP 41 NORTH, RANGE 11 EAST
OF THE THIRD PRINCIPAL MERIDIAN, IN COOK COUNTY, ILLINOIS.
<PAGE>
REIMBURSEMENT AGREEMENT
by and among
THE MILLER PARTNERSHIP, L.P.,
an Illinois limited partnership,
CENTERPOINT PROPERTIES CORPORATION,
a Maryland corporation,
and
THE ROYAL BANK OF SCOTLAND plc,
NEW YORK BRANCH
dated as of
March 1, 1996
-------------------------------------------------
relating to
$22,220,000 Aggregate Principal
Amount of
City of Gary, Indiana
Adjustable Rate Economic Development
Revenue Refunding Bonds, Series 1996 A
and
Taxable Adjustable Rate Economic Development
Revenue Refunding Bonds, Series 1996 B
<PAGE>
(The Miller Partnership, L.P. Project)
-45-
<PAGE>
TABLE OF CONTENTS
Page No.
--------
Section l. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . 2
Section 2. Reimbursement and Other Payments. . . . . . . . . . . . . . . 8
(a) Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Commissions and Fees . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Increased Costs. . . . . . . . . . . . . . . . . . . . . . . . . . 9
(d) Pledge of Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . 10
(e) Payments on the Pledged Bonds. . . . . . . . . . . . . . . . . . . 10
(f) Release of Pledged Bonds . . . . . . . . . . . . . . . . . . . . . 10
(g) Rights of the Bank Concerning Pledged
Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(h) Remedies in Respect of Pledged Bonds . . . . . . . . . . . . . . . 11
(i) Representations, Warranties and Covenants
Concerning Pledged Bonds . . . . . . . . . . . . . . . . . . . . 12
(j) No Dispositions, etc . . . . . . . . . . . . . . . . . . . . . . . 13
(k) Sale of Pledged Bonds. . . . . . . . . . . . . . . . . . . . . . . 13
(l) Payments and Computation of Payments and
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3. Issuance of the Letter of Credit; Conditions
Precedent to Issuance of the Letter of Credit. . . . . . . . 14
(a) Issuance of the Letter of Credit;
Substitute Letters of Credit . . . . . . . . . . . . . . . . . . 14
(b) Conditions Precedent to the Issuance of the
Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4. Obligations Absolute. . . . . . . . . . . . . . . . . . . . . 22
Section 5. Representations and Warranties. . . . . . . . . . . . . . . . 22
(a) Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Good Standing. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(c) Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(d) No Conflict. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(e) Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(f) Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(g) Financial Information. . . . . . . . . . . . . . . . . . . . . . . 24
(h) No Material Adverse Change . . . . . . . . . . . . . . . . . . . . 24
(i) Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 24
(j) Official Statement . . . . . . . . . . . . . . . . . . . . . . . . 25
<PAGE>
(k) Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(l) Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(m) Compliance with Applicable Law . . . . . . . . . . . . . . . . . . 25
(n) Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(o) Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . 25
(p) Related Documents. . . . . . . . . . . . . . . . . . . . . . . . . 27
(q) Borrower's Undertaking . . . . . . . . . . . . . . . . . . . . . . 27
Section 6. Covenants of the Obligors. . . . . . . . . . . . . . . . . . . . 28
(a) Financial Statements and Other Information . . . . . . . . . . . . 28
(b) Consolidations, Mergers. . . . . . . . . . . . . . . . . . . . . . 29
(c) Conduct of Business and Maintenance of
Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(d) Intentionally Deleted. . . . . . . . . . . . . . . . . . . . . . . 29
(e) Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . 29
(f) Inspection of Property, Books and Records. . . . . . . . . . . . . 29
(g) Amendment of Related Documents . . . . . . . . . . . . . . . . . . 30
(h) Registration of Bonds. . . . . . . . . . . . . . . . . . . . . . . 30
(i) Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(j) Required Value of Collateral; Appraisal. . . . . . . . . . . . . . 30
(k) Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . 31
(l) Sale, Substitution, or Lease of Mortgaged
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(m) Substitution and Removal of Equipment. . . . . . . . . . . . . . . 33
(n) Granting of Easements. . . . . . . . . . . . . . . . . . . . . . . 34
(o) Inspections. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(p) Corrections. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(q) Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(r) Agreement Concerning Supplemental Property
Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 9. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 10. No Waiver; Remedies. . . . . . . . . . . . . . . . . . . . . . . 39
Section 11. Right of Setoff. . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 12. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 40
- ii -
<PAGE>
Section 13. Environmental Indemnification. . . . . . . . . . . . . . . . . . 41
Section 14. Continuing Obligation. . . . . . . . . . . . . . . . . . . . . . 41
Section 15. Transfer of Letter of Credit; Reduction of
Stated Amount. . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 16. Limitations on Bank Liability . . . . . . . . . . . . . . . . . 42
Section 17. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . 43
Section 18. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 19. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 20. Substitute Letter of Credit Issuing Office. . . . . . . . . . . 44
Section 21. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 22. Accounting Terms and Definitions. . . . . . . . . . . . . . . . 45
Section 23. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 45
ANNEX I - LETTER OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . 46
EXHIBIT A - Legal Description of the Project Site. . . . . . . . . . . . . . 47
EXHIBIT B - Legal Description of Supplemental Property . . . . . . . . . . . 48
- iii -
<PAGE>
April 1, 1996
Irrevocable Letter of Credit
No. LCA 02229600417NY
Fifth Third Bank of Central Indiana,
as Trustee (the "Trustee") under the Trust
Indenture dated as of March 1, 1996,
between The City of Gary, Indiana
and the Trustee for the benefit of the holders
of $22,220,000 in aggregate principal amount
of the Adjustable Rate Economic Development
Revenue Refunding Bonds, Series 1996 A and
Taxable Adjustable Rate Economic Development
Revenue Refunding Bonds, Series 1996 B (The
Miller Partnership, L.P. Project)
251 North Illinois Street
Suite 1000
Indianapolis, Indiana 46204
Attention: Corporate Trust Department
At the request and for the account of our customers, The Miller
Partnership, L.P., an Illinois limited Partnership ("Miller") and CenterPoint
Properties Corporation, a Maryland corporation ("CenterPoint", and collectively
with Miller, the "Obligors") we establish in your favor, as Trustee (and agent
for the holders of the Bonds described below) under the Trust Indenture, dated
as of March 1, 1996 (the "Indenture"), between the City of Gary, Indiana (the
"Issuer") and you, pursuant to which $22,220,000 in aggregate principal amount
of the Issuer's Adjustable Rate Economic Development Revenue Refunding Bonds,
Series 1996 A (The Miller Partnership, L.P. Project) (the "Series 1996 A Bonds")
and Taxable Adjustable Rate Economic Development Revenue Refunding Bonds, Series
1996 B (The Miller Partnership, L.P. Project) (the "Series 1996 B Bonds", and
collectively with the Series 1996 A Bonds, the "Bonds"), are being issued, our
Irrevocable Letter of Credit No. LCA 02229600417NY, in the amount not to exceed
$22,634,774 (representing the principal amount of the Series 1996 A Bonds
($20,540,000), plus 56 days' interest thereon at a maximum rate of 12% per annum
($383,414), plus the principal amount of the Series 1996 B Bonds ($1,680,000),
plus 56 days' interest thereon at a maximum rate of 12% per annum ($31,360), in
each case calculated on the basis of a 360 day year consisting of twelve 30-day
months, all as more fully described below) effective immediately
<PAGE>
and expiring (unless earlier terminated in accordance with the provisions
hereof) on April 15, 2001, or such later date to which the Stated Expiration
Date has been extended in accordance with the terms hereof (the "Stated
Expiration Date").
We hereby irrevocably authorize you to draw on us, in accordance with the
terms and conditions hereinafter set forth, (1) in one or more drawings by your
draft payable one Business Day (as hereinafter defined) after sight, drawn on
us, and accompanied by your written and completed certificate signed by you in
substantially the form of Annex A attached hereto (such draft being your
"Interest Draft"), an amount not to exceed $414,774 (representing 56 days'
interest on the Bonds at a maximum rate of 12% per annum), subject to reduction
or reinstatement, if applicable, as hereinafter provided, (2) in one or more
drawings by your draft or drafts payable one Business Day after sight, drawn on
us, and, for each such drawing, accompanied by your written and completed
certificate signed by you in substantially the form of Annex B attached hereto
(any such draft being your "Principal Draft"), an aggregate amount not to exceed
$22,220,000, subject to reduction as hereinafter provided, (3) in one or more
drawings by your draft or drafts payable one Business Day (or in certain
circumstances as described herein on the same Business Day) after sight, drawn
on us, and, for each such drawing, accompanied by your written and completed
certificate signed by you in substantially the form of Annex C attached hereto
(any such draft being your "Bond Purchase Draft"), an aggregate amount not to
exceed $22,634,774 (representing the principal amount of the Bonds plus 56 days'
interest coverage at a maximum rate of 12% per annum), subject to reduction or
reinstatement, if applicable, as hereinafter provided, and (4) in a single
drawing by your draft payable one Business Day after sight, drawn on us, and
accompanied by your written and completed certificate signed by you in
substantially the form of Annex D attached hereto (such draft being your "Final
Draft"), an amount not to exceed $22,634,774 (representing the principal amount
of the Bonds plus 56 days' interest coverage at a maximum rate of 12% per
annum), as hereinafter provided. Any such draft, with the accompanying
certificate, drawn in strict conformity with the terms and conditions of this
Letter of Credit and presented at our office as hereinafter set forth prior to
5:00 p.m. (New York time) on any Business Day shall be honored by us before
12:00 noon (New York time) on the first Business Day thereafter in accordance
with your payment instructions; provided, however, that any Bond Purchase Draft,
with the accompanying certificate, drawn in strict conformity with the terms and
conditions of this Letter of Credit and presented at our office as hereinafter
set forth prior to 10:30 a.m. (New York time) on any Business Day shall be
honored by us before 12:30 p.m. (New York time) on the same Business Day if
specified in your payment instructions. You shall give us telephonic notice, at
(212) 269-1718, of your intention to make a drawing hereunder by your Bond
Purchase Draft, not later that 10:00 a.m. (New York time) on the day of such
drawing; provided that the giving of such telephonic notice shall not be a
condition precedent to your drawing hereunder. Notwithstanding any other
provision of this Letter of Credit, you are not authorized to draw on us
hereunder with respect to any payment of principal of or interest on any Pledged
Bonds (as defined in the Indenture).
If you shall draw on us by your Interest Draft and shall have received from
us within 15 calendar days from the date of our honoring such Interest Draft a
written direction under Section
-2-
<PAGE>
7.01(f) or 7.01(i) of the Indenture to declare the Bonds immediately due and
payable because of the occurrence and continuance of an Event of Default as
defined in the Reimbursement Agreement, dated as of March 1, 1996, by and among
the Obligors and us (the "Reimbursement Agreement"), your right to draw on us in
multiple drawings by your Bond Purchase Draft(s) or in a single drawing by your
Final Draft shall be reduced by the amount of such Interest Draft. Your right
to draw on us by your Interest Draft(s) shall also be reduced by the amount of
any drawing or drawings theretofore made on us by your Bond Purchase Draft(s)
and attributable to interest on the Bonds, unless reinstated. Your right to
draw on us by your Principal Draft(s), your Bond Purchase Draft(s) and your
Final Draft shall also be reduced by the amount of any drawing or drawings
theretofore made on us by your Principal Draft(s) and, unless reinstated, your
Bond Purchase Draft(s) attributable to principal of the Bonds.
If you shall draw on us by your Interest Draft and shall not have received
from us within 15 calendar days from the date of our honoring such Interest
Draft a written direction under Section 7.01(f) or 7.01(i) of the Indenture to
declare the Bonds immediately due and payable because of the occurrence and
continuance of an Event of Default as defined in the Reimbursement Agreement,
your right to draw on us in a single drawing by your Interest Draft under clause
(1) in the second paragraph hereof shall be automatically and irrevocably
reinstated and, effective the 16th calendar day from the date of our honoring
such Interest Draft, you shall again be irrevocably authorized to draw on us for
such Bonds in accordance with such clause (1) and the other terms and conditions
referred to or set forth above, in a drawing by your Interest Draft; and this
automatic reinstatement of your right to draw on us by your Interest Draft under
such clause (1) shall be applicable to successive drawings by your Interest
Drafts under such clause (1) so long as this Letter of Credit shall not have
terminated as set forth below.
If you shall draw on us by your Bond Purchase Draft and thereafter you
shall receive and confirm to us by telephone that you hold in trust for our
account collected and immediately available funds constituting the proceeds of
the remarketing of all or a portion of the Bonds or Beneficial Ownership
Interests (as defined in the Indenture) tendered to you for purchase in
accordance with the terms of the Indenture, such confirmation shall
automatically reinstate your right to draw on us (i) by your Interest Draft
under clause (1) above in the amount of the drawing made on us by such Bond
Purchase Draft and attributable to interest on the Bonds or Beneficial Ownership
Interests that have been remarketed and for which you are holding proceeds, (ii)
by your Principal Draft(s) under clause (2) above, in the amount of the drawing
made on us by such Bond Purchase Draft and attributable to principal on the
Bonds or Beneficial Ownership Interests that have been remarketed and for which
you are holding proceeds and (iii) by your Bond Purchase Draft(s) under clause
(3) above and your Final Draft under clause (4) above, in the amount of the
drawing made on us by such Bond Purchase Draft and attributable to the Bonds or
Beneficial Ownership Interests that have been remarketed and for which you are
holding proceeds. Upon the resale and delivery of the Bonds and transfer of the
Beneficial Ownership Interests in such amount under the Indenture and your
telephonic confirmation to us, you shall again be irrevocably authorized to draw
on us in accordance with clauses (1) through (4) in the second paragraph hereof,
and the other terms and conditions referred to or set forth above, in a single
or
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<PAGE>
multiple drawing as set forth above; and this automatic reinstatement of your
right to draw on us shall be applicable to successive drawings hereunder so long
as this Letter of Credit shall not have been terminated as set forth below. We
shall thereafter promptly confirm such reinstatement in writing, but such
written confirmation to you by us shall not be required to effect such
reinstatement.
Subject to the provisions set forth above for reinstatement of amounts
drawn under the Letter of Credit by your Interest Draft(s) and Bond Purchase
Draft(s), drawings under the Letter of Credit honored by us shall not, in the
aggregate, exceed the face amount of this Letter of Credit as reduced from time
to time as hereinabove provided.
In addition, the total amount of this Letter of Credit and the amounts
available to be drawn by you under any draft shall be decreased upon our receipt
of notice from you, in the form of your written and completed certificate signed
by you in substantially the form of Annex E attached hereto (a "Reduction
Certificate"), of a payment by means other than a draw under this Letter of
Credit of less than all of the unpaid principal of the Bonds outstanding, to the
respective amounts stated by you in such certificate. No more than one
Reduction Certificate shall be submitted to us in any six-month period, provided
that such limitation shall not apply to any Reduction Certificate in which the
reduction of the amount available to be drawn under the Letter of Credit equals
or exceeds $100,000.
Funds under this Letter of Credit are available to you against (1) your
Interest Draft accompanied by your written and completed certificate signed by
you in substantially the form of Annex A attached hereto, (2) your Principal
Draft accompanied by your written and completed certificate signed by you in
substantially the form of Annex B attached hereto, (3) your Bond Purchase Draft
accompanied by your written and completed certificate signed by you in
substantially the form of Annex C attached hereto, and (4) your Final Draft
accompanied by your written and completed certificate signed by you in
substantially the form of Annex D attached hereto. To the extent that amounts
are available to be drawn by your Interest Draft, such Interest Draft may be
presented together with your Principal Draft (but not your Final Draft). Each
such draft shall include thereon a reference to the number of this Letter of
Credit and each such draft and certificate shall be dated the date of its
presentation, shall be signed by an Authorized Officer (as defined below) and
shall be presented at our office located at 88 Pine Street, 26th Floor, New
York, New York 10005-1801, or such other address as we may specify in a writing
that mentions this letter of credit and is signed by us and received by you, or
if delivered via tested telex, to telex number WU 1620261, Answerback: RBSINY,
or if delivered via facsimile, to facsimile number (212) 480-0791, in each case
to the attention of Derek Bonnar, Vice President; provided, that any draft and
certificate presented by telex or facsimile shall be simultaneously confirmed
with our office by telephone at (212) 269-1718 (or such other telephone number
as we may designate) and an original executed copy of such draft and certificate
shall be forwarded to us promptly by first class mail or overnight mail or
courier. By "Authorized Officer" we mean any of your Vice Presidents, Assistant
Vice Presidents or Trust Officers. If requested by you, payment under this
Letter of Credit may be made by wire transfer or by deposit of immediately
-4-
<PAGE>
available funds into a designated account that you maintain with us. We agree
that all payments made by us hereunder will be made with our own funds.
This Letter of Credit shall automatically terminate upon the earliest to
occur of (i) our honoring your Final Draft hereunder, or (ii) your surrendering
this Letter of Credit to us for cancellation as a result of (A) the payment in
full of the Bonds pursuant to the provisions of the Indenture, or (B) the
acceptance by you of an Alternate Letter of Credit (as defined in the
Indenture), as certified by you to us, or (iii) the Stated Expiration Date, or
(iv) the fifth calendar day following the Fixed Interest Rate Commencement Date
(as defined in the Indenture) unless waived in writing by us prior to the Fixed
Interest Rate Commencement Date, or (v) the fifth calendar day following the
Interest Period Reset Date (as defined in the Indenture) from and after which
any of the Bonds bear interest at the Six Month Interest Rate, the One Year
Interest Rate or the Five Year Interest Rate, or (vi) the fifteenth calendar day
following delivery to you of a direction by us under Section 7.01(f) or 7.01(i)
of the Indenture to declare the Bonds immediately due and payable which has not
been rescinded.
If a demand for payment made by you hereunder does not, in any instance,
conform to the terms and conditions of this Letter of Credit, we shall give you
prompt written notice that the demand was not effected in accordance with the
terms and conditions of this Letter of Credit, stating the reasons therefore and
that we are holding any documents at your disposal or are returning the same to
you, as we may elect. Upon being notified that the demand was not effected in
conformity with this Letter of Credit, you may attempt to correct any such
non-conforming demand for payment if, and to the extent that, you are able to do
so in accordance with the terms of this Letter of Credit and within the
expiration date of the Letter of Credit.
Communications with respect to this Letter of Credit shall be in writing
and shall be addressed to us at 88 Pine Street, 26th Floor, New York, New York
10005-1801, or such other address as we may specify in a writing, or if
delivered via tested telex, to telex number WU 1620261, Answerback: RBSINY, or
if delivered via facsimile, to facsimile number (212) 480-0791, in each case to
the attention of Derek Bonnar, Vice President, and specifically referring to the
number of this Letter of Credit. By "Business Day" we mean any day on which we
are open in New York, New York for a commercial banking business.
This Letter of Credit is subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce,
Publication No. 500 (the "Uniform Customs") with the exceptions of Articles
48(f) and 48(g) thereof. This Letter of Credit shall be deemed to be a contract
made under the laws of the State of New York and shall, as to matters not
governed by the Uniform Customs, be governed by and constructed in accordance
with the laws of the State of New York, including the Uniform Commercial Code as
in effect in the State of New York.
This Letter of Credit is transferable to any transferee who has succeeded
you as Trustee under the Indenture. Each letter of credit issued upon any such
transfer may be successively
-5-
<PAGE>
transferred. Transfer of the available drawing(s) under this Letter of Credit
to such transferee shall be effected by the presentation to us of this Letter of
Credit accompanied by a written and completed certificate signed by you
substantially in the form of Annex F attached hereto. Upon such presentation we
shall forthwith transfer the same to your transferee or, if so requested by your
transferee, issue an irrevocable letter of credit to your transferee in the form
of this Letter of Credit.
The Stated Expiration Date may be extended from time to time, at our sole
discretion, by our delivery to you of a written and completed certificate in the
form of Annex G hereto. Each such extension of the Stated Expiration Date shall
become effective on the Business Day following delivery of such notice to you
and thereafter all references in this Letter of Credit or the Reimbursement
Agreement to the Stated Expiration Date shall be deemed to be references to the
date designated as such in such notice. Any date to which the Stated Expiration
Date has been extended as herein provided may, at our sole discretion, be
extended in a like manner. No further action shall be required to extend such
expiry date, and no substitute letter of credit shall be issued to effect such
extension.
This Letter of Credit sets forth in full our understanding, and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein
(including, without limitation, the Bonds), other than the certificates and the
drafts referred to herein; and any such reference shall not be deemed to
incorporate herein by reference any document, instrument or agreement except for
such certificates and such drafts.
Very truly yours,
THE ROYAL BANK OF SCOTLAND PLC
By:
---------------------------
Title:
-6-
<PAGE>
ANNEX A
CERTIFICATE FOR DRAWING IN CONNECTION
WITH THE PAYMENT OF INTEREST ON THE
CITY OF GARY, INDIANA
ADJUSTABLE RATE ECONOMIC DEVELOPMENT REVENUE REFUNDING
BONDS, SERIES 1996A (THE MILLER PARTNERSHIP, L.P. PROJECT) AND
TAXABLE ADJUSTABLE RATE ECONOMIC DEVELOPMENT REVENUE
REFUNDING BONDS, SERIES 1996B (THE MILLER PARTNERSHIP, L.P. PROJECT)
The undersigned, a duly authorized officer of Fifth Third Bank of Central
Indiana, an Indiana banking corporation (acting in its capacity as trustee under
the Indenture, the "Trustee"), hereby certifies to The Royal Bank of Scotland
plc (the "Bank"), with reference to Irrevocable Letter of Credit No. LCA
02229600417NY (the "Letter of Credit") issued by the Bank in favor of the
Trustee, that:
(1) The Trustee is the Trustee under the Indenture for the holders of
the Bonds.
(2) The Trustee is making a drawing under the Letter of Credit with
respect to a payment, pursuant to the terms of the Indenture, of interest on the
Bonds.
(3) The amount of the Interest Draft accompanying this Certificate is
$__________________, being drawn in respect of such interest, and does not
include any amount of interest on the Bonds included in any Interest Draft or
Bond Purchase Draft (that has not been reinstated) presented to you and not
dishonored by you on or prior to the date of presentation hereof.
(4) [The Interest Draft accompanying this Certificate is the first
Interest Draft presented by the Trustee under the Letter of Credit.](1) [The
Interest Draft last presented by the Trustee under the Letter of Credit was
honored by you on ______________, 19____, and the Trustee did not within 15
calendar days after such date receive a written direction from you under Section
7.01(f) or 7.01(i) of the Indenture to accelerate and declare the Bonds
immediately due and payable because of the occurrence and continuance of an
Event of Default as defined in the Reimbursement Agreement.](2)
(5) The amount of the Interest Draft accompanying this Certificate
was computed in accordance with the terms and conditions of the Bonds and the
Indenture. Such
_____________________
(1) To be used in the Certificate relating to the first Interest Draft only.
(2) To be used in each Certificate relating to each Interest Draft other than
the first Interest Draft.
<PAGE>
amount does not include any amount in respect of Pledged Bonds and does not
exceed the amount available to be drawn by an Interest Draft under the Letter of
Credit.
(6) This Certificate and the Interest Draft it accompanies are dated,
and are being presented to the Bank on the date that is one Business Day prior
to the date on which interest on the Bonds with respect to which this drawing is
being made is due and payable under the terms of the Bonds and the Indenture.
All capitalized terms used but not defined herein shall have the respective
meanings assigned thereto in the Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed this Certificate as of the
_____ day of ____________________, 19_____.
FIFTH THIRD BANK OF CENTRAL INDIANA, as Trustee
By:
-------------------------------------------
Its: Authorized Officer
<PAGE>
ANNEX B
CERTIFICATE FOR DRAWING IN CONNECTION
WITH THE PAYMENT OF UNPAID PRINCIPAL OF THE
CITY OF GARY, INDIANA
ADJUSTABLE RATE ECONOMIC DEVELOPMENT REVENUE REFUNDING
BONDS, SERIES 1996A (THE MILLER PARTNERSHIP, L.P. PROJECT) AND
TAXABLE ADJUSTABLE RATE ECONOMIC DEVELOPMENT REVENUE
REFUNDING BONDS, SERIES 1996B (THE MILLER PARTNERSHIP, L.P. PROJECT)
The undersigned, a duly authorized officer of Fifth Third Bank of Central
Indiana, an Indiana banking corporation (acting in its capacity as Trustee under
the Indenture, the "Trustee"), hereby certifies to The Royal Bank of Scotland
plc (the "Bank"), with reference to Irrevocable Letter of Credit No. LCA
02229600417NY (the "Letter of Credit") issued by the Bank in favor of the
Trustee, that:
(1) The Trustee is the Trustee under the Indenture for the holders of
the Bonds.
(2) The Trustee is making a drawing under the Letter of Credit with
respect to the payment, pursuant to the terms of the Indenture, of less than all
of the unpaid principal of the Bonds which are outstanding under the Indenture.
(3) The amount of the Principal Draft accompanying this Certificate
is $_______________, being drawn in respect of the payment of such principal,
and does not include any amount of principal on the Bonds included in any
Principal Draft, Bond Purchase Draft that has not been reinstated or Final Draft
presented to you and not dishonored by you on or prior to the date of
presentation hereof.
(4) The amount of the Principal Draft accompanying this Certificate
was computed in accordance with the terms and conditions of the Bonds and the
Indenture. Such amount does not include any amount in respect of Pledged Bonds
and does not exceed the amount available to be drawn with respect to principal
of the Bonds under the Letter of Credit.
(5) This Certificate and the Principal Draft it accompanies are
dated, and are being presented to the Bank on, the date that is one Business Day
prior to the date on which unpaid principal of the Bonds with respect to which
this drawing is being made is due and payable under the terms of the Bonds and
the Indenture.
The Trustee acknowledges that, pursuant to the terms of the Letter of
Credit, upon your honoring the Principal Draft accompanying this Certificate,
the total amount available under the Letter of Credit and the amounts available
to be drawn by the Trustee thereunder by any subsequent Principal Draft and
Final Draft are automatically decreased by an amount equal to the amount
specified in paragraph (3) above as being drawn in respect of the payment of
unpaid principal of the Bonds.
<PAGE>
All capitalized terms used but not defined herein shall have the respective
meanings assigned thereto in the Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed this Certificate as of the
______ day of _____________________, 19____.
FIFTH THIRD BANK OF CENTRAL INDIANA, as Trustee
By:
-------------------------------------------
Its: Authorized Officer
-2-
<PAGE>
ANNEX C
CERTIFICATE FOR DRAWING IN CONNECTION
WITH THE PAYMENT OF THE PURCHASE PRICE OF THE
CITY OF GARY, INDIANA
ADJUSTABLE RATE ECONOMIC DEVELOPMENT REVENUE REFUNDING
BONDS, SERIES 1996A (THE MILLER PARTNERSHIP, L.P. PROJECT) AND
TAXABLE ADJUSTABLE RATE ECONOMIC DEVELOPMENT REVENUE
REFUNDING BONDS, SERIES 1996B (THE MILLER PARTNERSHIP, L.P. PROJECT)
The undersigned, a duly authorized officer of Fifth Third Bank of Central
Indiana, an Indiana banking corporation (acting in its capacity as trustee under
the Indenture, the "Trustee"), hereby certifies to The Royal Bank of Scotland
plc (the "Bank"), with reference to Irrevocable Letter of Credit No. LCA
02229600417NY (the "Letter of Credit") issued by the Bank in favor of the
Trustee, that:
(1) The Trustee is the Trustee under the Indenture for the holders of
the Bonds.
(2) The Trustee is making a drawing under the Letter of Credit with
respect to the payment of the aggregate purchase price of the Bonds or
Beneficial Ownership Interests tendered to the Trustee for purchase pursuant to
the terms of the Bonds and of Section 2.04, 2.05 or 2.06 of the Indenture.
Sufficient funds are not available in the Remarketing Reimbursement Fund (as
defined in the Indenture) to purchase the Bonds and Beneficial Ownership
interests so tendered.
(3) The amount of the Bond Purchase Draft accompanying this
Certificate is $________________ (representing $__________ of principal and
$____________ of interest), being drawn in respect of the payment of the
purchase price of Bonds or Beneficial Ownership Interests properly tendered or
deemed tendered for purchase, and does not include any amount of principal on
the Bonds or Beneficial Ownership Interests included in any other Bond Purchase
Draft (except to the extent of your reinstatement of the amount which may be
drawn thereby under the terms of the Letter of Credit), or in any Principal
Draft or Final Draft presented to you, and not dishonored by you, on or prior to
the date of presentation hereof.
(4) The Bonds or Beneficial Ownership Interests being purchased with
the proceeds of the Bond Purchase Draft accompanying this Certificate are being
registered in the name of the Bank or its nominee and held by the Trustee for
the benefit of the Bank and the Beneficial Ownership Interests being purchased
with the proceeds of the Bond Purchase Draft accompanying this Certificate are
being registered in the name of the Bank on the books of the Depository or a
Direct Participant (each as defined in the Indenture), all in accordance with
the Indenture and the Reimbursement Agreement, dated as of March 1, 1996, by and
among the Obligors and the Bank.
<PAGE>
(5) The amount of the Bond Purchase Draft accompanying this
Certificate was computed in accordance with the terms and conditions of the
Bonds and the Indenture. Such amount does not include any amount in respect of
Pledged Bonds and does not exceed the amount available to be drawn under the
Letter of Credit with respect to the purchase of the Bonds.
(6) This Certificate and the Bond Purchase Draft it accompanies are
dated, and are being presented to the Bank on, the date that is not more than
one Business Day prior to the date on which the purchase price of the Bonds with
respect to which this Drawing is being made is due and payable under the terms
of the Bonds and the Indenture.
The Trustee acknowledges that, pursuant to the terms of the Letter of
Credit, upon your honoring the Bond Purchase Draft accompanying this
Certificate, the total amount of the Letter of Credit and the amounts available
to be drawn by the Trustee thereunder by (i) any subsequent Bond Purchase Draft,
Principal Draft, and Final Draft are automatically decreased by an amount equal
to the amount specified in paragraph (3) above as being drawn in respect of the
payment of unpaid principal of the Bonds or Beneficial Ownership Interests,
unless such amount is reinstated in the manner provided in the Letter of Credit,
and (ii) any subsequent Interest Draft, Bond Purchase Draft and Final Draft is
automatically decreased by an amount equal to the amount specified in paragraph
(3) above as being drawn in respect of the payment of unpaid interest on the
Bonds, unless such amount is reinstated in the manner provided in the Letter of
Credit.
All capitalized terms used but not defined herein shall have the respective
meanings assigned thereto in the Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed this Certificate as of the
______ day of ___________________, 19____.
FIFTH THIRD BANK OF CENTRAL INDIANA, as Trustee
By:
-------------------------------------------
Its: Authorized Officer
-2-
<PAGE>
ANNEX D
CERTIFICATE FOR DRAWING IN CONNECTION
WITH THE PAYMENT OF ENTIRE OUTSTANDING
PRINCIPAL OF AND INTEREST ON THE
CITY OF GARY, INDIANA
ADJUSTABLE RATE ECONOMIC DEVELOPMENT REVENUE REFUNDING
BONDS, SERIES 1996A (THE MILLER PARTNERSHIP, L.P. PROJECT) AND
TAXABLE ADJUSTABLE RATE ECONOMIC DEVELOPMENT REVENUE
REFUNDING BONDS, SERIES 1996B (THE MILLER PARTNERSHIP, L.P. PROJECT)
The undersigned, a duly authorized officer of Fifth Third Bank of Central
Indiana, an Indiana banking corporation (acting in its capacity as trustee under
the Indenture, the "Trustee"), hereby certifies to The Royal Bank of Scotland
plc (the "Bank"), with reference to Irrevocable Letter of Credit No. LCA
02229600417NY (the "Letter of Credit") issued by the Bank in favor of the
Trustee, that:
(1) The Trustee is the Trustee under the Indenture for the holders of
the Bonds.
(2) The Trustee is making a drawing under the Letter of Credit with
respect to the payment of the unpaid principal amount of, and up to 56 days'
interest on, all of the Bonds which are outstanding under the Indenture.
(3) The amount of the Final Draft accompanying this Certificate is
equal to the sum of (i) $__________________ being drawn in respect of unpaid
principal of the Bonds and (ii) $_________________ being drawn in respect of
unpaid interest on the Bonds, and does not include any amount of principal of or
interest on the Bonds or Beneficial Ownership Interests included in any Interest
Draft or Bond Purchase Draft that has not been reinstated, or Principal Draft
presented and not dishonored by you on or prior to the date of this Certificate.
(4) The amount of the Final Draft accompanying this Certificate was
computed in accordance with the terms and conditions of the Bonds and the
Indenture. Such amount does not include any amount in respect of Pledged Bonds
and does not exceed the amount available to be drawn by a Final Draft under the
Letter of Credit.
(5) This Certificate and the Final Draft it accompanies are dated,
and are being presented to the Bank on the date that is one Business Day prior
to the date on which the unpaid principal of, and interest on, all of the Bonds
which are outstanding under the Indenture are due and payable under the terms of
the Bonds and the Indenture.
The Trustee acknowledges that, pursuant to the terms of the Letter of
Credit, upon your honoring the Final Draft accompanying this Certificate, the
entire amount available to be drawn by the Trustee under the Letter of Credit
shall have been drawn and the Letter of Credit shall automatically terminate.
<PAGE>
All capitalized terms used but not defined herein shall have the respective
meanings assigned thereto in the Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed this Certificate as of this
______ day of ____________________, 19____.
FIFTH THIRD BANK OF CENTRAL INDIANA, as Trustee
By:
-------------------------------------------
Its: Authorized Officer
-2-
<PAGE>
ANNEX E
CERTIFICATE FOR THE REDUCTION OF AMOUNTS
AVAILABLE UNDER LETTER OF CREDIT NO. LCA 02229600417NY
ISSUED IN CONNECTION WITH THE
CITY OF GARY, INDIANA
ADJUSTABLE RATE ECONOMIC DEVELOPMENT REVENUE REFUNDING
BONDS, SERIES 1996A (THE MILLER PARTNERSHIP, L.P. PROJECT) AND
TAXABLE ADJUSTABLE RATE ECONOMIC DEVELOPMENT REVENUE
REFUNDING BONDS, SERIES 1996B (THE MILLER PARTNERSHIP, L.P. PROJECT)
The undersigned, a duly authorized officer of Fifth Third Bank of Central
Indiana, an Indiana banking corporation (acting in its capacity as trustee under
the Indenture, the "Trustee"), hereby certifies to The Royal Bank of Scotland
plc (the "Bank"), with reference to Irrevocable Letter of Credit No. LCA
02229600417NY (the "Letter of Credit") issued by the Bank in favor of the
Trustee, that:
(1) The Trustee is the Trustee under the Indenture for the holders of
the Bonds.
(2) The Trustee hereby notifies you that on or prior to the date
hereof $____________ in aggregate principal amount of the Bonds have been paid
(or provision for payment thereof has been made) with Eligible Funds (as defined
in the Indenture) pursuant to the Indenture.
(3) After giving effect to such payment(s), the aggregate principal
amount of all of the Bonds outstanding under the Indenture is or will be, as the
case may be $__________.
(4) The maximum amount of interest, computed in accordance with the
terms and conditions of the Bonds and the Indenture, accruing on the Bonds
referred to in paragraph (3) above in any period of 56 days is $_______________.
(5) The amount available to be drawn by the Trustee under the Letter
of Credit by any Interest Draft is hereby reduced to $____________ (such amount
being equal to the amount specified in paragraph (4) above).
(6) The aggregate amount available to be drawn by the Trustee under
the Letter of Credit by any Principal Draft(s) is hereby reduced to
$_______________ (such amount being equal to the amount specified in paragraph
(3) above).
(7) The amount available to be drawn by the Trustee under the Letter
of Credit by any Bond Purchase Draft(s) or Final Draft is hereby reduced to
$______________ (such amount being equal to the sum of the amounts specified in
paragraphs (3) and (4) above).
<PAGE>
(8) Either (a) the reduction of the amount available to be drawn
under the Letter of Credit evidenced by this Reduction Certificate exceeds
$100,000 or (b) no other Reduction Certificate, other than a Reduction
Certificate in which the reduction of the amount available to be drawn under the
Letter of Credit equaled or exceeded $100,000, has been submitted to the Bank in
the six-month period immediately preceding the date hereof.
The Trustee acknowledges that, pursuant to the terms of the Letter of
Credit, the amounts available to be drawn thereunder by an Interest Draft,
Principal Draft, Bond Purchase Draft and Final Draft shall be reduced to the
respective amounts set forth above effective upon the later of (i) the date on
which you received this Certificate or (ii) ___________________, 19____.
All capitalized terms used but not defined herein shall have the respective
meanings assigned thereto in the Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed this Certificate this _______
day of ___________________, 19_____.
FIFTH THIRD BANK OF CENTRAL INDIANA, as Trustee
By:
-------------------------------------------
Its: Authorized Officer
-2-
<PAGE>
ANNEX F
INSTRUCTIONS TO TRANSFER
_______________, 19_____
The Royal Bank of Scotland plc
88 Pine Street
26th Floor
New York, New York 10005-1801
Attention: Derek Bonnar, Vice President
Re: The Royal Bank of Scotland plc Irrevocable Letter of Credit No. LCA
02229600417NY
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
-------------------------
(Name of Transferee)
-------------------------
(Address)
all rights of the undersigned beneficiary to draw under the above Letter of
Credit. Such transferee has succeeded the undersigned beneficiary as Trustee
under the Indenture.
By this transfer, all rights of the undersigned beneficiary in such Letter
of Credit are transferred to the transferee and the transferee shall hereafter
have the sole rights as beneficiary thereof; PROVIDED, HOWEVER, that no rights
shall be deemed to have been transferred to the transferee until such transfer
complies with the requirements of such Letter of Credit pertaining to transfers.
Such Letter of Credit is returned herewith and in accordance therewith we
ask you to transfer the same to the transferee or, if so requested by the
transferee, to issue a new irrevocable letter of credit in favor of the
transferee with provisions consistent with such Letter of Credit.
<PAGE>
All capitalized terms used but not defined herein shall have the respective
meanings assigned thereto to such Letter of Credit.
FIFTH THIRD BANK OF CENTRAL INDIANA, as Trustee
By:
-------------------------------------------
Its: Authorized Officer
-2-
<PAGE>
ANNEX G
EXTENSION CERTIFICATE
_________________, 19_____
[Trustee address]
___________________________
___________________________
Attention: _______________________
Re: The Royal Bank of Scotland plc
Irrevocable Letter of Credit No. LCA 02229600417NY
Securing the City of Gary, Indiana
Adjustable Rate Economic Development Revenue Refunding
Bonds, Series 1996A (The Miller Partnership, L.P. Project) and
Taxable Adjustable Rate Economic Development Revenue
Refunding Bonds, Series 1996B (The Miller Partnership, L.P. Project)
Ladies and Gentlemen:
Reference is made to that certain Irrevocable Letter of Credit No. LCA
02229600417NY dated April 1, 1996 (the "Letter of Credit") issued by The Royal
Bank of Scotland plc in your favor as beneficiary. We hereby extend the Stated
Expiration Date (as defined in the Letter of Credit) from _____________________,
_______ to _______________________, ______.
Other than as set forth above, all rights of the beneficiary to draw under
the above Letter of Credit shall remain as set forth in such Letter of Credit.
THE ROYAL BANK OF SCOTLAND plc
By:
-------------------------------------------
Title:
-----------------------------------
<PAGE>
REMARKETING AGREEMENT
This Remarketing Agreement, dated as of April 1, 1996, is by and among
EVEREN Securities, Inc., a corporation organized under the laws of the State of
Delaware ("EVEREN"), and GATES Capital Corporation, a corporation organized
under the laws of the State of New York ("GATES"), as Remarketing Agent (jointly
the "Remarketing Agent"), the City of Gary, Indiana, a municipal corporation and
political subdivision organized and existing under the laws of the State of
Indiana, (the "Issuer") and The Miller Partnership, L.P., an Illinois limited
partnership (the "Borrower"). This Remarketing Agreement is executed in
connection with the offering and sale from time to time in the secondary market
of all or part of $20,540,000 and $1,680,000 aggregate principal amounts of
Adjustable Rate Economic Development Revenue Refunding Bonds, Series 1996 A and
Taxable Adjustable Rate Economic Development Revenue Refunding Bonds, Series
1996 B, respectively (collectively the "Bonds"), issued by the Issuer, under and
pursuant to an ordinance adopted by the Issuer on March 5, 1996 (the "Bond
Ordinance"), and that certain Trust Indenture dated as of March 1, 1996,
relating to the Bonds (the "Indenture"), by and among the Issuer, Borrower and
Fifth Third Bank of Central Indiana, a Banking organization duly organized,
existing and authorized to accept and execute trusts of the character therein
set out under the laws of the State of Indiana, as Trustee (the "Trustee"),
having its principal corporate trust office at Indianapolis, Indiana (together
with any successor trustee under the Indenture the "Trustee" and as tender agent
the "Tender Agent").
All capitalized terms used herein and not defined herein shall have
the meanings specified in the Indenture, unless the context otherwise requires.
Simultaneously with the execution and delivery of this Remarketing
Agreement, the Borrower and CenterPoint Properties Corporation, a Maryland
corporation, have entered into that certain Reimbursement Agreement, dated as of
March 1, 1996 (the "Letter of Credit Agreement"), by and between the Borrower
and The Royal Bank of Scotland plc, through its New York Branch (the "Bank"),
and the Bank has issued its irrevocable, direct-pay, letter of credit relating
to the Bonds (the "Letter of Credit") in favor of the Trustee.
Section 1. APPOINTMENT OF REMARKETING AGENT: OBLIGATIONS AND
RESPONSIBILITIES OF REMARKETING AGENT
(a) EVEREN and GATES are hereby appointed the Remarketing Agent for
the Bonds in accordance with the terms of the Indenture with the consent of the
Trustee. Subject to the terms and conditions herein contained, the Borrower
hereby consents to the appointment of EVEREN and GATES, and EVEREN and GATES
hereby accept such appointment, as Remarketing Agent in connection with the
offering and sale of the Bonds from time to time in the secondary market
subsequent to the date hereof. The Remarking Agent agrees that, so long as it
is the Remarketing Agent under the Remarketing Agreement, it will, at the times
and in the manner required by the Indenture, send notice to the Borrower, the
Bank, the Paying Agent and the Trustee advising them of the interest rate on the
Bonds, determined as provided in the Indenture, or it will advise such parties
that it is unable to determine an interest rate or rates as
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of such date. In determining the interest rate on the Bonds in accordance with
the terms of the Indenture, the remarketing agent shall not be acting as an
agent of the Borrower.
(b) It is understood by the Issuer, the Borrower, and the Remarketing
Agent that EVEREN and GATES shall collectively act as the sole and exclusive
Remarketing Agent under this Remarketing Agreement and the Indenture until such
time as EVEREN and GATES are collectively removed or resign as Remarketing
Agent.
