Exhibit 4(d)
================================================================================
LOAN AGREEMENT
between
THE DIRECTOR OF DEVELOPMENT
OF THE STATE OF OHIO
and
LESCO, INC.
Dated
as of
January 28, 1988
================================================================================
LOAN AGREEMENT
THIS LOAN AGREEMENT made and entered into as of December ____, 1987
between the Director of Development of the State of Ohio (the "Director"), and
Lesco, Inc., an Ohio corporation (the "Company"), under the circumstances
summarized in the following recitals (the capitalized terms used in the
recitals being used therein as defined in Article I hereof):
A. Pursuant to the Act, the Director is authorized, among other things, to
make loans to assist in the financing of an Eligible Project.
B. The Company has requested that the Director provide the financial
assistance for the Project hereinafter described.
C. The Director has determined that the Project constitutes an Eligible
Project and that the financial assistance to be provided pursuant to this
Agreement is appropriate under the Act and will be in furtherance and in
implementation of the public policy set forth in the Act.
D. The financial assistance to be provided pursuant to this Agreement has
been reviewed and approved by the Development Financing Advisory Board and the
Controlling Board, pursuant to the Act.
NOW, THEREFORE, in consideration of the premises and the representations
and agreements hereinafter contained, the Director and the Company agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1. USE OF DEFINED TERMS. In addition to the words and terms
elsewhere defined in this Agreement or by reference to the Security Document or
other instruments, the words and terms set forth in Section 1.2 hereof shall
have the meanings therein set forth unless the context or use expressly
indicates different meaning or intent. Such definitions shall be equally
applicable to both the singular and plural forms of any of the words and terms
therein defined.
Section 1.2. DEFINITIONS. As used herein:
"Act" means Chapter 166, Ohio Revised Code, as from time to time enacted
and amended.
"Agreement" means this Loan Agreement, as from time to time amended or
supplemented.
"Allowable Costs" means "allowable costs" of the Project within the meaning
of the Act.
"Application" means the Application of the Company submitted to the
Director requesting assistance under the Act.
"City" means Martins Ferry, Belmont County, Ohio.
"Closing Date" means January 28, 1988, the date of execution and delivery
of the Loan Documents.
"Commitment" means the Commitment Letter between the Director and the
Company dated September 2, 1987.
"Completion Date" means the date of completion of the Project, as
certified by the Company pursuant to Section 3.5 hereof.
"Controlling Board" means the Controlling Board of the State.
"Cost Certification" means a certification of the Company, as of a
specified date, setting forth in reasonable detail the costs incurred and, if
appropriate, to be incurred, by the Company in completing the provision of the
Project, including a detail by category of all Allowable Costs.
"Development Financing Advisory Board" means the Development Financing
Advisory Board of the State.
"Disbursement" means a disbursement by the Director of a portion of the
Loan to provide funds for the payment of Allowable Costs.
"Disbursement Date" means such date on which the Director shall have made
a Disbursement to the Company, which shall be not later than ten (10) days
after the Company shall have satisfied all conditions to disbursement set forth
in Section 3.6 and 3.8 of this Loan Agreement, subject, however, in each
instance to the Director's sole discretion with respect to the amount, if any,
of such Disbursement.
"Eligible Project" means an "eligible project" within the meaning of the
Act.
"Escrow Agent" means the Title Company, in its capacity as Escrow Agent
under the Escrow Agreement, if applicable.
"Escrow Agreement" means the Escrow Agreement of even date herewith among
the Company, the Director and the Escrow Agent, if applicable.
"Event of Default" means any of the events described as an event of
default in Section 5.1 hereof.
"Final Cost Certification" means the cost certification dated as of the
Completion Date.
"Final Disbursement Date" means the latest date on which a Disbursement may
be made by the Director to the Company, which date
-2-
shall be August 1, 1989, or such subsequent date as may be established by the
Director in writing in accordance with Section 3.7 hereof for the disbursement
of the Loan.
"Governing Instruments" means the articles of incorporation and code of
regulations (or by-laws) of the Company.
"Governmental Authority" means, collectively, the State, any political
subdivision thereof, any municipality, and any agency, department, commission,
board or bureau of any of the foregoing having jurisdiction over the Project.
"Initial Cost Certification" means the cost certification dated as of the
Closing Date.
"Lender" means Irving Trust Company.
"Lender Loan" means the loan in the principal amount of Five Million Eight
Hundred Seventy-Five Thousand Dollars ($5,875,000) made by the Lender to the
Company pursuant to the Lender's commitment therefor.
"Lender Loan Documents" means all documents evidencing or securing the
Lender Loan.
"Loan" means the loan by the Director to the Company in the total sum of
the Loan Amount, to be disbursed pursuant to Section 3.8 hereof.
"Loan Amount" means the lesser of (i) One Million Dollars ($1,000,000) or
(ii) seventeen percent (17%) of the Allowable Costs of the Project, as
determined by the Director in his sole discretion pursuant to this Agreement.
"Loan Approval Documents" means, with respect to the Loan, the
Recommendation of the Director to the Development Financing Advisory Board
dated July 9, 1987, the Resolution of the Development Financing Advisory Board
dated July 9, 1987, the Approval of the Controlling Board dated August 10, 1987
and the Commitment.
"Loan Documents" means all documents and instruments delivered to or
required by the Director to evidence or secure the Loan, including this
Agreement, as required by the Commitment and this Agreement.
"Note" means the promissory note, in the form attached hereto as Exhibit
A, evidencing the obligation of the Company to repay the Loan.
"Notice Address" means:
(a) As to the Director: Department of Development
P.O. Box 1001
Columbus, OH 43266-1001
Attn: Director
-3-
and
Calfee, Halter & Griswold
1800 Society Building
Cleveland, OH 44114
Attn: Robert A. Richardson
(b) As to the Company: Lesco, Inc.
