EXHIBIT 10.2
LOAN AGREEMENT
between
THE DIRECTOR OF DEVELOPMENT OF THE STATE OF OHIO
and
KAHIKI FOODS, INC.
Dated
as of
December 1, 2002
(OHIO ENTERPRISE BOND FUND PROGRAM)
123
INDEX
(The Index is not a part of this Loan
Agreement and is only for convenience of
reference).
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Use of Defined Terms. . . . . . . . . . . . . . . . . . . . . . ...2
Section 1.2 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3 Certain Words and References. . . . . . . . . . . . . . . . . . .. 8
ARTICLE II. DETERMINATION AND REPRESENTATIONS. . . . . . . . . . . . . . . . 10
Section 2.1 Determinations of the Director. . . . . . . . . . . . . . . . . . 10
Section 2.2 Representations and Warranties of the Company. . . . . . . . . . .10
ARTICLE ill COMMENCEMENT AND COMPLETION OF THE PROJECT. . . . . . . . . . . . 13
Section 3.1 Provision of the Project. . . . . . . . . . . . . . . . . . . . . 13
Section 3.2 Deposits to the Project Fund. . . . . . . . . . . . . . . . . . . 13
Section 3.3 Disbursements from the Project Fund. . . . . . . . . . . . . . . 13
Section 3.4 Establishment of Completion Date. . . . . . . . . . . .. . . . . 14
Section 3.5 Company Required to Pay Costs in Event Project Fund Insufficient. 14
Section 3.6 Plans and Specifications: Inspections. . . . . . . . . . . . . . 15
Section 3.7 Investment of Project Fund, Primary Reserve Account
or Collateral Proceeds Account. . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.8 Conditions to Deposit of the State Assistance. . . . . . . . . . 15
ARTICLE IV STATE ASSISTANCE AND REPAYMENT . . . . . . . . . . . . . . . . . . 18
Section 4.1 State Assistance. . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.2 Company Payments for the State Assistance. . . . . . . . . . . . 18
Section 4.3 Place of Payments . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.4 Primary Reserve Account. . . . . . . . . . . . . . . . . . . . . 19
Section 4.5 Obligation of the Company Hereunder Unconditional. . . . . . . . 20
ARTICLE V MAINTENANCE, TAXES AND INSURANCE . . . . . . . . . . . . . . . . . 21
Section 5.1 Maintenance and Modifications of Project by the Company. . . . . 21
Section 5.2 Removal of Project Equipment. . . . . . . . . . . . . . . . . . . 21
Section 5.3 Indemnification by the Company. . . . . . . . . . . . . . . . . . 21
Section 5.4 Taxes, Other Governmental Charges and Utility Charges. . . . . . 22
Section 5.5 Insurance Required. . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.6 Additional Provisions Respecting Insurance. . . . . . . . . . . . 23
Section 5.7 Application of Net Proceeds of Insurance .... . . . . . . . . . . 23
Section 5.8 Public Liability Insurance. . . . . . . . . . . . . . . . . . . . 23
Section 5.9 Advances. . . . . . . .. . . . . . . . . . . . . . . . . . . . . .24
Section 5.1 0 Environmental Matters. . . . . . . . . . . . . . . . . . . . . .24
ARTICLE VI DAMAGE, DESTRUCTION AND CONDEMNATION. . . . . . . . . . . . . . . .27
Section 6.1 Damage and Destruction. . . . . . . . . . . . . . . . . . . . . . 27
Section 6.2 Eminent Domain. . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VII SPECIAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.1 No Warranty of Condition or Suitability. . . . . . . . . . . . . 29
Section 7.2 Right of Access to the Project. . . . . . . . . . . . . . . . . . 29
Section 7.3 Information Concerning Operations. . . . . . . . . . . . . . . . 29
Section 7.4 Affirmative Covenants of the Company. . . . . . . . . . . . . . . 29
(a)Taxes and Assessments. . . . . . . . . . . . . . . . . . . . . . . . . . ..29
(b) Maintain Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(c) Maintain Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(d) Maintain Insurance. . . . . . . . . . . . . . . . . .. . . . . . . . . . 30
(e) Furnish Information. .. . . . . . . . . . . . . . . . . . . . . . . . . . 30
(f) Deliver Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(g) Inspection Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(h) Zoning Planning and Environmental Regulations. . . . . . . . . . . . . . 31
(i) Use of Project Fund Moneys. . . . . . . . . . . . . . . . . . . . . . . . 32
(j) Job Creation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..32
(k) Preference for Ohio Goods and Services. . . . . . . . . . . . . . . . . . 32
Section 7.5 Negative Covenants of the Company. . . . . . . . . . . . . . . . 32
(a) Maintain Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(b) Transfer of Interests in the Company. . . . . . . . . . . . . . . . . . 32
(c) ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(d) Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(e) Sale and Encumbrance of Assets. . . . . . . . . . . . . . . . . . . . . 34
(f) Removal of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . .34
(g) Leasebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(h) Suspension of Operation. . . . . . . . . . . . . . . . . . . . . . . . . 34
(i) Financial Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.6 Mechanics' and Other Liens. . . . . . . . . . . . . . . . . . . 34
ARTICLE VIII ASSIGNMENT, SELLING AND LEASING. . . . . . . . . . . . . . . . 35
Section 8.1 Assignment Sale or Lease by the Company. . . . . . . . . . . . . 35
Section 8.2 Pledge by the Director. . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . 36
Section 9.1 Event of Default . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 9.2 Remedies. . . . . . . . .. . .. . . . . . . . . . . . . . . . . . 37
Section 9.3 No Remedy Exclusive. . . . . . . . . . . . . . . . . . . . . . . 38
Section 9.4 Agreement to Pay Reasonable Attorneys' Fees and Expenses. . . . . 38
Section 9.5 No Additional Waiver Implied by One Waiver. . . . . . . . . . . . 39
Section 9.6 Waiver of Appraisement, Valuation, Etc. . . . . . . . . . . . . . 39
ARTICLE X REDEMPTION OF BONDS, PREPAYMENT OF LOAN. . . . . . . . . . . . . .. 40
Section 10.1 Redemption of Bonds . . . . . . . . . . . . . . . . . . . . . . 40
Section 10.2 Prepayment of Loan . . . . . . . . . . . . . . . . . . . . . . 40
Section 10.3 Option to Defease Bonds. . . . . . . . . . . . . . . . . . . . . 41
ARTICLE XI MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.1 Termination of Agreement. .. . . . . . . . . . . . . . . . . . . 42
Section 11.2 Amounts Remaining in Collateral Proceeds Account
and Primary Reserve Account. . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.4 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.5 Extent of Covenants of the Director: No Personal Liability. . . 42
Section 11.6 Amendments, Chances and Modifications. . . . . . . . . . . . . . 42
Section 11.7 Execution Counterparts. . . . . . . . . . . . . . . . . . . . . 43
Section 11.8 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 11.9 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 11.10 Governing Law. . . . . . . . . . . . . . . . . . . . . . . .. . 43
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 44
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-I
EXHIBIT B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
LOAN AGREEMENT
THIS LOAN AGREEMENT made and entered into as of December 1,2002 between the
Director of Development (the "Director") of the State of Ohio (the "State"),
acting on behalf of the State, and Kahiki Foods, Inc., a corporation organized
and existing under the laws of the State of Ohio (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. After making certain determinations pursuant to the Act, the Director is
authorized, among other things, to lend money in the Facilities Establishment
Fund to persons for the purpose of paying Allowable Costs of an Eligible
Project.
B. The Company has requested that the Director provide financial assistance
for the Provision of the Project by providing the State Assistance to the
Company subject to and in accordance with the terms' of this Loan Agreement.
C. The Director has determined that the Project constitutes an Eligible
Project and that the State Assistance to be provided pursuant to this Loan
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 State Assistance to be provided pursuant to this Loan Agreement has
been reviewed and approved by the Development Financing Advisory Council 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 (provided, that any obligation of the Director created by or arising out
of this Loan Agreement shall not be a general debt on the part of the Director
or the State but shall be payable solely out of the loan payments, revenues and
other income, charges and moneys realized from this Loan Agreement):
[Balance of page intentionally left blank]
1
ARTICLE I
DEF1NITIONS
Section 1.1 Use of Defined Terms. In addition to the words and tenns
elsewhere defined in this Loan Agreement or by reference to the Security
Documents or other instruments, the words and tenns set forth in Section 1.2
hereof shall have the meanings therein set forth unless the context or use
expressly indicates a 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:
"Acquisition Date" means December 12, 2002.
"Act" means Chapter 166, Ohio Revised Code, as from time to time amended.
"Additional Payments" means the additional payments specified in Section
4.2 of this Loan Agreement.
"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 the State Assistance.
"Authorized Company Representative" means the person at the time designated
to act on behalf of the Company by written certificate furnished to the Director
and the Trustee, containing the specimen signature of such person and signed on
behalf of the Company by an officer of the Company. Such certificate may
designate an alternate or alternates.
"Bonds" means the State Economic Development Revenue Bonds (Ohio Enterprise
Bond Fund), Series 2002-7 (Kahiki Foods, Inc. Project) (Tax-Exempt Bonds)
authorized by the General Bond Order and the Series Bond Order.
"Closing Date" means December 5, 2002, the date of execution and delivery
of the Loan Documents.
"Code" means the Internal Revenue Code of 1986, as amended, and references
to the Code and Sections of the Code shall include relevant regulations and
proposed regulations thereunder or under the Internal Revenue Code of 1954, as
amended, and any successor provisions to such Sections, regulations or proposed
regulations.
"Collateral Proceeds Account" means the Series 2002-7 Collateral Proceeds
Account, established pursuant to the General Bond Order and the Series Bond
Order, in the Economic Development Bond Service Fund.
2
"Commitment" means the letter from Director to the Company, dated October
28,2002, pursuant to which the Director, on behalf of the State, agrees to
provide the State Assistance for the Project.
"Company" means Kahiki Foods, Inc., a corporation organized and existing
under the laws of the State of Ohio, and its successors and assigns.
"Completion Date" means the date of completion of the Provision of the
Project, as certified by the Company pursuant to Section 3.4 hereof.
"Construction Period" means the period between the beginning of the
Provision of the Project or the date on which this Loan Agreement is delivered
to the Director, whichever is earlier, and the Completion Date.
"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.
"Debt Service Account" means the Debt Service Account, established pursuant
to the General Bond Order, in the Economic Development Bond Service Fund.
"Determination of Taxability" shall have the meaning set forth in the
Series Bond Order.
"Development Financing Advisory Council" means the Development Financing
Advisory Council of the State.
"Director" means the officer of the State, appointed pursuant to Section
121.03 of the Ohio Revised Code, who administers and is the executive head of
the Department of Development, the officer who by law performs the functions of
that office, and any person acting on behalf of the Director of Development
pursuant to any delegation permitted by law.
"Economic Development Bond Service Fund" means the Economic Development
Bond Service Fund created by Section 166.08(S) of the Act.
"Eligible Investments" means Eligible Investments as defined in the Trust
Agreement.
"Eligible Project" means an "eligible project" within the meaning of the
Act and, with respect to the State Assistance, means the Project.
"Environmental Complaint" has the meaning set forth in Section 5.10(c)
hereof.
"Environment" means soil, land surface or subsurface strata, surface waters
(including navigable waters and ocean waters), groundwater, drinking water
supply, stream sediments, ambient
3
air (including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"Environmental Law" means any federal, state, local, municipal, foreign,
international, multinational, or other constitutions, laws, ordinances,
principles of common law, regulations, statutes or1reaties designed to minimize,
prevent, punish, or remedy the consequences of actions that damage or threaten
the Environment or human health.
"ERlSA" means the Employee Retirement Income Security Act of 1974, as from
time to time amended.
"Event of Default" means any of the events described as an Event of Default
in Section 9.1 hereof.
"Facilities Establishment Fund" means the Facilities Establishment Fund
created by Section 166.03 of the Act.
"Federal Income Tax Compliance Agreement" means the Federal Income Tax
Compliance Agreement by and among the Treasurer, the Trustee and the Company
relating to the Bonds.
"Final Cost Certification" means the Cost Certification dated as of the
Completion Date.
"First Half Account" shall have the meaning set forth in the General Bond
Order.
"Force Majeure" means, without limitation, (i) acts of God; strikes,
lockouts or other industrial disturbances; acts of public enemies; orders or
res1raints of any kind of the government of the United States or of the State or
any of their departments, agencies, political subdivisions or officials, or any
civil or military authority; insurrections; civil disturbances; riots;
epidemics; landslides; nuclear accidents; lightning; earthquakes; fires,
hurricanes; tornadoes; storms, droughts; floods; arrests; restraint of
government and people; explosions, breakage, malfunction or accident to
facilities, machinery, transmission pipes or canals; partial or entire failure
of utilities; shortages of labor, materials, supplies or 1ransportation; or (ii)
any cause, circumstances or event not reasonably within the con1rol of the
Company.