(c) The Remarketing Agent hereby agrees to use its best efforts to
offer for sale and to sell at par in the secondary market the Bonds which are to
be remarketed in accordance with the provisions of the Indenture, including, but
not limited to, any Pledged Bonds which the Bank has requested in writing to be
remarketed. The Remarketing Agent shall sell such Bonds at a price of 100% of
the principal amount thereof plus accrued interest, if any. The Remarketing
Agent shall not remarket any such Bonds if the Bank is then in default of its
obligations under the Letter of Credit. The Remarketing Agent shall not
remarket any such Bonds to the Issuer, the Borrower, any affiliate of the
Borrower, or any guarantor of the reimbursement obligation of the Borrower to
the Bank. The Borrower hereby agrees not to purchase any of the Bonds, except
as permitted by the Indenture.
(d) The Remarketing Agent shall determine each interest rate for the
Bonds during interest rate periods pursuant to and in accordance with the
Indenture and shall not be required to consult or confer with the Issuer, the
Trustee, the Bank or the Borrower with respect to such actions.
(e) Subject to the terms and conditions hereof, the Remarketing Agent
also agrees to perform the other obligations of the Remarketing Agent as set
forth in the Indenture (which provisions are incorporated herein by reference)
and as may be reasonably requested by the Issuer and the Borrower and agreed to
by the Remarketing Agent.
(f) It is understood and agreed upon by the parties hereto that the
Remarketing Agent is undertaking its obligations pursuant to Section 1(c) hereof
on a best-efforts basis. The Remarketing Agent shall not act as an underwriter
for the Bonds and is in no way obligated to advance its own funds to purchase
any Bonds at any time under any circumstances.
(g) The Remarketing Agent agrees (i) to hold all Bonds delivered to
it in accordance with the Indenture in trust for the benefit of the holders of
such Bonds until such Bonds shall have been delivered by the Remarketing Agent
to the purchasers thereof or otherwise delivered as provided in the Indenture;
and (ii) to hold all moneys delivered to it for payment of the purchase price of
the Bonds remarketed by it in trust for the benefit of the respective
Bondholders to which such moneys are due until such moneys have been paid to
such Bondholders or otherwise paid as provided in the Indenture.
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(h) Neither the Issuer, the Borrower, nor any guarantor of the
reimbursement obligation of the Borrower to the Bank shall have any right, title
or interest in the proceeds of any Bonds remarketed.
(i) No obligation imposed on the Remarketing Agent under the
Indenture or hereunder or any actions taken by the Remarketing Agent in
performing such obligations shall constitute a warranty by the Remarketing Agent
that, with respect to any interest rate determination, there is a market for the
sale of Bonds affected thereby or that such Bonds can be sold at par, or that,
with respect to any remarketing effort it is required to or will purchase any
Bonds or expend any of its own funds or incur any liability for any portion of
the price of the Bonds; provided, however, nothing contained herein shall
prohibit the Remarketing Agent from purchasing Bonds or functioning as a broker
or dealer with respect to the Bonds.
(j) The duties of the Remarketing Agent shall be solely as provided
herein and in the Indenture and no implied covenants or obligations shall be
read into this Remarketing Agreement against the Remarketing Agent.
(k) To the extent Bonds tendered for purchase or deemed tendered for
purchase are not remarketed by the Remarketing Agent on the applicable purchase
date, the Remarketing Agent understands that the Paying Agent shall draw on the
Letter of Credit to satisfy such purchase obligations with respect to such Bonds
in accordance with the terms of the Indenture. The Remarketing Agent shall
continue to use its best efforts to remarket any Bonds purchased by a draw under
the Letter of Credit in accordance with the terms of this Remarketing Agreement.
(l) Notices or reports required by this Section may be given by
telephone, telecopier, interbank telex, telegram or other communication device,
promptly confirmed by a written notice to the Trustee, the Paying Agent, the
Bank, the Issuer and the Borrower.
Section 2. FURNISHING OF OFFERING MATERIALS.
(a) The Borrower agrees to furnish the Remarketing Agent with as many
copies as the Remarketing Agent may reasonably request of the Official Statement
and any amendment or supplement thereto (a "Supplement") and the Borrower agrees
to furnish the Remarketing Agent with such other information with respect to the
Borrower, the Bank, the Project and the Bonds as the Remarketing Agent shall
reasonably request from time to time. The Borrower agrees not to request the
amendment or supplementation of the Official statement or any Supplement prior
to notifying the Remarketing Agent in writing of the proposed amendment or
supplementation. If, at any time during the term of this Remarketing Agreement,
any event known to the Borrower relating to or affecting the Borrower, the Bank,
the Project or the Bonds shall occur which materially affects the accuracy or
completeness of any statement of a material fact contained in any Official
Statement or any Supplement, the Borrower shall promptly notify the Remarketing
Agent of the circumstances and details of such event, and if in the opinion of
the Remarketing Agent such event requires the preparation and publication of a
Supplement, the Borrower agrees, at the expense of the Borrower, to prepare a
Supplement in a form and in a
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manner approved by the Remarketing Agent. The Borrower shall provide such
certificates and opinions of counsel with respect to the accuracy and
completeness of any Supplement as may be requested by the Remarketing Agent.
(b) The Borrower and the Remarketing Agent acknowledge that the
Remarketing Agent may be obligated to comply with applicable provisions of Rule
15c2-12 under the 1934 Act in connection with certain remarketings of the Bonds,
including a remarketing upon a conversion of the Interest Rate Mode on the
Bonds. The Borrower agrees to cooperate with the Remarketing Agent to enable
the Remarketing Agent to comply with applicable provisions of Rule 15c2-12,
including the preparation of a disclosure document satisfactory to the
Remarketing Agent and its counsel, "deeming final" such disclosure document as
provided in Rule 15c2-12, providing sufficient copies of such disclosure
document within the time required by Rule 15c2-12 (together with such
certificates and opinions of counsel with respect to the accuracy and
completeness of such disclosure documents as may be reasonably requested by the
Remarketing Agent) and taking all such other action as may be reasonably
requested by the Remarketing Agent so as to enable the Remarketing Agent to
comply with applicable provisions of Rule 15c2-12.
Section 3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE BORROWER
(a) The Borrower represents and warrants to the Remarketing Agent and
the Issuer that all of the representations and warranties of the Borrower
contained in the Indenture and the Letter of Credit Agreement are true and
correct as if the same were made to the Issuer and the Remarketing Agent on the
date hereof.
(b) The Borrower represents and warrants to the Remarketing Agent and
the Issuer that this Remarketing Agreement constitutes a legal, valid and
binding obligation of the Borrower, enforceable in accordance with its terms,
subject to applicable bankruptcy, reorganization, insolvency, moratorium and
other laws of general applicability relating to or affecting creditors' rights
generally and the application of general principles of equity regardless of
whether such enforceability is considered in a proceeding in equity or at law.
(c) The Borrower represents and warrants to the Remarketing Agent
that with respect to the bonds, (i) the Borrower has duly ratified the
distribution of the Preliminary Official Statement; and (ii) it has duly
ratified the execution and delivery of, and the distribution of, the Official
Statement.
(d) The Borrower agrees with the Remarketing Agent that if, prior to
the termination of this Remarketing Agreement, any event shall occur or
condition shall exist relating to or affecting the Borrower, the Project, the
Bank or the ability of the Borrower or the Bank to pay the principal of,
purchase price of, or interest on the Bonds, pursuant to the Letter of Credit,
the Letter of Credit Agreement and the Indenture, which might materially
adversely affect the interests of the holders of the Bonds, or which might
affect the correctness of any statement of a material fact contained in any
Official Statement or Supplement or any additional reoffering memorandum, the
Borrower will promptly notify the Remarketing Agent of the circumstances and
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details of such event or condition. If, and as a result of such event or
condition, or any other event or condition, it is necessary or advisable, in the
reasonable opinion of the Remarketing Agent, to amend or supplement such
Official Statement or Supplement or any additional reoffering memorandum, in
light of such event or condition or such other event or condition, the Borrower
will have prepared forthwith, at the sole expense of the Borrower, a Supplement
or amendment to such Official Statement or any additional reoffering memorandum,
which Supplement, amendment or additional reoffering memorandum shall be in form
and substance satisfactory to the Remarketing Agent, the Borrower and their
respective counsel.
(e) The Borrower represents and warrants to the Remarketing Agent
that the Borrower will furnish such information, execute such documents and take
such other action in cooperation with the Remarketing Agent as the Remarketing
Agent may reasonably request in order to remarket the Bonds, provided that the
Borrower shall not be required to take any action which would submit it to, or
constitute consent to, service of process or to qualify as a foreign corporation
in any jurisdiction where it is not otherwise presently subject to service or so
qualified, as the case may be.
(f) The Borrower agrees that it will inform the Remarketing Agent of
any material adverse change which becomes known to it regarding the financial
condition of the Bank.
(g) The Borrower agrees that it shall immediately notify the
Remarketing Agent by telephone, confirmed in writing of:
(i) the execution of any amendments to the Indenture or the
Letter of Credit Agreement; or
(ii) the obtaining of any substitute Letter of Credit; or
(iii) The occurrence or existence of any event or condition
which becomes known to the Borrower and which would make any of its
representations contained herein or incorporated herein by reference
incorrect or untrue in any material respect if made on and as of any
day during the term of this Remarketing Agreement; or
(iv) the extension or termination of the Letter of Credit or any
substitute Letter of Credit; or
(v) any resignation or removal of, and appointment of a
successor for, the Trustee, the Tender Agent, the Registrar or the
Paying Agent.
Section 4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE ISSUER.
(a) The Issuer represents and warrants to the Remarketing Agent that
its following representations and warranties are true and correct:
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(i) The Issuer is a municipal corporation and political
subdivision duly organized and existing under the laws of the State of
Indiana.
(ii) The Issuer has full power and authority pursuant to the law
and the Act to act with respect to all transactions contemplated by
this Remarketing Agreement, the Bonds, the Bond Ordinance and the
Indenture, and to carry out and consummate all other transactions
contemplated by each of the aforesaid documents.
(iii) The Issuer has duly authorized the execution, delivery and
due performance of this Agreement, the Bonds, the Indenture, and the
taking of any and all such action as may be required on the part of
the Issuer to carry out, give effect to and consummate the
transactions contemplated by this Remarketing Agreement and all
approvals necessary in connection with the foregoing have been
received.
(iv) The Bonds have been duly authorized, issued, executed,
authenticated and delivered and constitute the legal, valid and
binding special obligations of the Issuer (payable solely from the
revenues and other funds provided in the Indenture) and will be
entitled to the benefit of the Indenture.
(v) The execution and delivery of this Remarketing Agreement and
compliance with the provisions thereof, will not conflict with or
constitute on the part of the Issuer a violation of the Constitution
of the State of Indiana or a violation of, breach of or default under
its by-laws or any statute, indenture, mortgage, deed of trust, note
agreement or other agreement or instrument to which the Issuer is a
party or by which the Issuer is bound, or, to the knowledge of the
Issuer, any order, rule or regulation of any court of governmental
authority or body having jurisdiction over the Issuer or any of its
activities or properties; and all consents, approvals, authorizations
and orders of governmental or regulatory authorities which are
required for the consummation of the transactions contemplated thereby
have been obtained.
(vi) There is no action, suit, proceeding or investigation at
law or in equity to which the Issuer is a party by or before any court
or public authority, or, to the best of the knowledge of the Issuer,
any basis therefor, wherein an unfavorable decision, ruling or finding
would adversely affect the transactions contemplated hereby and by the
Indenture, or which in any way, would adversely affect the validity of
the Bonds, the Bond Ordinance, the Indenture, this Remarketing
Agreement, or any agreement or instrument to which the Issuer is a
party and which is used or contemplated for use in consummation of the
transactions contemplated hereby or by the Indenture.
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(vii) The Issuer makes no representation or warranty concerning
the financial position or business condition of the Borrower, nor does
it represent or warrant as to the correctness of any statements or
representations made or materials furnished by the Borrower in
connection with the remarketing of the Bonds.
(b) The Issuer agrees with the Remarketing Agent that if, prior to
the termination of this Remarketing Agreement, any event shall occur as a result
of which it is deemed necessary by the Remarketing Agent to amend or supplement
the Official Statement relating to the Bonds to make that Official Statement not
misleading in any material respect in light of the circumstances existing at the
time it is delivered to a purchaser, or if it is necessary to amend or
supplement the Official Statement to comply with law, the Issuer, if notified of
the occurrence of such event by the Borrower and so requested, will cooperate
with the Borrower and the Remarketing Agent in the preparation of a Supplement
or any additional reoffering memorandum, at the sole expense of the Borrower
which Supplement or additional reoffering memorandum shall be in form and
substance satisfactory to the Remarketing Agent, Bond Counsel and the Borrower.
(c) The Issuer covenants with the Remarketing Agent that the Issuer
will furnish such information with respect to the Issuer as the Remarketing
Agent may reasonably request in order to remarket the Bonds.
Section 5. CONDITIONS TO REMARKETING AGENT'S OBLIGATION. The
obligations of the Remarketing Agent under this Remarketing Agreement have been
undertaken in reliance on, and shall be subject to, the due performance by the
Borrower of its obligations and agreements to be performed hereunder and to the
accuracy of and compliance with the representations, warranties, covenants and
agreements of the Borrower contained herein, on and as of the date of delivery
of this Remarketing Agreement and on and as of each date on which Bonds are to
be remarketed pursuant to this Remarketing Agreement; and to the further
conditions contained in the Bond Ordinance, the Indenture, the Letter of Credit
Agreement (including the exhibits thereto required to be executed and delivered
as a condition to the issuance of the Letter of Credit) and the Letter of
Credit, that such documents shall be in full force and effect and shall not have
been amended, modified or supplemented in any way which would materially and
adversely affect the Bonds, except as may have been agreed to in writing by the
Remarketing Agent; that no Event of Default under such documents shall have
occurred and be continuing, that the opinions relating to the financing which
have been previously delivered have not been withdrawn or modified, the
financing which have been previously delivered have not been withdrawn or
modified, except as agreed to by the Remarketing Agent; and that there shall be
in full force and effect additional resolutions, agreement, certificates which
shall be (1) considered necessary by the Remarketing Agent for the continued
remarketing of the Bonds and (2) reasonably satisfactory in form and substance
to Bond Counsel and counsel for the Remarketing Agent.
Section 6. RECORDS. The Remarketing Agent shall keep records of its
Bond remarketing transactions. Such records shall be kept in a manner
consistent with prudent industry
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practice. The Borrower may examine such records at times reasonably established
by the Remarketing Agent.
Section 7. TERM AND TERMINATION OF REMARKETING AGREEMENT.
(a) This Remarketing Agreement shall become effective upon its
execution by EVEREN and GATES, the Issuer and the Borrower, and shall continue
in full force and effect while the Bonds are outstanding, subject to the right
of EVEREN and GATES to resign as Remarketing Agent as provided in the Indenture.
In addition, the Agreement may be terminated by the Borrower, in its sole
discretion, on thirty (30) days prior written notice, by the filing by the
Borrower of an instrument to such effect with the Remarketing Agent, the Issuer,
the Bank, the Tender Agent, and the Trustee. Upon resignation or removal of the
Remarketing Agent, a successor remarketing agent shall be appointed in
accordance with the provisions of the Indenture.
(b) In addition to the provisions of subsection (a) hereof, the
Remarketing Agent may terminate its obligations under this Remarketing Agreement
upon thirty (30) days notice, by notifying the Borrower, the Issuer, the Bank,
the Tender Agent, the Trustee and the Registrar of its election so to do, if:
(i) Legislation shall be favorably reported by a committee of
House of Representatives or the Senate of the Congress of the United
States, or shall be introduced by Committee, by amendment or
otherwise, in, or be enacted by, the House of Representatives or the
Senate, or shall be recommended by the President of the United States
to the Congress of the United States for passage by the Congress of
the United States, or a decision by a court of the United States shall
be rendered, or a stop order, ruling, regulation or official statement
by, or on behalf of, the United States Securities and Exchange
Commission or other governmental authority having jurisdiction of the
subject matter shall be made or proposed, to the effect that the
offering or sale of obligations of the character of the Bonds or the
issuance of the Letter of Credit, as contemplated hereby, is or would
be in violation of any provision of the Securities Act of 1933, as
amended and as then in effect (the "Securities Act"), or the
Securities Exchange Act of 1934, as amended and as then in effect or
that the Indenture shall be required to be qualified under the Trust
Indenture Act of 1939, as amended and as then in effect, or with the
purpose or effect of otherwise prohibiting the offering or sale of
obligations of the character of the Bonds, or the Bonds, as
contemplated hereby, without registration under the Securities Act or
qualification of the Indenture under the Trust Indenture Act of 1939,
as amended; or
(ii) Legislation shall be favorably reported by a committee of
the House of Representatives or the Senate of the Congress of the
United States, or shall be introduced by committee, by amendment or
otherwise, in, or be enacted by, the House of Representatives or the
Senate, or shall be recommended by the President of the United States
to the Congress of the United States for passage by the
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Congress of the United States, or a decision by a court of the United
States shall be rendered, or a ruling, regulation or order of the
Treasury Department of the United States or the Internal Revenue
Service shall be made or proposed, to the effect of imposing federal
income taxation, or any other event shall have occurred which results
in the imposition of federal income taxation (other than tax laws or
regulations in effect on the date hereof) upon interest received on
the Bonds; or
(iii) Any information shall have become known, which, in the
Remarketing Agent's reasonable opinion makes untrue any statement of a
material fact contained in the Official Statement, as then
supplemented or amended in accordance with Section 2 hereof, or causes
the Official Statement, as so supplemented or amended, to contain any
untrue statement of a material fact or to omit to state a material
fact necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading; or
(iv) Any legislation, resolution, ordinance, rule or regulation
shall be introduced in, or be enacted by, any federal governmental
body, department or authority of the United States, any State of
Indiana governmental body, department or authority, the State of
Indiana, or a decision by any court of competent jurisdiction within
the United States or the State of Indiana shall be rendered which, in
the Remarketing Agent's reasonable opinion, materially adversely
affects the marketability of the Bonds; or
(v) Additional material restrictions not in force as of the date
hereof shall have been imposed upon trading in securities by any
governmental authority or by any national securities exchange, which,
in the Remarketing Agent's reasonable opinion, material adversely
affects the marketability of the Bonds; or
(vi) Any governmental authority shall impose, as to the Bonds,
or obligations of the character of the Bonds, any material
restrictions not now in force, or increase materially those now in
force which, in the Remarketing Agent's reasonable opinion, materially
adversely affects the marketability of the Bonds; or
(vii) A banking moratorium shall have been established by
federal or Indiana authorities; or
(viii) A war involving the United States shall have been
declared, or any existing conflict involving the armed forces, or
emergency relating to the effective operation of government or the
financial community shall have occurred, which, in the Remarketing
Agent's reasonable opinion, materially adversely affects the
marketability of the Bonds; or
(ix) Any event, including without limitation, the bankruptcy or
default of any issuer of, or obligor on, securities shall have
occurred that in the
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Remarketing Agent's reasonable opinion makes the marketing of
securities of the character of the Bonds impracticable or impossible.
Section 8. PAYMENT OF FEES AND EXPENSES.
(a) In consideration of the services to be performed by the
Remarketing Agent under this Remarketing Agreement, the Borrower agrees to pay
to GATES, on behalf of itself and EVEREN, the following fees in respect of the
Bonds: a fee equal to 1/8 of 1% per annum of the principal amount of Bonds then
outstanding for Bonds bearing interest at the Adjustable Rate Modes, payable
quarterly in advance for the actual number of days elapsed, upon receipt of
invoice in each year commencing April 1, 1996. Payments with respect to the
fees payable to the Remarketing Agent under this Section that are made in excess
of 20 Business Days after, shall bear interest at the Prime Rate of interest
plus two (2%) percent annually. For purposes of the Remarketing Agreement, the
Prime Rate shall mean the rate announced from time to time by a Money Center
Bank as its "Prime Rate."
(b) The Borrower shall bear all reasonable costs and expenses
incident to the performance of the obligations of the Remarketing Agent
hereunder including the fees and disbursements of counsel to the Remarketing
Agent in connection with the preparation and review of any amendment or
supplement to the Official Statement or any additional material described in
and/or furnished pursuant to Section 2 hereof.
Section 9. INDEMNIFICATION.
(a) To the extent, if any, that a court of competent jurisdiction
would find such obligation enforceable, the Borrower and its respective
successors and assigns, shall jointly and severally indemnify and hold harmless
the Remarketing Agent and its members, officers, directors and employees and
each person, if any, who controls the Remarketing Agent within the meaning of
Section 15 of the Securities Act (each an "Indemnified Person"), from and
against any and all losses, claims, damages, liabilities and expenses (including
without limitation costs of investigation and attorneys' fees and disbursements)
to which any such person or persons may become subject insofar as any such loss,
claim, damage, liability or action arises out of or is based upon:
(i) an allegation or determination that the Bonds or the
obligation of the Borrower should have been registered under the
Securities Act or the Indenture should have been qualified under the
Trust Indenture Act of 1939, as amended or
(ii) any untrue statement or alleged untrue statement of a
material fact contained in, or any omission or alleged omission to
state any material fact necessary to make the statements made therein
not misleading in light of the circumstances under which they were
made in, the Official Statement as amended or supplemented, or in any
disclosure documents prepared in accordance with Section 2 hereof.
The indemnity agreements contained in this Section 9 shall
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remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Remarketing Agent, or the
delivery of any payment for any Bonds hereunder, and shall survive the
termination or cancellation of this Remarketing Agreement.
(b) If an action or claim shall be brought or asserted against the
Remarketing Agent or any person so controlling the Remarketing Agent in respect
of which indemnity may be sought from the Borrower under subparagraph (a) above,
the Remarketing Agent or such controlling person, as the case may be, shall
promptly notify the Borrower in writing. The Borrower shall assume the defense
thereof, including the employment of counsel and the payment of all related
expenses. The Remarketing Agent or any such controlling person, as the case may
be, shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the Remarketing Agent or such controlling person, as
the case may be, unless:
(i) the employment thereof has been specifically authorized by
the Borrower, or
(ii) the Borrower has failed to assume the defense or employ
counsel. The Borrower shall not be liable for any settlement of any
such action effected without its consent, but if settled with the
consent of the Borrower, or if there is a final judgment for the
plaintiff in any such action, the Borrower will indemnify and hold
harmless any indemnified person from and against any loss or liability
by reason of such settlement or judgment insofar as such settlement or
judgment shall relate to any liability with respect to which indemnity
may be sought hereunder.
Section 10. DEALING IN BONDS BY REMARKETING AGENT. The Remarketing
Agent, in its individual capacity, either as principal or agent, may buy, sell,
own, hold, and deal in any of the Bonds, and may join in any action which any
Bondholder may be entitled to take with like effect as if it did not act in any
capacity hereunder. The Remarketing Agent, in its individual capacity, as
principal, may in good faith from time to time buy and hold Bonds for periods of
time mutually agreed to by the Remarketing Agent and the Borrower, and the
Remarketing Agent shall be reimbursed by the Borrower for the cost of holding
such Bonds in an amount to be agreed upon by the parties, which amount initially
shall be equal to the Remarketing Agent's actual cost of the principal of such
Bonds. Nothing in the preceding sentence shall relieve the Remarketing Agent of
its best efforts obligation to solicit indications of interest on the part of
purchasers of any tendered Bonds. The Remarketing Agent in its individual
capacity, either as principal or agent, may also engage in or be interested in
any financial or other transaction with the Issuer, the Borrower, or any of its
affiliates, and may act as tender agent, trustee, or agent for any committee or
body of bondholders or other obligations of the Issuer, the Borrower or any of
its affiliates, as freely as if it did not act in any capacity hereunder.
Section 11. INTENTION OF PARTIES. It is the express intention of the
parties hereto that no purchase, sale or transfer of any Bonds, as herein
provided, shall constitute or be
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<PAGE>
construed to be the extinguishment of any Bonds or the indebtedness evidenced
thereby or the reissuance of any Bonds or the refunding of any indebtedness
represented thereby.
Section 12. REMARKETING AGENT NOT ACTING AS UNDERWRITER. It is
understood and agreed by the parties hereto that the Remarketing Agent is only
obligated hereunder to use its best efforts to solicit indications of interest
on the part of the purchasers of any tendered Bonds. The Remarketing Agent
shall be construed to be acting as agent only for and on behalf of the owners
from time to time of the Bonds. The Remarketing Agent shall not act as an
underwriter for the tendered Bonds and shall in no way be obligated to advance
its own funds to purchase any tendered Bonds.
Section 13. MISCELLANEOUS.
(a) Except as otherwise specifically provided in this Remarketing
Agreement, all notices, demands and formal actions under this Remarketing
Agreement shall be in writing and mailed, telegraphed or delivered to the
parties at the following addressees:
If to the Remarketing Agent:
EVEREN Securities, Inc.
77 W. Wacker Drive, 28th Floor
Chicago, IL 60601-1398
Attention: Municipal Financial Department
and
GATES Capital Corporation
100 Park Avenue, 30th Floor
New York, NY 10017
Attention: Municipal Finance Department
If to the Issuer:
City of Gary, Indiana
504 Broadway, Suite 625
Gary, IN 46402
Attention: Kennard B. Sloan
If to the Borrower:
The Miller Partnership, L.P.
401 North Michigan Avenue
Suite 3000
Chicago, IL 60611
-12-
<PAGE>
Attention: Paul Fisher
If to the Bank:
The Royal Bank of Scotland plc
New York Branch
Wall Street Plaza
88 Pine Street, 26th Floor
New York, NY 10005-1801
Attention: Derek Bonnar
If to the Trustee:
Fifth Third Bank of Central Indiana
251 N. Illinois Street, Suite 1000
Indianapolis, Indiana 46204
Attention: Corporate Trust Department
If to the Paying Agent:
The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attention: Corporate Trust Department
The Remarketing Agent, the Issuer, the Borrower, the Bank, the Trustee
and the Paying Agent by notice given under this Remarketing Agreement, may
designate other addresses to which subsequent notices, requests, report or other
communications shall be directed.
(b) The obligations of the respective parties hereto may not be
assigned or delegated to any other person without the consent of the other
parties hereto. This Remarketing Agreement will inure to the benefit of and be
binding upon the Issuer, the Borrower, and the Remarketing Agent and their
respective successors and assigns, and will not confer any rights upon any other
person, company, association or corporation other than the indemnified persons
referred to in Section 9 hereof and the persons, if any, controlling the
Remarketing Agent within the meaning of the Securities Act. The terms
"successors" and "assigns" shall not include any purchaser of any of the Bonds
merely because of such purchase.
(c) In performing its duties and obligations hereunder, the
Remarketing Agent shall use the same degree of care and skill as a prudent
person would exercise under the same circumstances in the conduct of its own
affairs. The Remarketing Agent shall not be liable in connection with the
performance of its duties hereunder except for its own willful misconduct or
negligence or failure to act in a commercially reasonable manner.
-13-
<PAGE>
(d) Section headings have been inserted in this Remarketing Agreement
as a matter of convenience of reference only, and it is agreed that such section
headings are not a part of this Remarketing Agreement and will not be used in
the interpretation of any provisions of this Remarketing Agreement.
(e) This Remarketing Agreement may be amended only by a written
document executed by the parties hereto; provided that, if any amendment would
change the Borrower's right to remove the Remarketing Agent as set forth in
Section 7(a) hereof, the written consent of the Borrower also must be obtained
before such amendment becomes effective. If any provision of this Remarketing
Agreement shall be held or deemed to be or shall, in fact, be invalid,
inoperative or unenforceable as applied in any particular case in any
jurisdiction or jurisdictions, or in all jurisdictions because it conflicts with
any provisions of any constitution, statute, rule of public policy, or for any
other reason, such circumstances shall not have the effect of rendering the
provision in question invalid, inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions of this
Remarketing Agreement invalid, inoperative or unenforceable to any extent
whatever.
(f) This Remarketing Agreement may be executed in several
counterparts, each of which shall be regarded as an original and all of which
shall constitute one and the same document.
Section 14. GOVERNING LAW. This Remarketing Agreement shall be
governed by, and in its terms construed in accordance with, the laws of the
State of Indiana.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the Issuer, the Borrower, and the Remarketing
Agent have executed this Remarketing Agreement by their duly authorized officers
as of the date first above written.
EVEREN SECURITIES, INC.
As Remarketing Agent
By:
----------------------------------
Felicia O. Flowers-Smith
GATES CAPITAL CORPORATION
As Remarketing Agent
By:
----------------------------------
Amelia A. Recio
By:
----------------------------------
J. Douglas Casey
CITY OF GARY, INDIANA
As Issuer
By:
----------------------------------
Its:
---------------------------------
THE MILLER PARTNERSHIP, L.P.
As Borrower
By: CenterPoint Properties Corporation
Its General Partner
By:
-----------------------------
Paul Fisher
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<PAGE>
TAX REGULATORY AGREEMENT
Developer's
Name and Address: The Miller Partnership, L.P.
c/o CenterPoint Properties Corporation
401 N. Michigan Avenue, Suite 3000
Chicago, Illinois 60611
Attn: Paul Fisher and John Gates
Location of Property: 415 North Lake Street
Gary, Indiana
Name of Project: Lakeshore Apartment Complex
THIS TAX REGULATORY AGREEMENT (together with any amendments or supplements
hereto, the "Agreement") dated as of March 1, 1996 is made and entered into by
and among the City of Gary, Indiana, a municipal corporation of the State of
Indiana, having as its mailing address City Hall, Gary, Indiana 40402 (the
"Issuer"), the developer identified above and permitted successors and assigns
under the Loan Agreement as hereinafter defined (the "Developer") and Fifth
Third Bank of Central Indiana, as Trustee (the "Trustee"), under the Trust
Indenture, dated as of March 1, 1996 between the Trustee and the Issuer.
IN CONSIDERATION of the Issuer's participation in a financing transaction
which has and will provide funds to refinance the purchase, construction and
improvement on lands in Gary, Indiana, which is more particularly described in
EXHIBIT "A" attached hereto, of residential rental facilities consisting of
multi-family residential rental housing (the "Project") pursuant to a Loan
Agreement dated as of March 1, 1996 (the "Loan Agreement") between the Issuer
and the Developer, the Issuer, the Trustee and the Developer acknowledging that
this Agreement is necessary to preserve the federal income tax excludability
from gross income of interest on the Issuer's Adjustable Rate Economic
Development Refunding Revenue Bonds, Series 1996 A (The Miller Partnership, L.P.
Project) (the "Bonds"), issued to refinance the Project, covenant and agree that
in connection with the operation of the Project, they will comply, and will
require (except as otherwise provided herein) any subsequent lessee or purchaser
of the Project to comply, with the following:
Section 1. RENTAL REQUIREMENT.
(a) Once available for occupancy, each unit of the Project (as "unit" is
defined in Treas. Reg. Section 1.103-8(b)(8)(i) and "Project" is defined in
Treas. Reg. Section 1.103-8(b)(4)) must be rented or available for rental on a
continuous basis during the longer of (i) the remaining term of the Bonds, or
(ii) a period (the "Qualified Project Period") (A) commencing on the later of
(1) the
<PAGE>
first day on which at least 10% of the units in the Project are first occupied,
or (2) the date of issuance of the Bonds, and (B) ending on the date which is
the latest of (1) 15 years after the date on which at least 50% of the units in
the Project are first occupied, (2) the first day on which no tax-exempt private
activity bond issued with respect to such Project is outstanding (all within the
meaning of Section 142(d) of the Internal Revenue Code of 1986, as amended (the
"Code"), or (3) the date on which any assistance provided with respect to the
Project under Section 8 of the United States Housing Act of 1937 terminates.
(b) All of the units in the Project must be rented or available for rental
on a continuous basis to members of the general public and substantially all of
the Project must consist of similarly constructed units together with any
functionally related or subordinate facilities, including facilities for use by
tenants, E.G., swimming pools, recreational facilities, parking areas, and other
facilities which are reasonably required for such Project as a residential
rental facility.
Section 2. LOW OR MODERATE INCOME OCCUPANCY REQUIREMENT.
(a) Twenty percent (20%) or more of the completed units of the Project
(the "Low or Moderate Income Units") shall be occupied by Low or Moderate Income
Tenants (as described in SECTION 3 hereof) continuously during the Qualified
Project Period (the "Occupancy Requirement").
(b) A unit shall be treated as occupied by Low or Moderate Income Tenants
until re-occupied, other than for a temporary period not to exceed 31 days, by
another occupant, at which time the character of the unit shall be redetermined.
Section 3. LOW OR MODERATE INCOME TENANTS; ANNUAL REVIEWS.
(a) "Low or Moderate Income Tenants" means the occupants of a dwelling
unit in the Project whose adjusted income, as computed in accordance with
Exhibit C hereto, does not exceed fifty percent (50%) of the Median Gross Income
for the Area. "Median Gross Income for the Area" means the median income for
the area where the Project is located as determined with adjustments for larger
and smaller family sizes by the Secretary of the Department of Housing and Urban
Development under Section 8(f)(3) of the United States Housing Act of 1937, as
amended, or if programs under Section 8(f) are terminated, median income
determined under the method used by the Secretary immediately prior to such
termination.
(b) The determination of whether the income of the residents of a unit
exceed the applicable income limit shall be made first at the time of occupancy
and thereafter at least annually on the basis of the current income of such
residents. If the income of the occupants of a unit did not exceed the
applicable income limit upon commencement of such tenants' occupancy, the income
of such occupants shall be treated as continuing to not exceed the applicable
income limit unless, as of the most recent determination of annual income, such
occupants' income exceeds 140% of the applicable income limit for new tenants at
such Project AND before the next income
- 2 -
<PAGE>
determination, another residential unit of comparable or smaller size in the
Project is occupied by a new tenant whose income exceeds the applicable income
limit.
(c) If all the occupants of a unit are students as defined under
Section 151(e)(4) of the Code, no one of whom is entitled to file a joint return
under Section 6013 of the Code, such occupants shall not qualify as Low or
Moderate Income Tenants hereunder.
(d) Determination of the status of an occupant of a unit as a Low or
Moderate Income Tenant shall be made upon initial occupancy of a unit in the
Project by such occupant, and a new determination shall be made (i) at least
annually thereafter, and (ii) upon the initial occupancy by such occupant of any
other unit in the Project.
(e) Except as provided in SECTION 10 hereof, the method of determining low
or moderate income in effect on the date of issuance of the Bonds shall be
determinative even if such method is subsequently changed.
Section 4. ADDITIONAL COVENANTS THE DEVELOPER FURTHER COVENANTS AND AGREES
THAT:
(a) The Developer will own, manage and operate the Project on a continuous
basis as a residential rental project comprised of several proximate and
interrelated buildings or structures, each containing at least one dwelling unit
and all of which contain dwelling units and facilities functionally related and
subordinate thereto in accordance with Section 142(d) of the Code and the
regulations promulgated thereunder or applicable thereunder as described more
specifically in the Developer's Tax Representation Certificate dated as of the
closing date for the Bonds.
(b) All of the dwelling units in the Project will consist of similarly
constructed units, and each dwelling unit in the Project will contain separate
and complete facilities for living, sleeping, eating, cooking and sanitation
separate and distinct from other units, including cooking facilities equipped
with a cooking range, refrigerator and sink.
(c) None of the dwelling units in the Project will at any time be utilized
on a transient basis, will ever be leased or rented for an initial lease term of
less than six (6) months, nor will all or any part of the Project ever be used
as a hotel, motel, dormitory, fraternity house, sorority house, hospital,
nursing home, retirement home, sanitarium, rest home or trailer court or park.
(d) Except for dwelling units occupied by a resident manager or
maintenance personnel, the dwelling units in the Project will be rented to
persons who are members of the general public, and the Developer shall not give
preference to any particular class or group of persons in renting units other
than to Low or Moderate Income Tenants and other than as permitted under
Section 142(d) of the Code.
(e) The Developer covenants and agrees to prepare and submit to the Issuer
and the Trustee within thirty (30) days after each anniversary of the first day
on which at least 10% of the
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<PAGE>
units in the Project are first occupied, a report certified to be accurate by
the Developer substantially in the form of Exhibit B hereto ("Compliance
Certificate").
(f) The mortgage to be granted by the Developer in connection with the
Project (the "Mortgage") provides that the indebtedness secured thereby may be
declared to be immediately due and payable, at the option of the holder thereof,
upon sale or transfer of the Project or any interest therein or transfer of
beneficial interest in the Developer, unless certain conditions specified in the
mortgage are met. As a further condition to any sale or transfer of the
Project, the proposed purchaser or assignee shall assume in writing and agree to
be bound by all of the obligations and covenants of the Developer and all
restrictions applicable to the Project contained herein.
Section 5. COVENANTS AND RESTRICTIONS NOT TO APPLY UNDER CERTAIN
CIRCUMSTANCES.
(a) In the event of an involuntary noncompliance with the requirements of
this Agreement and Treas. Reg. Section 1.103-8(b) caused by fire, seizure,
requisition, foreclosure, transfer of title by deed in lieu of foreclosure,
change in federal law or an action of a federal agency after the date of
issuance of the Bonds which prevents the Issuer from enforcing the requirements
of this Agreement or Treas. Reg. Section 1.103-8(b), or condemnation or similar
event, the covenants and restrictions of this Agreement shall cease to apply,
but only if, within a reasonable period, either the Bonds are retired or amounts
received as a consequence of such event are used to provide a project which
meets the requirement of Section 142(d) of the Code and Treas. Reg. Section
1.103-8(b).
(b) Notwithstanding the foregoing, such requirements shall continue to
apply to the Project subsequent to foreclosure, transfer of title by deed in
lieu of foreclosure or similar event if, at any time during the Qualified
Project Period subsequent to such event, the obligor on the acquired purpose
obligation (as defined in Section 1.103-13(b)(4)(iv)(a) of the Regulations under
the Code) or "related person" (as defined in Section 147(a) of the Code or in
Section 1.103-10(e) of said Regulations) obtains an ownership interest in the
Project or any portion thereof for federal tax purposes.
Section 6. INCOME CERTIFICATION SUBMISSION TO TRUSTEE.
(a) During the term of this Agreement, the Income Certifications described
in Treas. Reg. Section 1.167(k)-3(b) will be submitted to the Trustee and the
Issuer in substantially the form of Exhibit C hereto and at the times as
provided herein.
(b) Except as provided in SECTION 5 hereof, the Occupancy Requirement
shall be a continuing requirement on the part of the Developer and its
successors and assigns for the period prescribed in SECTION 1 hereof, regardless
of whether or not the Bonds remain outstanding.
(c) The Developer shall maintain complete and accurate records pertaining
to the dwelling units occupied, or to be occupied, by Low or Moderate Income
Tenants and permit any
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<PAGE>
duly authorized representative of the Trustee or the Issuer to inspect the books
and records of the Developer pertaining to the incomes and the Income
Certifications of Low or Moderate Income Tenants residing in the Project upon
reasonable notice and at reasonable times.
(d) As soon as is reasonably possible, the Developer shall notify the
Trustee and the Issuer of the existence of any situation or the occurrence of
any event of which the Developer has knowledge, the existence or occurrence of
which would violate any of the provisions of this Agreement or cause the
interest on the Bonds to become includable in the gross income of the holders
thereof for federal income tax purposes, including the provision to the Trustee
of all notices and correspondence from the Issuer or the Internal Revenue
Service with respect to compliance with the provisions hereof.
Section 7. LOW OR MODERATE INCOME UNITS. The Developer will maintain the
Project so that the Low or Moderate Income Units will be similarly constructed
with all other units in the Project (although they need not be of the same size
nor have the same number of rooms or luxury amenities, but they shall be of
similar quality and type of construction). Low or Moderate Income Tenants shall
enjoy equal access to all common facilities of the Project.
Section 8. TENANT LISTS. All tenant lists, applications, and waiting
lists relating to the Project shall be kept separate and identifiable from any
other business of the Developer which is unrelated to the Project and shall be
maintained in a reasonable condition for proper audit and subject to examination
during business hours by representatives of the Issuer or the Trustee.
Section 9. TENANT LEASE REQUIREMENTS. All tenant leases with respect to
Low or Moderate Income Units will contain as an additional event of default by
the tenant thereunder any material misstatement contained in the Income
Certification submitted to the Developer. In addition, all leases entered into
after the date of original issuance and delivery of this Agreement shall
specifically provide that each such lease is subject and subordinate to the
terms and provisions of the Mortgage, and whether or not a particular lease so
provides, such lease shall nonetheless be subject and subordinate to the terms
and provisions of the Mortgage.
Section 10. MODIFICATION OF COVENANTS. It is understood and agreed that
the covenants of the Issuer and the Developer contained herein are intended to
comply with Section 142(d) of the Code and the regulations promulgated
thereunder. Consistent with such intent it is agreed that any amendment to
Section 142(d) of the Code (or any section of the Code or other law referred to
or referenced therein) which would have the effect of reducing the restrictions
imposed on the Developer pursuant to this Agreement, shall be deemed to be an
amendment to this Agreement without further action on the part of the parties
hereto, and this Agreement shall be deemed to have been amended in accordance
with the provisions of such amendment upon the effective date of such amendment.
Such amendments shall include, without limitation, any modification of the
definition of low or moderate income which would have the effect of increasing
the maximum permissible income of the tenants of the Low or Moderate Income
Units; provided, however, if any such amendment, in the opinion of qualified
Bond Counsel (such counsel to be acceptable to
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<PAGE>
the Trustee), would adversely affect the excludability of the interest on the
Bonds from gross income for federal tax purposes, such amendment shall be of no
force or effect.
Section 11. COVENANT RUNS WITH THE LAND. Successors BoundThis Agreement
shall be placed of record in the land records of Lake County, Indiana, and,
except as provided in Section 5 hereof, the covenants contained herein shall run
with the land and shall bind, and the benefits shall inure to, respectively, the
Developer and its successors and assigns, and the Issuer and all subsequent
owners of the Project or any interest therein, for the periods prescribed in
SECTION 1 and SECTION 2 hereof.
Section 12. NO CONFLICT WITH OTHER DOCUMENTS. The Developer warrants that
it has not and will not execute any other agreement with provisions
contradictory to, or in opposition to the provisions hereof, and that, in any
event, the requirements of this Agreement are paramount and controlling as to
the obligations herein set forth and supersede any other requirements in
conflict herewith.
Section 13. AMENDMENTS AND WAIVERS. This Agreement may be amended, or the
enforcement of any obligation of the Developer hereunder waived (in whole or in
part) or modified, only upon receipt by the Issuer of an opinion of qualified
Bond Counsel satisfactory to the Issuer and to the Trustee to the effect that
such proposed amendment or waiver will not adversely affect the excludability of
the interest on the Bonds from gross income for federal tax purposes and, except
in the case of a waiver, an amendment in writing executed by the parties hereto,
except with respect to modifications and/or amendments made or deemed made in
accordance with the provisions of SECTION 10 hereof, which modifications and/or
amendments shall be self-executing without action of the parties. The Developer
agrees, from time to time, to take all actions and steps which to its knowledge
are necessary to comply, and to cause the Project to comply, with the
requirements of Section 142(d) of the Code and to enter into modifications and
amendments to this Agreement to the extent required by Treasury Regulations
promulgated thereunder. Restrictions contained herein which are not required by
such regulations may be amended in accordance with the first sentence of this
section.
