PURCHASE CONTRACT
$8,500,000
California Economic Development Financing Authority
Variable Rate Demand
Industrial Development Revenue Bonds, Series 1997
(Advanced Aerodynamics and Structures, Inc. Project)
August 4, 1997
California Economic Development Financing Authority
801 K Street, Suite 1700
Sacramento, California 91584
The Honorable Matt Fong
Treasurer of the State of California
915 Capitol Mall, Room 110
Sacramento, California 95814
Ladies and Gentlemen:
1. Rauscher Pierce Refsnes, Inc. (the "Underwriter") offers to enter
into this purchase contract (this "Purchase Contract") with the California
Economic Development Financing Authority (the "Authority") and the Treasurer of
the State of California, solely in his capacity as agent of sale for the
Authority (the "Treasurer"), which upon the Authority's and the Treasurer's
acceptance hereof will be binding upon the Authority, the Treasurer and the
Underwriter. This offer is made subject to the Authority's and Treasurer's
acceptance by execution of this Purchase Contract and approval by Advanced
Aerodynamics and Structures, Inc., a Delaware corporation (the "Borrower") and
their delivery of same to the Underwriter at or before 9:00 p.m., New York time,
today. Delivered to you herewith as Exhibit A, is the Letter of Representation,
dated the date hereof (the "Letter of Representation"), under which the Borrower
makes certain representations and undertakes certain obligations with respect to
this Purchase Contract.
2. Upon the terms and conditions and upon the basis of the
representations, warranties and covenants hereinafter set forth, the Underwriter
hereby agrees to purchase from the Authority and the Treasurer for offering to
the public, and the Authority and the Treasurer hereby agree to sell to the
Underwriter for such purpose, at an interest rate to be determined in accordance
with the terms of the Indenture (hereinafter defined), all (but not less than
all) of $8,500,000 aggregate principal amount of the Authority's Variable Rate
Demand Industrial Development Revenue Bonds, Series 1997 (Advanced Aerodynamics
and Structures, Inc. Project), dated as of the date of delivery thereof (the
"Bonds"). The purchase price of the Bonds shall be 100% of the principal amount
of the Bonds.
3. The Bonds shall be otherwise as described in, and shall be issued
and secured under the provisions of, the Indenture of Trust, dated as of August
1, 1997 (the "Indenture"), by and
between the Authority and First Trust of California, National Association, as
trustee (the "Trustee"). The proceeds of sale of the Bonds will be loaned to the
Borrower pursuant to the Loan Agreement (as hereinafter defined) and will be
applied by the Borrower to defray the Borrower's cost of the acquisition,
construction, improving and equipping of a manufacturing facility (the
"Project"). The Project is further described in the Loan Agreement, dated as of
August 1, 1997 (the "Loan Agreement"), between the Authority and the Borrower.
The Bonds will be secured by an irrevocable direct pay letter of credit (the
"Letter of Credit") issued by The Sumitomo Bank, Limited, acting through its Los
Angeles Branch, (the "Bank"), pursuant to the Reimbursement Agreement, dated as
of August 1, 1997 (the "Reimbursement Agreement"), between the Bank and the
Borrower.
The Bonds are more fully described in the Official Statement relating
to the Bonds, dated August 4, 1997 (the "Official Statement").
4. The Underwriter agrees to make a bona fide public offering of all
the Bonds at par, plus interest accrued thereon, if any, to the date of
delivery. The Bonds may be offered and sold to certain dealers (including the
Underwriter and other dealers depositing such Bonds into investment trusts) at a
price or at prices lower than such public offering price.
5. As soon as practicable after the execution of this Purchase Contract
by the Authority, but no later than the Closing, the Authority shall deliver or
use its best efforts to cause to be delivered to the Underwriter manually
executed originals of the documents listed below in subparagraphs (a), (b), (d),
(e) and (g), a copy of the document listed below in subparagraph (c) and
certified copies of the documents listed below in subparagraph (f):
(a) the Indenture;
(b) the Reimbursement Agreement;
(c) the Letter of Credit, issued by the Bank in favor of the
Trustee in an amount equal to at least the principal amount of the
Bonds and 45 days' interest thereon calculated at the rate of 12% on
the basis of a 365/366 day year;
(d) the Loan Agreement;
(e) the Tax Regulatory Agreement, dated as of August 1, 1997
(the "Tax Regulatory Agreement"), among the Authority, the Borrower and
the Trustee;
(f) (i) the resolution of the Authority, adopted on April 30,
1997, expressing the Authority's intention to issue the Bonds and to
reimburse certain expenditures incurred by the Borrower from proceeds
of the Bonds, certified by the Secretary of the Authority, (ii) the
resolution of the Authority, adopted on June 20, 1997, authorizing the
issuance, sale and delivery of the Bonds and the execution and delivery
of the Indenture, the Loan Agreement, the Tax Regulatory Agreement and
this Purchase Contract, certified by the Secretary of the Authority,
and (iii) the resolution of the California Infrastructure and Economic
Development Bank (the "Infrastructure Bank"), adopted June 20, 1997,
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approving the issuance of the Bonds by the Authority, certified by the
Secretary of the Infrastructure Bank; and
(g) the Official Statement.