20005 Lake Road
Rocky River, Ohio 44116
Attn: Daniel G. Dunstam
and
Arter & Hadden
1100 Huntington Building
Cleveland, Ohio 44115
Attn: John W. Waldeck, Jr.
or such additional or different address, notice of which is given under Section
6.2 hereof.
"Plans and Specifications" means the plans and specifications or other
appropriate documents describing the Project prepared by or at the direction of
the Company.
"Project" means the Project Site, Project Equipment and the Project
Facilities, together constituting an Eligible Project.
"Project Equipment" means the equipment, machinery and other property
described in Exhibit D attached hereto.
"Project Facilities" means the buildings, structures, additions and
improvements described in Exhibit B attached hereto and more particularly
described in the Plans and Specifications.
"Project Purposes" means the acquisition of the Project Site, the
acquisition and rehabilitation of the Project Facilities and the acquisition
and rehabilitation of the Project Equipment for use in the manufacture of
products used in the lawn care industry, including but not limited to
fertilizers, herbicides and mowers.
"Project Site" means the real estate described in Exhibit C attached
hereto.
"Provision" means, as applicable, the acquiring, constructing,
reconstructing, rehabilitating, renovating, enlarging, improving, equiping or
furnishing of the Project.
"Security Document" means, collectively, the "Open-End Shared Mortgage and
Security Agreement," and "UCC Financing Statements" of even date herewith, as
from time to time amended or supplemented.
"State" means the State of Ohio.
-4-
"Title Company" means a title insurance company selected by the
Company which is acceptable to the Director.
Section 1.3. Certain Words and References. Any reference herein to the
Director shall include those succeeding to his functions, duties or
responsibilities pursuant to or by operation of law or lawfully performing such
functions. Any reference to a section or provision of the Constitution of the
State or to the Act or to a section, provision or chapter of the Ohio Revised
Code shall include such section, provision or chapter as from time to time
amended, modified, revised, supplemented or superseded.
The terms "hereof," "hereby," "herein," "hereto," "hereunder" and
similar terms refer to this Agreement; and the term "heretofore" means before,
and the term "hereafter" means after, the Closing Date.
-5-
ARTICLE II
DETERMINATIONS AND REPRESENTATIONS
Section 2.1. Determinations of the Director. Pursuant to the Act and
on the basis of the representations and other information provided by the
Company, the Director has heretofore made certain determinations, as set forth
in the Loan Approval Documents, which are hereby confirmed, and the Director
hereby determines that the financial assistance to be provided by the State
pursuant to this Agreement will conform to the requirements of the Act,
including Section 166.07 thereof, and will further and implement the purposes
of the Act by creating new jobs or preserving existing jobs and employment
opportunities and improving the economic welfare of the people of the State.
Section 2.2. Representations of the Company. The Company hereby
represents and warrants that:
(a) It is a corporation for profit duly organized, validly existing
and in good standing under the laws of the State.
(b) It has full power and authority to execute, deliver and perform
the Loan Documents and the Lender Loan Documents, and to enter
into and carry out the transactions contemplated thereby. Such
execution, delivery and performance do not, and will not,
violate any provision of law applicable to the Company or the
Governing Instruments of the Company and do not, and will not,
conflict with or result in a default under any agreement or
instrument to which the Company is a party or by which it or any
of its property or assets is or may be bound. The Loan Documents
and the Lender Loan Documents have, by proper action, been duly
authorized, executed and delivered and all necessary actions
have been taken to constitute the Loan Documents and the Lender
Loan Documents legal, valid and binding obligations of the
Company.
(c) The provision of financial assistance pursuant to the Loan
Approval Documents and this Agreement induced the Company to
provide the Project, thereby creating new jobs or preserving
existing jobs and employment opportunities and improving the
economic welfare of the people of the State.
(d) The Provision of the Project will be completed and the Project
will be operated and maintained in such manner as to conform
with all applicable zoning, planning, building, environmental
and other applicable governmental regulations imposed by
Governmental Authority and as to be consistent with the purposes
of the Act.
-6-
(e) It presently intends that the Project will be used and operated
in a manner consistent with the Project Purposes until the date
on which the Loan has been fully repaid, and the Company knows of
no reason why the Project will not be so operated.
(f) There are no actions, suits or proceedings pending or threatened
against or affecting the Company or the Project which, if
adversely determined, would individually or in the aggregate
materially impair the ability of the Company to perform any of
its obligations under the Loan Documents or the Lender Loan
Documents or materially adversely affect the financial condition
of the Company.
(g) The Company is not in default under any of the Loan Documents or
the Lender Loan Documents, or in the payment of any indebtedness
for borrowed money or under any agreement or instrument
evidencing any such indebtedness, and no event has occurred
which by notice, the passage of time or otherwise would
constitute any such event of default.
(h) The Project Site is zoned by the City under a zoning ordinance
which permits the Provision of the Project thereon in accordance
with the Plans and Specifications; and all utilities, including
water, storm and sanitary sewer, gas, electric and telephone,
and rights of access to public ways shall be available or will
be provided to the Project Site in sufficient locations and
capacities to meet the requirements of operating the Project and
of any applicable Governmental Authority.
(i) The Company has made no contract or arrangement of any kind,
other than the Loan Documents and the Lender Loan Documents,
which has given rise to or the performance of which by the other
party thereto would give rise to a lien or claim of lien on the
Project or other collateral covered by the Loan Documents or the
Lender Loan Documents, except for a mortgage to the City of
Martins Ferry, Ohio and Belmont County with respect to a loan of
Eighty Thousand Dollars ($80,000) in connection with the Project.
(j) No representation or warranty of the Company contained in any of
the Loan Approval Documents, Loan Documents or Lender Loan
Documents, and no statement contained in any certificate,
schedule, list, financial statement or other instrument
furnished to the Director of the Lender by or on behalf of the
Company (including, without limitation, the Application)
contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements contained
herein or therein not misleading.