Section 14. ASSIGNMENT OF ISSUER'S INTEREST. For so long as the Bonds are
outstanding, the interest of the Issuer in this Agreement will be, and hereby
is, assigned to the Trustee, and its successors, under the Indenture, and during
such period this Agreement shall be enforceable by the Trustee in accordance
with its terms. If the Bonds shall mature or be redeemed prior to the end of
the periods set forth in SECTIONS 1 AND 2 hereof, the Trustee shall continue to
enforce the provisions of this Agreement for and on behalf of the Issuer. In
such case, the Developer hereby covenants to pay the customary fees and
reasonable expenses, including reasonable attorney's fees, of the Trustee
incurred by the Trustee in enforcing the provisions hereof.
Section 15. DEFAULTS, REMEDIES. If the Developer shall fail to observe or
perform any covenant, condition or agreement contained herein on its part to be
observed or performed for a period of 30 days after the Trustee or the Issuer
shall have given written notice to the Developer
- 6 -
<PAGE>
of such failure, or such grace period as may be permitted by Section 142(d) of
the Code and the regulations thereunder, then and in such event, the Issuer or
the Trustee shall be entitled, individually or collectively, in addition to all
other remedies provided by law or in equity, to compel specific performance by
the Developer of its obligations under this Agreement, it being recognized that
the beneficiaries of the Developer's obligations hereunder cannot be adequately
compensated by monetary damages in the event of the Developer's default. The
Trustee agrees that upon receipt from the Developer of notice of noncompliance
pursuant to Section 6 hereof, it will promptly, by written notice to the
Developer, direct the Developer to institute action to correct such
noncompliance, such corrective action to be taken within a reasonable period
after the violation is first discovered.
Section 16. RELIANCE; COMPLIANCE.
(a) The Issuer and the Developer hereby recognize and agree that the
representations and covenants set forth herein may be relied upon by all persons
interested in the legality and validity of the Bonds and in the exclusion from
gross income for federal income tax purposes of the interest on the Bonds. In
performing their duties and obligations hereunder, the Issuer and the Trustee
may rely upon statements and certificates of the Developer and Low or Moderate
Income Tenants, unless the Issuer and the Trustee have reason to doubt them, and
upon audits of the books and records of the Developer pertaining to the Project.
In addition, the Issuer and the Trustee may consult with counsel, and the
opinion of such counsel shall be full and complete authorization and protection
in respect of any action taken or suffered by the Issuer or the Trustee
hereunder in good faith and in conformity with such opinion.
(b) Promptly following its receipt thereof, the Trustee will review each
Income Certificate and Compliance Certificate delivered pursuant to this
Agreement and verify that the percentage set forth in clause (ii) of the first
paragrpah of the Compliance Certificate is at least 20%. The Trustee will
maintain such documents on file and open to the inspection of the Issuer and the
Developer; provided, however, that the Trustee shall have no obligation to
request or review such other information, documents or certificates. The
Trustee shall hold such certifications and certificates solely for the benefit
of, and review by, the Holders of the Bonds.
(c) Promptly upon determining that any report or certificate submitted to
it is incomplete, the Trustee shall give written notice by certified mail,
return receipt requested, of such lack of completeness to the Developer and
direct the Developer to correct or complete the same, as the case may be, within
a reasonable period of time thereafter. If the Developer fails to submit to the
Trustee any certification required pursuant to this Agreement within 45 days of
the time set forth herein, the Trustee shall immediately give written notice of
that fact to the Issuer and the Developer. If any documentation filed with the
Trustee states that the Project has ceased to meet the requirements of this
Agreement, the Trustee shall immediately give written notice of that fact to the
Issuer and the Developer.
- 7 -
<PAGE>
Section 17. INDEMNIFICATION. The Developer shall indemnify, hold harmless
and defend the Issuer and the Trustee and their respective officers, members,
directors, agents and employees against all loss, costs, damages, expenses,
suits, judgments, actions and liabilities of whatsoever nature (including,
without limitation, attorney's 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 the performance by the Issuer or
Trustee of the duties imposed upon them under this Agreement, except to the
extent caused by gross negligence or willful misconduct.
Section 18. NOTICE. Any notice, demand, consent, permission or other
communication, which either party hereto is required or desires to give, or
communicate to the other party, shall be in writing and shall be given
personally or communicated by registered or certified mail, postage prepaid,
return receipt requested, addressed to the other party at the address of the
party set forth on the first page of this Agreement, and to the Trustee at Fifth
Third Bank of Central Indiana, 251 North Illinois Street, Suite 1000,
Indianapolis, Indiana 46277, Attention: Corporate Trust Department. Any such
notice or other communication so sent shall be deemed to have been given on the
second business day following the date the same was deposited in the mail, as
registered or certified matter, with postage fully prepaid thereon. Either
party may change its address for notice to the other party in the manner
provided in this section.
Section 19. DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein but defined in the Indenture shall have the meanings assigned to
them in the Indenture. Unless otherwise expressly provided herein or unless the
context clearly requires otherwise, the following terms shall have the
respective meanings set forth below for all purposes of this Agreement:
"Agreement" means this Tax Regulatory Agreement, as it may from time to
time be amended.
"Income Certification" means a certification as to income executed by a
tenant of the Project, in substantially the form of EXHIBIT C hereto.
Section 20. SEVERABILITY. If any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining portions shall not in any way be affected or impaired. In case
any covenant, stipulation, obligation or agreement of the Issuer or the
Developer contained herein shall for any reason be held to be in violation of
law, then such covenant, stipulation, obligation or agreement shall be deemed to
be the covenant, stipulation, obligation or agreement of the Issuer or the
Developer, as the case may be, to the full extent permitted by law.
Section 21. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana.
- 8 -
<PAGE>
Section 22. SUBORDINATION. The Issuer and the Developer agree that this
Agreement shall be subordinate in all respects to the Mortgage (provided that
the holder of such mortgage is not then in default under the letter of credit
issued to the Trustee in connection with the Bonds), and the Issuer and the
Developer shall, at the written request of the holder of the Mortgage, execute
such instruments as may be required to implement and evidence the subordination
expressed in this Section 22. The Issuer, the Trustee and the Developer further
agree that this Agreement shall terminate if the Project is acquired by
foreclosure of the Mortgage, conveyance of the Project by deed-in-lieu of
foreclosure or comparable conversion of the Mortgage, such termination to be
effective as of the date of such foreclosure, deed-in-lieu or foreclosure or
conversion. No right or authority on the part of the Issuer, the Trustee or any
other party which is provided by this Agreement with respect to the Project
shall survive the foreclosure, granting of a deed-in-lieu of foreclosure or
comparable conversion and no such right or authority shall apply to the Project
if title is transferred pursuant to or following any such foreclosure, deed-in-
lieu of foreclosure or comparable conversion.
- 9 -
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed and
sealed by their respective, duly authorized representatives, as of the day and
year first written above.
CITY OF GARY, INDIANA, as Issuer
(SEAL)
By:
--------------------------------
ATTEST: Scott L. King, Mayor
- ------------------------------------
Katie Hall, Clerk
- 10 -
<PAGE>
THE MILLER PARTNERSHIP, L.P. as
Developer
By: CenterPoint Properties Corporation,
its General Partner
By:
--------------------------------
Paul S. Fisher, Executive Vice
President
FIFTH THIRD BANK OF CENTRAL INDIANA, as
Trustee
By:
------------------------------------
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<PAGE>
STATE of INDIANA )
) SS:
COUNTY of LAKE )
On this 128th day of March, 1996, before me appeared Scott L. King and
Katie Hall, to me personally known who, being by me sworn did say that they are
the Mayor and Clerk, respectively, of the City of Gary, Indiana, a municipal
corporation of the State of Indiana, and that the seal affixed to the foregoing
instrument is the official seal of said corporation, and that said instrument
was signed and sealed on behalf of said municipal corporation, by authority of
its legislative body and said Mayor and Clerk, acknowledged said instrument to
be the free act and deed of said municipal corporation.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
official seal, the day and year last above written.
----------------------------------------------
Notary Public in and for said County and State
(SEAL)
My Commission expires:
---------------
My County of Residence:
---------------
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<PAGE>
STATE OF ILLINOIS )
) SS:
COUNTY OF COOK )
On this __________ day of ______________________, 1996, before me appeared
Paul S. Fisher to me personally known, who being by me duly sworn did say that
he is the Vice President of CenterPoint Properties Corporation, a Maryland
corporation, the sole General Partner of The Miller Partnership, L.P., an
Illinois limited partnership, and that he is the person who executed the
foregoing instrument as such officer acting for and on behalf of the corporate
general partner of said partnership, and acknowledged that he executed the same
as his free act and deed as such officer of the general partner of said
partnership.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial
seal, the day and year last above written.
----------------------------------------------
Notary Public in and for said County and State
[SEAL]
My Commission expires:
---------------
My County of Residence:
---------------
- 13 -
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
On this ________________ day of March, 1996, before me appeared
____________________, to me personally known who, being by me duly sworn did say
that he is a ______________________________________ of Fifth Third Bank of
Central Indiana, an Indiana banking association, and acknowledged said
instrument to be the free act and deed of said banking association.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
official seal, the day and year last above written.
----------------------------------------
(Signature)
----------------------------------------
(Printed Name)
Notary Public in and for said County and
State
[SEAL]
- 14 -
<PAGE>
My commission expires: .
-------------------------
My County of Residence: .
-----------------------
- 15 -
<PAGE>
EXHIBIT A TO TAX REGULATORY AGREEMENT
PROJECT DESCRIPTION
(1) Project Site
(a) The land legally described in Exhibit A-I, attached hereto and made a
part hereof.
(b) Any covenants, conditions, restrictions and easements of record
benefiting the Project as set forth on the title commitment delivered
in connection with the Loan Agreement
(c) All rights of Borrower under any rental lease agreements existing now
or in the future with respect to any apartment units comprising part
of the Project Buildings
(2) Project Buildings
14 low to midrise apartment buildings containing 682 units and one former
one-story commercial building located on the Project Site and as more
particularly described in the survey delivered pursuant to the terms of the
Reimbursement Agreement.
(3) Project Equipment
The items of fixtures, furnishings and equipment specified in the Plans (as
defined in the Reimbursement Agreement) including, but not limited to:
i) Kitchens (including refrigerators, stoves, sinks, cabinets and
dishwashers)
ii) Bathrooms (including sinks, toilets, bathtubs and vanities)
iii) Carpeting
iv) Security Inter-com systems
v) Windows
vi) Air conditioners
vii) Forced air heating units
viii) Washers and dryers
ix) Tennis court
x) Playground equipment
xi) Picnic equipment
xii) Lighting and electrical fixtures
xiii) Outside lighting
xiv) Other items as contained in the plans and specifications
submitted pursuant to the Reimbursement Agreement
A-1
<PAGE>
LEGAL DESCRIPTION - EXHIBIT A1
A-2
<PAGE>
EXHIBIT B
CERTIFICATION OF CONTINUING PROGRAM COMPLIANCE
Witnesseth that on this _______ day of ______________, ______, the
undersigned, having borrowed certain funds from the City of Gary, Indiana (the
"Issuer") in association with the Issuer's $20,540,000 Adjustable Rate Economic
Development Revenue Refunding Bonds, Series 1996 A (The Miller Partnership, L.P.
Project), for the purpose of refinancing a multifamily residential rental
housing project located in Gary, Indiana (the "Project"), does hereby certify
that during the preceding year such Project was continually in compliance with
the Tax Regulatory Agreement dated as of March 1, 1996 by and between the Issuer
and the Developer, (ii) ______% of the units in the Project were occupied by Low
or Moderate Income Tenants (minimum of 20% required) or are currently vacant and
being held available for such occupancy and have been so held continuously since
the date a Low or Moderate Income Tenant vacated such unit, as set forth below.
List names of Low or Moderate Income Tenants who commenced or terminated
occupancy during the preceding year.
Commenced Occupancy Terminated Occupancy
------------------- --------------------
1. 1.
2. 2.
3. 3.
Attach a separate sheet listing the apartment numbers of each unit in the
Project and indicating which units are occupied by Low or Moderate Income
Tenants.
The representations set forth herein are true and correct to the best of
the undersigned's knowledge and belief.
THE MILLER PARTNERSHIP, L.P.
By:
----------------------------------
B-1
<PAGE>
EXHIBIT C
INCOME COMPUTATION AND CERTIFICATION FORM
Re: Lakeshore Apartments Development
Gary, Indiana
Unit Address and Number:
-------------------------------
I/We, the undersigned, being first duly sworn, state that I/we have read
and answered fully, frankly and personally each of the following questions for
all persons who are to occupy the residential rental unit in the above
development for which application is made, all of whom are listed below:
Occupant Information
--------------------
1. 2. 3. 4.
Names of Members Relationship Social
of the to Head of Security
Household Household Age Number
--------- --------- --- ------
--------------- HEAD -------- ---------------
--------------- SPOUSE -------- ---------------
--------------- ---------- -------- ---------------
--------------- ---------- -------- ---------------
ANNUAL INCOME
5. The anticipated total income of all the above persons, except minors
younger than 18 years of age, during the 12-month period beginning this date is
as follows:
Interest
and Periodic
Name Wages Dividends Payments** Other*** Total
----- ----- --------- -------- ----- -----
- ---------- ---------- ---------- ---------- --------- ----------
- ---------- ---------- ---------- ---------- --------- ----------
- ---------- ---------- ---------- ---------- --------- ----------
- ---------- ---------- ---------- ---------- --------- ----------
TOTAL ----------
C-1
<PAGE>
*All wages and salaries, over-time pay, commissions, fees, tips and
bonuses, and other compensation for personal services, in each case before
payroll deductions.
**The full amount of periodic payments received from social security,
annuities, insurance policies, retirement funds, pensions, disability or death
benefits and other similar types of periodic receipts, worker's compensation,
public or welfare assistance, and alimony and child support payments.
***SEE SCHEDULE A ATTACHED HERETO FOR MORE DETAILED INFORMATION CONCERNING
OTHER INCOME AND EXCLUDABLE ITEMS.
FAMILY ASSETS
6. If any of the persons described above (or whose income or
contributions was included in item 5) has any savings, stocks, bonds, equity in
real property, personalty (excluding necessary items such as autos and
furniture) or any other form of capital investment, provide:
a. The total value of all such assets owned by all such persons
(including the excess of fair market value over consideration
received for business or family assets disposed of at less than
fair market value during the preceding two years):
$ ; and
-----------
b. The amount of income, if any, expected to be derived from such
assets in the 12-month period commencing this date which was
included in item 5 above: $
------------
STUDENTS
7. a. Will all of the persons listed in column 1 above be or have
they been full time students during five calendar months of
this calendar year at an educational institution (other than a
correspondence school) with regular faculty and students?
Yes No
---- ----
b. If so, is any such person (other than nonresident aliens)
married and eligible to file a joint federal income tax return?
Yes No
---- ----
CERTIFICATION
C-2
<PAGE>
I/We have reviewed Schedule A attached hereto and certify that the income
set forth in paragraph 5 above includes all income, from all sources described
on Schedule A, with no exceptions, and are given under penalty of perjury. We
acknowledge that all of the above information is relevant to the status under
federal income tax law of certain housing tax credits and/or tax-exempt economic
development revenue bonds to finance the apartment for which application is
being made. We consent to the disclosure of the foregoing information to the
U.S. Government, the developer of the project, investors in the project and
their legal and accounting representatives, and to any lender providing
financing for the development.
Date:
----------------- -----------------------------------
Head of Household
-----------------------------------
Spouse
[Notary Appears on Following Page]
C-3
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF __________ )
Before me, a Notary Public in and for said County and State, personally
appeared ___________ the ____________, who acknowledged execution of the
foregoing document as individuals on their own behalf, and who, having been duly
sworn, stated that the representations therein contained are true.
Witness my hand and Notarial Seal this _______ day of ________________,
1996.
My Commission Expires: -----------------------------------
(signature)
- -------------------------
-----------------------------------
(printed name)
My County of Residence: Notary Public in and for said
County and State
- -------------------------------
C-4
<PAGE>
FOR COMPLETION BY DEVELOPMENT OWNER OR MANAGER ONLY:
1. Calculation of Eligible Income:
1. Enter total amount entered for entire household,
except minors, in 5 above: $
---------------
2. If the amount entered in 6.a above is greater
than $5,000, enter the excess of ______%
(being the current passbook savings rate
as determined by HUD) of line 6.a. over
the amount entered on line 6.b., if any. $
---------------
TOTAL ELIGIBLE INCOME
(line 1.a plus line 1.b): $
---------------
2. FIRST YEAR CERTIFICATIONS. In order to comply with applicable federal tax
law the development has elected to comply with the requirement that at
least 20 percent of the units in the development will be rented to
individuals and families with incomes of less than or equal to 50 percent
of Median Gross Income for the Area. Based upon the foregoing election,
the Total Eligible Income of the occupants of the unit as a first year
tenant qualifies the unit as a set-aside unit for purposes of the housing
tax credit provisions contained in Section 42(g) and tax-exempt bond
provisions of Section 142(d) of the Internal Revenue Code of 1986.
3. RECERTIFICATIONS. Applicable federal law requires that the determination
of whether the income of residents of a unit in the Development exceeds the
applicable income limit shall be made at least annually on the basis of the
current income of the residents. On recertification, the income of such
resident shall be treated as continuing to not exceed the applicable income
limit unless, as of the most recent annual recertification, (a) such
resident's income exceeds 140% of the income limit applicable for first
year tenants, AND (b) before the next income determination, any residential
unit of comparable or smaller size in the development is occupied by a new
resident whose income exceeds the applicable income limit.
Applicant/Tenant:
___________ Qualifies as a first year Low or Moderate Income Tenant under
paragraph 2 above.
___________ Qualifies, on recertification, as a continuing tenant under the
140% test under paragraph 3 above.
C-5
<PAGE>
___________ Does not, on recertification, qualify as a Low or Moderate
Income Tenant (NOTE: If this box is checked and the development is not 100% Low
or Moderate Income, the next available unit of comparable or smaller size in the
development may need to be rented to a first year qualifying Low or Moderate
Income Tenant to assure that at least 20% of the units are occupied by, or
available for rental to, qualifying tenants).
Date:
------------ -----------------------------------
Owner/Manager
*"Median Gross Income for the Area" means the median income for the statistical
area where the Project is located as determined by the Secretary of Housing and
Urban Development under Section 8(f)(3) of the United States Housing Act of
1937, as amended, taking into account adjustments for family size or if programs
under said Section (8)(f) are terminated, median income determined under the
method used by the Secretary immediately prior to the termination. Such income
figures are to be updated annually by HUD.
C-6
<PAGE>
NEW ISSUE -- BOOK - ENTRY - ONLY RATING: Moody's Investors Service, Inc.
Aa3/VMIG 1
(See "RATING" herein)
In the opinions of Ice Miller Donadio & Ryan, Indianapolis, Indiana, Bond
Counsel, Karen Freeman-Wilson, Gary, Indiana, Co-Bond Counsel, and Meyer, Lyles
& Godshalk, Gary, Indiana, Co-Bond Counsel, under existing laws, regulations,
judicial decisions and rulings, interest on the Series 1996 A Bonds is
excludable from gross income under Section 103 of the Internal Revenue Code of
1986, as amended, except for interest on any Series 1996 A Bond for any period
during which such Series 1996 A Bond is owned by a person who is a "substantial
user" of the Project (hereinafter defined) or a "related person", as defined in
Section 147(a) of the Code. Such exclusion is conditioned on continuing
compliance with the Tax Covenants (hereinafter defined). Interest on the Series
1996 A Bonds must be taken into account for purposes of computing certain
alternative minimum taxes and certain other taxes. INTEREST ON THE SERIES 1996
B BONDS IS NOT EXCLUDABLE FROM GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES. In
the opinions of Ice Miller Donadio & Ryan, Indianapolis, Indiana, Karen Freeman-
Wilson, Gary, Indiana, and Meyer, Lyles & Godshalk, Gary, Indiana, under
existing laws, regulations, judicial decisions and rulings, interest on the
Series 1996 A Bonds and Series 1996 B Bonds is exempt from income taxation in
the State of Indiana. See "TAX MATTERS" herein.
$20,540,000 $1,680,000
CITY OF GARY, INDIANA CITY OF GARY, INDIANA
ADJUSTABLE RATE ECONOMIC DEVELOPMENT TAXABLE ADJUSTABLE RATE
REVENUE REFUNDING BONDS, SERIES 1996 A ECONOMIC DEVELOPMENT REVENUE
(THE MILLER PARTNERSHIP, L.P. PROJECT) REFUNDING BONDS SERIES 1996 B
(THE MILLER PARTNERSHIP, L.P. PROJECT)
Dated: Date of Issuance Maturity Date: March 1, 2031
Price: 100%
The City of Gary, Indiana Adjustable Rate Economic Development Revenue Refunding
Bonds, Series 1996 A (The Miller Partnership, L.P. Project) (the "Series 1996 A
Bonds") and the City of Gary, Indiana Taxable Adjustable Rate Economic
Development Revenue Refunding Bonds, Series 1996 B (The Miller Partnership, L.P.
Project) (the "Series 1996 B Bonds") (the Series 1996 A Bonds and the Series
1996 B Bonds being sometimes collectively referred to herein as the "Series 1996
Bonds") to be issued by the City of Gary, Indiana, will be issued pursuant to a
Trust Indenture, dated as of March 1, 1996 (the "Indenture"), between the City
and Fifth Third Bank of Central Indiana, as Trustee (the "Trustee"), and
pursuant to I.C. 36-7-11.9 and I.C. 37-7-12 and I.C. 5-1-5, as amended. The
Series 1996 Bonds are issuable only as fully registered bonds in denominations
of One Hundred Thousand and 00/100 Dollars ($100,000.00) and integral multiples
of Five Thousand and 00/100 Dollars ($5,000.00) in excess thereof. When issued,
the Series 1996 Bonds will be registered in the name of Cede & Co., as nominee
for The Depository Trust Company, New York, New York ("DTC"). Purchases of
beneficial interest in the Series 1996 Bonds will be made in Book-Entry Only
form. Purchasers of beneficial interest in the Series 1996 Bonds (the
"Beneficial Owners") will not receive physical delivery of certificate
representing their interest in the Series 1996 Bonds. As long as DTC or its
nominee is the registered owner of the Series 1996 Bonds, interest, together
with the principal of and redemption premium, if any, on the Series 1996 Bonds
and the purchase price of tendered Series 1996 Bonds will be paid directly to
DTC, so long as the Series 1996 Bonds are held in Book-Entry Only form. ( See
"THE SERIES 1996 BONDS -- Book-Entry-Only System.").
Interest on the Series 1996 Bonds is subject to a maximum rate of twelve percent
(12%) per annum. Subject to the conditions set forth in Indenture, the Series
1996 Bonds will bear interest from the most recent date to which interest has
been paid, or if no interest has been paid, from the date of initial delivery of
the Series 1996 Bonds, at an adjustable rate of interest in one of several modes
(the "Adjustable Interest Rate Modes") or at a Fixed Interest Rate. The
Adjustable Interest Rate Modes are: Weekly, One Month, Three Month, Six Month,
One Year and Five Year. The Series 1996 Bonds will be issued initially in the
Weekly Mode. See "THE SERIES 1996 BONDS -- Interest Rate Modes on Series 1996
Bonds."
THE SERIES 1996 BONDS, THE INTEREST PAYABLE THEREON AND PREMIUM, IF ANY, DO NOT
REPRESENT OR CONSTITUTE A DEBT OF THE ISSUER WITHIN THE MEANING OF THE
PROVISIONS OF THE CONSTITUTION OR STATUTES OF THE STATE OF INDIANA OR A PLEDGE
OF THE FAITH AND CREDIT OF THE ISSUER. THE SERIES 1996 BONDS, AS TO PRINCIPAL,
INTEREST AND PREMIUM, IF ANY, ARE NOT AN OBLIGATION OF THE STATE OF INDIANA, OR
OF ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE ISSUER, AND ARE PAYABLE
SOLELY AND ONLY FROM THE PAYMENT TO BE MADE ON THE SERIES 1996 NOTES
(HEREINAFTER DEFINED) DELIVERED BY THE MILLER PARTNERSHIP, L.P., AN ILLINOIS
LIMITED PARTNERSHIP (THE "BORROWER") ISSUED UNDER THE LOAN AGREEMENT
(HEREINAFTER DEFINED) PLEDGED AND ASSIGNED FOR THEIR PAYMENT IN ACCORDANCE WITH
INDENTURE. ALL PRINCIPAL AND UP TO 56 DAYS' INTEREST (BUT NOT ANY PREMIUM)
WHICH BECOMES DUE ON THE SERIES 1996 BONDS (WHETHER AT STATED MATURITY OR UPON
ADVANCEMENT OF STATED MATURITY BY REDEMPTION, MANDATORY TENDER, OR ACCELERATION)
THROUGH AND INCLUDING APRIL 15, 2001, IS TO BE PAID, AS NECESSARY, BY DRAWS ON
AN IRREVOCABLE LETTER OF CREDIT ISSUED BY:
THE ROYAL BANK OF SCOTLAND plc,
acting through its New York Branch (the "Bank")
The Series 1996 Bonds are subject to mandatory redemption as described herein
(i) in whole on the Interest Payment Date (hereinafter defined) which next
proceeds the expiration date of the Letter of Credit at a redemption price of
one hundred percent (100%) of the principal amount thereof plus accrued interest
to the redemption date unless, at least 45 days prior to any such Interest
Payment Date, the Bank shall have agreed to an extension of the Letter of Credit
to a date not earlier than one (1) year from the expiration date being extended,
or the Borrower shall have obtained and delivered to the Trustee an Alternate
Letter of Credit with a termination date not earlier than one (1) year from the
expiration date of Letter of Credit it replaces; and (ii) upon a Determination
of Taxability with respect to the Series 1996 A Bonds. The Series 1996 Bonds
are also subject to certain optional redemptions by the Borrower. See "THE
SERIES 1996 BONDS -- Redemption of Series 1996 Bonds Prior to Maturity" herein.
The Series 1996 Bonds may also become due in advance of the stated maturity as a
consequence of a default by the Borrower under the Reimbursement Agreement
pursuant to which the Letter of Credit is issued. Prospective purchasers of
Series 1996 Bonds should not assume that they have protection against an early
retirement of the Series 1996 Bonds.
The Series 1996 Bonds are offered when, as and if issued by the Issuer and
accepted by EVEREN Securities, Inc. (the "Underwriter"), subject to prior sale,
to the withdrawal or modification of the offer without notice and to certain
other conditions including the unqualified approval of legality by Ice Miller
Donadio & Ryan, Indianapolis, Indiana, Bond Counsel, Karen Freeman-Wilson, Gary,
Indiana, Co-Bond Counsel, and Meyer, Lyles & Godshalk, Co-Bond Counsel. Certain
legal matters will be passed upon for the Underwriter by Baker & Daniels,
Indianapolis, Indiana; for the Borrower by Coffield Ungaretti & Harris, Chicago,
Illinois; and for the Bank by Seyfarth, Shaw, Fairweather & Geraldson, Chicago,
Illinois. It is expected that delivery of the Series 1996 Bonds will be made
through the facilities of the DTC in New York, New York, on or about April 1,
1996, against payment therefor. Prior to this offering there has been no market
for the Series 1996 Bonds. Subject to applicable securities laws and market
conditions, the Underwriter intends to effect a secondary market in the Series
1996 Bonds; however, neither the Underwriter nor any other party described
herein is obligated to repurchase any Series 1996 Bonds except as otherwise
described herein. For information with respect to the Underwriter and its
compensation, see "UNDERWRITING" herein.
April 1, 1996 EVEREN SECURITIES, INC.
<PAGE>
NO DEALER, BROKER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED BY THE
BORROWER, THE ISSUER, THE UNDERWRITER OR THE BANK, TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS OFFICIAL STATEMENT,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE BORROWER, THE ISSUER, THE UNDERWRITER OR
THE BANK. THIS OFFICIAL STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THE SERIES 1996
BONDS BY ANY PERSON, IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON
TO MAKE SUCH OFFER, SOLICITATION OR SALE. THE INFORMATION SET FORTH HEREIN HAS
BEEN OBTAINED FROM THE BORROWER, THE ISSUER, THE BANK (WHICH PROVIDED ONLY THE
INFORMATION IN APPENDIX B) AND OTHER SOURCES WHICH ARE BELIEVED TO BE RELIABLE,
BUT IT IS NOT GUARANTEED AS TO ACCURACY OR COMPLETENESS, AND IS NOT TO BE
CONSTRUED AS A REPRESENTATION BY THE UNDERWRITER. THE INFORMATION, ESTIMATES
AND EXPRESSIONS OF OPINION IN THIS OFFICIAL STATEMENT ARE SUBJECT TO CHANGE
WITHOUT NOTICE, AND NEITHER THE DELIVERY OF THIS OFFICIAL STATEMENT NOR ANY SALE
OF THE SERIES 1996 BONDS SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE PARTIES REFERRED TO HEREIN,
SUBSEQUENT TO THE DATE AS OF WHICH SUCH INFORMATION IS PRESENTED.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 1996
BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE SERIES 1996 BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERIT AND
RISK INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR
STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
OFFICIAL STATEMENT SUMMARY . . . . . . . . . . . . . . . . . . . . . . . i
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
THE BORROWER, THE PROJECT AND USE OF SERIES 1996 BOND PROCEEDS . . . . . 4
THE SERIES 1996 BONDS. . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 1996 BONDS. . . . . . . .21
RISKS TO BONDHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . .22
TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
NO LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
APPROVAL OF LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . .25
UNDERWRITING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
RATING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
APPENDIX A - The Miller Partnership, L.P.
APPENDIX B - The Royal Bank of Scotland plc
APPENDIX C - Form of Bond Counsel Opinion
APPENDIX D - Definitions and Summary of Certain Legal Documents
<PAGE>
OFFICIAL STATEMENT SUMMARY
The following is a summary of certain information contained in this
Official Statement, to which reference should be made for a complete statement
thereof. The Series 1996 Bonds are offered to potential investors only by means
of the entire Official Statement, including the cover page, this summary
statement and the Appendices hereto. No person is authorized to detach this
summary statement from the Official Statement or otherwise use it without the
entire Official Statement.
SECURITIES BEING OFFERED
The following securities are being offered:
$20,540,000.00 $1,680,000.00
CITY OF GARY, INDIANA CITY OF GARY, INDIANA
ADJUSTABLE RATE TAXABLE ADJUSTABLE RATE
ECONOMIC DEVELOPMENT ECONOMIC DEVELOPMENT
REVENUE REFUNDING BONDS, REVENUE REFUNDING BONDS,
SERIES 1996 A SERIES 1996 B
(THE MILLER PARTNERSHIP, L.P. (THE MILLER PARTNERSHIP, L.P.
PROJECT) PROJECT)
THE SERIES 1996 BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER
AND ARE PAYABLE SOLELY OUT OF THE REVENUES AND OTHER AMOUNTS DERIVED FROM THE
LOAN AGREEMENT OR AS OTHERWISE AUTHORIZED BY THE BOND ORDINANCE OR THE INDENTURE
AND PERMITTED BY LAW (EXCEPT TO THE EXTENT PAID OUT OF MONEYS ATTRIBUTABLE TO
THE PROCEEDS DERIVED FROM THE SALE OF THE SERIES 1996 BONDS OR TO INCOME FROM
THE TEMPORARY INVESTMENT THEREOF). THE SERIES 1996 BONDS DO NOT CONSTITUTE AN
INDEBTEDNESS OF THE CITY OF GARY, INDIANA, WITHIN THE MEANING OF ANY INDIANA
CONSTITUTIONAL PROVISION OR STATUTORY LIMITATION, AND DO NOT CONSTITUTE OR GIVE
RISE TO A PECUNIARY LIABILITY OF THE CITY OF GARY, INDIANA, OR A CHARGE AGAINST
ITS GENERAL CREDIT OR TAXING POWERS.
THE TRUSTEE
Fifth Third Bank of Central Indiana, Indianapolis, Indiana, will serve
as the initial Trustee under the Indenture.
REGISTRAR, PAYING AGENT AND AUTHENTICATING AGENT
The Fifth Third Bank, Cincinnati, Ohio, has been appointed to serve as
registrar (the "Registrar"), paying agent (the "Paying Agent") and
authenticating agent (the "Authenticating Agent") under the Indenture.
THE BANK AND THE LETTER OF CREDIT
The Royal Bank of Scotland plc, acting through its New York Branch,
will provide a Letter of Credit for the Series 1996 Bonds (See APPENDIX B -- The
Royal Bank of Scotland plc). The Letter of Credit will permit the Trustee to
draw an amount with respect to the Series 1996 Bonds up to (a) the outstanding
principal amount of the Series 1996 Bonds (i) to enable the Trustee to pay the
principal amount of the Series 1996 Bonds when due at maturity, upon redemption
or acceleration and (ii) to enable the Trustee to pay the portion of the
purchase price of the Series 1996 Bonds or Beneficial Ownership Interests (as
hereinafter defined) tendered to it equal to the principal amount of such
tendered Series 1996 Bonds or Beneficial Ownership Interests, plus (b) an amount
equal to interest to accrue on the Series 1996 Bonds for 56 days at the maximum
interest rate of 12% per annum, (i) to enable the Trustee to pay interest on the
Series 1996 Bonds when due and (ii) to enable the Trustee to pay the portion, if
any,
<PAGE>
of the purchase price of the Series 1996 Bonds or Beneficial Ownership Interests
tendered to it equal to the accrued interest on such tendered Series 1996 Bonds
or Beneficial Ownership Interests. The Letter of Credit will terminate upon the
earliest to occur of the following (the "Termination Date"): (i) the honoring
by the Bank of the final drawing to be made thereunder, or (ii) surrender of the
Letter of Credit to the Bank for cancellation as a result of (A) the payment in
full of the Bonds pursuant to the provisions of the Indenture, or (B) the
acceptance by the Trustee of an Alternate Letter of Credit (as herein defined),
as certified by the Trustee to the Bank, or (iii) April 15, 2001, or (iv) the
fifth calendar day following the Fixed Interest Rate Commencement Date unless
waived in writing by the Bank pursuant to the Indenture prior to the Fixed
Interest Rate Commencement Date, (v) the fifth calendar day following the
Interest Period Reset Date from and after which any of the Bonds bear interest
at the Six Month Interest Rate, the One Year Interest Rate or the Five Year
Interest Rate, or (vi) the fifteenth calendar day following delivery to the
Trustee of a direction by the Bank pursuant to the Indenture to declare the
Bonds immediately due and payable which has not been rescinded (see "APPENDIX D
- -- Definitions and Summary of Certain Legal Documents").
REMARKETING AGENT
EVEREN Securities, Inc., and Gates Capital Corporation have been
appointed to serve as initial Co-Remarketing Agents under the Indenture
(jointly, the "Remarketing Agent").
THE BORROWER AND USE OF SERIES 1996 BOND PROCEEDS
The proceeds of the sale of the Series 1996 Bonds will be loaned to
The Miller Partnership, L.P., an Illinois limited partnership (the "Borrower")
and used by the Borrower to finance the costs of refunding certain bonds issued
by the Issuer in 1991 and 1993 (the "Prior Bonds") for the purposes of loaning
the proceeds of the Prior Bonds to The Miller Partnership, L.P., a previously
existing Illinois limited partnership (the "Prior Borrower") to finance the
acquisition, renovation and redevelopment of a multi-family rental housing
project (the "Project"). (See "THE BORROWER, THE PROJECT AND USE OF SERIES 1996
BOND PROCEEDS" herein.)
MATURITY, REDEMPTION AND MANDATORY PURCHASE
The Series 1996 Bonds will mature on March 1, 2031, subject to prior
optional and mandatory redemption, and are subject to mandatory purchase as set
forth herein (see "THE SERIES 1996 BONDS --Redemption of Series 1996 Bonds Prior
to Maturity," "THE SERIES 1996 BONDS--Mandatory Tender for Purchase of Series
1996 Bonds or Beneficial Ownership Interest upon Conversion Between Modes," "THE
SERIES 1996 BONDS--Mandatory Tender for Purchase of Series 1996 Bonds Upon
Conversion Between Interest Rate Modes" and "THE SERIES 1996 BONDS--Mandatory
Tender for Purchase of Series 1996 Bonds or Beneficial Ownership Interests Upon
Delivery of an Alternate Letter of Credit").
INTEREST RATES, PAYMENT DATES AND CONVERSION BETWEEN INTEREST RATE MODES
The Series 1996 Bonds will bear interest from the most recent date to
which interest has been paid, or if no interest has been paid, from the date of
initial delivery of the Series 1996 Bonds, at an adjustable rate of interest in
one of several modes (each an "Adjustable Interest Rate Mode") or at a Fixed
Interest Rate. (The Adjustable Interest Rate Modes and the Fixed Interest Rate
are collectively referred to as "Interest Rate Modes.") The Adjustable Interest
Rate Modes are: Weekly, One Month, Three Month, Six Month, One Year and Five
Year.
While the Series 1996 Bonds bear interest in one of the Adjustable
Interest Rate Modes, the Series 1996 Bonds bear interest during the period
generally corresponding to the title of the Adjustable Interest Rate Mode (the
"Interest Rate Period") at a rate determined by the Remarketing Agent. The
Remarketing Agent determines the rate on the "Interest Rate Determination Date"
and such rate is effective as of the "Interest Rate Adjustment Date," for such
Interest Rate Period.
The rate of interest determined by the Remarketing Agent for a
particular Interest Rate Period is to be the rate necessary to produce, as
nearly as practical, a par bid for the Series 1996 Bonds on the Interest Rate
-ii-
<PAGE>
Determination Date for that Interest Rate Period. If the Remarketing Agent has
been removed or has resigned and no successor has been appointed, or if the
Remarketing Agent has failed to determine the applicable interest rate, the
interest rate for the next succeeding Interest Rate Period will be the interest
rate then borne by the Series 1996 Bonds. In no event, however, can the
interest rate on the Series 1996 Bonds for any Interest Rate Mode exceed 12% per
annum.
The Series 1996 Bonds initially will bear interest in the Weekly
Interest Rate Mode. Commencing on the first day of June, 1996, the Borrower may
elect, from time to time, to change Interest Rate Modes on the Series 1996
Bonds. The date upon which such change becomes effective is referred to as an
"Interest Period Reset Date" and can only occur on the first Business Day of a
month (or the first day of a month when converting from a Six Month, One Year or
Five Year Adjustable Interest Rate Mode) following the conclusion of the
preceding Interest Rate Period (except when converting from the Weekly Interest
Rate Mode). The Series 1996 Bonds or Beneficial Ownership Interests (as
hereinafter defined) are subject to mandatory tender for purchase on the
Interest Period Reset Date upon a conversion between Interest Rate Modes,
subject to the right of each Holder or Beneficial Owner (as hereinafter defined)
to affirmatively elect to retain its Bonds or Beneficial Ownership Interests (as
hereinafter defined) (see "THE SERIES 1996 BONDS -- Mandatory Tender for
Purchase of Series 1996 Bonds or Beneficial Ownership Interests upon Conversion
Between Modes" herein).
Interest on the Series 1996 Bonds is payable monthly on the first
Business Day of each month while the Series 1996 Bonds bear interest in the
Weekly, One Month or Three Month Interest Rate Mode, and is payable semi-
annually on April 1 and October 1 while the Series 1996 Bonds bear interest in
the Six Month, One Year, Five Year or Fixed Interest Rate Mode. The first
interest payment date for the Series 1996 Bonds will be the first Business Day
of May, 1996. The chart below sets forth Interest Rate Adjustment Dates,
Interest Rate Determination Dates and Interest Rate Periods for the Adjustable
Interest Rate Modes:
<TABLE>
<CAPTION>
INTEREST RATE
INTEREST INTEREST RATE DETERMINATION INTEREST RATE
RATE MODE ADJUSTMENT DATE DATE PERIOD
- --------- --------------- -------------- ------------------
<S> <C> <C> <C>
Weekly Thursday of each week 2:00 p.m. on Wednesday 1 week commending
of each week, or the Thursday*
preceding Business Day if
Wednesday is not a Business Day*
One Month 1st Business Day of each month 7th Business Day before 1 month commencing the
the Interest Rate first Business Day of the
Adjustment Date month
Three Month 1st Business Day of any month, 10th Business Day before 3 months commencing the
and thereafter the first Business the Interest Rate first Business Day of
Day of January, April, July, and Adjustment Date January, April, July, and
October October**
Six Month 1st Business Day of any month, 10th Business Day before 6 months commencing
and thereafter April 1 and the Interest Rate April 1 or October 1**
October 1 Adjustment Date
One Year 1st Business Day of any month, 10th Business Day before 1 year commencing April
and thereafter April 1 or October the Interest Rate 1 and October 1**
1 commencing the next Interest Adjustment Date
Rate Period.
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Five Year 1st Business Day of any month, 10th Business Day before 5 years commencing
and thereafter April 1 or October the Interest Rate April 1 and October**
1 commencing the next Interest Adjustment Date
Rate Period
</TABLE>
* When converting from another Interest Rate Mode, the Interest Rate
Determination Date for the Weekly Interest Rate Mode is 2:00 p.m. on the
Business Day before the Interest Period Reset Date. The first Interest
Rate Period would commence on the Interest Period Reset Date and run
through the following Wednesday.
** The first Interest Rate Period may be less than the indicated period when
converting from another Interest Rate Mode.
The Interest Rate Determination Date for the Fixed Interest Rate Mode
is the tenth Business Day before the Interest Period Reset Date, which is the
first day or Business Day of a month following the conclusion of the preceding
Interest Rate Period and which is also the Interest Rate Adjustment Date. No
further conversion to other Interest Rate Modes can be made after conversion to
the Fixed Interest Rate Mode (see "THE SERIES 1996 BONDS -- Interest," "Interest
Rate Modes on Series 1996 Bonds," and "Conversion Between Interest Rate Modes"
herein).
PURCHASE OF SERIES 1996 BONDS OR BENEFICIAL OWNERSHIP INTERESTS ON DEMAND OF
OWNERS
THE SERIES 1996 BONDS WILL BE ISSUED INITIALLY IN BOOK-ENTRY ONLY
FORM, AND THE PROCEDURES SET FORTH BELOW ARE SUBJECT TO THE PROVISIONS OF A
LETTER OF REPRESENTATIONS EXECUTED BY THE ISSUER (SEE "THE SERIES 1996 BONDS--
BOOK-ENTRY ONLY SYSTEM" AND "THE SERIES 1996 BONDS--PURCHASE OF SERIES 1996
BONDS OR BENEFICIAL OWNERSHIP INTERESTS UPON DEMAND OF HOLDERS OR BENEFICIAL
OWNERS" HEREIN).
