1
EXHIBIT 10(m)
LOAN AGREEMENT
between
---------------------------------------
FORT BEND COUNTY INDUSTRIAL DEVELOPMENT CORPORATION
and
AARON RENTS, INC.
---------------------------------------
relating to
$4,200,000
FORT BEND COUNTY INDUSTRIAL DEVELOPMENT CORPORATION
INDUSTRIAL DEVELOPMENT REVENUE BONDS
(AARON RENTS, INC. PROJECT), SERIES 2000
---------------------------------------
NOTE: CERTAIN RIGHTS OF THE FORT BEND COUNTY INDUSTRIAL DEVELOPMENT
CORPORATION UNDER THIS LOAN AGREEMENT HAVE BEEN ASSIGNED TO, AND ARE
SUBJECT TO A SECURITY INTEREST IN FAVOR OF, FIRST UNION NATIONAL BANK,
AS TRUSTEE, UNDER A TRUST INDENTURE OF EVEN DATE HEREWITH, AS AMENDED
OR SUPPLEMENTED FROM TIME TO TIME. INFORMATION CONCERNING SUCH SECURITY
INTEREST MAY BE OBTAINED FROM THE TRUSTEE AT FIRST UNION NATIONAL BANK,
HOUSTON, TEXAS, ATTENTION: CORPORATE TRUST DEPARTMENT.
---------------------------------------
DATED AS OF OCTOBER 1, 2000
2
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION...................................................... 1
Section 1.1 DEFINITIONS........................................................................... 1
Section 1.2 RULES OF CONSTRUCTION................................................................. 9
ARTICLE II REPRESENTATIONS............................................................................ 10
Section 2.1 REPRESENTATIONS BY THE ISSUER......................................................... 10
Section 2.2 REPRESENTATIONS, WARRANTIES AND COVENANTS BY THE COMPANY.............................. 11
ARTICLE III.......PERMITS AND APPROVALS; COMPANY CONSENT TO ASSIGNMENT....................................... 18
Section 3.1 APPROVALS REQUIRED FOR THE PROJECT.................................................... 18
Section 3.2 COMPANY CONSENT TO ASSIGNMENT OF AGREEMENT AND EXECUTION OF INDENTURE................. 18
ARTICLE IV ISSUANCE OF THE BONDS...................................................................... 19
Section 4.1 AGREEMENT TO ISSUE THE BONDS.......................................................... 19
Section 4.2 DISBURSEMENTS FROM THE PROJECT FUND................................................... 19
Section 4.3 CLOSEOUT OF THE PROJECT FUND.......................................................... 19
Section 4.4 DISPOSITION OF THE BALANCE IN THE PROJECT FUND........................................ 19
Section 4.5 COMPANY REQUIRED TO PAY IN EVENT PROJECT FUND INSUFFICIENT............................ 19
Section 4.6 NO THIRD PARTY BENEFICIARY............................................................ 20
ARTICLE V LOAN BY THE ISSUER TO THE.................................................................. 21
Section 5.1 LOAN BY THE ISSUER; REPAYMENT......................................................... 21
Section 5.2 PAYMENT OBLIGATIONS OF THE COMPANY.................................................... 21
Section 5.3 SECURITY FOR PAYMENTS UNDER THE LOAN AGREEMENT........................................ 22
Section 5.4 COMPANY'S PERFORMANCE UNDER INDENTURE................................................. 22
Section 5.5 NO SET-OFF............................................................................ 22
Section 5.6 PREPAYMENTS........................................................................... 22
Section 5.7 LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT.......................................... 22
ARTICLE VI MAINTENANCE AND MODIFICATIONS; TAXES AND UTILITY........................................... 23
Section 6.1 MAINTENANCE AND MODIFICATION OF THE PROJECT BY THE COMPANY............................ 23
Section 6.2 TAXES AND UTILITY CHARGES............................................................. 23
Section 6.3 CASUALTY AND LIABILITY INSURANCE REQUIRED............................................. 24
Section 6.4 GENERAL REQUIREMENTS APPLICABLE TO INSURANCE.......................................... 25
Section 6.5 ADVANCES BY THE ISSUER OR THE TRUSTEE................................................. 25
Section 6.6 COMPANY TO MAKE UP DEFICIENCY IN INSURANCE COVERAGE................................... 26
Section 6.7 EMINENT DOMAIN........................................................................ 26
Section 6.8 APPLICATION OF NET PROCEEDS OF INSURANCE AND EMINENT DOMAIN........................... 26
Section 6.9 PARTIES TO GIVE NOTICE................................................................ 27
Section 6.10 NO WARRANTY OF CONDITION OR SUITABILITY BY ISSUER..................................... 27
i
3
ARTICLE VII SPECIAL COVENANTS.......................................................................... 29
Section 7.1 ACCESS TO THE PROJECT AND INSPECTION.................................................. 29
Section 7.2 FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS......................................... 29
Section 7.3 RECORDING AND FILING; OTHER INSTRUMENTS............................................... 29
Section 7.4 ARBITRAGE COVENANTS: NOTICE OF EVENT OF TAXABILITY.................................... 30
Section 7.5 NO PROHIBITED PAYMENTS................................................................ 33
Section 7.6 PERMITTED INVESTMENTS: PROHIBITED PAYMENTS............................................ 33
Section 7.7 INVESTMENT IN TAX-EXEMPT SECURITIES................................................... 33
Section 7.8 ADMINISTRATIVE EXPENSES............................................................... 33
Section 7.9 INDEMNITY AGAINST CLAIMS.............................................................. 34
Section 7.10 INDEMNITY OF ISSUER AND TRUSTEE....................................................... 34
Section 7.11 ADDITIONAL INFORMATION................................................................ 35
Section 7.12 DEFAULT CERTIFICATES.................................................................. 36
Section 7.13 OBSERVE LAWS.......................................................................... 36
ARTICLE VIII ASSIGNMENT, LEASING AND SELLING............................................................ 37
Section 8.1 ASSIGNMENT OF THIS LOAN AGREEMENT OR LEASE OR SALE OF THE PROJECT BY THE COMPANY...... 37
Section 8.2 RESTRICTIONS ON TRANSFER OF THE ISSUER'S RIGHTS....................................... 37
Section 8.3 ASSIGNMENT BY THE ISSUER.............................................................. 37
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES............................................................. 38
Section 9.1 EVENTS OF DEFAULT DEFINED............................................................. 38
Section 9.2 REMEDIES ON DEFAULT................................................................... 39
Section 9.3 APPLICATION OF AMOUNTS REALIZED IN ENFORCEMENT OF REMEDIES............................ 39
Section 9.4 NO REMEDY EXCLUSIVE................................................................... 39
Section 9.5 AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES......................................... 40
Section 9.6 CORRELATIVE WAIVERS................................................................... 40
ARTICLE X PREPAYMENTS................................................................................ 41
Section 10.1 OPTIONAL PREPAYMENTS.................................................................. 41
Section 10.2 MANDATORY PREPAYMENTS................................................................. 41
Section 10.3 OTHER MANDATORY PREPAYMENTS........................................................... 41
ARTICLE XI REBATE PROVISIONS.......................................................................... 43
Section 11.1 CREATION OF THE REBATE FUND........................................................... 43
Section 11.2 DETERMINATIONS, NOTICES AND RECORDS OF REBATE AMOUNT.................................. 43
Section 11.3 INVESTMENT EARNINGS ON BOND FUNDS..................................................... 43
Section 11.4 FILING OF REQUIRED REBATE............................................................. 44
ARTICLE XII MISCELLANEOUS.............................................................................. 45
Section 12.1 REFERENCES TO THE BONDS INEFFECTIVE AFTER BONDS PAID.................................. 45
Section 12.2 NO IMPLIED WAIVER..................................................................... 45
Section 12.3 ISSUER REPRESENTATIVE................................................................. 45
Section 12.4 COMPANY REPRESENTATIVE................................................................ 45
ii
4
Section 12.5 NOTICES............................................................................... 45
Section 12.6 IF PAYMENT OR PERFORMANCE DATE IS OTHER THAN A BUSINESS DAY........................... 46
Section 12.7 BINDING EFFECT........................................................................ 46
Section 12.8 SEVERABILITY.......................................................................... 46
Section 12.9 AMENDMENTS, CHANGES AND MODIFICATIONS................................................. 46
Section 12.10 EXECUTION IN COUNTERPARTS............................................................. 46
Section 12.11 APPLICABLE LAW........................................................................ 46
Section 12.12 EXPENSES.............................................................................. 46
Section 12.13 AMOUNTS REMAINING WITH THE TRUSTEE.................................................... 47
Section 12.14 REFERENCES TO THE CREDIT FACILITY ISSUER AND CREDIT FACILITY.......................... 47
Section 12.15 COVENANTS OF ISSUER NOT COVENANTS OF OFFICIALS INDIVIDUALLY........................... 47
Section 12.16 NO PERSONAL LIABILITY................................................................. 47
Section 12.17 LIMITED LIABILITY OF THE ISSUER....................................................... 48
iii
5
LOAN AGREEMENT
This LOAN AGREEMENT, dated as of October 1, 2000 between THE FORT BEND
COUNTY INDUSTRIAL DEVELOPMENT CORPORATION (the "Issuer"), a political
subdivision duly organized and existing under the laws of the Constitution and
laws of the State of Texas (the "State") and AARON RENTS, INC. (the "Company"),
a Georgia corporation.
WITNESSETH:
WHEREAS, the Issuer is authorized and empowered by the provisions of
the Development Corporation Act of 1979, Article 5190.6, Texas Revised Civil
Statutes, as amended, (the "Act") to issue its special revenue bonds for the
purpose of financing projects (as defined in the Act) and to lend the proceeds
of revenue bonds upon terms and conditions as the Issuer may deem advisable; and
WHEREAS, to obtain funds for such purposes the Issuer will issue and
sell its Fort Bend County Industrial Development Corporation Industrial
Development Revenue Bonds (Aaron Rents, Inc. Project), Series 2000 (the
"Bonds"), under and pursuant to the Act, to be secured by and contain such terms
and provisions as are set forth in that certain Trust Indenture (the
"Indenture") dated as of October 1, 2000 between the Issuer and First Union
National Bank, as Trustee (the "Trustee"), and the proceeds from the sale of the
Bonds shall be deposited with the Trustee and disbursed in the manner and for
the purposes set forth herein and in the Indenture, all as more fully provided
herein and therein; and
NOW, THEREFORE, in consideration of the respective representations and
agreements contained herein, the parties hereto, recognizing that under the Act
this Loan Agreement shall not be a debt of the Issuer and neither the Issuer,
Fort Bend County (the "County"), the State nor any political subdivision
thereof, shall be liable thereon within the meaning of any constitutional
provision or statutory limitation, except from moneys received or to be received
under the provisions of this Loan Agreement and from the Credit Facility Issuer
under a Credit Facility (each as hereinafter defined) or derived from the
exercise of the rights of the Issuer thereunder, agree as follows:
6
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.1 DEFINITIONS. In addition to words and terms elsewhere
defined in this Loan Agreement or in the Indenture, the following words and
terms shall have the following meanings:
"Act" shall mean Development Corporation Act of 1979, Article 5190.6,
Texas Revised Civil Statutes, as amended, and other applicable provisions of
applicable law.
"Administrative Expenses" shall mean the amounts payable pursuant to
Section 7.8 hereof by the Company to or for the account of the Issuer to provide
for payment of the costs and expenses incurred by the Issuer.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person. For the purposes of this definition, "control",
when used with respect to a Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Bank" shall initially mean First Union National Bank as issuer of the
Credit Facility.
"Bond" or "Bonds" shall mean the Fort Bend County Industrial
Development Corporation Industrial Development Revenue Bonds (Aaron Rents, Inc.
Project), Series 2000, authorized to be issued pursuant to the Indenture,
including such Bonds issued in replacement for mutilated, destroyed, lost or
stolen Bonds pursuant to Section 212 of the Indenture, and any amendments and
supplements thereto, and any renewals and extensions thereof, permitted by the
Indenture.
"Bond Documents" shall mean collectively the Indenture, the Bonds, this
Loan Agreement, the Letter of Credit Documents and the Remarketing Agreement.
"Bond Resolution" shall mean the resolution adopted by the Issuer on
September 19, 2000, as supplemented, authorizing, among other things, the
execution and delivery of the Issuer Documents to be signed by the Issuer and
the issuance of the Bonds by the Issuer.
"Bond Year" means a one-year period commencing on October 1 of each
year.
"Business Day" means a day on which (a) banks located in each of the
cities in which the principal office of the Trustee, the Credit Facility Issuer
and the Remarketing Agent is located are not required or authorized by law or
executive order to close for business, and (b) The New York Stock Exchange is
not closed.
"Capital Expenditures" shall have the meaning as specified in Section
2.2(j) hereof.
7
"Closing Date" means the date of the issuance and delivery of the
Bonds.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall mean Aaron Rents, Inc., a Georgia corporation and any
surviving, resulting or transferee corporation or other entity.
"Company Representative" shall mean any one of the persons at the time
designated to act on behalf of the Company by written certificate furnished to
the Trustee containing the specimen signatures of such persons and signed on
behalf of the Company.
"Completion Date" shall mean the date of completion of the Project, as
that date shall be certified as provided in Section 4.3 hereof.
"Computation Date" shall mean each Installment Computation Date and the
Final Computation Date.
"Consistent Basis" shall mean, in reference to the application of
Generally Accepted Accounting Principles, that the accounting principles
observed in the period referred to are comparable in all material respects to
those applied in the preceding period, except as to any changes consented to by
the Trustee and the Credit Facility Issuer.
"Construction," when used in connection with the Project, shall mean,
without limitation, the acquisition construction, installation, improving or
equipping of the Project.
