LOAN AGREEMENT
between
THE ALAMANCE COUNTY INDUSTRIAL FACILITIES AND
POLLUTION CONTROL FINANCING AUTHORITY
and
CULP, INC.
Dated as of December 1, 1996
Relating to
Tax-Exempt Adjustable Mode
Industrial Development Revenue Bonds
(Culp, Inc. Project)
Series 1996
in the aggregate principal amount of $6,000,000
CERTAIN RIGHTS OF THE ISSUER UNDER THIS AGREEMENT HAVE BEEN ASSIGNED TO, AND
ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF FIRST-CITIZENS BANK & TRUST
COMPANY, AS TRUSTEE UNDER AN INDENTURE OF TRUST, DATED AS OF THE DATE FIRST
ABOVE WRITTEN, AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME. INFORMATION
CONCERNING SUCH SECURITY INTEREST MAY BE OBTAINED FROM THE TRUSTEE AT 2917
HIGHWOODS BOULEVARD, RALEIGH, NORTH CAROLINA 27604, ATTENTION: CORPORATE
TRUST DEPARTMENT.
i
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1. Definitions.............................................. 2
Section 1.2. Rules of Construction.................................... 5
ARTICLE II
REPRESENTATIONS
Section 2.1. Representations by the Issuer............................ 5
Section 2.2. Representations by the Company........................... 7
ARTICLE III
ACQUISITION OF THE PROJECT
Section 3.1. Agreement to Undertake and Complete the Project.......... 9
Section 3.2. Disbursements from the Initial Fund...................... 9
Section 3.3. Establishment of Completion Date and Certificate ...........
as to Completion 10
Section 3.4. Closeout of Initial Fund; Disposition of Balance ...........
in Initial Fund 11
Section 3.5. Company Required to Pay Costs in Event Initial .............
Fund Insufficient 11
Section 3.6. Company and Issuer Representatives and Successors........ 12
Section 3.7. Investment of Moneys in Funds............................ 12
Section 3.8. Plans and Specifications................................. 13
ARTICLE IV
ISSUANCE OF THE BONDS
Section 4.1. Agreement to Issue the Bonds............................. 13
Section 4.2. No Third-Party Beneficiary............................... 13
ARTICLE V
LOAN; PAYMENT PROVISIONS
Section 5.1. Loan of Proceeds......................................... 14
Section 5.2. Amounts Payable.......................................... 14
Section 5.3. Unconditional Obligations................................ 15
Section 5.4. Prepayments.............................................. 16
Section 5.5. Credits Against Payments................................. 16
Section 5.6. Credit Facility and Alternate Credit Facility............ 16
Section 5.7. Interest Rate Determination Method....................... 16
Section 5.8. Company Approval of Indenture............................ 16
Section 5.9. Outstanding Bonds........................................ 17
ARTICLE VI
MAINTENANCE AND TAXES
Section 6.1. Company's Obligations to Maintain and Repair............. 17
Section 6.2. Taxes and Other Charges.................................. 17
ARTICLE VII
INSURANCE, EMINENT DOMAIN AND DAMAGE AND DESTRUCTION
Section 7.1. Insurance................................................ 17
Section 7.2. Provisions Respecting Eminent Domain..................... 18
Section 7.3. Damage and Destruction................................... 18
ARTICLE VIII
SPECIAL COVENANTS
Section 8.1. Access to the Property and Inspection.................... 18
Section 8.2. Financial Statements..................................... 18
Section 8.3. Further Assurances and Corrective Instruments............ 19
Section 8.4. Recording and Filing; Other Instruments.................. 19
Section 8.5. Exclusion from Gross Income for Federal Income Tax .........
Purposes of Interest on the Bonds.......................................... 19
Section 8.6. Indemnity Against Claims................................. 20
Section 8.7. Release and Indemnification.............................. 20
Section 8.8. Compliance with Laws..................................... 21
Section 8.9. Non-Arbitrage Covenant................................... 21
Section 8.10. Notice of Determination of Taxability.................... 22
Section 8.11. No Purchase of Bonds by Company or Issuer................ 22
Section 8.12. Maintenance of Corporate Existence....................... 22
Section 8.13. Duties and Obligations................................... 23
ARTICLE IX
ASSIGNMENT, LEASE AND SALE
Section 9.1. Restrictions on Transfer of Issuer's Rights.............. 23
Section 9.2. Assignment by the Issuer................................. 23
Section 9.3. Assignment, Lease or Sale of Project or Assignment .........
of Agreement by Company.................................................... 24
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.1. Events of Default Defined................................ 25
Section 10.2. Remedies on Default...................................... 26
Section 10.3. Application of Amounts Realized in Enforcement of ..........
Remedies 27
Section 10.4. No Remedy Exclusive...................................... 27
Section 10.5. Agreement to Pay Attorneys' Fees and Expenses............ 27
Section 10.6. Issuer and Company to Give Notice of Default............. 27
ARTICLE XI
PREPAYMENTS; PURCHASE OF BONDS
Section 11.1. Optional Prepayments..................................... 28
Section 11.2. Mandatory Prepayment Upon a Determination of ...............
Taxability 28
Section 11.3. Mandatory Prepayment in Event of Cessation of .................
Operation 29
Section 11.4. Optional Purchase of Bonds............................... 29
Section 11.5. Relative Priorities...................................... 29
Section 11.6. Prepayment to Include Fees and Expenses.................. 29
Section 11.7. Purchase of Bonds........................................ 30
ARTICLE XII
MISCELLANEOUS
Section 12.1. Amounts Remaining in Funds............................... 31
Section 12.2. No Implied Waiver........................................ 31
Section 12.3. Issuer Representative.................................... 31
Section 12.4. Company Representative................................... 31
Section 12.5. Notices.................................................. 31
Section 12.6. Issuer, Governing Body, and their Respective ...............
Members, Attorneys, Officers, Employees and Agents ...........................
Not Liable 31
Section 12.7. No Liability of Issuer; No Charge Against Issuer's .........
Credit 32
Section 12.8. If Performance Date Not a Business Day................... 33
Section 12.9. Binding Effect........................................... 33
Section 12.10. Severability............................................. 33
Section 12.11. Amendments, Changes and Modifications.................... 33
Section 12.12. Execution in Counterparts................................ 33
Section 12.13. Applicable Law........................................... 33
iv
Exhibit A - Description of the Project
Exhibit B - Form of Requisition and Certificate
Exhibit C - Form of Promissory Note
Exhibit D - Representations and Warranties
10
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of December 1, 1996, is made and entered
into by and between THE ALAMANCE COUNTY INDUSTRIAL FACILITIES AND POLLUTION
CONTROL FINANCING AUTHORITY the "Issuer"), a political subdivision duly
organized and existing under the Constitution and laws of the State of North
Carolina (the "State"), and CULP, INC. (the "Company"), a North Carolina
corporation;
W I T N E S S E T H:
WHEREAS, the Industrial and Pollution Control Facilities Financing Act,
Chapter 159C of the General Statutes of North Carolina, as amended (the
"Act"), authorizes the creation of industrial facilities and pollution
control financing authorities by the several counties in North Carolina and
empowers such authorities to acquire, construct, own, repair, maintain,
extend, improve, rehabilitate, renovate, furnish, equip and sell, lease,
exchange, transfer or otherwise dispose of industrial or manufacturing
facilities to the end that such authorities may be able to promote the right
to gainful employment opportunity and private industry and thereby promote
the general welfare of the inhabitants of North Carolina by exercising such
powers to aid in financing industrial or manufacturing facilities for the
purpose of alleviating unemployment or raising below average manufacturing
wages and further authorizes such authorities to loan to others the proceeds
of bonds issued for the purpose of paying for all or any part of an
industrial or manufacturing facility, to mortgage and pledge any or all of
such facilities, whether then owned or thereafter acquired, as security for
the payment of the principal of, premium, if any, and interest on any such
bonds and any agreements made in connection therewith and to pledge or assign
the revenues and receipts from such facilities or loan or from any other
source to the payment of such bonds; and
WHEREAS, the Issuer has been duly organized pursuant to the Act; and
WHEREAS, in order to further the purposes of the Act, the Issuer
proposes to undertake the financing of the acquisition and installation of
finishing equipment for upholstery fabric (the "Project") in it existing
facility in Alamance County, North Carolina, which constitutes an industrial
project under the Act, and to obtain the funds therefor by the issuance of
its Bonds (as hereinafter defined) under an Indenture of Trust securing such
Bonds, between the Issuer and First-Citizens Bank & Trust Company, Raleigh,
North Carolina, as Trustee, dated as of the date hereof (the "Indenture"); and
WHEREAS, the Issuer proposes to loan the proceeds from the sale of the
Bonds, as hereinafter defined, to the Company to acquire and install the
Project upon the terms and conditions hereinafter set forth; and
WHEREAS, the Company and Wachovia Bank of North Carolina, National
Association will enter into a Reimbursement Agreement (the "Reimbursement
Agreement") dated as of the date hereof pursuant to which the Bank will issue
an irrevocable letter of credit in an amount not to exceed $___________ to
the Trustee at the request and for the account of the Company upon the terms
set forth in the Reimbursement Agreement; and
WHEREAS, it has been determined that the financing of the acquisition
and installation of the Project will require the issuance, sale and delivery
by the Issuer of a series of bonds in the aggregate principal amount of Six
Million and no/100 Dollars ($6,000,000) (the "Bonds"); and
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto covenant, agree and bind
themselves as follows;
ARTICLE IARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section I.1. Definitions. In addition to the words and terms
elsewhere defined in this Agreement, the following words and terms as used
herein shall have the following meanings unless the context or use clearly
indicates another or different meaning or intent, and any other words and
terms defined in the Indenture shall have the same meanings when used herein
as assigned in the Indenture unless the context or use clearly indicates
another or different meaning or intent:
"Acquisition", when used with reference to the Project, means
acquisition and installation of the Project.
"Agreement" shall mean this Loan Agreement between the Issuer and the
Company and any modifications, alterations and supplements hereto made in
accordance with the provisions hereof and of the Indenture.
"Bond Documents" means, collectively, the Bonds, this Agreement, the
Note, the Indenture, the Credit Facility, the Credit Agreement, the Placement
Agreement, the Remarketing Agreement and the Offering Memorandum.
"Bond Proceeds" means the principal of the Bonds and any investment
earnings thereon while on deposit in the Initial Fund.
"Cessation of Operation" has the meaning set forth in Section 11.3
hereof.
"Commission" means the Local Government Commission of North Carolina, a
division of the Department of the State Treasurer, and any successor or
successors thereto.
"Company Representative" means any one of the persons at the time
designated to act on behalf of the Company by written certificate furnished
to the Issuer and the Trustee containing the specimen signatures of such
persons and signed on behalf of the Company by the President or any Vice
President of the Company.
"Completion Date" means, with respect to the Project, the date on which
the Company Representative delivers a completion certificate to the Trustee
pursuant to Section 3.3.