"General Bond Order" means the General Bond Order of the Treasurer, dated
April!!, 1988, as the same may be amended from time to time in accordance with
its provisions or the provisions of the Trust Agreement.
"Governing Ins1ruments" means the Articles of Incorporation and the Code of
Regulations 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.
"Guarantor" means Michael C. Tsao, a natural person and resident of the
State.
4
"Guaranty" mean the Guaranty Agreement, dated as of December 1,2002, of the
Guarantor given in favor of the Director, which unconditionally guarantees
(subject to the terms therein) the obligations of the Company under this Loan
Agreement.
"Hazardous Discharge" has the meaning set forth in Section 5.10(c) hereof.
"Hazardous Substance" means a hazardous substance as defined under the
Comprehensive Emergency Response Compensation and Liability Act of 1980,42
D.S.C. ss.6901, as from time to time amended.
"Hazardous Waste" means a hazardous waste as defined under the Resource
Conservation and Recovery Act of 1976,42 D.S.C. ss.6901, as from time to time
amended.
"Independent Engineer" means an engineer or engineering firm or an
architect or architectural firm qualified to practice the profession of
engineering or architecture under the laws of the State and who or which is not
an officer or a full time employee of the Company or any lessee of the Project.
"Interest Rate For Advances" means (a) the interest rate borne by the
Bonds; or (b) a rate which is one percent in excess of the prime or base
interest rate then charged by the Trustee in its lending capacity as a bank,
whichever is greater and lawfully chargeable.
"Issuance Expense Account" means the Series 2002-7 Issuance Expense Account
created in the Series Bond Order.
"Loan Agreement" means this Loan Agreement, as from time to time amended or
supplemented.
"Loan Approval Documents" means, with respect to this Loan Agreement, the
Resolution of the Development Financing Advisory Council dated September 30,
2002, the Approval of the Controlling Board dated October 28, 2002, and the
Commitment.
"Loan Documents" means this Loan Agreement and the Security Documents
delivered to or required by the Director to evidence or secure the State
Assistance.
"Loan Term" or "Term" means the period commencing upon the date of this
Loan Agreement and ending on the date on which all obligations of the Company
he~eunder have been paid.
"Market Conditions" means those conditions determined by the Director, with
advice from the Federal Reserve Bank of Cleveland, that the Director shall
consider, including the following:
1. Two consecutive quarters of decline in manufacturing employment in the
State as a whole or when possible by relevant manufacturing sector
(employmentfigures will be those reported by the Ohio Bureau of Employment
Services);
5
2. A decline, as a whole or by relevant sector, in twelve (12) of the last
thirty-six (36) months as detailed in the Federal Reserve's national industrial
production index.
3. A decline within the relevant sector of Standard and Poor's "Industrial
outlook".
"Mortgage" means the Open-End Leasehold Mortgage, Assignment of Rents and
Leases and Security Agreement, of even date herewith, between the Company and
the Director, pursuant to which the Company grants a first mortgage and security
interest in the Project, and assigns any rents and leases to be derived
therefrom to the Director to secure repayment of the State Assistance.
"Net Proceeds," when used with respect to any insurance or condemnation
award, means the gross proceeds from the insurance or condemnation award with
respect to which that term is used remaining after payment of all expenses
incurred in the collection of such gross proceeds.
"Notice Address" means:
(a) As to the Director: Department of
Development Economic Development Finance
Division P. O. Box 1001 28th Floor, 77
South High Street Columbus, OH
43216-1001 Attn: Office of Financial
Incentives
and
Hemmer Spoor Pangburn DeFrank PLLC
8044 Montgomery Road, Suite 624
Cincinnati, OH 45246
Attn: Richard D. Spoor, Esq.
(b) As to the Company: Kahiki Foods, Inc.
3004 E. 14th Avenue Columbus, OH 43219 .
Attn: Mr. Michael C. Tsao
With a copy to: Carlile, Patchen & Murphy LLP
366 E. Broad Street
Columbus, OH 43219
Attn: Andrew Federico, Esq
(c) As to the Trustee: The Provident Bank
Corporate Trust Dept. M.S. 654D
Cincinnati, OH 45202
6
or such additional or different address, notice of which is given under Section
11.3 hereof.
"Original Deposit" means $418,000, which amount (or the Reserve Letter of
Credit in such amount) is to be delivered to the Trustee to become the Primary
Reserve Account upon delivery of this Loan Agreement, in accordance with Section
4.4 hereof.
"Permitted Encumbrances" means Permitted Encumbrances as defined in the
Mortgage.
"Petroleum" means petroleum as defined under the Resource Conservation and
Recovery Act of 1976,42 U.S.C. ss.6901, as from time to time amended.
"Plans and Specifications" means the plans and specifications or other
appropriate documents describing the Project prepared by or at the direction of
the Company.
"Primary Reserve Account" means the Series 2002-7 Primary Reserve Account,
established pursuant to the General Bond Order and the Series Bond Order, in the
Economic Development Bond Service Fund.
"Project" means, collectively, the Project Site, the Project Facilities and
the Project Equipment, constituting an Eligible Project.
"Project Equipment" means the equipment, machinery and other personal
property described in Exhibit B hereto.
"Project Facilities" means all buildings, structures, additions,
improvements, appurtenances and hereditaments upon the Project Site.
"Project Fund" means the Series 2002-7 Project Fund, established pursuant
to the Series Bond Order.
"Project Purposes" means the Provision of the Project Equipment and Project
Facilities at the Project Site for use as a facility for the processing of
frozen food products.
"Project Site" means the real property described in Exhibit A attached
hereto.
"Provision" means, as applicable, the acquiring, constructing,
reconstructing, rehabilitating, renovating, enlarging, installing, improving,
equipping or furnishing of the Project.
"Required Equity Contribution" means the contribution by the Company of
$465,000.
"Reserve Letter of Credit" means an irrevocable letter of credit, in form
satisfactory to the Trustee, issued by a commercial bank organized under the
laws of the United States of America or any state thereof and acceptable to the
Director, which letter of credit may be drawn upon by the Trustee to provide
funds for the Primary Reserve Account pursuant to Section 4.4 of this Loan
Agreement. The Reserve Letter of Credit must permit drawings thereunder for a
period of not less
7
than one (1) year or until fifteen (15) days after the final maturity of the
Bonds, whichever comes first.
"Second Half Account" shall have the meaning set forth in the General Bond
Order.
"Security Documents" means, collectively, the Mortgage, the Guaranty, and
any collateral documents, as from time to time amended or supplemented.
"Series Bond Order" means Series Bond Order No. R7-02 of the Treasurer,
dated November __, 2002 as the same day be amended from time to time in
accordance with its provisions or the provisions of the Trust Agreement.
"State" means the State of Ohio.
"State Assistance" means the loan by the Director to the Company under the
Ohio Enterprise Bond Program established pursuant to Section 166.08 of the Act
in the total sum of the State Assistance Amount, to be disbursed pursuant to the
Terms and Conditions to Disbursement.
"State Assistance Amount" means the lesser of $4,180,000 or 90% of the
total Allowable Costs of the Project, as determined by the Director in the
Director's sole discretion pursuant to this Loan Agreement.
"Supplement" means the Seventieth Supplemental Trust Agreement, dated as of
December 1, 2002, between the Treasurer and the Trustee, of which the Series
Bond Order is a part.
"Terms and Conditions to Disbursement" means the terms and conditions which
must be satisfied by the Company with respect to each request for disbursement
of moneys from the Project Fund in order to obtain the Director's approval of
such request for disbursement, which terms and conditions are set forth on
Exhibit C attached hereto.
"Toxic Chemicals" means toxic chemicals as defined under Title ill of the
Superfund Amendments and Reauthorization Act of 1986 (Also cited as the
Emergency Planning and Community Right-to-Know Act) 42 V.S.C. ss. 11001, as from
time to time amended.
"Treasurer" means the Treasurer of State of the State, or the officer who
by law performs the functions of that office.
"Trustee" means the trustee at the time serving as such under the Trust
Agreement, initially The Provident Bank, Cincinnati, Ohio.
"Trust Agreement" means the Trust Agreement, dated as of April 1, 1988,
between the Treasurer and the Trustee, of which the General Bond Order is a
part, as the same may be amended, modified or supplemented by any amendments or
modifications thereof and any supplements thereto (including, but not limited
to, the Supplement) entered into in accordance with the provisions thereof.
8
Section 1.3 Certain Words and References. Any reference herein to the
Director shall include those succeeding to the Director's functions, duties or
responsibilities pursuant to or by operation of law or lawfully perfonning 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, provided that no such
amendment, modification,. supplementation, revision or supersession shall alter
the obligation of the Company to pay all the amounts payable hereunder on the
terms provided herein. Except as it relates to the Guarantor, all references to
"generally accepted accounting principles" shall have the meaning set forth in
Statement on Auditing Standards No. 69 or any predecessor or successor
pronouncement of the American Institute of Certified Public Accountants in
effect for any applicable fiscal period.
The terms "hereof," "hereby," "herein," "hereto," "hereunder" and similar
terms refer to this Loan Agreement; and the term "heretofore" means before, and
the term "hereafter" means after, the date of delivery of this Loan Agreement
Words of the masculine gender include the feminine and the neuter, and when the
sense so indicates, words of the neuter gender may refer to any gender.
[End of Article I]
9
ARTICLE II
DETERMINATION AND REPRESENTATIONS
Section 2.1 Detenninations 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, including without
limitation those set forth in the Loan Approval Documents, which are hereby
confirmed and the Director hereby detennines that the financial assistance to be
provided by the State pursuant to this Loan Agreement will conform to the
requirements of the Act, including Sections 166.07 thereof, and will further
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 and Warranties of the Companv. The Company
hereby represents and warrants that:
(a) The Company is a corporation du1y organized and validly existing under
the laws of the State and is qualified to do business in the State, and has all
requisite power, as a corporation, to conduct the Company's business, as
currently conducted, to own, or hold under lease, the Company's assets and
properties and is du1y qualified to do business in all other jurisdictions in
which the Company owns property and will remain so qualified and in good
standing during the Loan Term.
(b) The Company has full power and authority as a corporation to execute,
deliver and perform the Loan Documents to which the Company is a party and to
enter into and carry out the transactions contemplated hereby and thereby. Such
execution, delivery and performance do not, and will not, violate any provision
of current law applicable to the Company or the Governing Instruments of the
Company and do not, and will not, conflict with or resu1t in a defau1t under any
agreement or instrument to which the Company is a party or by which it or any
property or assets of the Company is bound, except where the violation of
current law or the conflict with or default under such agreement or instrument
wou1d not materially impair the ability of the Company to perform its
obligations under the Loan Documents or materially adversely affect the fmandal
condition of the Company or the abilities of the parties to consummate the
transactions contemplated by this Loan Agreement. The Loan Documents to which
the Company is a party have, by proper action, been du1y authorized, executed
and delivered and all necessary actions have been taken in order for the Loan
Documents to constitute legal, valid and binding obligations of the Company.
(c) The provision of financial assistance pursuant to the Loan Approval
Documents and this Loan Agreement induced the Company to provide the Project,
thereby, to the knowledge of the Company, creating new jobs and 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 by the Company, and the
Project will be operated and maintained by the Company in the City of Gahanna
and in the County of Franklin, Ohio in such a manner as to conform with all
applicable Environmental Laws and zoning, planning, building and other
governmental regulations imposed by any Governmental Authority and as to be
consistent with the purpose of the Act, except where such nonconfonnity or
inconsistency would not
10
materially impair the ability of the Company to perform its obligations under
the Loan Documents or materially adversely affect the financial condition of the
Company or the ability of the parties to consummate the transactions
contemplated by this Loan Agreement.
(e) The Company presently intends that the Project will be used and
operated in a manner consistent with the Project Purposes in the City of Gahanna
and the County of Franklin, Ohio until the end of the Loan Term, 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, to the Company's
knowledge, threatened against or affecting the Company or the Project which, if
adversely detennined, would individually or in the aggregate materially impair
the ability of the Company to perform any of its obligations under the 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 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 or both would constitute any such event of default, except
for such defaults that do not materially impair the ability of the Company to
perform its obligations under the Loan Documents or materially adversely affect
the financial condition of the Company or the abilities of the parties to
consummate the transactions contemplated by this Loan Agreement.
(h) The Project Site is zoned by the City of Gahanna, in the County of
Franklin, Ohio under zoning regulations which permit the Provision of the
Project thereon in accordance with the Plans and Specifications and the
operation of the Company's business thereon; and all utilities, including water,
storm and sanitary sewer, gas, electric and telephone, and rights of access to
public ways are 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, which has given rise to, or the performance of which by the
other party thereto would give rise to, a lien or claim oflien on the Project or
other collateral covered by the Loan Documents, except Permitted Encumbrances.