While the Series 1996 Bonds bear interest in an Adjustable Interest
Rate Mode, any Series 1996 Bond or any Beneficial Ownership Interest (or any
portion thereof in the amount of $100,000 or multiples of $5,000 in excess
thereof, and provided that the remaining portion to be held by the Holder or
Beneficial Owner is $100,000 or more in principal amount) will be purchased by
the Registrar upon the demand of the Holder or the Beneficial Owner at a
purchase price equal to the principal amount plus, if the Series 1996 Bond bears
interest in the Weekly Interest Rate Mode, accrued interest, if any, to the date
of purchase. In order to make such demand, the Holder or the Beneficial Owner
must give notice to the Registrar (and, if the Series 1996 Bonds bear interest
in the Weekly Interest Rate Mode, to the Trustee) in writing or by telecopy
stating (i) the name and address of the Holder or the Beneficial Owner, (ii) the
principal amount, CUSIP number and Series 1996 Bond numbers of the Series 1996
Bonds or Beneficial Ownership Interests to be purchased, (iii) that such Series
1996 Bonds or Beneficial Ownership Interests are to be purchased on the Purchase
Date (as defined below) pursuant to the terms of the Indenture, and (iv) that
such notice is irrevocable. The Beneficial Owner must provide the Registrar
with evidence satisfactory to the Registrar of the Beneficial Owner's interest
in the Beneficial Ownership Interest tendered for purchase. The Holder must
deliver the Series 1996 Bonds to be purchased to the Registrar at its principal
corporate trust office accompanied by fully completed and executed Instructions
to Sell, the form of which is printed on the Series 1996 Bonds. The Beneficial
Owner must cause a change in the records of DTC (as hereinafter defined) to
reflect the tender of a Beneficial Ownership Interest. Any Series 1996 Bonds
not so delivered after the Holder has made a demand for purchase nevertheless
shall be deemed tendered. After a demand for purchase, Beneficial Owners shall
be obligated to cause a change in the records of DTC to reflect a tender of such
Beneficial Ownership Interests. Notwithstanding any tender, Series 1996 Bonds
or Beneficial Ownership Interests (or the applicable portions thereof) tendered
for purchase will not be purchased if such Series 1996 Bonds mature or are
redeemed on or prior to the applicable Bond Purchase Date. Demand notices and
Series 1996 Bond deliveries must be given and made as follows (with all
references to local time meaning local time of the city where the principal
corporate trust office of the Registrar is located, presently Cincinnati, Ohio):
1. While the Series 1996 Bonds bear interest in the Weekly Interest
Rate Mode, the notice must be given no earlier than fifteen days but no
later than seven days prior to the Bond
-iv-
<PAGE>
Purchase Date. The Bond Purchase Date is determined by the Holder or
Beneficial Owner and must be a Business Day and, if the Interest Rate Mode
is to be converted from the Weekly Interest Rate Mode to another Interest
Rate Mode, must be no later than the Interest Period Reset Date for such
other Interest Rate Mode. In the case of a holder, the Series 1996 Bonds
must be delivered to the Registrar not later than 10:00 a.m., local time,
on the second Business Day before the Bond Purchase Date. The Beneficial
Owner must cause the transfer of the Beneficial Owner's Beneficial
Ownership Interest on the records of DTC (as hereinafter defined) by
10:00 a.m. (local time) on the Bond Purchase Date. In the case of a Series
1996 Bond or Beneficial Ownership Interest or portion thereof to be
purchased prior to an Interest Payment Date and after the Record Date in
respect thereof, the Holder or Beneficial Owner shall deliver a due-bill
check, in form satisfactory to the Registrar for interest due on such
Interest Payment Date.
2. While the Series 1996 Bonds bear interest in the One Month
Interest Rate Mode, the notice must be given no earlier than fifteen
days before the Bond Purchase Date but no later than 11:00 a.m., local
time, on the fifth Business Day before the Bond Purchase Date. The
Bond Purchase Date is the Interest Rate Adjustment Date for the One
Month Interest Rate Mode. The Series 1996 Bonds must be delivered to
the Registrar no later than 10:00 a.m., local time, on the fourth day
before the Bond Purchase Date or the next preceding Business Day if
such fourth day is not a Business Day. The Beneficial Owner must
cause the transfer of the Beneficial Owner's Beneficial Ownership
Interest on the records of DTC (as hereinafter defined) by 10:00 a.m.
(local time) on the Bond Purchase Date. (See "THE SERIES 1996 BONDS
-- Purchase of Series 1996 Bonds or Beneficial Ownership Interests on
Demand of Holders or Beneficial Owners" herein.)
3. While the Series 1996 Bonds bear interest in an Adjustable
Interest Rate Mode other than the Weekly Interest Rate Mode or the One
Month Interest Rate Mode, the notice must be given no earlier than
fifteen days before the Bond Purchase Date but no later than
11:00 a.m., local time, on the eighth Business Day before the Bond
Purchase Date. The Bond Purchase Date is the Interest Rate Adjustment
Date for that Adjustable Interest Rate Mode. The Series 1996 Bonds
must be delivered to the Registrar no later than 10:00 a.m., local
time, on the seventh day before the Bond Purchase Date or the next
preceding Business Day if such seventh day is not a Business Day. The
Beneficial Owner must cause the transfer of the Beneficial Owner's
Beneficial Ownership Interest on the records of DTC (as hereinafter
defined) by 10:00 a.m. (local time) on the Bond Purchase Date. (See
"THE SERIES 1996 BONDS -- Purchase of Series 1996 Bonds or Beneficial
Ownership Interests on Demand of Holders or Beneficial Owners"
herein.)
[Balance of page intentionally left blank]
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<PAGE>
INTRODUCTION
This Official Statement sets forth information in connection with the
issuance and sale by the City of Gary, Indiana (the "Issuer") of the Series 1996
A and the Series 1996 B Bonds (collectively, the "Series 1996 Bonds"). The
Series 1996 Bonds are being issued pursuant to a Trust Indenture dated as of
March 1, 1996 (the "Indenture"), between the Issuer and Fifth Third Bank of
Central Indiana, Indianapolis, Indiana, as trustee (the "Trustee"). The Series
1996 Bonds will be dated as of and bear interest from the date of their initial
delivery. The Series 1996 Bonds will mature on March 1, 2031, and will be
subject to redemption prior to maturity as described herein under "THE SERIES
1996 BONDS--Redemption of Series 1996 Bonds Prior to Maturity."
In 1991, the Issuer issued its $14,500,000 City of Gary, Indiana,
Economic Development Revenue Bonds, Series 1991 A (The Miller Partnership, L.P.
Project), and its $1,000,000 City of Gary, Indiana, Taxable Economic Development
Revenue Bonds, Series 1991 B (The Miller Partnership, L.P. Project)
(collectively, the "Series 1991 Bonds"), and in 1993, the Issuer issued its
$6,040,000 City of Gary, Indiana, Economic Development Revenue Bonds, Series
1993 A (The Miller Partnership, L.P. Project) and its $1,460,000 City of Gary,
Indiana, Taxable Economic Development Revenue Bonds, Series 1993 B (The Miller
Partnership, L.P. Project) (collectively, the "Series 1993 Bonds") (the Series
1991 Bonds and the Series 1993 Bonds being collectively referred to herein as
the "Prior Bonds").
The Issuer loaned the proceeds received from the sale of the Series
1991 Bonds and the Series 1993 Bonds to The Miller Limited Partnership, L.P., a
previously existing Illinois limited partnership (the "Prior Borrower") for the
purpose of financing the acquisition, renovation and redevelopment of a
multifamily rental housing project (the "Project") containing approximately 682
units located in Miller, a neighborhood in the City of Gary, Indiana. The loans
made by the Issuer to the Prior Borrower (collectively, the "Prior Loans") were
made pursuant to the Loan Agreement, Mortgage, Security Agreement, Assignment of
Rents and Leases and Financing Statement, dated as of April 1, 1991, among the
Issuer, the Bank, and the Borrower (the "Original Loan Agreement") and the First
Supplemental Loan Agreement, Mortgage, Security Agreement, Assignment of Rents
and Leases and Financing Statement, dated as of September 1, 1993 (the
"Supplemental Loan Agreement") (the Original Loan Agreement as supplemented by
the Supplemental Loan Agreement being referred to herein as the "Prior Loan
Agreement.") As evidence of the Prior Loans, the Prior Borrower executed and
delivered (i) a promissory note dated April 1, 1991, in the principal amount of
$14,500,000; (ii) a promissory note dated April 1, 1991, in the principal amount
of $1,000,000; (iii) a promissory note dated September 1, 1993, in the principal
amount of $6,040,000; and (iv) a promissory note dated September 1, 1993, in the
principal amount of $1,460,000 (collectively, the "Prior Notes"). The Prior
Notes mature and bear interest in accordance with a schedule designed to provide
the Issuer with money sufficient to pay when due the principal of, and interest
on, the Prior Bonds. The Prior Notes are prepayable prior to maturity in
accordance with the terms stated in the Prior Loan Agreement.
The proceeds received from the sale of the Series 1996 Bonds will be
loaned to The Miller Partnership, L.P., an Illinois limited partnership (the
"Borrower"). The loan of the proceeds of the Series 1996 Bonds (collectively,
the "Loans") will be made pursuant to the terms of a Loan Agreement dated as of
March 1, 1996, between the Borrower and the Issuer (the "Loan Agreement") to
provide moneys which, when combined with other funds of the Borrower and/or
CenterPoint, will be used for the purpose of refunding the Prior Bonds. The
Borrower, the Project and the projected use of the proceeds of the Series 1996
Bonds and other funds of the Borrower to refund the Prior Bonds are more
particularly described in "THE BORROWER, THE PROJECT AND USE OF SERIES 1996 BOND
PROCEEDS" herein. Pursuant to the Loan Agreement, the Borrower will agree to
make payments by the times and in the amounts necessary to pay the principal of,
premium (if any) and interest on the Series 1996 Bonds when due (the "Bond
Service Charges"). To evidence such Loans, the Borrower also will execute and
deliver to the Trustee a promissory note dated the date of delivery of the
Series 1996 A Bonds, in the principal amount of $20,540,000 (the "Series 1996 A
Promissory Note") and a promissory note dated the date of delivery of the Series
1996 B Bonds, in the principal amount of $1,680,000 (the "Series 1996 B
Promissory Note") (the Series 1996 A Promissory Note and the Series 1996 B
Promissory Note being collectively referred to as the "Series 1996 Notes").
THE SERIES 1996 BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER,
PAYABLE SOLELY FROM THE REVENUES ASSIGNED AND PLEDGED BY THE INDENTURE TO SECURE
SUCH PAYMENT, WHICH WILL INCLUDE MONEYS DRAWN UNDER THE LETTER OF CREDIT
DESCRIBED BELOW (SEE "SECURITY AND SOURCES OF PAYMENT FOR THE
<PAGE>
SERIES 1996 BONDS" HEREIN). THOSE REVENUES WILL ALSO INCLUDE THE LOAN PAYMENTS
REQUIRED TO BE MADE BY THE BORROWER UNDER THE LOAN AGREEMENT AND THE SERIES 1996
NOTES.
The principal of and interest on the Series 1996 Bonds will be payable
from the proceeds of draws under a Letter of Credit (the "Letter of Credit") to
be issued by Royal Bank of Scotland plc, acting through its New York Branch (the
"Bank") (see "APPENDIX D - Definitions and Summary of Certain Legal Documents"
herein). The repayment of drawings under the Letter of Credit will be provided
pursuant to a Reimbursement Agreement as of March 1, 1996 (the "Reimbursement
Agreement") among the Borrower, CenterPoint Properties Corporation, a Maryland
corporation and the general partner of the Borrower ("CenterPoint"), and the
Bank. The obligations of the Borrower to the Bank under the Reimbursement
Agreement will be secured by a mortgage and certain other collateral documents
(collectively, the "Bank Security Documents") to the Bank. The Bank Security
Documents will be for the sole benefit and security of the Bank and will not be
for the benefit or security of the Trustee or the Holders.
THE SERIES 1996 BONDS ARE BEING OFFERED SOLELY ON THE BASIS OF THE
LETTER OF CREDIT AND THE FINANCIAL STRENGTH OF THE BANK AND ARE NOT BEING
OFFERED ON THE BASIS OF THE FINANCIAL STRENGTH OF THE BORROWER OR ANY OTHER
SECURITY. THIS OFFICIAL STATEMENT DOES NOT DESCRIBE THE FINANCIAL CONDITION OF
THE BORROWER. THE SERIES 1996 BONDS ARE SUBJECT TO ACCELERATION OF MATURITY
UPON THE OCCURRENCE OF A DEFAULT BY THE BORROWER UNDER THE REIMBURSEMENT
AGREEMENT, WHICH INCLUDE THE BORROWER'S REIMBURSEMENT OBLIGATION PURSUANT TO
SUCH REIMBURSEMENT AGREEMENT AND CERTAIN OTHER OBLIGATIONS, LOANS AND CREDIT
ACCOMMODATIONS PROVIDED TO THE BORROWER BY THE BANK, BUT SUCH DEFAULTS ARE NOT
FULLY DESCRIBED HEREIN. AS A RESULT OF THE FOREGOING, PROSPECTIVE INVESTORS
WILL NOT BE ABLE TO EVALUATE THE LIKELIHOOD OF A DEFAULT BY THE BORROWER UNDER
THE REIMBURSEMENT AGREEMENT AND RESULTING ACCELERATION OF THE SERIES 1996 BONDS.
ANY PREMIUM PAYABLE ON THE SERIES 1996 BONDS UPON THEIR OPTIONAL
REDEMPTION WHILE THEY BEAR INTEREST AT THE FIXED INTEREST RATE (SEE "THE SERIES
1996 BONDS--OPTIONAL REDEMPTION" HEREIN) IS NOT SECURED BY THE LETTER OF CREDIT.
As long as the Series 1996 Bonds bear interest in any of the
Adjustable Interest Rate Modes defined under "THE SERIES 1996 BONDS--Interest"
herein, the Series 1996 Bonds will be purchased by the Registrar upon demand by
the registered owner thereof (initially, The Depository Trust Company ("DTC"),
or its nominee) (the "Holder"), and beneficial ownership interests in Series
1996 Bonds ("Beneficial Ownership Interests") will be purchased by the Registrar
upon the demand of the owners thereof ("Beneficial Owners"). Any such purchase
will be made on the applicable Bond Purchase Date, as defined herein under "THE
SERIES 1996 BONDS--Purchase of Series 1996 Bonds or Beneficial Ownership
Interests on Demand of Holders or Beneficial Owners." The Beneficial Owner must
provide satisfactory evidence to the Registrar of such Beneficial Owner's
Beneficial Ownership Interest and must comply with the remaining requirements of
the Indenture applicable to the tender of Beneficial Ownership Interests (see
"THE SERIES 1996 BONDS--Purchase of Series 1996 Bonds or Beneficial Ownership
Interests Upon Demand of Holders or Beneficial Owners"). The Indenture provides
for the remarketing by Co-remarketing agents, initially, EVEREN Securities,
Inc., and Gates Capital Corporation, (jointly, the "Remarketing Agent"), of the
Series 1996 Bonds or Beneficial Ownership Interests tendered by the Holders or
Beneficial Owners thereof. If the proceeds of remarketing are not sufficient to
purchase the Series 1996 Bonds or Beneficial Ownership Interests tendered for
purchase, the Trustee is required to draw on the Letter of Credit to pay the
necessary purchase price.
The Borrower may convert the Series 1996 Bonds to a different
Adjustable Interest Rate Mode or to a Fixed Interest Rate Mode as of a specified
date (the "Interest Period Reset Date"). The Series 1996 Bonds or Beneficial
Ownership Interests are subject to mandatory purchase on any such Interest
Period Reset Date from proceeds of remarketing or from proceeds of a drawing on
the Letter of Credit, subject to the right of each Holder or Beneficial Owner to
affirmatively elect to retain its Series 1996 Bonds or Beneficial Ownership
Interests (see "THE SERIES 1996 BONDS--Mandatory Tender for Purchase of Series
1996 Bonds or Beneficial Ownership Interests Upon Conversion Between Modes"
herein).
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<PAGE>
The Borrower may provide for the delivery of an Alternate Letter of
Credit (as hereinafter defined) to the Trustee. The Series 1996 Bonds or
Beneficial Ownership Interests are subject to mandatory tender upon the delivery
of an Alternate Letter of Credit to the Trustee, subject to the right of each
Holder or Beneficial Owner to affirmatively elect to retain its Series 1996
Bonds or Beneficial Ownership Interests. (See "THE SERIES 1996 BONDS --
Mandatory Tender for Purchase of Series 1996 Bonds or Beneficial Ownership
Interests Upon Delivery of an Alternate Letter of Credit" herein.)
On the Interest Payment Date next preceding the Termination Date (as
hereinafter defined) of the Letter of Credit or the expiration date of any
Alternate Letter of Credit, the Series 1996 Bonds or Beneficial Ownership
Interests are subject to mandatory redemption unless, at least 45 days prior to
such Interest Payment Date, (a) the Bank shall have agreed to an extension of
the expiration date of the Letter of Credit to a date not earlier than one year
from the expiration date of such Letter of Credit or (b) the Borrower shall have
obtained an Alternate Letter of Credit with a termination date not earlier than
one year from the termination date of the letter of credit it replaces. (See
"THE SERIES 1996 BONDS -- Redemption of Series 1996 Bonds Prior to Maturity").
Except for the information contained herein under the caption "THE
ISSUER," the Issuer has not provided any of the information contained in this
Official Statement. The Issuer is not responsible for and does not certify as
to the accuracy or sufficiency of the disclosures made herein or any other
information provided by the Borrower, the Bank, the Underwriter or any other
person.
Herein follow brief descriptions of the Issuer and the Series 1996
Bonds. Summaries of the Letter of Credit, the Reimbursement Agreement, the Loan
Agreement and the Indenture appear at "DEFINITIONS AND SUMMARY OF CERTAIN LEGAL
DOCUMENTS" in Appendix D herein. Information regarding the Bank is included in
Appendix B hereto. The descriptions and summaries of the Letter of Credit, the
Reimbursement Agreement, the Loan Agreement, the Indenture and other documents
contained in the "DEFINITIONS AND SUMMARY OF CERTAIN LEGAL DOCUMENTS" in
Appendix D herein, do not purport to be comprehensive or definitive and are
qualified in their entirety by reference to those documents, and all references
to Series 1996 Bonds are qualified in their entirety by the definitive form
thereof included in the Indenture. Copies of such documents are available from
the Underwriter.
THE ISSUER
The Issuer is a municipal corporation and political subdivision
organized and existing under the laws of the State of Indiana. The Series 1996
Bonds are authorized and issued by the Issuer pursuant to the provisions of the
Constitution and statutes of the State of Indiana, particularly Indiana
Code 36-7-11.9 and 12 and I.C. 5-1-5 (collectively, the "Act"), and pursuant to
an ordinance adopted by the Common Council of the Issuer (the "Issuing
Authority").
THE SERIES 1996 BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER
AND ARE PAYABLE SOLELY OUT OF THE REVENUES AND OTHER AMOUNTS DERIVED FROM THE
LOAN AGREEMENT OR AS OTHERWISE AUTHORIZED BY THE BOND ORDINANCE OR THE INDENTURE
AND PERMITTED BY LAW (EXCEPT TO THE EXTENT PAID OUT OF MONEYS ATTRIBUTABLE TO
THE PROCEEDS DERIVED FROM THE SALE OF THE SERIES 1996 BONDS OR TO INCOME FROM
THE TEMPORARY INVESTMENT THEREOF). THE SERIES 1996 BONDS DO NOT CONSTITUTE AN
INDEBTEDNESS OF THE ISSUER WITHIN THE MEANING OF ANY INDIANA CONSTITUTIONAL
PROVISION OR STATUTORY LIMITATION, AND DO NOT CONSTITUTE OR GIVE RISE TO A
PECUNIARY LIABILITY OF THE ISSUER OR A CHARGE AGAINST ITS GENERAL CREDIT OR
TAXING POWERS.
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<PAGE>
THE BORROWER, THE PROJECT AND USE OF SERIES 1996 BOND PROCEEDS
Appendix A to this Official Statement has been furnished by the
Borrower and contains information regarding the Borrower.
The Project financed with the proceeds of the Prior Bonds included the
acquisition, renovation and development of a 682 unit multi-family apartment
complex located in the principally single family residential lake front
community of Miller, a neighborhood in Gary, Indiana. It is situated on over
twenty (20) acres of land and is located approximately two blocks from Lake
Michigan, immediately adjacent to the Indiana Dunes Lakeshore National Park.
The Project is within walking distance of schools, shopping and recreational
facilities and is approximately one mile from commuter rail service to Chicago
and two miles from the interchange accessing four major interstate highways. It
is approximately 25 miles from downtown Chicago.
Rental rates for units of the Project are positioned below average
market rents and priced to be affordable to middle income households. The
renovations financed by the Prior Bonds resulted in a complete updating and
renovation of the complex including kitchens, bathrooms, carpeting, security
systems, exterior building facades with new windows, HVAC, laundry rooms,
playgrounds, tennis court, swimming pools, parking and extensive landscaping
with picnic areas. There are 682 units available for rental at the Project.
The Project currently has an occupancy rate of approximately 93.5%.
The proceeds of the Series 1996 A Bonds will be loaned by the Issuer
to the Borrower for the purpose of refunding the outstanding Series 1991 A Bonds
and Series 1993 A Bonds. The proceeds of the Series 1996 B Bonds will be loaned
by the Issuer to the Borrower, when combined with other funds of the Borrower,
for the purpose of refunding the outstanding Series 1991 B Bonds and Series 1993
B Bonds. The Borrower anticipates that the sources and uses of funds for the
Project will be approximately as follows:
USES OF FUNDS
- -------------
Series 1991 A Bonds and Series 1993 A
Bonds Refunding $ 20,868,250.00
Series 1991 B Bonds and Series 1993 B
Bonds Refunding 2,501,256.25
Costs of Issuance 484,953.45
---------------
Total Uses of Funds $ 23,854,459.70
SOURCES OF FUNDS
- -----------------
Series 1996 A Bond Proceeds $ 20,540,000.00
Series 1996 B Bond Proceeds 1,680,000.00
Borrower Funds 1,634,459.70
---------------
Total Sources $ 23,854,459.70
THE SERIES 1996 BONDS ARE BEING OFFERED ON THE BASIS OF THE LETTER OF
CREDIT AND NOT ON THE BASIS OF THE FINANCIAL STRENGTH OF THE BORROWER.
ACCORDINGLY, NO FINANCIAL INFORMATION WITH RESPECT TO THE BORROWER IS INCLUDED
IN THIS OFFICIAL STATEMENT.
-4-
<PAGE>
THE SERIES 1996 BONDS
GENERAL
The Series 1996 Bonds will be issued as fully registered Series 1996
Bonds without coupons and will be dated as of and bear interest from the date of
their initial delivery. The Series 1996 Bonds will mature on March 1, 2031, and
are subject to mandatory and optional redemption prior to maturity as described
under "Redemption Prior to Maturity." A DEFAULT BY THE BORROWER UNDER THE
REIMBURSEMENT AGREEMENT COULD CONSTITUTE AN EVENT OF DEFAULT UNDER THE INDENTURE
AND RESULT IN THE ACCELERATION OF THE SERIES 1996 BONDS PRIOR TO THEIR MATURITY.
The Series 1996 Bonds are issuable in denominations of $100,000 and increments
of $5,000 in excess thereof.
The Series 1996 Bonds will be issued initially solely in book-entry
form. See "THE SERIES 1996 BONDS--Book-Entry Only System" below.
In the event that the Series 1996 Bonds are no longer held in a book-
entry only system, the principal of and redemption premium (if any) on the
Series 1996 Bonds will be payable at the principal corporate trust office of,
The Fifth Third Bank, as paying agent, (the "Paying Agent"). Payments of
interest due on each Series 1996 Bond will be made by check or draft mailed on
each Interest Payment Date described below to the Holder of that Series 1996
Bond as of the close of business on the fifth Business Day preceding an Interest
Payment Date or the fifteenth Business Day preceding an Interest Payment Date
if the Series 1996 Bonds bear interest at the Fixed Interest Rate (the "Regular
Record Date") at such Holder's address as it appears on the registration books
maintained by The Fifth Third Bank, as registrar, (the "Registrar"). The term
"Business Day" means a day of the year other than a Saturday or Sunday on which
commercial banks, located in the cities in which the principal corporate trust
office of the Paying Agent and the Registrar and the principal offices of the
Bank and the Remarketing Agent are located, are not required or authorized to
remain closed and on which The New York Stock Exchange is not closed. In the
event of a default in the payment of interest on any Series 1996 Bond when due,
the Trustee may establish a Special Record Date with respect to that payment of
interest when money becomes available for such payment.
Any act in connection with the Registrar required to be done by a
certain time is to be done as of the local time in the city where the principal
corporate trust office of the Registrar is located (presently, Cincinnati,
Ohio). Any act in connection with the Paying Agent, required to be done by a
certain time, is to be done at local time in the city where the principal
corporate trust office of the Paying Agent is located (presently, Cincinnati,
Ohio).
BOOK-ENTRY ONLY SYSTEM
The Series 1996 Bonds initially will be issued solely in book-entry
form to be held in the book-entry only system maintained by The Depository Trust
Company ("DTC"), New York, New York. So long as such book-entry system is used,
only DTC will receive or have the right to receive physical delivery of Series
1996 Bonds and, except as otherwise provided herein with respect to tenders of
Beneficial Owners of Beneficial Ownership Interests, Beneficial Owners will not
be or be considered to be, and will not have any rights as, owners or holders of
the Series 1996 Bonds under the Indenture.
THE FOLLOWING INFORMATION ABOUT THE BOOK-ENTRY ONLY SYSTEM APPLICABLE
TO THE SERIES 1996 BONDS HAS BEEN SUPPLIED BY DTC. NONE OF THE ISSUER, THE
TRUSTEE, THE REGISTRAR, THE PAYING AGENT, THE BORROWER, THE BANK, THE
UNDERWRITER OR THE REMARKETING AGENT MAKES ANY REPRESENTATIONS, WARRANTIES OR
GUARANTEES WITH RESPECT TO ITS ACCURACY OR COMPLETENESS.
DTC will act as securities depository for the Series 1996 Bonds. The
Series 1996 Bonds initially will be issued as fully-registered securities
registered in the name of Cede & Co. (DTC's partnership nominee). One
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fully-registered Series 1996 A Bond certificate and one fully registered Series
1996 B Bond will be issued, in the aggregate principal amount of the Series 1996
A Bonds and Series 1996 B Bonds, respectively, and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participants ("Participants")
deposit with DTC. DTC also facilitates the settlement among Participants of
securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
"Direct Participants" include securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations. DTC is owned
by a number of its Direct Participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks, and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The Rules applicable to DTC and its
Participants are on file with the Securities and Exchange Commission.
Purchases of Series 1996 Bonds under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Series 1996
Bonds on DTC's records. The ownership interest of each actual purchaser of each
Series 1996 Bond ("Beneficial Owner") is in turn to be recorded on the Direct
and Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase, but Beneficial Owners are expected to
receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Series 1996 Bonds ("Beneficial Ownership Interest")
are to be accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their Beneficial Ownership Interests in Series 1996 Bonds, except
in the event that use of the book-entry system for the Series 1996 Bonds is
discontinued.
To facilitate subsequent transfers, all Series 1996 Bonds deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Series 1996 Bonds with DTC and their registration in
the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Series 1996 Bonds; DTC's
records reflect only the identity of the Direct Participants to whose accounts
such Series 1996 Bonds are credited, which may or may not be the Beneficial
Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners, will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of
the Series 1996 Bonds are being redeemed, DTC's practice is to determine by lot
the amount of the interest of each Direct Participant in the Series 1996 Bonds
to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the
Series 1996 Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to
the Issuer as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Series 1996 Bonds are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
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Principal and interest payments on the Series 1996 Bonds will be made
to DTC. DTC's practice is to credit Direct Participants' accounts on the
payable date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payment on the payable
date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of such Participant and not of DTC, the
Trustee, the Registrar, the Paying Agent or the Issuer, subject to any statutory
or regulatory requirements as may be in effect from time to time. Payment of
principal and interest to DTC is the responsibility of the Issuer or the Paying
Agent, disbursement of such payments to Direct Participants shall be the
responsibility of DTC, and disbursement of such payments to the Beneficial
Owners shall be the responsibility of Direct and Indirect Participants.
A Beneficial Owner shall give notice to elect to have its Beneficial
Ownership Interests purchased or tendered, through its Participant, to the
Registrar, and shall effect delivery of such Beneficial Ownership Interests by
causing the Direct Participant to transfer the Participant's interest in the
Series 1996 Bonds on DTC's records, to the purchaser or the Registrar, as
appropriate. The requirements for physical delivery of Series 1996 Bonds in
connection with a demand for purchase or a mandatory purchase will be deemed
satisfied when the ownership rights in the Series 1996 Bonds are transferred by
Direct Participants on DTC's records.
DTC may discontinue providing its services as securities depository
with respect to the Series 1996 Bonds at any time by giving reasonable notice to
the Issuer, the Trustee, the Registrar, or the Paying Agent. Under such
circumstances, in the event that a successor securities depository is not
obtained, Series 1996 Bond certificates are required to be printed and
delivered, as described below under "THE SERIES 1996 BONDS--Revision of Book-
Entry System; Replacement Bonds."
NEITHER THE ISSUER, THE BORROWER, THE BANK, THE TRUSTEE, THE REGISTRAR
NOR THE PAYING AGENT WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY DIRECT
PARTICIPANT, INDIRECT PARTICIPANT OR ANY BENEFICIAL OWNER, EXCEPT AS PROVIDED
WITH RESPECT TO THE PURCHASE OF A BENEFICIAL OWNERSHIP INTEREST, OR ANY OTHER
PERSON NOT SHOWN ON THE REGISTRATION BOOKS OF THE REGISTRAR AS BEING A HOLDER
WITH RESPECT TO: (1) THE SERIES 1996 BONDS; (2) THE ACCURACY OF ANY RECORDS
MAINTAINED BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT; (3) THE
PAYMENT BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT
DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PURCHASE PRICE OF TENDERED SERIES
1996 BONDS, EXCEPT AS PROVIDED WITH RESPECT TO THE PURCHASE OF A BENEFICIAL
OWNERSHIP INTEREST, OR THE PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THE
SERIES 1996 BONDS; (4) THE DELIVERY BY ANY DIRECT PARTICIPANT OR INDIRECT
PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED
UNDER THE TERMS OF THE INDENTURE TO BE GIVEN TO HOLDERS; (5) THE SELECTION OF
THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION
OF THE SERIES 1996 BONDS; OR (6) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC
AS HOLDER.
Each Beneficial Owner for whom a Direct Participant or Indirect
Participant acquires an interest in the Series 1996 Bonds, as nominee, may
desire to make arrangements with such Direct Participant or Indirect Participant
to receive a credit balance in the records of such Direct Participant or
Indirect Participant, to have all notices of redemption, elections to tender
Series 1996 Bonds or other communications to or by DTC which may affect such
Beneficial Owner forwarded in writing by such Direct Participant or Indirect
Participant, and to have notification made of all debt service payments.
Beneficial Owners may be charged a sum sufficient to cover any tax,
fee, or other governmental charge that may be imposed in relation to any
transfer or exchange of their interests in the Series 1996 Bonds.
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The Issuer cannot and does not give any assurances that DTC, Direct
Participants, Indirect Participants or others will distribute payments of debt
service on the Series 1996 Bonds made to DTC or its nominee as the registered
owner, or any redemption or other notices, to the Beneficial Owners, or that
they will do so on a timely basis, or that DTC, Direct Participants or Indirect
Participants will serve and act in the manner described in this Official
Statement.
DTC LETTER OF REPRESENTATIONS
Certain duties of DTC and procedures to be followed by DTC, the
Trustee, the Registrar, the Paying Agent and the Remarketing Agent will be set
forth in a Letter of Representation (the "DTC Letter of Representations")
executed by the Issuer. In the event of any conflict between the provisions of
the Indenture and the provisions of the DTC Letter of Representations relating
to delivery of Series 1996 Bonds to the Registrar, the provisions of the DTC
Letter of Representations shall control.
REVISION OF BOOK-ENTRY SYSTEM; REPLACEMENT BONDS
The Indenture provides for the issuance and delivery of fully
registered Series 1996 Bonds (the "Replacement Bonds") directly to owners other
than DTC only in the event that DTC determines not to continue to act as
securities depository for the Series 1996 Bonds and the Issuer does not or is
unable to establish a book entry relationship with another depository.
Upon occurrence of such event, the Issuer may attempt to establish a
securities depository book-entry relationship with another securities
depository. If the Issuer does not do so, or is unable to do so, and after the
Trustee has notified the Beneficial Owners or their representatives with respect
to the Series 1996 Bonds by appropriate notice to DTC, the Issuer will issue and
the Registrar will authenticate and deliver Replacement Bonds with minimum
denominations of $100,000 to the assignees of the Depository or its nominee.
In the event that the book-entry only system is discontinued, the
principal or redemption price of and interest on the Series 1996 Bonds will be
payable in the manner described above in the third paragraph under "THE SERIES
1996 BONDS--General," and the following provisions would apply. The Series 1996
Bonds may be transferred or exchanged for one or more Series 1996 Bonds in
different authorized denominations upon surrender thereof at the designated
office of the Registrar or at the designated office of any Authenticating Agent
(initially, the Registrar) by the registered owners or their duly authorized
attorneys or legal representatives. Upon surrender of any Series 1996 Bonds to
be transferred or exchanged, the Issuer will execute, and the Registrar will
record the transfer or exchange in its registration books and the Registrar or
Authenticating Agent shall authenticate and deliver, new Series 1996 Bonds
appropriately registered and in appropriate authorized denominations. Neither
the Issuer, the Registrar nor any Authenticating Agent shall be required to
transfer or exchange any Series 1996 Bond during a period beginning at the
opening of business 15 days before the day of the mailing of a notice of
redemption of the Series 1996 Bonds and ending at the close of business on the
day of such mailing, nor any Series 1996 Bond all or part of which has been
selected for redemption.
INTEREST
The Series 1996 Bonds are subject to a maximum rate of interest of 12%
per annum. The Series 1996 Bonds will bear interest in one of several different
Adjustable Interest Rate Modes: Weekly, One Month, Three Month, Six Month, One
Year or Five Year (the "Adjustable Interest Rate Modes") or at a Fixed Interest
Rate in the Fixed Interest Rate Mode. (The Adjustable Interest Rate Modes and
the Fixed Interest Rate Mode are referred to as "Interest Rate Modes.") The
Interest Rate Modes are described below under "Interest Rate Modes on Series
1996 Bonds." The Borrower may elect to convert the Interest Rate Mode on the
Series 1996 Bonds, from time to time, as described under "Conversion Between
Interest Rate Modes" below.
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While the Series 1996 Bonds bear interest in one of the Adjustable
Interest Rate Modes they bear interest in such mode for a period of time
generally corresponding to the title of that Adjustable Interest Rate Mode (the
"Interest Rate Period") at a rate determined by the Remarketing Agent. The
Remarketing Agent determines the interest rate for a particular Interest Rate
Period on the Interest Rate Determination Date for such Interest Rate Period.
The Interest Rate Periods and Interest Rate Determination Dates for each
Adjustable Interest Rate Mode are described below under "Interest Rate Modes on
the Series 1996 Bonds."
The Interest Payment Dates for the Series 1996 Bonds will be (a) the
first Business Day of each month for any periods that Series 1996 Bonds bear
interest at the Weekly Interest Rate, the One Month Interest Rate or the Three
Month Interest Rate or (b) the first day of each April and October for any
periods that Series 1996 Bonds bear interest at the Six Month Interest Rate, the
One Year Interest Rate, the Five Year Interest Rate or the Fixed Interest Rate.
While Series 1996 Bonds bear interest in the Weekly, the One Month or
the Three Month Interest Rate Mode, such interest shall be calculated on the
basis of a 365/366 day year. While Series 1996 Bonds bear interest in the Six
Month, One Year, Five Year or Fixed Interest Rate Mode, such interest shall be
calculated on the basis of a 360 day year, consisting of twelve 30-day months.
The Series 1996 Bonds will bear interest initially at the Weekly
Interest Rate. The first Interest Payment Date on the Series 1996 Bonds will be
the first Business Day of May, 1996.
INTEREST RATE MODES ON SERIES 1996 BONDS
While the Series 1996 Bonds bear interest in one of the Adjustable
Interest Rate Modes, the interest rate for a particular Interest Rate Period is
determined by the Remarketing Agent on the Interest Rate Determination Date.
Such interest rate is effective on the Interest Rate Adjustment Date, for the
succeeding Interest Rate Period.
The interest rate determined by the Remarketing Agent on the Interest
Rate Determination Date is to be that rate of interest per annum determined by
the Remarketing Agent to be the interest rate necessary, during the Interest
Rate Period commencing on the next Interest Rate Adjustment Date, in the
judgment of the Remarketing Agent (taking into consideration current
transactions and comparable securities with which the Remarketing Agent is
involved or of which it is aware and prevailing financial market conditions) to
produce as nearly as practical a par bid for the Series 1996 Bonds on the
Interest Rate Determination Date. In the event that the Remarketing Agent has
been removed or has resigned and no successor has been appointed or the
Remarketing Agent has failed to determine the appropriate interest rate on the
Interest Rate Determination Date for whatever reason, the interest rate then in
effect with respect to the Series 1996 Bonds, without adjustment, will continue
for the next Interest Rate Period. In no event, however, may any interest rate
on the Series 1996 Bonds exceed 12% per annum.
On the Interest Rate Determination Date, the Remarketing Agent will
give the Trustee, the Registrar, and the Paying Agent notice of the interest
rate to be borne by the Series 1996 Bonds for the following Interest Rate
Period. After any Interest Rate Determination Date any Holder or Beneficial
Owner may contact the Registrar (513/579-6280) or the Remarketing Agent
(212/661-8686) in order to be advised of the applicable interest rate. No
notice of the applicable interest rate will be sent to the Holders or Beneficial
Owners.
The determination of any interest rate by the Remarketing Agent is
binding and conclusive upon the Borrower, the Bank, the Beneficial Owners and
the Holders of the Series 1996 Bonds.
The Interest Rate Modes and their Interest Rate Determination Dates,
Interest Rate Adjustment Dates and Interest Rate Periods are as follows:
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WEEKLY INTEREST RATE. In the Weekly Interest Rate Mode, the Interest
Rate Period is a period of one week commencing on Thursday. The Interest Rate
Determination Date in the Weekly Interest Rate Mode is not later than 2:00 p.m.
on Wednesday of each week, or the next preceding Business Day if Wednesday is
not a Business Day. The Interest Rate Adjustment Date for the Weekly Interest
Rate Mode is Thursday of each week. (In the event of a conversion to the Weekly
Interest Rate Mode from a different Interest Rate Mode, the first Interest Rate
Period may be less than one week. Such first Interest Rate Period commences on
the Interest Period Reset Date, which must be the first Business Day of a month
(or the first day of a month upon conversion from a Six Month, One Year or Five
Year Interest Rate Mode) and ends on the next succeeding Wednesday. In such
event, the Interest Rate Determination Date is not later than 2:00 p.m. on the
Business Day preceding the Interest Period Reset Date. In the event of a
conversion from the Weekly Interest Rate Mode to a different Interest Rate Mode,
the last Interest Rate Period may be less than one week as a result of such last
Interest Rate Period ending on the day preceding the first Business Day or the
first day of a month.)
ONE MONTH INTEREST RATE. In the One Month Interest Rate Mode, the
Interest Rate Adjustment Date is the first Business Day of the month and the
Interest Rate Period is one month commencing on the first Business Day of the
month to and including the day preceding the first Business Day of the next
month. The Interest Rate Determination Date is the seventh Business Day
preceding the first Business Day of the month.
THREE MONTH INTEREST RATE. In the Three Month Interest Rate Mode, the
Interest Rate Adjustment Date is the first Business Day of each January, April,
July and October and the Interest Rate Period commences on the Interest Rate
Adjustment Date and continues up to and including the day preceding the next
Interest Rate Adjustment Date. The Interest Rate Determination Date is the
tenth Business Day before the Interest Rate Adjustment Date. (In the event of a
conversion from another Interest Rate Mode to the Three Month Interest Rate
Mode, the first Interest Rate Adjustment Date would be the Interest Period Reset
Date for the Three Month Interest Rate Mode which may be the first Business Day
or the first day of any month. Accordingly, the first Interest Rate Period may
be shorter than a full three months.)
SIX MONTH INTEREST RATE. In the Six Month Interest Rate Mode, the
Interest Rate Adjustment Dates are April 1 and October 1 and the Interest Rate
Period commences on the Interest Rate Adjustment Date and continues up to and
including the day preceding the next Interest Rate Adjustment Date. The
Interest Rate Determination Date is the tenth Business Day preceding the
Interest Rate Adjustment Date. (Upon a conversion from another Interest Rate
Mode to the Six Month Interest Rate Mode, the first Interest Rate Adjustment
Date is the Interest Period Reset Date for the Six Month Interest Rate Mode,
which may be the first Business Day or the first day of any month. Accordingly,
the first Interest Rate Period may be shorter than a full six months.)
ONE YEAR INTEREST RATE. In the One Year Interest Rate Mode, the
Interest Rate Adjustment Date is either April 1 or October 1 and the Interest
Rate Period is a one year period commencing on the appropriate Interest Rate
Adjustment Date and ending on either March 31 or September 30. The Interest
Rate Determination Date is the tenth Business Day preceding the Interest Rate
Adjustment Date. (Upon a conversion from another Interest Rate Mode to the One
Year Interest Rate Mode, the First Interest Rate Adjustment Date would be the
Interest Period Reset Date for the One Year Interest Rate Mode, which may be the
first Business Day or the first day of any month. Accordingly, the first
Interest Rate Period may be shorter than one full year.)
FIVE YEAR INTEREST RATE. In the Five Year Interest Rate Mode, the
Interest Rate Adjustment Date is either April 1 or October 1 and the Interest
Rate Period is a five year period commencing on the appropriate Interest Rate
Adjustment Date and ending on either March 31 or September 30. The Interest
Rate Determination Date is the tenth Business Day preceding the Interest Rate
Adjustment Date. (Upon a conversion to the Five Year Interest Rate Mode from
another Interest Rate Mode, the first Interest Rate Adjustment Date would be the
Interest Period Reset Date for the Five Year Interest Rate Mode, which may be
the first Business Day or the first day of any month. Accordingly, the first
Interest Rate Period may be shorter than five full years.)
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FIXED INTEREST RATE. In the Fixed Interest Rate Mode, there is only
one Interest Rate Adjustment Date and that is the Interest Period Reset Date
upon which such Interest Rate Mode commences. The Interest Rate Period
commences on such Interest Rate Adjustment Date and continues to the final
maturity of the Series 1996 Bonds. The Interest Rate Determination Date is the
tenth Business Day preceding the Interest Rate Adjustment Date.
CONVERSION BETWEEN INTEREST RATE MODES
The Interest Rate Mode on the Series 1996 Bonds may be changed, at the
election of the Borrower with the approval of the Bank, as of an Interest Period
Reset Date in the manner described below. "Interest Period Reset Date" means
the date on which the interest rate on the Series 1996 Bonds converts from one
Interest Rate Mode to a new Interest Rate Mode. An Interest Period Reset Date
must be the first Business Day of a month; provided that, upon conversion from a
Six Month, One Year or Five Year Interest Rate Mode, an Interest Period Reset
Date shall be the first day of a month; and provided further that, except when
converting from a Weekly Interest Rate Mode, an Interest Period Reset Date may
not occur prior to the end of the preceding Interest Rate Period.