"Cost(s) of the Project", "Cost" or "Costs" means all costs and
allowances which the Issuer or the Company may properly pay or accrue for
the Project and which, under generally accepted accounting principles, are
chargeable to the capital account of the Project or could be so charged
either with a proper election to capitalize such costs or, but for a proper
election, to expense such costs, including (without limitation) the following
costs:
(a) fees and expenses incurred in preparing the plans and
specifications for the Project (including any preliminary study or planning
or any aspect thereof); any labor, services, materials and supplies used or
furnished in site improvement; any equipment for the Project; any acquisition
necessary to provide utility or other services, including water supply,
sewage and waste disposal facilities; and all tangible personal property
deemed necessary by the Company and acquired in connection with the Project;
(b) fees for architectural, engineering, supervisory and consulting
services;
(c) any fees and expenses incurred in connection with perfecting and
protecting title to the Project and any fees and expenses incurred in
connection with preparing, recording or filing such documents, instruments or
financing statements as either the Company or the Issuer may deem desirable
to perfect or protect the rights of the Issuer or the Trustee under the Bond
Documents;
(d) any legal, accounting or financial advisory fees and expenses,
including, without limitation, fees and expenses of Bond Counsel and counsel
to the Issuer, the Company, the Credit Issuer, the Placement Agent, the
Remarketing Agent or the Trustee, any fees and expenses of the Issuer,
Trustee, Remarketing Agent, Placement Agent, Credit Issuer, Tender Agent,
Paying Agent or any rating agency, filing fees, and printing and engraving
costs, incurred in connection with the authorization, issuance, sale and
purchase of the Bonds, and the preparation of the Bond Documents and all
other documents in connection with the authorization, issuance and sale of
the Bonds;
(e) interest to accrue on the Bonds during construction of the
Project;
(f) any administrative or other fees charged by the Issuer or
reimbursement thereto of expenses in connection with the Project until the
Completion Date; and
(g) any other costs and expenses relating to the Project which could
constitute costs or expenses for which the Issuer may expend Bond proceeds
under the Act.
"Eminent Domain" means the taking of title to, or the temporary use of,
the Project or any part thereof pursuant to eminent domain or condemnation
proceedings, or by any settlement or compromise of such proceedings, or any
voluntary conveyance of the Project or any part thereof during the pendency
of, or as a result of a threat of, such proceedings.
"Event of Default" shall have the meaning set forth in Section-10.1.
"Governing Body" means the board, commission, council or other body in
which the general legislative powers of the Issuer are vested.
"Issuer Representative" means any one of the persons at the time
designated to act on behalf of the Issuer by written certificate furnished to
the Company and the Trustee containing the specimen signatures of such
persons and signed on behalf of the Issuer by its Chairman or Vice Chairman.
"Net Proceeds", when used with respect to any proceeds of insurance or
proceeds resulting from Eminent Domain, means the gross proceeds therefrom
less all expenses (including attorneys' fees) incurred in realization thereof.
"Note" means the Company's promissory note in the principal amount of
$6,000,000 in the form of Exhibit C, as it may be amended from time to time.
"Offering Memorandum" means the Preliminary Offering Memorandum and the
final Offering Memorandum prepared and used in connection with the initial
placement of the Bonds on the Issue Date.
"Plans and Specifications" shall mean the plans and specifications used
in the Acquisition of the Project, as the same may be revised from time to
time by the Company in accordance with Section-3.8.
"Project" means, collectively, the property described in Exhibit-A
hereto, as the same may at any time exist.
"Remarketing Agreement" means the Remarketing and Interest Services
Agreement, dated as of December 1, 1996, between the Company and the
Remarketing Agent.
"Tax Regulations" means the applicable treasury regulations promulgated
under the Code or under Section 103 of the Internal Revenue Code of 1954, as
amended, whether at the time proposed, temporary, final or otherwise.
I.2. Rules of Construction. Unless the context clearly indicates to the
contrary, the following rules shall apply to the construction of this
Agreement:
(a) Capitalized terms used but not defined in this Agreement shall
have the meaning ascribed to them in the Indenture.
(b) Words importing the singular number shall include the plural
number and vice versa.
(c) The table of contents, captions and headings herein are solely
for convenience of reference only and shall not constitute a part of this
Agreement nor shall they affect its meaning, construction or effect.
(d) Words of the masculine gender shall be deemed and construed to
include correlative words of the feminine and neuter genders, and words of
the neuter gender shall be deemed and construed to include correlative words
of the masculine and feminine genders.
(e) All references in this Agreement to particular Articles or
Sections are references to Articles and Sections of this Agreement, unless
otherwise indicated.
ARTICLE IIARTICLE II
REPRESENTATIONS
Section II.1. Representations by the Issuer. The Issuer represents
and warrants as follows:
(a) The Issuer is a political subdivision within the meaning of the
Act and is authorized by the Act to execute and to enter into this Agreement
and to undertake the transactions contemplated herein and to carry out its
obligations hereunder.
(b) The Issuer has all requisite power, authority and legal right to
execute and deliver the Bond Documents to which it is a party and all other
instruments and documents to be executed and delivered by the Issuer pursuant
thereto, to perform and observe the provisions thereof and to carry out the
transactions contemplated by the Bond Documents. All corporate action on the
part of the Issuer which is required for the execution, delivery, performance
and observance by the Issuer of the Bond Documents has been duly authorized
and effectively taken, and such execution, delivery, performance and
observation by the Issuer do not contravene applicable law or any contractual
restriction binding on or affecting the Issuer.
(c) The Issuer has duly approved the issuance of the Bonds and the
loan of the proceeds thereof to the Company for the Acquisition of the
Project; no other authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required
as a condition to the performance by the Issuer of its obligations under any
Bond Documents. THE ISSUER MAKES NO REPRESENTATION OR WARRANTY WHATSOEVER AS
TO THE USE OF THE PROCEEDS OF THE BONDS OR TO THE SUITABILITY OF THE PROJECT
FOR THE COMPANY'S PURPOSES.
(d) This Agreement is, and each other Bond Document to which the
Issuer is a party when delivered will be, legal, valid and binding special
obligations of the Issuer enforceable against the Issuer in accordance with
its terms.
(e) There is no default of the Issuer in the payment of the principal
of or interest on any of its indebtedness for borrowed money or under any
instrument or instruments or agreements under and subject to which any
indebtedness for borrowed money has been incurred which does or could affect
the validity and enforceability of the Bond Documents or the ability of the
Issuer to perform its obligations thereunder, and no event has occurred and
is continuing under the provisions of any such instrument or agreement which
constitutes or, with the lapse of time or the giving of notice, or both,
would constitute such a default.
(f) With respect to the Bonds, there are no other obligations of the
Issuer that have been, are being or will be sold (i) at substantially the
same time, (ii) under a common plan of marketing, and (iii) at substantially
the same rate of interest.
(g) There is pending or, to the knowledge of the undersigned
officers of the Issuer, threatened no action or proceeding before any court,
governmental agency or arbitrator (i) to restrain or enjoin the issuance or
delivery of the Bonds or the collection of any revenues pledged under the
Indenture, (ii) in any way contesting or affecting the authority for the
issuance of the Bonds or the validity of any of the Bond Documents, or (iii)
in any way contesting the existence or powers of the Issuer.
(h) In connection with the authorization, issuance and sale of the
Bonds, the Issuer has complied with all provisions of the Constitution and
laws of the State, including the Act.
(i) The Issuer has not assigned or pledged and will not assign or
pledge its interest in this Agreement for any purpose other than to secure
the Bonds under the Indenture. The Bonds constitute the only bonds or other
obligations of the Issuer in any manner payable from the revenues to be
derived from this Agreement, and except for the Bonds, no bonds or other
obligations have been or will be issued on the basis of this Agreement.
(j) The Issuer is not in default under any of the provisions of the
laws of the State, where any such default would affect the issuance, validity
or enforceability of the Bonds or the transactions contemplated by this
Agreement or the Indenture.
(k) The Issuer has obtained from the Governing Body approval of the
issuance of the Bonds required by Section 159C-4(d) of the Act, from the
Secretary of the Department of Commerce of the State approval of the Project
required by Section 159C 7 of the Act and from the Local Government
Commission of the State the approvals required by Sections 159C-6, -8 and -9
of the Act.
II.2. Representations by the Company. The Company represents and warrants as
follows:
(a) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of North Carolina, is in
good standing under the laws of the State, and has corporate and other legal
power and authority to enter into and to perform the agreements and covenants
on its part contained in the Bond Documents to which it is a party, and has
duly authorized the execution, delivery and performance of the Bond Documents
to which it is a party and has duly approved the Bond Documents.
(b) The execution and delivery of the Bond Documents to which it is a
party, consummation of the transactions contemplated hereby and thereby and
by the Bond Documents to which it is not a party, and the fulfillment of or
compliance with the terms and conditions hereof and thereof will not conflict
with or constitute a breach of or a default under the Company's articles of
incorporation or bylaws or any agreement or instrument to which the Company
is a party or any existing law, administrative regulation, court order or
consent decree to which the Company is subject, or by which it or any of its
property is bound.
(c) 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 or affecting the Company or any of its officers, nor to
the best knowledge of the Company is there any basis therefor, wherein an
unfavorable decision, ruling or finding would materially adversely affect the
transactions contemplated by this Agreement or that would adversely affect,
in any way, the validity or enforceability of any of the Bond Documents or
any other agreement or instrument to which the Company is a party and that is
to be used or contemplated for use in the consummation of the transactions
contemplated hereby.
(d) No further authorizations, consents or approvals of governmental
bodies or agencies are required in connection with the execution and delivery
by the Company of this Agreement or the other Bond Documents to which the
Company is a party or in connection with the carrying out by the Company of
its obligations under this Agreement or the other Bond Documents to which the
Company is a party.
(e) The financing of the Project as provided under this Agreement,
and commitments therefor made by the Issuer have induced the Company to
expand or locate its operations in the jurisdiction of the Issuer.
(f) The Company anticipates that upon completion of the Acquisition
of the Project, the Company will operate the Project as a "project" within
the meaning of the Act until the Bonds have been paid in full.
(g) The Project is of the type authorized and permitted by the Act,
and the Project is substantially the same in all material respects to that
described in the notice of public hearing published on _________________,
1996.
(h) The Project will be acquired and installed and will be operated
by the Company in such manner as to conform with all applicable zoning,
planning, building, environmental and other regulations of the governmental
authorities having jurisdiction over the Project.
(i) The Company will cause all of the proceeds of the Bonds to be
applied solely to the payment of Costs of the Project.
(j) The Company has taken no action, and has not omitted to take any
action, which action or omission to take action would in any way affect or
impair the excludability of interest on the Bonds from gross income of the
Holders thereof for federal income tax purposes.
(k) The Company presently in good faith estimates the Cost of the
Project to equal or exceed the original principal amount of the Bonds.
(l) The Project will be located wholly within Alamance County.
(m) The representations and warranties contained in Exhibit D and
made a part hereof are true and complete.
ARTICLE IIIARTICLE III
ACQUISITION OF THE PROJECT
Section III.1. Agreement to Undertake and Complete the Project. The
Company covenants and agrees to undertake and complete the Acquisition of the
Project. Upon written request of the Issuer or the Trustee, the Company
agrees to make available to the Issuer and the Trustee (for review and
copying) all the then current Plans and Specifications for the Project.
The Company agrees to cause the Project to be completed as soon as may
be practicable and to cause all proceeds of the Bonds, including investment
earnings, to be expended no later than three years from the Issue Date. For
Costs of the Project incurred prior to receipt by the Issuer of the proceeds
of the Bonds, the Company agrees to advance all funds necessary for such
purpose. Such advances may be reimbursed from the Initial Fund to the extent
permitted by Section 3.2.
The Company shall obtain or cause to be obtained all necessary permits
and approvals for the Acquisition, operation and maintenance of the Project.