(j) No representation or warranty made by the Company contained in any of
the Loan Approval Documents or the Loan Documents, and no statement contained in
any certificate, schedule, financial statement or other instrument furnished to
the Director by or on behalf of the Company including, without limitation, the
Application; contains as of the date thereof 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.
(k) All proceeds of the State Assistance 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 any
11
supplier, contractor, architect, subcontractor, laborer or materialman
performing work or services or supplying materials in connection with the
Provision of the Project.
(l) The Company shall provide the Required Equity Contribution by the
Closing Date.
(m) No Hazardous Substance, Hazardous Waste, Toxic Chemical or Petroleum
has been discharged, dispersed, released, stored or treated at the Project Site.
No Hazardous Waste, Toxic Chemical or Petroleum will be discharged, dispersed,
released, stored or treated at the Project Site, except for such use and storage
of any Hazardous Substance, Hazardous W aste, Toxic Chemical or Petroleum which
may be utilized and stored on the Project Site by the Company in the ordinary
course of its business operations in compliance with Environmental Laws. No
asbestos or asbestoscontaining materials have been or will be installed, used or
incorporated into any buildings, structures, additions, improvements,
facilities, fixtures or installations at the Project Site, or disposed of on or
otherwise released at or from the Project Site. No underground storage tanks are
located at the Project Site. No investigation, administrative order, consent
order and agreement, litigation or settlement under any Environmental Law with
respect to any Hazardous Substance, Hazardous Waste, Toxic Chemical, Petroleum,
asbestos or asbestos-containing material is in existence, or, to the best of the
Company's knowledge, is proposed, threatened or anticipated with respect to the
Eligible Project. The Eligible Project is in compliance with all applicable
Environmental Laws, and the Company has not received any notice from any entity,
Governmental Authority, or individual claiming any violation of, or requiring
compliance with any Environmental Law. The Company has not received any request
for information, notice of claim, demand or other notification that the Company
may be responsible for a threatened or actual release of any Toxic Chemical,
Hazardous Substance, Hazardous Waste, Petroleum, asbestos or asbestos-containing
material or for any damage to the environment or to natural resources. No
"clean-up" of the Project has occurred pursuant to any applicable Environmental
Laws which would 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 on the Project.
(n) Upon completion of the Provision of the Project, the Company will have
good and marketable title to the Project, subject in all cases to no lien,
charge, condition, restriction, encumbrance, easement or agreement, including,
without limitation, parking agreements, encroachment agreements, access
easements, service agreements or other similar agreements affecting the Project,
except as created by or otherwise permitted by the Loan Documents.
[End of Article II]
12
ARTICLE III
COMMENCEMENT AND COMPLETION OF THE PROJECT
Section 3.1 Provision of the Proiect The Company (a) has commenced or shall
promptly hereafter cause the Provision of the Project; (b) shall pay all
expenses incurred in the Provision of the Project from funds made available
therefor in accordance with this Loan Agreement or from other sources; 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 the Company's agreement in the Commitment that all
wages paid to laborers and mechanics employed on the Provision of the Project
shall be paid, as required by Chapter 4115 of the Ohio Revised Code at the
prevailing rates of wages of laborers and mechanics for the classes of work
called for by the Project, which wages shall be determined in accordance with
the requirements of Chapter 4115 of the 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 the Company's regular bargaining unit employees
who are covered under collective bargaining agreements, which were 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 3.2 Deposits to the Proiect Fund. In order to provide funds for
payment of a portion ofthe Allowable Costs of the Project, the Director, upon
delivery of this Loan Agreement and satisfaction of the conditions set forth in
Section 3.8 hereof, shall cause to be deposited to the Project Fund the sum of
$4,103,244.10.
Section 3.3 Disbursements fTom the ProiectFund. The Treasurer has, in the
Supplement, authorized and directed the Trustee to disburse the moneys in the
Project Fund for Allowable Costs of the Project. Except as otherwise provided in
this Loan Agreement, each payment from the Project Fund shall be made only upon
(A) the written direction of the Authorized Company Representative who shall
certify with respect to each such payment: (i) that each item for which payment
is requested is an Allowable Cost properly payable out. of the Project Fund in
accordance with the terms and conditions of this Loan Agreement and none of the
items for which the payment is proposed to be made has formed the basis for
early payment theretofore made from the Project Fund, (ii) that each item for
which payment is proposed to be made is or was necessary in connection with the
Project and (iii) that, if applicable, the Company has received from each payee
appropriate waivers of any mechanics' or other liens (or has provided
indemnification in lieu thereof satisfactory to the Director) and (B) the
written approval of the Director and the Director's inspector of the Project
appointed by the Director in accordance with Section 3.6 hereof, which approval
shall not be unreasonably withheld. The Director shall not be required to
approve any request for disbursement of moneys from the Project Fund unless the
Company has complied with all of the Terms and Conditions to Disbursement and
this Agreement. Except for the disbursements to be made on the Closing Date, the
Trustee shall be allowed a reasonable time, not to exceed fifteen (15) days, in
view of the character of any installment or investments required to be
liquidated for the purpose, for the making of any disbursement from the Project
Fund authorized by this Section.
13
Section 3.4 Establishment of Completion Date. The Provision of the Project
involves the acquisition of an existing building on leased land and the
renovation and equipping of said building. If applicable as hereinafter
provided, the Completion Date shall occur not later than one (1) year after any
damage or destruction to the Project if the Project is to be restored or
rebuilt, and shall be evidenced to the Director and to the Trustee by a
certificate signed by the Authorized Company Representative stating (i) the
Completion Date, (ii) that all licenses and approvals, including a certificate
of occupancy, for the Project required by any Governmental Authority have been
obtained, (iii) that, except for amounts retained by the Trustee in the Project
Fund for Allowable Costs of the Project not then due and payable, Provision of
the Project has been completed in accordance with the Plans and Specifications
and all labor, services, materials and supplies used in Provision of the Project
have been paid for, (iv) all other facilities necessary in connection with the
Project have been constructed, acquired and installed in accordance with the
plans and specifications therefor and all costs and expenses incurred in
connection therewith have been paid, (v) the Project Facilities and all other
facilities necessary in connection with the Project have been constructed,
acquired or installed, as the case may be, in such manner as to conform to all
applicable zoning, planning, building, environmental and other regulations of
the Governmental Authorities; provided that if any part of the construction or
installation does not conform to such regulation, the certificate shall describe
any such non-conformities and the actions being taken to remedy them, (vi) the
Project Equipment, if any, (which shall be described in an exhibit attached to
said certificate) has been installed to the Company's satisfaction, and as so
installed is suitable and sufficient for the efficient operation of the Project
for the Project Purposes, and (vii) all materially significant disputes,
controversies or claims arising out of or in connection with the Provision of
the Project have been resolved, satisfied or paid in full, as the case may be,
except as otherwise disclosed in the certificate. Notwithstanding the foregoing,
such certificate shall state that it is given without prejudice to any rights
against third parties which exist at the date of such certificate or which may
subsequently come into being. The Company shall also deliver to the Director and
to the Trustee a Final Cost Certification and completed forms AIA-G-702 and
AIA-G-703. Any amount remaining in the Project Fund on the Completion Date,
except for amounts which the Authorized Company Representative certifies to the
Trustee as being required to pay Allowable Costs of the Project not then due and
payable, shall be transferred by the Trustee to the Collateral Proceeds Account.
Section 3.5 Company Required to Pav Costs in Event Proiect Fund
Insufficient. If the Project is destroyed by fire or other casualty and is to be
restored or rebuilt, in the event the moneys in the Project Fund available for
payment of costs of the Project are not sufficient to pay the portion of the
Allowable Costs contemplated by this Loan Agreement to be paid therefrom or if
any other costs of the Project remain unpaid, the Company shall, nonetheless and
irrespective of the cause of the insufficiency, for the benefit of the Director,
complete the Project in accordance with the Plans and Specifications and pay all
costs of such completion in full. The Director does not make any warranty,
either express or implied, that the moneys which will be paid into the Project
Fund which under the provisions of this Loan Agreement will be available for
payment of the Allowable Costs of the Project will be sufficient to pay the
portion of the Allowable Costs contemplated to be paid therefrom. The Company
agrees that if after exhaustion of the moneys in the Project Fund the Company
should pay any portion of the said costs of the Project pursuant to the
provisions of this Section, it shall not be entitled to any reimbursement
therefor from the Director or the Trustee, nor shall it be entitled to any
diminution in or postponement of the loan payments payable under Section 4.2 or
Section 4.3 hereof. The Company shall also pay all costs incident to the State
Assistance, including insurance premiums and escrow fees. The Company shall
defend, indemnify and hold the
14
Director and any officials, employees, agents or representatives of the Director
or the State harmless against any and all loss, cost, expense, claims or actions
arising out of or connected with the execution and delivery of the Loan
Documents and the preparation of documents relating to the disbursement of the
State Assistance, including all aforementioned costs and expenses, regardless of
whether or not the disbursement of the State Assistance shall actually occur.
The provisions of this Section shall survive the termination of this Loan
Agreement until the expiration of the Loan Term.
Section 3.6 Plans and Specifications: Inspections. If the Project is to be
rebuilt or restored after damage, at the Director's option, the Director may
designate an employee or officer of the State or may retain, at the Company's
expense and with the Company's prior approval, an architect, engineer, appraiser
or other consultant for the purpose of approving the Plans and Specifications,
verifying costs and performing inspections of the Project as Provision of the
Project progresses or reviewing any construction contracts and payment or
performance bonds or other forms of assurance of completion of the Project. Such
inspections, reviews or approvals. shall not impose any responsibility or
liability of any nature upon the Director, the State or officers, employees,
agents, representatives or designees of the Director or the State, or, without
limitation, make or cause to be made 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. The Company
shall, at the written request of the Director, make periodic reports (including,
if required, submission of updated Cost Certifications) to the Director within
45 days after receipt of such written request concerning the status of
completion and the expenditures for costs in respect thereof.
The Company may revise the Plans and Specifications from time to time;
provided, that no 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 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, upon request. Except as provided in
the allowable amendments and revisions, the Company shall complete the Provision
of the Project in accordance with the Plans and Specifications.
Section 3.7 Investment ofProiect Fund. Primary Reserve Account or
Collateral Proceeds Account. Any moneys held as part of the Project Fund, the
Primary Reserve Account or the Collateral Proceeds Account shall be invested by
the Trustee, upon the written or oral direction (but if oral, confirmed promptly
in writing) of the Authorized Company Representative, in Eligible Investments.
Section 3.8 Conditions to Deposit of the State Assistance. On the Closing
Date the Director shall deposit the State Assistance to the Project Fund in
accordance with Section 3.2 hereof, provided the Director shall have received
the following on or before the Closing Date:
(a) the Series Bond Order, duly executed;
(b) the Supplement, duly executed;
15
(c) the Bond purchase Agreement dated -,2002, among the Treasurer, the
Director, the Company and the Underwriter relating to the sale of the Bonds,
du1yexecuted;
(d) a specimen of the dilly executed and authenticated Bonds;
(e) such certificates, opinions and other documents as the Director shall
reasonably request in connection with the issuance of the Bonds, including a
Certificate of the Trustee acknowledging receipt of the State Assistance Amount;
(f) this Loan Agreement, du1y executed;
(g) the du1y executed and recorded Security Documents;
(h) the Guaranty du1y executed;
(i) A du1y executed Power of Attorney to effect wire transfers, if
applicable;
(j) evidence of the Required Equity Contribution and the Reserve Letter of
Credit;
(k) an environmental audit of the Project Site, in form and substance
satisfactory to the Director and upon which the Director is entitled to rely;
(l) if applicable, the prevailing wage rates for all laborers and
mechanics, the name and identity of the prevailing wage coordinator and a list
of all contractors and subcontractors, including their names and addresses,
certified as true, correct and complete by the Company, and a Certificate of
Compliance, certifying as to full compliance with Chapter 4115, Ohio Revised
Code;
(m) certification by the Company that (i) the Company's representations and
warranties made in the Loan Approval Documents and Loan Documents remain true,
accurate and complete as of the Closing Date in all material respects, (ii) no
defaillt or event which, by notice, the passage of time or otherwise, wou1d
constitute adefau1t, exists under the Loan Documents, (iii) that the value of
the Project is, or upon completion will be, equal to or greater than the total
amount of money expended in the Provision of the Project, and (iv) the aggregate
amount of the State Assistance will not exceed 90% of the total Allowable Costs
of the Project;
(n) evidence of the liability and property insurance required by the Loan
Documents;
(o) evidence of availability and adequacy of utilities for the Project;
(p) a Cost Certification of the Project as of the Closing Date;
(q) certification by the Company that the Plans and Specifications, any
construction contracts for the Project, and any payment and performance bonds or
other forms of assurance of completion of the Project are available for review
in accordance with Section 3.6 of this Loan Agreement;
16
(r) the Company's Certificate of Good Standing as a corporation from the
Secretary of State of the State dated within ten (10) days prior to the Closing
Date;
(s) certified copies of the resolutions of the Company authorizing
execution and delivery of all documents with respect to the State Assistance and
performance thereunder;
(t) copies, certified by the Company to be true, correct and complete, of
the Governing Instruments of the Company;
(u) a commitment for title insurance payable to the Director as mortgagee
in the amount of $2,300,000 (with mechanics lien and survey exceptions deleted)
reasonably satisfactory to the Director;
(v) a Key-Man Life Insurance Policy assigned to the Director in the amount
of$750,000 insuring the life of Mr. Michael C. Tsao, the Guarantor;
(w) evidence satisfactory to the Director that the Project Site is not
located in a "Flood Hazard 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 Site is located in a such flood-prone area, that
appropriate flood insurance or other satisfactory measures have been taken to
protect the Project from flood damage;
(x) all licenses and permits required by any Governmental Authority with
respect to the operation of the Project;
(y) an opinion of the Company's counsel in form and substance reasonably
satisfactory to counsel for the Director; and
(z) a certificate of the Guarantor in form and substance reasonably
satisfactory to the Director.