"Costs of the Project" shall mean all costs and allowances for the
acquisition, equipping and renovation of the Project which are permitted under
the Act and which include, but are not limited to, all capital costs of the
Project, including the following:
(1) the acquisition, expansion and improving of the
Project, including the acquisition of all machinery and equipment;
(2) preparation of the plans and specifications for the
Project (including any preliminary study or plan of the Project or any
aspect thereof), any labor, services, materials and supplies used or
furnished in the Construction of the Project, the construction and
installation necessary to provide utility services or other services
and all real and tangible personal property deemed necessary by the
Company in connection with the Project;
(3) the fees for architectural, engineering, supervisory
and consulting services in connection with Construction of the Project;
2
8
(4) to the extent they shall not be paid by a contractor,
the premiums of all insurance and surety and performance bonds required
to be maintained in connection with the Construction of the Project;
(5) any fees and expenses incurred in connection with
construction, perfection and protection of title to the Project;
(6) interest prior to and during the period until completion
of construction of the Project; and
(7) any administrative or other fees charged by the
Issuer or reimbursement thereof of expenses, in connection with the
Project to the completion of construction of the Project.
"Counsel" shall mean an attorney or firm of attorneys acceptable to the
Trustee, and may, but need not, be counsel to the Issuer or the Company.
"County" shall mean Fort Bend County, Texas.
"Credit Facility" shall mean the Letter of Credit or any Alternate
Credit Facility delivered to the Trustee pursuant to Section 503 of the
Indenture.
"Credit Facility Issuer" shall mean the Bank with respect to the Letter
of Credit and the institution issuing any Alternate Credit Facility.
"Department" shall mean the Texas Department of Economic Development.
"Determination of Taxability" shall be defined as and shall be deemed
to have occurred on the first to occur of the following:
(1) on the date when the Company files any statement,
supplemental statement or other tax schedule, return or document which
discloses that an Event of Taxability shall have in fact occurred;
(2) on the date when any Bondholder or former Bondholder
notifies the Company or the Trustee that it has received a written
opinion of Bond Counsel to the effect that an Event of Taxability shall
have occurred unless, within one (1) year after receipt by the Company
of such notification from the Trustee, any Bondholder or any former
Bondholder, the Company shall obtain and deliver to the Trustee a
favorable ruling or determination letter issued to or on behalf of the
Company by the Commissioner or any District Director of Internal
Revenue (or any other government official exercising the same or a
substantially similar function from time to time) to the effect that,
after taking into consideration such facts as form the basis for the
opinion that an Event of Taxability has occurred, an Event of
Taxability shall not have occurred;
3
9
(3) on the date when the Company shall be advised in
writing by the Commissioner or any District Director of Internal
Revenue (or any other government official or agent exercising the same
or a substantially similar function from time to time) that, based upon
filings of the Company, or upon any review or audit of the Company, or
upon any other ground whatsoever, an Event of Taxability shall have
occurred;
(4) on the date when the Company shall receive notice in
writing from any Bondholder or former Bondholder, or from the Trustee,
that the Internal Revenue Service (or any other government agency
exercising the same or a substantially similar function from time to
time) has assessed as includable in the gross income of any Bondholder
or former Bondholder the interest on such Bondholder's or former
Bondholder's Bonds due to the occurrence of an Event of Taxability;
provided, however, no Determination of Taxability shall be deemed to have
occurred under subparagraph (3) or (4) hereof unless the Company has been
afforded the opportunity, at its expense, to contest any such assessment or
unfavorable ruling and, further, no Determination of Taxability shall be deemed
to have occurred until such contest, if made, has been finally determined.
"Eminent Domain" shall mean the taking of title to, or the temporary
use of, the Project or any part thereof pursuant to eminent domain or
condemnation proceedings, or any voluntary conveyance of any part of the Project
during the pendency of, or as a result of a threat of, such proceedings.
"Event of Default" or "Default" shall have the meaning set forth in
Section 9.1 hereof.
"Event of Taxability" shall mean a change in law or fact or the
interpretation thereof, or the occurrence or existence of any fact, event or
circumstance (including, without limitation, the issuance of obligations or the
incurring of capital expenditures in excess of those permitted by Section
144(a)(4) of the Code, or the taking of any action by the Company, or the
failure to take any action by the Company, or the making by the Company of a
misrepresentation herein or in any certificate required to be given in
connection with the issuance, sale or delivery of the Bonds) which has the
effect of causing the interest paid or payable on any Bond to become includable
in the gross income of any Bondholder or former Bondholder of any Bond other
than a Bondholder or former Bondholder who is or was a Substantial User or
Related Person.
"Fair Market Value" means the price at which a willing buyer would
purchase an investment from a willing seller in a bona-fide, arm's length
transaction, as more specifically set forth in Section 1.148-5(d)(6) of the
Regulations.
"Final Computation Date" shall mean the final maturity of the Bonds.
4
10
"Financing Statements" means any and all financing statements
(including continuation statements) filed for record from time to time to
perfect the security interests created or assigned pursuant to the Bond
Documents.
"Generally Accepted Accounting Principles" shall mean those principles
of accounting set forth in pronouncements of the Financial Accounting Standards
Board and its predecessors or pronouncements of the American Institute of
Certified Public Accountants or those principles of accounting which have other
substantial authoritative support and are applicable in the circumstances as of
the date of application, as such principles are from time to time supplemented
and amended.
"Indenture" shall mean the Trust Indenture of even date herewith
between the Issuer and the Trustee, together with any amendments or supplements
thereof permitted thereby.
"Installment Computation Date" shall mean the last day of the fifth and
each succeeding fifth Bond Year.
"Issuer" shall mean the Fort Bend County Industrial Development
Corporation and its successors and assigns.
"Issuer Documents" shall mean collectively the Indenture, the Placement
Agent Agreement and this Loan Agreement.
"Issuer Representative" shall mean 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 the Chairman.
"Letter of Credit" shall mean the irrevocable direct pay letter of
credit dated October 26, 2000 in the amount of $4,287,500 issued by the Bank,
with an initial term of three (3) years, subject to any extensions thereof.
"Letter of Credit Documents" shall mean the Letter of Credit, the
Reimbursement Agreement and the Pledge Agreement.
"Loan Agreement" shall mean this Loan Agreement and any amendments and
supplements thereto permitted by the Indenture.
"Local Facilities" means "facilities" (as that term is used in Section
144(a)(4) of the Code) of which the Company, any other Principal User of the
Project, or a Related Person of any of the foregoing, is or will be a Principal
User and which are located within the unincorporated areas of the County.
For the purposes of this definition, a "contiguous or integrated facility" (as
that term is used in Section 1.103-10(d)(2)(i) of the Regulations) located
partly within and partly without the
5
11
unincorporated areas of the County, shall be considered as being located
entirely within the unincorporated areas of the County.
"Net Proceeds," when used with respect to (i) any insurance proceeds or
(ii) any award resulting from, or other amount received in connection with,
Eminent Domain, means the gross proceeds from such proceeds, award or other
amount, less all expenses (including reasonable and actual attorneys' fees)
incurred in the realization thereof.
"Non-Purpose Investment" means any investment property (other than a
tax-exempt obligation under Section 103(a) of the Code) that is not acquired to
carry out the governmental purpose of the Bonds.
"Overdue Rate" shall mean the Prime Rate plus two percent per annum, or
the maximum contract rate permitted by law, whichever is lower.
"Payment of the Bonds" shall mean payment of (i) the principal of and
interest on the Bonds in accordance with their terms whether through payment at
maturity, upon acceleration or prepayment, (ii) all amounts due as
Administrative Expenses or otherwise, and (iii) any and all other liabilities
and obligations arising under the Indenture and this Loan Agreement; in any
case, payment in such a manner that all such amounts due and owing with respect
to the Bonds shall have been paid.
"Permitted Encumbrances" shall mean, as of any particular time, (i)
liens for ad valorem taxes and special assessments, if any, which are not then
delinquent or which are being contested in good faith, (ii) the liens created
pursuant to the Indenture, any mortgage or deed to secure debt from the Company
to the Bank, (iii) judgment liens which remain undischarged and unstayed for not
more than thirty (30) days and (iv) mechanic's, materialmen's, warehousemen's,
carrier's and other similar liens incurred in the ordinary course of business
remaining undischarged or unstayed for not longer than sixty (60) days from the
date of attachment thereof.
"Person" shall mean an individual, partnership, corporation, trust,
unincorporated organization, association, joint venture, joint-stock company, or
a government or agency or political subdivision thereof.
"Placement Agent" shall mean the securities dealer, bank or trust
company which is designated by the Company with the consent of the Credit
Facility Issuer, which will use its best efforts to arrange for the initial
placement of the Bonds and which will agree to establish the Preliminary Fixed
Rate and to use its best efforts to arrange for the sale of Tendered Bonds on
the Conversion Date, all as more particularly described in Section 2.2(e) of the
Indenture.
"Placement Agent Agreement" shall mean that certain letter agreement
dated the date of issuance of the Bonds among the Issuer, the Company and
Placement Agent for the initial placement of the Bonds.
6
12
"Pledge Agreement" shall mean the Pledge Agreement of even date
herewith by the Company to the Bank, and any amendments or supplements thereof.
"Prime Rate," prior to the Conversion Date, shall mean that rate of
interest per annum announced by First Union National Bank at its principal
office in Charlotte, North Carolina, from time to time to be its "prime rate,"
and after the Conversion Date shall mean the interest rate published in the
"Money Rate" table of The Wall Street Journal as such rate (or if a range of
rates is published, then the highest rate in such range). In the event that The
Wall Street Journal shall abolish or abandon the practice of publishing a "prime
rate," or should the same become unascertainable, the Trustee shall designate a
comparable reference rate which shall be deemed to be the Prime Rate for
purposes hereof.
"Principal User" shall have the meaning as specified in Section 2.2(v)
hereof.
"Project" shall mean the financing, in whole or in part, of the
acquisition, construction, installation and equipping of a manufacturing
facility located in the County, to be used to manufacture upholstered furniture
and wood office furniture.
"Project Fund" shall mean the trust fund so designated which is
established pursuant to Section 4.1 of the Indenture.
"Qualified Costs" means those Costs of the Project paid and incurred
subsequent to June 4, 2000 for the acquisition and renovation of land or
property of a character subject to the allowance for depreciation under Section
167 of the Code and shall include all amounts which are chargeable to the
capital account of the Project or would be so chargeable either with a proper
election by the Company or but for a proper election by the Company to deduct
such amounts and shall exclude all costs paid to a Related Person to the
Company.
"Rebate Amount" has the meaning ascribed in Section 1.148-3 of the
Regulations and generally means the excess as of any date of the future value of
all receipts on Nonpurpose Investments over the future value of all payments on
Nonpurpose Investments, all as determined in accordance with Section 1.148-3 of
the Regulations.
"Rebate Fund" means the fund of that name created pursuant to Section
405 of the Indenture and described in Section 11.1 hereof.
"Regulations" shall mean the applicable Treasury Regulations under
Sections 103 and 141 through 150 of the Code whether at the time proposed,
temporary, final or otherwise, including, where applicable, Treasury Regulations
under Section 103 of the Internal Revenue Code of 1954, as amended and in effect
prior to adoption of the Code.
"Reimbursement Agreement" shall mean the Letter of Credit and
Reimbursement Agreement, of even date herewith, by and between the Company and
the Bank, and any supplements or amendments thereto.
7
13
"Related Person" means "related person" within the meaning of Section
144(a)(3) of the Code.
"Remarketing Agent" shall mean First Union National Bank, Charlotte,
North Carolina and its successors as provided in Section 1101 of the Indenture.
"Remarketing Agreement" shall mean the Remarketing Agreement of even
date herewith between the Company and the Remarketing Agent.
"Security Interest" or "security interests" shall refer to the security
interests created in the Indenture.
"State" shall mean the State of Texas.
"Substantial User" shall have the meaning as specified in Section 2.2
hereof.
"Trustee" shall mean the banking institution at the time serving as
Trustee under the Indenture.
"Yield" means, (1) on a fixed yield issue, the discount rate that, when
used in computing the present value as of the issue date of all unconditionally
payable payments of principal, interest, and fees for qualified guarantees on
such issue and amounts reasonably expected to be paid as fees for qualified
guarantees on such issue, produces an amount equal to the present value, using
the same discount rate, of the same aggregate issue price of the issue as of the
issue date thereof. The "yield "on an investment allocated to an issue of bonds
is the discount rate that, when used in computing the present value as of the
date the investment is first allocated to such issue of all unconditionally
payable receipts from the investment, produces an amount equal to the present
value of all unconditionally payable payments for the investment. The yield on
an investment allocated to an issue is computed under the economic accrual
method, using the same compounding interval and financial conventions to compute
the yield on the issue. Thus, for example, if the yield on an investment
allocated to an issue is determined on the basis of semiannual interest
compounding, then the yield on the issue shall also be expressed in terms of
semiannual interest compounding. (2) The yield on a variable yield issue is
computed separately for each computation period. The yield for each computation
period is the discount rate that, when used in computing the present value as of
the first day of the computation period of all the payments of principal and
interest and fees for qualified guarantees that are attributable to the
computation period, produces an amount equal to the present value, using the
same discount rate, of the aggregate issue price (or deemed issued price, as
determined in Regulation Section 1.148-4(c)(2)(iv)) of the Bonds as of the first
day of the computation period.
SECTION 1.2 RULES OF CONSTRUCTION.
(1) Words of masculine gender shall be deemed and
construed to include correlative words of the feminine and neuter
genders, and words of the neuter gender
8
14
shall be deemed and construed to include correlative words of the
masculine and feminine genders.
(2) The table of contents, captions and headings in this
Loan Agreement are for convenience only and in no way define, limit or
describe the scope or intent of any provisions or Sections of this Loan
Agreement.
(3) All references herein to particular Articles or
Sections are references to Articles or Sections of this Loan Agreement
unless some other reference is established.
(4) All accounting terms not specifically defined herein
shall be construed in accordance with Generally Accepted Accounting
Principles applied on a Consistent Basis.