III.2.SectioDisbursements from the Initial Fund. In the Indenture, the
Issuer has authorized and directed the Trustee to use the moneys in the
Initial Fund for payment or reimbursement to the Company of the Costs of the
Project.
Each payment for a Cost of the Project shall be made only upon the
receipt by the Trustee and, upon written request therefor, the Issuer of a
requisition and certificate, substantially in the form attached hereto as
Exhibit B and signed by the Company Representative, certifying:
(a) the requisition and certificate number;
(b) the payee, which may be the Issuer or the Trustee for the payment
of the fees and expenses of the Issuer or the Trustee, as the case may be,
and which may be the Company in the case of (i) work performed by the
Company's personnel, or (ii) payments advanced by the Company for the Project;
(c) the amount to be paid;
(d) that the payment is due, is a proper charge against the Initial
Fund, and has not been the basis for any previous withdrawal from the Initial
Fund;
(e) that all funds being requisitioned shall be used in compliance
with the Code and the Tax Regulations promulgated thereunder, and that
substantially all such funds shall be used for the acquisition or
installation of property of a character subject to the allowance for
depreciation as prescribed by Section 144(a)(1)(A) of the Code and the Tax
Regulations promulgated thereunder. The Company agrees, however, that it
will not request any such disbursement which, if paid, would result in (i)
less than substantially all (at least ninety-five percent (95%)) of the
proceeds of the Bonds being used to provide land or property subject to the
allowance for depreciation under Section 167 of the Code, constituting the
Project, (ii) less than all of the proceeds of the Bonds being used to
provide the Project under the Act, or (iii) the inclusion of the interest on
any of the Bonds in the gross income of any Holder for purposes of federal
income taxation (as long as such Holder is not a "related person" or a
"substantial user" of the Project as such terms are used in Section 144 of
the Code); and
(f) that no Event of Default, as defined in Section 10.1 of this
Agreement, has occurred which has not been waived and that the Company is not
aware of any then existing event or condition which, with the passage of
time, would constitute an Event of Default under Section 10.1.
Interest on the Bonds and all legal, consulting and issuance expenses
shall be set forth separately in any requisition and certificate requesting
payment therefor. Such requisitions and certificates shall be consecutively
numbered. Upon request, the Company shall furnish the Issuer or the Trustee
with copies of invoices or other appropriate documentation supporting
payments or reimbursements requested pursuant to this Section. The Issuer
and the Trustee may rely conclusively upon any statement made in any such
requisition and certificate.
Section III.3. Establishment of Completion Date and Certificate as
III.3.pletioEstablishment of Completion Date and Certificate as to
Completion. The Completion Date shall be the date on which the Company
Representative signs and delivers to the Trustee a certificate stating that,
except for amounts retained by the Trustee for Costs of the Project not then
due and payable, or the liability for which the Company is, in good faith,
contesting or disputing, (a) the Project has been completed to the
satisfaction of the Company, and all labor, services, materials and supplies
used in such Acquisition have been paid for, and (b) the Project is suitable
and sufficient for the efficient operation as a "project" (as defined in the
Act).
Notwithstanding the foregoing, such certificate may state that it is
given without prejudice to any rights against third parties which exist at
the date of such certificate or which may subsequently come into being.
Section III.4. Closeout of Initial Fund; Disposition of Balance in
III.4.l FundCloseout of Initial Fund; Disposition of Balance in Initial
Fund. All moneys and any unliquidated investments remaining in the Initial
Fund on the Completion Date and after payment in full of the Costs of the
Project (except for costs not then due and payable for the payment of which
the Trustee shall have retained amounts as hereinafter provided) shall, as
soon as practicable after the Completion Date, and no later than ninety days
thereafter, at the direction of the Company, be delivered to the Trustee for
deposit in the Surplus Fund. The Trustee shall, at the direction of the
Company Representative, retain moneys in the Initial Fund for payment of
Costs of the Project not then due and payable. Any balance of such retained
funds remaining after full payment of such Costs of the Project shall at the
direction of the Company be delivered to the Trustee for deposit in the
Surplus Fund to be applied to the redemption of Bonds in accordance with the
terms of the Indenture.
Section III.5. Company Required to Pay Costs in Event Initial Fund
III.5.icientCompany Required to Pay Costs in Event Initial Fund
Insufficient. If the moneys in the Initial Fund available for payment of the
Costs of the Project should not be sufficient to make such payments in full,
the Company agrees to pay directly (or to deposit moneys in the Initial Fund
for the payment of) such costs of completing the Project as may be in excess
of the moneys available therefor in the Initial Fund. THE ISSUER DOES NOT
MAKE ANY WARRANTY OR REPRESENTATION (EITHER EXPRESS OR IMPLIED) THAT THE
MONEYS DEPOSITED INTO THE INITIAL FUND AND AVAILABLE FOR PAYMENT OF THE COSTS
OF THE PROJECT, UNDER THE PROVISIONS OF THIS AGREEMENT, WILL BE SUFFICIENT TO
PAY ALL OF THE COSTS OF THE PROJECT. If, after exhausting the moneys in the
Initial Fund for any reason (including, without limitation, losses on
investments made by the Trustee under the Indenture), the Company pays, or
deposits moneys in the Initial Fund for the payment of, any portion of the
Costs of the Project pursuant to the provisions of this Section, the Company
shall not be entitled to any reimbursement therefor from the Issuer or from
the Trustee, nor shall it be entitled to any diminution of the amounts
payable under Section-5.2.
III.6.SectioCompany and Issuer Representatives and Successors. At or prior
to the initial sale of the Bonds, the Company and the Issuer shall appoint a
Company Representative and an Issuer Representative, respectively, for the
purpose of taking all actions and delivering all certificates required to be
taken and delivered by the Company Representative and the Issuer
Representative under the provisions of this Agreement. The Company and the
Issuer, respectively, may appoint alternate Company Representatives and
alternate Issuer Representatives to take any such action or make any such
certificate if the same is not taken or made by the Company Representative or
the Issuer Representative. In the event any of such persons, or any
successor appointed pursuant to the provisions of this Section, should resign
or become unavailable or unable to take any action or deliver any certificate
provided for in this Agreement, another Company Representative or alternate
Company Representative, or another Issuer Representative or alternate Issuer
Representative, shall thereupon be appointed by the Company or the Issuer,
respectively. If the Company or the Issuer fails to make such designation
within ten (10) days following the date when the then incumbent Company
Representative or Issuer Representative resigns or becomes unavailable or
unable to take any such actions, the President or any Vice President of the
Company, or the Chairman or the Vice Chairman of the Issuer, shall serve as
the Company Representative or the Issuer Representative, respectively.
Whenever the provisions of this Agreement require the Company's
approval or require the Issuer or the Trustee to take some action at the
request or direction of the Company, the Company Representative shall make,
in writing, such approval or such request or direction unless otherwise
specified in this Agreement. Any Company action so taken with the written
approval of or at the written direction of the Company Representative shall
be binding upon the Company.
III.7.SectioInvestment of Moneys in Funds. The Trustee may invest or
reinvest any moneys held pursuant to the Indenture to the extent permitted by
Section 4.7 of the Indenture and by law (but subject to the provisions of
Section 8.9(a) hereof), in Permitted Investments, as defined in the
Indenture, as directed by a Company Representative.
Any such securities may be purchased at the offering or market price
thereof at the time of such purchase.
The Trustee may make any and all such investments through its own bond
department or trust investments department. Any interest accruing on or
profit realized from the investment of any moneys held as part of the Initial
Fund shall be credited to the Initial Fund, and any loss resulting from such
investment shall be charged to the Initial Fund. Any interest accruing on or
profit realized from the investment of any moneys held as a part of the Bond
Fund shall be credited to the Bond Fund, and any loss resulting from such
investment shall be charged to the Bond Fund. Neither the Issuer nor the
Trustee shall be liable for any loss resulting from any such investments,
provided the Trustee has performed its respective obligations under Section
4.7 of the Indenture in accordance with Section 7.1(b) of the Indenture. For
the purposes of this Section, any interest-bearing deposits, including
certificates of deposit, issued by or on deposit with the Trustee shall be
deemed to be investments and not deposits.
III.8.SectioPlans and Specifications. The Company shall maintain a set of
Plans and Specifications at the Project which shall be available to the
Issuer and the Trustee for inspection and examination during the Company's
regular business hours. The Issuer, the Trustee and the Company agree that
the Company may supplement, amend and add to the Plans and Specifications,
and that the Company shall be authorized to omit or make substitutions for
components of the Project, without the approval of the Issuer and the
Trustee, provided that no such change shall be made which, after giving
effect to such change, would cause any of the representations and warranties
set forth in Section 2.2 hereof to be false or misleading in any material
respect, or would result in a violation of the covenant set forth in Section
8.5. If any such change would render materially incorrect or inaccurate the
description of the initial components of the Project as set forth in Exhibit
A to this Agreement, the Company shall deliver to the Issuer and the Trustee
an opinion of Bond Counsel to the effect that such change will not cause the
interest on the Bonds to be includable in the gross income of the owners
thereof for federal income tax purposes, and thereafter, the Company and the
Issuer shall amend such Exhibit A to reflect such change. No approvals of
the Issuer and the Trustee shall be required for the Acquisition of the
Project or for the solicitation, negotiation, award or execution of contracts
relating thereto.
ARTICLE IVARTICLE IV
ISSUANCE OF THE BONDS
Section IV.1. Agreement to Issue the Bonds. To provide funds for
the Acquisition of the Project, the Issuer agrees that it will sell, issue
and deliver the Bonds in the aggregate principal amount of $6,000,000 to the
initial purchasers thereof and will cause the proceeds of the Bonds to be
applied as provided in Section 4.5 of the Indenture.
IV.2. No Third-Party Beneficiary. It is specifically agreed between the
parties executing this Agreement that it is not intended by any of the
provisions of any part of this Agreement to establish in favor of the public
or any member thereof, other than as expressly provided herein or as
contemplated in the Indenture, the rights of a third-party beneficiary
hereunder, or to authorize anyone not a party to this Agreement to maintain a
suit for personal injuries or property damage pursuant to the terms or
provisions of this Agreement. The duties, obligations and responsibilities
of the parties to this Agreement with respect to third parties shall remain
as imposed by law.
ARTICLE VARTICLE V
LOAN; PAYMENT PROVISIONS
Section V.1. Loan of Proceeds. The Issuer agrees, upon the terms
and conditions contained in this Agreement and the Indenture, to lend to the
Company the proceeds received by the Issuer from the sale of the Bonds. The
loan shall be made by depositing the accrued interest, if any, from the
initial sale of the Bonds into the Bond Fund and the remainder of said
proceeds in the Initial Fund in accordance with Section 4.5 of the
Indenture. Such proceeds shall be disbursed to or on behalf of the Company
as provided in Section-3.2. The Company's obligation to repay the loan shall
be evidenced by a Promissory Note, the form of which is attached hereto as
Exhibit C, dated the Issue Date.
V.2. Amounts Payable. The Company hereby agrees to pay the Note and repay
the loan made pursuant to this Agreement by making the following payments:
(a) The Company shall pay or cause to be paid to the Trustee in
immediately available funds for the account of the Issuer for deposit into
the Bond Fund on or before any Interest Payment Date for the Bonds or any
other date that any payment of interest, premium, if any, or principal is
required to be made in respect of the Bonds pursuant to the Indenture, until
the principal of, premium, if any, and interest on the Bonds shall have been
fully paid or provision for the payment thereof shall have been made in
accordance with the Indenture, a sum which, together with any Eligible Funds
available for such payment in the Bond Fund, will enable the Trustee to pay
the amount payable on such date as principal of (whether at maturity or upon
redemption or acceleration or otherwise), premium, if any, and interest on
the Bonds as provided in the Indenture; provided, however, that the
obligation of the Company to make any payment hereunder shall be deemed
satisfied and discharged to the extent of the corresponding payment made by
the Credit Issuer under the Credit Facility.