[End of Article III]
17
ARTICLE IV
STATE ASSISTANCE AND REPAYMENT
Section 4.1 State Assistance. The Director hereby lends to the Company the
moneys transferred from the Facilities Establishment Fund to the Project Fund
pursuant to the Supplement as the State Assistance for the purposes of financing
a portion of the Allowable Costs of the Project. The Company hereby agrees to
repay the State Assistance by making all of the payments provided for in Section
4.2 of this Loan Agreement.
Section 4.2 Company Payments for the State Assistance. On the 15th of each
month from December 15, 2003 through June 15, 2003, both inclusive, the Trustee
will draw from the appropriate accounts funded from Bond proceeds, the sum of
(i) one-sixth (1/6) of the amount of interest on the Bonds which will be payable
by the State on the next succeeding date on which such interest is due to be
paid, (ii) one-twelfth (1/12) of the Trustees annual administration fee (as
hereinbelow described), and (iii) one-twelfth (1/12) of the Director's annual
administrative fees (as hereinbelow described). The Company shall make such loan
payments on the 15th of each month from July 15,2003 through November 15, 2003,
both inclusive.
Not later than the fifteenth day of each month commencing December 15, 2003
and continuing thereafter until the principal and interest on the Bonds shall
have been fully paid or provision for the payment thereof shall have been made
in accordance with the Trust Agreement, the Company shall pay as loan payments
for the State Assistance (A) the sum of (i) one-sixth (1/6) of the amount of
interest on the Bonds which will be payable by the State on the next succeeding
date on which such interest is due to be paid, and (ii) one-sixth (1/6) of the
amount of principal of the Bonds which will be payable (whether at stated
maturity or by redemption) by the State on the next succeeding date on which
such principal is due to be paid. If the Company fails to make any payment
required by this paragraph on the due date thereof with respect to the Bonds,
the Trustee shall, to the extent that funds are available therefor, transfer to
the Debt Service Account an amount equal to such payment from the Collateral
Proceeds Account and, if the balance in the Collateral Proceeds Account is
insufficient, from the Primary Reserve Account.
If moneys are transferred from the Primary Reserve Account or the
Collateral Proceeds Account to the Debt Service Account pursuant to the
provisions of Section 14 of the General Bond Order, and if no Event of Default
is then existing, the Company shall receive a credit against loan payments
payable hereunder with respect to the Bonds, in inverse order of their maturity,
in an amount equal to the amount so transferred.
If no Event of Default is then existing and if the balance in the Primary
Reserve Account is greater than or equal to the aggregate amount ofloan payments
relating to the Bonds to become due and payable during the remaining Term of
this Loan Agreement, the Company may direct the Trustee to apply moneys in the
Primary Reserve Account to monthly Bond loan payments as they become due and, in
such case and notwithstanding the provisions of Section 4.4 hereof, the Company
shall not be required to deliver moneys to the Trustee to restore the balance in
the Primary Reserve Account to an amount equal to the Original Deposit.
18
Not later than the fifteenth day of each month, commencing July 15, 2003,
the Company shall pay to the Trustee (i) an amount equal to one-twelfth (1/12)
of the Trustee's annual administrative fee (which annual administrative fee
shall be calculated at a rate of .12% of the principal amount of Bonds
outstanding), constituting the fee of the Trustee in connection with its
administration of the Project Fund, the Primary Reserve Account and the
Collateral Proceeds Account, and (ii) to the Director an amount equal to
one-twelfth (1/12) of the Director's annual administrative fee (which annual
administrative fee shall be calculated at the rate of .125% of the outstanding
principal amount of the Bonds) ("Additional Payments"). The Company and the
Director acknowledge and agree that the Additional Payments are intended to
reimburse the Department of Development for a portion of the cost of
administering the Ohio Enterprise Bond Fund.
Except for costs associated with the negligence or willful misconduct of
the Director, the Company also agrees to pay to the Director reasonable expenses
of the Director related to the Project and requested by the Company or required
by this Loan Agreement or the Trust Agreement, or incurred in enforcing the
provisions of this Loan Agreement or the Trust Agreement and which are not
otherwise required to be paid by the Company under the terms of this Loan
Agreement.
In the event Company should fail to make any of the payments required in
this Section 4.2, the item or installment so in default shall continue as an
obligation of the Company until the amount in default shall have been fully
paid, and the Company agrees to pay the same with interest thereon at the rate
of the Interest Rate for Advances. If any payment required by the first
paragraph of this Section 4.2 or of Section 4.4 hereof is not made by the first
day of the month following the month in which such payment is due, the Company
shall pay, in addition to such payment, a late payment charge of five percent
(5%) of the amount of such payment.
Section 4.3 Place of Payments. The loan payments provided for in the first
paragraph of Section 4.2 hereof and the late payment charge provided for in the
last paragraph of Section 4.2 hereof shall be paid directly to the Trustee at
its principal corporate trust office for the account of the Director, and the
Trustee shall deposit such payments in the Debt Service Account. Additional
Payments shall be paid to the Trustee, who shall pay such amounts to the
Director, not less frequently than monthly, for deposit in the First Half
Account (if received by the Director between January 1 and June 30) or the
Second Half Account (if received by the Director between July 1 and December 31)
created in the Trust Agreement. The Additional Payments to be made to the
Director under Section 4.2 hereof shall be paid directly to the Director for use
as provided in such Section.
Section 4.4 Primary Reserve Account. Upon delivery of this Loan Agreement
and in accordance with the General Bond Order and the Series Bond Order, the
Company shall deliver or cause to be delivered to the Trustee for deposit or
credit to the Primary Reserve Account a sum of money equal to the Original
Deposit (which sum may, to the extent provided for in the Series Bond Order, be
derived from proceeds of the sale of the Bonds) or the Reserve Letter of Credit
in the amount of the Original Deposit. In accordance with the provisions of the
General Bond Order and the Series Bond Order, the Trustee shall transfer moneys
from the Primary Reserve Account to the Debt Service Account (and shall draw on
the Reserve Letter of Credit, if necessary in order to obtain such moneys) if
(a) the Company shall have failed to make a loan payment required by the first
paragraph of Section 4.2 hereof, and (b) the balance in the Collateral Proceeds
Account is insufficient to provide funds for such transfer.
19
If, as a result of a transfer described in the immediately preceding
paragraph, the balance in the Primary Reserve Account is less than the Original
Deposit, the Trustee shall promptly notify the Company, by telephone and
confirmed in writing, of the amount of such deficiency, and the Company shall,
not later than ten (10) days after receipt of such notice, deliver to the
Trustee for deposit or credit to the Primary Reserve Account moneys or the
Reserve Letter of Credit in the amount of such deficiency.
Pursuant to the Supplement, the Trustee is directed to draw on the Reserve
Letter of Credit prior to its expiration for the full amount thereof and deposit
the proceeds of such drawing in the Primary Reserve Account unless, not later
than thirty (30) days prior to the expiration of the Reserve Letter of Credit,
the Company shall have delivered to the Trustee a replacement Reserve Letter of
Credit in the same amount as the expiring Reserve Letter of Credit, or evidence
that the issuer of the Reserve Letter of Credit has extended the maturity
thereof for a period of not less than one year (or to the final maturity date of
the Bonds, if earlier).
Pursuant to Section 14 of the General Bond Order, the Trustee shall, under
the circumstances described in said Section 14, transfer moneys from the Primary
Reserve Account to the Debt Service Account, and the Trustee shall draw on the
Reserve Letter of Credit, if necessary, in order to obtain moneys to make such
transfer.
Section 4.5 Oblieation of the Company Hereunder Unconditional. The
obligations of the Company to make the payments required in Sections 4.2 and 4.4
hereof and to perform and observe the other agreements on its part contained
herein shall be absolute and unconditional until such time as the principal of
and interest and premium, if any, on the Bonds shall have been fully paid or
provision for the payment thereof shall have been made in accordance with the
Trust Agreement and shall not be affected by any circumstances, including, but
not limited to, any set off, counterclaim, recoupment, defense (other than
payment itself) or other right which the Company may have against the Director
or anyone else for any reason whatsoever or the failure to complete the
Provision of the Project. The Company hereby waives, to the extent permitted by
applicable law, any and all rights which it may now have or which at any time
hereafter may be conferred upon it, by statute or otherwise, to terminate or
cancel this Loan Agreement except in accordance with the express terms hereof.
Nothing contained in this Section shall be construed to .release the Director
from the performance of any of the agreements on Director's part contained in
this Loan Agreement; and in the event Director should fail to perform any such
agreement on its part, the Company may institute such action against the
Director as the Company may deem necessary to compel performance or recover the
Company's damages for nonperformance so long as such action shall not impair the
agreements on the part of the Company contained in this Section.
[End of Article IV]
20
ARTICLE V
MAINTENANCE, TAXES AND INSURANCE
Section 5.1 Maintenance anq Modifications of Project bv the Company. The
Company agrees that during the Loan Term it will keep the Project including all
appurtenances thereto and the equipment and machinery therein in good repair and
good operating condition at the Company's own cost.
The Company shall have the privilege of remodeling or making additions,
modifications or improvements to the Project from time to time as it, in the
Company's discretion, may deem to be desirable for its uses and purposes;
provided, the Project is still used for the Project Purposes upon completion of
remodeling, additions, modifications or improvements. The cost of such
remodeling, additions, modifications and improvements shall be paid by the
Company.
Section 5.2 Removal of Project Equipment. The Company shall have the
privilege from time to time of substituting machinery, equipment and related
property for any Project Equipment, if any; provided that the machinery and
equipment so substituted shall be of a value not materially less than the value
of the machinery or equipment replaced and shall not make the Project unsuitable
for the Project Purposes. Any such substitute machinery and equipment shall
become part of the Project Equipment for purposes of the Mortgage. The Company
shall promptly notify the Director and the Trustee of any substitutions of
machinery or equipment, which notice shall include a description of the
substituted machinery or equipment. The Company shall also have the privilege of
removing any Project Equipment, without substitution therefor; provided, that
the Company pays to the Director a sum equal to the then value of said Project
Equipment, as determined by an Independent Engineer selected by the Company, and
so long as any of the Bonds remain outstanding, the Company shall pay such
amounts directly to the Trustee for deposit in the Collateral Proceeds Account
and shall deliver to the Director and the Trustee a certificate signed by said
Independent Engineer setting forth the value of said Project Equipment and
stating that the removal of such equipment will not make the Project unsuitable
for the Project Purposes.
The Company may at any time while it is not in default under this Loan
Agreement remove from the Project any machinery or equipment purchased and
installed by it at the Project Site and not included as Project Equipment. In
the event any such removal causes damage to existing buildings or structures,
the Company shall restore the same or repair such damage at its sole expense.
The Director agrees to execute and deliver such documents as the Company
may properly request in connection with any action taken by the Company in
conformity with this Section 5.2. The removal from the Project of any portion of
the Project Equipment pursuant to the provisions of this Section shall not
entitle the Company to any abatement or diminution of the amounts payable under
Sections 4.2 or 4.4 hereof.
Section 5.3 Indemnification by the Com{Janv. The Company shall indemnify
and hold the Director, the Treasurer and the Trustee (including any member,
officer, director or employee thereof) (collectively, the "Indemnified Parties")
harmless against any and all claims, asserted by or on behalf of any person,
firm or corporation, private or public, arising or resulting from, or in any way
connected with (i) financing, acquisition, construction, installation,
operation, use or maintenance
21
of the Project (including, but not limited to, claims relating to compliance
with Chapter 4115, Ohio Revised Code), (ii) any act, failure to act or
misrepresentation by any person, finn, corporation or governmental authority in
connection with the issuance, sale or delivery of the Bonds and (iii) any act,
failure to act or misrepresentation by any other Indemnified Party in connection
with, or in the performance of any obligation related to the issuance, sale and
delivery of the Bonds or under this Loan Agreement, including all liabilities,
costs and expenses, including reasonable counsel fees, incurred in any action or
proceeding brought by reason of any such claim. In the event any action or
proceeding is brought against any Indemnified Party by reason of any such claim,
such Indemnified Party will promptly give written notice thereof to the Company.