By execution of this Purchase Contract, the Authority consents to the
use by the Underwriter of all of the above documents and the information
contained therein in connection with the public offering of the Bonds.
6. The Authority represents and warrants to the Underwriter that:
(a) The Authority is a body public and corporate, and a public
instrumentality of the State of California (the "State"), organized and
existing under the laws of the State, specifically Section 15710 et
seq. of the California Government Code, as amended, with all necessary
power and authority to issue the Bonds and to enter into the Loan
Agreement for the purpose of promoting and encouraging commerce and
industry, and generally to foster economic development in the State; to
enter into the Indenture, the Tax Regulatory Agreement and this
Purchase Contract; to issue, sell and deliver the Bonds to the
Underwriter as provided herein; and to carry out and consummate all
other transactions contemplated by each of the aforesaid documents.
(b) The Authority has duly authorized, by all appropriate
action, and complied with all provisions of law with respect to, the
execution and delivery of the Indenture, the Loan Agreement, the Tax
Regulatory Agreement and this Purchase Contract and the issuance, sale,
execution and delivery of the Bonds.
(c) When delivered to and paid for by the Underwriter in
accordance with the terms of this Purchase Contract and the Indenture,
the Bonds will have been duly and validly authorized, executed,
authenticated, issued and delivered by the Authority and will
constitute legal, valid and binding limited obligations of the
Authority enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency or other laws affecting creditors'
rights and remedies, and will be entitled to the benefits of the
Indenture.
(d) The execution and delivery of the Bonds, the Indenture,
the Loan Agreement, the Tax Regulatory Agreement and this Purchase
Contract, and compliance with the provisions thereof, do not and will
not conflict with, or constitute on the part of the Authority a
violation of, breach of or default under any indenture, mortgage, deed
of trust, resolution, note agreement or other agreement or instrument
to which the Authority is a party or by which the Authority is bound,
or, to its knowledge, any constitutional provision or statute of the
State or of the United States of America, any order, rule or regulation
of any court or governmental agency or body having jurisdiction over
the Authority or any of its activities or properties; and all consents
of any governmental authority of the State or of the United States of
America required in connection with the issuance or sale of the Bonds
by the Authority have been obtained;
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provided, however, that no representation is made concerning compliance
with the federal securities laws or the securities or "Blue Sky" laws
of the various states.
(e) There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, or before or by any court or
governmental agency or body pending or, to the best of its knowledge,
threatened against or affecting the Authority, nor to the best of its
knowledge is there any basis therefor, wherein an unfavorable decision,
ruling or finding would materially adversely affect the transactions
contemplated by this Purchase Contract, the Indenture, the Loan
Agreement or the Tax Regulatory Agreement, or which, in any way, would
adversely affect the validity or enforceability of the Bonds, the
Indenture, the Loan Agreement, the Tax Regulatory Agreement or this
Purchase Contract or any other agreement or instrument to which the
Authority is a party, used or contemplated for use in the consummation
of the transactions contemplated by this Purchase Contract, the
Indenture, the Loan Agreement or the Tax Regulatory Agreement.
(f) The Authority will not take or omit to take any action
which action or omission will in any way cause the proceeds from the
sale of the Bonds to be applied in a manner contrary to that provided
for in the Indenture.
(g) The Authority has reviewed the statements contained in the
Official Statement relating to the Authority under the caption "THE
AUTHORITY" and such statements, insofar as they are within the
knowledge of the Authority, are true and correct and fairly summarize
the matters encompassed thereby to the extent such matters are
described therein. If between the date of this Purchase Contract and
the date of the Closing (as hereinafter defined) any event shall occur
which, in the opinion of the Authority, might or would cause the
Official Statement as then supplemented or amended to contain, with
respect to statements contained in the Official Statement relating to
the Authority under the caption "THE AUTHORITY", any untrue statement
of a material fact or omit to state any material fact necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading, the Authority shall notify the
Underwriter, and if in the opinion of the Authority or the Underwriter
such event requires the preparation and publication of a supplement or
amendment to the Official Statement, the Authority, at the expense of
the Borrower, will supplement or amend the Official Statement in a form
and in a manner approved by the Underwriter.
7. At 11:00 A.M., New York time, on August 5, 1997, or at such other
time or on such earlier or later business day as shall have been mutually agreed
upon by the Authority, the Borrower and the Underwriter, the Authority will
deliver or cause to be delivered to the Underwriter the Bonds, in definitive
fully registered form, duly executed and authenticated, at a place in New York,
New York, to be mutually agreed upon by the Authority and the Underwriter. The
Authority will deliver or cause to be delivered to the Underwriter in Los
Angeles, California, at such time and on such date and at a place to be mutually
agreed upon by the Authority, the Borrower and the Underwriter, the closing
documents mentioned paragraph 7(b) hereof. The Underwriter will accept such
delivery and pay the purchase price of the Bonds as set forth in Paragraph 2
hereof, by a Federal Funds check or wire transfer to the order of "First Trust
of California, National Association, as Trustee" unless the Authority
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shall otherwise direct. This payment and delivery is herein called the
"Closing." The Bonds will be delivered in authorized denominations as set forth
in the Indenture and registered in the name of CEDE & Co., as nominee of The
Depository Trust Company or in such other names as the Underwriter shall have
requested. The Bonds will be made available to the Underwriter for checking and
packaging by the Underwriter at least one business day before the Closing at a
place to be mutually agreed upon by the Authority and the Underwriter.