-7-
(k) The financial statements of the Company heretofore delivered to
the Director are true and correct, in all respects, have been
prepared in accordance with generally accepted accounting
principles consistently applied, and fairly present the
financial condition and the results of operation of the Company
as of the dates thereof. No materially adverse change has
occurred in the financial condition of the Company reflected
therein since the respective dates thereof.
(l) All proceeds of the Loan shall be used for the payment of
Allowable Costs relating to Provision of the Project. No part of
any such proceeds shall be knowingly paid to or retained by the
Company or any partner, officer, shareholder, director or
employee of the Company as a fee, kick-back or consideration of
any type. The Company has no identity of interest with the
general contractor or any architect, subcontractor, laborer or
materialman performing work or services or supplying materials
in connection with the Provision of the Project; provided
however that certain employees of the Company are anticipated to
perform services in connection with the Provision of the Project.
(m) The Company has a good and marketable title to a fee simple
interest in the Project Site and Project Facilities subject in
all cases to no lien, charge, easement, condition, restriction
or encumbrance except as created by the Loan Documents and the
Lender Loan Documents, or shown as Permitted Encumbrances under
the Parity Open-End Mortgage and Security Agreement.
(n) Except as disclosed (i) elsewhere in this Agreement and the Loan
Documents, and (ii) in the title policy pursuant to Section
3.6(d) hereof, and except as created by the Loan Documents and
the Lender Loan Documents, and except for utility easements,
there are no other easements or agreements, including, without
limitation, parking agreements, encroachment agreements, access
easements, service agreements and other similar agreements
affecting the Project.
(o) To the best of our knowledge of the Company, the Project Site
has never contained and does not currently contain nor is it
contaminated by, any hazardous or toxic waste materials in
violation of any applicable environmental laws or regulations,
including, but not limited to Section 103 of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 USG
9601 et seq. and Chapter 375 of the Ohio Revised Code; and to
the best of our knowledge of the Company, no "clean-up" of the
Project has occurred pursuant to any applicable federal or state
environmental laws or regulations which would
-8-
give rise to (i) liability on the part of any person, entity or
association to reimburse any governmental authority for the
costs of any such "clean-up" or (ii) a lien or encumbrance of
the Project Site.
ARTICLE III
LOAN; PROVISION OF PROJECT; CONDITIONS TO DISBURSEMENT DATE
Section 3.1. Loan and Repayment. On the terms and conditions of this
Agreement and the Commitment, the Director shall lend to the Company the Loan
Amount to assist in the financing of the Project. The Loan shall be evidenced
by this Agreement and the Note and secured by the Security Document and other
Loan Documents, as applicable. Those instruments shall be executed and
delivered by the Company to the Director on the Closing Date, concurrently with
the execution and delivery of this Agreement and the delivery of all other
documents and the satisfaction of all other closing conditions required by this
Agreement and the Commitment. The Security Document and other Loan Documents
evidencing or securing the Loan which are to be recorded shall be deposited with
the Escrow Agent pursuant to the Escrow Agreement for filing and recording in
connection with the disbursement of the Loan, or may be filed for record prior
to disbursement if deemed appropriate by the Director. The Loan shall be
disbursed on the Disbursement Date pursuant to Section 3.8 hereof upon the
satisfaction of the conditions set forth in Section 3.6 hereof. The Loan shall
be disbursed only from, and only to the extent that on the Disbursement Date
funds not heretofore committed are available to make the Loan from moneys in
the "Facilities Establishment Fund" created by the Act.
The terms of repayment of the Loan shall be as set forth in the Note
and the Company shall make all payments required to be made under the Note as
and when due.
Section 3.2. Provision of Project. The Company (a) has commenced or
shall promptly hereafter commence the Provision of the Project; (b) shall pay
all expenses incurred in such Provision from funds made available therefor in
accordance with this Agreement or otherwise; and (c) shall demand, sue for,
levy and recover all sums of money and debts which may be due and payable under
the terms of any contract, order, receipt, guaranty, warranty, writing or
instruction in connection with the Provision of the Project and will enforce
the terms of any contract, agreement, obligation, bond or other performance
security with respect thereto. The Company confirms its agreement in the
Commitment that all wages paid to laborers and mechanics employed on the
Project shall be paid at not less than the prevailing rates of wages for
laborers and mechanics for the class of work called for by the Project, which
wages shall be determined in accordance with the requirements of Chapter 4115,
Ohio Revised Code, for determination of prevailing wage rates; provided that if
the Company undertakes, as part of the Project work to be performed by its
regular bargaining unit employees
-9-
who are covered under a collective bargaining agreement which was in existence
prior to the date of the Commitment, the rate of pay provided under the
applicable collective bargaining agreement may be paid to such employees.
Section 3.3. Plans and Specifications; Inspections. At his option,
the Director may retain, at the Company's expense, an architect, engineer,
appraiser or other consultant for the purpose of approving the Plans and
Specifications, verifying costs and performing inspections as Provision of the
Project progresses. Such inspections or approvals of Plans and Specifications
or the Project Facilities shall impose no responsibility or liability of any
nature upon the Director, the State, their agents, representatives or designees
nor, without limitation, carry any warranty or representation as to the
adequacy or safety of the structures or any of their component parts or any
other physical condition or feature pertaining to the Project Facilities. The
Company shall, at the request of the Director, make periodic reports
(including, if required, submission of updated Cost Certifications) to the
Director concerning the status of completion and the expenditure of costs in
respect thereof.
The Company may revise the Plans and Specifications from time to
time; provided that no material revision shall be made (a) which would change
the Project Purposes to purposes other than those permitted by the Act; (b)
without obtaining, to the extent required by law, the approval of any
applicable Governmental Authority; and (c) without the prior written approval
of the Director if such revision would change the amounts set forth in the most
recently furnished Cost Certification. In any event, all revisions to the Plans
and Specifications shall be promptly filed with the Director.