It is understood and agreed that the Note and all payments payable by
the Company under this subsection are assigned by the Issuer to the Trustee
for the benefit of the Holders. The Company assents to such assignment. The
Issuer hereby directs the Company and the Company hereby agrees to pay to the
Trustee at the principal corporate trust office of the Trustee all payments
payable by the Company pursuant to the Note and this subsection.
(b) The Company will also pay the reasonable fees and expenses of the
Issuer, the Trustee, the Tender Agent, the Paying Agent, the Placement Agent,
the Remarketing Agent and the Registrar under the Indenture and all other
amounts which may be payable to the Trustee, Paying Agent, Registrar or the
Tender Agent under Section 7.2 of the Indenture, and the reasonable fees and
expenses of the Remarketing Agent, such fees and expenses to be paid when due
and payable by the Company directly to the Trustee, Tender Agent, Paying
Agent, Registrar and Remarketing Agent, respectively, for their own account.
(c) The Company will also pay when due and payable the reasonable
fees and expenses of the Issuer related to the issuance of the Bonds,
including without limitation, attorneys' fees and expenses.
(d) The Company covenants, for the benefit of the Holders, to pay or
cause to be paid, to the Paying Agent, such amounts as shall be necessary to
enable the Paying Agent to pay the Purchase Price of Bonds delivered to the
Tender Agent or the Remarketing Agent, as the case may be, for purchase, all
as more particularly described in Section 2.6 of the Indenture; provided,
however, that the obligation of the Company to make any such payment under
this subsection shall be reduced by the amount of moneys available for such
payment described in Section 2.6(g)(i) and (ii) of the Indenture; and
provided, further, that the obligation of the Company to make any payment
under this subsection shall be deemed to be satisfied and discharged to the
extent of the corresponding payment made by the Credit Issuer under the
Credit Facility.
(e) In the event the Company shall fail to make any of the payments
required in this Section, the item or installment so in default shall
continue as an obligation of the Company until the amount in default shall
have been fully paid.
V.3. Unconditional Obligations. The obligation of the Company to make the
payments required by Section 5.2 shall be absolute and unconditional. The
Company shall pay all such amounts without abatement, diminution or deduction
(whether for taxes or otherwise) regardless of any cause or circumstance
whatsoever including, without limitation, any defense, set-off, recoupment or
counterclaim that the Company may have or assert against the Issuer, the
Trustee or any other Person.
V.4. Prepayments. The Company may prepay all or any part of the amounts
required to be paid by it under Section-5.2, at the times and in the amounts
provided in Article-
XI for redemption of the Bonds, and in the case of
mandatory redemptions of the Bonds, the Company shall cause to be furnished
to the Issuer such amounts on or prior to the applicable redemption dates.
Prepayment of amounts due hereunder pursuant to this Section shall be
deposited in the Bond Fund.
V.5. Credits Against Payments. To the extent that principal of or premium,
if any, or interest on the Bonds shall be paid with moneys available under
the Credit Facility, from remarketing proceeds (with respect to Purchase
Price) or other sources available under the Indenture, the obligation of the
Company to make, payments required by Section 5.2 shall be satisfied and
discharged to the extent of an amount equal to the principal of or premium,
if any, or interest on the Bonds so paid. If the principal of and premium,
if any, and interest on the Bonds shall have been paid sufficiently that
payment of the Bonds shall have occurred in accordance with Article V of the
Indenture, then the obligations of the Company pursuant to Section 5.2, ipso
facto, shall be deemed to have been paid in full, and the Company's
obligations under Section-5.2 and this Agreement shall be discharged.
Notwithstanding the foregoing to the extent that principal of or premium, if
any, or interest on the Bonds is paid from drawings under the Credit
Facility, there shall be credited against the unpaid loan payments required
by Section 5.2 hereof, an amount equal to the principal of or premium, if
any, or interest on the Bonds so paid.
V.6. Credit Facility and Alternate Credit Facility. The Company shall
provide for the payment of amounts payable pursuant to Section 5.2(a) and (d)
herein, by the delivery to the Trustee on the Issue Date of the Original
Credit Facility. The Company shall be entitled to terminate the Credit
Facility as provided therein and in the Indenture and shall be entitled to
provide an Alternate Credit Facility under certain circumstances as provided
in the Indenture.
V.7. Interest Rate Determination Method. The Company is hereby granted the
right to designate from time to time changes in the Interest Rate
Determination Method (as defined in the Indenture) in the manner and to the
extent set forth in Section-2.4 of the Indenture.
V.8. Company Approval of Indenture. A copy of the Indenture has been
submitted to the Company for its examination and review. By its execution of
this Agreement, the Company acknowledges that it has approved, has agreed to
and is bound by the provisions of the Indenture which by their terms are
applicable to the Company. The Company agrees that the Trustee shall be
entitled to enforce and to benefit from the terms and conditions of this
Agreement that relate to it notwithstanding the fact that it is not a
signatory hereto.
V.9. Outstanding Bonds. Promptly after each June 30, the Company shall
notify the Commission and the Issuer, by first class mail, of the aggregate
principal amount of the Bonds Outstanding at the close of business on such
June 30.
ARTICLE VIARTICLE VI
MAINTENANCE AND TAXES
Section VI.1. Company's Obligations to Maintain and Repair. The
Company agrees that during the term of this Agreement it will keep and
maintain the Project in good condition, repair and working order, ordinary
wear and tear excepted, at its own cost, and will make or cause to be made
from time to time all necessary repairs thereto (including external and
structural repairs) and renewals and replacements thereto.
VI.2. Taxes and Other Charges. (a) The Company will promptly pay and
discharge or cause to be promptly paid and discharged, as the same become
due, all taxes, assessments, governmental charges or levies and all utility
and other charges incurred in the operation, maintenance, use, occupancy and
upkeep of the Project imposed upon it or in respect of the Project before the
same shall become in default, as well as all lawful claims which, if unpaid,
might become a lien or charge upon such property and assets or any part
thereof, except such that are contested in good faith by the Company for
which the Company has maintained adequate reserves satisfactory to the Credit
Issuer, or in the absence of any Credit Issuer, satisfactory to the Issuer
and the Trustee.
(b) The Company shall furnish the Issuer and the Trustee, upon request,
with proof of payment of any taxes, governmental charges, utility charges,
insurance premiums or other charges required to be paid by the Company under
this Agreement.
ARTICLE VIIARTICLE VII
INSURANCE, EMINENT DOMAIN AND DAMAGE AND DESTRUCTION
Section VII.1. Insurance. The Company will during the term of this
Agreement and at all times while any Bonds are outstanding continuously
insure the Project against such risks as are customarily insured against by
businesses of like size and type, paying as the same become due all premiums
in respect thereof. In addition the Company shall comply, or cause
compliance, with applicable worker's compensation laws of the State. While a
Credit Facility is in effect, the Company shall only be required to comply
with the insurance requirements set forth in the Credit Agreement.
VII.2.SectioProvisions Respecting Eminent Domain. In case of any damage to
or destruction of all or any part of the Project exceeding $50,000, the
Company shall give prompt written notice thereof to the Issuer and the
Trustee. In case of a taking or proposed taking of all or any part of the
Project or any right therein by Eminent Domain, the party upon which notice
of such taking is served shall give prompt written notice to the other and to
the Trustee. Each such notice shall describe generally the nature and extent
of such damage, destruction, taking, loss, proceedings or negotiations.
VII.3.SectioDamage and Destruction. If at any time while any of the Bonds
are Outstanding, the Project, or any portion thereof, shall be damaged or
destroyed by fire, flood, windstorm or other casualty, or title to, or the
temporary use of, the Project, or any portion thereof, shall have been taken
by the power of Eminent Domain, the Company (unless it shall have exercised
its option to prepay all of the Bonds) shall cause the Net Proceeds from
insurance or condemnation or an amount equal thereto to be used for the
repair, reconstruction, restoration or improvement of the Project.
Notwithstanding the above, so long as the Credit Facility is outstanding, the
Company shall comply with the terms of the Credit Agreement related to the
use of insurance proceeds.
VIII ARTICLE VIII
SPECIAL COVENANTS
Section VIII.1. Access to the Property and Inspection. The Issuer
and the Trustee, and their respective agents and employees, shall have the
right, at all reasonable times during normal business hours of the Company
upon the furnishing of reasonable notice to the Company under the
circumstances, to enter upon and examine and inspect the Project and to
examine and copy the books and records of the Company insofar as such books
and records relate to the Project or the Bond Documents.
VIII.2.ectioFinancial Statements. The Company shall, upon request, deliver
to the Trustee and the Issuer as soon as practicable and in any event within
120 days after the end of each fiscal year of the Company, the financial
reports of the Company for such fiscal year.
VIII.3.ectioFurther Assurances and Corrective Instruments.Instruments
(a) Subject to the provisions of the Indenture, the Issuer and the
Company agree that they will, from time to time, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, such
supplements and amendments hereto and such further instruments as may
reasonably be required for carrying out the intention or facilitating the
performance of this Agreement.
(b) The Company shall cause this Agreement to be kept recorded and
filed in such manner and in such places as may be required by law to fully
preserve and protect the security of the Holders and the rights of the
Trustee and to perfect the security interest created by the Indenture.
VIII.4.ectioRecording and Filing; Other Instruments.Instruments
(a) The Company covenants that it will cause continuation statements
to be filed as required by law in order fully to preserve and to protect the
rights of the Trustee or the Issuer in the assignment of certain rights of
the Issuer under this Agreement and otherwise under the Indenture. The
Company covenants that it will cause Counsel to render an opinion to the
Issuer and to the Trustee not earlier than 60 nor later than 30 days prior to
each anniversary date occurring at five-year intervals after the issuance of
the Bonds to the effect that all Financing Statements, notices and other
instruments required by applicable law, including this Agreement, have been
recorded or filed or re-recorded or re-filed in such manner and in such
places required by law in order to fully preserve and protect the rights of
the Trustee in the assignment of certain rights of the Issuer under this
Agreement and otherwise under the Indenture.
(b) The Company and the Issuer shall execute and deliver all
instruments and shall furnish all information and evidence deemed necessary
or advisable in order to enable the Company to fulfill its obligations as
provided in subsection (a) of this Section. The Company shall file and
re-file and record and re-record or shall cause to be filed and re-filed and
recorded and re-recorded all instruments required to be filed and re-filed
and recorded or re-recorded and shall continue or cause to be continued the
liens of such instruments for so long as any of the Bonds shall be
Outstanding.
Section VIII.5. Exclusion from Gross Income for Federal Income Tax
VIII.5.s of Exclusion from Gross Income for Federal Income Tax Purposes of
Interest on the Bonds. The Company covenants and agrees that it has not
taken and will not take or cause to be taken, and has not omitted and will
not omit or cause to be omitted, any action which will result in interest
paid on the Bonds being included in gross income of the Holders of the Bonds
for the purposes of federal income taxation.