In case such notice shall be so given, the Company shall be entitled to
participate at its own expense in the defense or, if it so elects, to assume at
its own expense the defense of such claim, suit, action or proceeding, in which
event such defense shall be conducted by counsel chosen by the Company and
reasonably satisfactory to such Indemnified Party against whom such action or
proceeding is pending; but if the Company shall elect not to assume such
defense, it shall reimburse such Indemnified Party for the reasonable fees and
expenses of any counsel retained by such Indemnified Party. If at any time the
Indemnified Party becomes dissatisfied with the selection of counsel by the
Company, a new mutually agreeable counsel shall be retained at the expense of
the Company. Each Indemnified Party agrees that the Company shall have the sole
right to compromise, settle or conclude any claim, suit, action or proceeding
against any of the Indemnified Parties. Notwithstanding the foregoing, each
Indemnified Party shall have the right to employ counsel in any such action at
its own expense; and provided further that such Indemnified Party shall have the
right to employ counsel in any such action and the fees and expenses of such
counsel shall be at the expense of the Company if: (i) the employment of counsel
by such Indemnified Party has been authorized by the Company, (ii) there
reasonably appears that there is a conflict of interest between the Company and
the Indemnified Party in the conduct of the defense of such action (in which
case the Company shall not have the right to direct the defense of such action
on behalf of the Indemnified Party) or (iii) the Company shall not in fact have
employed counsel to assume the defense of such action. The Company shall also
indemnify the Indemnified Parties ITom and against all costs and expenses,
including reasonable counsel fees, lawfully incurred in enforcing any
obligations of the Company under this Loan Agreement or any of the Security
Documents. Anything herein to the contrary notwithstanding, the foregoing
agreements by the Company to indemnify any Indemnified Party shall not apply to
grossly negligent acts or acts of willful misconduct on the part of such
Indemnified Party. The obligations of the Company under this Section shall
survive the termination of this Loan Agreement and the Security Documents until
the expiration of the Loan Term and shall be in addition to any other rights,
including without limitation, rights to indemnity which any Indemnified Party
may have at law, in equity, by contract or otherwise.
Section 5.4 Taxes. Other Governmental Charges and Utility Charges. The
Company shall pay, as the same respectively become due, all taxes, assessments,
whether general or special, and governmental charges of any kind whatsoever that
may at any time be lawfully assessed or levied against or with respect to the
Project or any machinery, equipment or other property installed or brought by
the Company therein or thereon (including, without limiting the generality of
the foregoing, any taxes levied upon or with respect to the receipts, income or
profits of the Director from the Project which, if not paid, may become or be
made a lien on the Project or a charge on the revenues and receipts therefrom),
and all utility and other charges incurred in the operation, maintenance, use,
occupancy and upkeep of the Project.
22
Section 5.5 Insurance Required. The Company shall insure the Project in an
aggregate amount equal to the replacement cost of the Project, but in any event
not less than 110% of the aggregate principal amount of Bonds outstanding from
time to time, against loss or damage by fire, boiler explosion, as well as such
other risks as are covered by the endorsement commonly known as "extended
coverage", plus vandalism and malicious mischief, in insurance companies
authorized to issue such policies in the State. Any insurance policy maintained
by the Company pursuant to this Section may provide that the policy does not
cover the first $25,000 or less ofloss, or such greater amount as may (with due
regard to insurance practices from time to time current with respect to
buildings and equipment similar to the Project Facilities and the Project
Equipment) be approved in writing by the Director, with the result that the
Company is its own insurer to that extent. Any return of insurance premium or
dividends based upon such premium shall be due and payable solely to the Company
unless such premium shall have been paid by the Director or Trustee.
As an alternative to the above, the Company may insure such property under
a blanket insurance policy or policies which cover not only such property but
other properties of the Company or its affiliates.
During any Construction Period, the Company shall carry, or cause the
contractor or contractors for the Project to carry, builders' risk insurance of
such character and in such amount as is customarily carried on similar projects
in the State.
Section 5.6 Additional Provisions Respecting Insurance. Any insurance
policy issued pursuant to Section 5.5 hereof shall be so written or endorsed as
to make losses, if any, adjustable by the Company and payable to the Company and
the Trustee, for the account of the Director; provided, any such insurance
policy may be so written or endorsed as to make losses not in excess of$ 1
00,000 for each occurrence payable directly to the Company as hereinafter
provided in Section 6.1. Each insurance policy provided for in Section 5.5 and
Section 5.8 hereof shall contain a provision to the effect that the insurance
company shall not cancel the same without first giving written notice thereof to
the Director and the Trustee at least thirty (30) days in advance of such
cancellation, and the Company shall deliver to the Director and the Trustee
duplicate copies or certificates of insurance pertaining to each such policy of
insurance procured by the Company and shall keep such duplicate copies or
certificates up to date.
Section 5.7 Application oiNet Proceeds of Insurance. The Net Proceeds of
the insurance carried pursuant to the provisions of this Loan Agreement shall be
applied as follows: (i) the Net Proceeds of the insurance required in Section
5.5 hereof shall be applied as provided in Section 6.1 hereof, and (ii) the Net
Proceeds of the insurance required in Section 5.8 hereof shall be applied toward
extinguishment or satisfaction of the liability with respect to which such
insurance proceeds may be paid.
Section 5.8 Public Liabilitv Insurance. The Company agrees that it will
carry public liability insurance with reference to its operations at the Project
with one or more reputable insurance companies duly qualified to do business in
the State, in minimum amounts of $1,000,000 for the death of or personal injury
to one person and $3,000,000 for personal injury or death for each occurrence in
connection with the Project and $500,000 for property damage of any occurrence
in connection with the Project, with a deductible not to exceed $50,000. The
Director and the Trustee
23
shall be made additional insureds under such policies. The insurance provided by
this Section 5.8 may be by blanket insurance policy or policies.
Section 5.9 Advances. In the event the Company shall fail to maintain the
full insurance coverage required by this Loan Agreement or shall fail to keep
the Project in good repair and operating condition, the Director or the Trustee
may (but shall be under no obligation to) take out the required policies of
insurance and pay the premiums on the same or may make such repairs or
replacements as are necessary and provide for payment thereof; and all amounts
so advanced therefor by the Director shall become an additional obligation of
the Company to the Director, which amounts, together with interest thereon at
the Interest Rate for Advances from the date thereof, the Company agrees to pay
on demand.
Section 5.10 Environmental Matters. Throughout the Loan T enn, the Company
agrees that the Company shall:
(a) (i) ensure that the Project Site remains in compliance with all
Environmental Laws; and (ii) shall not place or permit to be placed any asbestos
or asbestos-containing material, Hazardous Substance, Hazardous Waste, Toxic
Chemical or Petroleum on the Project Site except as not prohibited by applicable
law or appropriate Governmental Authorities;
(b) maintain a system to assure and monitor continued compliance with all
applicable Environmental Laws which system shall include periodic reviews of
such compliance;
(c) (i) employ in connection with the Company's use of the Project Site
appropriate technology necessary to maintain compliance with any applicable
Environmental Laws and (ii) dispose of any and all Hazardous Waste generated at
the Project Site only at facilities and with carriers that maintain valid
permits under any applicable Environmental Laws; and (iii) use the Company's
best efforts to obtain certificates of disposal, such as hazardous waste
manifest receipts, :trom all treatment, transport, storage or disposal
facilities or operators employed by the Company in connection with the transport
or disposal of any Hazardous Waste generated at the Project Site; in the event
the Company obtains, gives or receives notice of any release or threat of
release of a reportable quantity of any asbestos or asbestos-containing
material, Hazardous Substance, Hazardous Waste, Toxic Chemical or Petroleum at
the Project Site (any such event being hereinafter referred to as a "Hazardous
Discharge") or receives any notice of violation, request for infonnation or
notification that the Company is potentially responsible for investigation or
cleanup of environmental conditions at the Project Site, demand letter or
complaint, order, citation, or other written notice with regard to any Hazardous
Discharge or violation of Environmental Laws affecting the Project Site or the
Company's or Director's respective interests therein (any of the foregoing being
hereinafter referred to as an "Environmental Complaint") from any person or
entity, including the Ohio Environmental Protection Agency or the United States
Environmental Protection Agency (any such person or entity being hereinafter
referred to as the "Authority"), within five (5) business days, give written
notice of same to the Director detailing facts and circumstances of which the
Company is aware giving rise to the Hazardous Discharge or Environmental
Complaint. Such infonnation is to be provided solely to allow the Director to
protect the Director's security interest in the Project Site and is not intended
to create nor shall it create any obligation, responsibility or liability on the
part of the Director with respect thereto.
24
(d) promptly forward to the Director copies of any request for information,
notification of potential liability, demand letter relating to potential
responsibility with respect to the investigation or cleanup of any asbestos or
asbestos-containing material, Hazardous Substance, Hazardous Waste, Toxic
Chemical or Petroleum at any other site owned, operated or used by Company to
dispose of any asbestos or asbestos-containing material, Hazardous Substance,
Hazardous Waste, Toxic Chemical or Petroleum and shall continue to forward
copies of correspondence between the Company and the Governmental Authority
regarding such claims to the Director until the claim is settled. The Company
shall promptly forward to the Director copies of all documents and reports
concerning a Hazardous Discharge at the Project Site that the Company is
required to file under any Environment Laws. Such information is to be provided
solely to allow the Director to protect Director's security interest in the
Project Site and is not intended to create nor shall it create any obligation,
responsibility or liability on the part of the Director with respect thereto.
(e) respond promptly to any Hazardous Discharge or Environmental Complaint
and take all necessary action in order to safeguard the health of any person and
to avoid subjecting the Project Site to any lien. If the Company shall fail to
respond promptly to any Hazardous Discharge or Environmental Complaint or the
Company shall fail to comply with any of the requirements of any Environment
Laws, the Director may, but without the obligation to do so, for the sole
purpose of protecting the Director's security interest in the Project Site: (A)
give such notices or (B) enter onto the Project Site (or authorize third parties
to enter onto the Project Site) and take such actions as the Director (or such
third parties as directed by the Director) deems reasonably necessary or
advisable, to clean up, remove, mitigate or otherwise deal with any such
Hazardous Discharge or Environmental Complaint. All reasonable costs and
expenses incurred by the Director (or such third parties) in the exercise of any
such rights, including any sums paid in connection with any judicial or
administrative investigation or proceedings, fines and penalties, together with
interest thereon from the date expended at the Interest Rate for Advances shall
be paid upon demand by the Company and until paid shall be added to and become a
part of the indebtedness created by the terms of this Loan Agreement and any
other agreement between Director and Company;
(f) promptly upon the written request of the Director from time to time,
provide to the Director, at the Company's expense, an environmental site
assessment or environmental audit report prepared by an environmental
engineering firm acceptable in the reasonable opinion of the Director, to assess
with a reasonable degree of certainty the existence of a Hazardous Discharge and
the potential cost in connection with abatement, cleanup and removal of any
asbestos, asbestos-containing material, Hazardous Substance, Hazardous W aste,
Toxic Chemical or Petroleum found on, under, at or within the Project Site. Any
report or investigation of such Hazardous Discharge proposed and acceptable to
an appropriate Authority that is charged to oversee the clean-up of such
Hazardous Discharge shall be acceptable to the Director. If such estimates,
individually or in the aggregate, exceed $25,000, the Director shall have the
right to require the Company to post a bond, letter of credit or other security
reasonably satisfactory to the Director to secure payment of these costs and
expenses.
(g) defend and indemnify the Director and hold the Director hannless from
and against all loss, liability, damage and expense, claims, costs, fines and
penalties, including reasonable attorney's fees, suffered or incurred by the
Director under or on account of any Environmental Laws, including, without
limitation, the assertion of any lien thereunder, with respect to any Hazardous
25
Discharge, the presence of any asbestos, asbestos-containing materials,
Hazardous Substance, Hazardous Waste, Toxic Chemical or Petroleum affecting any
of the Project Site, whether or not the same originates or emerges from the
Project Site or any contiguous real estate, including any loss of value of the
Project Site as a result of the foregoing.
The Company's obligations described above in subsection (g) of this Section
shall arise upon the discovery of the presence of any asbestos,
asbestos-containing material, Hazardous Substance, Hazardous W aste, Toxic
Chemical or Petroleum at the Project Site, whether or not any federal, state, or
local environmental agency has taken or threatened any action in connection with
the presence of any asbestos, asbestos-containing material, Hazardous Substance,
Hazardous Waste, Toxic Chemical or Petroleum.
The Company's obligations and the indemnifications hereunder shall survive
the termination of this Loan Agreement until the expiration of the Loan Term.