(5) All references herein to the Company shall be deemed
to refer to each of the Persons if more than one are described by such
term. Obligation, duty or liability of the Company shall be a joint and
several agreement, obligation, duty or liability of each of the Persons
so described by such term.
(6) Any terms not defined herein but defined in any of
the other Bond Documents shall have the same meaning herein.
9
15
ARTICLE II
REPRESENTATIONS
SECTION 2.1 REPRESENTATIONS BY THE ISSUER. The Issuer represents,
warrants and agrees as follows:
(a) The Issuer is a nonprofit industrial development corporation
duly organized under the Constitution and laws of the State.
(b) Under the provisions of the Act, the Issuer is duly authorized
to enter into, execute and deliver or, if appropriate, accept the Issuer
Documents, to issue and deliver the Bonds, to undertake the transactions
contemplated by the Issuer Documents and the Bonds and to carry out its
obligations hereunder and thereunder.
(c) The Issuer proposes to issue the Bonds in the aggregate
principal amount of $4,200,000 to finance, in whole or in part, the acquisition,
construction, installation and equipping of the Project.
(d) By the Bond Resolution, the Issuer has duly authorized the
execution, delivery and performance or, if appropriate, acceptance of the Issuer
Documents, including the borrowing under and the issuance and performance of the
Bonds.
(e) The Bonds will be issued under and pursuant to the Indenture
and will mature, bear interest, and have the other terms and provisions set
forth or provided for in the Indenture.
(f) To the best of its knowledge, no event has occurred and no
condition exists with respect to the Issuer which would constitute an "event of
default" as defined in this Loan Agreement or the Indenture or which, with the
lapse of time or with the giving of notice or both, would become an "event of
default" under this Loan Agreement or the Indenture.
(g) Neither this Loan Agreement nor any portion of the Trust
Estate have been pledged or hypothecated in any manner or for any purpose other
than as provided in the Indenture as security for the payment of the Bonds. The
Bonds constitute the only bonds or other obligations of the Issuer in any manner
payable from the revenues to be derived from this Loan Agreement, and except for
the Bonds, no bonds or other obligations have been or will be issued on the
basis of this Loan Agreement.
(h) With respect to the Bonds, there are no other obligations of
the Issuer that have been, are being or will be sold (1) at substantially the
same time, (2) under the same plan of financing, and (3) payable from the same
source of funds.
(i) On August 2, 2000, the Issuer adopted an initial resolution
approving the issuance of the Bonds.
10
16
(j) No member of the Issuer voting on this financing has any
interest whatsoever in the Company or in the transactions contemplated by this
Loan Agreement.
(k) The Issuer will not enter into any agreement or instrument
which might in any way prevent or materially impair its ability to perform its
obligations under the Bond Documents.
(l) So long as any Bonds shall remain unpaid, the Issuer will,
upon request of the Trustee and provided it shall be furnished with sufficient
funds to pay all costs and expenses (including reasonable and actual attorney's
fees) reasonably incurred by it as such costs and expenses accrue:
(1) take all action and do all things which it is
authorized by law to take and do in order to perform and observe all
covenants and agreements on its part to be performed and observed under
the Bond Documents; and
(2) execute, acknowledge, where appropriate, and deliver
from time to time promptly at the request of the Trustee all such
instruments and documents as in the opinion of the Trustee are
necessary or desirable to carry out the intent and purpose of the Bonds
Documents or any of them.
(m) So long as any Bonds shall remain unpaid, the Issuer will not,
without the written consent of the Trustee:
(1) take any action which, directly or indirectly,
adversely affects its existence or status as a political subdivision
organized and existing under the laws of the State;
(2) take any action which would adversely affect the
exclusion from gross income for federal income tax purposes of interest
on the Bonds; or
(3) pledge any interest in this Loan Agreement, or the
amounts to be derived herefrom, other than as contemplated by the
Indenture.
SECTION 2.2 REPRESENTATIONS, WARRANTIES AND COVENANTS BY THE
COMPANY. The Company represents, warrants and covenants and agrees as follows:
(a) The Company is a corporation duly organized and validly
existing under the laws of the State of Georgia. The Company is not in violation
of any provision of its Articles of Incorporation, as amended, has the corporate
power to enter into and perform this Agreement, and has duly authorized by
proper corporate action the execution and delivery of this Agreement, and is
qualified to do business and is in good standing under the laws of the State.
(b) Neither the execution and delivery of this Loan Agreement, the
Remarketing Agreement, the Reimbursement Agreement or the Pledge Agreement, nor
the consummation of
11
17
the transactions contemplated hereby and thereby, nor the fulfillment of or
compliance with the terms and conditions hereof or thereof (i) conflicts with or
results in a breach of the articles of incorporation or the bylaws of the
Company or constitutes a default under the articles or bylaws of the Company,
(ii) materially conflicts with or results in a material breach of the terms,
conditions, or provisions of any agreement or instrument to which the Company is
now a party or by which the Company is bound, or constitutes a material default
under any of the foregoing, or (iii) results in the creation or imposition of
any lien, charge or encumbrance whatsoever upon any of the property or assets of
the Company other than as expressly contemplated by the terms of any such
instrument or agreement.
(c) There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, public board or
body, known to be 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 Loan Agreement or which
would adversely affect, in any way, the validity or enforceability of the Bonds,
this Loan Agreement, the Pledge Agreement, the Reimbursement Agreement, the
Remarketing Agreement, or any agreement or instrument to which the Company is a
party, used or contemplated for use in the consummation of the transactions
contemplated hereby.
(d) The Project is of the type authorized and permitted by the
Act, and its estimated cost is not less than $4,200,000.
(e) The sales and investment proceeds of the Bonds deposited under
the Indenture will be used only for payment of Costs of the Project and costs of
issuing the Bonds (not exceeding 2% of the principal amount of the Bonds). None
of the proceeds of the Bonds will be used as working capital or to finance
inventory. The Company will pay all Project costs not paid with Bond proceeds.
(f) The Company will use due diligence to cause the Project to be
constructed and operated in accordance with the laws, rulings, regulations and
ordinances of the State and the departments, agencies and political subdivisions
thereof. The Company has obtained or will cause to be obtained all requisite
approvals of the State and of other federal, state, regional and local
governmental bodies for the construction and equipping of the Project.
(g) The Company will not claim an exemption arising from the
issuance of the Bonds from State sales, use or excise taxes on personal property
or property taxes on real property with respect to property acquired in
connection with the Project.
(h) The Company will keep all taxes and assessments against the
Project fully paid before the same become delinquent.
(i) The Company will fully and faithfully perform all the duties
and obligations which the Issuer has covenanted and agreed in the Indenture to
cause the Company to perform, any duties and obligations which the Company is
required in the Indenture to perform and any delegable or assignable duties and
obligations which the Issuer is required in the Indenture to
12
18
perform. The foregoing shall not apply to any duty or undertaking of the Issuer
which by its nature cannot be delegated or assigned.
(j) Except for any architectural, engineering, surveying, soil
testing, or similar preliminary activities occurring earlier, the commencement
of the construction of the Project, and each of the several components thereof,
occurred subsequent to June 4, 2000, which is sixty days prior to the date of
adoption by the Issuer of its initial inducement resolution. No sales and
investment proceeds of the Bonds will be used to reimburse the Company for
amounts paid prior to June 4, 2000 other than for "preliminary expenditures" as
defined in Section 1.150-2(f) of the Income Tax Regulations.
(k) The Company has entered into various contracts providing for
the construction and improving of the Project that collectively create a
substantial binding commitment on the Company's part to expend at least five
percent (5%) of the net sale proceeds of the Bonds on the Project. For purposes
of the preceding sentence and subsection (m) below, the term "net sale proceeds"
means the proceeds actually or constructively received by the Issuer from the
sale of the Bonds (including amounts used to pay any placement agent's or
underwriters' discount).
(l) The Project consists of land and/or property subject to the
allowance for depreciation under the Code, and substantially all of the net
proceeds of the Bonds, including earnings from the investment thereof, will be
used to pay Qualified Costs.
(m) No changes shall be made in the Project and no actions will be
taken by the Company that shall in any way cause interest on the Bonds to be
included in gross income for federal income tax purposes.
(n) Based on current facts, estimates and circumstances, the
Company currently expects:
(1) that the acquisition, construction, installation and
equipping of the Project and the expenditure of all of the net sale
proceeds of the Bonds will be completed by October 1, 2003;
(2) to proceed with due diligence toward completion of
the Project (the work on which has already commenced) and the
expenditure of the net sale proceeds of the Bonds in connection with
the Project; and
(3) the proceeds of the Bonds deposited under the
Indenture are needed for the purpose of paying all or a part of the
Cost of the Project.
(o) As of the date of execution and delivery of this Loan
Agreement, there exists no Event of Default or any condition or event which
would constitute, or with the passage of time or the giving of notice, or both,
would constitute an Event of Default hereunder.
13
19
(p) The average maturity of the Bonds does not exceed one hundred
twenty percent (120%) of the average reasonably expected economic life of the
assets being financed with the proceeds of the Bonds, with the average
reasonably expected economic life of each asset being measured from the later of
the date of issuance of the Bonds or the date such asset is reasonably expected
to be placed in service and by taking into account the respective cost of each
asset being financed. The information furnished by the Company and used by the
Issuer to verify the average reasonably expected economic life of each asset of
the Project to be financed with the proceeds of the Bonds is true, accurate and
complete.
(q) (i) The payment of principal or interest with respect to the
Bonds is not guaranteed (in whole or in part) by the United States (or any
agency or instrumentality thereof); (ii) five percent (5%) or more of the
proceeds of the Bonds will not be (A) used in making loans the payment of
principal and interest with respect to which are to be guaranteed (in whole or
in part) by the United States (or any agency or instrumentality thereof), or (B)
invested (directly or indirectly) in federally insured deposits or accounts as
defined in Section 149(B) of the Code; and (iii) the payment of principal or
interest on the Bonds is not otherwise indirectly guaranteed (in whole or in
part) by the United States (or any agency or instrumentality thereof).
The foregoing provisions of this subsection shall not apply to proceeds
of the Bonds being (i) invested for an initial temporary period until such
proceeds are needed for the purpose for which such issue was issued; (ii) held
in a bona fide debt service fund; (iii) held in a reserve that meets the
requirements of Section 148(d) of the Code with respect to reasonably required
reserve or replacement funds; (iv) invested in obligations issued by the United
States Treasury; or (v) held in a refunding escrow (i.e., a fund containing
proceeds of a refunding bond issue established to provide for the payment of
principal or interest on one or more prior bond issues); or (vi) invested in
other investments permitted under regulations promulgated pursuant to Section
149(b)(3)(B) of the Code.
(r) Any information supplied by the Company that has been relied
upon by the Issuer and by Bond Counsel with respect to the eligibility of the
Project and the exclusion from gross income for federal income tax purposes of
interest on the Bonds is true and correct.
(s) The Company shall promptly provide written notice to the
Issuer and the Trustee if the Company becomes aware of an Event of Default as
such term is used in Section 9.1 hereof.
(t) All components of the Project are or will be located wholly
within the unincorporated boundaries of the County.
(u) This Loan Agreement constitutes a valid and binding obligation
of the Company enforceable against the Company in accordance with its terms.
(v) There is no other bond or issue of bonds, the interest on
which is tax exempt pursuant to Section 144(a) of the Code or Section 103(b)(6)
of the Internal Revenue Code of
14
20
1954, as amended, part or all of the net proceeds of which are to be used with
part or all of the net proceeds of the Bonds with respect to a single building,
an enclosed shopping mall, or a strip of offices, stores or warehouses using
substantial common facilities, as contemplated by Section 144(a)(9) of the Code.
There are no heating, cooling or other facilities shared by the Project and by
any other facility financed with tax-exempt bonds. There are no common
entrances, to plazas, malls, lobbies, parking, elevators or stairways shared by
the Project and any other facility financed with tax-exempt use by employees or
patrons of the Project and such facility.
(w) Neither the Company nor any Related Persons (as such term is
used in the Code) to the Company are owners or principal users (as such term is
used in the Code) of any facility (other than the Project) in the unincorporated
area of the County, or outside of, but contiguous with, the unincorporated area
of the County.
(x) The Project is not integrated with any facility located
outside of the unincorporated area of the County.
(y) (i) The aggregate authorized face amount of the Bonds
allocated to any test-period beneficiary (as such term is used in the Code),
when increased by the outstanding tax-exempt facility-related bonds (within the
meaning of Section 144(a)(10) of the Code) of such beneficiary, does not exceed
$40,000,000. (ii) For purposes of applying subparagraph (i) above, with respect
to any issue, the outstanding tax-exempt facility-related bonds of any person
who is a test-period beneficiary, as such term is used in the Code, with respect
to such issue is the aggregate face amount of all tax-exempt bonds which, within
the meaning of Section 144(a)(10)(B)(ii) of the Code, are exempt facility bonds,
qualified small issue bonds and qualified redevelopment bonds or industrial
development bonds (as defined in Section 103(b)(2) of the Internal Revenue Code
of 1954, as in effect on the date before the date of enactment of the Tax Reform
Act of 1986) to which Section 141(a) of the Code does not apply: (A) which are
allocated to such beneficiary, and (B) which are outstanding on the date of
issuance of the Bonds (not including as outstanding any obligation which is to
be redeemed from the proceeds of the Bonds). (iii) The amount of any issue shall
be allocated so that: (y) except as may otherwise be provided in regulations
promulgated under Section 144(a)(10)(C) of the Code, the portion of the face
amount of any issue allocated to any test-period beneficiary of the facility
financed by the proceeds of such issue (other than an owner of such facility) is
an amount which bears the same relationship to the entire face amount of such
issue as the portion of such facility used by such beneficiary bears to the
entire facility; and (z) except as otherwise provided in regulations promulgated
under Section 144(a)(10)(C) of the Code, the portion of the face amount of an
issue allocated to any test period beneficiary who is an owner of a facility
financed by the proceeds of such issue is an amount which bears the same
relationship to the entire face amount of such issue as the portion of such
facility owned by such beneficiary bears to the entire facility.