Section 3.4. Company Required to Pay Costs in Event Proceeds
Insufficient. In the event that the proceeds of the Loan and the Lender Loan
are not sufficient to pay all costs of the Project, the Company will,
nonetheless and irrespective of the cause of such deficiency, complete the
Project in accordance with the Plans and Specifications and pay all costs of
such completion in full from its own funds.
Section 3.5. Completion Date. The Completion Date shall occur not
later than August 1, 1989 and shall be evidenced to the Director by (a) a
certificate of the Company stating the Completion Date, that all licenses,
permits and approvals, including a certificate of occupancy, required by any
Governmental Authority have been procured and/or obtained, and (b) that all
improvements and additions reflected in the Plans and Specifications have been
made, that all costs of providing the Project have been paid and the date as of
which operation of the Project shall commence, which certificate shall be
accompanied by the Final Cost Certification, and if Provision of the Project
entailed construction, by completed Forms AIA-G702 and G703.
Section 3.6. Conditions to Disbursement. The disbursement of the Loan
shall be made on or before the Disbursement Date, provided
-10-
the Director shall have received the following on or before the initial
Disbursement Date or on such later date as is hereinafter specifically noted:
(a) the executed Note;
(b) the items required by Section 3.5 hereof (except that the items
required by 3.5(b) shall be delivered on or before the Final
Disbursement Date);
(c) prior to each disbursement, an affidavit pursuant to Section
4115.07, Ohio Revised Code, of each contractor and subcontractor
which performed work in connection with the Project, prior to
such Disbursement, certifying as to full compliance with Chapter
4115, Ohio Revised Code;
(d) a paid ALTA loan policy of title insurance issued by the Title
Company, in the Loan Amount, insuring the Director's interest
created by the Security Document at the level of priority therein
stated to be a valid lien on the Project Site (including all
appurtenances thereto) and the Project Facilities free and clear
of all defects and encumbrances except as created by the Loan
Documents and the Lender Loan Documents or consisting of
Permitted Encumbrances as set forth in the Security Document,
with such endorsements as the Director may require, which policy
shall contain:
(i) affirmative insurance coverage against mechanic's liens;
(ii) no survey exception not theretofore approved by the
Director and his legal counsel;
(iii) affirmative insurance coverage regarding access,
compliance with respect to restrictive covenants and any
other matters to which the Director may have objection or
require affirmative insurance coverage; and
(iv) the results of a UCC search and federal tax lien search in
the county(s) wherein the Project is located and the
Company has its principal place of business;
(v) an endorsement dated the date of each Disbursement
updating the policy to the date of such Disbursement;
(e) a current (dated not more than sixty (60) days prior to the
Disbursement Date) as-built survey of the Project Site, prepared
by a licensed surveyor acceptable to the Director, certified to
the Director and the Title
-11-
Company, pursuant to certificate of survey acceptable to the
Director, showing:
(i) the location of the perimeter of the Project Site by
courses and distances with all reference points shown or
referred to in the aforesaid title report;
(ii) all easements (including those easements whose existence
is disclosed by physical inspection of the Project Site),
rights-of-way and the location of all utility lines
serving the Project Site;
(iii) the established building lines;
(iv) the full legal description of the Project Site (conforming
to the legal description subject to the aforesaid title
policy) and a certification as to the acreage and square
footage thereof;
(v) the highway and street right-of-way lines abutting the
Project Site and the width thereof;
(vi) encroachments upon the Project Site and the extent thereof
in feet and inches;
(vii) the Project Facilities and the relation thereof by
distances to the perimeter of the Project Site, the
established building lines and the street lines; and
(viii) if the Project Site is described as being a filed map, a
legend relating the survey to said map;
(f) certification prior to each Disbursement by the Company that its
representations and warranties made in the Loan Approval
Documents or Loan Documents remain true, accurate and complete as
of the Disbursement Date and no default or event which, by
notice, the passage of time or otherwise, would constitute a
default, exists under the Loan Documents or the Lender Loan
Documents;
(g) certificate of occupancy;
(h) evidence of the liability and property insurance required by the
Security Document;
(i) evidence of zoning compliance;
(j) evidence of availability and adequacy of utilities;
(k) copies of all building permits;
(l) determination of prevailing wage by the Department of Industrial
Relations and, prior to each Disbursement,
-12-
certifications concerning payment of prevailing wages to the
date thereof;
(m) Cost Certifications and a final Cost Certification prior to Final
Disbursement;
(n) the duly executed Security Document;
(o) the Plans and Specifications;
(p) the Company's Certificate of Corporate Good Standing issued by
the Secretary of State of the State, dated within ten (10) days
of the Disbursement Date;
(q) certified copies of the resolutions of the Company authorizing
execution and delivery of all documents with respect to the Loan
and the Lender Loan;
(r) financing statements to evidence and perfect the security
interests created by the Security Document;
(s) certificate of incumbency as to the Company;
(t) copies, certified by the Company to be true, correct and
complete, of the following:
(i) the Governing Instruments of the Company; and
(ii) the Lender Loan Documents;
(u) an opinion of the Company's counsel, which sets forth the
following:
(i) that the Company is a corporation organized and validly
existing under the laws of, and in good standing with, the
State;
(ii) that the Company has power and authority to own its
properties and conduct its business;
(iii) that the execution of the Loan Documents by the Company
does not conflict with the Governing Instruments of the
Company;
(iv) that the Agreement, the Loan Documents, the Note, Security
Document and the Lender Loan Documents have been duly
authorized, executed and delivered by the Company and are
valid and binding instruments, enforceable against the
Company in accordance with their respective terms except
as such enforcement may be limited by bankruptcy,
insolvency or other laws or equitable principles affecting
the enforcement of creditor's rights generally; and that
the
-13-
Company has taken all actions necessary to authorize the
execution and delivery of the same;
(v) that there are no approvals or authorizations of any
Governmental Authority necessary or required for the
sale, at foreclosure, of the project, including without
limitation, subdivision approval, and the Project may be
sold separately from any other property owned by the
Company;
(vi) to the best of our knowledge and belief after due
investigation there are no actions, suits or proceedings,
at law or in equity, or before or by any court, public
board or body, pending or threatened or affecting the
Company or the Project which, if adversely determined,
would individually or in the aggregate materially impair
the ability of the Company to perform any of its
obligations under the Loan Documents or the Lender Loan
Documents;
(vii) that the use and operation of the Project for its
intended purposes comply with all applicable zoning
ordinances, regulations and environmental protection laws
affecting the Project, and all requirements for such use
and operation have been satisfied;
(viii) to the best of our knowledge and belief the execution of
the Loan Documents and the consummation of the
transactions contemplated in this Agreement will not
result in a breach or violation or default under any
judgment, decree, loan, mortgage, agreement, indenture or
other instrument applicable to the Company;
(ix) to the best of our knowledge and belief, the Company is
not in default under any contract, agreement or other
instrument by which it is bound, in the payment of any
monetary obligation, or with respect to any judgment,
order, injunction or regulation of any court or
governmental authority, and there exists no condition or
event which after notice or lapse of time or both would
constitute any such default.