Each lease of the Project entered into by the Company shall impose on the lessee
thereunder the covenants set forth in this Section 5.10 with respect to such
lessee's use of the Project.
The Company further acknowledges and agrees that the Director may retain,
at the Company's expense, an independent consultant to perform an overall
environmental assessment and to prepare a report certifying that (a) the Project
Site is not being used for, or threatened by, nor has ever been used for, or
threatened by, the use, generation, treatment, storage or disposal of any
asbestos or asbestos-containing material, petroleum or any hazardous or toxic
chemical, material, substance or waste to which exposure is prohibited, limited
or regulated by any Environmental Laws or which, even if not so regulated, is
known to pose a hazard to the health or safety of the occupants of the Project
Site or of property adjacent thereto, (b) if the Project Site has ever been used
for or threatened by any such condition, the condition has been fully remedied
in compliance with all Environmental Laws and, (c) the Company's environmental
management practices are in compliance with all Environmental Laws. The overall
environmental assessment may be done in three phases. The Company represents and
warrants that the Company has the authority to grant, and hereby does grant, to
the Director, the Director's agents, representatives, employees, consultants and
contractors the right to enter the Project Site after the Company's acquisition
of the Project and to perform such acts as are necessary to conduct such
assessment.
[End of Article V]
26
ARTICLE VI
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 6.1 Damage and Destruction. If prior to full payment of the Bonds
(or provision for payment thereof having been made in accordance with the
provisions of the Trust Agreement), the Project Facilities or Project Equipment
shall be damaged or partially or totally destroyed by fire, floo~ windstorm, or
other casualty, there shall be no abatement or reduction in the amounts payable
by the Company under this Loan Agreement, an~ to the extent that the claim for
loss resulting from such damage or destruction is not greater than $100,000, the
Company (i) will promptly repair, rebuild or restore the property damaged or
destroyed with such changes, alterations and modifications (including the
substitution and addition of other property) as may be desired by the Company
and as will not make the Project unsuitable for the Project Purposes, and (ii)
will apply for such purpose so much as may be necessary of any Net Proceeds of
insurance policies resulting from claims for such losses not in excess of
$100,000 as well as any additional moneys of the Company necessary therefor. All
Net Proceeds of insurance resulting from claims for any such loss not in excess
of $100,000 shall be paid to the Company.
If prior to full payment of the Bonds (or provision for payment thereof
having been made in accordance with the provisions of the Trust Agreement), the
Project Facilities or the Project Equipment shall be destroyed (in whole or in
part) or damaged by fire, flood, windstorm or other casualty to such extent that
the claim for loss resulting from such destruction or damage is in excess of
$100,000, the Company shall promptly give written notice thereofto the Director
and the Trustee. All Net Proceeds ofinsurance policies resulting from claims for
such losses in excess of $100,000 shall be paid to and held by the Trustee in
the Collateral Proceeds Account, whereupon, unless the Company shall have
elected to exercise its option to prepay all amounts due under this Loan
Agreement pursuant to the provisions of Section 1O.2(a) of this Loan Agreement,
(i) the Company will proceed to repair, rebuild or restore the property damaged
or destroyed with such changes, alterations and modifications (including the
substitution and addition of other property) as may be desired by the Company
and as will not make the Project unsuitable for the Project Purposes, and (ii)
the Trustee will disburse moneys in the Collateral Proceeds Account to or upon
the direction of the Company for payment of the costs of such repair, rebuilding
or restoration, either on completion thereof or, if the Company shall so
request, as the work progresses. Any such disbursements shall be made pursuant
to the procedures set forth in Section 3.3 of this Loan Agreement for
disbursement of moneys in the Project Fun, including, but not limited to, the
requirement that the Company obtain the written approval of the Director with
respect to each disbursement. In the event the moneys in the Collateral Proceeds
Account are not sufficient to pay in full the costs of such repair, rebuilding
or restoration, the Company nonetheless will complete the work and pay the costs
thereof from its own resources. The Company shall not, by reason of the payment
of such excess costs, be entitled to any reimbursement from the Director or any
diminution in or postponement of the amounts payable under Section 4.2 or 4.4 of
this Loan Agreement.
Section 6.2 Eminent Domain. In the event that title to or the temporary use
of the Project, or any part thereof, shall be taken under the exercise of the
power of eminent domain by any Governmental Authority or by any person, firm or
corporation acting under Governmental Authority, there shall be no abatement or
reduction in the amounts payable by the Company under this Loan Agreement, and
any Net Proceeds received from any award made in such eminent domain
27
proceedings shall be paid to and deposited by the Trustee in the Collateral
Proceeds Account and shall be applied by the Director or the Company in one or
more of the following ways as shall be directed in writing by the Authorized
Company Representative:
(a) to the restoration of the improvements located on the Project Site to
substantially the same condition as they existed prior to the exercise of said
power of eminent domain;
(b) to the acquisition, by construction or otherwise, by the Company of
other improvements suitable for the Company's operation at the Project (which
improvements shall be deemed a part of the Project); or
(c) to the redemption of all of the Bonds pursuant to the Trust Agreement,
together with accrued interest thereon to the date of redemption upon exercise
of the option to prepay authorized by Section 1 0.2(b) of this Loan Agreement.
Within ninety (90) days from the date of entry of a final order in an
eminent domain proceeding granting condemnation, the Authorized Company
Representative shall direct the Director and the Trustee in writing as to which
of the ways specified in this Section the Company elects to have the Net
Proceeds of the condemnation award applied. Any balance of the Net Proceeds
remaining after such application shall be retained in the Collateral Proceeds
Account.
[End of Article VI]
28
ARTICLE VII
SPECIAL COVENANTS
Section 7.1 No Warranty of Condition or Suitability. The Director does not
make any warranty, either express or implied, as to the condition, workmanship,
merchantability or capacity of the Project or any part thereof or as to its or
any part's suitability or operation for the Project Purposes.
Section 7.2 Right of Access to the Pr01ect. During the Loan Term, the
Company agrees that the Director and any of the Director's duly authorized
agents shall, upon reasonable prior notice, have the right during regular
business hours and without interruption of daily business activities to enter
upon the Project and to examine and inspect the same. The Company further agrees
that the Director and the Director's duly authorized agents shall have such
rights of access to the Project as may be reasonably necessary to cause to be
completed the construction and installation provided for in Section 3.1 hereof,
and thereafter for the proper maintenance of the Project in the event of failure
by the Company to perform its obligations under Sections 3.1 or 5.1 hereof.
Notwithstanding anything in this Section to the contrary, the Company shall not
be obligated to provide access to any information that it reasonably considers
to be a trade secret or similar confidential information.
Section 7.3 Information Concerning Operations. During the Loan Term, 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 begjnning 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 7.4 Affirmative Covenants of the Comvanv. Throughout the Term of
this Loan 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 the Company, the Company's income or
any of the Company's 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 the Company's property.
Notwithstanding the preceding sentence, the Company may, at the Company's
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 oflegal counsel satisfactory to the Director,
by nonpayment of any such items the lien and security interest created by the
Security Documents 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 Company shall promptly pay such taxes, assessments, charges, levies or
claims or make appropriate provisions to place sufficient funds in escrow or
other arrangement approved by a court of competent jurisdiction so that such
lien and security interest will not be adversely affected in any material way.
29
(b) Maintain Existence. Do or cause to be done all things necessary to
preserve and keep in full force and effect the Company's existence, except as
provided in subsection (a) of Section 7.5 hereof, the Company's current
ownership and the Company's material rights and franchises.
(c) Maintain Property. Maintain and keep the Company's 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 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 and provided, further that the
Company shall comply with the Security Documents.
(d) Maintain Insurance. Keep all of the Company's 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 maintali1 all such workers' compensation or similar insurance as
may be required under the laws of any state or jurisdiction in which the Company
may be engaged in business. All insurance for which provision has been made in
this subsection 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, as applicable, with full replacement cost coverage, and
all insurance herein provided for shall be effected and maintali1ed in force
under a policy or policies issued by insurers of recognized responsibility,
except that the Company 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 self-insurance which is in accordance with
applicable law.
(e) Furnish Information. Furnish to the Director:
(i) Ouarterlv Reports. Within forty-five (45) days after the end
of each quarterly period of each fiscal year of the Company, the internally
compiled financial statements of the Company, including the balance sheet
of the Company as at the end of such quarterly period, together with
related statements of income and retained earnings (oraccumulated 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, except that such financial statements need not contain the
notes required by generally accepted accounting principles.
(ii)Annual Financial Statements. Within one hundred twenty (120)
days after the last day of each fiscal year of the Company (beginning with
fiscal year 2003), the compiled annual audited financial statements of the
Company, including the 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 audited by and accompanied by a
30
certificate of, the Company's independent certified public accountants to the
effect that such financial statements were prepared in accordance with generally
accepted accounting principles consistently applied, and present fairly the
Company's financial position at the close of such period and the results of its
operations for such period.
(iii) Certificate: No Default. With each of the financial
statements required to be furnished pursuant to 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 the Company or
against the Company at law or in equity, or before any Governmental
Authority, is pending or, to the Company's knowledge, 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 Loan Agreement or would
materially and adversely affect the Company's 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, except
that the Company shall not be obligated to provide access to any
infonnation that it reasonably considers to be a trade secret or similar
confidential information.
(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 the Company or against the
Company at law or in equity, or before any Governmental Authority,
instituted or, to the knowledge of the Company, 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 Loan Agreement, or would
materially and adversely affect the Company's business, operations,
properties, assets or condition, or
(iii) the occurrence of a Reportable Event, as defined in ERISA,
under, or the institution of steps by the Company to withdraw from, or the
institution of any steps to terminate, any Plan, as defined Section 7.5(c)
hereof, as to which the Company may have liability.
31
(g) Inspection Rights. Permit the Director, or any agents orrepresentatives
thereof, upon reasonable prior notice, during regular business hours and without
interruption of daily business activities to examine and make copies of and
abstract ITom the records and books of account of, the Company visit the
properties of the Company, and discuss the general business affairs of the
Company with any of its officers or shareholders. Notwithstanding anything in
this Section to the contrary, the Company shall not be obligated to provide
access to any information that it reasonable considers to be a trade secret or
similar confidential information.
(h) Zoning, Planning and Environmental Regulations. 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 (orvariances
thereITom) imposed by any Governmental Authority and as to be consistent with
the purposes of the Act, except where such nonconformity or inconsistency would
not materially impair the ability of the Company to perform its obligations
under the Loan Documents or materially adversely affect the financial condition
of the Company or the abilities of the parties to consummate the transactions
contemplated by this Loan Agreement.
(i) Use of Project Fund Moneys. All moneys disbursed ITom the Project Fund
(except for any amounts transferred to the Collateral Proceeds Account pursuant
to the terms of this Loan Agreement) shall be used for the payment of Allowable
Costs relating to Provision of the Project. No part of any such moneys 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, except for compensation for services rendered and
expenses incurred otherwise included in Allowable Costs.
(j) Job Creation. The Company reasonably believes that the State Assistance
will permit the Company to retain an estimated 70 jobs and employment
opportunities and create an estimated 80 jobs and employment opportunities in
the City ofGahanna in the County of Franklin, Ohio during the three-year period
after the Acquisition Date.
(k) Preference for Ohio Goods and Services. The Company will use its best
efforts to purchase goods and services with respect to the Project from persons,
partnerships and corporations located in the State.
Section 7.5 Negative Covenants of the Company. Throughout the Term of this
Loan Agreement, the Company shall not without the prior written consent of the
Director:
(a) Maintain Existence. Sell, transfer or otherwise dispose of all, or
substantially all, of the Company's assets, consolidate with or merge into any
other entity, or permit one or more entities to consolidate with or merge into
the Company; provided, however, that the Company may, without violating the
agreement contained in this subsection, consolidate with or merge into another
entity, or permit one or more other entities to consolidate with or merge into
the Company, or sell, transfer or otherwise dispose of all, or substantially
all, of the Company's assets and thereafter dissolve if: (i) the written consent
of the Director is obtained (which consent shall not be unreasonably withheld);
(ii) the surviving, resulting or transferee entity, as the case may be, assumes
in writing all of the obligations of the Company hereunder (if such surviving,
resulting or transferee entity is other
32
than the Company); and (iii) the surviving, resulting or transferee entity, as
the case may be, is a corporation or limited liability company 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 ofform.
(b) Transfer of Interests in the Comuany. Permit or cause any transfer,
issuance or retirement of, or other transaction changing the ownership interest
in the Company unless following such transfer, issuance or retirement the
Guarantor retains directly or indirectly not less than 34.5% of the voting
shares of the Company.
(c) 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 1986, 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 the Company 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.
(d) Agreements. Enter into any agreement containing any provision which
would be violated or breached by the performance of the Company's obligations
hereunder or under any instrument or document delivered or to be delivered by
the Company hereunder or in connection herewith.