8. The Underwriter's obligations hereunder to purchase and pay for the
Bonds shall be subject to the performance by the Authority of the obligations to
be performed by it hereunder at or prior to the Closing, to the performance by
the Borrower of the obligations and agreements to be performed by the Borrower
at or prior to the Closing under the Letter of Representation and to the
accuracy in all material respects of the representations and warranties of the
Authority contained herein and of the Borrower contained in the Letter of
Representation, as of the date hereof and as of the Closing, and shall also be
subject to the following conditions:
(a) At the time of the Closing (i) the Indenture, the Letter
of Credit, the Loan Agreement, the Reimbursement Agreement, the Tax
Regulatory Agreement and the Letter of Representation shall be in full
force and effect, and shall not have been amended, modified or
supplemented except as may have been agreed to in writing by the
Underwriter; and (ii) the Authority shall perform or have performed all
of its obligations required under or specified in this Purchase
Contract to be performed at or prior to the Closing.
(b) The Bonds shall have been duly authorized, executed and
authenticated in accordance with the provisions of the Indenture.
(c) The Underwriter may terminate this Purchase Contract by
notification to the Authority if at any time subsequent to the date
hereof and at or prior to the Closing (i) legislation shall have been
enacted by the United States or shall have been reported out of
committee or being considered by any committee of the Congress of the
United States, or a decision shall have been rendered by a court of the
United States or the Tax Court of the United States, or a ruling shall
have been made or a regulation or a temporary regulation shall have
been proposed or made or any other release or announcement shall have
been made by the Treasury Department of the United States or the
Internal Revenue Service, with respect to federal taxation upon
revenues or other income or payments of the general character to be
derived by the State or upon interest received on obligations of the
general character of the Bonds, which in the reasonable opinion of the
Underwriter materially adversely affects the market for the Bonds; (ii)
there shall have occurred any new outbreak of hostilities or any
national or international calamity or crisis, the effect of such
outbreak, calamity or crisis being such as could cause a major
disruption in the debt markets and as, in the reasonable judgment of
the Underwriter, would make it impracticable for it to market the Bonds
or to enforce contracts for the sale of the Bonds; (iii) there shall be
in force a general suspension of trading on The New York Stock
Exchange, Inc., or minimum or maximum prices for trading shall have
been fixed and be in force, or maximum ranges for prices for securities
shall have been required and be in force on The New York Stock
Exchange,
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Inc., whether by virtue of a determination by that exchange or by order
of the Securities and Exchange Commission or any other governmental
authority having jurisdiction; (iv) a general banking moratorium shall
have been declared by federal, New York, or California authorities
having jurisdiction and be in force; or (v) any event shall have
occurred or shall exist which makes untrue or incorrect, as of such
time, in any material respect, any material statement or information
contained in the Official Statement or which is not reflected in the
Official Statement, but should be reflected therein in order to make
such material statements and information contained therein not
misleading as of such time.
(d) At or prior to the Closing, the Underwriter shall receive
the following documents:
(1) The approving opinion of Kutak Rock ("Bond
Counsel"), relating to the Bonds, dated the date of the
Closing, in the form set forth as Appendix A to the Official
Statement, together with a letter of Bond Counsel, dated the
date of the Closing and addressed to the Underwriter stating
that the Underwriter may rely on such opinion.
(2) The supplemental opinion of Bond Counsel dated
the date of the Closing and addressed to the Underwriter, to
the effect that:
(i) this Purchase Contract has been duly
authorized, executed and delivered by the Authority
and, assuming due authorization, execution and
delivery by the Underwriter and approval by the
Borrower, is a valid and binding agreement of the
Authority, subject to laws relating to bankruptcy,
insolvency, reorganization or creditors' rights
generally and to the application of equitable
principles;
(ii) the statements contained in the
Official Statement in the sections thereof entitled:
"DESCRIPTION OF THE BONDS," "SECURITY FOR THE BONDS,"
"THE LOAN AGREEMENT," "THE INDENTURE" and "TAX
MATTERS" insofar as such statements purport to
summarize certain provisions of the Bonds, the Loan
Agreement or the Indenture, and Bond Counsel's
opinion concerning certain tax matters relating to
the Bonds are accurate in all material respects; and
(iii) the Bonds are not subject to the
registration requirements of the Securities Act of
1933, as amended, and the Indenture is exempt from
qualification as an indenture pursuant to the Trust
Indenture Act of 1939, as amended.