(v) evidence satisfactory to the Director that the Project is not
located in a flood-prone area as defined by the United States
Department of Housing and Urban Development in the Flood
Disaster Protection Act of 1973, as amended, or if the Project
is located in a flood-prone area, that appropriate flood
insurance or other satisfactory measures have been taken to
protect the Project from flood damage.
-14-
(w) all licenses and permits required by Governmental Authority;
(x) certified list of all contractors and subcontractors (names and
addresses) who worked on the Project, complete to the date of
each Disbursement;
(y) such other certifications, documents or opinions as the Director
may reasonably request.
Section 3.7. Postponement of Final Disbursement Date. At the written
request of the Company setting forth the reasons therefor and received at least
twenty (20) days prior to the Final Disbursement Date, the Director may, but
shall be under no obligation to, postpone the Final Disbursement Date to a
later date. No such postponement will be deemed to have been granted unless
stated in a writing signed by the Director specifying the length of the
extension given. If for any reason the Loan shall not have been disbursed on or
before the Final Disbursement Date or such subsequent date as the Director
shall have specified in writing pursuant to the preceding sentence, the
Director shall have no obligation to make further Disbursements. For purposes of
this Section, time is of the essence.
Section 3.8. Disbursement of Loan. Not less than ten days prior to
each Disbursement requested by the Company, the Company shall supply the
Director with a written request executed by the Company for a Disbursement,
which request shall set forth the amount sought, shall constitute a covenant
and affirmation of the Company that the warranties and conditions of this
Agreement are being complied with, and that no Event of Default has occurred as
of the Disbursement Date. Each request for a Disbursement shall be accompanied
by a Cost Certification and, in addition, the Director shall receive an
endorsement to the ALTA loan policy of title insurance described in Section
3.6(d) updating said policy to the Disbursement Date, without additional
exceptions or objections except taxes and assessments not currently due and
payable and such other matters as to which the Director may have consented.
Provided the Director is satisfied that the Company has complied with the
foregoing conditions, the Director shall make the Disbursement not to exceed
the Loan Amount by delivering funds directly to the Company or at the direction
of the Company, as determined by the Director in his sole discretion based on
the Cost Certification in accordance with and subject to the following
conditions:
(a) The Director shall make no more than four (4) Disbursements with
respect to the Project, the last of which shall occur not later
than the Final Disbursement Date, and each Disbursement Date, at
the Director's option, shall occur on the first day of the
calendar month following the Company's request for Disbursement
submitted to the Director;
(b) The amount of each Disbursement shall be equal to the lesser of:
(i) with respect to the initial Disbursement;
-15-
the Loan Amount, or (ii) with respect to Disbursements subsequent
to the initial Disbursement, the Loan Amount less the aggregate
amount of all prior Disbursements, or (iii) 13.33% of Allowable
Costs as disclosed by the Cost Certification, but in no event
shall the Director be obligated to honor a request for
Disbursement unless the amount thereof is equal to or exceeds
Two Hundred Fifty Thousand Dollars ($250,000);
(c) The Director shall cause the Note to be endorsed on each
Disbursement Date in the amount of the Disbursement, and
interest shall accrue thereon commencing as of the Disbursement
Date.
Section 3.9. Payment of Costs; Indemnification. The Company shall pay
all costs incident to the Loan, including recording and title fees, title
examination and insurance fees and escrow fees. The Company shall defend,
indemnify and hold the Director and any officials of the State harmless against
any and all loss, cost, expense, claims or actions arising out of or connected
with the execution and delivery of this Agreement or any other Loan Documents
and the preparation of documents relating to the Disbursement of the Loan,
including all aforementioned costs and expenses, regardless of whether or not
the Disbursement of the Loan shall actually occur. The provisions of this
Section will survive the termination of this Agreement.
ARTICLE IV
ADDITIONAL COVENANTS AND AGREEMENTS
Section 4.1. Information Concerning Operations. At the request of the
Director and, in any event, within seventy-five (75) days after the last day of
each fiscal year of the Company beginning with the fiscal year in which the
Completion Date occurs, the Company shall furnish to the Director a report on
Project operations setting forth the total number of employees then employed on
the Project and such other employment, economic and statistical data concerning
the Project as may reasonably be requested by the Director.
Section 4.2. Affirmative Covenants of the Company. Throughout the
term of this Agreement, the Company shall:
(a) Taxes and Assessments. Pay and discharge promptly, or cause to
be paid and discharged promptly, when due and payable, all taxes,
assessments and governmental charges or levies imposed upon it,
its income or any of its property, or upon any part thereof, as
well as all claims of any kind (including claims for labor,
materials and supplies) which, if unpaid, might by law become a
lien or charge upon its property.