(e) Sale and Encumbrance of Assets. Sell, pledge, assign, hypothecate or in
any manner encumber any of the Company's assets, except purchase money security
interest and except as otherwise expressly permitted by the Loan Documents.
(f) Removal of Assets. Remove, transfer or transport any of the Company's
assets ITom the Project Site, except the operation of motor vehicles, the
shipment of goods in the ordinary course of business or as otherwise permitted
by the Loan Documents.
(g) Leasebacks. Enter into any arrangements, directly or indirectly, with
any person, whereby the Company shall sell or transfer any property, whether now
owned or hereafter acquired, used or useful in the Company's business, in
connection with the rental or lease of the property so sold or transferred or of
other property which the Company intends to use for substantially the same
purpose or purposes as the property so sold or transferred.
(h) Suspension of Operation. Suspend or discontinue operation of the
Project for a continuous period of ninety (90) days.
Section 7.6 Mechanics' and Other Liens. The Company shall not suffer or
permit any mechanics' or other liens to be filed or exist against the Project
nor any part thereof, nor against the Project Fund or the Collateral Proceeds
Account, by reason of work, labor, services, or materials supplied or claimed to
have been supplied to, for or in connection with the Project or any part thereof
or to the Company or anyone holding the Project or any part thereof through or
under the Company. If any such liens shall at any time be filed, the Company
shall, within one hundred twenty days (120)
33
after notice of the filing thereofbut subject to the right to contest
hereinafter set forth, cause the same to be discharged of record by payment,
deposit, bond, order of a court of competent jurisdiction or otherwise. If the
Company shall fail to cause such lien to be discharged, or to contest the
validity or amount thereof, within the period aforesaid, then, in addition to
any other right or remedy of the Director, the Director may, but shall not be
obligated to, discharge the same either by paying the amount claimed to be due
or by procuring the discharge of such lien by deposit or by bonding. Any amount
paid by the Director shall be reimbursed by the Company to the Director on
demand, and if not so reimbursed on demand shall be paid by the Company with
interest thereof at the Interest Rate for Advances from the date of payment by
the Director, which amounts the Company agrees to pay. Nothing in this Section
shall require the Company to payor discharge any such lien so long as the
validity thereof shall be contested in good faith and by appropriate legal
proceedings, provided that the Company shall have delivered to the Director an
opinion of counsel, selected by the Company and reasonably acceptable to the
Director, to the effect that nonpayment of any such lien during the pendency of
such contest will not adversely affect the priority of the liens of the Security
Documents on right, title or interest in the Project.
[End of Article VII]
34
ARTICLE VIII
ASSIGNMENT, SELLING AND LEASING
Section 8.1 Assignment Sale or Lease by the Company. Except as otherwise
permitted by Sections 5.2 or 7.5(a) hereof, the Company may not assign this Loan
Agreement in whole or in part, sell or lease the Project in whole or in part or
grant the right to occupy or use the Project, or any part thereof, to persons
other than the Company, without the prior written consent of the Director.
Section 8.2 Pledge by the Director. The Director has pledged any moneys
receivable under or pursuant to this Loan Agreement (except for reimbursement of
expenses and indemnification by the Company) to the Trustee pursuant to the
Trust Agreement. The Company hereby consents to such assignment and pledge.
[End of Article VIII]
35
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.1 Event of Default. Each of the following shall be an "Event of
Default":
(a) Failure by the Company to pay when due any installment of principal,
interest service fee, or any combination thereof under this Loan Agreement; or
(b) The occurrence and continuation of an Event of Default under any of the
other Loan Documents related to a failure in the payment of money; or
(c) Failure by the Company to pay within ten (10) days of demand any
amounts to be so paid to the Director under this Loan Agreement or the Loan
Documents; or
(d) Failure by the Company to observe and perform any term, covenant or
agreement of this Loan Agreement or any other Loan Documents (other than as
required pursuant to subsections (a), (b) and (c) above), and continuation of
such failure for sixty (60) days after written notice thereof shall have been
given to the Company by the Director, or for such longer period as the Director
may agree to in writing; or
(e) The occurrence and continuation of a default or event of default,
whether relating to nonpayment of money or otherwise, on the part of the Company
under any loan document or other debt instrument to which it is a party after
notice thereof and the expiration of any grace or cure period relating thereto.
(f) Any representation or warranty made by the Company or any of the
Company's officers, herein or in any of the other Loan Documents or in any of
the Loan Approval Document or in connection herewith or therewith shall prove to
have been incorrect in any material respect when made; or
(g) The Company shall fail to pay any indebtedness of the Company, or any
interest or premium thereon, in excess of $100,000 when due (whether at
scheduled maturity, by required prepayment, by acceleration, 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
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, or to permit the
acceleration of, 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; or
(h) The Company shall: (i) admit in writing the Company's inability to pay
the Company's debts generally as such debts become due; (ii) (A) commence a
voluntary case concerning the Company or (B) have an involuntary bankruptcy case
commenced against the Company and have an order entered in any such case or have
the case remain undismissed and unstayed for ninety (90) days; (iii) commence
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
36
or hereafter in effect and either have an order entered against the Company
thereunder or remain undismissed or unstayed for ninety (90) days or there is
commenced against the Company any such proceeding which remains undismissed or
unstayed for ninety (90) days; (iv) the Company is adjudicated insolvent or
bankrupt; (v) make a general assignment for the benefit of creditors; (vi) have
a receiver, trustee or custodian appointed for the Company or for the whole or
any substantial part of the Company's property or a receiver, trustee or
custodian or any other officer or representative of the court or of creditors,
or any court, government officer or agency shall take and hold possession of any
substantial part of the Company's property; or (vii) any other action for the
purpose of effecting the foregoing;
(i) A judgment or order for the payment of money in excess of $100,000
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
(j) Failure by the Company to meet the Company's minimum funding
requirements under Section 301 et seq. of ERISA, with respect to any of its
Plans;
The foregoing provisions of subsection (d) only of this Section are subject
to the following limitations: ifby reason of Force Majeure the Company is unable
in whole or in part to perform or observe the Company's obligations under this
Loan Agreement, other than the Company's obligation to make payments required
hereunder, the Company shall not be deemed in default during the continuance of
such inability, including a reasonable time for the removal of the effect
thereof.
The Company shall promptly give notice to the Direccor of the existence of
an event ofF orce Majeure and shall use commercially reasonable efforts to
remove the effect thereof; provided, that the settlement of strikes or other
industrial disturbances shall be entirely within the reasonable business
discretion of the Company.
Section 9.2 Remedies. If an Event of Default shall have occurred and be
continuing, the Director, at any time, at the Director's election, may exercise
any or all or any combination of the remedies conferred upon or reserved to the
Director under this Loan Agreement, any of the other Loan Documents or any
instrument or document collateral thereto, or now or hereafter existing at law,
or in equity or by statute. Subject to the foregoing, any or all of the
following remedies may be exercised:
(a) If the State Assistance has not been disbursed, termination of any and
all of the Director's obligations under this Loan Agreement and the Commitment;
(b) Declaration that the entire unpaid balance of all amounts owed to the
Director are immediately due and payable, whereupon the same shall become
immediately due and payable, without notice or demand, such notice or demand
being expressly waived by the Company;
(c) Direction to the Trustee, in writing, to transfer any amounts remaining
in the Project Fund to the Collateral Proceeds Account;
37
(d) Exercise of all or any rights and remedies as the Director may have
under this Loan Agreement, any of the other Loan Documents or any instrument or
document collateral thereto;
(e) Inspection, examination and copying of the books, records, accounts and
financial data of the Company, provided that the Company shall not be obligated
to provide access to any information that it reasonably considers to be a trade
secret or similar confidential information;
(f) Exercise of any rights, remedies and powers the Director may have at
law or in equity as may appear necessary or desirable to collect all amounts
then due and thereafter to become due under this Loan Agreement and the other
Loan Documents or any instrument or document collateral thereto or to enforce
the performance and observance of any other obligation, agreement or covenant of
the Company under the Loan Documents or any instrument or document collateral
thereto, including, without limitation, as a secured party under the Commercial
Code (as defined in the other Loan Documents) or other similar laws in effect;
and
(g) Take whatever action at law or in equity as may appear to the Director
to be necessary or desirable to collect the amounts then due and thereafter to
become due, or to enforce performance and observance of any obligation,
agreement or covenant of the Company under this Loan Agreement.
Any amounts collected pursuant to action taken under this Section shall be
paid first into the Collateral Proceeds Account and applied in accordance with
the provisions of the Trust Agreement or, if the Bonds have been fully paid (or
provision for payment thereof has been made in accordance with the provisions of
the Trust Agreement), then to all other amounts payable thereunder and under the
Loan Documents, and [mally, if all such amount have been fully paid, as directed
by the Company.
Section 9.3 No Remedy Exclusive. No remedy conferred upon or reserved to
the Director by this Loan 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 Loan Agreement,
each other Loan Document and any instrument or document collateral thereto 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 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 9.4 Agreement to Pay Reasonable Attorneys' Fees and Expenses. If an
Event of Default shall occur and the Director shall incur expenses, including
reasonable attorneys' fees, in connection with the enforcement of this Loan
Agreement, any of the other Loan Documents or any instrument or document
collateral thereto 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,
shall, to the extent permitted by law, constitute additional indebtedness
secured hereby and by the Trust Agreement and the Security Documents, and in any
38
action brought to collect such indebtedness or enforce the Security Documents,
the Director shall be entitled to seek the recovery of such expenses in such
action.
Section 9.5 No Additional Waiver Implied by One Waiver. No failure by the
Director to insist upon the strict performance by the Company of any provision
hereof shall constitute a waiver of the Director's 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.
Section 9.6 Waiver of Appraisement. Valuation. Etc. In the event the
Company should default under any of the provisions of this Loan Agreement
requiring payments by the Company, the Company agrees to waive, to the extent it
may lawfully do so, the benefit of all appraisement, valuation, stay, extension
or redemption laws now or hereafter in force, and all right of appraisement and
redemption to which it may be entitled.
[End of Article IX]
39
ARTICLE X
REDEMPTION OF BONDS; PREPAYMENT OF LOAN
Section 10.1 Redemption of Bonds. The Director, at the written request at
any time of the Company if the Bonds are then callable, shall forthwith take all
steps that may be necessary under the applicable redemption provisions of the
Trust Agreement to effect redemption of all or part of the then outstanding
Bonds, as may be specified by the Company, on the earliest redemption date on
which such redemption may be made under such applicable provisions, if the
Company shall then have deposited with the Trustee moneys sufficient to pay the
principal of and premium, if any, and interest due or to become due on such
redemption date with respect to the Bonds as to which such request is made. In
addition, the Trustee may accelerate one Series 2002-7 Bonds (or shall
accelerate upon the request of the registered owners of not less than 25% in
aggregate principal amount of the outstanding Series 2002-7 Bonds) and shall
require the Company to prepay the Loan as provided in Section 10.2 of this Loan
Agreement.
Section 10.2 Prepavment of Loan. The Company shall have, and is hereby
granted, the option to prepay all amounts due hereunder prior to the expiration
of the Term and prior to the full payment of the Bonds (or provision for payment
thereof having been made in accordance with the provisions of the Trust
Agreement), if any of the following shall have occurred:
(a) The Project Facilities or the Project Equipment shall have been damaged
or destroyed as set forth in Section 6.1 hereof (i) to such extent that they
cannot be reasonably restored within a period of six (6) months to the condition
thereof immediately preceding such damage or destruction, or (ii) to such extent
that the Company is thereby prevented from carrying on its nonnal operations for
a period of six (6) consecutive months.
(b) Title to, or the temporary use of, all or substantially all of the
Project shall have been taken under the exercise of the power of eminent domain
by any Governmental Authority, or person, finn or corporation acting under
governmental authority (including such a taking or takings as results in the
Company being thereby prevented from carrying on its nonnal operations therein
for a period of six (6) consecutive months).
To exercise such option, the Company shall, within ninety (90) days
following the event authorizing the exercise of such option, give written notice
to the Director, and to the Trustee if any of the Bonds shall then be unpaid,
and shall specify therein the date of such prepayment, which date shall be not
less than forty-five (45) nor more than ninety (90) days from the date such
notice is mailed, and in case of a redemption of the Bonds in accordance with
the provisions of the Trust Agreement shall make arrangements satisfactory to
the Trustee for the giving of the required notice of redemption, in which
arrangements Director shall cooperate. The prepayment amount payable by the
Company, in the event of its exercise of the option granted in this Section or
in the event mandatory prepayment is required as provided hereinafter, shall be
the sum of the following:
(i) An amount of money which, when added to (i) the moneys and
investments held to the credit of the Collateral Proceeds Account and the
Primary Reserve Account and (ii) the aggregate loan payments made by the Company
and not theretofore applied to the payment of principal of or interest on the
Bonds, will be sufficient pursuant to the provisions of the Trust
40
Agreement, to pay and discharge all then outstanding Bonds on the first possible
date for redemption, plus
(ii)An amount of money equal to the Trustee's fees and expenses,
to the extent payable by the Company pursuant to this Loan Agreement, accrued
and to accrue until such final payment and redemption of the Bonds, plus
(iii) The sum of One Dollar ($1.00) to the Director.