(z) The information furnished by the Company and used by the
Issuer in making its election to issue the Bonds pursuant to Section 144(a)(4)
of the Code was true and complete as of the date hereof. The aggregate principal
amount of all obligations assumed, expenditures
15
21
made and obligations incurred during the six year period beginning on the date
three years prior to the issuance of the Bonds and ending on the date three
years after the issuance of the Bonds with respect to Local Facilities
(including, without limitation, the leasing of equipment) which constitute
"capital expenditures", as that term is used in Section 144(a)(4) of the Code
("Capital Expenditures") (other than those mentioned in Section 144(a)(4)(C) of
the Code), by the Company, any other Principal User of the Project, any Related
Person of either, or otherwise with respect to Local Facilities, but excluding
such Capital Expenditures paid out of the proceeds of the Bonds, did not at any
time during the period referenced above exceed $10,000,000.
(aa) No customer of the Company is expected to purchase ten percent
(10%) or more of the Company's annual output from the Project during the first
three years of the term of the Loan Agreement on a basis different than any
other customer of the Company.
(bb) The Project constitutes a "manufacturing facility" within the
meaning and contemplation of Section 144(a)(12) of the Code, and any office
space included as part of the Project will be (i) located at or within the
Project, (ii) directly related to the day-to-day manufacturing operations at the
Project, and (iii) de minimis in size and cost in relation to the size and cost
of the Project.
(cc) The Company shall use at least 95% of the sale and investment
proceeds of the Bonds that are disbursed to finance Qualified Costs.
(dd) The Company shall timely provide the written direction
required under Section 401(g) of the Indenture in order to comply with the
requirements of Section 1.144-2 of the Regulations.
(ee) The Project will not include at any time any airplane, skybox
or other private luxury box, health club facility, facility primarily used for
gambling, store the principal business of which is the sale of alcoholic
beverages for consumption off premises, any private or commercial golf course,
country 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, or racetrack.
(ff) Less than 25 percent of the Net Proceeds of the Bonds actually
expended will be used, directly or indirectly, for the acquisition of land or an
interest therein. Notwithstanding the immediately preceding sentence no portion
of the Net Proceeds of the Bonds will be used, directly or indirectly, for the
acquisition of land or an interest therein to be used for farming purposes.
(gg) No portion of the Net Proceeds of the Bonds will be used for
the acquisition of any existing property or an interest therein unless (i) the
first use of such property is pursuant to such acquisition or (ii) the
rehabilitation expenditures with respect to any building and the equipment
therefore equal or exceed 15 percent of the cost of acquiring such building
financed with the proceeds of the Bonds (with respect to structures other than
buildings, this clause shall be applied by substituting 100 percent for 15
percent). For purposes of the preceding
16
22
sentence, the term "rehabilitation expenditures" shall have the meaning set
forth in section 147(d)(3) of the Code.
(hh) The costs of issuance (within the meaning of section 147(g) of
the Code and applicable regulations thereunder) financed with the proceeds of
the Bonds shall not exceed 2 percent of the proceeds from the sale of the Bonds.
When used in this Section 2.2, the term Net Proceeds of the Bond shall
mean the proceeds from the sale of the Bonds, including investment earnings on
such proceeds, less accrued interest.
All of the above representations, warranties, covenants and agreements
shall survive the execution of this Loan Agreement.
17
23
ARTICLE III
PERMITS AND APPROVALS; COMPANY CONSENT TO ASSIGNMENT
SECTION 3.1 APPROVALS REQUIRED FOR THE PROJECT. The Company has
obtained or caused to be obtained all necessary material permits and approvals
for the operation and maintenance of the Project and has complied and will
continue to comply in all material respects with all lawful requirements of any
governmental body regarding the use or condition of the Project. The Company
may, however, contest any such requirement by an appropriate proceeding
diligently prosecuted.
SECTION 3.2 COMPANY CONSENT TO ASSIGNMENT OF AGREEMENT AND
EXECUTION OF INDENTURE. The Company understands that the Issuer, as security for
the payment of the principal of, and the interest on, the Bonds, will assign and
pledge to, and create a security interest in favor of, the Trustee pursuant to
the Indenture certain of its rights, title and interest in and to this Loan
Agreement including all Revenues, reserving, however, its rights (a) pursuant to
this Loan Agreement providing that notices, approvals, consents, requests and
other communications be given to the Issuer, (b) to reimbursement and payment of
costs and expenses under this Loan Agreement, and (c) to indemnification and to
exemption from liability, both individual and corporate, under this Loan
Agreement, and the Company hereby agrees and consents to such assignment and
pledge. The Company acknowledges that it has received a copy of the Indenture
and consents to the execution of the same by the Issuer.
18
24
ARTICLE IV
ISSUANCE OF THE BONDS
SECTION 4.1 AGREEMENT TO ISSUE THE BONDS. To provide funds to
finance the acquisition, construction and improving of the Project, the Issuer
agrees that it will authorize, sell, issue and deliver the Bonds in the
aggregate principal amount of $4,200,000 in the manner set forth in the
Indenture and cause the proceeds of the Bonds to be applied as provided in the
Indenture.
SECTION 4.2 DISBURSEMENTS FROM THE PROJECT FUND. The Issuer has,
in the Indenture, authorized and directed the Trustee to make disbursements from
the Project Fund in accordance with the terms of this Loan Agreement including
refinancing the loan as more fully set forth in the Indenture.
SECTION 4.3 CLOSEOUT OF THE PROJECT FUND. The Completion Date for the
Project shall be promptly established and evidenced to the Trustee and shall be
the date on which the Company Representative delivers to the Trustee a
certificate stating that, except for amounts retained by the Trustee at the
Company's direction for any Cost of the Project not then due and payable, the
Construction of the Project has been completed substantially in accordance with
the plans and specifications, if any, and all costs and expenses incurred in
connection therewith have been paid. Notwithstanding the foregoing, such
certificate may state that it is given without prejudice to any rights against
third parties that exist at the date of such certificate or that may
subsequently come into being.
SECTION 4.4 DISPOSITION OF THE BALANCE IN THE PROJECT FUND.
Pursuant to Section 401(g) of the Indenture, as soon as practicable after, and
in any event within sixty (60) days from, the Trustee's receipt of the
certificate mentioned in Section 4.3 hereof, all amounts remaining in the
Project Fund, including any unliquidated investments made with money theretofore
deposited in the Project Fund, except for amounts to be retained in the Project
Fund for any Cost of the Project not then due and payable as provided in Section
4.3 hereof, shall be transferred by the Trustee to the Bond Fund and shall be
applied immediately as set forth in the written direction of the Company as
described in subsections (i) through (iii) of Section 401(g) of the Indenture.
SECTION 4.5 COMPANY REQUIRED TO PAY IN EVENT PROJECT FUND
INSUFFICIENT. In the event the moneys in the Project Fund available for the
Project are not sufficient for the Project, the Company agrees to provide such
funds and to pay the amount in excess of the moneys available therefor in the
Project Fund. The Issuer does not make any warranty, either express or implied,
that the moneys paid into the Project Fund will be sufficient for such purpose.
The Company agrees that if after exhaustion of the moneys in the Project Fund,
the Company should pay any amount to finance the construction and equipping of
the Project pursuant to the provisions of this Section, the Company shall not be
entitled to any reimbursement therefor from the Issuer, the Trustee or the
Bondholders, nor shall the Company be entitled to any diminution of the amounts
payable under Section 5.2 hereof.
19
25
SECTION 4.6 NO THIRD PARTY BENEFICIARY. It is specifically agreed
between the parties executing this Loan Agreement that it is not intended by any
of the provisions of any part of this Loan Agreement to create in the public or
any member thereof, other than as may be expressly provided herein or as
contemplated in the Indenture, a third party beneficiary hereunder, except for
the Department, or to authorize anyone not a party to this Loan Agreement to
maintain a suit for personal injuries or property damage pursuant to the terms
or provisions of this Loan Agreement. The duties, obligations, and
responsibilities of the parties to this Loan Agreement with respect to third
parties shall remain as imposed by law.
20
26
ARTICLE V
LOAN BY THE ISSUER TO THE
COMPANY; REPAYMENT
SECTION 5.1 LOAN BY THE ISSUER; REPAYMENT.
(a) Upon the terms and conditions of this Loan Agreement, the
Issuer shall lend to the Company the proceeds from the sale of the Bonds. The
loan shall be evidenced by and repayable as set forth in this Loan Agreement.
The loan shall be made by depositing said proceeds in the Project Fund in
accordance with the terms of the Indenture.
(b) As consideration for the issuance of the Bonds and the making
of the loan to the Company by the Issuer, the Company will execute and deliver
this Loan Agreement, and the Issuer will assign this Loan Agreement to the
Trustee, as the assignee of the Issuer under the Indenture, contemporaneously
with the issuance of the Bonds. The Company shall repay the loan in accordance
with the provisions of this Loan Agreement.
SECTION 5.2 PAYMENT OBLIGATIONS OF THE COMPANY.
(a) One day prior to the first Business Day of each month
beginning on the first Business Day of November 2000, and in each year
thereafter until payment in full of the Bonds, the Company shall pay or cause to
be paid to the Trustee for the account of the Issuer as loan payments a sum
equal to the amount payable on each such date as principal of (whether at
maturity or upon redemption prior to maturity) and interest on the Bonds, as
provided in the Indenture. Each loan payment under this Section shall be
sufficient to pay the total amount of principal (whether at maturity or upon
redemption prior to maturity) and interest payable on such payment date, and if
at any payment date the balance in the Bond Fund is insufficient to make
required payments of principal and interest on such date, the Company shall
forthwith pay any such deficiency. Such payments may be applied by the Trustee
to reimburse the Credit Facility Issuer if funds for such payment or redemption
are obtained or are to be obtained pursuant to a draw under the Credit Facility.
On or by the third Business Day before the first Business Day of each month that
the Company's payment has not been received, the Issuer hereby directs the
Trustee, in accordance with the Indenture, to give telephonic and written notice
to the Company of the upcoming loan payment date.
Anything herein to the contrary notwithstanding, any amount at any time
held by the Trustee in the Bond Fund shall be credited against the next
succeeding loan payment and such credit shall reduce the payment to be then made
by the Company; and further, if the amount held by the Trustee in the Bond Fund
should be sufficient to pay at the times required the principal of and interest
on all Bonds then remaining unpaid, the Company shall not be obligated to make
any further loan payments under the provisions of this Section.
(b) The Company agrees to pay to the Trustee until the Bonds are
paid in full, (i) an amount equal to the aggregate annual fee of the Trustee
which is $2,750.00 for the ordinary services of the Trustee rendered and its
ordinary expenses incurred under the Indenture, (ii) the
21
27
reasonable fees and charges of the Trustee and any other paying agent for acting
as paying agent and as Bond Registrar as and when the same become due, and (iii)
the reasonable fees and charges of the Trustee for extraordinary services
rendered by it and extraordinary expenses incurred by it under the Indenture, as
and when the same become due.
If the Company should fail to make any of the payments required in this
paragraph, the item or installment so in default shall continue as an obligation
of the Company until the same shall have been fully paid, and the Company agrees
to pay the same with interest thereon, to the extent legally enforceable, at the
Overdue Rate until paid.
SECTION 5.3 SECURITY FOR PAYMENTS UNDER THE LOAN AGREEMENT. It is
understood and agreed that payments required to be made to the Issuer under this
Loan Agreement are assigned and pledged to the Trustee under the Indenture. The
Company hereby assents to such assignment and pledge. The Company further agrees
that (i) all payments under this Loan Agreement shall be paid directly to the
Trustee for the account of the Issuer and shall be deposited in the Bond Fund;
and (ii) all payments required to be made as provided in Section 5.2(b) hereof
shall be paid directly to the Trustee for its own use, or any paying agents or
Counsel.
SECTION 5.4 COMPANY'S PERFORMANCE UNDER INDENTURE. The Company
agrees, for the benefit of the holders from time to time of the Bonds, to do and
perform all acts and things contemplated in the Indenture to be done or
performed by it.
SECTION 5.5 NO SET-OFF. The obligation of the Company to make the
payments required by this Loan Agreement shall be absolute and unconditional.
The Company will pay without abatement, diminution or deduction (whether for
taxes or otherwise) all such amounts 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, any Bondholder or any other person. The provisions of this Section 5.5,
however, are subject to the provisions of the last paragraph of Section 5.2.
SECTION 5.6 PREPAYMENTS. The Company may prepay all or any part
of the amounts it is obligated to pay as provided in Section 601 of the
Indenture with respect to prepayment of the Bonds. Except as provided in this
Section 5.6 and in Sections 10.1, 10.2 and 10.3 hereof, the Company shall not be
entitled to cause the Bonds to be prepaid. The Company shall prepay all of the
amounts it is required to prepay as provided in Sections 10.2 and 10.3 hereof.
SECTION 5.7 LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT. As a
further condition to the Issuer's financing the Project hereunder, the Company
shall:
(a) cause the Letter of Credit to be issued and delivered to the
Trustee as security for the Bonds and until the Conversion Date, cause a Credit
Facility meeting the requirements of Section 503 of the Indenture to be
maintained with the Trustee; and
22
28
(b) enter into the Reimbursement Agreement with the Bank in
form and substance satisfactory to the Bank and execute and deliver the other
Letter of Credit Documents required by the Bank.
ARTICLE VI
MAINTENANCE AND MODIFICATIONS; TAXES AND UTILITY
CHARGES; INSURANCE AND EMINENT DOMAIN
SECTION 6.1 MAINTENANCE AND MODIFICATION OF THE PROJECT BY THE
COMPANY.