On the first day of June, 1996, and on any Interest Period Reset Date
thereafter, the Interest Rate Mode on the Series 1996 Bonds may be converted to
a different Interest Rate Mode upon receipt by the Trustee, the Paying Agent,
the Registrar, and the Remarketing Agent of a written direction from the
Borrower, given on behalf of the Issuer, not less than 45 days prior to such
Interest Period Reset Date, to convert the interest rate on the Series 1996
Bonds to an Interest Rate Mode other than the Interest Rate Mode then in effect.
Except when converting from the Weekly Interest Rate Mode, no Interest Period
Reset Date shall be earlier than the day after the end of the Interest Rate
Period in effect on the date of such direction from the Borrower. Such
direction to convert the interest rate on the Series 1996 Bonds to a different
Interest Rate Mode shall be accompanied by (a) an opinion of nationally
recognized bond counsel ("Bond Counsel") stating that the conversion to the
specified Interest Rate Mode will not adversely affect the exclusion from gross
income of the interest on the Series 1996 Bonds for federal income tax purposes
and (b) a written certificate of the Remarketing Agent stating that the interest
coverage period provided by the Letter of Credit is appropriate for the Interest
Rate Mode directed to be in effect and that the termination date of the Letter
of Credit is no earlier than fifteen days after the end of the new Interest Rate
Period or if the conversion is to the Fixed Interest Rate, that the termination
date of the Letter of Credit is no earlier than the earlier of 15 days after the
First Optional Redemption Date (or 15 days after the final maturity date of the
Series 1996 Bonds, if earlier). If the Series 1996 Bonds bear interest at the
Weekly Interest Rate, the One Month Interest Rate or the Three Month Interest
Rate, the interest coverage period for the Letter of Credit must be at least
56 days of interest at the maximum interest rate. If the Series 1996 Bonds bear
interest at the Six Month Interest Rate, the One Year Interest Rate, the Five
Year Interest Rate or the Fixed Interest Rate, then the interest coverage period
for the Letter of Credit must be at least 195 days of interest at the maximum
interest rate. The Borrower shall be required to provide a Letter of Credit or
an Alternate Letter of Credit which will provide the appropriate interest
coverage. Notwithstanding any provision of this paragraph, no conversion shall
be effective (i) if the Series 1996 Bonds after the conversion would bear
interest at a One Year Interest Rate, Five Year Interest Rate or Fixed Interest
Rate and the Borrower makes an election on or prior to the day immediately
succeeding any Interest Rate Determination Date not to convert to a different
Interest Rate Mode or (ii) the Trustee and the Registrar have not received on
the effective date of such conversion an opinion of Bond Counsel to the same
effect as described in clause (a) above. In either such event, the Interest
Rate Mode for the Series 1996 Bonds will remain as the Interest Rate Mode then
in effect for the Series 1996 Bonds without regard to any proposed conversion.
The Series 1996 Bonds and Beneficial Ownership Interests will continue to be
subject to tender for purchase on the scheduled effective date of the proposed
conversion without regard to the failure of such proposed conversion. If the
Registrar shall have sent any notice to Holders or Beneficial Owners regarding
the proposed conversion, then in the event of a failure of such conversion as
specified above, the Register shall promptly notify all Holders or Beneficial
Owners of such failure, of the reason for such failure, and of the continuation
of the Interest Rate Mode then in effect.
If the Interest Rate Mode on the Series 1996 Bonds is converted to a
different Interest Rate Mode, at least 30 days prior to the Interest Period
Reset Date, the Registrar shall use its best efforts to notify Holders of all
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outstanding Series 1996 Bonds by telephone (to the extent their telephone
numbers have been provided in writing to the Registrar), immediately confirmed
in writing by first class mail to all Holders that on such Interest Period Reset
Date the Series 1996 Bonds shall be converted to a different Interest Rate Mode,
which Interest Rate Mode shall be specified, and that all Series 1996 Bonds or
Beneficial Ownership Interests shall be subject to mandatory tender, subject to
the right of Holders or Beneficial Owners to affirmatively elect to waive the
mandatory tender and retain their Series 1996 Bonds or Beneficial Ownership
Interests. (See "THE SERIES 1996 BONDS -- Mandatory Tender for Purchase of
Series 1996 Bonds or Beneficial Ownership Interests Upon Conversion Between
Modes.") Except as otherwise described herein, so long as the Series 1996 Bonds
are held by DTC or its nominee, Cede & Co., in book-entry only form, the
Registrar will recognize and treat DTC or its nominee, Cede & Co., as the Holder
of Series 1996 Bonds for all purposes under the Indenture. (See "THE SERIES
1996 BONDS -- Book-Entry Only System" herein.) Consequently, the foregoing
notices of conversion will be sent by the Registrar only to DTC or its nominee
and any corresponding notice to the Beneficial Owners will be the responsibility
of DTC and the applicable Direct Participant or Indirect Participant.
The Borrower may elect to convert between Interest Rate Modes with
respect to the Series 1996 Bonds from time to time, as described above. If the
Borrower, however, elects to convert the Series 1996 Bonds to a Fixed Interest
Rate Mode, no further conversions between Interest Rate Modes may be made with
respect to the Series 1996 Bonds.
MUTILATED, LOST, WRONGFULLY TAKEN OR DESTROYED BONDS
If a Series 1996 Bond is mutilated, lost, wrongfully taken or
destroyed, in the absence of written notice to the Issuer and Registrar that
such Series 1996 Bond has been acquired by a bona fide purchaser, the Registrar
shall authenticate a new Series 1996 Bond. Any mutilated Series 1996 Bond shall
be surrendered to the Registrar, and in the case of any lost, wrongfully taken
or destroyed Series 1996 Bond, there shall be first furnished to the Issuer and
the Registrar evidence of such loss, wrongful taking or destruction satisfactory
to the Issuer and the Registrar, together with indemnity satisfactory to the
Borrower, the Bank, the Issuer and the Registrar. In the event any such lost,
wrongfully taken or destroyed Series 1996 Bond shall have matured, instead of
issuing a new Series 1996 Bond, the Borrower may direct the Paying Agent to pay
the same without surrender thereof upon the furnishing of the satisfactory
evidence and indemnity as in the case of issuance of a new Series 1996 Bond.
The Issuer, the Registrar and the Trustee may charge the Holder of such Series
1996 Bond their reasonable fees and expenses in connection therewith.
REDEMPTION OF SERIES 1996 BONDS PRIOR TO MATURITY
The Series 1996 Bonds are callable for redemption in the circumstances
and in the manner described below under "Optional Redemption," "Mandatory
Redemption Upon Determination of Taxability," and "Mandatory Redemption Upon
Expiration of Letter of Credit."
OPTIONAL REDEMPTION. Upon the election of the Borrower, the Series
1996 Bonds are subject to redemption by the Issuer, but only while the Series
1996 Bonds bear interest in one of the Adjustable Interest Rate Modes, in whole
or in part (in integral multiples of $5,000, provided that the unredeemed
portion of any Series 1996 Bond redeemed in part shall be $100,000 or more) on
any Interest Rate Adjustment Date at a redemption price of 100% of the principal
amount redeemed, plus interest accrued thereon to the redemption date.
If the Series 1996 Bonds bear interest at the Fixed Interest Rate,
upon the election of the Borrower, the Series 1996 Bonds are subject to
redemption by the Issuer in whole or in part (in integral multiples of $5,000,
provided that the unredeemed portion of any Series 1996 Bond redeemed in part
shall be $100,000 or more) at any time on or after the First Optional Redemption
Date, as defined below, at redemption prices described below (as a percentage of
principal to be redeemed) plus accrued interest to the date of redemption:
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Redemption Dates
Occurring During Following Periods Redemption Prices
---------------------------------- -----------------
First Optional Redemption Date,
through the following last day of
March 103%
First Anniversary of the First
Optional Redemption Date, through
the following last day of March 102%
Second Anniversary of the First
Optional Redemption Date through
the following last day of March 101%
Third Anniversary of the First
Optional Redemption Date and
thereafter 100%
"First Optional Redemption Date" means the earlier to occur of the
April 1 occurring in the year which is (i) at least ten (10) full years after
the Fixed Interest Rate Commencement Date or (ii) a number of years after the
Fixed Interest Rate Commencement Date equal to the number of full years between
the Fixed Interest Rate Commencement Date and the maturity date of the Series
1996 Bonds, multiplied by one-half (1/2) and rounded up to the nearest whole
number.
Prior to the Series 1996 Bonds being converted to a Fixed Interest
Rate, the Borrower is required to provide a Letter of Credit or Alternate Letter
of Credit which will provide the appropriate interest rate coverage.
In addition, at the option of the Borrower and with the written
consent of the Bank except with respect to subparagraph (c), as to which the
consent of the Bank is not required, the Series 1996 Bonds are subject to
redemption by the Issuer at any time in whole or in part (in integral multiples
of $5,000, provided that the unredeemed portion of any Series 1996 Bond redeemed
in part shall be $100,000 or more) at a redemption price of 100% of the
principal amount thereof redeemed, plus accrued interest thereon to the
redemption date (each an "Extraordinary Optional Redemption"), within 90 days of
any of the following events:
(a) The Project shall have been damaged or destroyed to such an
extent that (1) it cannot reasonably be expected to be restored within
a period of three (3) months, to the condition thereof immediately
preceding such damages or destruction or (2) its normal use and
operation is reasonably expected to be prevented for a period of three
(3) months;
(b) Title to, or the temporary use of, all or a significant part
of the Project shall have been taken under the exercise of the power
of eminent domain (1) to such extent that Project cannot be reasonably
expected to be restored within a period of three (3) months to a
condition of usefulness comparable to that existing prior to the
taking; or (2) as a result of the taking, normal use and operation of
the Project is reasonably expected to prevented for a period of three
(3) months;
(c) As a result of any changes in the Constitution of the State
of Indiana, the Constitution of United States of America or state or
federal laws, or as a result 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 Issuer, the Trustee or the Borrower
in good faith, the Loan Agreement shall not become void or
unenforceable or impossible if performance in accordance with the
intent and purpose of parties expressed Loan Agreement;
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(d) If unreasonable burdens or excessive liabilities shall be
imposed with respect to the Project or the operation thereof,
including, without limitation, federal, state or other ad valorem,
property, income or other taxes not being imposed as of the date of
the Loan Agreement other than ad valorem taxes presently levied upon
privately owned property used for the same general purpose as the
Project; or
(e) Changes in the economic availability of raw materials,
operating supplies, energy sources or supplies, or facilities
(including, but not limited to, facilities in connection with the
disposal of industrial waste) necessary for the operation of the
Project shall have occurred or technological other changes shall have
occurred which the Borrower cannot reasonably overcome or control and
in the Borrower's reasonable judgment rendered the operation of the
Project uneconomic.
To exercise any such redemption option, the Borrower within 90 days
following the event authorizing the exercise of that option, or at any time
during the continuation of the condition referred to in clause (e), shall give
notice to the Issuer and to the Trustee, together with a copy of the Bank's
consent, specifying the date on which the Borrower will deliver the funds
required for that redemption, which date shall be not more than 90 days from the
date that notice is mailed and shall make arrangements satisfactory to the
Trustee for the giving of the required notice of redemption.
Notwithstanding anything herein to the contrary, as provided in the
Indenture, the Registrar will not, except with the prior written consent of the
Bank, cause notice of optional redemption to be sent to Holders as provided
herein under "THE SERIES 1996 BONDS--Redemption of Series 1996 Prior to Maturity
- -- Notice of Redemption and Payments," unless the Borrower deposits Eligible
Funds, as defined in the Indenture, into the Bond Fund, as provided in the
Indenture, in the amount necessary to reimburse the Bank for the draw on the
Letter of Credit to effect such redemption and an amount of money equal to any
premium payable upon such redemption. PREMIUMS ARE NOT PAYABLE FROM DRAWS ON
THE LETTER OF CREDIT.
MANDATORY REDEMPTION UPON DETERMINATION OF TAXABILITY. Upon the
occurrence of a Determination of Taxability, as defined below, the Series 1996
Bonds are subject to mandatory redemption in whole by the Issuer at a redemption
price of 100% of the outstanding principal amount thereof, plus accrued interest
to the redemption date, at the earliest practicable date selected by the
Trustee, after consultation with the Borrower, but in no event later than
45 days following the Trustee's and Registrar's receipt of notification of the
Determination of Taxability. The occurrence of a Determination of Taxability
with respect to the Series 1996 A Bonds will not constitute an Event of Default
under the Indenture and the Series 1996 Bonds will be subject to mandatory
redemption in accordance with the Indenture. No redemption premium will be
payable and no increase in the interest payable with respect to the Series 1996
Bonds will occur in the event a Determination of Taxability occurs.
"Determination of Taxability" means and shall occur when, (i) the
Trustee receives written notice from the Borrower, supported by an opinion of
Bond Counsel, that interest on the Series 1996 A Bonds is includable in the
gross income of Holders of the Series 1996 A Bonds for federal income tax
purposes or (ii) the Internal Revenue Service shall claim in writing that
interest on the Series 1996 A Bonds is includable in the gross income of Holders
of the Series 1996 A Bonds for federal income tax purposes; provided, that such
a claim shall not be deemed a Determination of Taxability unless the Borrower is
afforded reasonable opportunity (at its sole expense and for a period not to
exceed 2 years) to pursue any judicial or administrative remedy available to the
Borrower with respect to such claim.
MANDATORY REDEMPTION UPON EXPIRATION OF LETTER OF CREDIT. The Series
1996 Bonds are subject to mandatory redemption in whole on the Interest Payment
Date which next precedes the date which is five (5) days prior to the Letter of
Credit Termination Date, at a redemption price of 100% of the outstanding
principal amount thereof plus accrued interest 45 days prior to any such
Interest Payment Date, (a) the Bank shall have agreed to an
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extension or further extension of the Letter of Credit Termination Date to a
date not earlier than one year from the Letter of Credit Termination Date being
extended or (b) the Borrower shall have obtained and deliver to the Trustee an
Alternate Letter of Credit with a termination date not earlier than one year
from the Letter of Credit Termination Date of the Letter of Credit it replaces.
NOTICE OF REDEMPTION AND PAYMENTS. Notice of redemption with respect
to the Series 1996 Bonds is to be given by the Registrar on behalf of the
Issuer, subject to the deposit by the Borrower, except with the consent of the
Bank, of sufficient Eligible Funds (as hereinafter defined) in the Bond Fund to
redeem such Series 1996 Bonds in the case of an Optional Redemption or
Extraordinary Optional Redemption to the registered owner of each Series 1996
Bond being redeemed by first class mail, addressed to the last known address of
such Holder as it appears upon the Register (the "Register") maintained by the
Registrar, or at such other address as is furnished in writing by the Holder to
the Registrar, not less than 30 days nor more than 60 days prior to redemption
(except in the case of mandatory redemption upon the occurrence of a
Determination of Taxability, in which case notice shall be given at least five
days and not more than fifteen days prior to the date fixed for redemption).
Failure to receive any such notice or any defect therein shall not affect the
validity of any proceeding for the redemption of any other Series 1996 Bond.
Notice of the call for redemption of Series 1996 Bonds held under a
book entry system will be sent by the Registrar only to DTC or its nominee as
registered owner. Selection of book entry interests in the Series 1996 Bonds
called, and notice of call to the Beneficial Owners is the responsibility of
DTC, Direct Participants and Indirect Participants. Any failure of DTC to
advise any Direct Participant, or of any Direct Participant or any Indirect
Participant to notify the Beneficial Owners, of any such notice and its content
or effect will not affect the validity of any proceedings for the redemption of
the Series 1996 Bonds. See "THE SERIES 1996 BONDS--Book-Entry Only System"
herein.
When less than the entire unmatured portion of the Series 1996 Bonds
are called for redemption at any time or from time to time, the selection of
such Series 1996 Bonds or portions of Series 1996 Bonds in the amount of $5,000
or any integral multiple thereof is to be made by lot in such manner as
determined by the Trustee provided that the unredeemed portion of any Series
1996 Bond or Beneficial Ownership Interest redeemed in part shall be $100,000 or
more. Except as provided in the preceding sentence, if less than all of an
outstanding Series 1996 Bond held under a book entry system is to be called for
redemption, the Trustee will give notice of redemption only to DTC or its
nominee as registered owner. The selection of the book entry interests in that
Series 1996 Bond to be redeemed, and notice of call to the Beneficial Owners of
those interests called, is the responsibility of DTC, Direct Participants and
Indirect Participants.
The Trustee is required to draw upon the Letter of Credit in amounts
sufficient to pay the principal amount of the Series 1996 Bonds to be redeemed
and any interest accrued thereon.
If any Series 1996 Bonds are not presented for payment at the date
fixed for their redemption and the funds for such payment are available
therefor, the Holders of such Series 1996 Bonds will thereafter be restricted
exclusively to the funds available for redemption for the satisfaction of any
claim relating to such Series 1996 Bonds. Any such funds remaining unclaimed
for four years after becoming due and payable shall be paid to the Bank, unless
it confirms to the Trustee that no moneys are due to the Bank under the
Reimbursement Agreement, in which case such funds shall be paid to the Borrower
and the Holders of such Series 1996 Bonds shall thereafter be entitled to look
only to the Borrower for payment and only in an amount equal to the amounts
received by or paid to or on behalf of the Borrower, without any interest
thereon.
PURCHASE OF SERIES 1996 BONDS OR BENEFICIAL OWNERSHIP INTERESTS ON DEMAND OF
HOLDERS OR BENEFICIAL OWNERS
While the Series 1996 Bonds bear interest in any Adjustable Interest
Rate Mode, each Holder and each Beneficial Owner shall have the option to tender
for purchase all of the Series 1996 Bonds or Beneficial
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<PAGE>
Ownership Interests owned by such Holders or Beneficial Owners, or such lesser
principal amount thereof (in denominations of $100,000 or integral multiples of
$5,000 in excess thereof, provided that the untendered portion of any Series
1996 Bond or Beneficial Ownership Interest shall be $100,000 or more in
principal amount) as such Holder or Beneficial Owner may specify in accordance
with the terms, conditions and limitations set forth in the Indenture. The
Trustee shall purchase such tendered Series 1996 Bonds or Beneficial Ownership
Interests at their par value plus, if the Series 1996 Bonds bear interest in the
Weekly Interest Rate Mode, interest accrued to the date of purchase. The
purchase price shall be paid first from the proceeds of the remarketing of the
Series 1996 Bonds or Beneficial Ownership Interests, and second from money drawn
on the Letter of Credit if the proceeds of remarketing are insufficient to pay
the purchase price. Such purchase price will be paid in lawful money of the
United States of America by check or draft and will be paid in full on the Bond
Purchase Date.
The term "Bond Purchase Date" means any Business Day selected by the
Holder or Beneficial Owner while the Series 1996 Bonds bear interest in the
Weekly Interest Mode and if the Interest Rate Mode on the Series 1996 Bonds is
to be converted from the Weekly Interest Rate Mode to a new Interest Rate Mode,
must be a date no later than the Interest Period Reset Date with respect to that
new Interest Rate Mode. While the Series 1996 Bonds bear interest in any other
Adjustable Interest Rate Mode, the term "Bond Purchase Date" means any Interest
Rate Adjustment Date. The Holders or Beneficial Owners do not have the option
to tender their Series 1996 Bonds or Beneficial Ownership Interests for purchase
after the Interest Rate Mode on the Series 1996 Bonds has been converted to the
Fixed Interest Rate Mode.
To exercise the option to tender for purchase, the Holder or
Beneficial Owner must (1) give notice to the Registrar by the time and the date
set forth below in writing or by telecopy stating (i) the name and address of
the Holder or Beneficial Owner, (ii) the principal amount, CUSIP number and
Series 1996 Bond numbers of Series 1996 Bonds or Beneficial Ownership Interests
to be purchased, (iii) that such Series 1996 Bonds or Beneficial Ownership
Interests are to be purchased on the Bond Purchase Date pursuant to the terms of
the Indenture, and (iv) that such notice is irrevocable, (2) in the case of a
purchase of a Beneficial Ownership Interest, each Beneficial Owner must provide
the Registrar with evidence satisfactory to the Registrar of such Beneficial
Owner's Beneficial Ownership Interest, (3) in the case of a Holder, deliver to
the Registrar at its principal corporate trust office (by the time and date set
forth below), the Series 1996 Bonds to be purchased, accompanied by fully
completed and executed Instructions to Sell, the form of which is printed on the
Series 1996 Bonds and (4) in the case of a Beneficial Owner cause the transfer
of the Beneficial Owner's Beneficial Ownership Interest on the records of DTC as
instructed by the Registrar (by the date and time set forth below). After a
demand for purchase any Series 1996 Bonds not so delivered shall be deemed
tendered. After a demand for purchase Beneficial Owners shall be obligated to
transfer such Beneficial Ownership Interests on the records of DTC in accordance
with instructions of the Registrar. (All references to local time mean local
time of the city where the principal corporate trust office of the Registrar is
located, presently Cincinnati, Ohio.) Notwithstanding the foregoing, so long as
the Series 1996 Bonds are held in the DTC book-entry only system, the
requirement of physical delivery of tendered Series 1996 Bonds will be deemed to
be satisfied as described herein under "THE SERIES 1996 BONDS--Book-Entry Only
System."
WEEKLY INTEREST RATE MODE. To exercise the option to tender the
Series 1996 Bonds or Beneficial Ownership Interest while the Series 1996 Bonds
bear interest in the Weekly Interest Rate Mode, the Holder or Beneficial Owner
must (1) give the notice no earlier than the fifteenth day and no later than the
seventh day prior to the Bond Purchase Date (2) in the case of a Holder deliver
the Series 1996 Bonds no later than 10:00 a.m. local time on the second Business
Day preceding the Bond Purchase Date and (3) in the case of a Beneficial Owner,
cause the transfer of the Beneficial Ownership Interest on the records of DTC by
10:00 a.m. local time on the Bond Purchase Date. In the case of a Series 1996
Bond or Beneficial Ownership Interest or portion thereof to be purchased prior
to an Interest Payment Date and after the Record Date in respect thereof, the
Holder or Beneficial Owner shall deliver a due-bill check, in form satisfactory
to the Registrar for interest due on such Interest Payment Date.
ONE MONTH INTEREST RATE MODE. To exercise the option to tender the
Series 1996 Bonds or Beneficial Ownership Interest while the Series 1996 Bonds
bear interest in the One Month Interest Rate Mode the
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<PAGE>
Holder or Beneficial Owner must (1) give the notice to the Registrar no earlier
than fifteen days prior to the Bond Purchase Date and no later than 11:00 a.m.
local time on the fifth Business Day prior to the Bond Purchase Date, (2) in the
case of a Holder deliver the Series 1996 Bonds no later than 10:00 a.m. local
time on the fourth day prior to the Bond Purchase Date or the next preceding
Business Day if such fourth day is not a Business Day, and (3) in the case of a
Beneficial Owner, cause the transfer of the Beneficial Ownership Interest on the
records of DTC by 10:00 a.m. local time on the Bond Purchase Date.
OTHER ADJUSTABLE INTEREST RATE MODES. To exercise the option to
tender Series 1996 Bonds or Beneficial Ownership Interests while the Series 1996
Bonds bear interest in any Adjustable Interest Rate Mode other than the One
Month Interest Rate Mode or the Weekly Interest Rate Mode, the Holder or
Beneficial Owner must (1) give the notice to the Registrar no earlier than
fifteen days prior to the Bond Purchase Date and no later than 11:00 a.m. local
time on the eighth Business Day prior to the Bond Purchase Date, (2) in the case
of a Holder deliver the Series 1996 Bonds no later than 10:00 a.m. local time on
the seventh day prior to the Bond Purchase Date or the next preceding Business
Day if such seventh day is not a Business Day, and (3) in the case of a
Beneficial Owner, cause the transfer of the Beneficial Ownership Interest on the
records of DTC by 10:00 a.m. local time on the Bond Purchase Date.
If less than all of a Series 1996 Bond so delivered is to be
purchased, the Registrar will authenticate one or more Series 1996 Bonds,
registered in the name of such Holder, having the aggregate principal amount
being retained by such Holder, and will deliver such authenticated Series 1996
Bond or Series 1996 Bonds to such Holder.
The tender options granted to the Holders and the Beneficial Owners
and all mandatory Series 1996 Bond tenders are subject to the additional
condition that any tendered Series 1996 Bonds or Beneficial Ownership Interests
(or the applicable portions thereof) will not be purchased if such Series 1996
Bonds (or applicable portions thereof) mature or are redeemed on or prior to the
applicable Bond Purchase Date.
SO LONG AS THE SERIES 1996 BONDS ARE HELD BY DTC OR ITS NOMINEE,
CEDE & CO., IN BOOK-ENTRY ONLY FORM, THE REGISTRAR AND THE PAYING AGENT WILL
RECOGNIZE AND TREAT DTC OR ITS NOMINEE, CEDE & CO., AS THE HOLDER OF THE SERIES
1996 BONDS FOR ALL PURPOSES UNDER THE INDENTURE, PROVIDED THAT THE REGISTRAR AND
THE PAYING AGENT WILL RECOGNIZE BENEFICIAL OWNERS FOR PURPOSES OF THE PURCHASE
OF BENEFICIAL OWNERSHIP INTERESTS. (SEE "THE SERIES 1996 BONDS--BOOK-ENTRY ONLY
SYSTEM" HEREIN.) EACH BENEFICIAL OWNER IS RESPONSIBLE FOR OBSERVING THE
PROCEDURES OF DTC, THE DIRECT PARTICIPANT, ANY INDIRECT PARTICIPANT AND THE
REGISTRAR AS SET FORTH IN THE INDENTURE, IN ORDER TO PERMIT THE TIMELY
OBSERVANCE OF THE TENDER PROCESS WITH RESPECT TO BENEFICIAL OWNERSHIP INTERESTS.
MANDATORY TENDER FOR PURCHASE OF SERIES 1996 BONDS OR BENEFICIAL OWNERSHIP
INTERESTS UPON CONVERSION BETWEEN INTEREST RATE MODES
Upon any conversion of the Series 1996 Bonds from one Interest Rate
Mode to another, the Series 1996 Bonds and Beneficial Ownership Interests shall
be subject to mandatory purchase on the Interest Period Reset Date with respect
to the new Interest Rate Mode.
The Borrower is required to give notice to the Trustee, the Paying
Agent, the Registrar, and Remarketing Agent of its election to convert the
Series 1996 Bonds to a new Interest Rate Mode at least 45 days prior to the
Interest Period Reset Date for the new Interest Rate Mode. The Registrar is
required to notify Holders of all outstanding Series 1996 Bonds of such
conversion to a different Interest Rate Mode at least 30 days before the
Interest Period Reset Date. Unless the new Interest Rate Mode is a Weekly
Interest Rate Mode or the One Month Interest Rate Mode, the Remarketing Agent
will determine the interest rate for the first Interest Rate Period for the new
Interest Rate Mode on the Interest Rate Determination Date, which will be the
tenth Business Day before the Interest Period Reset Date for the new Interest
Rate Mode. If the new Interest Rate Mode is the Weekly Interest Rate Mode, the
Remarketing Agent will determine the first Weekly Interest Rate on the Interest
Rate Determination Date for the
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<PAGE>
Weekly Interest Rate Mode, which will be 2:00 p.m. local time of the Registrar
on the Business Day preceding the Interest Period Reset Date. If the new
Interest Rate Mode is the One Month Interest Rate Mode, the Interest Rate
Determination Date will be the seventh Business Day before the Interest Period
Reset Date. A Holder or Beneficial Owner may elect to waive the mandatory
purchase and hold its Series 1996 Bonds or Beneficial Ownership Interests by
delivering notice to the Registrar of such election not later than 11:00 a.m.,
on the eighth Business Day prior to the Interest Period Reset Date for the new
Interest Rate Mode, unless the interest rate is to be converted to the One Month
Interest Rate Mode, in which case the notice to the Registrar must be delivered
not later than 11:00 a.m. on the fifth Business Day prior to the Interest Period
Reset Date. Such notice must state that (a) such Holder or Beneficial Owner
realizes that the Series 1996 Bonds are being converted to a different Interest
Rate Mode, (b) unless the interest rate on the Series 1996 Bonds is being
converted to the Weekly Interest Rate Mode, such Holder or Beneficial Owner
realizes that the next Bond Purchase Date upon which the Series 1996 Bonds or
Beneficial Ownership Interests may be tendered for purchase is the next Interest
Rate Adjustment Date or, if such Series 1996 Bonds are being converted to the
Fixed Interest Rate, that such Series 1996 Bonds or Beneficial Ownership
Interests may no longer be tendered for purchase, (c) such Holder or Beneficial
Owner realizes that any securities rating on the Series 1996 Bonds may be
withdrawn or lowered and (d) such Holder or Beneficial Owner affirmatively
elects to hold its Series 1996 Bonds or Beneficial Ownership Interests and
receive interest at the applicable Interest Rate Mode. A Holder or Beneficial
Owner may be advised of the interest rate for the first Interest Rate Period for
the new Interest Rate Mode by calling the Registrar (513/579-6280) or the
Remarketing Agent (212/661-8686) on the Interest Rate Determination Date or
thereafter.
Series 1996 Bonds or Beneficial Ownership Interests with respect to
which the Registrar shall not have received the election required by the
preceding paragraph shall be deemed to have been tendered without further action
by the Holders or Beneficial Owners thereof and subject to the right of the
Holders or Beneficial Owners of such Series 1996 Bonds or Beneficial Ownership
Interests to receive the purchase price of such Series 1996 Bonds or Beneficial
Ownership Interests and interest accrued thereto to the Interest Period Reset
Date, such Series 1996 Bonds or Beneficial Ownership Interests shall be null and
void and the Registrar shall authenticate and deliver new Series 1996 Bonds, or
new Beneficial Ownership Interests shall be created, in replacement thereof
pursuant to the remarketing of such Series 1996 Bonds or Beneficial Ownership
Interests or the pledge of such Series 1996 Bonds or Beneficial Ownership
Interests to the Bank in lieu of remarketing.
SO LONG AS THE SERIES 1996 BONDS ARE HELD BY DTC OR ITS NOMINEE,
CEDE & CO., IN BOOK-ENTRY ONLY FORM, THE REGISTRAR AND THE PAYING AGENT WILL
RECOGNIZE AND TREAT DTC OR ITS NOMINEE, CEDE & CO., AS THE HOLDER OF THE SERIES
1996 BONDS FOR ALL PURPOSES UNDER THE INDENTURE, PROVIDED, HOWEVER, THAT THE
REGISTRAR AND THE PAYING AGENT WILL RECOGNIZE A BENEFICIAL OWNER WITH RESPECT TO
THE WAIVER OF THE PURCHASE OF BENEFICIAL OWNERSHIP INTERESTS. (SEE "THE SERIES
1996 BONDS--BOOK-ENTRY ONLY SYSTEM" HEREIN.) EACH BENEFICIAL OWNER IS
RESPONSIBLE FOR OBSERVING THE PROCEDURES APPLICABLE TO DTC, THE DIRECT
PARTICIPANT, ANY INDIRECT PARTICIPANT AND THE REGISTRAR, AS SET FORTH IN THE
INDENTURE, IN ORDER TO PERMIT THE TIMELY OBSERVANCE OF THE MANDATORY TENDER
WAIVER PROCESS WITH RESPECT TO BENEFICIAL OWNERSHIP INTERESTS.
MANDATORY TENDER FOR PURCHASE OF SERIES 1996 BONDS OR BENEFICIAL OWNERSHIP
INTERESTS UPON DELIVERY OF AN ALTERNATE LETTER OF CREDIT
If the Borrower provides for the delivery to the Trustee of an
Alternate Letter of Credit (as hereinafter defined), on a date determined by the
Borrower, with the consent of the Trustee which date shall precede the
Replacement Date (as hereinafter defined) by at least five (5) Business Days (a
"Bond Purchase Date"), the Series 1996 Bonds and Beneficial Ownership Interests
shall be subject to mandatory tender for purchase from the Holders and
Beneficial Owners thereof.
At least forty-five (45) days prior to a Bond Purchase Date, the
Registrar shall, if the Series 1996 Bonds are then rated by a Rating Service (as
hereinafter defined) give notice to each Rating Service which then has a rating
on the Series 1996 Bonds of the provision of the Alternate Letter of Credit. At
least 30 days prior to the Bond
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<PAGE>
Purchase Date the Registrar shall use its best efforts to notify the Holders of
all outstanding Series 1996 Bonds by telephone (to the extent their telephone
numbers have been provided in writing to the Registrar), immediately confirmed
by first class mail to all Holders, that an Alternate Letter of Credit is to be
delivered by the Borrower to the Registrar. Such notice shall advise the
Holders of the Bond Purchase Date and the requirements of the Indenture and the
Series 1996 Bonds relating to Alternate Letters of Credit, that such
requirements have been met, the name of the financial institution issuing the
Alternate Letter of Credit and that all Series 1996 Bonds and Beneficial
Ownership Interests shall be subject to mandatory purchase from the Holders and
Beneficial Owners thereof, subject to the right of each Holder or Beneficial
Owner to affirmatively elect to waive the mandatory tender for purchase and
retain its Series 1996 Bonds or Beneficial Ownership Interests. (See "THE
LETTER OF CREDIT--Alternate Letter of Credit" herein.)
Any Holder or Beneficial Owner may elect to retain its Series 1996
Bonds or Beneficial Ownership Interests by delivering to the Registrar a written
notice no later than 11:00 a.m. according to the local time at the principal
corporate trust office of the Registrar on the eighth Business Day prior to such
Bond Purchase Date which written notice shall state that (a) such Holder or
Beneficial Owner has received notice of and realizes that the Borrower is
delivering an Alternate Letter of Credit to the Registrar pursuant to the
Indenture, (b) such Holder or Beneficial Owner realizes that any securities
rating on the Refunding Bonds may be withdrawn or lowered as a result of the
delivery of the Alternate Letter of Credit and (c) such Holder or Beneficial
Owner affirmatively elects to hold its Series 1996 Bonds or Beneficial Ownership
Interests.
Series 1996 Bonds or Beneficial Ownership Interests with respect to
which the Registrar shall not have received the election required by the
preceding paragraph shall be deemed to have been tendered without further action
by the Holders or Beneficial Owners thereof and subject to the right of the
Holders or Beneficial Owners of such Series 1996 Bonds and Beneficial Ownership
Interests to receive the purchase price of such Series 1996 Bonds and Beneficial
Ownership Interests and interest accrued thereto to the Bond Purchase Date, such
Series 1996 Bonds or Beneficial Ownership Interests shall be null and void and
the Registrar shall authenticate and deliver new Series 1996 Bonds, or new
Beneficial Ownership Interests shall be created, in replacement thereof pursuant
to the remarketing of such Series 1996 Bonds or Beneficial Ownership Interests
or the pledge of such Series 1996 Bonds or Beneficial Ownership Interests to the
Bank in lieu of remarketing such Series 1996 Bonds or Beneficial Ownership
Interests.
SO LONG AS THE SERIES 1996 BONDS ARE HELD BY DTC OR ITS NOMINEE,
CEDE & CO., IN BOOK-ENTRY ONLY FORM, THE REGISTRAR AND THE PAYING AGENT WILL
RECOGNIZE AND TREAT DTC OR ITS NOMINEE, CEDE & CO., AS THE HOLDER OF THE SERIES
1996 BONDS FOR ALL PURPOSES UNDER THE INDENTURE PROVIDED, HOWEVER THE REGISTRAR
AND THE PAYING AGENT WILL RECOGNIZE A BENEFICIAL OWNER WITH RESPECT TO WAIVERS
OF THE PURCHASE OF BENEFICIAL OWNERSHIP INTERESTS. (SEE "THE SERIES 1996
BONDS--BOOK-ENTRY ONLY SYSTEM" HEREIN.) EACH BENEFICIAL OWNER IS RESPONSIBLE
FOR OBSERVING THE PROCEDURES APPLICABLE TO DTC, THE DIRECT PARTICIPANT, ANY
INDIRECT PARTICIPANT AND THE REGISTRAR, AS SET FORTH IN THE INDENTURE, IN ORDER
TO PERMIT THE TIMELY OBSERVANCE OF THE MANDATORY TENDER WAIVER PROCESS WITH
RESPECT TO BENEFICIAL OWNERSHIP INTERESTS.
REMARKETING OF SERIES 1996 BONDS OR BENEFICIAL OWNERSHIP INTERESTS
Whenever Series 1996 Bonds or Beneficial Ownership Interests are
tendered for purchase by the Holders or Beneficial Owners thereof, either by
optional tender or mandatory tender (other than a mandatory tender pursuant to
the expiration of the Letter of Credit or any Alternate Letter of Credit), as
described above, the Remarketing Agent will use its best efforts to remarket
such Series 1996 Bonds or Beneficial Ownership Interests. If Series 1996 Bonds
or Beneficial Ownership Interests tendered for purchase are not remarketed by
the Remarketing Agent, the Trustee shall draw on the Letter of Credit to pay the
purchase price of such Series 1996 Bonds or Beneficial Ownership Interests and
such Series 1996 Bonds or Beneficial Ownership Interests will be delivered to
the Bank or, at the direction of the Bank, held by the Trustee for the benefit
of the Bank. Any due-bill checks delivered to the Registrar pursuant to a
tender of Series 1996 Bonds or Beneficial Ownership Interests shall be delivered
to the
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<PAGE>
Holder or Beneficial Owner to whom such Series 1996 Bonds or Beneficial
Ownership Interests have been remarketed, or to the Bank if the purchase price
for the Series 1996 Bonds or Beneficial Ownership Interests has been paid
pursuant to a draw on the Letter of Credit.
Series 1996 Bonds or Beneficial Ownership Interests tendered for
purchase upon the expiration of the Letter of Credit or any Alternate Letter of
Credit shall be delivered to the Bank or, at the direction of the Bank, held by
the Trustee for the benefit of the Bank. Such Series 1996 Bonds or Beneficial
Ownership Interests shall not be remarketed prior to the Borrower's delivery of
a letter of credit which satisfies the terms of the Indenture with respect to
the delivery of an Alternate Letter of Credit (as hereinafter defined) (See "THE
LETTER OF CREDIT--Alternate Letter of Credit" herein).
SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 1996 BONDS
The Series 1996 Bonds will constitute special limited obligations of
the Issuer payable solely from, and secured by, the revenues pledged and
assigned by the Indenture to secure that payment. Those revenues include the
loan payments required to be made by the Borrower under the Loan Agreement and
the Note; all other moneys received by the Issuer or the Trustee for the account
of the Issuer in respect of repayment of the Series 1996 Bonds; all moneys and
investments in the Bond Fund (as defined in the Indenture and hereinafter
described), including money received by the Trustee from draws on the Letter of
Credit; and the income and profit from the investment of those moneys
(collectively, the "Revenues").
THE SERIES 1996 BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER
AND ARE PAYABLE SOLELY OUT OF THE REVENUES AND OTHER AMOUNTS DERIVED FROM THE
LOAN AGREEMENT AND RELATED NOTE OR AS OTHERWISE AUTHORIZED BY THE BOND ORDINANCE
OR THE INDENTURE AND PERMITTED BY LAW (EXCEPT TO THE EXTENT PAID OUT OF MONEYS
ATTRIBUTABLE TO THE PROCEEDS DERIVED FROM THE SALE OF THE SERIES 1996 BONDS OR
TO INCOME FROM THE TEMPORARY INVESTMENT THEREOF). THE SERIES 1996 BONDS DO NOT
CONSTITUTE AN INDEBTEDNESS OF THE CITY OF GARY, INDIANA, WITHIN THE MEANING OF
ANY INDIANA CONSTITUTIONAL PROVISION OR STATUTORY LIMITATION, AND DO NOT
CONSTITUTE OR GIVE RISE TO A PECUNIARY LIABILITY OF THE CITY OF GARY, INDIANA,
OR A CHARGE AGAINST ITS GENERAL CREDIT OR TAXING POWERS.
The principal of and interest on the Series 1996 Bonds will be payable
from the proceeds of draws under the Letter of Credit. The Borrower's
obligation to reimburse the Bank for such draws, as provided for in the
Reimbursement Agreement, will be secured by the Bank Security Documents (see
"INTRODUCTION"). The Bank Security Documents will be for the sole benefit and
security of the Bank and will not be for the benefit of or to secure the Trustee
or the Holders.
THE SERIES 1996 BONDS ARE BEING OFFERED SOLELY ON THE BASIS OF THE
LETTER OF CREDIT AND THE FINANCIAL STRENGTH OF THE BANK AND ARE NOT BEING
OFFERED ON THE BASIS OF THE FINANCIAL STRENGTH OF THE BORROWER OR ANY OTHER
SECURITY. THIS OFFICIAL STATEMENT DOES NOT DESCRIBE THE FINANCIAL CONDITION OF
THE BORROWER. THE SERIES 1996 BONDS ARE SUBJECT TO ACCELERATION OF MATURITY
UPON THE OCCURRENCE OF A DEFAULT BY THE BORROWER OR CENTERPOINT UNDER THE
REIMBURSEMENT AGREEMENT, WHICH INCLUDE THE BORROWER'S REIMBURSEMENT OBLIGATION
PURSUANT TO SUCH REIMBURSEMENT AGREEMENT AND CERTAIN OTHER OBLIGATIONS, LOANS,
AND CREDIT ACCOMMODATIONS PROVIDED TO THE BORROWER AND CENTERPOINT BY THE BANK,
BUT SUCH DEFAULTS ARE NOT FULLY DESCRIBED HEREIN. AS A RESULT OF THE FOREGOING,
PROSPECTIVE INVESTORS WILL NOT BE ABLE TO EVALUATE THE LIKELIHOOD OF A DEFAULT
BY THE BORROWER UNDER THE REIMBURSEMENT AGREEMENT AND RESULTING ACCELERATION OF
THE SERIES 1996 BONDS.
Enforceability of the provisions of the Series 1996 Bonds, the Loan
Agreement, the Letter of Credit and the Indenture may be subject to bankruptcy,
insolvency, reorganization, moratorium or other laws in effect from
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<PAGE>
time to time affecting creditors' rights, and to the exercise of judicial
discretion in accordance with general principles of equity.
IN THE EVENT OF A DEFAULT BY THE BANK UNDER THE LETTER OF CREDIT, NO
INSURANCE PROCEEDS FROM THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY, INSTRUMENTALITY OR AUTHORITY WOULD BE AVAILABLE TO PAY
BONDHOLDERS.
RISKS TO BONDHOLDERS
In addition to factors set forth elsewhere in this Official Statement,
purchasers of Series 1996 Bonds should carefully consider the following risks
factors in connection with investment in the Series 1996 Bonds.
1. The principal of (but not redemption premium) and up to
fifty-six (56) days' accrued interest on the Series 1996 Bonds (to the
Maximum Rate of 12% per annum) are secured by the Letter of Credit.
The Letter of Credit expires on April 15, 2001, which is prior to the
final maturity of the Series 1996 Bonds, and unless at least 45 days
prior to such expiration date the Letter of Credit is renewed,
replaced or extended, the Series 1996 Bonds are subject to mandatory
redemption on the Interest Payment Date next preceding April 15, 2001,
or are subject to mandatory redemption on the Interest Payment Date
next preceding any later expiration date of the Letter of Credit or
the Interest Payment Date next preceding the expiration date of any
Alternate Letter of Credit at a redemption price equal to 100% of the
principal amount thereof (without premium), plus accrued interest to
the Mandatory Bond Purchase Date. See "THE SERIES 1996 BONDS --
Mandatory Redemption and APPENDIX D -- Definitions and Summary of
Certain Legal Documents" herein.