In the event of the exercise of the option granted in this Section, any Net
Proceeds of insurance or condemnation shall be paid to the Company,
notwithstanding any provision of Section 6.1 and 6.2 hereof.
The mutual agreements contained in this Section 10.2 are independent of,
and constitute an agreement separate and distinct from, any and all provisions
of this Loan Agreement and shall be unaffected by any fact or circumstance which
might impair or be alleged to impair the validity of any other provisions.
In addition, the Company shall be required to prepay the Loan in full, plus
a premium equal to 2% of the principal amount thereof. immediately in the event
that the Series 2002-7 Bonds are accelerated by the Trustee at the direction of
the Director as provided in the Supplement.
Section 10.3 Option to Defease Bonds. Provided no Event of Default has
occurred and is existing, the Company may instruct the Trustee to apply any
moneys on deposit in the Collateral Proceeds Account, together with any moneys
furnished to the Trustee by the Company but not constituting payments due under
Article IV of this Loan Agreement, to any of the following purposes:
(a) Purchase of Bonds in the open market at prices not greater than their
fair market value;
(b) Redemption of Bonds pursuant to the optional redemption provisions
thereof; or
(c) Defeasance of Bonds pursuant to Article IX of the Trust Agreement.
If the sum of the amounts in the Collateral Proceeds Account and the Primary
Reserve Account, when added to the amount delivered by the Company to the
Trustee for application in accordance with this Section, is sufficient to
purchase for cancellation, optionally redeem or defease all of the outstanding
Bonds, the Trustee shall, at the direction of the Company, apply moneys in the
Primary Reserve Account for any of such purposes.
[End of Article X]
41
ARTICLE XI
MISCELLANEOUS
Section 11.1 Termination of Agreement This Loan Agreement shall be in full
force and effect ITom the date hereof until the end of the Loan Term, at which
time the obligations of the Director and the Company hereunder shall terminate,
provided that any obligations of the Company with respect to the payment of
costs and expenses under this Loan Agreement shall survive such termination and
continue in effect until such costs and expenses are paid.
Section 11.2 Amounts Remaining in Collateral Proceeds Account and Primary
Reserve Account. It is agreed by the parties hereto that any amounts remaining
in the Collateral Proceeds Account or the Primary Reserve Account upon
expiration or sooner cancellation or termination of this Loan Agreement, after
payment in full of the Bonds (or provision for payment thereof having been made
in accordance with the provisions of the Trust Agreement) and the fees, charges
and expenses of the Trustee and all other amounts required to be paid hereunder,
shall belong to and be paid to the Company by the Trustee as overpayment of loan
payments.
Section 11.3 Notices. All notices, certificates, requests or other
communications hereunder shall be in writing and shall be deemed sufficiently
given when mailed by registered or certified mail, postage prepaid, addressed to
the recipient at the appropriate Notice Address. A duplicate copy of each
notice, certificate, request or other communication given hereunder to the
Director, the Company, or the Trustee shall also be given to the others. The
Company, the Director and the Trustee may, by notice given hereunder, change a
Notice Address or designate any further addresses to which subsequent notices,
certificates, requests or other communications shall be sent.
Section 11.4 Binding Effect. This Loan Agreement shall inure to the benefit
of and shall be binding upon the Director, the Company and their respective
successors and assigns, subject, however, to the limitations contained in
Section 8.1 hereof, and subject to the further limitation, as set forth on page
1 of this Loan Agreement, that any obligation of the Director created by or
arising out of this Loan Agreement shall not be a general debt of the Director
or the State but shall be payable solely out of the proceeds derived from this
Loan Agreement.
Section 11.5 Extent of Covenants of the Director: No Personal Liabilitv.
All covenants, stipulations, obligations and agreements of the Director
contained in this Loan Agreement shall be effective to the extent authorized and
permitted by applicable law. No such covenant, stipulation, obligation or
agreement shall be deemed to be a covenant, stipulation, obligation, or
agreement of any present or future Director in other than such Director's
official capacity acting pursuant to the Act.
Section 11.6 Amendments. Changes and Modifications. This Loan Agreement may
not be amended, or supplemented except by an instrument in writing executed by
the Director and the Company.
Section 11.7 Execution Counterparts. This Loan 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.
42
Section 11.8 Severability. If any provision of this Loan 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, provision, covenant,
obligation or agreement were not contained herein. Such invalidity or
unenforceability shall not affect any valid or 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 11.9 Captions. The captions or 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.
Section 11.10 Governing Law. This Loan Agreement shall be deemed to be a
contract made under the laws of the State of Ohio and for all purposes shall be
governed by and construed in accordance with the laws of the State of Ohio.
[End of Article XI]
43
IN WITNESS WHEREOF, the Director and the Company have caused this Loan Agreement
to be executed in their respective names by their duly authorized officers, all
as of the date first above written.
DIRECTOR OF DEVELOPMENT
OF THE STATE OF OHIO, ACTING ON
BEHALF OF THE STATE
By: /s/
KAHIKI FOODS, INC.
By: /s/
President (Title)
44
EXHIBIT A
Project Site
Situate in the State of Ohio, County of Franklin, City of Gahanna and being
a part of Lot No.7 of David Taylor's Subdivision of the Third Quarter, Township
No.1, Range 16, United States Military Lands and being a part of that original
231.05 acre tract as conveyed to Elizabeth Pizzurro of record in Deed Book 1662,
Page 303 and a part of that 6.296 acre tract as conveyed to The Broad Street
Trading, Company of record in Deed Book 3018, Page 410 records of the Recorder's
Office, Franklin County, Ohio and being more particularly described as follows:
Beginning, for reference at a pointm the southerly line of Claycraft Road
(60 feet in width) said,' point being located 30.00 feet easterly of (as
measured at right angles) the centerline of Relocated Morrison Road as
established by a survey made in 1967, by the Ohio Department of Highways of
Relocated Morrison Road and Interstate Route No. 270 (FRA-270-28.30 N,
FRA-317-1617) said beginning point also being in the centerline of Old Morrison
Road;
Thence S. 03 22' 57" E, a distance of 380.79 feet, along the centerline of
Old Morris Road to the true point of beginning, said point being located N 03
22' 57" W, a distance of 70.31 feet, from the southwesterly corner of the
aforesaid 6.296 acre tract.
Thence N. 81 27' 08" E, a distance of 877.32 feet crossing the aforesaid
6.296 acre tract to a point in the easterly line of the aforesaid 6.296 acre
tract and in the westerly line of a 3.128 acre tract as conveyed to M.M. B.
Realty Company, of record in Deed Book 3444, page 172;
Thence S 08 49'35" E, a distance of 602.19feet along the easterly line of
the aforesaid 6.296 acre tract and the westerly line of the aforesaid 3.128 acre
tract and crossing the aforesaid original 231.05 acre tract to a point and
(passing the southeasterly corner of the aforesaid 6.296 acre tract and the
southwesterly corner of the aforesaid 3.128 acre tract at a distance of 70.00
feet);
Thence S 80 00'20" W, a distance of 1064.77 feet crossing the aforesaid
231.05 acre tract to a point in the proposed easterly right-of-way line of
Relocated Morrison Road; (passing an iron pin at 1046.01 feet);
Thence with a curve to the right having a radius of 614.42 feet, a central
angle of 12 44' 06", the chord to which bears N 01 45' 00" W, a distance 136.28
feet along said proposed line of Relocated Morrison, Road to a point of
tangency, said point being located 30.00 feet easterly of and at right angles to
the centerline of the aforesaid Relocated Morrison Road as established by a
Survey made in 1967, by the Ohio Department of Highways of Relocated Morrison
Road and Interstate Route No. 270 (FRA-270-28.30 N, FRA-317-16.67); , "
Thence N 04 37' 04" E, a distance, of 507.07 feet along the proposed
easterly right-of-way line of the aforesaid Relocated Morrison Road and being
30.00 feet easterly of and parallel to the aforesaid centerline of Relocated
Morrison Road to a point; " '
Thence N 81 27' 08" E, a distance of 52.56 feet to the true point of
beginning and containing 14.169 acres, more or less, subject to all easements,
restrictions and rights-of-way of record.
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EXHIBIT B
The fixtures and equipment located at 1100 Morrison Road, Gahanna,
Ohio, including but not limited to, build-in appliances, heating, ventilating,
airconditioning (HVAC) and humidifying equipment and their control apparatus;
stationary tubs; pumps; water softening equipment; roof antennae; attached
wall-to-wall carpeting and attached floor coverings, curtain rods and window
coverings including draperies and curtains; attached mirrors; light, bathroom
and lavatory fixtures; storm and screen doors and windows, awnings, blinds and
window air conditioners, whether now in or on the premises or in storage; garage
door openers and controls; attached fireplace equipment; security systems and
controls; smoke alarms; satellite TV reception system and components; all
exterior plants and trees; and pallet racks as installed or erected.
All other personal property, machinery, apparatus, furniture, equipment and
other property which will be financed from the proceeds of the Bonds, together
with all replacement, additions and renewals thereof, whether located at the
Project Site or otherwise.
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EXHIBIT C
TERMS AND CONDITIONS TO DISBURSEMENT OF STATE ASSISTANCE
Part I - Disbursements of State Assistance for costs of construction of the
Project
No disbursement, be it the initial disbursement or any subsequent
disbursement, need be approved by the Director until the following conditions
have been fully performed to the satisfaction of the Director, and to the extent
that the Director shall, in its sole discretion, waive any of the following
conditions with regard to anyone or more disbursements, said conditions may be
reinstated as to any and all-subsequent disbursements:
(a) The Director shall be provided a "metes and bounds" survey of the
Property, certified to the Director and title insurance company by a licensed
surveyor acceptable to the Director with adequate errors and omissions
insurance, showing, through the use of course bearings and distances, the
boundaries of the Property and location of any improvements in relation thereto
and all dimensions thereof, and all easements, set-back lines, deviations
between survey lines and title lines, rights of way, encroachments, bench marks,
etc. The survey must contain a full legal description of the Property,
certification of square footage or acreage, certification of absence of flood
hazard and identification of adjacent and contiguous streets as well as
measurement to the nearest intersection or other adequate checkpoint.
(b) The Company shall submit evidence that the Project and all planned
imrrovements and intended uses will fully comply with all applicable deed
restrictions, laws, regulations, and zoning requirements. The Company covenants
that zoning at closing of the State Assistance may not be appealed, and that
there are no pending proceedings, either administrative, legislative, or
judicial, which would in any manner adversely affect that status of zoning with
respect to the Project or any part thereof. The Director shall also be provided
with copies of all building permits, operating permits, licenses, consents and
approvals, which building permits, operating permits, licenses, consents and
approvals shall be conditionally assigned to the Director. The Project and all
improvements shall thereafter be constructed in accordance with generally
accepted engineering and architectural principles and practices and in
compliance with all applicable deed restrictions, laws, and governmental
regulations including, without limitation, all federal, state, and local
environmental requirements specified by statute or impact study.
(c) The Director shall be provided with an AL T A loan title insurance
commitment prior to closing, and an AL T A loan title insurance policy upon
closing, in an amount satisfactory to the Director issued by a company
satisfactory to the Director and with such coinsurance as the Director may
require. Said policy shall insure the Mortgage as the first lien on the Project
subject only to Permitted Encumbrances and shall be issued without survey and
mechanics lien exceptions and containing only such other exceptions as the
Director shall approve. If the policy contains a pending disbursements clause,
such clause must be (degree)in a form acceptable to the Director. Should the
title insurance commitment contain exceptions for blanket easements which cannot
be located by the surveyor, the Company shall locate the easements through their
respective owners in order to have them plotted on the surveyor eliminated as
exceptions in the title insurance policy. Prior to closing, the Company shall
execute a no-lien affidavit in favor of the Director and title insurance
company.
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Prior to each disbursement, if applicable, the Company shall furnish the
Director and the title insurance company lien waivers of all contractors,
subcontractors and materialmen performing work on or furnishing materials to the
Project through the time of the disbursement.
Part IT - Disbursements of State Assistance for Project Equipment
(a) The Director shall have verified that the items of equipment for which
disbursement is being requested (a) conform, in description, to the Project
Equipment described in the Exhibit B hereof; and (b) have been installed at the
Project Site.
(b) If disbursement is requested to reimburse the Company for Allowable
Costs paid by the Company, the Company shall have furnished the Director with
evidence that such costs have been paid to the equipment suppliers.
(c) If disbursement is to be made directly to an equipment supplier, the
Company shall have furnished the Director with supplier invoices evidencing the
amount due.
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