(3) The opinion of counsel to the Borrower, which may
be rendered by one or more firms acceptable to the Authority
and the Underwriter, dated the date of the closing and in form
and substance acceptable to the Authority and the Underwriter.
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(4) A certificate dated the date of the Closing of
the Chair of the Authority, or the Chair's designee, to the
effect that as of such date, (a) no litigation is pending or,
to his knowledge, threatened in any court (i) challenging the
creation, organization or existence of the Authority, (ii)
seeking to restrain or enjoin the issuance or delivery of any
of the Bonds, or the collection of revenues or other moneys
pledged or to be pledged to pay the principal of and interest
on the Bonds, or in any way contesting or affecting the
validity of the Bonds or the Indenture or the collection of
revenues or other moneys or the pledge thereof, or contesting
the powers of the Authority to issue the Bonds or to enter
into the Indenture, (iii) in any way contesting or affecting
the validity of the Loan Agreement, the Tax Regulatory
Agreement or this Purchase Contract, or contesting the powers
of the Authority to enter into or to execute and deliver the
Loan Agreement, the Tax Regulatory Agreement or this Purchase
Contract, (b) the representations and warranties of the
Authority contained herein are true and correct in all
material respects on and as of the date of the Closing as if
made on the date of the Closing; and (c) to the best of his
knowledge, no event affecting the Authority has occurred since
the date of the Official Statement which has not been
disclosed therein or by supplement or amendment thereto and
which should be disclosed in the Official Statement for the
purpose for which it is to be used or which it is necessary to
disclose therein in order to make the statements and
information therein not misleading in any material respect.
(5) An opinion, dated the date of the Closing and
addressed to the Underwriter, the Authority, Bond Counsel and
Standard & Poor's Ratings Services ("Standard & Poor's") of
United States and Japanese counsel to the Bank in form and
substance acceptable to the Underwriter, the Authority, Bond
Counsel and Standard & Poor's.
(6) A certificate of an authorized officer of the
Bank, dated the date of the Closing, to the effect that the
information under the captions "THE BANK" and "THE LETTER OF
CREDIT AND THE REIMBURSEMENT AGREEMENT" in the Official
Statement does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the
statements made under such caption, in light of the
circumstances under which they were made, not misleading.
(7) A preference opinion, dated the date of the
Closing, of Bond Counsel, addressed to Standard & Poor's.
(8) A certificate of the Borrower, dated the date of
the Closing and signed by an authorized officer of the
Borrower, acting solely in his official capacity, to the
effect that (i) since the date hereof no material and adverse
change has occurred in the financial position or results of
operations of the Borrower; (ii) the Borrower has not, since
the date hereof, incurred any material liabilities other than
in the ordinary course of business or as set forth in or
contemplated by the Official Statement; (iii) no event
affecting the Borrower has
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occurred since the date of the Official Statement which should
be disclosed in the Official Statement for the purpose for
which it is to be used or which is necessary to be disclosed
therein in order to make the statements and information
therein in light of the circumstances under which they are
made not misleading as of the date of Closing; and (iv) the
representations and warranties included in the Letter of
Representation are true and correct in all material respects
as of the date of the Closing, and all obligations to be
performed by the Borrower under the Letter of Representation
on or prior to the date of the Closing have been performed.
(9) The Official Statement signed on behalf of the
Authority.
(10) Executed counterparts of the Indenture, the Loan
Agreement, the Remarketing Agreement, the Reimbursement
Agreement and the Tax Regulatory Agreement and specimens of
the Letter of Credit and the Bonds.
(11) Copies of the resolutions or other documents of
the Borrower authorizing the execution and delivery of the
Loan Agreement, the Reimbursement Agreement, the Remarketing
Agreement, the Letter of Representations and the Tax
Regulatory Agreement, certified by the Secretary or an
Assistant Secretary of the Borrower as having been duly
adopted and being in full force and effect.
(12) Copies of the resolutions of the Authority
authorizing the issuance of the Bonds, the use of the Official
Statement and authorizing or approving the execution and
delivery of the documents to which the Authority is a party,
certified by the Secretary of the Authority, as having been
duly adopted and being in full force and effect.
(13) A certificate of a duly authorized officer of
the Authority satisfactory to the Underwriter, dated the date
of Closing, stating that such officer is charged, either alone
or with others, with the responsibility for issuing the Bonds;
setting forth, in the manner permitted by the Treasury
Regulations and the Internal Revenue Code of 1986 (the
"Code"), the reasonable expectations of the Authority as of
such date as to the use of proceeds of the Bonds and of any
other funds of the Authority pledged or expected to be used to
pay principal or purchase price of, premium, if any, or
interest on the Bonds and the facts and estimates on which
such expectations are based; and stating that, to the best of
the knowledge and belief of the certifying officer, the
Authority's expectations are reasonable, which certification
may be made in reliance upon a similar certification, dated
the date of the Closing, furnished to such person for such
purpose by a duly authorized officer or attorneys-in-fact of
the Borrower satisfactory to the Underwriter.