(a) The Company agrees that, until Payment of the Bonds shall be
made, it will at its own expense, (1) keep the Project or cause the Project to
be kept in as reasonably safe condition as its operations shall permit, (2) make
or cause to be made from time to time all necessary repairs thereto and renewals
and replacements thereof and otherwise keep the Project in good repair and in
good operating condition, and (3) not permit or suffer others to commit a
nuisance on or about the Project. The Company shall pay or cause to be paid all
costs and expenses of operation and maintenance of the Project.
(b) The Company may, at its own expense, make from time to time
any additions, modifications or improvements to the Project that it may deem
desirable for its business purposes and that do not materially impair the
effective use or decrease the value of the Project.
SECTION 6.2 TAXES AND UTILITY CHARGES.
(a) The Company shall pay as the same respectively become due, (i)
all taxes, assessments, levies, claims and charges of any kind whatsoever that
may at any time be lawfully assessed or levied against or with respect to the
Project (including, without limiting the generality of the foregoing, any tax
upon or with respect to the income or profits of the Issuer from the Project and
that, if not paid, would become a charge on the payments to be made under this
Loan Agreement prior to or on a parity with the charge thereon created by the
Indenture and including ad valorem, sales and excise taxes, assessments and
charges upon the Company's interest in the Project), (2) all utility and other
charges incurred in the operation, maintenance, use, occupancy and upkeep of the
Project and (3) all assessments and charges lawfully made by any governmental
body for public improvements that may be secured by a lien on any portion of the
Project.
(b) The Company may, at its expense, contest in good faith any
such levy, tax, assessment, claim or other charge, but the Company may permit
the items so contested to remain undischarged and unsatisfied during the period
of such contest and any appeal therefrom only if the Company shall notify the
Issuer and the Trustee that in the opinion of Counsel, by non-payment of any
such items, the rights of the Trustee with respect to this Loan Agreement
created by the assignment under the Indenture, as to the rights assigned under
this Loan Agreement or any part of the payments to be made under this Loan
Agreement will not be materially endangered, nor will the Project or any part
thereof be subject to loss or
23
29
forfeiture. If the Company is unable to deliver such an opinion of Counsel, the
Company shall promptly pay or bond and cause to be satisfied or discharged all
such unpaid items or furnish, at the expense of the Company, indemnity
satisfactory to the Trustee; but provided further, that any tax, assessment,
charge, levy or claim shall be paid forthwith upon the commencement of
proceedings to foreclose any lien securing the same. The Issuer and the Trustee,
at the expense of the Company, will cooperate fully in any such permitted
contest.
(c) If the Company shall fail to pay any of the items required to
be paid by it pursuant to (a) above, the Issuer or the Trustee may (but shall be
under no obligation to) pay the same, and any amounts so advanced therefor by
the Issuer or the Trustee shall become an additional obligation of the Company
to the one making the advancement which amounts, together with interest thereon
at the Overdue Rate, from the date of payment, the Company agrees to pay on
demand therefor.
(d) 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 Loan Agreement.
SECTION 6.3 CASUALTY AND LIABILITY INSURANCE REQUIRED. Until
Payment of the Bonds shall be made, the Company will keep the Project properly
and continuously insured against such risks as are customarily insured against
by businesses of like size and type engaged in the same or similar operations
(other than business interruption insurance) including, without limiting the
generality of the foregoing, all insurance required under the Reimbursement
Agreement or any of the Letter of Credit Documents;
(a) casualty insurance on the Project in an amount not less than
the full insurable value of all property located at, and all improvements to,
the Project, against loss or damage by fire and lightning and other hazards
ordinarily included under uniform broad form of extended coverage endorsement at
the time in use in the State;
(b) general comprehensive liability insurance against claims for
bodily injury, death or property damage occurring on, in or about the Project
(such coverage to include provisions waiving subrogation against the Issuer and
the Trustee) in amounts no less than $1,000,000 with respect to bodily injury to
any one person, $1,000,000 with respect to bodily injury to two or more persons
in any one accident and $1,000,000 with respect to property damage resulting
from any one occurrence;
(c) liability insurance with respect to the Project under the
workers' compensation laws of the State; provided, however, that the insurance
so required may be provided by blanket policies or under a self insurance
program now or hereafter maintained by the Company; and
(d) if at any time any portion of the Project is in an area that
has been identified by the Secretary of Housing and Urban Development as having
special flood and mudslide hazards, a policy of flood insurance covering
improvements located on such portion of the
24
30
Project with amounts and coverage reasonably satisfactory to the Trustee and the
Credit Facility Issuer.
SECTION 6.4 GENERAL REQUIREMENTS APPLICABLE TO INSURANCE.
(a) Except as otherwise agreed to by the Credit Facility Issuer
during such time as a Credit Facility is in effect, each insurance policy
obtained in satisfaction of the requirements of Section 6.3 hereof:
(1) shall be by such insurer (or insurers) as shall be
financially responsible, qualified to do business in the State and of
recognized standing;
(2) shall be in such form and have such provisions
(including, without limitation, the lenders long-form loss payable
clause, the waiver of subrogation clause, the deductible amount, if
any, and the standard mortgagee endorsement clause), as are generally
considered standard provisions for the type of insurance involved and
are acceptable in all respects to the Trustee and the Credit Facility
Issuer;
(3) shall prohibit cancellation or substantial
modification, termination or lapse in coverage by the insurer without
at least thirty (30) days' prior written notice to the Issuer, the
Trustee and the Credit Facility Issuer;
(4) shall provide that losses thereunder, prior to the
occurrence of an Event of Default (or event which, with notice or lapse
of time or both, would constitute an Event of Default) shall be
adjusted with the insurer by the Company at its expense on behalf of
the insured parties and the decision of the Company as to any
adjustment shall be final and conclusive; and
(5) without limiting the generality of the foregoing, all
insurance policies carried on the Project shall name the Company, the
Trustee and the Credit Facility Issuer as parties insured thereunder as
the respective interests of each of such parties may appear, and any
loss thereunder shall be made payable and shall be applied as provided
in Section 6.8 hereof.
(b) Prior to expiration of any such policy, the Company shall
furnish the Issuer and the Trustee with evidence satisfactory to them that the
policy or certificate has been renewed or replaced in compliance with this Loan
Agreement or is no longer required by this Loan Agreement and the Credit
Facility Issuer.
SECTION 6.5 ADVANCES BY THE ISSUER OR THE TRUSTEE. In the event
the Company shall fail to maintain, or cause to be maintained, the full
insurance coverage required by this Loan Agreement or shall fail to keep or
cause to be kept the Project in good repair and good operating condition, the
Issuer or the Trustee may (but shall be under no obligation to), after ten (10)
days written notice to the Company, contract for the required policies of
insurance and pay the premiums on the same or make any required repairs,
renewals and replacements; and the Company agrees to reimburse the Issuer and
the Trustee to the extent of the amounts so
25
31
advanced by them or any of them with interest thereon at the Overdue Rate, from
the date of advance to the date of reimbursement. Any amounts so advanced by the
Issuer or the Trustee shall become an additional obligation of the Company,
shall be payable on demand, and shall be deemed a part of the obligation of the
Company.
SECTION 6.6 COMPANY TO MAKE UP DEFICIENCY IN INSURANCE COVERAGE.
The Company agrees that to the extent that it shall not carry insurance required
by Sections 6.3 and 6.4 hereof, it shall pay promptly to the Trustee for
application in accordance with the provisions of Section 6.8 hereof, such amount
as would have been received as Net Proceeds by the Trustee under the provisions
of Section 6.8 hereof had such insurance been carried to the extent required.
SECTION 6.7 EMINENT DOMAIN. Unless the Company shall have prepaid
its obligations pursuant to the provisions of Article X hereof, in the event
that title to, or the temporary use of, the Project or any part thereof shall be
taken by Eminent Domain, the Company shall be obligated to continue to make the
payments required to be made pursuant to this Loan Agreement and the Net
Proceeds received as a result of such Eminent Domain shall be applied as
provided in Section 6.8(b) hereof.
SECTION 6.8 APPLICATION OF NET PROCEEDS OF INSURANCE AND EMINENT
DOMAIN.
(a) Except as otherwise agreed to by the Credit Facility Issuer
during such time as a Credit Facility is in effect, the Net Proceeds of the
insurance carried pursuant to the provisions of Sections 6.3(b) and 6.3(c)
hereof shall be applied by the Company toward extinguishment of the defect or
claim or satisfaction of the liability with respect to which such insurance
proceeds may be paid.
(b) Except as otherwise provided in the Reimbursement Agreement
(which shall govern during such time that the Credit Facility is in effect), the
Net Proceeds of the insurance carried with respect to the Project pursuant to
the provisions of Sections 6.3(a) and (d) hereof (excluding the Net Proceeds of
any business interruption insurance, which shall be paid to the Company), and
the Net Proceeds resulting from Eminent Domain shall be paid to the Trustee and
applied as follows:
(1) If the amount of the Net Proceeds does not exceed
$50,000, the Net Proceeds shall be paid to the Company and shall be
applied to any repair, replacement, renewal or improvement of the
Project, if any, as the Company deems necessary.
(2) If the amount of the Net Proceeds exceeds $50,000,
the Net Proceeds shall be paid to and held by the Trustee as a special
trust fund and invested in accordance with Section 502 of the Indenture
and the provisions of Article XI hereof pending receipt of written
instructions from the Company. At the option of the Company, to be
exercised within the period of ninety (90) days from the receipt by the
Trustee of such Net Proceeds, the Company shall advise the Trustee that
(A) the Company will use the Net Proceeds for the repair, replacement,
renewal or improvement of the Project (such funds to be delivered by
the Trustee to the
26
32
Company), or (B) the Net Proceeds shall be applied to the prepayment of
the Bonds as provided in Section 10.1 hereof. If the Company does not
advise the Trustee within said period of ninety (90) days that it
elects to proceed under clause (A) to use such Net Proceeds for the
repair, replacement, renewal or improvement of the Project, such Net
Proceeds shall be applied to the prepayment of the Bonds pursuant to
Article X hereof. Any prepayment pursuant to the preceding sentence
shall be effected on the next Interest Payment Date not less than
thirty (30) days after the expiration of said period of ninety (90)
days without an election by the Company.
(c) The Company agrees that if it shall elect to use the moneys
paid to the Trustee pursuant to subsection (b)(2) of this Section 6.8 for the
repair, replacement, renewal or improvement of the Project, it will restore the
Project, or cause the same to be done, to a condition substantially equivalent
to its condition prior to the occurrence of the event to which the Net Proceeds
were attributable. To the extent that the Net Proceeds are not sufficient to
restore or replace the Project, the Company shall use its own funds to complete
the restoration or replacement of the Project. Prior to the commencement of such
work, the Trustee may require the Company to furnish a completion bond, escrow
deposit or other satisfactory evidence of the Company's ability to pay or
provide for the payment of any estimated costs in excess of the amount of the
Net Proceeds. Any balance remaining after any such application of such Net
Proceeds shall be paid to the Company. The Company shall be entitled to the Net
Proceeds of any insurance or resulting from Eminent Domain relating to property
of the Company not included in the Project and not providing security for this
Loan Agreement.
SECTION 6.9 PARTIES TO GIVE NOTICE. In case of any material
damage to or destruction of all or any part of the Project, the Company shall
give prompt notice thereof to the Issuer, the Credit Facility 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 Company shall give prompt
notice thereof to the Issuer, the Credit Facility Issuer and the Trustee. Each
such notice shall describe generally the nature and extent of such damage,
destruction, taking, loss, proceeding or negotiations.
SECTION 6.10 NO WARRANTY OF CONDITION OR SUITABILITY BY ISSUER.
The Company recognizes that the Issuer does not deal in goods of the kind
comprising components of the Project or otherwise hold itself out as having
knowledge or skill peculiar to the practices or goods involved in the Project,
and that the Issuer is not one to whom such knowledge or skill may be attributed
by its employment of an agent or broker or other intermediary who by his
occupation holds himself out as having such knowledge or skill. The Company
further recognizes that since the components of the Project have been and are to
be designated and selected by the Company, THE ISSUER HAS NOT MADE AN INSPECTION
OF THE PROJECT OR OF ANY FIXTURE OR OTHER ITEM CONSTITUTING A PORTION THEREOF,
AND, EXCEPT AS OTHERWISE PROVIDED HEREIN, THE ISSUER MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED OR OTHERWISE, WITH RESPECT TO THE SAME OR TO
THE LOCATION, USE, DESCRIPTION, DESIGN, MERCHANTABILITY, FITNESS FOR USE FOR ANY
PARTICULAR PURPOSE, CONDITION OR DURABILITY THEREOF, TO THE
27
33
QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, IT BEING AGREED THAT ALL RISKS
INCIDENT THERETO ARE TO BE BORNE BY THE COMPANY. IN THE EVENT OF ANY DEFECT OR
DEFICIENCY OF ANY NATURE IN THE PROJECT OR ANY FIXTURE OR OTHER ITEM
CONSTITUTING A PORTION THEREOF, OR WHETHER PATENT OR LATENT, THE ISSUER SHALL
HAVE NO RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO. THE PROVISIONS OF THIS
SECTION HAVE BEEN NEGOTIATED AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND
NEGATION OF ANY WARRANTIES OR REPRESENTATIONS BY THE ISSUER, EXPRESS OR IMPLIED
(TO THE EXTENT PERMITTED BY APPLICABLE LAW), WITH RESPECT TO THE PROJECT OR ANY
FIXTURE OR OTHER ITEM CONSTITUTING A PORTION THEREOF, WHETHER ARISING PURSUANT
TO THE U.C.C. OR ANOTHER LAW NOW OR HEREAFTER IN EFFECT OR OTHERWISE.