2. Upon the occurrence of certain events, including, but not
limited to, (a) default by the Borrower of its obligations under the
Series 1996 Bonds or the Loan Agreement, (b) default by the Borrower
and CenterPoint of their respective obligations under the
Reimbursement Agreement including, without limitation, any default
with respect to separate loans and credit accommodations made to the
Borrower and CenterPoint and governed by the Reimbursement Agreement
or cross defaulted with the Reimbursement Agreement or (c) damage to
or condemnation of all or a part of the Project, the Series 1996 Bonds
may be subject to prepayment in whole or in part at a price equal to
100% of the principal amount thereof (without premium), plus accrued
interest. See "APPENDIX D -- Summary of Certain Legal Documents and
"THE SERIES 1996 BONDS -- Optional Redemption" herein.
3. Upon the occurrence of a Determination of Taxability (as
defined herein) with respect to the Series 1996 A Bonds, the Series
1996 Bonds are subject to redemption in whole at a price equal to 100%
of the principal amount thereof (without premium), plus accrued
interest. See "THE SERIES 1996 BONDS -- Mandatory Redemption" herein.
4. The Series 1996 Bonds and Beneficial Ownership Interests are
subject to mandatory purchase upon the conversion of the interest rate
on the Series 1996 Bonds to a different Interest Rate Mode and are
subject to mandatory purchase upon the delivery of an Alternate Letter
of Credit (as hereinafter defined) at a purchase price equal to 100%
of the principal amount thereof, plus accrued interest. See "THE
SERIES 1996 BONDS -- Mandatory Tender for Purchase of Series 1996
Bonds or Beneficial Ownership Interests Upon Conversion Between Modes"
and "THE SERIES 1996 BONDS -- Mandatory Tender for Purchase of Series
1996 Bonds or Beneficial Ownership Interests Upon Delivery of an
Alternate Letter of Credit" herein.
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<PAGE>
5. THE PRIMARY SECURITY FOR THE SERIES 1996 BONDS IS INTENDED
TO BE THE LETTER OF CREDIT DELIVERED BY THE BANK TO THE TRUSTEE. AS A
CONSEQUENCE, NO FINANCIAL INFORMATION IN RESPECT OF THE CREDIT
WORTHINESS OF THE BORROWER IS INCLUDED HEREIN. REFERENCE IS HEREBY
MADE TO "THE ROYAL BANK OF SCOTLAND PLC" AT APPENDIX B HEREIN WHICH
CONTAINS CERTAIN FINANCIAL INFORMATION REGARDING THE BANK. It is
possible, in the event of the insolvency of the Bank, or the
occurrence of some other event precluding the Bank from honoring its
obligation to make payments as stated in the Letter of Credit, that
the financial resources of the Borrower will be the only source of
payment on the Series 1996 Bonds. There can be no assurance that the
financial resources of the Borrower would be sufficient to pay the
principal, premium, if any, and interest on the Series 1996 Bonds in
the event the Trustee were forced to seek recourse against the
Borrower.
6. Enforcement of remedies provided in the Indenture with
respect to payments to be made by the Bank under the Letter of Credit
may be limited by insolvency, bankruptcy or other laws relating to
creditors' rights generally. The security provided by the Letter of
Credit for payment of the principal of and interest on the Series 1996
Bonds, or the purchase price of the Series 1996 Bonds or Beneficial
Ownership Interests, may be impaired in the event of a deterioration
of the financial condition of the Bank, as the Letter of Credit
represents a general claim against the assets of the Bank.
7. Performance by the Bank of its obligations under the Letter
of Credit is subject to the satisfaction of certain conditions by the
Trustee, as set forth in the Letter of Credit. Bondholders are thus
dependent upon the Trustee acting to satisfy such conditions before
they will receive the benefit of the Letter of Credit. Furthermore,
the question of whether the Trustee has properly satisfied such
conditions is a question of fact which, if disputed, could delay or
defeat the Trustee's rights of enforcement of the Letter of Credit.
8. The United States Bankruptcy Code generally stays the
enforcement of claims against the estate of a bankrupt once a petition
in bankruptcy is filed. The Bank is required under the Letter of
Credit to pay amounts sufficient to pay the principal of and up to
fifty-six (56) days' interest on the Series 1996 Bonds in the event of
the bankruptcy of the Borrower. However, it is possible in the event
of a bankruptcy of the Borrower that a bankruptcy court could at least
temporarily stay the payment of the Letter of Credit until relief from
that stay is granted by the court, thus delaying payment to the
Bondholders.
9. Bond Counsel will opine that interest on the Series 1996 A
Bonds will not be includable in the gross income of the Holders
thereof for federal income tax purposes. However, Bond Counsel's
opinion relates only to the exclusion from gross income on the Series
1996 A Bonds for federal income tax purposes and is conditioned on
continuing compliance by the Issuer and the Borrower with
representations and covenants contained in certain certificates with
respect to arbitrage and other tax matters to be delivered at closing.
Failure to comply with the representations and covenants made in those
certificates could cause interest on the Series 1996 A Bonds to lose
the exclusion from gross income for federal income tax purposes
retroactive to their date of issue. Furthermore, certain categories
of holders of the Series 1996 A Bonds may be subject to taxation as
discussed under "TAX MATTERS" herein.
10. The various legal opinions to be delivered concurrently with
the delivery of the Series 1996 Bonds will be qualified as to the
enforceability of the various legal instruments by limitations imposed
by the valid exercise of the constitutional powers of the State of
Indiana, in the United States of America and other governmental
authorities, including police powers exercised for the benefit of the
public health and welfare, and by bankruptcy, reorganization,
insolvency or other
-22-
<PAGE>
similar laws affecting the rights of creditors generally, and by general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
11. The various legal opinions to be delivered concurrently with
the delivery of the Series 1996 Bonds express the professional
judgment of the attorneys rendering the opinions on the legal issues
explicitly addressed therein. By rendering a legal opinion, the
opinion giver does not become an insurer or guarantor of that
expression of professional judgment, of the transaction opined upon,
or of the future performance of parties to such transaction. Nor does
the rendering of an opinion guarantee the outcome of any legal dispute
that may arise out of the transaction.
TAX MATTERS
In the opinion of Ice Miller Donadio & Ryan, Indianapolis, Indiana ("Bond
Counsel"), Karen Freeman-Wilson, Gary, Indiana ("Co-Bond Counsel") and Meyer,
Lyles & Godshalk, Gary, Indiana ("Co-Bond Counsel"), under existing laws,
regulations, judicial decisions and rulings, interest on the Series 1996 A Bonds
is excludable from gross income under Section 103 of the Internal Revenue Code
of 1986, as amended (the "Code"), for federal income tax purposes, except for
interest on any Series 1996 A Bond for any period during which such Series 1996
A Bond is owned by a person who is a "substantial user" of the Project or a
"related person" as defined in Section 147(a) of the Code. These opinions
relate only to the exclusion from gross income of interest on the Series 1996 A
Bonds for federal income tax purposes under Section 103 of the Code and are
conditioned on continuing compliance by the Issuer and the Borrower with the Tax
Covenants (as hereinafter defined). Failure to comply with the Tax Covenants
could cause interest on the Series 1996 A Bonds to lose the exclusion from gross
income for federal income tax purposes retroactive to the date of issue. In the
opinion of Bond Counsel and each Co-Bond Counsel, under existing laws,
regulations, judicial decisions and rulings, interest on the Bonds is exempt
from income taxation in the State of Indiana. These opinions relate only to the
exemption of interest on the Bonds for State of Indiana income tax purposes.
The Code imposes certain requirements which must be met subsequent to the
issuance of the Series 1996 A Bonds as condition to the exclusion from gross
income of interest on the Series 1996 A Bonds for federal income tax purposes.
The Issuer and the Borrower will covenant not to take any action nor fail to
take any action within their respective power and control with respect to the
Series 1996 A Bonds that would result in the loss of the exclusion from gross
income for federal income tax purposes of interest on the Series 1996 A Bonds
pursuant to Section 103 of the Code (collectively, the "Tax Covenants"). The
Indenture, the Loan Agreement and certain certificates and agreements to be
delivered on the date of delivery of the Series 1996 A Bonds establish
procedures under which compliance with the requirements of the Code can be met.
It is not an event of default under the Indenture if interest on the Series 1996
A Bonds is not excludable from gross income for federal income tax purposes or
otherwise pursuant to any provision of the Code which is not in effect on the
issue date of the Series 1996 A Bonds.
The interest on the Series 1996 A Bonds is a specific preference item for
purposes of the federal individual or corporate alternative minimum taxes.
Interest on the Series 1996 A Bonds is also included in adjusted current
earnings in calculating the environmental tax imposed by Section 59A of the
Code.
Indiana Code 6-5.5 imposes a franchise tax on certain taxpayers (as defined
in Indiana Code 6-5.5) which, in general, are all corporations which are
transacting the business of a financial institution in the State of Indiana.
The franchise tax is measured in part by interest excluded from gross income
under Section 103 of the Code minus associated expenses disallowed under Section
265 of the Code. Taxpayers should consult their own tax advisors regarding the
impact of this legislation on their ownership of the Bonds.
Although Bond Counsel and each Co-Bond Counsel will render an opinion that
interest on the Series 1996 A Bonds is excludable from federal gross income and
exempt from State of Indiana income tax, the accrual or receipt
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<PAGE>
of interest on the Series 1996 A Bonds may otherwise affect a Bondholder's
federal or state tax liability. The nature and extent of these other tax
consequences will depend upon the Bondholder's particular tax status and the
Bondholder's other items of income or deductions. Taxpayers who may be affected
by such other tax consequences include, without limitation, financial
institutions, certain insurance companies, S corporations, certain foreign
corporations, individual recipients of Social Security or railroad retirement
benefits and taxpayers who may be deemed to have incurred ( or continued )
indebtedness to purchase or carry the Series 1996 A Bonds. Bond Counsel and
each Co-Bond Counsel express no opinion regarding any other such tax
consequences. Prospective purchasers of the Bonds should consult their own tax
advisors with regard to the other tax consequences of owning the Bonds,
including whether any Bondholder that purchases Bonds in the secondary market at
a price other than par may have potential sale or exchange consequences on a
conversion of the Bonds from one Interest Rate Mode to another, even if the
Bondholder elects to retain its Bonds upon any such conversion.
By the terms of the Indenture, the Loan Agreement and other relevant
documents, the interest rate mode as set forth in the Indenture for the Series
1996 A Bonds may be changed and certain actions may be taken under the
circumstances and subject to the terms and conditions set forth in such
documents subject to receipt of an approving opinion of nationally recognized
bond counsel. Bond Counsel and each Co-Bond Counsel express no opinion as to
the effect upon any Bond or the excludability of the interest on any Series 1996
A Bond for federal income taxation purposes resulting from any such change or
action.
NO LITIGATION
To the knowledge of the Borrower and the Issuer, there is no pending
or threatened litigation against the Borrower or the Issuer which in any way
questions or affects the validity of the Series 1996 Bonds, or any proceedings
or transactions relating to their issuance, sale or delivery or the pledge or
application of any moneys or security provided for the payment of the Bonds.
As of the date of this Official Statement, the Borrower does not know
of any fact or set of facts from which liability might arise which individually
or collectively would materially and adversely affect the business or operation
of the Borrower or the Project.
APPROVAL OF LEGAL PROCEEDINGS
Legal matters incident to the authorization, issuance and sale of the
Series 1996 Bonds are subject to the approving opinions of Ice Miller Donadio &
Ryan, Indianapolis, Indiana, Bond Counsel, Karen Freeman-Wilson, Gary, Indiana,
Co-Bond Counsel, and Meyer, Lyles & Godshalk, Gary, Indiana, Co-Bond Counsel,
and the Underwriter's obligation to purchase the Series 1996 Bonds is subject to
among other things, receipt by it of Co-Bond Counsels unqualified approving
opinions with respect thereto. Certain legal matters relating to the Letter of
Credit will be passed upon by the law firm of Seyfarth, Shaw, Fairweather &
Geraldson, Chicago, Illinois, counsel to the Bank. Certain legal matters will
be passed upon for the Underwriters by the law firm of Baker & Daniels,
Indianapolis, Indiana. Certain legal matters will be passed upon for the
Borrower by its counsel, Coffield Ungaretti & Harris, Chicago, Illinois.
UNDERWRITING
EVEREN Securities, Inc. (the "Underwriter") has agreed, subject to the
terms of a Bond Purchase Agreement among the Underwriter, the Issuer and the
Borrower, to purchase from the Issuer at a price of par the $20,540,000
aggregate principal amount of the Series 1996 A Bonds and the $1,680,000
aggregate principal amount of the Series 1996 B Bonds with the Underwriter
receiving a commission of $154,050 for the Series 1996 A Bonds,
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<PAGE>
and a commission of $12,600 for the Series 1996 B Bonds. Concessions from the
initial price may be allowed to selected dealers and special purchasers. The
initial price is subject to change after the date hereof. The Borrower has
agreed to indemnify the Underwriter and the Issuer against certain civil
liabilities, including liabilities under securities laws, relating to this
Official Statement.
RATING
Moody's Investors Service ("Moody's") has given the Bonds the rating
of "Aa3/VMIG 1." An explanation of the rating by Moody's may be obtained from
such agency at 99 Church Street, New York, New York 10007. Any such rating
reflects only the view of Moody's and is not a recommendation to buy, sell or
hold any of the Series 1996 Bonds. There is no assurance that any rating will
continue for any given period of time or that any rating will not be revised
downward or withdrawn entirely if, in the judgment of Moody's, circumstances so
warrant. Any such downward revision or withdrawal of any rating may have an
adverse effect on the market price or marketability of the Series 1996 Bonds.
MISCELLANEOUS
The foregoing summaries and explanations and those in the Appendices
do not purport to be comprehensive and are expressly made subject to the exact
provisions of the complete documents referred to herein. For details of all
terms and conditions, prospective purchasers are referred to the Letter of
Credit, the Reimbursement Agreement, the Refunding Notes, the Loan Agreement and
the Indenture, copies of which may be obtained from the Underwriter. The
Appendices attached hereto are a part of this Official Statement. Any matters
in this Official Statement involving matters of opinion, whether or not
expressly so stated, are intended as such and not as representations of fact.
THE MILLER PARTNERSHIP, L.P.
By: CenterPoint Properties Corporation
Its General Partner
By: /s/ Paul Fisher
----------------------------------
Its: EXECUTIVE VICE PRESIDENT, CHIEF
----------------------------------
FINANCIAL OFFICER AND SECRETARY
----------------------------------
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<PAGE>
FIRST AMENDMENT TO UNSECURED
REVOLVING CREDIT AGREEMENT
This First Amendment to Unsecured Revolving Credit Agreement (this
"Amendment") is made as of the 26th day of November, 1996, by and among
CENTERPOINT PROPERTIES CORPORATION, a Maryland corporation (the "Borrower"), the
several banks, financial institutions and other entities from time to time
parties to the Credit Agreement described below (collectively, the "Lenders"),
LEHMAN BROTHERS HOLDINGS INC., d/b/a/ Lehman Capital, a division of Lehman
Brothers Holdings Inc. ("Lehman"), not individually but as Documentation Agent,
and THE FIRST NATIONAL BANK OF CHICAGO, not individually, but as "Administrative
Agent."
R E C I T A L S:
A. The Lenders, the Administrative Agent, and Lehman as Documentation
Agent are parties to an Unsecured Revolving Credit Agreement dated as of October
23, 1996 (the "Credit Agreement"). All capitalized terms used in this agreement
and not otherwise defined herein shall have the meanings described as such terms
in the Credit Agreement.
B. The parties desire to amend the Credit Agreement to clarify the way in
which the interest rate applicable under the Facility is rounded.
NOW, THEREFORE, in consideration of the foregoing recitals and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
A G R E E M E N T S
1. The foregoing Recitals to this Amendment hereby are incorporated into
and made a part of this Amendment.
2. The following sentence is hereby added to the definition of "LIBOR
Base Rate" in Article I of the Credit Agreement:
The LIBOR Base Rate shall be rounded to the
next higher multiple of 1/16 of 1% if the rate
is not such a multiple.
3. The last sentence in the definition of LIBOR Rate in Article I of the
Credit Agreement is hereby deleted.
4. All of the obligations of the parties to the Credit Agreement, as
amended hereby, are hereby ratified and confirmed. All references to the Credit
Agreement shall henceforth be deemed to refer to the Credit Agreement as amended
by this Amendment.
<PAGE>
5. This Amendment may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Amendment by signing such counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
CENTERPOINT PROPERTIES
CORPORATION, a Maryland corporation
By: /s/ Paul S. Fisher
---------------------------------
Print Name:
-------------------------
Title: Chief Financial Officer
------------------------------
401 N. Michigan Avenue, Suite 3000
Chicago, IL 60611
Attention: Paul S. Fisher
Telephone: (312) 346-5600
Facsimile: (312) 456-7696
THE FIRST NATIONAL BANK OF
CHICAGO, Individually and as
Administrative Agent
By: /s/ Kevin L. Gillen
---------------------------------
Print Name:
-------------------------
Title: Corporate Banking Officer
------------------------------
One First National Plaza
Chicago, Illinois 60670
Attention: Kevin L. Gillen
Suite 0151, 14th Floor
Telephone: (312) 732-1486
Facsimile: (312) 732-1117
-2-
<PAGE>
LEHMAN BROTHERS HOLDINGS, INC.,
d/b/a Lehman Capital, a division of Lehman
Brothers Holdings, Inc., Individually and as
Documentation Agent
By: /s/ Francis X. Gilhool
---------------------------------
Print Name:
-------------------------
Title: Vice President
------------------------------
3 World Financial Center
New York, New York 10285-1200
Attention: Allyson V. Bailey, Floor 12
Telephone: (212) 526-5849
Facsimile: (212) 526-5484
THE FIRST NATIONAL BANK OF
BOSTON
By: /s/ Lori Y. Litow
---------------------------------
Print Name:
-------------------------
Title: Vice President
------------------------------
Notice Address:
The First National Bank of Boston
100 Federal Street
Boston, Massachusetts 02110
Attention: Real Estate Department
Facsimile: (617) 434-7108
-3-
<PAGE>
NATIONSBANK, N.A. (SOUTH)
By: /S/ Donna Friedel
---------------------------------
Print Name:
-------------------------
Title: Senior Vice President
------------------------------
Notice Address:
Nationsbank Plaza
600 Peachtree, 6th Floor
Atlanta, Georgia 30308
Attention: Donna Friedel
Telephone: (404) 607-4107
Facsimile: (404) 607-4145
BANK OF AMERICA ILLINOIS
By: /s/ George W. Kirtland, Jr.
---------------------------------
Name:
-------------------------------
Title: Vice President
------------------------------
Notice Address:
Bank of America Illinois
231 S. LaSalle Street, 15th Floor
Chicago, Illinois 60697
Attention: George W. Kirtland, Jr.
Telephone: (312) 828-7230
Facsimile: (312) 974-4970
-4-
<PAGE>
LASALLE NATIONAL BANK
By: /s/ John C. Hein
---------------------------------
Name:
-------------------------------
Title: Executive Vice President
------------------------------
Notice Address:
LaSalle National Bank
135 S. LaSalle Street, Suite 1225
Chicago, Illinois 60603
Attention: John Hein
Telephone: (312) 781-8620
Facsimile: (312) 904-6467
-5-
<PAGE>
SECOND AMENDMENT TO UNSECURED
REVOLVING CREDIT AGREEMENT
--------------------------
This Second Amendment to Unsecured Revolving Credit Agreement (the
"Amendment") is made as of the 6th day of March, 1997, by and among CENTERPOINT
PROPERTIES CORPORATION, a Maryland corporation (the "BORROWER"), the several
banks, financial institutions and other entities from time to time parties to
the Credit Agreement described below (collectively, the "LENDERS"), LEHMAN
BROTHERS HOLDINGS INC. D/B/A LEHMAN CAPITAL, A DIVISION OF LEHMAN BROTHERS
HOLDINGS INC. ("Lehman") not individually but as Documentation Agent and THE
FIRST NATIONAL BANK OF CHICAGO, not individually, but as "ADMINISTRATIVE AGENT".
RECITALS
--------
A. The Lenders, The First National Bank of Boston, the Administrative
Agent, and Lehman as Documentation Agent are parties to an Unsecured Revolving
Credit Agreement dated as of October 23, 1996, as previously amended by First
Amendment to Unsecured Revolving Credit Agreement dated as of November 26, 1996
(the "Credit Agreement'). All capitalized terms used in this agreement and not
otherwise defined herein shall have the meanings described as such terms in the
Credit Agreement.
B. As of the date hereof, The First National Bank of Boston has assigned
all of its rights and obligations under the Credit Agreement to The First
National Bank of Chicago and Dresdner Bank AG, New York and Grand Cayman
Branches, which collectively assumed all of such rights and obligations.
Accordingly, The First National Bank of Boston is no longer a Lender.
C. The parties desire to amend the Credit Agreement to change the
interest rate applicable under the Facility.
NOW, THEREFORE, in consideration of the foregoing recitals and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
AGREEMENTS
----------
1. The foregoing Recitals to this amendment hereby are incorporated into
and made a part of this Amendment.
2. Section 2.4 of the Credit Agreement is amended as of the date hereof
by deleting the table containing the Applicable Margins corresponding to various
debt ratings and inserting in lieu thereof the following table:
<PAGE>
LIBOR CBR
MOODY'S APPLICABLE APPLICABLE PRICING
S&P RATING RATING MARGIN MARGIN CATEGORY
---------- ------ ------ ------ --------
A- or A3 or 0.95% 0 0
higher higher
BBB+ Baa1 1.05% 0 1
BBB Baa2 1.15% 0.15% 2
BBB- Baa3 1.30% 0.30% 3
Less than BBB- Less than Baa3 1.60% 0.60% 4
Accordingly, the Applicable Margins shall be as set forth in the foregoing table
from and after the date hereof (including with respect to any LIBOR Loans
outstanding on the date hereof).
3. The Borrower hereby represents and warrants that no Default exists
under the terms of the Credit Agreement.
4. All of the obligations of the parties to the Credit Agreement, as
amended hereby, are hereby ratified and confirmed. All references to the Credit
Agreement shall henceforth be deemed to refer to the Credit Agreement as amended
by this Amendment. Except as amended hereby, all of the terms and conditions of
the Credit Agreement shall remain unchanged.
5. This Amendment may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Amendment by signing such counterpart.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written
CENTERPOINT PROPERTIES
CORPORATION, a Maryland corporation
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
401 N. Michigan Avenue, Suite 3000
Chicago, IL 60611
Attention: Paul S. Fisher
Telephone: (312) 346-5600
Facsimile: (312) 456-7696
THE FIRST NATIONAL BANK OF
CHICAGO, Individually and as
Administrative Agent
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
One First National Plaza
Chicago, IL 60670
Attention: Kevin L. Gillen
Suite 0151, 14th Floor
Telephone: (312) 732-1486
Facsimile: (312) 732-1117
<PAGE>
LEHMAN BROTHERS HOLDINGS INC., d/b/a Lehman
Capital, a Division of Lehman Brothers
Holdings Inc., Individually and as
Documentation Agent
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
3 World Financial Center
New York, New York 10285-1200
Attention: Allyson V. Bailey, Floor 12
Telephone: (212) 526-5849
Facsimile: (212) 526-5484
NATIONSBANK, N.A. (SOUTH)
By:
--------------------------------
Print Name: Donna Friedel
------------------------
Title: Senior Vice President
------------------------------
Notice Address:
Nationsbank Plaza
600 Peachtree, 6th Floor
Atlanta, Georgia 30308
Attention: Donna Friedel
Telephone: (404) 607-4107
Facsimile: (404) 607-4145
<PAGE>
LASALLE NATIONAL BANK
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
Notice Address:
LaSalle National Bank
135 South LaSalle Street, Suite 1225
Chicago, Illinois 60603
Attention: John Hein
Telephone: (312) 781-8620
Facsimile: (312) 904-6467
DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN
BRANCHES
By:
---------------------------------
Print Name:
-------------------------
Title:
------------------------------
Notice Address:
Dresdner Bank
-------------------------
-------------------------
Attention:
---------------
Telephone: ( )
---------------
Facsimile: ( )
---------------
<PAGE>
EXHIBIT 11
CENTERPOINT PROPERTIES CORPORATION
COMPUTATION OF EARNINGS PER SHARE
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net income (loss) (A) $14,941 $8,212 $2,359 ($4,930) ($1,175)
--------
--------
Interest expense - debentures 1,385 3,057 4,336 281
---------- ---------- --------- --------
Adjusted net income (loss) (B) $16,326 $11,269 $6,695 ($4,649)
---------- ---------- --------- -----------
---------- ---------- --------- -----------
Weighted average number of shares of
common stock outstanding 13,890,049 9,236,612 5,726,581 1,264,031 658,811
--------
--------
Additional number of common
equivalent shares outstanding:
Stock options - net (1) 285,913 121,810 28,669 168
Convertible preferred stock (2) 832,091 635,118
---------- ---------- --------- -----------
Weighted average common and common
equivalent shares outstanding (C) 15,008,053 9,993,540 5,755,250 1,264,199
Additional weighted average shares
outstanding assuming debentures
converted (at issue date in 1993) 923,060 2,037,989 2,892,435 175,643
---------- ---------- --------- -----------
Weighted average shares outstanding for
fully-diluted (D) 15,931,113 12,031,529 8,647,685 1,439,842
---------- ---------- --------- -----------
---------- ---------- --------- -----------
Net income (loss) per share:
Primary (A/C) (3) $1.00 $0.82 $0.41 ($3.90) ($1.78)
Fully-diluted (4) (B/D) $1.02 $0.94 $0.77 ($3.22)
</TABLE>
- ------------------------------------
NOTES:
(1) Represents stock options using the treasury stock method.
(2) Represents convertible preferred stock as if converted on a share for
share basis; prorated for the days the convertible preferred stock was
outstanding. The convertible preferred stock is considered a common
stock equivalent as it participates in dividends with common stock and
was converted into common stock upon shareholder approval.
(3) Net income for 1996 and 1995 includes an extraordinary loss of
($3,330,684) or ($0.22) per share and ($632,419) or ($0.06) per share,
respectively.
(4) Conversion of debentures is anti-dilutive.
<PAGE>
EXHIBIT 12
CENTERPOINT PROPERTIES CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
YEAR ENDED DECEMBER 31,
1996 1995 1994 1993 1992
Available earnings:
Net income (loss) $14,941 $ 8,212 $2,359 ($4,930) ($1,175)
Add interest expense (1) 10,992 12,985 12,157 4,111 2,638
------- -------- ------ ------- -------
Available earnings (loss) (2) $25,933 $21,197 $14,516 ($ 819) $1,463
Fixed Charges:
Interest expense $10,992 $12,985 $12,157 $4,111 $2,638
Capitalized interest 142 20 63 470 831
------- -------- ------ ------- -------
Total Fixed Charges $11,134 $13,005 $12,220 $4,581 $3,469
------- -------- ------ ------- -------
------- -------- ------ ------- -------
Ratio of earnings to
Fixed Charges (3) 2.33 1.63 1.19
- ---------------------------------------
NOTES:
(1) Interest expense includes amortization of debt expense.
(2) Interest portion of rental expense is not calculated because annual rental
expense for the Company is not significant.
(3) The ratio of earnings to fixed charges for the years ended
December 31, 1993 and 1992 was less than one to one. The approximate
dollar amounts necessary to cover the deficiency in those periods were as
follows: 1993 -- $5,400; 1992 -- $2,006.
<PAGE>
WHERE INDUSTRY WORKS
CENTERPOINT PROPERTIES
1996 ANNUAL REPORT
[Photograph of bottles on a conveyer in a bottling plant]
<PAGE>
RESPONSIVE STRONG FLEXIBLE CREATIVE
OUR MISSION Founded in 1984, CenterPoint Properties has grown to
become the largest and leading industrial property company in North America's
largest and most diverse industrial property market -- Greater Chicago. We are
entirely focused on adding value to our tenants through the ownership, intensive
management, development and redevelopment of warehouse, distribution and light
manufacturing buildings.
Our mission is to be the industrial landlord of choice in the Greater
Chicago region. We seek long-term relationships with our tenants by being
highly responsive to their changing needs, being prepared to meet any challenge
and constantly innovating to enhance mutual growth. In order to accomplish
this, we are committed to similar relationships with our internal colleagues,
business partners and the community at large.
These efforts will allow us to meet our overall financial objectives of
sustaining high per share growth, a conservative balance sheet and returns well
above our long-term cost of capital.
FINANCIAL HIGHLIGHTS 1 LETTER TO SHAREHOLDERS 3 THE GREATER CHICAGO MARKET 6
ABOUT CENTERPOINT 8 ACQUISITIONS 10 BUILD TO SUIT 12 REDEVELOPMENT 14
FINANCIAL SECTION 16 BOARD OF DIRECTORS, OFFICERS AND SHAREHOLDER INFORMATION
INSIDE BACK COVER PROPERTY PORTFOLIO AND MAP BACK COVER FOLDOUT
<PAGE>
CENTERPOINT PROPERTIES
THE LEADER IN NORTH AMERICA'S LARGEST
INDUSTRIAL PROPERTY MARKET
[CHART] [CHART] [CHART] [CHART] [CHART] [CHART]
[Six bar charts showing the following information are depicted:
TOTAL RETURN ON $1,000 INVESTMENT SINCE THE IPO (WITH DIVIDENDS REINVESTED)
1994 $1,114
1995 1,502
1996 2,174
GROWTH IN PER SHARE FFO
1994 $1.52
1995 1.72
1996 1.95
DEBT TO TOTAL MARKET CAPITALIZATION (FULLY DILUTED)
1994 44%
1995 27%
1996 22%
TOTAL MARKET CAPITALIZATION (IN MILLIONS)
1994 $307
1995 443
1996 732
EBITDA GROWTH (IN MILLIONS)
1994 $20.7
1995 30.0
1996 39.9
INVESTMENT PORTFOLIO SQUARE FOOTAGE (IN MILLIONS)
1994 7.8
1995 11.7
1996 16.3]
[In the background of the charts is a photograph of a construction site with an
airplane landing at O'Hare Airport.]
<PAGE>
1 CENTERPOINT
PROPERTIES
FINANCIAL HIGHLIGHTS
(in thousands, except per share amounts)
1996 1995 1994
Total Market Capitalization $ 732,136 $ 443,531 $ 307,453
Income Before Extraordinary Item 18,272 8,844 2,360
Funds from Operations 30,445 20,492 13,138
Per Share:
FFO (fully diluted) 1.95 1.72 1.52
Distributions 1.62 1.56 1.50
Payout Ratio 83% 91% 99%
- --------------------------------------------------------------------------------
DIVIDENDS AND SHARE PRICE
Share Price
----------------------------
Dividends High Low
- --------------------------------------------------------------------------------
1996
4 Q $ 0.405 $ 32 3/4 $ 30 7/8
3 Q 0.405 26 7/8 26 3/4
2 Q 0.405 27 26 1/8
1 Q 0.405 24 1/8 22
1995
4 Q $ 0.390 $ 23 3/8 $ 21 5/8
3 Q 0.390 22 7/8 20 1/2
2 Q 0.390 20 3/4 19 5/8
1 Q 0.390 19 5/8 18 3/8
1994
4 Q $ 0.375 $ 19 7/8 $ 17 1/2
1996 HIGHLIGHTS
- - Total shareholder return exceeds 50 percent in 1996
- - Total shareholder return totals 117 percent since IPO (1994-1996)
- - $1.95 FFO per share (fully diluted), up 13.4 percent
- - Two-fold increase in net operating income
- - Fully diluted total market capitalization of $732 million, up 65 percent
- - Portfolio grew 50 percent, to 16.4 million square feet
- - Occupancy remains at 98 percent
- - First acquisition in Milwaukee, Wisconsin
- - Quarterly dividends increased $0.06 per share, to $1.68 per year for 1997
- - Leverage reduced to 23 percent at year-end, and further reduced to 15
percent in 1Q97
- - Received Baa2 investment grade rating from Moody's
- - Listed on the New York Stock Exchange
<PAGE>
CENTERPOINT'S INVESTMENT COMMITTEE:
STANDING, LEFT TO RIGHT: ROCKFORD O. KOTTKA,
ROBERT L. STOVALL, AND PAUL S. FISHER
SEATED: JOHN S. GATES JR. AND MICHAEL M. MULLEN.
[A chart is shown depicting CenterPoint's emphasis during various business
cycles: (i) during a recovery, CenterPoint's emphasis is on acquisitions; (ii)
during a strong economy, CenterPoint's emphasis is on build-to-suit
developments; and (iii) during a recession, CenterPoint's emphasis is on
redevelopments.]
Our investment strategy maximizes value through each phase
of the economic cycle.
ACQUISITION: In a recovering economy, tenant demand for
additional space tends to surge, while investment capital
remains scarce. CenterPoint uses its market knowledge and
liquidity to acquire standing, fully leased industrial
properties.
BUILD TO SUIT: In a strong economy, vacancy is falling and
tenant demand can best be accommodated by new construction.
CenterPoint uses its in-house expertise to develop new,
generic buildings that are leased before construction.
REDEVELOPMENT: During a recession, CenterPoint purchases
redundant facilities from down-sizing corporations and
develops them into attractively priced multi-tenant
industrial parks.
<PAGE>
2 CENTERPOINT
3 PROPERTIES
TO OUR SHAREHOLDERS
CenterPoint went public in December of 1993 to consolidate the organization and
capital structure which would enable it to become the "landlord of choice" in
the nation's largest industrial property market. In the intervening three years
we have enjoyed outstanding growth and success. But, it was in 1996 that the
results of these efforts began to coalesce into a "franchise," which in and of
itself will add value to our tenants and shareholders.
1996 - ANOTHER YEAR OF SIGNIFICANT GROWTH
1996 brought the addition of 5.8 million square feet of fully leased property
acquisitions and pre-leased build-to-suit developments to our portfolio -- a 50%
increase -- at an average initial cash yield of 11.2 percent. This brought our
portfolio to 16.4 million square feet at year end. In addition, total market
capitalization grew to $732 million -- a 65% increase.
Our 1996 funds from operations (FFO) totalled $1.95 per share on a fully
diluted basis, an increase of 13.4 percent over comparable 1995 results of $1.72
per share. At the same time, our operating income more than doubled to $18.4
million, from $8.9 million in 1995.
FINANCIAL CAPACITY AND FLEXIBILITY
During 1996, we greatly enhanced our financial flexibility and improved our
balance sheet through a variety of capital market transactions. In April, we
issued $20.5 million of tax-exempt debt, to refund existing tax-exempt debt at
favorable rates, followed in June by an oversubscribed "spot" common stock
public offering that generated $80 million to the Company. In October, we
replaced our $92 million secured lines of credit with a $135 million unsecured
credit facility at a significant savings in interest.
Also in June, CenterPoint moved to the New York Stock Exchange.
Shareholders should benefit from the greater liquidity, broader institutional
support and increased visibility that comes with a NYSE listing.
In December, we applied to Moody's for a rating of our senior unsecured
debt. Recently, this resulted in CenterPoint becoming one of a very few REITs
to receive an investment grade rating of Baa2.
We believe that our forward looking capital strategy positions CenterPoint
to respond to growth opportunities, or to react accretively to any possible
downturns in the stock market, the REIT sector or the economy at large.
SHAREHOLDER RETURNS TOPS 50 PERCENT
These results enabled shareholders to achieve a total return in 1996, with
dividends reinvested, of 53 percent. In the three years since our initial public
offering, CenterPoint Properties has provided shareholders with a total
compounded return of 117 percent.
<PAGE>
We also recently announced a quarterly dividend increase for 1997 to $0.42
per share, or $1.68 per share for the year. 1996 dividends totalled $1.62 per
share, with a 51-percent return of capital component.
ADDING VALUE TO TENANTS AND PROPERTY
Tenant satisfaction continues to be CenterPoint's primary focus. Our 1996
occupancy rate remained at its historic level of approximately 98 percent with a
portfolio wide 10.6 percent rate of rental growth on scheduled 1996 lease
expirations. Our overall rents are approximately 80 percent of market rates
through virtually all submarkets, providing ample room for "same store" rental
growth. During the past year, we renewed or replaced substantially all of the
1996 lease expirations. The tremendous diversity and low volatility of the
Chicago market contributes measurably to the stability of our portfolio.
As we forecast in the prior year, we were busy in 1996 with the largest
number of build-to-suit (pre-leased) development projects in our history in
order to meet increased tenant demand for new space. Eight projects totalling
1.6 million square feet currently are underway.
Perhaps our highest profile project in 1996 was O'Hare Express -- the first
and only privately developed industrial park inside O'Hare Airport providing
direct access to aircraft. We gained control of the land in mid-1996 and quickly
moved the project forward. Leasing activity has been dramatic, leading to
construction of half of the three-year planned project in just six months.
Currently in progress are air cargo facilities that will be occupied by DHL, Air
Canada and Alliance Airlines. O'Hare Express is only one part of the substantial
and growing pipeline of projects awaiting CenterPoint during 1997 and beyond. We
have more than $200 million in new investments and developments in our 1997
pipeline, thus far.
We are specifically targeting Milwaukee for additional 1997 acquisition and
development activity. We acquired a 184,000-square-foot facility in 1996, now
leased to grocery wholesaler Roundy's, and plan to significantly expand our
presence this year. We like the Milwaukee market for its progressive stance on
industrial issues, its stable tenant base and traditionally balanced industrial
property market. In fact, its per capita industrial inventory is even larger
than Chicago's, and it represents a tremendous portfolio growth opportunity
for CenterPoint.
MANAGEMENT DEVELOPMENTS
To keep pace with our growth in 1996, we added Fred Reynolds as Vice President
of Development. Fred brings to CenterPoint a market-recognized expertise in
development and redevelopment work. We strengthened our regional office network
and improved our responsiveness to tenants by further integrating management and
accounting activities for each region. We also continued to invest in
state-of-the-art management information systems to promote efficient
intra-company communication and financial control.
A FORWARD LOOK
As in the years past, CenterPoint will maintain its focus on exploiting prudent
opportunities to expand our "franchise" as the industrial landlord of choice in
the nation's largest industrial market. Also as in the past, we will continue to
be highly dilution conscious and vigilant to invest our capital above its true
long term cost. From time to time, we
<PAGE>
4 CENTERPOINT
5 PROPERTIES
will again take advantage of opportunities to efficiently re-deploy capital
through the sale of stabilized assets -- with proceeds reinvested into new
assets where significant shareholder value can be added.
CenterPoint's impressive 1996 results were driven by the huge size and
diversity of the Greater Chicago market. Our approximate 1.5 percent market
share leaves us enormous opportunities for additional growth, and our strengths
- -- deep market penetration, creative solutions and ability to respond quickly --
position us to succeed this year and beyond. Being four or five times larger
than our next largest competitor, we are exposed to most of the opportunities
that arise in our 1.2 billion square foot market -- usually first.
As one of the longest periods of prosperity in our nation's history
continues to mature, CenterPoint remains very busy with many pre-leased
development activities. As we enter our next period of growth, we recognize that
it may well be in a different point in the economic cycle but one for which
CenterPoint is no less prepared. With a very flexible balance sheet and the
internal skill-sets to "do it all," we believe we are positioned to achieve
sustained growth through every cycle of the economy. We cannot predict when
change will come, but we know it surely will. We also know that CenterPoint has
in place the necessary personnel and strategies to respond in order to sustain
consistent per share Funds from Operation growth.
CenterPoint's achievements in 1996 could not have been possible without the
efforts of our internal colleagues, the support of the industrial property
community and the ongoing loyalty of our tenants. We take this opportunity to
formally thank them for their continued contributions to our growing franchise
as the landlord of choice in the nation's largest industrial property market.
A SPECIAL THANKS TO A GOOD FRIEND
During the year, we initiated a management development and succession plan. This
will not only provide depth and continuity to our organization but also enabled
us to seamlessly prepare for the upcoming retirement of Chief Operating Officer
Robert L. Stovall. Fortunately, we will not be losing "Bobby" altogether. He
becomes Vice Chairman of the Board of Directors and will chair the board's Asset
Allocation Committee of independent directors. Michael Mullen, currently our
very talented Chief Investment Officer, will succeed Mr. Stovall as COO.
Shareholders and all of us associated with CenterPoint owe enormous
gratitude to Bobby -- not only for his role as one of our founders, but for
continuing to share his unsurpassed experience and expertise. He remains our
friend and mentor.
Sincerely,
/s/ John S. Gates Jr
John S. Gates Jr
President and Chief Executive Officer
March 10, 1997
<PAGE>
THE GREATER CHICAGO MARKET
CENTERPOINT PROPERTIES SERVES
NORTH AMERICA'S LARGEST INDUSTRIAL PROPERTY MARKET.
The largest industrial property market in the nation -- 1.2 billion square feet
- -- is located within a 150-mile radius of downtown Chicago.
This Greater Chicago Market is larger than the next six midwestern markets
combined. It contains more warehouse and light manufacturing space than the
entire southeast United States.
It is both huge and diversified, the hub of a regional economy that
generates steady growth and predictable space demands. What had been tagged
"Rust Belt" has now been polished -- often by adversity -- into a worldwide
competitor.
This North American giant is anchored by the metropolitan Chicago
industrial market. Chicago represents 6.6 percent of the U.S. population, but
accounts for 12.25 percent of the nation's industrial space. It is unparalled in
diversity: No single industry accounts for more than 12.9 percent of the
industrial tenant base. Chicago also has less available industrial or warehouse
space than the national average.
Further, Chicago is now the nation's largest job market and continues to
grow consistently, thanks to being the nation's lowest cost "24 hour" city.
TRUCKING
- - Thirteen interstate highways - Largest trucking hub in nation
RAIL FREIGHT
- - Chicago handles more than 26,000 freight and intermodal cars each day, in 22
rail yards that include eight major freight marshalling areas.
AIR FREIGHT
- - More than 1.2 million tons annually moves through O'Hare International
Airport -- the world's busiest.
SHIPPING
- - Ocean-going freight via Great Lakes - Barge traffic via Mississippi River
<PAGE>
6 CENTERPOINT
7 PROPERTIES
CENTERPOINT BENEFITS FROM THE DIVERSITY
AND BROAD BASE OF THE CHICAGO INDUSTRIAL MARKET.
[CHART]
[A bar chart of Metro Chicago's Net Effective Vacancy Industrial & Warehouse
Space (as a percentage of square footage) depicts the following: 1992, 8%;
1993, 6.5%; 1994, 5.5%; 1995, 3.5%; and 1996, 5%.]
[A pie diagram shows the Chicago Industrial Tenant Profile as follows:
Wholesale Trade--Durables 12.9%; Wholesale Trade--Non-Durables 5.3%; Printing &
Publishing 4.4%; Fabricated Metal Products 10%; Trucking & Warehousing 7.1%;
Rubber & Misc. Plastic Products 5%; Other 29.9%; Food & Kindred Products 8%;
Primary Metal 3.9%; Industrial Machinery 12.2%; and Electronics & Other ELC
5.5%.]