-16-
Notwithstanding the preceding paragraph, the Company may, at its
expense and after prior notice to the Director, by appropriate
proceedings diligently prosecuted, contest in good faith the
validity or amount of any such taxes, assessments, governmental
charges, levies and claims and during the period of contest, and
after notice to the Director, may permit the items so contested
to remain unpaid. However, if at any time the Director shall
notify the Company that, in the opinion of legal counsel
satisfactory to the Director, by nonpayment of any such items the
lien created by the Security Document as to any part of the
Project will be materially affected or the Project or any part
thereof will be subject to imminent loss or forfeiture, the
Mortgagor shall promptly pay such taxes, assessments, charges,
levies or claims.
(b) Maintain Existence. Do or cause to be done all things necessary
to preserve and keep in full force and effect its existence and
its material rights and franchises.
(c) Maintain Property. Maintain and keep its property in good
repair, working order and condition, and from time to time make
all repairs, renewals and replacements which, in the opinion of
the Company, are necessary and proper so that the business
carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that
nothing in this subsection (c) shall prevent the Company from
selling or otherwise disposing of any property whenever, in the
good faith judgment of the Company, such property is obsolete,
worn out, without economic value or unnecessary for the conduct
of the business of the Company.
(d) Maintain Insurance. Keep all of its insurable property insured
against loss or damage by fire and other risks, maintain public
liability insurance against claims for personal injury, death,
or property damage suffered by others upon, in or about any
premises occupied by the Company; and maintain all such worker's
compensation or similar insurance as may be required under the
laws of any state or jurisdiction in which it may be engaged in
business. All insurance for which provision has been made in
this subsection (d) shall be maintained against such risks and
in at least such amounts as such insurance is usually carried by
persons engaged in the same or similar businesses, and all
insurance herein provided for shall be effected and maintained
in force under a policy or policies issued by insurers of
recognized responsibility, except that it may effect worker's
compensation or similar insurance in respect of operations in
any state or other jurisdiction either through an insurance fund
operated by such state or other jurisdiction or by causing to be
maintained a system or systems of
-17-
self-insurance which is in accordance with applicable law.
(e) Furnish Information. Furnish to the Director:
(i) Quarterly Reports. Within sixty (60) days after the end of
each quarterly period of each fiscal year of the Company,
the balance sheet of the Company as at the end of such
quarterly period, together with related statements of
income and retained earnings (or accumulated deficit) and
changes in financial position for such quarterly period,
setting forth in comparative form the corresponding
figures as at the end of or for the corresponding quarter
of the previous fiscal year, all in reasonable detail,
prepared in accordance with generally accepted accounting
principles applied on a consistent basis, subject to usual
year-end audit adjustments.
(ii) Annual Reports. Within one hundred twenty (120) days
after the last day of each fiscal year of the Company, a
copy of its audit report containing a balance sheet of
the Company as at the end of such fiscal year, together
with related statements of income and retained earnings
(or accumulated deficit) and changes in financial
position for such fiscal year, setting forth in
comparative form the corresponding figures as at the end
of or for the previous fiscal year, all in reasonable
detail and all examined by and accompanied by a review
letter or opinion of its independent certified public
accountants to the effect that such financial statements
were prepared in accordance with the generally accepted
accounting principles consistently applied, and present
fairly the Company's financial position at the close of
such periods and the results of its operations for such
periods.
(iii) Certificate; No Default. With the financial reports
required to be furnished under this Section, a certificate
of the Company's chief executive officer or chief
financial officer stating that (a) no Event of Default has
occurred and is continuing and no event or circumstance
which would constitute an Event of Default, but for the
requirement that notice be given or time elapse or both,
has occurred and is continuing, or, if such an Event of
Default or such event or circumstance has occurred and is
continuing, a statement as to the nature thereof and the
action which the Company proposes to take with respect
thereto, and that (b) no action, suit or proceeding by it
or against it at law or in equity, or before any
governmental instrumentality or
-18-
agency, is pending or threatened, which, if adversely
determined, would materially impair the right or ability
of the Company to carry on the business which is
contemplated in connection with the Project or would
materially impair the right or ability of the Company to
perform the transactions contemplated by this Agreement
or the other Loan Documents or would materially and
adversely affect its business, operations, properties,
assets or condition, all as of the date of such
certificate, except as disclosed in such certificate.
(iv) Other Information. Such other information respecting the
business, properties or the condition or operations,
financial or otherwise, of the Company as the Director
may reasonably request.
(f) Deliver Notice. Forthwith upon learning of any of the following,
deliver written notice thereof to the Director, describing the
same and the steps being taken by the Company with respect
thereto:
(i) the occurrence of an Event of Default or an event or
circumstance which would constitute an Event of Default,
but for the requirement that notice be given or time
elapse or both, or
(ii) any action, suit or proceeding by it or against it at law
or in equity, or before any governmental instrumentality
or agency, instituted or threatened which, if adversely
determined, would materially impair the right or ability
of the Company to carry on the business which is
contemplated in connection with the Project or would
materially impair the right or ability of the Company to
perform the transactions contemplated by the Loan
Documents, or would materially and adversely affect its
business, operations, properties, assets or condition, or
(iii) the occurrence of a Reportable Event, as defined in the
Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), under, or the institution of steps by
the Company to withdraw from, or the institution of any
steps to terminate, any employee benefit plan as to which
the Company may have liability.
(g) Inspection Rights. At any reasonable time and from time to time,
permit the Director, or any agents or representatives thereof,
to examine and make copies of and abstract from the records and
books of account of, and visit the properties of, the Company
and discuss the general business affairs of the Company with any
of its
-19-
officers; provided, however, that the Company reserves the right
to restrict access to any of its facilities in accordance with
reasonably adopted procedures relating to safety and security.