(14) An opinion of counsel to the Authority, dated
the date of the Closing, addressed to the Underwriter, the
Trustee and Bond Counsel, in form and substance acceptable to
the Underwriter, the Trustee and Bond Counsel.
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(15) The letter from Standard & Poor's indicating the
rating for the Bonds which is not lower than "A/A-1."
(16) Evidence satisfactory to the Underwriter that
the Bonds have been approved by the Governor of the State or
other appropriate official or governing body, after a public
hearing thereon held after reasonable public notice in
accordance with Section 147(f) of the Code.
(17) Evidence of the filing, as required by Section
149(e) of the Code, of Form 8038.
(18) A certified copy of the resolution of the
California Debt Limit Allocation Committee granting the
Authority a portion of the State's volume cap for the Bonds
equal to at least the amount of the Bonds purchased pursuant
to this Purchase Contract.
(19) Such additional certificates, instruments and
other documents as the Underwriter reasonably may deem
necessary to evidence the truth and accuracy as of the time of
the Closing of the representations of the Authority, the
Borrower and the Bank and the due performance or satisfaction
by the Authority, the Borrower and the Bank at or prior to
such time of all agreements then to be performed and all
conditions then to be satisfied by the Authority, the Borrower
and the Bank.
If the Authority shall be unable to satisfy the conditions contained in
this Purchase Contract, or if the obligations of the Underwriter shall be
terminated for any reason permitted by this Purchase Contract, this Purchase
Contract shall terminate and neither the Underwriter nor the Authority shall be
under further obligation hereunder, except as set forth in Paragraph 10.
9. The Authority covenants with the Underwriter to cooperate with it
and the Borrower in qualifying the Bonds for offer and sale under the securities
or "Blue Sky" laws of such States as the Underwriter may request; provided that
in no event shall the Authority be obligated to take any action which would
subject it to general service of process in any State where it is not now so
subject. It is understood that the Authority is not responsible for compliance
with or the consequences of failure to comply with applicable "Blue Sky" laws.
10. (a) The Underwriter shall be under no obligation to pay any
expenses incident to the performance of the Authority's obligations hereunder,
including but not limited to (i) the cost of printing and delivering and
preparation for printing or other reproduction of the Indenture, the Letter of
Credit, the Loan Agreement, the Reimbursement Agreement, this Purchase Contract,
the Letter of Representation, the Remarketing Agreement and the Official
Statement; (ii) the fees and disbursements of Bond Counsel, counsel to the
Authority and any experts or consultants retained by the Authority or the
Borrower; (iii) the fees and disbursements of the Bank and its counsel and (iv)
the fees of Standard & Poor's. The costs and expenses set forth in the
immediately preceding sentence shall be paid out of the proceeds of the Bonds,
or other
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available funds of the Borrower in accordance with the Indenture or if the Bonds
are not delivered to the Underwriter by the Authority (unless such delivery be
prevented by the Underwriter's default hereunder, in which event the Underwriter
shall pay such costs and expenses as and for liquidated damages hereunder),
shall be paid by the Borrower pursuant to the Letter of Representation.
(b) The Underwriter shall pay (i) all advertising expenses in
connection with the public offering of the Bonds and (ii) all other expenses
incurred by it in connection with the public offering and distribution of the
Bonds.
11. Any notice or other communication to be given to the Authority
under this Purchase Contract may be given by delivering the same in writing at
its address set forth above, addressed Attention: Chair, and any such notice or
other communication to be given to the Underwriter may be given by delivering
the same to Rauscher Pierce Refsnes, Inc., 117 East Colorado Boulevard, Suite
210, Pasadena, California 91105. All notices or communications hereunder by any
party shall be given and served upon each other party.
12. This Purchase Contract shall constitute the entire agreement
between the Authority, the Treasurer and the Underwriter and is made solely for
the benefit of the Authority, the Borrower and the Underwriter (including the
successors or assigns of the Underwriter). No other person shall acquire or have
any rights hereunder or by virtue hereof. All representations, warranties and
agreements of the Authority in this Purchase Contract shall remain operative and
in full force and effect, regardless of (a) any investigation made by or on
behalf of the Underwriter, (b) the delivery of any payment for the Bonds
hereunder and (c) any termination of this Purchase Contract. The parties hereto
agree to cooperate prior and subsequent to the Closing to take such actions as
shall be necessary or desirable in connection with securing the rating of the
Bonds by Standard & Poor's.
13. This Purchase Contract may not be amended without the written
consent of the Authority, the Treasurer and the Borrower.
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14. The validity, interpretation and performance of this Purchase
Contract shall be governed by the laws of the State of California.
RAUSCHER PIERCE REFSNES, INC.
By:______________________________________
Managing Director
CALIFORNIA ECONOMIC DEVELOPMENT
FINANCING AUTHORITY
By:______________________________________
Chair
Attest:
By:_________________________________
Secretary
OFFICE OF THE STATE TREASURER
By:_____________________________________
Deputy Treasurer
Agreed to and Approved by:
ADVANCED AERODYNAMICS AND
STRUCTURES, INC.