[A pie diagram shows CenterPoint's Tenant Diversity as follows: Wholesale
Trade--Durables 20.3%; Wholesale Trade--Non-Durables 3%; Printing & Publishing
4.6%; Fabricated Metal Products 2.5%; Trucking & Warehousing 23.9%; Rubber &
Misc. Plastic Products 5.7%; Other 12%; Misc. Retail 2%; Paper & Allied Products
2.5%; Fabricated Metal 2.5%; Transportation Equipment 3.8%; Stone Clay & Glass
5%; Electronics 2%; Primary Metal 3.6%; Business Services 5%; and Industrial
Machinery 3%.]
[A bar chart shows the Top Five U.S. Industrial Markets (in millions of square
feet) as follows: Chicago (including the area from Milwaukee, Wisconsin to
South Bend, Indiana) 1,200; Los Angeles 800; Northern New Jersey 700;
Philadelphia 390; and Detroit 380.]
[A map of the United States depicting the major railways and highways throughout
the United States with a radial diagram extending concentric circles away from
the Chicago area is shown above the following caption: "Chicago is the nation's
dominant distribution hub. One-third of the U.S. GDP is produced within an
8-hour drive of Chicago."]
<PAGE>
ABOUT CENTERPOINT
CenterPoint Properties focuses on adding value for tenants through our creative
and flexible approach to providing the right space at the right time in the
right place. When conditions change, we are able to respond -- finding solutions
to our tenants' needs that benefit all.
Our goal is to become the landlord of choice in our market. To achieve
this, we provide: high-quality, attractive space at competitive rates;
intensive attention to our buildings; operating charges that reflect our
economies of scale; and rapid response to expansion, relocation or other space
requirements.
We retained 96 percent of our tenants in 1996, and 94 percent over the last
five years. In effect, our commitment to tenant satisfaction preserves and
increases our cash flow and the value of our portfolio.
Underpinning the value of our portfolio is the strength of our balance
sheet and our internal resources. Our management -- with a combined 240 years of
experience in this market -- has developed strong relationships at all levels of
the industry and community.
Further, we have established strategies for responding to every phase of
the economic cycle. We are active in build-to-suit projects, acquisitions and
redevelopment work. The following pages provide an overview our efforts.
<PAGE>
8 CENTERPOINT
9 PROPERTIES
[A photograph of people gathered around a table in a conference room]
CenterPoint's tenant services are organized into six regional offices. These
CenterPoint managers are on the front line of tenant services everyday.
In 1996, CenterPoint responded to the right-sizing needs of six tenants. As a
result of these transactions, we upgraded five buildings in our portfolio,
acquired a sixth and initiated two more as build-to-suit developments. Time
frame: 60 days.
[An image is shown depicting how CenterPoint
reconfigured tenants among seven buildings]
<PAGE>
THE TYPICAL
CENTERPOINT BUILDING
- - $3-5 million facility
- - Industrial park site
- - Close to major highways
- - Ample loading docks
- - Rail access
- - Flexible floor plan
- - Easily divisible
- - Structurally sound
- - Heavy floor loads
- - 5% or less office space
- - Sprinklers throughout
PAUL AHERN
VICE PRESIDENT OF ACQUISITIONS
CenterPoint has grown consistently by meeting tenants "right-sizing" needs. Our
current portfolio of 86 properties emphasizes generic industrial buildings that
are suitable for a wide variety of tenant uses.
Traditionally, the seller is a company that is growing rapidly and can
better invest its capital in its own business rather than in owning bricks and
mortar. Often the property is leased back to the former owner, while
CenterPoint takes on that role and enhances the facility through intensive
and professional management.
In 1996, more than half of our acquisitions were from corporate sellers. "I
believe our willingness to move forward promptly is what appeals most," says
Paul Ahern, vice president of acquisitions. "We're known for our ability to
close. We have the market knowledge, internal systems and the financial
wherewithal to put together a transaction quickly. Corporate America appreciates
that approach."
For example, Honeywell contacted CenterPoint when it began planning to
leave its suburban campus. CenterPoint bought the entire 60-acre site and leased
back the office building to Honeywell for 10 years and the manufacturing
facility for one.
In return, CenterPoint gained two meticulously maintained buildings with
abundant parking, and 12 acres of development land at a prime location.
<PAGE>
ACQUISITIONS
[Photograph of a modern building, and a photograph of a key]
IN 1996, CENTERPOINT INVESTED $113
MILLION IN NEW PROPERTY, INCLUDING 15
ACQUISITIONS, THANKS TO THE STRENGTH OF
ITS BALANCE SHEET.
<PAGE>
BUILD TO SUIT
[Photograph of a hammer, and a photograph of a crane]
SUCCESSFUL BUILD-TO-SUITS DEMAND
FLEXIBILITY. YOU HAVE TO MOVE ON AN
OPPORTUNITY, ADJUST TO THE DEMANDS OF
THE SITE AND BE READY TO PROVIDE A
MYRIAD OF SOLUTIONS TO YOUR CUSTOMERS'
EVOLVING NEEDS.
<PAGE>
12 CENTERPOINT
13 PROPERTIES
Build-to-suit development is a rapidly expanding aspect of CenterPoint's growth.
"Successful build-to-suits call for flexibility, quick response and creative
solutions. Most importantly, you are building long-term relationships," says
Fred Reynolds, vice president of development, describing CenterPoint's approach
to this aspect of the industrial property business.
When the tenant is ready, CenterPoint responds immediately and is able to
provide a myriad of solutions to their evolving needs. Our goal is to understand
a tenant's specific needs and then design and build their future home -- on
time, in the right location and cost effectively.
For example, in mid-1996, we took on assignments for international
air-freight carriers Burlington Air Express, DHL, Air Canada and Alliance
Airlines. We quickly moved forward to satisfy their similar needs, through the
development of three air-freight distribution facilities totalling 450,000
square feet at CenterPoint's O'Hare Express Center. It is the only privately
controlled industrial park inside the airport with direct access to aircraft.
In all, CenterPoint's 1996 build-to-suit activity totalled 1.8 million
square feet. Among the companies that turned to us to create new facilities were
Continental General Tire, Playboy Enterprises, Ameritech, Factory Card Outlet,
Chicago Exhibit Productions and Chelsea & Scott.
A TYPICAL BUILD-TO-SUIT
- - A TURNKEY PROJECT
- - 100 PERCENT PRE-LEASED
- - PLANS MEET CLASS A SPECS
- - DESIGN IS FLEXIBLE TO
ACCOMMODATE FUTURE
TENANTS
- - DETAILED BUDGET INCLUDES
INDIRECT AND DIRECT COSTS
- - BUILT BY REPUTABLE LOCAL
CONTRACTOR
FRED REYNOLDS
VICE PRESIDENT OF DEVELOPMENT
<PAGE>
TYPICAL REDEVELOPMENTS
- - GENERIC, DIVISIBLE AND
WELL-BUILT STRUCTURE
- - GENERALLY LARGER PROPERTIES
- - OFTEN REQUIRE SIGNIFICANT
CHANGE OF USE
- - INCLUDE A PORTION PRE-LEASED
TO DOWNSIZING SELLER
- - CREATE A HIGH-QUALITY,
MULTI-TENANT INDUSTRIAL PARK
- - RE-MARKETED AT BELOW-MARKET RENTAL RATES
JIM JANSEN
REGIONAL MANAGER
While rehabbing industrial properties is often a multi-year project, even
redevelopment can be fast tracked, as Fortune 500 steelmaker Wheeling Pittsburgh
discovered. In 87 days -- thanks to an excellent team and a detailed schedule --
CenterPoint renovated 65,300 square feet top to bottom.
This 24-hour-a-day effort transformed a 60-year-old former defense plant
into the first-class manufacturing facility Wheeling Corrugated needed for a new
product line. The new plant has three 30-ton overhead cranes, as well as
completely new electric service, heating and lighting systems, new truck doors,
floors, locker rooms, offices, etc.
Wheeling Pittsburgh was surprised at the extent of CenterPoint's
understanding of their business. "We understood what they needed, worked with
them to develop a number of refinements, and completely re-built the building
within Wheeling's tight -- but necessary -- time frame," says Jim Jansen,
CenterPoint regional manager. Pleased with their new facility, Wheeling
Pittsburgh recently initiated another project with CenterPoint, their third.
In 1997, CenterPoint will begin redeveloping a 677,00-sq.-ft. facility
across from O'Hare International Airport. Acquired from Montgomery Ward as a
sale/lease back in 1995, it will be converted to a multi-tenant
facility for distributors and air cargo operations.
<PAGE>
REDEVELOPMENT
[Photograph of a building being redeveloped, and a photograph of a crowbar]
NO REAL ESTATE ENTERPRISE REQUIRES MORE
CREATIVITY THAN A REDEVELOPMENT PROJECT.
SEEING A BUILDING'S POSSIBILITIES AND
MATCHING IT TO THE MARKET ARE THE KEYS
TO SUCCESS.
<PAGE>
QUARTERLY FINANCIAL HIGHLIGHTS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
1Q 2Q 3Q 4Q
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1996
Total Revenues $ 13,926 $ 14,454 $ 15,687 $ 19,264
Income Before Extraordinary Item 3,627 3,613 5,358 5,674
Income per share Before Extraordinary Item 0.28 0.28 0.32 0.35
Net Income 3,627 2,183 5,358 3,773
Net Income per share 0.28 0.17 0.32 0.23
Total Market
Capitalization 436,058 500,796 603,298 732,136
EBITDA* 8,872 9,067 10,329 11,644
Funds form Operations (FFO) 6,482 6,633 8,300 9,030
Per share FFO 0.47 0.48 0.48 0.52
Per share Distributions 0.405 0.405 0.405 0.405
Year Ended December 31,
1Q 2Q 3Q 4Q
--------- --------- --------- ---------
1995
Total Revenues $ 10,404 $ 11,427 $ 11,549 $ 13,573
Income Before Extraordinary Item 1,483 1,811 1,682 3,868
Income per share Before Extraordinary Item 0.18 0.20 0.17 0.18
Net Income 1,483 1,811 1,682 3,236
Net Income per share 0.18 0.20 0.17 0.23
Total Market Capitalization 322,845 362,009 398,126 443,531
EBITDA* 6,688 7,350 7,632 4,479
Funds form Operations (FFO) 4,445 4,702 5,013 6,332
Per share FFO 0.42 0.41 0.43 0.46
Per share Distributions 0.390 0.390 0.390 0.390
*(ORDINARY EARNINGS BEFORE INTEREST, INCOME TAXES, DEPRECIATION AND AMORTIZATION)
</TABLE>
SELECTED FINANCIAL DATA 17 MANAGEMENT'S DISCUSSION AND ANALYSIS 18
STATEMENTS OF OPERATIONS 22 BALANCE SHEETS 23
STATEMENTS OF STOCKHOLDERS EQUITY 24 STATEMENTS OF CASH FLOWS 26
NOTES TO FINANCIAL STATEMENTS 27 AUDITOR'S REPORT 36
<PAGE>
<TABLE>
<CAPTION>
SELECTED HISTORICAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA, RATIOS AND NUMBER OF PROPERTIES)
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Operating Data:
Revenues $63,330 $46,952 $33,633 $9,068 $6,456
Expenses:
Operating expenses excluding depreciation and
amortization (1) (20,751) (14,773) (11,442) (4,124) (2,566)
Depreciation and other amortization (10,648) (8,456) (6,176) (2,539) (1,365)
General and administrative (2,567) (2,150) (1,573) (3,223) (1,091)
Interest expense:
Interest incurred, net (9,865) (11,563) (11,073) (3,808) (2,502)
Amortization of deferred financing costs (1,127) (1,150) (976) (228) (107)
--------- --------- --------- --------- ---------
Operating income (loss) 18,372 8,860 2,393 (4,854) (1,175)
Other expense (2) (100) (16) (34) (76) --
--------- --------- --------- --------- ---------
Income (loss) before extraordinary item 18,272 8,844 2,359 (4,930) (1,175)
Extraordinary item (3,331) (632) -- -- --
--------- --------- --------- --------- ---------
Net income (loss) 14,941 8,212 2,359 (4,930) (1,175)
Net income (loss) per share 1.00 .82 .41 (3.90) (1.78)
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Balance Sheet Data:
Investment in real estate (before accumulated
depreciation) $429,034 $317,460 $248,281 $180,396 $43,101
Net investment in real estate 398,828 295,884 234,825 172,946 37,332
Total assets 451,206 334,866 254,073 190,289 42,720
Total debt 177,349 145,271 179,492 131,963 42,790
Stockholders' equity (deficit) 248,114 168,320 59,016 46,240 (5,720)
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Other Data:
Funds from Operations (3) $30,445 $20,492 $13,138 $(2,110) $ 297
EBITDA (4) 39,912 30,013 20,584 1,564 2,799
Net cash flow:
Operating activities 29,551 16,473 8,976 275 324
Investing activities (111,554) (82,557) (65,311) (140,120) (2,982)
Financing activities 80,194 68,542 52,837 142,443 3,115
Distributions 24,065 15,953 8,775 1,295
Return of capital portion of distribution 12,280 8,554 4,320 -- --
Number of properties included in operating results (5) 76 69 53 38 5
Ratio of earnings to fixed charges (6) 2.33 1.63 1.19 -- --
</TABLE>
- ---------------
(1) Operating expenses include real estate taxes, repairs and maintenance,
insurance and utilities and exclude interest, depreciation and amortization
and general and administrative expenses.
(2) Other expense includes gains and losses on property dispositions in 1996,
and other miscellaneous operating and non-operating items.
(3) Funds from Operations represents net income (loss), excluding extraordinary
items, sales of (or adjustments to basis of) properties plus depreciation
and amortization, convertible subordinated debenture interest and
amortization of deferred financing costs on convertible subordinated
debentures. Funds from operations is computed as follows:
<PAGE>
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net income (loss) $14,941 $8,212 $2,359 ($4,930) ($1,175)
Extraordinary item 3,331 632 -- -- --
Depreciation and amortization 10,648 8,456 6,176 2,540 1,365
Amortization of deferred financing costs, debentures 67 135 267 13
Convertible subordinated debenture interest 1,385 3,057 4,336 267 --
Loss on disposition of properties 73 -- -- -- --
--------- --------- --------- --------- -------
Funds from Operations $30,445 $20,492 $13,138 ($2,110) $190
------- ------- ------- -------- ----
------- ------- ------- -------- ----
</TABLE>
Management of the Company believes that Funds from Operations is helpful to
investors as a measure of the performance of equity REIT shares because,
along with cash flows from operating activities, financing activities and
investing activities, it provides investors an understanding of the ability
of the Company to incur and service debt and to make capital expenditures.
Funds from Operations does not represent cash flow from operations as
defined by generally accepted accounting principles ("GAAP"), should not be
considered by the reader as an alternative to net income as an indicator of
the Company's operating performance or to cash flows as a measure of
liquidity, and is not indicative of cash available to fund all cash flow
needs. Investors are cautioned that Funds from Operations, as calculated
by the Company, may not be comparable to similarly titled but differently
calculated measurers for other REITs.
The National Association of Real Estate Investment Trusts (NARIET) defines
funds from operations as net income before extraordinary items plus
depreciation and amortization less the amortization of deferred financing
costs.
(4) Earnings before interest, income taxes, depreciation and amortization.
Management believes that EBITDA is helpful to investors as an indication of
property operations, because it excludes costs of financing and non-cash
depreciation and amortization amounts. EBITDA does not represent cash
flows from operations as defined by GAAP, should not be considered by the
reader as an alternative to net income as an indicator of the Company's
operating performance, and is not indicative of cash available to fund all
cash flow needs.
(5) Increase in the number of properties in 1993 reflects the disposition of
one property in January 1993 and the acquisition of 34 properties in
December 1993. Increase in number of properties in 1994 reflects the
acquisition of 15 properties throughout 1994. Increase in number of
properties reflects acquisition of 16 properties throughout 1995. Increase
in number of properties in 1996 reflects acquisition of 15 properties and
the disposition of 8 properties throughout 1996. See "MANAGEMENTS'
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
(6) The ratio of earnings to fixed charges for the years ended December 31,
1992 through December 31, 1993, was less than one to one. The approximate
dollar amounts (in thousands) necessary to cover the deficiencies in those
periods were as follows: 1993 - $5,400; 1992 - $2,006.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL BACKGROUND
The following is a discussion of the historical operating results of the
Company. This discussion should be read in conjunction with the Financial
Statements and the information set forth under "SELECTED HISTORICAL FINANCIAL
DATA."
The results of the Company reflect cumulative significant acquisition,
build-to-suit and redevelopment activities. Since 1989, the Company has grown
its portfolio from six properties, with approximately 1.9 million square feet in
area, to 76 properties with approximately 14.0 million square feet in area as of
December 31, 1996, an annual compound growth rate of 35.1%. In addition,
through the issuance of mortgages on properties and build-to-suit projects under
development, the Company has a total investment of 16.4 million square feet in
area.
In 1994, the Company grew its portfolio by 50% during the year by
concluding 14 warehouse/industrial acquisitions, one build-to-suit project, and
three building expansions having an aggregate area of 2.1 million square feet,
and, in 1995, the Company grew its portfolio of owned properties by 35% during
the year by concluding 15 warehouse/industrial acquisitions and one
build-to-suit project having an aggregate area of 2.7 million square feet. In
addition in 1995, the Company invested in three development projects and issued
a convertible mortgage on a warehouse/industrial property for an aggregate area
of 1.1 million square feet. In 1996 the Company grew its portfolio of owned
properties by 33% during the year by concluding 13 warehouse/industrial property
acquisitions, one office property acquisition and the acquisition of one parking
lot. The Company disposed of seven warehouse/industrial properties and one
retail property in 1996. The Company's total increase in area, net of
disposals, was 3.4 million square feet. In addition, the Company invested in
eight build-to-suit projects and issued a mortgage on one warehouse/industrial
property for an aggregage area of 1.9 million square feet. The Company's
Consolidated Financial Statements for the year ended December 31, 1996, 1995 and
1994 reflect partial period results for acquisitions, dispositions and
expansions made during each respective year as well as full year results,
including the lease-up of previously vacant space, related to the properties
owned by the Company as of January 1, 1996, 1995 and 1994, respectively. The
Company's 1994 acquisitions included two additional properties and 1996
acquisitions included three additional properties previously owned by entities
in which certain executive officers of the Company had an interest. These
transactions satisfied the Company's investment criteria and were approved by
the Company's independent directors.
Finally, the historical results of the Company reflect the Company's
significant property redevelopment and development activities in which
substantial capital costs and related expenses were incurred in advance of
receipt of rental income. At December 31, 1996, the Company and its
subsidiaries had $28.4 million invested in build-to-suit projects under
development which are not producing income. Four of the Company's properties
preceding the IPO, with a total area of approximately 1.9 million square feet,
were property redevelopments and the Company currently holds several additional
properties it intends to redevelop. Redevelopments are typically larger
properties that are acquired, subdivided and released. During construction,
certain costs are capitalized; however, in certain circumstances, such costs are
expended after completion but prior to leasing, resulting in a decline in net
income.
<PAGE>
RESULTS OF OPERATIONS
COMPARISON OF YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER 31, 1995.
Total revenues increased by $16.3 million or 34.9% over the same period
last year. The revenues of the Company are derived primarily from base rents
and additional rents from expense reimbursements, pursuant to the terms of
tenant leases for occupied space at the warehouse/industrial properties. These
properties represent approximately 95% of the gross leasable area of the
Company's portfolio as of December 31, 1996.
Rental revenues increased by $10.3 million in 1996 primarily because of
full period income from sixteen warehouse/industrial properties acquired
totaling 2.7 million square feet in 1995 and thirteen warehouse/industrial
properties acquired totaling 3.3 million square feet in 1996 net of seven
property disposals. Initial minimum net rental income from the 1996 acquisition
properties is approximately $13.1 million, providing an average annual
capitalization rate (initial minimum net rental income divided by the purchase
price) of approximately 11.2%. In addition, mortgage interest income, which
originated in December, 1995, contributed $1.4 million to the increase in
revenue. Real estate fee income primarily consisting of fees earned by the
Company in connection with its build-to-suit and development activities and
third party management fees increased by $3.7 million and equity in net income
of affiliate increased by $1.0 million due to their increased activity in
build-to-suit activity. The Company's unconsolidated affiliate began operations
during the third quarter of 1995 and did not recognize income from development
activities until 1996.
On a "same-store" basis (comparing the results of operations, on a cash
basis, of the properties owned at December 31, 1995, with the results of
operations of the same properties at December 31, 1996), the Company recognized
a 4.1 % increase in revenues primarily due to lease up of vacant space, rental
increases on renewed leases and contractual increases in minimum rent under
leases in place.
Total operating expenses, excluding general and administrative expenses,
interest, depreciation and amortization, increased by $6.0 million, from $14.8
million in 1995 to $20.8 million in 1996. $4.1 million of the increase is due
to real estate taxes. The majority of the real estate tax increase, $3.3
million, resulted from 1995 and 1996 acquisitions and the balance, $0.8 million,
from tax increases throughout the portfolio with the largest increase in Cook
County, Illinois. Insurance, utilities and property operating and leasing
expenses, all components of operating expenses, increased at levels comparable
to the level of acquisitions.
Depreciation and other amortization increased by $2.2 million, from $8.4
million in 1995 to $10.6 million in 1996. The increase is due primarily to full
period depreciation on acquisitions completed during 1995 and depreciation from
dates of acquisition for the 1996 additions 1996.
General and administrative expenses increased by $0.4 million, from $2.1
million in 1995 to $2.5 million in 1996, due primarily to the growth of the
Company.
Interest incurred decreased by $1.7 million over the same period last year
due to the conversion to common stock of $8.9 million of convertible
subordinated debentures. Although the acquisition level was higher during 1996,
interest expense was held to the same level as 1995 due to the repayment of debt
from a public offering that closed in July, 1996, and reduced borrowing rates.
Other expenses increased by $84,000 from the same period last year due to
the loss on disposition of three properties totaling $72,000.
<PAGE>
As a result of the factors described above, net income, before
extraordinary item, increased by $9.4 million from $8.9 million in 1995 to $18.4
million in 1996, an increase of 106.6%. Earnings before interest, income
taxes, depreciation and amortization increased by $10.0 million, from $30.0
million in 1995 to $40.0 million in 1996.
In 1996, the Company incurred an extraordinary loss of $3.3 million
representing a write off of unamortized deferred financing costs as a result of
the refunding of the its outstanding 1991 and 1993 tax exempt and related
taxable bonds by issuing new tax exempt and taxable bonds and the replacement of
its $92 million secured lines of credit with a $135 million unsecured credit
facility at a significant savings in interest.
COMPARISON OF YEAR END DECEMBER 31, 1995 TO YEAR END DECEMBER 31, 1994
Total revenues increased by $12.3 million or 36.6% over last year. The
revenues of the Company are derived primarily from base rents and additional
rents from expense reimbursements, pursuant to the terms of tenant leases for
occupied space at the warehouse/industrial properties. These properties
represent approximately 95% of the gross leasable area of the Company's
portfolio as of December 31, 1995.
Revenues increased in 1995 primarily because of full period income from 15
properties acquired in 1994 and partial year income from acquisition and
development activity concluded during the year. During 1995 the Company
acquired 16 warehouse/industrial properties (including one build-to-suit
project) with a total area of approximately 2.7 million square feet. Initial
minimum net rental income from the 1995 acquisition properties is approximately
$7.2 million, providing an average annual capitalization rate (initial minimum
net rental income divided by the purchase price) of approximately 11.16%.
Mortgage interest income is due to the issuance, by the Company, of a
convertible mortgage note receivable in December, 1995. In addition, fee
income, primarily due to fees earned by the Company in connection with its
build-to-suit and development activities and third party management fees
increased by $0.3 million, from $1.1 million in 1994 to $1.4 million in 1996.
The equity in net income of affiliate of $32,608 represents the income from the
Company's unconsolidated affiliate, CenterPoint Realty Services Corporation,
which was formed during the second quarter of 1995.
In addition, on a "same-store" basis (comparing the results of operations,
on a cash basis, of the properties owned at December 31, 1994, with the results
of operations of the same properties at December 31, 1995), the Company
recognized a 5.7% increase in revenues primarily due to rental increases on
renewed leases, lease up of vacancy and contractual increases in minimum rent
under leases in place.
Total operating expenses (total expenses excluding general and
administrative, incentive stock awards, depreciation, amortization and interest
expense) increased by $3.4 million, from $11.4 million in 1994 to $14.8 million
in 1995. The increase resulted primarily from expenses for a full year of
operations from properties acquired during 1994 and expenses for a partial year
for properties acquired in 1995. Real estate taxes, insurance, utilities and
property operating and leasing expenses, all components of operating expenses,
increased at levels comparable to the level of acquisitions.
<PAGE>
Depreciation and other amortization expense increased by $2.3 million, from
$6.2 million in 1994 to $8.5 million in 1995. Depreciation on properties
acquired in 1994 and 1995 accounted for $2.2 million of the increase and the
remaining $0.1 million is increased amortization of leasing expenses due to
leasing activity. General and administrative expenses increased by $0.5 million
from $1.6 million in 1994 to $2.1 million in 1995 due primarily to the growth of
the Company.
Interest incurred increased in 1995 by $0.5 million, from $11.1 million in
1994 to $11.6 million in 1995. The increase is due to increased borrowings to
fund acquisitions net of interest savings from the repayment of the Company's
lines of credit of approximately $29.9 million following its second public
offering completed in January, 1995, and $48.0 million repaid from proceeds of
its private equity offering in September, 1995. Amortization of deferred
financing costs was $0.2 million higher than the previous year due to costs
incurred in completing 3 debt transactions, the expansion of the Lehman
revolving line of credit to $52 million, the expansion of the LaSalle line of
credit to $40 million and the placement of $50 million of securitized bonds.
As a result of the factors described above, net income, before
extraordinary item, increased by $6.4 million from $2.4 million in 1994 to $8.8
million in 1995. Earnings before interest, income taxes, depreciation and
amortization for the year increased by $9.6 million from $20.7 million in 1994
to $30.3 million in 1995.
In 1995, the Company incurred an extraordinary loss of $632,419
representing a write off of unamortized deferred financing costs as a result of
early extinguishment of certain debt obligations resulting from the Company's
1995 debt transactions.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow generated from Company operations has historically been utilized
for working capital purposes and making distributions, while proceeds from
financings and capital raises have been used to fund acquisitions and other
capital costs. Cash flow from operations during 1996 of $29.6 million was used
to pay $24.1 million of current year distributions and $4.9 million of
distributions declared in the fourth quarter of 1995 and paid in the first
quarter of 1996.
Acquisitions, construction in progress on development projects, and
improvements and additions to properties of approximately $114.9 million for the
year were funded with borrowings under the Company's lines of credit and
mortgage notes payable totaling $15.7 million, proceeds from the disposition of
real estate of $19.0 million and $80.2 million of net proceeds from the July 2,
1996 public offering of common stock.
The issuance of mortgage notes receivable of $18.5 million was funded by
repayments of mortgage notes receivable of $5.5 million and the balance of
borrowings under the Company's lines of credit and mortgage notes payable.
At December 31, 1996, the Company's debt constitutes approximately 22.8% of
its fully diluted market capitalization. At that date, the Company's fully
diluted equity market capitalization was approximately $570 million, and its
fully diluted total market capitalization was approximately $732 million. The
Company's leverage ratios benefited during 1996 from the conversion of
approximately $8.9 million of its 8.22% Convertible Subordinated Debentures, due
2004, to 485,680 shares of common stock.
<PAGE>
At December 31, 1996, the Company had a $135 million unsecured credit
facility co-led by First Chicago NBD and Lehman Brothers with participating
banks including ABN LaSalle, Bank of America, Bank of Boston and NationsBank.
As of December 31, 1996, the Company had outstanding borrowings of approximately
$46.1 million under the unsecured revolving line of credit (approximately 6.5%
of the Company's fully diluted market capitalization), and the Company had
remaining availability of approximately $89 million under its unsecured line of
credit
On July 2, 1996, the Company completed a public offering of 3,450,000
shares of common stock at $23.75 per share. Net proceeds from the offering,
after the underwriting discounts, were approximately $80.2 million. The
proceeds of the offering were used to repay approximately $55.3 million then
outstanding under the Company's lines of credit and to fund future investments.
The public offering left the entire amount under the Company's lines of credit
available.
Subsequent to year end, on March 6, 1997, the Company completed a public
offering of 2,250,000 shares of common stock at $31.50 per share under a shelf
registration statement declared effective by the Securities and Exchange
Commission in January 1997. Net proceeds from the offering after the
underwriting discounts were approximately $67.2 million. The proceeds of the
offering were used to refund approximately $58.2 million outstanding under the
Company's line of credit with the balance of $9.0 million to fund investments.
In January 1997, Moody's Investors Service assigned investment grade
ratings to the Company's senior unsecured debt and preferred stock issuable
under the Company's shelf registration and convertible subordinated notes.
These investment grade ratings further enhance the Company's financial
flexibility.
As of December 31, 1996, the Company had approximately $977,000 in
restricted cash, most of which was held in real estate tax escrows for tenants
requiring such escrows under the terms of their leases. The Company believes
that its liquidity is adequate for operations and that positive cash flow from
operations, as supplemented by proceeds of borrowings under its lines of credit
and other financings, will be adequate to fund the Company's acquisition
activities and allow distributions to the Company's stockholders in accordance
with the requirements for qualification as a REIT.
During 1996, the Company declared distributions of $24.1 million,
representing an annualized distribution rate of approximately $1.62 per share.
The following factors, among others, will affect the future availability of
funds for distribution: (i) scheduled increases in base rents under existing
leases and (ii) changes in minimum base rents attributable to replacement of
existing leases with new or replacement leases.
<PAGE>
<TABLE>
<CAPTION>
CENTERPOINT PROPERTIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
DECEMBER 31,
--------------------------------
1996 1995
---- ----
<S> <C> <C>
Assets:
Investment in real estate:
Land $72,003,830 $49,413,885
Buildings 284,625,543 219,911,526
Building improvements 43,583,267 39,054,302
Furniture, fixtures, and equipment 10,429,242 9,080,444
Construction in progress 18,392,364
------------- -------------
429,034,246 317,460,157
Less accumulated depreciation 30,206,095 21,576,209
------------- -------------
Net investment in real estate 398,828,151 295,883,948
Cash and cash equivalents 1,069,522 2,877,760
Restricted cash and cash equivalents 976,821 1,301,362
Tenant accounts receivable, net 10,193,323 8,743,344
Mortgage notes receivable 22,665,117 9,588,154
Investment in and advances to affiliate 9,672,971 5,356,526
Prepaid expenses and other assets 3,630,443 4,841,456
Deferred expenses, net 4,169,660 6,273,583
------------- -------------
$451,206,008 $334,866,133
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $114,450,683 $121,970,756
Line of credit 46,100,000
Convertible subordinated debentures payable 14,380,000 23,244,000
Notes payable 2,418,475 56,660
Distributions payable 4,952,274
Accounts payable 4,130,360 1,781,433
Accrued expenses 17,914,158 11,837,810
Rents received in advance and security deposits 3,698,586 2,703,253
------------- -------------
203,092,262 166,546,186
------------- -------------
Commitments and contingencies
Stockholders' equity:
Series A preferred stock, $.001 par value, 10,000,000 shares
authorized; 0 and 2,272,727 issued and outstanding, respectively 2,273
Common stock, $.001 par value, 47,727,273 shares authorized;
14,333,231 and 10,358,958 issued and outstanding, respectively 14,333 10,359
Class B common stock, $.001 par value, 2,272,727 shares
authorized; 2,272,727 and 0 issued and outstanding, respectively 2,273
Additional paid-in-capital 276,141,599 187,160,773
Retained earnings (deficit) (27,725,936) (18,602,473)
Unearned compensation - restricted stock (318,523) (250,985)
------------- -------------
Total stockholders' equity 248,113,746 168,319,947
------------- -------------
$451,206,008 $334,866,133
------------- -------------
------------- -------------
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Revenue:
Minimum rents $41,950,923 $33,870,187 $24,651,035
Straight-line rents 2,086,548 1,349,323 810,451
Expense reimbursements 11,413,363 8,781,299 6,924,468
Miscellaneous tenant income 156,192 1,395,452 114,189
Mortgage interest income 1,513,684 84,492
Real estate fee income 5,140,898 1,438,706 1,132,665
Equity in net income of affiliate 1,068,766 32,608
----------- ----------- -----------
Total revenue 63,330,374 46,952,067 33,632,808
----------- ----------- -----------
Expenses:
Real estate taxes 11,867,536 7,719,144 5,180,882
Repair and maintenance 1,867,954 1,276,485 1,074,399
Insurance 493,312 399,833 275,883
Utilities 1,154,552 1,179,359 1,272,754
Property operating and leasing 5,367,445 4,199,075 3,637,437
General and administrative 2,567,757 2,149,549 1,573,122
Depreciation and amortization 10,647,887 8,455,668 6,175,816
Interest expense:
Interest incurred, net 9,864,953 11,563,047 11,072,850
Amortization of deferred financing costs 1,126,968 1,149,955 976,460
----------- ----------- -----------
Total expenses 44,958,364 38,092,115 31,239,603
----------- ----------- -----------
Operating income 18,372,010 8,859,952 2,393,205
Other expense 99,887 15,605 34,155
----------- ----------- -----------
Income before extraordinary item 18,272,123 8,844,347 2,359,050
Extraordinary item, early extinguishment of debt (3,330,684) (632,419)
----------- ----------- -----------
Net income $14,941,439 $8,211,928 $2,359,050
----------- ----------- -----------
----------- ----------- -----------
Income before extraordinary item per share $1.22 $0.88 $0.41
Extraordinary item per share (0.22) (0.06)
----------- ----------- -----------
Net income per share $1.00 $0.82 $0.41
----------- ----------- -----------
----------- ----------- -----------
Distributions per share $1.62 $1.56 $1.50
----------- ----------- -----------
----------- ----------- -----------
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
CLASS B COMMON
PREFERRED STOCK STOCK COMMON STOCK
--------------- ----- ------------
NUMBER NUMBER NUMBER
OF SHARES AMOUNT OF SHARES AMOUNT OF SHARES AMOUNT
--------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994 0 $0 0 $0 5,348,054 $5,348
Conversion of convertible subordinated
debentures to common stock 794,621 795
Incentive stock award 1,100 1
Shares issued for purchase of properties 272,108 272
Distributions in connection with acquisitions
of interests in properties
Additional offering costs for initial public
offering
Distributions declared on common stock,
$1.50 per share
Net income
---------- ---------- --------- ------ ---------- -------
Balance, December 31, 1994 0 0 0 0 6,415,883 6,416
Issuance of common stock:
Public offering, less $5,160,329 of
offering costs 2,587,500 2,588
Private offering 149,200 149
Shares issued for purchase of property 48,261 48
Issuance of preferred stock in private offering 2,272,727 2,273
Conversion of convertible subordinated
debentures to common stock 1,137,165 1,137
Shares issued for stock options exercised 600 1
Incentive stock awards 17,499 17
Director stock awards 2,850 3
Amortization of unearned compensation
Distributions declared on common stock,
$1.56 per share
Distributions declared on preferred stock,
$0.44 per share
Net income
---------- ---------- --------- ------ ---------- -------
Balance, December 31, 1995 2,272,727 2,273 0 0 10,358,958 10,359
Issuance of common stock:
Public offering, less $2,386,799 of
offering costs 3,450,000 3,450
Conversion of preferred stock to Class B
common stock (2,272,727) (2,273) 2,272,727 2,273
Conversion of convertible subordinated
debentures to common stock 485,680 486
Shares issued for stock options exercised 27,787 28
Incentive stock awards 8,290 8
Director stock awards 2,516 2
Amortization of unearned compensation
Distributions declared on common stock,
$1.62 per share
Distributions declared on preferred stock,
$0.42 per share
Distributions declared on Class B common
stock, $1.25 per share
Net income
---------- ---------- --------- ------ ---------- -------
Balance, December 31, 1996 0 $0 2,272,727 $2,273 14,333,231 $14,333
---------- ---------- --------- ------ ---------- -------
---------- ---------- --------- ------ ---------- -------
</TABLE>
<TABLE>
<CAPTION>
UNEARNED
ADDITIONAL RETAINED COMPENSATION- TOTAL
PAID-IN EARNINGS RESTRICTED STOCKHOLDERS'
CAPITAL (DEFICIT) STOCK EQUITY
------- --------- ----- ------
<S> <C> <C> <C> <C>
Balance, January 1, 1994 $50,680,697 ($4,446,010) $0 $46,240,035
Conversion of convertible subordinated
debentures to common stock 14,073,954 14,074,749
Incentive stock award 22,549 22,550
Shares issued for purchase of properties 5,299,728 5,300,000
Distributions in connection with acquisitions
of interests in properties (89,922) (89,922)
Additional offering costs for initial public
offering (115,545) (115,545)
Distributions declared on common stock,
$1.50 per share (8,774,790) (8,774,790)
Net income 2,359,050 2,359,050
------------ ------------ ---------- ------------
Balance, December 31, 1994 69,871,461 (10,861,750) 0 59,016,127
Issuance of common stock:
Public offering, less $5,160,329 of
offering costs 42,058,958 42,061,546
Private offering 3,387,198 3,387,347
Shares issued for purchase of property 1,122,020 1,122,068
Issuance of preferred stock in private offering 49,997,727 50,000,000
Conversion of convertible subordinated
debentures to common stock 20,314,606 20,315,743
Shares issued for stock options exercised 10,949 10,950
Incentive stock awards 341,213 (341,230)
Director stock awards 56,641 56,644
Amortization of unearned compensation 90,245 90,245
Distributions declared on common stock,
$1.56 per share (14,951,061) (14,951,061)
Distributions declared on preferred stock,
$0.44 per share (1,001,590) (1,001,590)
Net income 8,211,928 8,211,928
------------ ------------ ---------- ------------
Balance, December 31, 1995 187,160,773 (18,602,473) (250,985) 168,319,947
Issuance of common stock:
Public offering, less $2,386,799 of
offering costs 79,547,251 79,550,701
Conversion of preferred stock to Class B
common stock
Conversion of convertible subordinated
debentures to common stock 8,682,532 8,683,018
Shares issued for stock options exercised 507,919 507,947
Incentive stock awards 186,517 (186,525)
Director stock awards 56,607 56,609
Amortization of unearned compensation 118,987 118,987
Distributions declared on common stock,
$1.62 per share (20,276,721) (20,276,721)
Distributions declared on preferred stock,
$0.42 per share (947,045) (947,045)
Distributions declared on Class B common
stock, $1.25 per share (2,841,136) (2,841,136)
Net income 14,941,439 14,941,439
------------ ------------ ---------- ------------
Balance, December 31, 1996 $276,141,599 ($27,725,936) ($318,523) $248,113,746
------------ ------------ ---------- ------------
------------ ------------ ---------- ------------
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $14,941,439 $8,211,928 $2,359,050
Adjustments to reconcile net income to net
cash provided by operating activities:
Extraordinary item-early extinguishment of debt 3,330,684 632,419
Bad debts 462,245 432,832 120,000
Depreciation 10,198,721 8,160,904 6,005,507
Amortization of deferred financing costs 1,126,968 1,149,955 976,460
Other amortization 449,166 294,764 170,309
Incentive stock awards 175,596 146,889 22,550
Interest on converted debentures 76,810 235,219 150,993
Equity in net income of affiliate (1,068,766) (32,608)
Loss on disposal of real estate 60,155
Net changes in:
Tenant accounts receivable (1,889,660) (4,003,068) (3,017,872)
Prepaid expenses and other assets (937,062) (292,895) (849,660)
Rents received in advance and security deposits 589,497 119,470 829,282
Accounts payable and accrued expenses 2,035,585 1,417,067 2,209,622
------------- ------------ ------------
Net cash provided by operating activities 29,551,378 16,472,876 8,976,241
------------- ------------ ------------
Cash flows from investing activities:
Change in restricted cash and cash equivalents 324,541 4,580 3,746,938
Acquisition of real estate (85,267,555) (61,880,989) (52,421,967)
Construction in progress (17,063,084)
Improvements and additions to properties (12,574,683) (5,031,108) (10,224,418)
Disposition of real estate 18,990,923 2,383,650
Change in deposits on acquisitions 1,036,708 (501,821) (2,979,153)
Issuance of mortgage notes receivable (18,523,150) (9,588,154)
Repayment of mortgage notes receivable 5,543,033
Investment in and advances to affiliate (1,047,679) (5,323,918)
Receivables from affiliates and employees 106,116 273,960 (351,305)
Additions to deferred expenses (3,079,206) (2,892,829) (3,081,079)
------------- ------------ ------------
Net cash used in investing activities (111,554,036) (82,556,629) (65,310,984)
------------- ------------ ------------
Cash flows from financing activities:
Proceeds from sale of preferred stock 50,000,000
Proceeds from sale of common stock 82,445,447 50,620,172
Offering costs paid (2,386,799) (4,386,217) (2,565,511)
Proceeds from line of credit 46,100,000
Proceeds from issuance of mortgage notes payable 45,881,822 50,000,000 125,016,046
Repayments of mortgage notes payable (62,704,903) (63,929,723) (57,893,250)
Repayments of notes payable (123,327) (111,734) (79,534)
Repayments of notes payable to CRP-London (5,012,233)
Distributions (29,017,176) (13,649,784) (6,628,100)
Conversion of convertible subordinated
debentures payable (644) (868) (164)
------------- ------------ ------------
Net cash provided by financing activities 80,194,420 68,541,846 52,837,254
------------- ------------ ------------
Net change in cash and cash equivalents (1,808,238) 2,458,093 (3,497,489)
Cash and cash equivalents, beginning of the year 2,877,760 419,667 3,917,156
------------- ------------ ------------
Cash and cash equivalents, end of year $1,069,522 $2,877,760 $419,667
------------- ------------ ------------
------------- ------------ ------------
The accompanying notes are an integral part of these consolidated financial statements
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
CenterPoint Properties Corporation (the "Company"), a Maryland corporation,
and its subsidiaries, owns and operates primarily warehouse/industrial
properties in the metropolitan Chicago area and operates as a real estate
investment trust.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
Minimum rents are recognized on a straight-line basis over the terms of the
respective leases. Unbilled rents receivable represents the amount that
straight-line rental revenue exceeds rents due under the lease agreements.
Unbilled rents receivable, included in tenants accounts receivable, at December
31, 1996 and 1995 were $4,098,745 and $2,262,468, respectively. Recoveries from
tenants for taxes, insurance and other property operating expenses are
recognized in the period the applicable costs are incurred.
The Company provides an allowance for doubtful accounts against the portion
of accounts receivable which is estimated to be uncollectible. Accounts
receivable in the consolidated balance sheets are shown net of an allowance for
doubtful accounts of $747,715 and $500,000 as of December 31, 1996 and 1995,
respectively.
Miscellaneous tenant income in 1995 includes a lease buy out fee of
$1,200,000 realized in connection with the early termination of a tenant's
lease.