The Company covenants and agrees that it will take or cause to be taken
all required actions necessary to preserve the exclusion from gross income
for federal income tax purposes of interest on the Bonds; and the Issuer
covenants and agrees that it will take or cause to be taken all required
actions to preserve the exclusion from gross income for federal income tax
purposes of interest on the Bonds.
VIII.6.ectioIndemnity Against Claims. The Company will pay and discharge and
will indemnify and hold harmless the Issuer, the Commission and the Trustee,
and their respective officers, employees and agents, from any taxes,
assessments, impositions and other charges in respect of the Project. If any
such claim is asserted, or any such lien or charge upon payments, or any such
taxes, assessments, impositions or other charges, are sought to be imposed,
the Issuer or the Commission, as the case may be, will give prompt written
notice to the Company and the Trustee; provided, however, that the failure to
provide such notice will not relieve the Company of the Company's obligations
and liability under this Section and will not give rise to any claim against
or liability of the Issuer or the Trustee. The Company shall have the sole
right and duty to assume, and shall assume, the defense thereof, with counsel
selected by the Company and reasonably acceptable to the person on behalf of
which the Company undertakes a defense, with full power to litigate,
compromise or settle the same in its sole discretion.
VIII.7.ectioRelease and Indemnification. The Company shall at all times
protect, indemnify and hold harmless the Trustee, the Issuer, the Governing
Body, the Commission and their respective directors, members, officers,
attorneys, agents and employees against any and all liability, losses,
damages, costs, expenses, taxes, causes of action, suits, claims, demands and
judgments of any nature arising from or in connection with the Project or the
financing of the Project, including, without limitation, all claims or
liability resulting from, arising out of or in connection with the acceptance
or administration of the Bond Documents or the trusts thereunder or the
performance of duties under the Bond Documents or any loss or damage to
property or any injury to or death of any person that may be occasioned by
any cause whatsoever pertaining to the Project or the use thereof, including
without limitation any lease thereof or assignment of its interest in this
Agreement, such indemnification to include the reasonable costs and expenses
of defending itself or investigating any claim of liability and other
reasonable expenses and attorneys' fees incurred by the Issuer, The Trustee,
the Governing Body and their respective directors, members, officers,
attorneys, agents and employees in connection therewith, provided that the
benefits of this Section shall not inure to any person other than the Issuer,
the Governing Body, the Trustee and their respective directors, members,
officers, attorneys, agents and employees, and provided further that such
loss, damage, death, injury, claims, demands or causes shall not have
resulted from the gross negligence or willful misconduct of, the Issuer, the
Trustee or such director, member, officer, attorneys, agent or employee. The
obligations of the Company under this Section shall survive the termination
of this Agreement and the Indenture. Notwithstanding any other provision of
this Agreement or the Indenture to the contrary, the Company agrees (i)-not
to assert any claim or institute any action or suit against the Trustee or
its employees arising from or in connection with any investment of funds made
by the Trustee in good faith as directed by a Company Representative, and
(ii)-to indemnify and hold harmless the Trustee and its employees against any
liability, losses, damages, costs, expenses, causes of action, suits, claims,
demands and judgments of any nature arising from or in connection with any
such investment. In addition, the Issuer shall have the right, in the event
of a suit against the Issuer, to hire its own counsel, and the Company shall
indemnify the Issuer for the costs thereof.
VIII.8.ectioCompliance with Laws. The Company agrees to comply with all
applicable zoning, planning, building, environmental and other regulations of
the governmental authorities having jurisdiction of the Project during the
Company's operation of the Project.
VIII.9.ectioNon-Arbitrage Covenant. Covenant
(a) The Company and the Issuer covenant that they will (i) not take,
or fail to take, any action or make any investment or use of the proceeds of
the Bonds that would cause the Bonds to be "arbitrage bonds" within the
meaning of Section 148 of the Code and (ii) comply with the requirements of
Section 148 of the Code; provided that, the Issuer shall not be liable for
any loss resulting from the investment of any funds in accordance with any
written instructions of the Company.
(b) In the event that all of the proceeds of the Bonds, including the
investment proceeds thereof, are not expended by the date which is six (6)
months following the Issue Date, or if for any other reason a rebate is
payable to the United States pursuant to Section 148 of the Code, the Company
shall calculate, or cause to be calculated, the Rebate Amount (as defined in
the Indenture). The Company agrees to pay the amount so calculated, together
with supporting documentation, to the Trustee so as to permit the Trustee to
pay such rebate to the United States at the times required by the Code. The
amount paid by the Company to the Trustee shall be deposited into the Rebate
Fund. The Company shall maintain or cause to be maintained records of the
determinations of the rebate, if any, pursuant to this Section 8.9(b) until
six (6) years after the retirement of the Bonds. This Section 8.9(b) shall
be construed in accordance with Section 148(f) of the Code, including,
without limitation, any applicable tax regulations promulgated under the
Code. Nothing contained in this Agreement or in the Indenture shall be
interpreted or construed to require the Issuer to pay any applicable rebate,
such obligation being the sole responsibility of the Company. The Company
shall pay all fees, costs and expenses associated with calculation of the
Rebate Amount (as defined in the Indenture) and, upon request from the
Issuer, provide the Issuer with a copy of such calculation.
VIII.10.ctioNotice of Determination of Taxability. Promptly after the
Company first becomes aware of any Determination of Taxability or an event
that could trigger a Determination of Taxability, the Company shall give
written notice thereof to the Issuer, the Remarketing Agent and the Trustee.
VIII.11.ctioNo Purchase of Bonds by Company or Issuer. During the time a
Credit Facility is in effect, neither the Company, the Issuer nor any
affiliates of any of them shall purchase any of the Bonds from the
Remarketing Agent except under the circumstances under which the Remarketing
Agent may remarket Bonds to the Company or the Issuer as provided in Section
2.7(d) of the Indenture.
VIII.12.ctioMaintenance of Corporate Existence.e Existence
So long as a Credit Facility is in effect the Company agrees that it
will maintain its corporate existence, will not dissolve or otherwise dispose
of all or substantially all of its assets and will not consolidate with or
merge into another corporation or permit one or more other corporations to
consolidate with or merge into it, except either with the consent of the
Credit Issuer or as provided in the original Credit Agreement; if a Credit
Facility is not in effect, the Company agrees that it will continue to be a
corporation either organized under the laws of or duly qualified to do
business as a foreign corporation in the State, will maintain its corporate
existence, will not dissolve or otherwise dispose of all or substantially all
of its assets and will not consolidate with or merge into another corporation
or permit one or more corporations to consolidate with or merge into it;
provided, that the Company may, without violating the foregoing, consolidate
with or merge into another corporation, or permit one or more corporations to
consolidate with or merge into it, or transfer all or substantially all of
its assets to another such corporation (and thereafter dissolve or not
dissolve, as the Company may elect) if the corporation surviving such merger
or resulting from such consolidation, or the corporation to which all or
substantially all of the assets of the Company are transferred, as the case
may be:
(i) is a corporation organized under the laws of the United
States of America, or any state, district or territory thereof, and
qualified to do business in the State;
(ii) shall expressly in writing assume all of the obligations of
the Company contained in this Agreement;
(iii) has a consolidated tangible net worth (after giving effect
to such consolidation, merger or transfer) of not less than the
consolidated tangible net worth of the Company and its consolidated
subsidiaries immediately prior to such consolidation, merger or
transfer; and
(iv) provided that no Event of Default has occurred and is
continuing hereunder.
The term "consolidated tangible net worth," as used in this
Section, shall mean the difference obtained by subtracting total consolidated
liabilities (not including as a liability any capital or surplus item) from
total consolidated tangible assets of the Company and all of its consolidated
subsidiaries, computed in accordance with generally accepted accounting
principles. Prior to any such consolidation, merger or transfer the Trustee
shall be furnished a certificate from the chief financial officer of the
Company or his/her deputy stating that in the opinion of such officer none of
the covenants in this Agreement will be violated as a result of said
consolidation, merger or transfer.
VIII.13.ctioDuties and Obligations. The Company covenants and agrees that it
will fully and faithfully perform all the duties and obligations that the
Issuer has covenanted and agreed in the Indenture to cause the Company to
perform and any duties and obligations that the Company is required in the
Indenture to perform. The foregoing shall not apply to any duty or
undertaking of the Issuer that by its nature cannot be delegated or assigned.
IX ARTICLE IX
ASSIGNMENT, LEASE AND SALE
Section IX.1. Restrictions on Transfer of Issuer's Rights. The
Issuer agrees that, except for the assignment of its rights under this
Agreement to the Trustee pursuant to the Indenture, it will not during the
term of this Agreement sell, assign, transfer or convey its interests in this
Agreement except as provided in Section 9.2.
IX.2. Assignment by the Issuer. It is understood, agreed and acknowledged
that the Issuer, as security for payment of the principal of and premium, if
any, and interest on the Bonds, will assign to the Trustee pursuant to the
Indenture, among other things, certain of its rights, title and interests in
and to this Agreement (reserving its rights, however, pursuant to sections of
this Agreement providing that notices, reports and other statements be given
to the Issuer and that consents be obtained from the Issuer and also
reserving its rights to reimbursement and payment of costs and expenses under
Sections 5.2(b) and (c), its right of access under Section 8.1, and its
rights to indemnification and non-liability under Sections 8.6, 8.7, 12.6 and
12.7, all of this Agreement). The Company consents to such assignment and
agrees that the Trustee shall be entitled to enforce this Agreement directly
against the Company as a third party beneficiary hereof.
Section IX.3. Assignment, Lease or Sale of Project or Assignment of
IX.3.mAssignment, Lease or Sale of Project or Assignment of Agreement by
Company. (a) With the prior written consent of the Trustee, the Issuer and
if a Credit Facility is then in effect, the issuer of such Credit Facility
(i) the rights of the Company under this Agreement may be assigned by the
Company and (ii) the Project may be leased or sold as a whole or in part by
the Company; provided, however, that (1) no such assignment, lease or sale
shall relieve the Company from primary liability for any of its obligations
hereunder, and in the event of any assignment, lease or sale, the Company
shall continue to remain primarily liable for payments to be made pursuant to
the Note and hereunder and for the performance and observance of the other
agreements on its part herein provided to be performed and observed by it to
the same extent as though no assignment, lease or sale had been made, (2)
each lessee, purchaser or assignee of the Company's interest in this
Agreement shall assume the obligations of the Company hereunder to the extent
of the interest assigned, leased or sold, and the Company shall, not more
than 60 nor less than 30 days prior to the effective date of any such
assignment, lease or sale, furnish or cause to be furnished to the Issuer and
the Trustee a true and complete copy of each such assignment, lease or
purchase contract and assumption of obligations and (3) prior to any lease or
sale, the Company shall have caused to be delivered to the Issuer and the
Trustee an opinion of Bond Counsel to the effect that such leasing or sale
will not cause interest on the Bonds to be includable in the gross income of
the owners thereof for purposes of federal income taxation.
(b) Notwithstanding the provisions of Section 9.3(a) above, the
Company may sell or lease the Project and assign its interest in this
Agreement in full, and may be released from all liability under this
Agreement, so long as the Trustee receives (i) consent of the Issuer, 100% of
the Holders of the Bonds, and, if a Credit Facility is in effect, the issuer
of such Credit Facility to such transfer or assignment, and (ii) an Opinion
of Bond Counsel that such sale, lease, assignment or release, as applicable,
will not have an adverse effect on the excludability of interest on the Bonds
from gross income for federal income tax purposes.