By:_______________________________
Authorized Signatory
EXHIBIT A
Letter of Representation
August 4, 1997
California Economic Development Financing Authority
801 K Street, Suite 1700
Sacramento, California 91584
The Honorable Matt Fong
Treasurer of the State of California
915 Capitol Mall, Room 110
Sacramento, California 95814
Rauscher Pierce Refsnes, Inc.
117 East Colorado Boulevard, Suite 210
Pasadena, California 91105
Ladies and Gentlemen:
Pursuant to a purchase contract dated the date hereof (the "Purchase
Contract"), with Rauscher Pierce Refsnes, Inc. (the "Underwriter"), which the
undersigned (the "Borrower") has approved, the California Economic Development
Financing Authority (the "Authority") and the Treasurer of the State of
California propose to sell $8,500,000 aggregate principal amount of the
Authority's Variable Rate Demand Industrial Development Revenue Bonds, Series
1997 (Advanced Aerodynamics and Structures, Inc. Project) (the "Bonds"). The
offering of the Bonds is described in an official statement, dated August 4,
1997 (the "Official Statement").
Certain revenues and other moneys received by the Authority pursuant or
with respect to the Loan Agreement, dated as of August 1, 1997 (the "Loan
Agreement"), between the Authority and the Borrower will be pledged to secure
the payment of the Bonds, including the interest thereon pursuant to an
Indenture of Trust, dated as of August 1, 1997 (the Indenture"), between the
Authority and First Trust of California, National Association, as trustee (the
"Trustee"), relating to the Bonds. In addition, the Bonds shall be payable from
funds drawn under an irrevocable direct pay letter of credit (the "Letter of
Credit") issued by The Sumitomo Bank, Ltd., acting through its Los Angeles
Branch, (the "Bank"), pursuant to a Reimbursement Agreement, dated as of August
1, 1997 (the "Reimbursement Agreement"), between the Borrower and the Bank.
In order to induce you to enter into the Purchase Contract and to make
the sale and purchase and reoffering of the Bonds therein contemplated, the
Borrower hereby represents, warrants and agrees with each of you as follows:
(1) The Borrower is a corporation, organized and validly
existing under the laws of the State of Delaware, has full legal right,
power and authority to enter into this
A-1
Letter of Representation, the Loan Agreement, the Reimbursement
Agreement and the Remarketing Agreement, to approve the Purchase
Contract and to carry out and consummate all transactions contemplated
by this Letter of Representation, the Loan Agreement, the Reimbursement
Agreement, the Remarketing Agreement, the Tax Regulatory Agreement and
the Purchase Contract and by proper action has duly authorized the
execution and delivery of this Letter of Representation, the Loan
Agreement, the Reimbursement Agreement, the Tax Regulatory Agreement
and the Remarketing Agreement and the approval of the Purchase
Contract.
(2) The officer of the Borrower executing this Letter of
Representation, the Loan Agreement, the Reimbursement Agreement and the
Remarketing Agreement and approving the Purchase Contract is duly and
properly authorized to execute the same.
(3) The Purchase Contract has been duly approved by, and this
Letter of Representation, the Loan Agreement, the Reimbursement
Agreement, the Tax Regulatory Agreement and the Remarketing Agreement
have been duly authorized, executed and delivered by the Borrower. The
Loan Agreement, when assigned to the Trustee pursuant to the Indenture,
will constitute the legal, valid and binding obligation of the Borrower
to the Trustee enforceable against the Borrower in accordance with its
terms for the benefit of the owners of the Bonds; except as enforcement
of the Loan Agreement may be limited by bankruptcy, insolvency,
moratorium, reorganization, fraudulent conveyance laws, laws affecting
the enforcement of creditors rights, the application of equitable
principles and judicial discretion, and by the covenant of good faith
and fair dealing which may be implied by law into contracts. This
Letter of Representation, the Reimbursement Agreement, the Remarketing
Agreement and the Tax Regulatory Agreement and any rights of the
Authority and obligations of the Borrower under the Loan Agreement not
so assigned to the Trustee will constitute the legal, valid and binding
agreements of the Borrower enforceable against the Borrower in
accordance with their respective terms; except as enforcement of each
of the above-named documents may be limited by bankruptcy, insolvency,
moratorium, reorganization, fraudulent conveyance laws, laws affecting
the enforcement of creditors rights, the application of equitable
principles and judicial discretion, and by the covenant of good faith
and fair dealing which may be implied by law into contracts.
(4) The Borrower is not in any material way in breach of or
default under (i) any applicable law or administrative regulation of
the State of California or the United States or any applicable judgment
or decree or (ii) any material loan agreement, indenture, bond, note,
resolution, agreement or other instrument to which it is a party or is
otherwise subject, and no event has occurred and is continuing which,
with the passage of time or the giving of notice or both, would
constitute an event of default under any such instrument.