28
34
ARTICLE VII
SPECIAL COVENANTS
SECTION 7.1 ACCESS TO THE PROJECT AND INSPECTION. The Credit
Facility Issuer, the Trustee and the Issuer shall have the right, at all
reasonable times upon the furnishing of reasonable notice to the Company under
the circumstances, to enter upon the Project site and to examine and inspect the
Project. The Trustee, the Credit Facility Issuer, the Issuer and their duly
authorized agents shall also have such right of access to the Project as may be
reasonably necessary for its proper maintenance, in the event of failure by the
Company to perform its obligations relating to maintenance under this Loan
Agreement. The Company hereby covenants to execute, acknowledge and deliver all
such further documents, and do all such other acts and things as may be
reasonably necessary to grant to the Credit Facility Issuer, the Trustee and the
Issuer such right of entry. The Credit Facility Issuer, the Trustee and the
Issuer shall also be permitted, at all reasonable times, to examine the books
and records of the Company with respect to obligations of the Company hereunder,
but neither shall be entitled to access to trade secrets or other proprietary
information (other than financial information) of the Company. All information
obtained in any such examination shall be kept confidential and shall not be
disclosed except in connection with any proceedings to enforce the Company's
obligations hereunder.
SECTION 7.2 FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS.
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 correcting any
inadequate or incorrect description of the Project and for carrying out the
intention or facilitating the performance of this Loan Agreement.
SECTION 7.3 RECORDING AND FILING; OTHER INSTRUMENTS.
(a) The Company covenants that it will, upon the request of the
Trustee and at the Company's expense, cause Counsel in the State to take all
steps as are reasonably necessary to render an opinion to the Issuer and the
Trustee to the effect that all financing statements, continuation statements,
notices and other instruments required by applicable law 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
granting by the Issuer of certain rights of the Issuer, pursuant to the
Indenture, under this Loan Agreement.
(b) The Company, the Issuer and the Trustee shall execute and
deliver all instruments and shall furnish all information and evidence deemed
necessary or advisable by such Counsel to enable such Counsel to render the
opinion referred to in subsection (a) of this Section. The Company, at the
request of the Trustee, shall file and re-file and record and re-record or 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 pursuant to the opinion of
such Counsel and shall continue or cause to be continued the liens of such
instruments for so long as the Bonds shall be outstanding, except as otherwise
required by this Loan Agreement.
29
35
SECTION 7.4 ARBITRAGE COVENANTS: NOTICE OF EVENT OF TAXABILITY.
(a) Neither the Company nor the Issuer shall take any action or
fail to take any action, and the Company covenants that it will not approve the
Trustee's taking any action or failure to take any action or making any
investment or use of the proceeds of the Bonds, if such action, use or failure
would adversely affect the tax-exempt status of the interest on the Bonds under
Section 103 of the Code or cause any of the Bonds to be an "arbitrage bond"
within the meaning of Section 148 of the Code and the Regulations as the same
may be applicable to the Bonds at the time of such action, investment or use.
(b) The Company shall give prompt written notice to the Issuer,
the Department and the Trustee of the filing by the Company of any statement,
tax schedule, return or document with the Internal Revenue Service which
discloses that an Event of Taxability shall have occurred and its receipt of any
oral or written advice from the Internal Revenue Service that an Event of
Taxability shall have occurred.
(c) The Company acknowledges that it has examined the provisions
of this Loan Agreement and the certificates executed by the Company in
connection with the issuance of the Bonds relating to compliance with the Code
and shall comply in all material respects with the covenants, instructions and
guidelines contained herein and therein. The Company's obligation herein and/or
therein to make any rebate payments and to prepare and furnish to the Issuer and
the Trustee the statements and forms described herein and/or therein shall
survive payment in full of the Bonds notwithstanding any provision of this Loan
Agreement to the contrary.
(d) The Company and the Issuer also covenant and agree that the
Company and the Issuer will furnish accurate information necessary to enable
Bond Counsel to make any certifications which might be required under the
Regulations.
(e) Whenever the Issuer shall be required to file, deliver or
execute, or produce any reports, notices of other documents while the Bonds are
outstanding, the Company shall furnish or cause the proper person to furnish in
due time to the Issuer, through the attorney for the Issuer, the completed form
of such report, notice or other required document together with (i) a
certification by the Company or other proper person required to provide
information that such document is accurate, and (ii) if requested by the Issuer
or if otherwise required herein or in the Indenture, an opinion of Bond Counsel
addressed to the Issuer that the report or other document is not in violation of
any provision of law or of the documents constituting the complete transcript of
proceedings relating to the issuance of the Bonds and that such report, notice
or other required document meets the legal requirements for such filing,
delivery or execution. In the event of the failure or refusal of the Company or
other proper person to comply with this provision, the Company agrees to pay the
statement for reasonable and actual attorney's fees and administrative time
presented by the Issuer for filing, delivering or executing such report or
documents, such statement to be paid within thirty (30) days after written
notice to the Company by the Issuer.
(f) In order to insure that interest on the Bonds is not and will
not become subject to federal income taxes as a result of failure of the Bonds
to satisfy the requirement of
30
36
Section 149(e) of the Code, the Company covenants with the Issuer and the
Trustee that it will, on or before the date of issuance of the Bonds supply to
the Issuer and the Trustee all information required under Internal Revenue
Service Form 8038, Information Return for Private Activity Bond Issues (Form
8038), including without limitation the following:
(1) the name and address of the Issuer;
(2) the date of issue, the amount of lendable proceeds of
the issue, and the stated interest rate, term and face amount of each
obligation which is part of the issue;
(3) where required, the name of the applicable elected
representative who approved the issue, or a description of the voter
referendum by which the issue was approved; and
(4) a description of any property to be refinanced from
the proceeds of the issue.
The Company further covenants that on or before the due date thereof,
it will cause Form 8038 to be completed, executed and filed with the appropriate
office of the Internal Revenue Service.
(g) Rebate. The Company agrees to take all steps necessary to
compute and pay any rebatable arbitrage in accordance with Section 148(f) of the
Code, including:
(1) Delivery of Documents and Money on Computation Dates.
The Company shall deliver to the Trustee, within 55 days after each
Computation Date,
(a) a statement, signed by an officer of the
Company, stating the Rebate Amount as of such Computation
Date; and
(b) (a) if such Computation Date is an
Installment Computation Date, an amount that, together with
any amount then held for the credit of the Rebate Fund, is
equal to at least 90% of the Rebate Amount in respect of the
Bonds as of such Installment Computation Date, less any prior
payments made to the United States for "rebatable arbitrage"
(as that term is defined in Section 148(f) of the Code) in
respect of the Bonds, or (b) if such Computation Date is the
Final Computation Date, an amount which, together with any
amount then held for the credit of the Rebate Fund in respect
of the Bonds, is equal to the Rebate Amount as of such Final
Computation Date, less any prior payments made to the United
States for "rebatable arbitrage" (as that term is defined in
Section 148(f) of the Code) in respect of such issue of Bonds;
and
(c) an Internal Revenue Service Form 8038-T
completed as of such Computation Date.
31
37
(2) Correction of Underpayments. If the Company shall
discover or be notified as of any date that any payment paid to the
United States Treasury pursuant to this Section of an amount described
above shall have failed to satisfy any requirement of Section 1.148-3
of the Regulations (whether or not such failure shall be due to any
default by the Company, the Issuer, or the Trustee), the Company shall
(1) pay to the Trustee (for deposit to the Rebate Fund) and cause the
Trustee to pay to the United States Treasury from the Rebate Fund the
Rebate Amount, together with any penalty and/or interest due, as
specified in Section 1.148-3(h) of the Regulations, within 175 days
after any discovery or notice and (2) deliver to the Trustee an
Internal Revenue Service Form 8038-T completed as of such date. If such
Rebate Amount, together with any penalty and/or interest due, is not
paid to the United States Treasury in the amount and manner and by the
time specified in the Regulations the Company shall take such steps as
are necessary to prevent the Bonds from becoming arbitrage bonds,
within the meaning of Section 148 of the Code.
(3) Records. The Company shall retain all of its
accounting records relating to the Debt Service Fund and the Rebate
Fund and all calculations made in preparing the statements described in
this Section for at least six years after the later of the final
maturity of the Bonds or the first date on which no Bonds are
outstanding for federal income tax purposes.
(4) Fees and Expenses. The Company agrees to pay all of
the fees and expenses of a nationally-recognized bond counsel, a
certified public accountant and any other necessary consultant employed
by the Company, the Trustee or the Issuer in connection with computing
the Rebate Amount.
(5) No Diversion of Rebatable Arbitrage. The Company will
not indirectly pay any amount otherwise payable to the federal
government pursuant to the foregoing requirements to any person other
than the federal government by entering into any investment arrangement
with respect to the gross proceeds of the Bonds that is not purchased
at fair market value or includes terms that the Company would not have
included if the Bonds were not subject to Section 148(f) of the Code.
(6) Modification of Requirements. If at any time during
the term of this Agreement the Issuer, the Trustee, or the Company
desires to take any action that would otherwise be prohibited by the
terms of this Section, such Person shall be permitted to take such
action if it shall first obtain and provide to the other Persons named
herein an Opinion of Bond Counsel to the effect that such action shall
not adversely affect the exclusion of interest on the Bonds from gross
income of the Holders thereof for federal income tax purposes and shall
be in compliance with the laws of the State of Texas and the terms of
this Agreement.
SECTION 7.5 NO PROHIBITED PAYMENTS. The Company covenants and
agrees that it will not purchase, nor will it direct the Trustee to purchase,
any Non-Purpose Investment for a price in excess of the Fair Market Value of
such investment. This Section shall apply to all
32
38
investments made by the Company and the Trustee under the Indenture, except for
investments of moneys in the Bond Fund in any Bond Year in which earnings on
investments in the Bond Fund do not exceed $100,000.00.
SECTION 7.6 PERMITTED INVESTMENTS: PROHIBITED PAYMENTS. Reference
is made to Section 6.2 of the Indenture, wherein the investments permitted to be
made by the Trustee are set forth. For the purpose of determining the Fair
Market Value of an investment, the following rules shall apply:
(1) The Fair Market Value of a United States Treasury
obligation purchased directly from the United States Treasury is its
purchase price.
(2) The purchase price of a certificate of deposit is
treated as its Fair Market Value if the yield on such certificate of
deposit is not less than (i) the yield on reasonably comparable direct
obligations of the United States and (ii) the highest yield that is
published or posted by the provider to be currently available from the
provider on reasonably comparable certificates of deposit offered to
the public.
(3) The purchase price of a guaranteed investment
contract is treated as its Fair Market Value on the purchase date if
the requirements of Section 1.148-5(d)(6)(iii) of the Regulations are
satisfied.
Any investment not described in subsections (1), (2), or (3) of this
Section 7.6 or which is not alternatively of a type traded on an established
securities market, within the meaning of Section 1273 of the Code, or otherwise
within the definition of Investment Obligations shall not be permitted unless
the Trustee receives, if the Trustee so requests, an opinion of Bond Counsel
that such investment will not adversely affect the tax-exempt status of the
Bonds. The Company agrees that it shall bear the cost of obtaining such opinion
and shall not require the Trustee to make any such investment without said
opinion of Bond Counsel.
SECTION 7.7 INVESTMENT IN TAX-EXEMPT SECURITIES. Notwithstanding
anything to the contrary in Section 7.5 or 7.6, the Trustee may invest moneys
under the terms of the Indenture in tax-exempt obligations described in Section
103(a) of the Code without obtaining any opinion of Bond Counsel, if and to the
extent permitted by the Indenture, but all such investments shall be directed
and authorized by the Company.
SECTION 7.8 ADMINISTRATIVE EXPENSES. The Company shall pay to or
for the account of the Issuer within thirty (30) days after notice thereof all
reasonable and actual costs and expenses incurred by the Issuer in connection
with the financing and administration of the Project, except such as may be paid
out of the proceeds of the Bonds on deposit in the Project Fund, including,
without limitation, the costs of administering this Loan Agreement and the fees
and expenses of the Trustee, attorneys, consultants and others.
33
39
SECTION 7.9 INDEMNITY AGAINST CLAIMS.
(a) The Company will pay and discharge and will indemnify and hold
harmless the Issuer and the Trustee from (1) any lien or charge upon amounts
payable hereunder by the Company to the Issuer, and (2) any taxes, assessments,
impositions and other charges in respect of the Project.
(b) If any claim of 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 Trustee, as the case may be, will give prompt notice to the
Company, and the Company shall have the right and duty to assume, and shall
assume, the defense thereof, with full power to litigate, compromise or settle
the same in its sole discretion.
SECTION 7.10 INDEMNITY OF ISSUER, THE DEPARTMENT AND TRUSTEE. If
the Issuer, the Department or the Trustee, or any director, member, employee,
officer, attorney or agent thereof (collectively the "Indemnified Persons") is
made a party defendant to any litigation concerning the Project or any part
thereof, or concerning the occupancy thereof by the Company, or concerning the
issuance of the Bonds, the Company agrees to indemnify, defend and hold
Indemnified Persons harmless from and against any and all liability by reason of
such litigation, including reasonable and actual attorneys' fees and expenses
incurred by the Indemnified Persons, whether or not any such litigation is
prosecuted to judgment. If the Indemnified Persons commence an action against
the Company to enforce any of the terms of any of the documents executed in
connection with the Bonds, or for the breach by the Company of any such terms,
the Company shall pay to the Indemnified Persons reasonable and actual
attorneys' fees and expenses in connection with such action, and the right to
such attorneys' fees and expenses shall be enforceable whether or not such
action is prosecuted to judgment. If the Company breaches any term of any of the
documents executed in connection with the Bonds, the Indemnified Persons may
employ an attorney or attorneys to protect its rights, and in the event of such
employment following any such breach by the Company, the Company shall pay the
reasonable and actual attorneys' fees and expenses of the Indemnified Persons so
incurred, whether or not any action is actually commenced against the Company by
reason of such breach.