(c) Notwithstanding the foregoing, if the Company with the consent of
the Credit Issuer determines that any fixtures, apparatus, or other movable
property constituting a part of the Project have become inadequate, obsolete,
worn out, unsuitable, undesirable, inappropriate or unnecessary for its
purposes at any time, the Company may remove such items from the Project and
sell, trade in, or otherwise dispose of them (as a whole or in part).
ARTICLE XARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section X.1. Events of Default Defined. The term "Event of
Default" shall mean any one or more of the following events:
(a) Failure by the Company to make any payments required to be paid
pursuant to Section 5.2(a) or to pay the Purchase Price of Bonds as required
pursuant to Section 5.2(d) herein;
(b) The occurrence of an Event of Default under the Indenture;
(c) Any representation by or on behalf of the Company contained in
this Agreement or in any instrument furnished in compliance with or in
reference to this Agreement or the Indenture proves false or misleading in
any material respect as of the date of the making or furnishing thereof;
(d) Failure by the Company to observe or perform any of its other
covenants, conditions, payments or agreements under this Agreement for a
period of 30 days after written notice, specifying such failure and
requesting that it be remedied, is given to the Company by the Issuer or the
Trustee; provided, however, that if such performance, observation or
compliance requires work to be done, action to be taken or conditions to be
remedied that by their nature cannot reasonably be done, taken or remedied
within such 30 day period, no Event of Default shall be deemed to have
occurred or to exist if, and so long as, the Company shall commence such
performance, observation or compliance within such period and shall
diligently and continuously prosecute the same to completion;
(e) The Company shall (i) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, assignee,
sequestrator, trustee, liquidator or similar official of the Company or of
all or a substantial part of its property, (ii) admit in writing its
inability, or be generally unable, to pay its debts as such debts become due,
(iii) make a general assignment for the benefit of its creditors, (iv)
commence a voluntary case under the Federal Bankruptcy Code (as now or
hereafter in effect), (v) file a petition seeking to take advantage of any
other federal or state law relating to bankruptcy, insolvency,
reorganization, arrangement, winding-up or composition or adjustment of
debts, (vi) fail to controvert in a timely or appropriate manner, or
acquiesce in writing to, any petition filed against the Company in an
involuntary case under said Federal Bankruptcy Code, or (vii) take any
corporate action for the purpose of effecting any of the foregoing;
(f) A proceeding or case shall be commenced, without the application
or consent of the Company, in any court of competent jurisdiction, seeking
(i) the liquidation, reorganization, arrangement, dissolution, winding-up or
composition or adjustment of debts of the Company, (ii) the appointment of a
trustee, receiver, custodian, assignee, sequestrator, liquidator or similar
official of the Company or of all or any substantial part of its assets, or
(iii) similar relief in respect of the Company under any law relating to
bankruptcy, insolvency, reorganization, arrangement, winding-up or
composition or adjustment of debts and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any of the
foregoing shall be entered and continue unstayed and in effect, for a period
of 90 days from the commencement of such proceeding or case or the date of
such order, judgment or decree, or an order for relief against the Company
shall be entered in an involuntary case under said Federal Bankruptcy Code;
(g) If a Credit Facility is in effect, the Trustee shall have
received a written notice from the Credit Issuer of the occurrence and
continuance of an "Event of Default" (as defined in the Credit Agreement); or
(h) If a Credit Facility is in effect, the Trustee shall have
received a written notice from the Credit Issuer that amounts which may be
drawn upon under the Credit Facility with respect to interest (other than
interest corresponding to the principal amount of Bonds which have been
redeemed) will not be reinstated following any drawing for such interest.
X.2. Remedies on Default. Upon the occurrence of an Event of Default under
this Agreement, the Trustee, as assignee of the Issuer, but only if
acceleration of the principal amount of the Bonds has been declared pursuant
to Section 6.2 of the Indenture, shall take any one or more of the following
remedial steps:
(a) By written notice declare all payments hereunder and under the
Note immediately due and payable, whereupon the same shall become immediately
due and payable without presentment, demand, protest or any other notice
whatsoever, all of which are hereby expressly waived by the Company.
(b) Take whatever other action at law or in equity may appear
necessary or desirable to collect the amounts payable pursuant hereto and
under the Note then due and thereafter to become due or to enforce the
performance and observance of any obligation, agreement or covenant of the
Company under this Agreement, including the making of any drawing under the
Credit Facility.
In the enforcement of the remedies provided in this Section, the Issuer
and the Trustee may treat all reasonable expenses of enforcement, including,
without limitation, legal, accounting and advertising fees and expenses, as
additional amounts payable by the Company then due and owing.
Section X.3. Application of Amounts Realized in Enforcement of
X.3.diApplication of Amounts Realized in Enforcement of Remedies. Any
amounts collected pursuant to action taken under Section 10.2 shall be paid
to the Trustee and applied in accordance with Section 6.7 of the Indenture.
X.4. No Remedy Exclusive. No remedy herein conferred upon or reserved to
the Issuer is intended to be exclusive of any other available remedy or
remedies, but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Agreement or now or hereafter
existing at law or in equity or by statute. No delay or omission to exercise
any right or power accruing upon an Event of Default under this Agreement
shall impair any such right or power or shall be construed to be a waiver
thereof, but any such right and power may be exercised from time to time and
as often as may be deemed expedient.
X.5. Agreement to Pay Attorneys' Fees and Expenses. Upon the occurrence of
an Event of Default under this Agreement, if the Issuer or the Trustee
employs attorneys or incurs other expenses for the collection of amounts
payable hereunder or for the enforcement of the performance or observance of
any covenants or agreements on the part of the Company herein contained,
whether or not suit is commenced, the Company agrees that it will on demand
therefor pay to the Issuer or the Trustee or any combination thereof, as the
case may be, the reasonable fees of such attorneys and such other reasonable
expenses so incurred by the Issuer or the Trustee.
X.6. Issuer and Company to Give Notice of Default. The Issuer and the
Company severally covenant that they will, at the expense of the Company,
promptly give to the Trustee, the Tender Agent, the Remarketing Agent, the
Paying Agent and the Credit Issuer, and to each other, written notice of any
Event of Default under this Agreement of which they shall have actual
knowledge or written notice, but the Issuer shall not be liable for failing
to give such notice.
ARTICLE XIARTICLE XI
PREPAYMENTS; PURCHASE OF BONDS
Section XI.1. Optional Prepayments.
(a) The Company shall have, and is hereby granted, the option to
prepay the unpaid principal amount hereunder and under the Note in whole,
together with interest thereon to the date of redemption of the Bonds, at any
time by taking, or causing the Issuer to take, the actions required by the
Indenture for the redemption of all Bonds then outstanding, upon the
occurrence of any of the events set forth in Section 2.18(b) of the Indenture.
(b) The Company shall have, and is hereby granted, the option to
prepay all or any portion of the unpaid balance hereunder and under the Note,
together with interest thereon to the date of redemption of the Bonds, at any
time by taking, or causing the Issuer to take, the actions required by the
Indenture (i) to discharge the lien thereof through the redemption, or
provision for payment of redemption of all Bonds then outstanding or (ii) to
effect the redemption, or provision for payment or redemption, of less than
all Bonds then outstanding, pursuant to Section 2.18(a) of the Indenture.
(c) To make a prepayment pursuant to this Section 11.1, the Company
shall give written notice to the Issuer, the Trustee and the Registrar which
shall specify therein (i) the date of the intended prepayment, which shall
not be less than 45 days from the date any Bonds are to be redeemed from such
prepayment, and (ii) the principal amount to be prepaid and the date or dates
on which the prepayment is to occur. All such prepayments shall be in the
amount of the unpaid amount hereunder and under the Note if made pursuant to
Section 11.1(a) or in the amount of an Authorized Denomination if made
pursuant to Section 11.1(b) and the Company shall furnish additional funds,
if necessary, to make such prepayments in such amounts. In addition, the
Company shall make such additional payments as shall be necessary to pay any
redemption premium on the Bonds in connection with such redemption.
Section XI.2. Mandatory Prepayment Upon a Determination of
XI.2.iMandatory Prepayment Upon a Determination of Taxability. In the event
of a Determination of Taxability, the Company shall forthwith, and in any
event within 45 days of any such Determination of Taxability, pay the entire
unpaid principal balance hereunder and under the Note plus accrued interest
thereon to the date of payment, provided, that, if the Company delivers to
the Trustee the opinion of Bond Counsel described in Section 2.18(c) of the
Indenture, which opinion states that interest on the Bonds will not be
includable in the gross income of the owners thereof if less than all of the
Bonds are redeemed, then the Company shall prepay the Loan in the amount
necessary to redeem the amount of Bonds stated in such opinion.
The Company hereby agrees to give prompt written notice to the Issuer
and the Trustee of (a) the occurrence of an event that gives or may give rise
to a Determination of Taxability or (b) its receipt of any oral or written
advice from the Internal Revenue Service that an event giving rise to a
Determination of Taxability shall have occurred.
Section XI.3. Mandatory Prepayment in Event of Cessation of Operation. In
the event of a "Cessation of Operation," the Company shall be required to
prepay the unpaid aggregate amount of the Note within 45 days after the date
of "Cessation of Operation," such payment to be due on the redemption date,
plus accrued interest to the date of redemption of the Bonds from such
prepayment, in accordance with the provisions of the Bonds and without
payment of premium.
For the purposes of this Section 11.3, a "Cessation of Operation" of
the Project shall not be deemed to have occurred until 60 days shall have
elapsed after written notice has been given to the Company by the Issuer or
the Trustee that operation of the Project shall have ceased and the Company
shall not have demonstrated to the satisfaction of the Issuer and the Trustee
that the Company (or an assignee or lessee permitted by Section 9.3 hereof)
is operating the Project as a "project" (within the meaning of the Act).
XI.4. Optional Purchase of Bonds. Subject to the terms of the Indenture
regarding the use of Eligible Funds, the Company may at any time, and from
time to time, furnish moneys to the Tender Agent accompanied by a notice
directing such moneys to be applied to the purchase of Bonds delivered for
purchase pursuant to the terms thereof, which Bonds shall be delivered to the
Trustee for cancellation in accordance with Section 2.8 of the Indenture.
The Company shall deliver to the Remarketing Agent and the Credit Issuer a
copy of any such notice.
XI.5. Relative Priorities. The obligations of the Company under Section 11.2
shall be and remain superior to the rights, obligations and options of the
Company under Section 11.1.
XI.6. Prepayment to Include Fees and Expenses. Any prepayment under this
Article shall also include any expenses of prepayment, as well as all
expenses and costs provided for herein.
XI.7. Purchase of Bonds.Purchase of Bonds
(a) In consideration of the issuance of the Bonds by the Issuer, but
for the benefit of the Holders, the Company has agreed, and does hereby
covenant, to cause the necessary arrangements to be made and to be thereafter
continued whereby the Holders from time to time may deliver, or may be
required to deliver Bonds for purchase and whereby such Bonds shall be so
purchased. In furtherance of the foregoing covenant of the Company, the
Issuer, at the request of the Company, has set forth in the Bonds the terms
and conditions relating to the delivery of Bonds by the Holders thereof for
purchase, has set forth in the Indenture the duties and responsibilities of
the Tender Agent with respect to the purchase of Bonds, and of the
Remarketing Agent with respect to the remarketing of Bonds and has therein
provided for the appointment of the Tender Agent and Remarketing Agent. The
Company hereby authorizes and directs the Tender Agent and the Remarketing
Agent to purchase, offer, sell and deliver Bonds in accordance with the
provisions of the Indenture.