(5) The approval of the Purchase Contract and the Official
Statement; the execution and delivery of the Loan Agreement, the
Reimbursement Agreement, the Tax Regulatory Agreement, the Remarketing
Agreement and this Letter of Representation; the consummation of the
transactions herein and therein contemplated; and the fulfillment
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of or compliance with the terms and conditions hereof and thereof will
not conflict with or constitute a violation or breach of or default
(with due notice or the passage of time or both) under the Borrower's
Organization Documents (as defined in the Indenture), or any applicable
law or administrative rule or regulation, or any applicable court or
administrative decree or order, or, to the knowledge of the Borrower,
any indenture, mortgage, deed of trust, loan agreement, lease, contract
or other agreement or instrument to which it is a party or by which it
or its properties are otherwise subject or bound, or result in the
creation or imposition of any prohibited lien, charge or encumbrance of
any nature whatsoever upon any of the Borrower's assets, which
conflict, violation, breach, default, lien, charge or encumbrance might
have consequences that would materially and adversely affect the
consummation of the transactions contemplated by the Purchase Contract,
the Indenture, the Loan Agreement, the Reimbursement Agreement, the
Remarketing Agreement, the Tax Regulatory Agreement, this Letter of
Representation or the Official Statement or the financial condition,
assets, properties or operations of the Borrower.
(6) No consent or approval of any trustee or holder of any
indebtedness of the Borrower, and no consent, permission,
authorization, order or license of, or filing or registration with, any
governmental authority (except in connection with Blue Sky proceedings)
is necessary in connection with the execution and delivery of this
Letter of Representation, the Loan Agreement, the Reimbursement
Agreement, the Tax Regulatory Agreement or the Remarketing Agreement;
the approval of the Purchase Contract; or the consummation of any
transaction therein or herein contemplated on the part of the Borrower,
except as have been obtained or made and as are in full force and
effect or, as appropriate, will be in full force and effect at the
Closing. The Borrower makes no representation as to any approvals or
actions as may be required under any state Blue Sky or federal
securities laws.
(7) There is no action, suit, proceeding, inquiry or
investigation before or by any court or federal, state, municipal or
other government authority pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or its assets,
properties or operations which, if determined adversely to the Borrower
or the interests thereof, would have a material and adverse effect upon
the consummation of the transactions contemplated by or the validity of
the Purchase Contract, the Loan Agreement, the Reimbursement Agreement,
the Remarketing Agreement, the Tax Regulatory Agreement, this Letter of
Representation or the Official Statement or upon the financial
condition, assets, properties or operations of the Borrower, and the
Borrower is not in default with respect to any order or decree of any
court or any order, regulation or demand of any federal, state,
municipal or other governmental authority, which default would
materially and adversely affect the consummation of the transactions
contemplated by the Purchase Contract, the Loan Agreement, the
Reimbursement Agreement, the Remarketing Agreement, the Tax Regulatory
Agreement, this Letter of Representation, the Official Statement or the
financial condition, assets, properties or operations of the Borrower.
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(8) The Borrower has obtained or will obtain all variances
from applicable zoning ordinances and has obtained or will obtain in
due course all building permits and easements or licenses for the
acquisition, construction and equipping of the Project (as said term is
defined in the Indenture), to the extent and as such Project is
described in the Official Statement, and such variances, permits,
easements and licenses constitute all approvals required for the
Project; and the Project should not be subject to change by any
administrative or judicial body so as to materially affect such
acquisition and construction. The Project has complied with the
requirements of the California Environmental Quality Act.
(9) The Borrower hereby agrees to pay the expenses described
in Paragraph 10(a) of the Purchase Contract, and to pay any expenses
incurred in amending or supplementing the Official Statement pursuant
to the Purchase Contract.
(10) As of the date hereof, the Official Statement, as amended
or supplemented pursuant to the Purchase Contract or this Letter of
Representation, if applicable, does not and will not contain as of the
Closing any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(11) If between the date hereof and the date of the Closing
any event shall occur which might or would cause the Official
Statement, as then supplemented or amended, to contain an untrue
statement of a material fact or to omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, the Borrower shall notify the Authority and the
Underwriter and if in the opinion of the Borrower, the Authority or the
Underwriter such event requires the preparation and publication of a
supplement or amendment to the Official Statement, the Authority will
request the Borrower to cause the Official Statement to be amended or
supplemented in a form and in a manner approved by the Underwriter.
(12) After the Closing, the Borrower (a) will not participate
in the issuance of any amendment of or supplement to the Official
Statement to which, after being furnished with a copy, the Underwriter
or the Authority shall reasonably object in writing or which shall be
disapproved by counsel for the Underwriter or the Authority and (b) if
any event relating to or affecting the Authority or the Borrower or its
present or proposed facilities shall occur as a result of which it is
necessary, in the opinion of counsel for the Underwriter or the
Authority, to amend or supplement the Official Statement in order to
make the Official Statement not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser,
forthwith prepare and furnish to the Underwriter and the Authority (at
the expense of the Borrower) a reasonable number of copies of an
amendment of or supplement to the Official Statement (in form and
substance satisfactory to counsel for the Underwriter and counsel to
the Authority) which will amend or supplement the Official Statement so
that it will not contain an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time the
Official Statement is
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delivered to purchaser, not misleading. For the purposes of this
subsection, the Authority and the Borrower will furnish such
information as the Underwriter may from time to time reasonably
request.