DEFERRED EXPENSES
Deferred expenses consist principally of financing fees and leasing
commissions. Leasing commissions are amortized on a straight-line basis over
the terms of the respective agreements ranging from 1 to 8 years. Financing
costs are amortized over the terms of the respective agreements. Deferred
expenses relating to debenture conversions of $257,148 and $646,022 were charged
to paid-in capital in 1996 and 1995, respectively, and fully amortized deferred
expenses of $56,973 and $994,496 were written off in 1996 and 1995,
respectively. The balances are as follows:
DECEMBER 31
-----------
1996 1995
---- ----
Deferred financing costs, net of accumulated
amortization of $827,868 and $1,474,949 $2,098,035 $4,912,839
Deferred leasing costs, net of accumulated
amortization of $1,381,925 and $962,286 2,071,625 1,360,744
---------- ----------
$4,169,660 $6,273,583
---------- ----------
---------- ----------
PROPERTIES
Real estate assets are stated at cost. Interest and real estate taxes and
other directly related expenses incurred during construction periods are
capitalized and amortized on the same basis as the related assets. Depreciation
expense is computed using the straight-line method based upon the following
estimated useful lives:
YEARS
-----
Building and improvements 31.5 and 40
Land improvements 15
Furniture, fixtures and equipment 4 to 15
Construction allowances for tenant improvements are capitalized and
amortized over the terms of each specific lease. Repairs and maintenance are
charged to expense when incurred. Expenditures for improvements are
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
capitalized. When assets are sold or retired, their cost and related
accumulated depreciation are removed from the accounts with the resulting gains
or losses reflected in operations.
In accordance with the requirements of Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of" issued in 1995, the Company
has reviewed the recoverability of the carrying value of its investment in real
estate. The Company has conducted such reviews annually by estimating the fair
value of its properties generally by analysis and comparison of the capitalized
values of the expected net operating cash flows of the properties. If
management determines that an impairment of property has occurred, the carrying
value of such property will be reduced to its fair value.
CASH AND CASH EQUIVALENTS
For purposes of the consolidated financial statements, the Company
considers all liquid investments purchased with original maturities of three
months or less to be cash equivalents.
INVESTMENT IN AND ADVANCES TO AFFILIATE
The Company accounts for its investment in affiliate using the equity
method whereby its cost of the investment is adjusted for its share of equity in
net income or loss from the date of acquisition and reduced by distributions
received.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates
INCOME TAXES
The Company qualifies as a real estate investment trust ("REIT") under
sections 856-860 of the Internal Revenue Code beginning January 1, 1994. In
order to qualify as a REIT, the Company is required to distribute at least 95%
of its taxable income to stockholders and to meet certain asset and income tests
as well as certain other requirements. As a REIT, the Company will generally
not be liable for Federal income taxes, provided it satisfies the necessary
distribution requirements. The distributions declared and paid for the years
ended December 31, 1996, 1995 and 1994 represent a return of capital of
approximately 51%, 54% and 50% respectively.
EARNINGS PER COMMON SHARE
Income per share amounts are based on the weighted average of common and
common equivalent (stock options and convertible preferred stock in 1996 and
1995) shares outstanding of 15,008,053, 9,993,540 and 5,755,250, for 1996, 1995,
and 1994, respectively. The convertible preferred stock is considered common
stock equivalents as they participate in dividends with common stock and was
converted into common stock in 1996. The assumed conversion of the convertible
subordinated debentures into common shares for purposes of computing fully
diluted earnings (loss) per share in 1996, 1995 and 1994 would be anti-dilutive.
RECLASSIFICATIONS
The consolidated statements of operations for prior periods have been
reclassified to conform with current classifications with no effect on results
of operations.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. PROPERTY ACQUISITIONS AND DISPOSITIONS
During the year ended December 31, 1996 and 1995, the Company acquired
fifteen and sixteen properties, respectively, consisting principally of
single-tenant buildings for an aggregate amount of approximately $103,532,000
and approximately $65,828,000, respectively. Substantially all of these
properties were acquired in singular transactions and, except for three of the
transactions in 1996, involved unrelated third parties. The three properties
acquired from related parties is discussed in Note 11, Related Party
Transactions. The properties acquired were funded with borrowings under the
Company's lines of credit, proceeds from five properties sold during 1996 in
transactions that qualify as a tax-free exchange, proceeds of a public offering
of shares of the Company's common stock completed on July 2, 1996, and the
issuance of shares of the Company's common stock with respect to one property in
1995. The acquisitions have been accounted for utilizing the purchase method of
accounting and, accordingly, the results of operations of the acquired
properties are included in the consolidated statements of operations from the
dates of acquisition.
The Company disposed of eight properties during the year ended December 31,
1996 and one property during the year ended December 31, 1995. In 1996, five of
the properties were disposed of in transactions that qualify as a tax-free
exchange under applicable provisions of the Internal Revenue Code.
Due to the effect of the January, 1995 public offering, the September, 1995
private offering, the July, 1996 public offering and the subsequent acquisitions
and dispositions of properties, the historical results are not indicative of the
future results of operations. The following unaudited pro forma information is
presented as if the 1994 and 1995 acquisitions and dispositions of properties,
the January, 1995 public offering, the September, 1995 private offering and the
corresponding repayment of certain debt had occurred on January 1, 1994 and as
if the July, 1996 public offering, the corresponding repayment of certain debt,
and the 1996 acquisitions and dispositions had all occurred on January 1, 1995
(or on the date the property first commenced operations with a third party
tenant, if later). The unaudited pro forma information is based upon the
historical consolidated statements of operations before any extraordinary items
and does not purport to present what actual results would have been had the
transactions, in fact, occurred at the beginning of 1995 or 1994, or to project
results for any future period.
<TABLE>
<CAPTION>
PROFORMA FOR THE YEAR ENDED DECEMBER 31 (UNAUDITED)
---------------------------------------------------
1996 1995 1994
---- ---- ----
(in thousands, except for per share data)
<S> <C> <C> <C>
Total revenues $68,144 $57,411 $39,871
Total expenses 48,338 41,764 32,155
------- ------ -------
Income before extraordinary item $19,806 $15,647 $ 7,716
------- ------ -------
------- ------ -------
Income before extraordinary item per common share $ 1.18 $ 1.03 $ 0.71
------- ------ -------
------- ------ -------
</TABLE>
4. MORTGAGE NOTES RECEIVABLE
Mortgage notes receivable at December 31, 1996 and 1995 consist of the
following:
<TABLE>
<CAPTION>
CARRYING AMOUNT OF NOTES ESTIMATED
DECEMBER 31, PERIODIC BALLOON FINAL
PROPERTY PLEDGED ------------ INTEREST PAYMENT PAYMENT AT MATURITY
AS COLLATERAL 1996 1995 RATE TERMS MATURITY DATE
- ------------- ---- ---- ---- ----- -------- ----
<S> <C> <C> <C> <C> <C> <C>
1150 Spring Lake Drive
Itasca, IL $908,791 $838,154 (a) (b) $908,791 01/31/97
1800 Wolf Road
DesPlaines, IL 8,750,000 8,750,000 11.25% (b) 8,750,000 12/01/00
4833 Diversey Road
Chicago, IL 929,652 10.50% $8,828(c) 6/01/10
6634 West 68th Street
Bedford Park, IL 4,749,750 11.00% (b) 4,749,750 7/01/01(f)
777 Remington
Bolingbrook, IL(e) 2,676,924 8.50% (b) 2,676,924(d) 3/15/98
1400 West 35th Street
Chicago, IL 4,650,000 8.25% (d) 4,650,000 6/30/97
----------- ----------
$22,665,117 $9,588,154
----------- ----------
----------- ----------
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(a) Prime plus 1.0%
(b) Monthly payments of interest only.
(c) The monthly payment is an increasing payment per the loan schedule. This
amount is the required payment at December 31, 1996.
(d) No payments are required until maturity, when principal and accrued
interest are due.
(e) This mortgage note is a construction loan which will increase through
construction.
(f) The borrower has an option to extend the term of this loan for two one year
periods at an increased interest rate of 12% for the first year and 13% for
the second year.
As of December 31, 1996 mortgage notes receivable mature as follows:
1997. . . . . . . . . . . . . . . . . . . . $ 5,570,427
1998. . . . . . . . . . . . . . . . . . . . 2,694,420
1999. . . . . . . . . . . . . . . . . . . . 24,170
2000. . . . . . . . . . . . . . . . . . . . 8,781,770
2001. . . . . . . . . . . . . . . . . . . . 4,790,155
Thereafter. . . . . . . . . . . . . . . . . 804,175
-----------
Total. . . . . . . . . . . . . . . . . $22,665,117
-----------
-----------
Based on borrowing rates available at the end of 1996 and 1995 for mortgage
loans with similar terms and maturities, the fair value of the mortgage notes
receivable approximates the carrying values.
Land and buildings related to such mortgages exceeding the carrying value
of the mortgages at December 31, 1996 have been pledged as collateral for the
above debt.
5. INVESTMENT IN AND ADVANCES TO AFFILIATE
The Company holds approximately 99% of the economic interest in CenterPoint
Realty Services Corporation ("CRS"). To maintain compliance with limitations on
income from business activities received by REITs and their qualified REIT
subsidiaries, the Company holds its interest in CRS in the form of non-voting
equity ownership which qualifies as an unconsolidated taxable subsidiary.
As of December 31, 1996 and 1995, the Company had advanced to CRS
approximately $6,300,000 and $5,200,000, respectively, under a demand loan with
an interest rate of 8.125%. The proceeds of the loans were required for
development projects. Principal and interest is due upon demand.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. MORTGAGE NOTES PAYABLE
Mortgage notes payable at December 31, 1996 and 1995 consist of the
following:
<TABLE>
<CAPTION>
CARRYING AMOUNT OF NOTES ESTIMATED
------------------------ PERIODIC BALLOON FINAL
DECEMBER 31,
PROPERTY PLEDGED ------------ INTEREST PAYMENT PAYMENT AT MATURITY
AS COLLATERAL 1996 1995 RATE TERMS MATURITY DATE
- ------------- ---- ---- ---- ----- -------- ----
<S> <C> <C> <C> <C> <C> <C>
MORTGAGE NOTES PAYABLE:
440 North Lake Street
Miller, IN $ 20,540,000 $ 15,500,000 (a) (a) $20,540,000 3/01/31
1,680,000 7,500,000 (a) (a) 1,680,000 3/01/31
905 Irving Park Road (h)
Itasca, IL 1,978,378 9.00%(b) $18,295(c) 1,912,026 7/18/97
6843 Santa Fe Drive
Hodgkins, IL 2,076,673 10.13%(b) 18,934(c)
351 North Rohlwing Road
Itasca, IL 340,705 10.50%(b) 3,493(c)
850 Arthur Avenue
Elk Grove Village, IL 575,000 575,000 8.00% 11,500(d) 575,000 10/03/00
1800 Bruning Drive
Itasca, IL 5,655,683 8.40% 47,910(c) 5,570,116 10/10/97
2553 North Edgington
Franklin Park, IL 6,000,000 (e) (f) 6,000,000 11/30/98
POOL MORTGAGE NOTES
PAYABLE:
Designated pools of 20
properties 50,000,000 50,000,000 7.62% 317,500(f) 50,000,000 11/01/02
Designated pools of 18
properties 30,000,000 30,000,000 6.91% 172,750(f) 30,000,000 5/15/99
LINES OF CREDIT:
Revolving line of credit 14,000,000 (g) (f)
------------ ------------
$114,450,683 $121,970,756
------------ ------------
------------ ------------
</TABLE>
(a) This debt consists of Economic Development Revenue Bonds issued by the City
of Gary, Indiana and is collateralized by a letter of credit. The letter
of credit contains certain financial covenants pertaining to the tangible
net worth and liabilities in relation to portfolio value of the Company.
In April 1996, the bonds outstanding at December 31, 1995 were refunded.
The new bonds were issued in two series; $20,540,000 tax exempt and
$1,680,000 taxable, bearing interest in the Weekly Adjustable Interest Rate
Mode at a rate determined by the Remarketing Agent (4.35% on the tax exempt
bonds and 5.85% on the taxable bonds at December 31, 1996). The new bonds
require monthly payments of interest only.
(b) The effective interest rate is 8.0% pursuant to a mortgage assumption
credit received in connection with the acquisition of the related
properties.
(c) Amount represents the monthly payment of principal and interest.
(d) The loan requires quarterly payments of interest only.
(e) The interest rate is one month LIBOR plus 1.75% (7.38% at December 31,
1996).
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(f) The loan requires monthly payments of interest only.
(g) This $52,000,000 revolving line of credit which was collateralized by 6
properties was replaced by a $135 million unsecured line of credit in
October, 1996 (see Note 7). The interest rate was one month LIBOR plus
1.5% (7.25% at December 31, 1995 on $4,000,000 and 7.1875% at December 31,
1995 on $10,000,000).
(h) During 1996, the Company sold the property subject to the mortgage which
was not repaid due to the prepayment cost. The Company will pay the note
upon maturity in 1997 and is collateralized by a $2.0 million letter of
credit purchased by the Company (see Note 10).
As of December 31, 1996 mortgage notes mature as follows:
1997 . . . . . . . . . . . . . . . . . . . . $ 5,655,683
1998 . . . . . . . . . . . . . . . . . . . . 6,000,000
1999 . . . . . . . . . . . . . . . . . . . . 30,000,000
2000 . . . . . . . . . . . . . . . . . . . . 575,000
2001 . . . . . . . . . . . . . . . . . . . . 0
Thereafter . . . . . . . . . . . . . . . . . 72,220,000
------------
Total . . . . . . . . . . . . . . . . . $114,450,683
------------
------------
Based on borrowing rates available to the Company at the end of 1996 and
1995 for mortgage loans with similar terms and maturities, the fair value of the
mortgage notes payable approximates the carrying values.
Land, buildings and equipment related to such mortgages with an aggregate
net book value of approximately $174 million at December 31, 1996 have been
pledged as collateral for the above debt.
7. LINE OF CREDIT
In October, 1996, the Company obtained a $135 million unsecured line of
credit. The current interest rate is LIBOR plus 1.15% for LIBOR borrowings and
First Chicago's corporate base rate plus .15% for other borrowings (a range of
6.938% to 7.138% at December 31, 1996). The line requires payments of interest
only when LIBOR contracts mature and monthly on borrowings under First Chicago's
corporate base rate. The line matures on October 24, 1999. There is a fee of
1/4% per year on the average unused balance of the line. At December 31, 1996,
the Company had $88.9 million available under the line.
8. EXTRAORDINARY ITEM
In 1996 and 1995, the Company incurred losses of $3,330,684 and $632,419,
respectively, representing a write off of unamortized deferred financing costs
as a result of early extinguishment of certain debt obligations.
9. CONVERTIBLE SUBORDINATED DEBENTURES PAYABLE
Concurrent with the initial public offering in December, 1993, the Company
issued $58,500,000 of convertible subordinated debentures ("Debentures") due
2004. At December 31, 1996 and 1995, $14,380,000 and $23,244,000 of debentures
were outstanding, respectively. The Debentures are unsecured general
obligations of the Company and are subordinate to all existing and subsequently
incurred indebtedness of the Company. The Debentures are optionally redeemable
by the Company, at par, commencing December 4, 1998. Holders may convert the
Debentures at any time, without premium, to common stock of the Company at a
conversion price of $18.25 per share, subject to certain adjustments. The
Debentures bear interest at 8.22% per annum, payable semiannually on January 15
and July 15 of each year, commencing July 15, 1994. During 1996, 1995 and 1994,
debentures totaling $8,864,000, $20,754,000 and $14,502,000, respectively, were
converted into shares of common stock. Based principally on the conversion
feature and share price of common stock at the end of 1996 and 1995, the fair
value of the Debentures approximates $25,805,000 and $29,453,000, respectively.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. NOTES PAYABLE
Notes payable at December 31, 1996 includes amounts payable to related
parties as a consequence of properties acquired and settlement of tax
reimbursement obligations of the Company during 1996 totaling $483,333. These
notes payable are interest free. Also outstanding at December 31, 1996 is a
$1,935,142 note, scheduled to mature in July 1997, which is collateralized by a
$2.0 million letter of credit purchased by the Company. At December 31, 1995,
the amount payable consists of an equipment loan with an interest rate at 8.00%,
monthly principal and interest payments of $3,114, and final payment was made in
1996.
11. RELATED PARTY TRANSACTIONS
In June, 1996, the Company acquired three properties in which Robert
Stovall, the Company's Chief Operations Officer and a director, and Michael
Mullen, the Company's Executive Vice President of Acquisitions had an interest
and, in which they, continue to own an insignificant interest in two of the
properties. The three properties were purchased for an aggregate amount of
approximately $24.6 million in transactions which satisfied the Company's
investment criteria and were approved by the Company's independent directors.
12. CAPITAL STOCK
On December 10, 1993, the Company completed an initial public offering of
3,750,000 shares of common stock at $18.25 per share.
As of December 31, 1996 the Company has reserved 1,500,000 shares of common
stock for future issuance under the 1993 Stock Option Plan, 150,000 shares of
common stock for future issuance under the 1995 Restricted Stock Incentive Plan,
75,000 shares of common stock for future issuance under the 1995 Director Stock
Plan, 787,945 shares of common stock for issuance upon the conversion of the
Debentures and 1,000,000 shares of common stock for future issuance under the
dividend reinvestment and stock purchase plan.
On January 19, 1995, the Company completed a second public offering of
2,587,500 shares of common stock at $18.25 per share. Net proceeds from the
offering after the underwriting discounts and associated costs were
approximately $42 million. The proceeds of the offering were used to repay a
term loan from Lehman Brothers, Inc. "Lehman" of $19.3 million, repay borrowings
under a line of credit from Lehman of $10.4 million and the purchase of three
properties.
On June 5, 1995, the Company filed a shelf registration statement with the
Securities and Exchange Commission for an aggregate amount of $200 million of
common stock, preferred stock, debt securityes and security warrants of the
Company. On July 27, 1995, the registration statement, as amended, was declared
effective by the Securities and Exchange Commission. On January 23, 1996 the
Company filed post effective amendment No. 1 to the shelf registration statement
removing preferred stock and debt securities from the registration statement.
On January 26, 1996 the registration statement, as amended by post effective
amendment No. 1, was declared effective by the Securities and Exchange
Commission.
On July 26, 1995, the Company filed an additional registration statement to
register 200,000 shares of common stock owned by one of the Company's founders,
Capital and Regional Properties, plc (CRP-London), through an affiliate. The
shares were purchased by CRP-London at the time of the Company's initial public
offering. The shares were sold and CRP-London continues to hold 1,008,478
common shares in the Company.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
On September 22, 1995, the Company completed a $50 million private equity
placement of non-voting preferred stock. In May, 1996, the preferred stock
automatically converted, on a share for share basis, to non-voting common stock,
upon shareholder approval of an amendment to the Company's charter permitting
non-voting common stock at the Company's annual meeting. The distribution on
the non-voting shares is equal to the distribution paid on the voting shares of
the Company plus an additional $.0468 per share. Unless previously converted,
after three years, the shares will be converted to voting common shares on a
share for share basis up to 4.9 percent of the Company's then outstanding voting
shares with all shares to fully convert within ten years. As the shares convert
to voting common, the distribution paid shall be the same as all other voting
common shares. Proceeds of the offering were used to pay down borrowings under a
line of credit from Lehman of $48.1 million and the balance to fund working
capital.
On July 2, 1996, the Company completed a public offering of 3,450,000
shares of common stock at $23.75 per share under a shelf registration statement
declared effective by the Securities and Exchange Commission in January, 1996.
The proceeds of the offering were used to refund approximately $55.3 million
outstanding under the Company's lines of credit and the balance of $24.9 million
to fund investments.
On December 19, 1996 the Company filed a shelf registration statement with
the Securities and Exchange Commission for a aggregate amount of $200 million of
common stock, preferred stock, debt securities and securities warrants of the
Company. The prospectus included in this registration statement is a combined
prospectus which also relates to the shelf registration statement filed with the
Securities and Exchange Commission on June 5, 1995. On January 6, 1997 this
registration was declared effective by the Securities and Exchange Commission.
Under the terms of the Company's Restricted Stock Grant Agreements, certain
key employees were granted 7,829 restricted shares of the Company's common stock
in 1995. Shares were awarded in the name of each of the employees, who have all
the rights of other common stockholders, subject to certain restrictions and
forfieture provisions. Restrictions on the shares expired one year after the
date of award.
In 1996 and 1995, under the terms of the Company's 1995 Restricted Stock
Incentive Plan, adopted in 1995, certain key employees were granted 8,290 and
9,670 restricted shares, respectively, of the Company's common stock. Shares
were awarded in the name of each of the participants, who have all the rights of
other common stockholders, subject to certain restrictions and forfeiture
provisions. Restrictions on the shares expire no more than eight years after
the date of award, or earlier if certain performance targets are met.
Unearned compensation was recorded at the date of awards based on the
market value of shares. Unearned compensation, which is shown as a separate
component of stockholders' equity, is being amortized to expense over the eight
year vesting period. The amount amortized to expense during 1996 and 1995 was
$118,987 and $90,245, respectively. Shares reserved under the 1995 Restricted
Stock Incentive Plan for future grants at December 31, 1996 were 132,040.
The 1995 Director Stock Plan provides that each independent director, upon
election or re-election to the Board, may elect to receive 50% of his annual
retainer fee in shares of common stock at the market price on such date. In
1996 and 1995, 2,516 and 2,850 shares of common stock were issued under this
plan, respectively, leaving 69,634 shares available for future issuance. In
connection with the issuance of such shares, $56,609 and $56,644 was charged to
expense in 1996 and 1995, respectively.
13. STOCK OPTION PLAN
The Company has adopted the 1993 Stock Option Plan (the "Plan") and in May,
1996, increased the maximum number of shares from 750,000 to 1,500,000 shares of
common stock which may be granted for qualified and non-qualified options. The
Company adopted the Plan to provide additional incentives to attract and retain
directors, officers and key employees. The Plan was amended in 1995 to provide
that each independent director receive an option for 3,000 shares of common
stock at fair market value at the time of being elected or re-elected to the
Board. Options are to be granted by the Compensation Committee of the Board of
Directors. The term of the
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
option shall be fixed by the Compensation Committee, but no option shall be
exercisable more than 10 years after the date of grant.
The options granted are at fair market value on the date of grant, are for
10 year terms and become exercisable in 20% annual increments after one year
from date of grant. Option activity for the three years ended December 31, 1996
is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 606,839 494,460 453,960 $18.25
Granted 104,428 $22.50 112,979 $19.55 40,500* 19.76
Exercised (27,787) 18.28 (600) 18.25
------- ------- -------
Outstanding at end of year 683,480 606,839 494,460
------- ------- -------
------- ------- -------
* Includes 3,000 shares under separate agreement
Exercisable at end of year 282,784 189,084 90,792
Available for future grant at year end 791,133 145,561 258,540
Weighted average per share fair value of
options granted during the year $2.43 $2.41
</TABLE>
The fair value of each option grant was estimated on the date of grant
using the Black-Scholes option-pricing model with the following assumptions:
1996 1995
---- ----
Risk free interest rate 6.1% 7.0%
Dividend yield 6.5% 6.5%
Expected lives 6 years 6 years
Expected volatility 17.4% 17.4%
The following table summarized information about stock options at
December 31, 1996:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------- -------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
NUMBER REMAINING AVERAGE NUMBER AVERAGE
RANGE OF OUTSTANDING CONTRACTUAL EXERCISE EXERCISABLE EXERCISE
EXERCISE PRICE AT 12/31/96 LIFE PRICE AT 12/31/96 PRICE
-------------- ----------- ---- ----- ----------- -----
<S> <C> <C> <C> <C> <C>
$18.25-$22.50 683,480 7.6 years $19.20 282,784 $18.44
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company has applied Accounting Principles Board Opinion No. 25 and
related interpretations in accounting for its Plan, accordingly, no
compensation costs have been recognized. Had compensation costs for the
Company's Plan been determined based on the fair value at the grant date for
options granted in 1996 and 1995 in accordance with the method required by
Statement of Financial Accounting Standards No. 123, the Company's net income
and net income per share would have been reduced to the pro forma amounts as
follows:
Year ended December 31,
(in thousands, except per share data)
-------------------------------------
1996 1995
---- ----
Net income As reported $14,941 $8,212
Pro forma 14,848 8,171
Net income per share As reported 1.00 0.82
Pro forma 0.99 0.82
14. FUTURE RENTAL REVENUES
Under existing noncancelable operating lease agreements as of December 31,
1996, tenants of the warehouse/industrial properties are committed to pay in
aggregate the following minimum rentals:
1997 $43,960,000
1998 39,482,000
1999 33,724,000
2000 29,300,000
2001 24,559,000
Thereafter 74,644,000
------------
Total $245,669,000
------------
------------
At December 31, 1996, 656 of the total 682 apartments available for rental
at the Lakeshore Dunes property were leased. Lease terms are generally for one
year.
No single tenant represented more than 10% of consolidated minimum rents in
1996, 1995 and 1994.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
15. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Supplemental disclosure of cash flow information:
Interest paid, net of interest capitalized $9,915,937 $12,988,842 $9,542,272
Interest capitalized 142,263 20,386 63,240
Income taxes paid 46 25 6,625
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
In conjunction with the property acquisitions, the Company
assumed the following assets and liabilities:
Purchase of real estate $103,531,749 $65,828,289 $59,048,485
Accounts receivable 614,227 44,953 3,900
Prepaid expenses and other assets 359,861
Accounts payable and accrued expenses (5,380,601) (1,764,645) (1,330,418)
Mortgage notes payable (13,307,681) (575,000)
Notes payable (550,000)
Prepaid acquisition costs (530,540)
Issuance of Common Stock (1,122,068) (5,300,000)
------------- ------------- -------------
Acquisition of real estate $85,267,555 $61,880,989 $52,421,967
------------- ------------- -------------
------------- ------------- -------------
In conjunction with the property dispositions, the Company
disposed of the following assets and liabilities:
Sale of real estate $(22,481,151) $(2,429,336)
Accounts receivable (591,663)
Prepaid expenses and other assets (22,432)
Mortgage notes receivable 935,000
Accounts payable and accrued expenses 1,099,794 45,686
Mortgage notes payable 2,069,529
------------- -------------
Disposition of real estate $(18,990,923) $(2,383,650)
------------- -------------
------------- -------------
Conversion of convertible subordinated debentures payable:
Convertible subordinated dentures converted $8,864,000 $20,754,000 $14,502,000
485,680, 1,137,165 and 794,621 shares of
common stock issued at $18.25 per share 8,863,356 20,753,132 14,501,836
------------- ------------- -------------
Cash disbursed for fractional shares $ 644 $ 868 $ 164
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
16. COMMITMENTS AND CONTINGENCIES
In the normal course of business, from time to time, the Company is
involved in legal actions relating to the ownership and operations of its
properties. In management's opinion, the liabilities, if any, that may
ultimately result from such legal actions are not expected to have a materially
adverse effect on the consolidated financial position or results of operations
of the Company.
The Company has entered into several contracts for the acquisition of
properties. Each acquisition is subject to satisfactory completion of due
diligence and, in the case of developments, completion and occupancy of the
project.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
At December 31, 1996, ten of the properties owned are subject to purchase
options held by certain tenants. The purchase options are exercisable at
various intervals through 2006 for amounts which are greater than the net book
value of the assets. The tenant at a property in Woodale, IL has exercised its
option to purchase the building in May, 1997.
17. SUBSEQUENT EVENTS
Since December 31, 1996 through March 5, 1997, an additional $2,195,000 of
convertible subordinated debentures have been converted to 120,259 shares of
common stock leaving a balance of convertible subordinated debentures
outstanding of $12,185,000.
On January 17, 1997, the Company acquired an industrial property located in
Waukegan, Illinois for approximately $6.4 million, which was funded with a $5.1
million advance under the Company's line of credit and working capital.
18. SUPPLEMENTAL EARNINGS PER SHARE
On March 6, 1997, the Company completed a public offering of 2,250,000
shares of common stock at $31.50 per share under a shelf registration statement
declared effective by the Securities and Exchange Commission in January 1996.
Net proceeds from the offering after the underwriting discounts were
approximately $67.2 million. The proceeds of the offering were used to refund
approximately $58.2 million outstanding under the Company's line of credit with
the balance of $9.0 million to fund investments.
In accordance with Accounting Principles Board Opinion No. 15, "Earnings
Per Share", when a portion of the proceeds of a common stock offering have been
used to retire debt, supplemental earnings per share data is required to be
furnished to show what earnings per share would have been for the latest fiscal
year if the retirement of debt had taken place at the beginning of the fiscal
year. Net income per share would have been $1.13 per share for the fiscal year
1996 if the $58.2 million of outstanding borrowings were retired at the
beginning of fiscal year 1996.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
CenterPoint Properties Corporation
We have audited the accompanying consolidated balance sheets of CenterPoint
Properties Corporation and Subsidiaries as of December 31, 1996 and 1995, and
the related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Corporation's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of CenterPoint
Properties Corporation and Subsidiaries as of December 31, 1996 and 1995, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
February 13, 1997, except for Notes 17 and 18, as
to which the date is March 6, 1997
<PAGE>
<TABLE>
<CAPTION>
[A map of the Chicago metropolitan area is shown depicting the location of Centerpoint's investments]
YEAR BUILT/ SQUARE MAJOR INVESTMENT
LAST REHAB FOOTAGE TENANT TYPE
1997 INVESTMENTS
<S> <C> <C> <C> <C> <C>
1 3145 Central Avenue, Waukegan, IL 1958/1996 300,000 OMC/Stone Container Acquisition
1996 INVESTMENTS
2 2885 West Diehl Road, Naperville, IL 1996/1997 301,560 General Tire Build-to-Suit
3 2727 West Diehl Road, Naperville, IL 1996/1997 438,154 Factory Card Outlet Build-to-Suit
4 900 Rohlwing Road, Itasca, IL 1996/1997 128,867 Playboy Enterprises, Inc. Build-to-Suit
5 777 Remington, Bolingbrook, IL 1996/1997 141,000 Chicago Exhibit Productions Build-to-Suit
6 O'Hare Express Phase A-2 1996/1997 120,971 DHL/Air Canada Build-to-Suit
7 O'Hare Express Phase B-1 1996/1997 170,668 Alliance Airlines Build-to-Suit
8 2701-2801 Busse Road, Elk Grove Village, IL 1996/1997 250,000 To Be Announced Build-to-Suit
9 1500 W. Dundee Road, Arlington Heights, IL 1969/1997 500,000 Honeywell, Inc. Acquisition
10 777 Big Timber Road, Elgin, IL 1983/1996 118,018 Ameritech Acquisition
11 425 South 37th Avenue, St, Charles, IL 1975/1996 103,106 Power Packaging, Inc. Acquisition
12 16400 West 103rd Street, Lemont, IL 1983/1995 63,612 Royal Scott Floor Covering Acquisition
13 911 Commerce, Buffalo Grove, IL 1993 118,009 VWR Scientific Acquisition
14 10740 West Grand Ave., Franklin Park, IL 1965/1971 66,000 American Logistics Services Acquisition
15 400 North Wolf Road, Northlake, IL 1956/1997 1,353,582 Select Beverage Acq/Redev
16 6634 West 68th St., Bedford Park, IL 1973/1996 256,510 Midwest Warehouse Acquisition
17 7501 North 81st Street, Milwaukee, WI 1987 183,958 Roundy's Acquisition
18 1800 Bruning Drive, Itasca, IL 1975/1978 202,000 Oce Bruning Acquisition
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
YEAR BUILT/ SQUARE MAJOR INVESTMENT
LAST REHAB FOOTAGE TENANT TYPE
<S> <C> <C> <C> <C> <C>
19 1501 Pratt Ave., Elk Grove Village, IL 1973/1996 151,900 Magnetek/Time Definite Acquisition
20 875 Fargo Ave., Elk Grove Village, IL 1980 82,368 Cam Fran Tool Co. Acquisition
21 1100 Chase Ave., Elk Grove Village, IL 1980/1996 41,651 Swingles Acquisition
22 2553 North Edgington, Franklin Park, IL 1967/1995 274,303 General Motors Acquisition
23 6600 River Road, Hodgkins, IL 1968/1997 630,410 GATX Logistics Acquisition
165 Aviation Boulevard, Atlanta, GA 1996 72,000 Alliance Airlines Build-to-Suit
SUBTOTAL 5,768,647
PRIOR YEARS INVESTMENTS
24 1800 South Wolf Road, Des Plaines, IL 1976 521,000 LaGrou Distribution Acquisition
25 4400 South Kolmar Ave., Chicago, IL 1966 92,000 Home Depot Acquisition
26 10601 Seymour Ave., Franklin Park, IL 1963/1970 677,000 Montgomery Wards Acq/Redev
27 11601 S. Central Ave., Alsip, IL 1970 259,000 Masco Corporation Acquisition
28 11701 S. Central Ave., Alsip, IL 1970 300,000 Dart Warehouse Acquisition
29 850 Arthur Ave., Elk Grove Village, IL 1971/1973 42,490 Arcon Fasteners Acquisition
30 1827 North Bendix, South Bend, IN 1964/1990 199,730 Solvay Automotive Acquisition
31 11743 Mayfield Ave., Alsip, IL 1962 33,668 Automotion Acquisition
32 1810 Industrial Drive, Libertyville, IL 1977 85,000 Uline Inc. Acquisition
33 1700 Butterfield Road, Mundelein, IL 1976 60,000 Bowater PLC. Acquisition
34 1733 Downs Drive, West Chicago, IL 1975 145,528 Crown Cork & Seal Acquisition
35 1645 Downs Drive, West Chicago, IL 1975 129,390 CP&P Management Acquisition
36 825 Hawthorne Lane, West Chicago, IL 1974 158,772 Georgia Paper Tube Acquisition
37 800-1000 Chase Avenue, Elk Grove Village, IL 1972 341,848 General Tire Acquisition
38 750 East 110th Street, Chicago, IL 1966 71,510 Federated Metals Acq/Redev
39 2600 Elmhurst Road, Elk Grove Village, IL 1995 105,000 B & K Industries Build-to-Suit
40 1015 East State Parkway, Schaumburg, IL 1980 19,576 Great Lakes Bus. Forms Acquisition
41 1700 West Hawthorne, West Chicago, IL 1959/1969 735,196 LaGrou Distribution Acquisition
42 8901 102nd St., Pleasant Praries, WI 1990 105,637 Wrought Washer Mfg. Acquisition
43 8200 100th St., Pleasant Prarie, WI 1990 148,472 Orion Corp. Acquisition
44 655 Wheat Lane, Wood Dale, IL 1984 41,300 Power Great Lakes Acquisition
45 1300 Northpoint Rd., Waukegan, IL 1994 65,000 Cosmed Sterilization Acquisition
46 900 W. University Drive, Arlington Heights, IL 1974 86,254 Hudson Respiratory Care Acquisition
47 7001 Adams St., Willowbrook, IL 1994 25,324 Baldwin Technology Build-to-Suit
48 745 Birginal Road, Bensenville, IL 1974 113,266 Factory Card Outlet Acquisition
49 1 Wildlife Way, Long Grove, IL 1994 54,100 Sysmex Corporation Redevelopment
50 21399 Torrence Avenue, Sauk Village, IL 1987 372,835 Dependable Storage Acquisition
51 4-48 Barrington Road, Streamwood, IL 1991 38,633 Auto Serve Acquisition
52 2764 Golfview, Naperville, IL 1985 20,022 Farraday Acquisition
53 1020 Frontenac, Naperville, IL 1980 99,684 Ricmar, Inc. Acquisition
54 820 Frontenac, Naperville, IL 1988 153,604 Butler McDonald Acquisition
55 1800 Industrial Drive, Libertyville, IL 1992/1994 175,196 Contempo Design Acquisition
56 1120 Frontenac, Naperville, IL 1980/1994 153,902 Solar Press Acquisition
57 800 Enterprise, Naperville, IL 1985 34,984 GNB Industrial Battery Acquisition
58 920 Frontenac, Naperville, IL 1987 121,200 Vacant Acquisition
59 1651 Frontenac, Naperville, IL 1978 30,414 Odermath U.S.A. Acquisition
60 720 Frontenac, Naperville, IL 1991 171,935 Jackson Storage Acquisition
61 1500 Shore Road, Naperville, IL 1985 43,230 Spring Ram Acquisition
62 1560 Frontenac, Naperville, IL 1987 85,608 Sanco Acquisition
63 1510 Frontenac, Naperville, IL 1986 104,886 Echlin Acquisition
64 1150 Shore Road, Naperville, IL 1985 30,184 Embossed Graphics Acquisition
65 1250 Carolina Drive, West Chicago, IL 1988 150,000 WinCup Build-to-Suit
66 1400 Busse Road, Elk Grove Village, IL 1975 148,436 Field Container Acquisition
67 5619-25 W. 115th Street, Alsip, IL 1974 396,979 Tribune Corporation Redevelopment
68 825 Tollgate Road, Elgin, IL 1989 83,122 Hydrox Chemical Acquisition
69 5990 Touhy Avenue, Niles, IL 1960/1993 295,964 HaLo Advertising Redevelopment
70 620-630 Butterfield Road, Mundelein, IL 1990/1993 24,237 Allstate Build-to-Suit
71 2339-41 Ernie Krueger Court, Waukegan, IL 1990/1993 54,450 Whalen Moving & Storage Build-to-Suit
72 1319 Marquette Drive, Romeoville, IL 1990 36,349 Heritage Environmental Build-to-Suit
73 1850 Greenleaf, Elk Grove Village, IL 1965 58,627 R.D. Niven & Associates Acquisition
74 900 E. 103rd Street, Chicago, IL 1910/1990 575,462 Ryerson Steel/Amerail Redevelopment
75 4501 Augusta Boulevard, Chicago, IL 1942/1989 432,661 Record Center Redevelopment
76 2743 Armstrong Court, Des Plaines, IL 1989 53,325 Alliance Airlines Build-to-Suit
77 245 Beinoris Drive, Wood Dale, IL 1988/1993 11,989 Romano's Tile Build-to-Suit
78 1520 Pratt Avenue, Elk Grove Village, IL 1968 62,546 Schiffmayer Plastics Acquisition
79 425 W. 151st Street, East Chicago, IN 1913/1991 349,236 Inland Steel Redevelopment
80 201 Mississippi Street, Gary, IN 1945/1988 1,052,173 Wheeling Pittsburgh Steel Redevelopment
81 950-970 Tower Road, Mundelein, IL 1979/1990 38,359 Amerikal Paper Build-to-Suit
82 1201 Lunt Avenue, Elk Grove Village, IL 1971 7,380 Pullmax Inc. Acquisition
83 84-120 McHenry Road, Wheeling, IL 1990/1993 20,535 Merlin Muffler Acquisition
84 351 North Rohlwing Road, Itasca, IL 1993 2,015 Burger King Build-to-Suit
Lakeshore Dunes 1971/1993 485,100 Apartments Redevelopment
SUBTOTAL 10,591,323
PROPERTY TOTAL 16,659,970
</TABLE>
<PAGE>
CENTERPOINT PROPERTIES
BOARD OF DIRECTORS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
BOARD OF DIRECTORS OFFICERS AUDITORS FORM 10-K
Chairman John S. Gates Jr. Coopers & Lybrand LLP The Company's
Martin Barber President and 203 North LaSalle Street complete Form 10-K
Chairman Chief Executive Chicago, Illinois 60601 was filed with the
Capital and Officer Securities and
Regional Properties plc LEGAL COUNSEL Exchange Commission in
Robert L. Stovall Ungaretti & Harris March, 1997.
Nicholas C. Babson Chief Operating 3500 Three First National Plaza
President and Chairman Officer Chicago, Illinois 60603 UPON REQUEST, THE COMPANY
Babson Brothers Co. WILL PROVIDE WITHOUT CHARGE
Paul S. Fisher Katz Randall & Weinberg A COPY OF THE COMPANY'S
Alan D. Feld Chief Financial 333 West Wacker Drive FORM 10-K, AS FILED WITH
Sr. Executive Partner Officer Chicago, Illinois 60606 THE SECURITIES AND
Akin Gump Straus General Counsel EXCHANGE COMMISSION. ALL
Hauer & Feld and Secretary STOCK INFORMATION REQUESTS FOR THE FORM 10-K
CenterPoint Properties common SHOULD BE DIRECTED TO
John S. Gates Jr. Michael M. Mullen stock and convertible CINDY A. NOVAK, AT THE
President and Chief Investment and subordinated debentures are ADDRESS AND PHONE NUMBER
Chief Executive Officer Development Officer traded on the New York ABOVE.
CenterPoint Properties Stock Exchange, under the symbols
Corporation Rockford O. Kottka CNT and CNTA, respectively. RESEARCH
Sr. Vice President and Treasurer The following organizations
John J. Kinsella The Company has a dividend have initiated investment
Former Chairman, reinvestment and stock purchase research coverage
Chief Executive SHAREHOLDER INFORMATION plan for its shareholders. on CenterPoint Properties:
Officer and If you are interested in
President Investor Relations obtaining more information A.G. Edwards and Sons
Leo Burnett Robert L. Athey and a prospectus, please Duff & Phelps Equity
Company, Inc. Vice President of contact Cindy A. Novak Research
Corporate Affairs at the address and Lehman Brothers
Thomas E. Robinson phone number above. McDonald and Company
President and Chief Investor Information Moody's Investor Service
Operating Officer Cindy A. Novak ANNUAL MEETING Natwest Securities
Storage USA Inc. CenterPoint Properties The CenterPoint Properties Penobscot Group
401 North Michigan Avenue Corporation annual meeting will Robertson Stephen & Company
Robert L. Stovall Suite 3000 be held May 15, 1997 S.G. Warburg
Chief Operating Chicago, Illinois 60611 at 11:00 a.m. in Smith Barney
Officer 312-346-5600 the Lower Level Conference Wheat First Butcher Singer
CenterPoint Properties 312-456-7696 Fax Center,
Corporation 401 North Michigan Avenue,
TRANSFER AGENT AND Chicago, Illinois.
REGISTRAR
First Chicago Trust Co. of
New York
P.O. Box 2500
Jersey City, New
Jersey 07303-2500
</TABLE>
<PAGE>
[LOGO]
CENTERPOINT PROPERTIES
401 NORTH MICHIGAN AVENUE
30TH FLOOR
CHICAGO, ILLINOIS 60611
312.346.5600
312.456.7696 FAX
<PAGE>
EXHIBIT 21
LIST OF SUBSIDIARIES
CP Financing Corporation I, an Illinois corporation (wholly-owned)
CP Financing Trust, a Maryland real estate investment trust (wholly-owned)
CenterPoint O'Hare L.L.C., an Illinois limited liability company
The Miller Partnership, L.P., an Illinois limited partnership
East Chicago Partners, L.P., an Indiana limited partnership
Elk Grove Limited Partnership, an Illinois limited partnership
The Edge Venture, an Illinois general partnership
<PAGE>
EXHIBIT 23
CENTERPOINT PROPERTIES CORPORATION
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of CenterPoint Properties Corporation on Form S-3 (Nos. 33-90374,
33-95792, 33-99858 and 333-18235), Form S-8/S-3 (File No. 333-05087) and
Form S-8 (File No. 333-05141) of our reports dated February 13, 1997, except
for Notes 17 and 18, as to which the date is March 6, 1997, on our audits of
the consolidated financial statements and financial statement schedules of
CenterPoint Properties Corporation and Subsidiaries as of December 31, 1996
and 1995, and for the three years in the period ended December 31, 1996,
which reports are included in this Annual Report on Form 10-K.
Coopers & Lybrand L.L.P.
Chicago, Illinois
March 25, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
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