Without limiting the generality of the foregoing covenant of the
Company, and in consideration of the Issuer's having set forth in the Bonds
and the Indenture the aforesaid provisions, the Company covenants, for the
benefit of the Holders, to provide for arrangements to pay, or cause to be
paid, such amounts as shall be necessary to effect the payment of the
Purchase Price of Bonds delivered for purchase, all as more particularly
described in the Indenture.
(b) Notwithstanding the provisions of subsection (a) of this Section,
the obligations of the Company under subsection (a) of this Section with
respect to the purchase of Bonds shall be terminated on the date the Bonds
begin to bear interest at the Fixed Rate in accordance with the Indenture.
(c) In furtherance of the obligations of the Company under subsection
(a) of this Section, the Company shall provide for the payment of its
obligations under said subsection (a) by the delivery of the Original Credit
Facility simultaneously with the original delivery of the Bonds. In order to
implement such undertaking of the Company, the Issuer, at the direction of
the Company, has set forth in the Indenture the terms and conditions relating
to drawings under the Credit Facility to provide moneys for the purchase of
Bonds. The Company hereby authorizes and directs the Trustee to draw moneys
under the Credit Facility in accordance with the provisions of the Indenture
to the extent necessary to provide moneys payable under Section 2.7 of the
Indenture if and when due.
(d) The Issuer shall have no obligation or responsibility, financial
or otherwise, with respect to the purchase of Bonds or the making or
continuation of arrangements therefor other than as expressly set forth in
subsection (a) of this Section, except that the Issuer shall generally
cooperate with the Company, the Tender Agent and the Remarketing Agent as
contemplated in Section 2.7 of the Indenture.
ARTICLE XIIARTICLE XII
MISCELLANEOUS
Section XII.1. Amounts Remaining in Funds. Subject to the
provisions of Article V of the Indenture and as provided in Article IV of the
Indenture, it is agreed by the parties hereto that amounts remaining in the
Bond Fund, Initial Fund or Bond Purchase Fund upon expiration or earlier
termination of this Agreement, as provided in this Agreement, after payment
in full of the Bonds (or provision for payment thereof having been made in
accordance with the provisions of the Indenture) and all other amounts owing
under the Indenture, shall be paid to the Credit Issuer (if a Credit Facility
is in effect and there is any amount then owing by the Company to the Credit
Issuer) and otherwise shall belong to and be paid to the Company by the
Trustee.
XII.2.SectioNo Implied Waiver. In the event any provision of this Agreement
should be breached by either party and thereafter waived by the other party,
such waiver shall be limited to the particular breach so waived and shall not
be deemed to waive any other breach thereunder or hereunder.
XII.3.SectioIssuer Representative. Whenever under the provisions of this
Agreement the approval of the Issuer is required or the Issuer is required to
take some action at the request of the Company, such approval shall be made
or such action shall be taken by the Issuer Representative; and the Company
and the Trustee shall be authorized to rely on any such approval or action.
XII.4.SectioCompany Representative. Whenever under the provisions of this
Agreement the approval of the Company is required or the Company is required
to take some action at the request of the Issuer, such approval shall be made
or such action shall be taken by the Company Representative; and the Issuer,
the Tender Agent, the Remarketing Agent, the Paying Agent and the Trustee
shall be authorized to rely on any such approval or action.
XII.5.SectioNotices. Notice under this Agreement shall be given in
accordance with Section 9.4 of the Indenture.
Section XII.6. Issuer, Governing Body, and their Respective Members,
XII.6.eys, OIssuer, Governing Body, and their Respective Members, Attorneys,
Officers, Employees and Agents Not Liable. To the extent permitted by law,
no recourse shall be had for the enforcement of any obligation, promise or
agreement of the Issuer contained herein or in the other Bond Documents to
which the Issuer is a party or for any claim based hereon or thereon or
otherwise in respect hereof or thereof against the Commission, any member of
the Governing Body, any commissioner, director, officer, agent, attorney or
employee, as such, in his/her individual capacity, past, present or future,
of the Commission, any member of the Governing Body, the Issuer or of any
successor entity, either directly or through the Issuer, the Governing Body
or any successor entity, whether by virtue of any constitutional provision,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise. No personal liability whatsoever shall attach to, or be incurred
by, the Commission, any member of the Governing Body, any commissioner,
officer, agent, attorney or employee, as such, in his/her individual
capacity, past, present or future, of the Commission, the Issuer, the
Governing Body, or of any successor entity, either directly or through the
Commission, the Issuer, the Governing Body, or of any successor entity, under
or by reason of any of the obligations, promises or agreements entered into
between the Issuer, the Commission or Governing Body and the Company, whether
herein contained or to be implied herefrom as being supplemental hereto; and
all personal liability of that character against every such member of the
Governing Body, commissioner, director, officer, agent, attorney or employee
is, by the execution of this Agreement and as a condition of, and as part of
the consideration for, the execution of this Agreement, expressly waived and
released.
Notwithstanding any other provision of this Agreement, the Issuer shall
not be liable to the Company or the Trustee or any other person for any
failure of the Issuer to take action under this Agreement unless the Issuer
(a) is requested in writing by an appropriate person to take such action, (b)
is assured of payment of, or reimbursement for, any reasonable expenses in
such action, and (c) is afforded, under the existing circumstances, a
reasonable period to take such action. In acting under this Agreement, or in
refraining from acting under this Agreement, the Issuer may conclusively rely
on the advice of its counsel.
Section XII.7. No Liability of Issuer; No Charge Against Issuer's
XII.7. No Liability of Issuer; No Charge Against Issuer's Credit. Any
obligation of the Issuer created by, arising out of, or entered into in
contemplation of this Agreement, including the Bonds, shall not impose a debt
or pecuniary liability upon the Issuer, the State or any political
subdivision thereof or constitute a charge upon the general credit or taxing
powers of any of the foregoing. Any such obligation shall be payable solely
out of the revenues and any other moneys derived hereunder and under the
Indenture and the Credit Facility, except (as provided in the Indenture and
in this Agreement) to the extent it shall be paid out of moneys attributable
to the proceeds of the Bonds or the income from the temporary investment
thereof.
The principal of, premium, if any, and interest on the Bonds shall be
payable solely from the funds pledged for their payment in accordance with
the Indenture and from payments made pursuant to the Credit Facility.
XII.8.SectioIf Performance Date Not a Business Day. If the last date for
performance of any act or the exercising of any right, as provided in this
Agreement, shall not be a Business Day, such payment may be made or act
performed or right exercised on the next succeeding Business Day.
XII.9.SectioBinding Effect. This Agreement shall inure to the benefit of and
shall be binding upon the Issuer, the Company, and their respective
successors and assigns. No assignment of this Agreement by the Company shall
relieve the Company of its obligations hereunder.
XII.10.ectioSeverability. In the event any provision of this Agreement shall
be held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provision
hereof.
XII.11.ectioAmendments, Changes and Modifications. Subsequent to the
issuance of the Bonds and prior to payment of the Bonds, this Agreement may
not be effectively amended, changed, modified, altered or terminated except
in accordance with the Indenture.
C-302349
33
XII.12.ectioExecution in Counterparts. This Agreement may be executed in
several counterparts, each of which, taken together, shall be an original and
all of which shall constitute but one and the same instrument.
XII.13.ectioApplicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State.
[The remainder of this page is left blank intentionally]
C-302349
36
IN WITNESS WHEREOF, the Issuer and the Company have caused this
Agreement to be executed in their respective legal names and their respective
corporate seals to be hereunto affixed, and the signatures of duly authorized
persons to be attested, all as of the date first above written.
THE ALAMANCE COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
By: /s/ William H. Ritter
Chairman
[SEAL]
ATTEST:
/s/ J. Douglas Avent
Secretary
CULP, INC.
By: /s/ Franklin N. Saxon
Senior Vice President
[SEAL]
ATTEST:
/s/ Kenneth M. Ludwig
Assistant Secretary
A-1
EXHIBIT A
DESCRIPTION OF THE PROJECT
Acquisition and installation of finishing equipment for upholstery fabric in an
existing fmanufacturing facility in Alamance County, North Carolina.
B-2
EXHIBIT B
$__________________ No. _____________
REQUISITION AND CERTIFICATE
______________, 19___
First-Citizens Bank & Trust Company
2917 Highwoods Boulevard
Raleigh, North Carolina 27604
Attention: Corporate Trust Department
Ladies and Gentlemen:
On behalf of Culp, Inc. (the "Company"), I hereby requisition from the funds
representing the proceeds of the sale of the Tax-Exempt Adjustable Mode
Industrial Development Revenue Bonds (Culp, Inc. Company Project) Series 1996,
issued by The Alamance County Industrial Facilities and Pollution Control
Financing Authority (the "Issuer"), and dated December 1, 1996 (the "Bonds"),
which funds are held by you in the Initial Fund in accordance with the Indenture
of Trust, dated as of December 1, 1996 (the "Indenture"), from the Issuer to you
the sum of $_________________ to be paid to the person or persons indicated
below:
(1) $__________________ for
_________________________________________________
_________________________________________________
payable to _________________________________, and
(2) $_____________for________________________________
________________________________________________
payable to______________________________________.
I hereby certify that (a) the obligation to make such payment was incurred by
the Issuer or the Company in connection with the Acquisition (as defined in the
Agreement, of even date with the Indenture, between the Issuer and the Company,
hereinafter referred to as the "Agreement") of the Project (referred to in the
Agreement), is a proper charge against the Costs of the Project (as defined in
the Agreement), and has not been the basis for any prior requisition which has
been paid; (b) neither the Company nor, to the best of the Company's knowledge,
the Issuer has received written notice of any lien, right to lien or attachment
upon, or claim affecting the right of such payee to receive payment of, any of
the money payable under this requisition to any of the persons, firms or
corporations named herein, or if any notice of any such lien, attachment or
claim has been received such lien, attachment or claim has been released or
discharged or will be released or discharged upon payment of this requisition;
(c) this requisition contains no items representing payment on account of any
retained percentages which the Issuer or the Company is entitled to retain at
this date; (d) the payment of this requisition will not result in less than
substantially all (95% or more) of the proceeds of the Bonds to be expended
under this requisition and under all prior requisitions having been used for the
acquisition and installation of real property or property of a character subject
to the allowance for depreciation under the Internal Revenue Code of 1986, as
amended; and (e) no "Event of Default" (as defined in the Agreement), or event
which after notice or lapse of time or both would constitute such an "Event of
Default" has occurred and not been waived.
The following paragraph is to be completed when any requisition and
certificate includes any item for payment for labor or to contractors, builders
or
materialmen.
I hereby certify that insofar as the amount covered by the above requisition
includes payments to be made for labor or to contractors, builders or
materialmen, including materials or supplies, in connection with the Acquisition
of the Project, (i) all obligations to make such payment have been properly
incurred, (ii) any such labor was actually performed and any such materials or
supplies were actually furnished or installed in or about the Project and are a
proper charge against the Costs of the Project, and (iii) such materials or
supplies either are not subject to any lien or security interest or, if the same
are so subject, such lien or security interest will be released or discharged
upon payment of this requisition.