Section 4.3. Negative Covenants of the Company. Throughout the term of
this Agreement, the Company shall not:
(a) Maintain Existence. Sell, transfer or otherwise dispose of all,
or substantially all, of its assets, consolidate with or merge
into any other entity, or permit one or more entities to
consolidate with or merge into it; provided, however, that the
Company may, without violating the agreement contained in this
subsection (a), consolidate with or merge into another
corporation, or sell, transfer or otherwise dispose of all, or
substantially all, of assets as a corporation and thereafter
dissolve, if: (i) the prior written consent of the Director is
obtained; (ii) the surviving, resulting or transferee
corporation, as the case may be, assumes in writing all of the
obligations of the Company hereunder (if such surviving,
resulting or transferee corporation is other than the Company);
and (iii) the surviving, resulting or transferee corporation, as
the case may be, is a corporation duly organized and validly
existing under the laws of the State or duly qualified to do
business therein, and has a net worth of not less than that of
the Company immediately prior to such disposition, consolidation
or merger, transfer or change of form.
(b) ERISA. Voluntarily terminate any employee benefit plan or other
plan (a "Plan") maintained for employees of the Company and
covered by Title IV of ERISA, so as to result in any material
liability of the Company to the Pension Benefit Guaranty
Corporation ("PBGC"), enter into any Prohibited Transaction (as
defined in Section 4975 of the Internal Revenue Code of 1954, as
amended, and in ERISA) involving any Plan which results in any
material liability of the Company to the PBGC, cause any
occurrence of any Reportable Event (as defined in Title IV of
ERISA) which results in any material liability of it to the
PBGC, or allow or suffer to exist any other event or condition
which results in any material liability of the Company to the
PBGC.
(c) Agreements. Enter into any agreement containing any provisions
which would be violated or breached by the performance of its
obligations hereunder or under any instrument or document
delivered or to be delivered by it hereunder or in connection
herewith.
-20-
(d) Assignment or Lease. In whole or in part, assign this Agreement or
lease or grant the right to occupy or use the Project to others,
without the prior written consent of the Director.
(e) Without the prior written consent of the Director,
(i) Suspension of Operation. Suspend or discontinue operation of the
Project.
(ii) Removal of Assets. Remove, transfer or transport any of the
Company's assets that are subject to the Security Document from
the State other than the operation of motor vehicles, the
shipment of goods in the ordinary course of business or the sale
of assets in the ordinary course of business.
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES; TERMINATION
Section 5.1. Events of Default. Each of the following shall be an "Event
of Default":
(a) The Company shall fail to pay any amount payable pursuant to this
Agreement on the date on which such payment is due and payable or
under the Note within ten (10) days after the date on which such
payment is due and payable; or
(b) The Company shall fail to observe and perform any agreement, term or
condition contained in this Agreement other than as required pursuant
to subsection (a) above, and such failure continues for a period as
the Director may agree to in writing; provided, that if the failure is
of such nature that it can be corrected but not within the applicable
period, such failure shall not constitute an Event of Default so long
as the Company institutes curative action within the applicable period
and diligently pursues such action to completion; or
(c) Any representation or warranty made by the Company (or any of its
officers) herein or in any other Loan Documents, Loan Approval
Documents or Lender Loan Documents or in connection herewith or
therewith shall prove to have been incorrect in any material respect
when made; or
(d) The Company shall fail to pay any indebtedness of the Company in
excess of Fifty Thousand Dollars ($50,000), or any interest or
premium thereon, when due (whether by scheduled maturity, required
prepayment, by acceleration,
-21-
on demand or otherwise) and such failure shall continue after the
applicable grace period, if any, specified in the agreement or
instrument relating to such indebtedness or otherwise agreed upon by
the holder of such indebtedness; or any other default under any
agreement or instrument relating to any such indebtedness, or any
other event, shall occur and shall continue after the applicable grace
period, if any, specified in such agreement or instrument, if the
effect of such default or event is to accelerate the maturity of such
indebtedness; or any such indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof;
provided that, the foregoing shall not be deemed to be an Event of
Default if, at the Company's expense and after prior notice to the
Director, by appropriate proceedings diligently prosecuted, the
Company contests in good faith the validity or amount of any of the
foregoing items and during the period of contest, and after notice to
the Director, may permit the items so contested to remain unpaid;
provided further that, if at any time the Director, in his sole
discretion, shall instruct the Company to pay any such items and such
items are not paid within three (3) days after notice from the
Director, such failure to pay shall be an Event of Default hereunder;
and or
(e) The Company commences a voluntary case concerning it under Title II of
the United States Code entitled "Bankruptcy" as now or hereafter in
effect, or any successor thereto (the "Bankruptcy Code"); or an
involuntary case is commenced against the Company under the Bankruptcy
Code and relief is ordered against the Company, or the petition is
controverted but is not dismissed within sixty (60) days after the
commencement of the case; or the Company is not generally paying its
debt as such debts become due; or a custodian (as defined in the
Bankruptcy Code) is appointed for, or takes charge of, all or
substantially all of the property of the Company; or the Company
commences any other proceeding under any reorganization, arrangement,
readjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or
hereafter in effect; or there is commenced against the Company any
such proceeding which remains undismissed for a period of sixty (60)
days; or the Company is adjudicated insolvent or bankrupt; or the
Company fails to controvert in a timely manner any such case under the
Bankruptcy Code or any such proceeding any such case or proceeding or
in the appointment of any custodian or the like of or for it or any
substantial part of its property or suffers any such appointment to
continue undischarged or unstayed for a
-22-
period of sixty (60) days; or the Company makes a general assignment
for the benefit of creditors; or any action is taken by the Company
for the purpose of effecting any of the foregoing; or a receiver or
trustee or any other officer or representative of the court or of
creditors, or any court, governmental officer or agency, shall under
color of legal authority, take and hold possession of any substantial
part of the property or assets of the Company for a period in excess
of sixty (60) days; or
(f) A judgment or order for the payment of money in excess of Fifty
Thousand Dollars ($50,000.00) shall be rendered against the Company
and either (i) enforcement proceedings shall have been commenced by
any creditor upon such judgment or order or (ii) there shall be any
period of thirty (30) consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal
or otherwise, shall not be in effect; or
(g) Any default under the Note, the Security Document or any other Loan
Document or Lender Loan Documents shall have occurred and be
continued; or
(h) The Company fails to meet its minimum funding requirements under
Section 301 et seq. of ERISA, with respect to any of its Plans.