(13) The Borrower agrees to indemnify and hold harmless the
Authority and the Underwriter and each person, if any, who controls (as
such term is defined in Section 15 of the Securities Act of 1933, as
amended) the Authority and the Underwriter and their officers, agents,
employees, advisors and attorneys against any and all judgments,
losses, claims, damages, liabilities and expenses (i) arising out of
any statement or information in the Official Statement, relating to the
Borrower and the Project, that is or is alleged to be untrue or
incorrect in any material respect or the omission or alleged omission
therefrom of any statement or information that should be stated therein
or that is necessary to make the statements therein relating to the
Borrower and the Project not misleading in any material respect, and
(ii) to the extent of the aggregate amount paid in settlement of any
litigation commenced or threatened arising from a claim based upon any
such untrue statement or omission if such settlement is effected with
the written consent of the Borrower. In case any claim shall be made or
action brought against the Authority or the Underwriter or any
controlling person based upon the Official Statement for which
indemnity may be sought against the Borrower, as provided above, such
party shall promptly notify the Borrower in writing setting forth the
particulars of such claim or action and the Borrower shall assume the
defense thereof, including the retaining of counsel acceptable to such
party and the payment of all expenses. The Authority and the
Underwriter or any such controlling person shall have the right to
retain separate counsel in any such action and to participate in the
defense thereof but shall bear the fees and expenses of such counsel
unless (i) the Borrower shall have specifically authorized the
retaining of such counsel or (ii) the parties to such suit include such
Underwriter or controlling person or persons, and the Borrower and such
Underwriter or controlling person or persons have been advised by such
counsel that one or more legal defenses may be available to it or them
which may not be available to the Borrower, in which case the Borrower
shall not be entitled to assume the defense of such suit
notwithstanding its obligation to bear the fees and expenses of such
counsel.
(14) In order to provide for just and equitable contribution
in circumstances in which the indemnification provided for in Paragraph
(13) hereof is applicable but for any reason is held to be unavailable
from the Borrower, the Borrower and the Underwriter shall contribute to
the aggregate losses, claims, damages and liabilities (including any
investigation, legal and other expenses incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or
any claims asserted, but after deducting any contribution received by
the Borrower from persons who control the Borrower within the meaning
of Section 20 of the Securities Exchange Act of 1934 and Section 15 of
the Securities Act of 1933, as amended (collectively, the "Securities
Acts"), to which the Borrower and the Underwriter may be subject in
such proportions that the Underwriter are responsible for that portion
represented by the percentage that the underwriting discount or fee
received by the Underwriter bears to the offering price of the Bonds
and the Borrower is responsible for the balance; provided, however,
that (i) in no case shall the Underwriter be responsible for any amount
in excess of the
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underwriting fee or discount applicable to the Bonds purchased by such
Underwriter pursuant to the Purchase Contract and (ii) no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act of 1933, as amended) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Paragraph (14), each person, if
any, who controls the Underwriter within the meaning of the Securities
Acts, shall have the same rights to contribution as the Underwriter,
and each person, if any, who controls the Borrower within the meaning
of the Securities Acts shall have the same rights to contribution as
the Borrower, subject in each case to clauses (i) and (ii) of this
Paragraph (14). Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding
against such party in respect of which a claim for contribution may be
made against another party or parties under this Paragraph (14), notify
such party or parties from whom contribution may be sought, but the
omission to so notify such party from whom contribution may be sought
shall not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have hereunder or
otherwise than under this Paragraph (14). No party shall be liable for
contribution with respect to any action or claims settled without its
consent.
The representations, warranties, agreements and indemnities herein
shall survive the Closing under the Purchase Contract and any investigation made
by or on behalf of the Authority and the Underwriter or any person who controls
the Authority or the Underwriter of any matters described in or related to the
transactions contemplated hereby and by the Purchase Contract, the Official
Statement, the Loan Agreement, the Remarketing Agreement and the Indenture.
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This Letter of Representation shall be binding upon the Borrower and
shall inure solely to the benefit of the Authority, the Underwriter and, to the
extent set forth herein, persons controlling the Authority and the Underwriter,
and their respective officers, employees, agents, advisors, attorneys and
personal representatives, successors and assigns, and no other person or firm
shall acquire or have any right under or by virtue of this Letter of
Representation.
Very truly yours,
ADVANCED AERODYNAMICS AND
STRUCTURES, INC.
By:________________________________
Authorized Signatory
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PURCHASE CONTRACT
among
CALIFORNIA ECONOMIC DEVELOPMENT
FINANCING AUTHORITY
TREASURER OF THE STATE OF CALIFORNIA
and
RAUSCHER PIERCE REFSNES, INC.
Dated August 4, 1997
Relating to
$8,500,000
California Economic Development Financing Authority
Variable Rate Demand
Industrial Development Revenue Bonds, Series 1997
(Advanced Aerodynamics and Structures, Inc. Project)