(a) It is the intention of the parties that the Indemnified
Persons shall not incur pecuniary liability by reason of the terms of this
Agreement or by reason of the undertakings of the Indemnified Persons required
hereunder in connection with the issuance of the Bonds or execution of this Loan
Agreement or the Indenture or in connection with the performance of any act by
the Indemnified Persons requested by the Company or in any way arising from the
transaction with which this Agreement is a part arising in any manner in
connection with the Project or financing of the Project; nevertheless, if any of
the Indemnified Persons should incur any such pecuniary liability, then in such
event the Company shall indemnify and hold the Indemnified Persons harmless
against all claims by and on behalf of any person arising out of the same, and
all costs incurred in connection with any claim, action or proceeding brought
thereon, and upon notice from the Indemnified Persons, the Company shall defend
the Indemnified Persons in any such action, or proceeding in consultation with
counsel for the
34
40
Indemnified Persons. In the event any proceeding shall be initiated against any
of the Indemnified Persons, the Company shall furnish a defense to the
Indemnified Persons, shall be permitted to control, in the exercise of its
reasonable judgment, the defense of any such action or proceeding, and pay all
fees of counsel to the Indemnified Persons. Any settlement of litigation that
involves the Issuer shall require the consent of the Issuer.
Notwithstanding anything to the contrary contained herein, the Company
shall have no liability to indemnify the Issuer, the Department or the Trustee
against claims or damages resulting from the Indemnified Persons' own willful
misconduct, bad faith or fraud.
(b) No recourse shall be had for the enforcement of any
obligation, promise or agreement of the Indemnified Persons contained herein or
in the other documents to which the Indemnified Persons is a party or for any
claim based hereon or otherwise in respect hereof or thereof against any
director, member, officer, agent, attorney or employee, as such, in his
individual capacity, past, present or future, of the Indemnified Persons or of
any successor entity, either directly or through the Indemnified Persons 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, any director,
member, officer, agent, attorney or employee as such, past, present or future,
of the Indemnified Persons or any successor entity, either directly or through
the Indemnified Persons or any successor entity, under or by reason of any of
the obligations, promises or agreements entered into between the Indemnified
Persons 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 director, member, officer, agent, attorney and employee is, by the
execution of this Loan Agreement and as a condition of, and as part of the
consideration for execution of this Loan Agreement, expressly waived and
released.
Notwithstanding any other provision of this Loan 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 Loan 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 Loan Agreement, or in
refraining from acting under this Loan Agreement, the Issuer may conclusively
rely on the advice of its counsel.
SECTION 7.11 ADDITIONAL INFORMATION. Until payment of the Bonds
shall have occurred, the Company shall promptly from time to time deliver to the
Trustee such information regarding the operations, business affairs and
financial condition of the Company as the Trustee may reasonably request. The
Trustee is hereby authorized to deliver a copy of any such financial information
delivered hereunder to any regulatory authority having jurisdiction over the
Trustee and to any other Person as may be required by law. The Issuer and the
Trustee are authorized to provide information concerning the outstanding
principal amount and payment history of, and other information pertaining to,
the Bonds to any agency or regulatory authority of the State requesting such
information.
35
41
SECTION 7.12 DEFAULT CERTIFICATES. The Company shall deliver to
the Trustee forthwith, upon obtaining knowledge of any Event of Default
hereunder, under the Indenture or the Reimbursement Agreement, or an event which
would constitute such an Event of Default but for the requirement that notice be
given or time elapse or both, a certificate of the Company specifying the nature
and period of existence thereof and what action the Company proposes to take
with respect thereto.
SECTION 7.13 OBSERVE LAWS. The Company shall observe in all
material respects all applicable laws, regulations and other valid requirements
of any regulatory authority with respect to its operations at the Project.
36
42
ARTICLE VIII
ASSIGNMENT, LEASING AND SELLING
SECTION 8.1 ASSIGNMENT OF THIS LOAN AGREEMENT OR LEASE OR SALE OF
THE PROJECT BY THE COMPANY. The rights of the Company under this Loan Agreement
may be assigned, and the Project may be leased or sold as a whole or in part,
without the necessity of obtaining the consent of the Issuer or the Trustee,
subject to the following conditions:
(a) no assignment, transfer, sale or lease shall relieve the
Company from primary liability for any of its obligations hereunder, and if any
such assignment, transfer, sale or lease occurs, the Company shall continue to
remain primarily liable for the payments specified herein and for performance
and observance of the other agreements on its part herein provided to be
performed and observed by it, subject to the provisions of the last paragraph of
Section 5.2;
(b) the assignee, lessee or purchaser shall assume the obligations
of the Company hereunder to the extent of the interest assigned, leased or sold
(except to the extent such lease relates to less than ten percent (10%) of the
property and is on a temporary or transitional basis and does not adversely
effect the tax-exempt status of the Bonds);
(c) the Company shall, within thirty (30) days after the delivery
thereof, furnish or cause to be furnished to the Issuer and to the Trustee a
true and complete copy of each such assignment, instrument of transfer, lease or
sale agreement, as the case may be, together with any instrument of assumption;
(d) the Company shall, prior to such assignment, transfer, sale or
lease, deliver to the Trustee an opinion of Bond Counsel to the effect that such
assignment, transfer, sale or lease does not adversely affect the legality of
the Bonds or the exclusion of interest on the Bonds from gross income for
federal income tax purposes; and
(e) if a Credit Facility is in effect, such assignment, transfer,
sale or lease must be permitted under the Reimbursement Agreement or the Credit
Facility Issuer must have given its prior written consent to such assignment,
transfer, sale or lease.
SECTION 8.2 RESTRICTIONS ON TRANSFER OF THE ISSUER'S RIGHTS.
Except for the assignment made pursuant to the Indenture of certain of its
rights under this Loan Agreement, the Issuer will not during the term of this
Loan Agreement sell, assign, transfer or convey any of its interests in this
Loan Agreement except as hereinafter provided in Section 8.3 hereof.
SECTION 8.3 ASSIGNMENT BY THE ISSUER. It is understood, agreed
and acknowledged that the Issuer, as security for payment of the principal of
and interest on the Bonds, will grant to the Trustee pursuant to the Indenture,
inter alia, certain of its right, title and interest in and to this Loan
Agreement (reserving certain of its rights, as more particularly described in
the Indenture).
37
43
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
SECTION 9.1 EVENTS OF DEFAULT DEFINED. The term "Event of
Default" shall mean any one or more of the following events:
(a) the failure by the Company to pay when due on the first
Business Day of each month beginning on November 1, 2000, any payment of
principal of or interest on or other amount payable under Section 5.2 of this
Loan Agreement;
(b) [Reserved.]
(c) the failure of the Company to perform any of its obligations
under Section 7.4 hereof provided, however, that unless an Event of Taxability
shall have occurred the Company shall be afforded a thirty (30) day cure period
after notice of same from the Issuer or the Trustee to perform such obligations;
(d) the occurrence of an "Event of Default" or "event of default"
under any of the other Bond Documents upon the expiration of any applicable
notice or cure period;
(e) any representation or warranty of the Company contained in
Section 2.2 hereof, or in any document, instrument or certificate delivered
pursuant hereto or to the Indenture or in connection with the issuance and sale
of the Bonds shall be false, misleading or incomplete in any material respect on
the date as of which made and to the extent curable, has not been cured within
thirty (30) days after notice of same from the Issuer or the Trustee;
(f) failure by the Company to observe and perform any covenant,
condition or agreement on the part of the Company under this Loan Agreement,
other than as referred to in the preceding paragraphs of this Section 9.1, for a
period of thirty (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, unless the Issuer and the Trustee shall agree in writing to an
extension of such time prior to its expiration; provided, however, if such
default shall be such that it cannot be corrected within the applicable period,
it shall not constitute an Event of Default if corrective action is instituted
by the Company within the applicable period and diligently pursued until the
default is corrected;
(g) the commencement against the Company of an involuntary case
under the federal bankruptcy laws, as now constituted or hereafter amended, or
any other applicable federal or state bankruptcy, insolvency or other similar
law, or of any action or proceeding for the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar official) of
the Company or for any substantial part of its property, or for the winding-up
or liquidation of its affairs and the continuance of any such case, action, or
proceeding unstayed and in effect for a period of ninety (90) consecutive days;
or
(h) the commencement by the Company of a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or any other
applicable federal or
38
44
state bankruptcy, insolvency or other similar law, or the consent by it to, or
its acquiescence in the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) of the Company or of any substantial part of its property, or the
making by it of or the consent by it to any assignment for the benefit of
creditors, or the failure of the Company generally to pay its debts as such
debts become due, or the taking of any action by the Company in furtherance of
any of the foregoing.
SECTION 9.2 REMEDIES ON DEFAULT.
(a) If Payment of the Bonds shall not have been made, whenever any
Event of Default referred to in Section 9.1 hereof shall have happened and shall
not have been waived:
(1) The Issuer may, by written notice, declare all
installments of principal repayable pursuant to this Loan Agreement for
the remainder of the term hereof to be immediately due and payable,
whereupon the same, together with accrued interest thereon as provided
for in this Loan Agreement, 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; provided,
however, all such amounts shall automatically be and become immediately
due and payable without notice upon the occurrence of any event
described in Section 9.1(g) or 9.1(h) hereof, which notice the Company
hereby expressly waives.
(2) The Issuer may take whatever other action at law or
in equity may appear necessary or desirable to collect the amounts
payable pursuant to this Loan Agreement 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 Loan
Agreement or under any of the other Bond Documents.
(b) In the enforcement of the remedies provided in this Section
9.2, the Issuer 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, and the Company
agrees to pay such additional amounts upon demand, the amount of such legal fees
to be without regard to any statutory presumption.
SECTION 9.3 APPLICATION OF AMOUNTS REALIZED IN ENFORCEMENT OF
REMEDIES. Any amounts collected pursuant to action taken under Section 9.2
hereof shall be paid to the Trustee and applied as set forth in Article VIII of
the Indenture.
SECTION 9.4 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 Loan 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 the occurrence of an Event of Default
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.
39
45
SECTION 9.5 AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES. In any
Event of Default, if the Issuer, the Trustee, the Credit Facility Issuer or any
Bondholder 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, the Company agrees that it will on demand therefor pay to the Issuer,
the Trustee, the Credit Facility Issuer or such Bondholder the reasonable and
actual fees of such attorneys and such other reasonable expenses so incurred by
the Issuer, the Trustee, the Credit Facility Issuer or such Bondholder, the
amount of such fees of attorneys to be without regard to any statutory
presumption.
SECTION 9.6 CORRELATIVE WAIVERS. If an "Event of Default" under
Section 801 of the Indenture shall be cured or waived and any remedial action by
the Trustee rescinded, any correlative default under this Loan Agreement shall
be deemed to have been cured or waived.
40
46
ARTICLE X
PREPAYMENTS
SECTION 10.1 OPTIONAL PREPAYMENTS.
(a) The Company is hereby granted, and shall have, the option to
prepay the unpaid principal of the Bonds in whole or in part in accordance with
and as set forth in Section 601(a) of the Indenture with respect to the
prepayment of the Bonds; provided, all prepayments shall be made in immediately
available funds and with interest accrued to the date of prepayment and that any
prepayment of the Bonds in part shall be applied to unpaid installments of
principal in inverse order of maturity. Any prepayment pursuant to this
subsection (a) shall be made by the Company taking, or causing the Issuer to
take, the actions required (1) for Payment of the Bonds, in the case of
prepayment of the Bonds in whole, or (2) to effect prepayment of less than all
of the Bonds according to their terms in the case of a partial prepayment Bonds.
(b) To exercise the option granted in subsection (a) of this
Section 10.1, the Company shall give written notice to the Issuer and the
Trustee which shall specify therein (i) the date of the intended prepayment of
the Bonds, which shall not be less than forty-five (45) nor more than sixty (60)
days from the date the notice is mailed and (2) the principal amount of the
Bonds to be prepaid. When given, such notice shall be irrevocable by the Company
unless the Company in such notice states that it is revocable and requests that
the notice of the Trustee to the Bondholders pursuant to Section 604 of the
Indenture be conditioned on the deposit of Available Moneys with the Trustee no
later than the redemption date of the Bonds.
SECTION 10.2 MANDATORY PREPAYMENTS.
(a) In the event of a Determination of Taxability, the Company
shall, on a date selected by the Company not more than one hundred eighty (180)
days following the receipt by the Trustee of written notice of a Determination
of Taxability, prepay the entire unpaid principal balance of the Bonds in full.
Immediately upon the occurrence of a Determination of Taxability, the Company
shall notify the Issuer and the Trustee of the date selected for payment
pursuant to this Section 10.2.
(b) During the Variable Rate Period, in the event any Credit
Facility is not renewed and an Alternate Credit Facility has not been provided
in accordance with Section 503 of the Indenture, the Company shall on or before
the Interest Payment Date occurring closest to but not after fifteen (15) days
prior to the expiration date of the then current Credit Facility, prepay the
entire unpaid principal balance of the Bonds in full. The Company shall promptly
notify the Issuer and the Trustee of the date selected for such payment.
SECTION 10.3 OTHER MANDATORY PREPAYMENTS. The amounts required to
be applied to the prepayment of the Bonds by Section 4.4 hereof shall be applied
by the Company to prepay, together with accrued interest, all or a portion of
the unpaid principal of the Bonds. Such
41
47
prepayment shall be made by the Company taking, or causing the Issuer to take,
the actions required (a) for Payment of the Bonds, in the case of prepayment of
the Bonds in whole, or (b) to effect the prepayment of less than all of the
Bonds in inverse order of their maturities.
42
48
ARTICLE XI
REBATE PROVISIONS
SECTION 11.1 CREATION OF THE REBATE FUND.
(a) The Issuer hereby creates and establishes with the Trustee on
behalf of the Company a special trust fund in the name of the Issuer to be
designated by the Trustee and which is referred to herein as the Rebate Fund
(the "Rebate Fund"), which shall be held, invested, expended and accounted for
in accordance with this Loan Agreement and the Indenture.