Section 5.2. Remedies on Default. Whenever an Event of Default shall have
happened and be subsisting, any one or more of the following remedial steps may
be taken:
(a) If the Loan has not been disbursed, the Director may terminate any and
all of its obligations under this Agreement and the Commitment;
(b) The Director may declare all payments under the Note to be immediately
due and payable, whereupon the same shall become immediately due and
payable;
(c) The Director may exercise any or all or any combination of the
remedies specified in Section 6.3 of the Open-End Parity Mortgage and
Security Agreement or in any other Loan Documents;
(d) The Director may have access to, inspect, examine and make copies of
the books and records accounts and financial data of the Company; or
(e) The Director may pursue all remedies now or hereafter existing at law
or in equity to collect all amounts then due and thereafter to become
due under this Agreement, the Security Document, the Note or any other
Loan Documents, or to enforce the performance and observance of
-23-
any other obligation or agreement of the Company under the Loan
Documents.
Section 5.3. No Remedy Exclusive. No remedy conferred upon or reserved to
the Director by this Agreement is intended to be exclusive of any other
available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this
Agreement, each other Loan Document, or now or hereafter existing at law, in
equity or by statute. No delay or omission to exercise any right or power
accruing upon any default shall impair 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. In order to entitle
the Director to exercise any remedy reserved to it in this Article, it shall
not be necessary to give any notice, other than such notice as may be expressly
provided for herein or required by law.
Section 5.4. Agreement to Pay Attorneys' Fees and Expenses. If an Event of
Default shall occur and the Director shall incur expenses, including attorney's
fees, in connection with the enforcement of this Agreement, or any other Loan
Document, or the collection of sums due thereunder, the Company shall reimburse
the Director for the expenses so incurred upon demand. If any such expenses are
not so reimbursed, the amount thereof, together with interest thereon from the
date of demand for payment at the Interest Rate for Advances (as defined in the
Security Document), shall constitute indebtedness secured by the Security
Document, and in any action brought to collect such indebtedness or to
foreclose or enforce the Security Document, the Director shall be entitled to
seek the recovery of such expenses in such action.
Section 5.5. No Waiver. No failure by the Director to insist upon the
strict performance by the Company of any provision hereof shall constitute a
waiver of his right to strict performance and no express waiver shall be deemed
to apply to any other existing or subsequent right to remedy the failure by the
Company to observe or comply with any provision hereof.
ARTICLE VI
MISCELLANEOUS
Section 6.1. Term of Agreement. This Agreement shall be and remain in full
force and effect from the date of its delivery until (a) the termination of
this Agreement pursuant to Section 5.2(a) hereof or (b) such time as the Loan
shall have been fully repaid and all other sums payable to the Company under
this Agreement, the Security Document, the Note and the other Loan Documents
shall have been paid.
Section 6.2. Notices. All notices, certificates, requests or the
communications hereunder shall be in writing and shall be deemed to be
sufficiently given when mailed by registered or certified mail, postage
prepaid, and addressed to the appropriate Notice Address. The
-24-
Company or the Director may, by notice given hereunder, designate any further
or different addresses to which subsequent notices, certificates, requests or
other communications shall be sent.
Section 6.3. Extent of Covenants of the Director; No Personal Liability.
All covenants, obligations and agreements of the Director contained in this
Agreement shall be effective to the extent authorized and permitted by
applicable law. No such covenant, obligation or agreement shall be deemed to be
a covenant, obligation or agreement of any present or future Director in other
than his official capacity acting pursuant to the Act.
Section 6.4. Binding Effect. This Agreement shall incure to the benefit of
and shall be binding in accordance with its terms upon the Director, the
Company and their respective successors and assigns.
Section 6.5. Amendments and Supplements. This Agreement may not be amended
or supplemented except by an instrument in writing executed by the Director and
the Company.
Section 6.6. Execution Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be regarded as an original and all
of which shall constitute but one and the same instrument.
Section 6.7. Severability. If any provision of this Agreement, or any
covenant, obligation or agreement contained herein is determined by a court to
be invalid or unenforceable, such determination shall not affect any other
provision, covenant, obligation or agreement, each of which shall be construed
and enforced as if such invalid or unenforceable portion were not contained
herein. Such invalidity or unenforceability shall not affect any valid and
enforceable application thereof, and each such provision, covenant, obligation
or agreement, shall be deemed to be effective, operative, made, entered into or
taken in the manner and to the full extent permitted by law.
Section 6.8. Captions. The captions and headings in this Agreement shall
be solely for convenience of reference and shall in no way define, limit or
describe the scope or intent of any provisions or Sections of this Agreement.
Section 6.9. Governing Law. This Agreement shall be deemed to be a
contract made under the laws of the State and for all purposes shall be
governed by and construed in accordance with the laws of the State.
[Signatures on next page]
-25-
IN WITNESS WHEREOF, this Agreement has been executed and delivered all
as of the date hereinbefore written.
DIRECTOR OF DEVELOPMENT OF THE
STATE OF OHIO, ACTING ON BEHALF
OF THE STATE
By: /s/ Mark Barbash
-------------------------
Mark Barbash
Deputy Director
LESCO, INC., an Ohio corporation
By: /s/
------------------------
Title: Exec. V.P.
-26-