______________________________________
Company Representative
C-2
EXHIBIT C
AFTER THE ENDORSEMENT AS HEREON PROVIDED AND PLEDGE OF THIS NOTE, THIS NOTE MAY
NOT BE ASSIGNED, PLEDGED, ENDORSED OR OTHERWISE TRANSFERRED EXCEPT TO AN
ASSIGNEE OR SUCCESSOR OF THE TRUSTEE IN ACCORDANCE WITH THE INDENTURE, BOTH
REFERRED TO HEREIN.
$6,000,000 December ___, 1996
PROMISSORY NOTE
FOR VALUE RECEIVED, Culp, Inc., a corporation duly formed and existing under the
laws of the State of North Carolina (the "Company"), by this promissory note
hereby promises to pay to the order of The Alamance County Industrial Facilities
and Pollution Control Financing Authority (the "Issuer") the principal sum of
Six Million Dollars ($6,000,000), together with interest on the unpaid principal
amount hereof, from the Issue Date (as defined in the Indenture referenced
below) until paid in full, at a rate per annum equal to the rate of interest
borne by the Bonds (as hereinafter defined), premium, if any, on the Bonds and
Purchase Price (as defined in the Indenture). All such payments of principal,
interest, premium and Purchase Price shall be made in funds which shall be
immediately available on the due date of such payments and in lawful money of
the United States of America at the principal corporate trust office of
First-Citizens Bank & Trust Company, Raleigh, North Carolina, or its successor
as trustee under the Indenture.
The principal amount, interest, premium, if any, and Purchase Price shall be
payable on the dates and in the amount, that principal of, interest on the
Bonds, premium, if any, and Purchase Price are payable, subject to prepayment as
hereinafter provided.
The Company shall receive a credit for the amounts due and payable hereunder to
the extent that payments are made by the Credit Issuer (as defined in the
Indenture) pursuant to drawings under the Credit Facility (as defined in the
Indenture).
This promissory note is the "Note" referred to in the Loan Agreement, dated as
of December 1, 1996 (the "Agreement") between the Company and the Issuer, the
terms, conditions and provisions of which are hereby incorporated by reference.
This Note and the payments required to be made hereunder are irrevocably
assigned, without recourse, representation or warranty, and pledged to
First-Citizens Bank & Trust Company under the Indenture of Trust, dated as of
December 1, 1996 (the "Indenture"), by and between the Issuer and First-Citizens
Bank & Trust Company, as Trustee, and such payments will be made directly to the
Trustee for the account of the Issuer pursuant to such assignment. Such
assignment is made as security for the payment of $6,000,000 in aggregate
principal amount of Tax-Exempt Adjustable Mode Industrial Development Revenue
Bonds (Culp, Inc. Project) Series 1996 (the "Bonds"), issued by the Issuer
pursuant to the Indenture. All the terms, conditions and provisions of the
Indenture and the Bonds are hereby incorporated as a part of this Note.
The Company may at its option, and may under certain circumstances be required
to, prepay together with accrued interest, all or any part of the amount due on
this Note, as provided in the Agreement.
C-2
Presentation, demand, protest and notice of dishonor are hereby expressly waived
by the Company.
The Company hereby promises to pay reasonable costs of collection and
reasonable attorneys' fees in case of default on this Note.
This Note shall be governed by, and construed in accordance with, the laws of
the State of North Carolina.
CULP, INC.
[SEAL] By:________________________________
Name: _____________________________
Title: ____________________________
ATTEST:
___________________________
_________ Secretary
ENDORSEMENT
Pay to the order of First-Citizens Bank & Trust Company, without recourse, as
Trustee under the Indenture referred to in the within mentioned Agreement, as
security for such Bonds issued under such Indenture. This endorsement is given
without any warranty as to the authority or genuineness of the signature of the
maker of the Note.
THE ALAMANCE COUNTY INDUSTRIAL FACILITIES AND
POLLUTION CONTROL FINANCING AUTHORITY
By: ________________________________
Name: _______________________________
Title: ______________________________
Dated: __________, 1996
EXHIBIT D
REPRESENTATIONS AND WARRANTIES RELATING TO TAX MATTERS
WITH RESPECT TO THE BONDS AND THE PROJECT
1. Not less than 95% of the net proceeds of the Bonds (consisting of the face
amount of the Bonds less any original issue discount plus any original issue
premium, but including issuance costs) shall be used to provide facilities to be
used in the manufacturing or production of tangible personal property, including
facilities that are directly related and ancillary to such manufacturing
facilities and located on the same site as the manufacturing facilities;
provided, however, that not more than twenty-five percent (25%) of the net
proceeds shall be used to provide such ancillary facilities.
2. The aggregate amount of capital expenditures (as defined by Section
1.103-10(b)(2) of the Tax Regulations to include any expenditure which was or
could have been treated as a capital expenditure under any rule or election
under the Code) with respect to facilities located in the same incorporated
municipality as the Project, or which are contiguous or integrated facilities,
the principal user of which was or is the Company or any Related Person, paid or
incurred during the period beginning three years before the date of issuance of
the Bonds, and financed otherwise than out of the Bond proceeds (not including
investment earnings thereon) and otherwise than out of the proceeds of other
outstanding issues to which Section 144(a)(2) of the Code applies, is
$1,303,000.
3. The aggregate face amount of all prior issues outstanding as of the date of
issuance of the Bonds (whether or not the issuer of each issue is the same) to
which Section 144(a) of the Code or Section 103(b)(6) of the Internal Revenue
Code of 1954, as amended applies, the proceeds of which were or will be used to
any extent with respect to facilities located in the same incorporated
municipality as the incorporated municipality in which the Project is located
and the principal user of which is the Company or a Related Person, is
$2,124,000. The Issuer hereby elects to have the provisions of Section 144(a) of
the Code apply to the Bonds. The Company and, at the direction of the Company,
the Issuer, shall file any reports or statements and take any other action as
may be required from time to time with respect to the qualification of the Bonds
as an exempt small issue within the meaning of Section 144(a) of the Code.
4. (a) During the period commencing 15 days before the date of issuance of the
Bonds, neither the Company nor any Related Person (or group of Related Persons
which includes the Company) has guaranteed, arranged, participated in, assisted
with, borrowed the proceeds of, or leased facilities financed by, obligations
issued under Section 144(a) of the Code by any state or local governmental unit
or any constituted authority empowered to issue obligations by or on behalf of
any state or local governmental unit other than the Issuer. Except for the
Company or any "related person" (or group of "related persons"), no Person has
(1)-guaranteed, arranged, participated in, assisted with or paid any portion of
the cost of the issuance of the Bonds, or (2)-provided any property or any
franchise, trademark or trade name (within the meaning of Section 1253 of the
Code) which is to be used in connection with the Project.
(b) During the period commencing on the date of issuance of the Bonds and ending
15 days thereafter, there will be no obligations issued under Section 144(a) of
the Code which are guaranteed by the Company or any Related Person (or group of
Related Persons which includes the Company) or which are issued with the
assistance or participation of, or by arrangement with, the Company or any
Related Person (or group of Related Persons which includes the Company) without
the written opinion of Hunton & Williams to the effect that the issuance of such
obligations will not adversely affect their opinion as to the exemption from
present federal income tax of interest on the Bonds. Other than the Company or
any Related Person (or group of Related Persons including the Company), no
Person has (i) guaranteed, arranged, participated in, assisted with the issuance
of, or paid any portion of the cost of the issuance of, any of the Bonds, and
(ii) provided any property or any franchise, trademark or trade name (within the
meaning of Section 1253 of the Code) which is to be used in connection with the
Project.
(c) The Bonds are not being issued as part of an issue the interest of which is
exempt from federal income taxation under any other provision of law other than
Section 144(a) of the Code.
5. No portion of the Bond proceeds is being used to provide a facility, a
purpose of which is retail food and beverage services, automobile sales or
service, or the provision of recreation or entertainment. No portion of the Bond
proceeds is being used to provide any private or commercial golf course, country
club, health club, massage parlor, tennis club, skating facility (including
roller skating, skateboard and ice skating), racquet sports facility (including
any handball or racquetball court), hot tub facility, suntan facility,
racetrack, skybox or other luxury box, airplane, store the principal business of
which is the sale of alcoholic beverages for consumption off premises, or
facility used primarily for gambling. No portion of the Bond proceeds is being
used directly or indirectly to provide residential real property for family
units.
6. (a) As of the date of issuance of the Bonds, the sum of (i) the aggregate
authorized face amount of the Bonds allocated in accordance with Section
144(a)(10)(C) of the Code to the Company or any Related Person to the Company
plus (ii) the aggregate authorized face amount of any outstanding tax-exempt
facility-related bonds (as defined in Section 144(a)(10)(B) of the Code) of the
Company, or any Related Person to the Company, does not exceed $40 million.
(b) As of the date of issuance of the Bonds, the sum of (i) the aggregate
authorized face amount of the Bonds allocated in accordance with Section
144(a)(10)(C) of the Code to any known test-period beneficiary, as defined in
Section 144(a)(10)(D) of the Code, or any Related Person to such test-period
beneficiary (other than the Company or any Related Person to the Company) plus
(ii) the aggregate authorized face amount of any outstanding tax-exempt
facility-related bonds (as defined in Section 144(a)(10)(B) of the Code) of such
known test-period beneficiary, or any Related Person thereto (other than the
Company or any Related Person to the Company), does not exceed $40 million.
7. There are no other bonds to which Section 144(a) of the Code applies which,
together with the Bonds, are to be used with respect to (a) a single building,
(b) an enclosed shopping mall, or (c) a strip of offices, stores or warehouses,
using substantial common facilities with the Project or a portion thereof.
8. Bond proceeds that will be used to pay the cost of acquisition of any real or
personal property other than land (or any interest therein) is or will be used
only with respect to either (aF) real or personal property the first use of
which is pursuant to such acquisition with the Bond proceeds or (b) a building
(and/or related equipment therefor) if the rehabilitation expenditures (as
defined in Section 147(d)(3) of the Code) with respect to such building equal or
exceed fifteen percent (15%) of the portion of the cost of acquiring such
building (and the equipment thereof) to be financed with the Bond proceeds; or
(c) a structure other than a building (and equipment therefor) if rehabilitation
expenditures (as defined in Section 147(d)(3) of the Code) with respect to such
property equal or exceed one hundred percent of the portion of the cost of
acquiring such property to be financed with the Bond proceeds.
9. (a) No portion of the Bond proceeds will be used directly or indirectly for
the acquisition of land or any interest therein to be used for the purpose of
farming.
(b) Less than 25% of the Bond proceeds are or will be used directly or
indirectly for the acquisition of land to be used for purposes other than
farming.
10. The Bonds will not be federally guaranteed within the meaning of Section
149(b) of the Code. For purposes of this representation, no principal user of
the financed property has entered into any leases of the financed property to,
or sales or service contracts with, any federal government agency.
11. The costs of the issuance of the Bonds including, but not limited to,
underwriter's spread, counsel fees, financial advisor fees, rating agency fees,
trustee fees incurred in connection with the borrowing, paying agent and
certifying and authenticating agent fees related to the issuance of the Bonds,
accountant fees, printing costs and costs incurred in obtaining public approval
of the Bonds, paid from the proceeds of the Bonds or investment earnings
thereon, will not exceed 2% of the aggregate face amount of the Bonds.
12. The Company hereby represents that the information contained in the
certificates or letters of representation of the Company with respect to the
compliance with the requirements of Section 103 of the Code, including the
information in Form 8038 (excluding the issue number and the employer
identification number of the Issuer), filed by the Company on behalf of the
Issuer with respect to the Bonds, and the Project is true and correct in all
material respects.