(b) Moneys in the Rebate Fund shall be held in trust by the
Trustee and, subject to Section 7.4 hereof, shall be held for the benefit of the
United States as contemplated under the provisions of this Loan Agreement and
shall not be considered to be held for the benefit of the Issuer, the Company,
the Trustee or the owners of the Bonds.
SECTION 11.2 DETERMINATIONS, NOTICES AND RECORDS OF REBATE AMOUNT.
(a) The Company shall determine the Rebate Amount or cause the
same to be determined in the manner provided in Section 148(i) of the Code and
the Regulations. The Company shall provide the Trustee and the Issuer with a
written copy of each such determination when made; this covenant shall survive
the defeasance of any Bonds pursuant to Article XIV of the Indenture. The
Company shall retain records of each such determination until a date six (6)
years after the retirement of the last Bond. The Company shall make such records
available for review by the Issuer and the Trustee upon reasonable notice.
(b) The Company shall make payments to the Trustee for deposit in
the Rebate Fund in such amounts and at such times as are required by the Code,
the Regulations and this Loan Agreement so that the Trustee will have sufficient
amounts in the Rebate Fund to pay the Rebate Amount to the United States when
required by the Code and the Regulations. In the event that the amount in the
Rebate Fund shall be insufficient to make the necessary payment to the United
States of the Rebate Amount when required by the Code and the Regulations, the
Company shall immediately pay to the Trustee for deposit into the Rebate Fund
such insufficiency. The Issuer and the Trustee have no responsibility for
calculating, receiving, holding or paying the Rebate Amount nor for compelling
the Company to calculate or pay the Rebate Amount.
(c) The Company shall furnish the Trustee with all information and
forms necessary to cause the Rebate Amount to be properly and timely paid to the
United States in accordance with the Code and the Regulations.
SECTION 11.3 INVESTMENT EARNINGS ON BOND FUNDS. For the purpose of
determining the amount to be paid into the Rebate Fund hereunder, the Company
shall not take into account amounts earned on the investment of moneys in the
Bond Fund during a Bond Year (or earnings attributable to the reinvestment of
such amounts) if such earnings during the Bond
43
49
Year in question do not exceed One Hundred Thousand Dollars ($100,000). Pursuant
to Section 148-3(k) of the Regulations, an issue with an average annual debt
service that is not in excess of $2,500,000 may be treated as satisfying this
$100,000 limitation.
SECTION 11.4 FILING OF REQUIRED REBATE. Each payment of the Rebate
Amount shall be filed by the Company with the Internal Revenue Service Center,
Ogden, Utah 84201 and shall be accompanied by (i) a copy of Form 8038-T, and
(ii) a statement summarizing the Company's determination of the amount of the
Rebate Amount so paid. The Company shall provide the Trustee, and to the Issuer
upon request, with copies of all documents and reports required by this Section
and filed with the Internal Revenue Service.
44
50
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 REFERENCES TO THE BONDS INEFFECTIVE AFTER BONDS PAID.
Upon Payment of the Bonds, all references in this Loan Agreement to the Bonds
shall be ineffective and the Issuer and any owner of the Bonds shall not
thereafter have any rights hereunder, excepting reporting and payment of rebate
payments under Sections 7.4, 11.2 and 11.4 hereof and rights of the Issuer to
indemnification and payment of expenses contained, without limitation, in
Sections 7.8, 7.9 and 7.10 hereof.
SECTION 12.2 NO IMPLIED WAIVER. In the event any agreement
contained in this Loan 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
hereunder. Neither any failure nor any delay on the part of the Trustee to
exercise any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude any other or further exercise thereof, or the exercise of any
other right, power or privilege.
SECTION 12.3 ISSUER REPRESENTATIVE. Whenever under the provisions
of this Loan 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 may be
made or such action may be taken by the Issuer Representative or by the Issuer;
and the Company, the Trustee and the Bondholders shall be authorized to rely on
any such approval or action.
SECTION 12.4 COMPANY REPRESENTATIVE. Whenever under the provisions
of this Loan Agreement the approval of the Company is required or the Company is
required to take some action upon the request of the Issuer, such approval shall
be made or such action shall be taken by the Company Representative; and the
Issuer, the Trustee and the Bondholders shall be authorized to act on any such
approval or action.
SECTION 12.5 NOTICES.
(a) All notices, certificates or other communications hereunder
shall be sufficiently given and shall be deemed given when delivered by hand
delivery, sent via overnight courier service or mailed by first class, postage
prepaid, registered or certified mail, addressed as follows:
(1) if to the Issuer, to Fort Bend County Industrial
Development Corporation, c/o Greater Fort Bend Economic Development
Council, One Fluor Daniel Drive, Sugar Land, Texas 77478;
(2) if to the Department, to Texas Department of Economic
Development, 1700 N. Congress, P. O. Box 12728, Austin, Texas 78711,
Attention: Finance Section IRB Program;
45
51
(3) if to the Company, to Aaron Rents, Inc., 309 E. Paces
Ferry Road, N.E., Atlanta, Georgia 30305, Attention: Gilbert L.
Danielson;
(4) if to the Trustee, to First Union National Bank, 5847
San Felipe, Suite 1050, Houston, Texas 77057, Attention: Corporate
Trust Department; or
(5) if to any successor Trustee or Co-Trustee, addressed
to it at its principal corporate trust office (Attention: Corporate
Trust Department).
(b) The Issuer, the Company or the Trustee may, by notice given
hereunder, designate from time to time any further or different addresses to
which subsequent notices, certificates or other communications shall be sent.
SECTION 12.6 IF PAYMENT OR PERFORMANCE DATE IS OTHER THAN A
BUSINESS DAY. If the specified or last date for the making of any payment, the
performance of any act or the exercising of any right, as provided in this Loan
Agreement, shall be a day other than a Business Day, such payment may be made or
act performed or right exercised on the next succeeding Business Day; provided
that interest shall accrue during any such period during which payment shall not
occur.
SECTION 12.7 BINDING EFFECT. This Loan Agreement shall inure to
the benefit of and shall be binding upon the Issuer, the Company and their
respective successors and assigns, subject to the provisions of Sections 7.12,
8.1 and 8.3 hereof.
SECTION 12.8 SEVERABILITY. In the event any provision of this Loan
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 or thereof.
SECTION 12.9 AMENDMENTS, CHANGES AND MODIFICATIONS. Subsequent to
the issuance of the Bonds and prior to Payment of the Bonds, this Loan Agreement
and the Indenture may not be effectively amended, changed, modified, altered or
terminated except in accordance with the Indenture.
SECTION 12.10 EXECUTION IN COUNTERPARTS. This Loan Agreement may be
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument, and no one counterpart
of which need be executed by all parties.
SECTION 12.11 APPLICABLE LAW. This Loan Agreement shall be governed
by and construed in accordance with the laws of the State.
SECTION 12.12 EXPENSES. The Company agrees to pay all reasonable
fees and expenses incurred in connection with the preparation, execution,
delivery, modification, waiver, and amendment of this Loan Agreement, the other
Bond Documents and related documents, and the fees and expenses of Bond Counsel,
Counsel for the Issuer and Counsel for the Trustee. The Company also agrees to
pay to the Trustee, as and when the same become due, an aggregate of $2,750.00
each year for services rendered and its expenses incurred as Trustee,
46
52
including the reasonable fees of its counsel, and such other amounts as the
Company herein assumes or agrees to pay, including any costs or expenses
necessary to cancel and discharge the Indenture. The Company also agrees to pay
all expenses incurred by the Trustee or the Issuer in collection of any
indebtedness incurred hereunder in the event of default by the Company,
including reasonable and actual attorneys fees, provided that the amount of any
legal fees so incurred shall be without regard to any statutory presumption.
SECTION 12.13 AMOUNTS REMAINING WITH THE TRUSTEE. Any amounts
remaining in the Bond Fund, the Project Fund or otherwise in trust with the
Trustee under the Indenture or this Loan Agreement shall, after Payment of the
Bonds and all Administrative Expenses in accordance with this Loan Agreement, be
disbursed by the Trustee in accordance with the provisions of the Indenture or
otherwise as may be required by law.
SECTION 12.14 REFERENCES TO THE CREDIT FACILITY ISSUER AND CREDIT
FACILITY. If the Credit Facility is not in effect at any time, all references
herein to the Credit Facility Issuer, the Credit Facility and the Trustee shall
be deemed ineffective during such time.
SECTION 12.15 COVENANTS OF ISSUER NOT COVENANTS OF OFFICIALS
INDIVIDUALLY. All covenants, stipulations, obligations and agreements of the
Issuer contained in this Indenture shall be deemed to be covenants,
stipulations, obligations and agreements of the Issuer to the full extent
permitted by the Constitution and laws of the State. No covenant, stipulation,
obligation or agreement contained herein shall be deemed to be a covenant,
stipulation, obligation or agreement of any present or future officer, member,
agent or employee of the Issuer in his individual capacity, and no officer of
the Issuer executing the Bonds shall be liable personally on the Bonds or be
subject to any personal liability or accountability by reason of the issuance
thereof. No officer, agent or employee of the Issuer shall incur any personal
liability in acting or proceeding or in not acting or not proceeding in
accordance with the terms of this Indenture.
SECTION 12.16 NO PERSONAL LIABILITY. No recourse shall be had for
the enforcement of any obligation, promise or agreement of the Issuer contained
herein or in the Bonds or other documents to which the Issuer is a party or for
any claim based hereon or thereon or otherwise in respect hereof or thereof
against any director, member, officer, agent, attorney or employee, as such, in
his/her individual capacity, past, present or future, of the Issuer or of any
successor entity, either directly or through the Issuer or any successor entity,
under or by reason of any of the obligations, promises or agreements entered
into in the Bonds or between the Issuer and the Trustee, whether herein
contained or to be implied herefrom as being supplemental hereto; and all
personal liability of that character against every such director, member,
officer, agent, attorney and employee is, by the execution of this Indenture and
as a condition of, and as part of the consideration for, the execution of this
Indenture, expressly waived and released.
The Bonds shall be limited obligations of the Issuer. The Bonds and
the interest thereon and redemption premium, if any, shall not be deemed to
constitute or create an indebtedness, liability or obligation of the Issuer, the
State or any political subdivision or
47
53
agency thereof within the meaning of any State constitutional provision or
statutory limitation or a pledge of the faith the credit or the taxing power of
the State or any such political subdivision or agency. The Bonds and the
interest thereon are payable solely from and secured by the Trust Estate,
including the moneys available to be drawn by the Trustee under the Letter of
Credit that may be in effect from time to time to support payments due on or
with respect to the Bonds, all as described in and subject to limitations set
forth in this Indenture, for the equal and ratable benefit of the Holders, from
time to time, of the Bonds. Nothing in the Bonds or in the Indenture or the
proceedings of the Issuer to create a debt of the Issuer, the State, or any
political subdivision thereof within the meaning of any constitutional or
statutory provision of the State. No member, director or officer, agent,
attorney or employee of the Issuer, including any person executing the Indenture
or the Bonds, shall be liable personally on the Bonds or subject to any personal
liability for any reason relating to the issuance of the Bonds. The Bonds and
interest due thereon shall not be a general obligation, debt or liability of the
Issuer and do not constitute or give rise to any pecuniary liability or charge
against the general credit of the Issuer.
No recourse shall be had for the enforcement of any obligation, promise
or agreement of the Issuer contained herein or in the Bonds or the other
documents to which the Issuer is a party or for any claim based hereon or
thereon or otherwise in respect hereof or thereof against any director, member,
officer, agent, attorney or employee, as such, in his/her individual capacity,
past, present or future, of the Issuer or of any successor entity, either
directly or through the Issuer 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, any member, officer, agent, attorney or employee
as such, past, present or future, of the Issuer or of any successor entity,
either directly or through the Issuer or any successor entity, under or by
reason of any of the obligations, promises or agreements entered into in the
Bonds or between the Issuer and the Trustee, whether herein contained or to be
implied herefrom as being supplemental hereto; and all personal liability of
that character against every such direct, member, officer, agent, attorney and
employee is, by the extension of this Indenture and as a condition of, and as
part of the consideration for, the execution of this Indenture, expressly waived
and released.
SECTION 12.17 LIMITED LIABILITY OF THE ISSUER. Notwithstanding
anything to the contrary, any liability for payment of money and any other
liability or obligation which the Issuer may incur under the Bonds, this
Indenture, the Loan Agreement or the Placement Agreement shall not constitute a
general obligation of the Issuer but shall constitute limited obligations of the
Issuer payable solely from and enforced only against the Trust Estate. No
recourse shall be had for the enforcement of any obligation, promise or
agreement of the Issuer contained herein or in the Bonds or the Loan Agreement
to which the Issuer is a party or for any claim based hereon or thereon or
otherwise in respect hereof or thereof against any director, member, officer,
agent, attorney or employee, as such, in his individual capacity, past, present
or future, of the Issuer or of any successor entity, either directly or through
the Issuer 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 otherwise. No personal liability whatsoever shall attach to, or be
incurred by, any director, member, officer, agent, attorney or
48
54
employee as such, past, present or future, of the Issuer or of any successor
entity, either directly or through the Issuer or any successor entity, under or
by reason of any of the obligations, promises or agreements entered into in the
Bonds or between the Issuer and the Trustee, whether herein contained or to be
implied herefrom as being supplemental hereto; and to all personal liability of
that character against every such director, member, officer, agent, attorney and
employee is by the execution of this Indenture and as a condition of, and as
part of the consideration for, the execution of this Indenture, expressly waived
and released.
49
55
IN WITNESS WHEREOF, the Issuer and the Company have caused this Loan
Agreement to be executed in their respective legal names by their duly
authorized representatives as of the date first above written.
Fort Bend County Industrial
Development Corporation
By:
-----------------------------------
Chairman
Attest:
-----------------------------
Secretary
Aaron Rents, Inc.
By:
-----------------------------------
Title:
Attest:
-----------------------------
Secretary
50