Exhibit 10.1.4
REIMBURSEMENT AGREEMENT
Between
PECO II, INC.
AND
THE HUNTINGTON NATIONAL BANK
Re: $6,500,000 County of Arapahoe, Colorado
Adjustable Rate Demand
Industrial Development Revenue Bonds,
Series 2001 (PECO II, Inc. Project)
Consisting of
$2,000,000 Series 2001A Bonds and
$4,500,000 Series 2001B Bonds
TABLE OF CONTENTS
Page
1. Definitions And Accounting Terms.................................................................... 1
1.1 Defined Terms................................................................................ 1
1.2 Use of Defined Terms......................................................................... 5
1.3 Accounting Terms............................................................................. 5
1.4 Exhibits..................................................................................... 5
2. Bonds............................................................................................... 5
3. Letter of Credit.................................................................................... 5
3.1 Series 2001A Letter of Credit................................................................ 5
3.2 Series 2001B Letter of Credit................................................................ 6
4. Letter of Credit Documents.......................................................................... 6
4.1 Security Documents........................................................................... 6
4.2 Other Documents and Actions.................................................................. 6
4.3 Right of Set-Off Against the Borrower; Additional Collateral................................. 7
5. Conditions to Issuance, Disbursements and Closing................................................... 7
5.1 Conditions to Issuance....................................................................... 7
5.2 Bank's Consent to Disbursements.............................................................. 10
5.3 Disbursement Requests........................................................................ 10
5.4 Conditions to Disbursement................................................................... 10
6. Reimbursement and Other Payments; Extension......................................................... 11
6.1 Reimbursement and Other Payments............................................................. 11
6.2 Payments..................................................................................... 13
6.3 Increased Costs Due to Change in Law......................................................... 13
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6.4 Obligations Absolute......................................................................... 14
6.5 Termination and Extension of Letters of Credit............................................... 15
6.6 Pledge of Remarketing Bonds and Beneficial Ownership Interests............................... 16
6.7 Reinstatement................................................................................ 17
7. Representations and Warranties by the Borrower...................................................... 17
7.1 Organization of the Borrower................................................................. 17
7.2 Execution, Delivery and Performance of Letter of Credit Documents and Bond Documents......... 18
7.3 Financial Statements......................................................................... 19
7.4 No Material, Adverse Change.................................................................. 19
7.5 Tax Liability................................................................................ 19
7.6 Compliance with Laws......................................................................... 20
7.7 Litigation................................................................................... 20
7.8 Compliance with Requirements................................................................. 20
7.9 Statements................................................................................... 20
7.10 Pension Plan Liabilities..................................................................... 20
7.11 Environmental Protection..................................................................... 21
7.12 Year 2000 Compliance......................................................................... 22
8. Affirmative Covenants of the Borrower............................................................... 22
8.1 Protection of Lien on Project Facilities..................................................... 22
8.2 Protection of Security Interest in Personal Property......................................... 23
8.3 Payment of Taxes, Assessments and Charges.................................................... 23
8.4 Undisbursed Bond Proceeds.................................................................... 23
8.5 Insurance.................................................................................... 23
8.6 Escrow for Taxes, Assessments and Insurance.................................................. 23
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8.7 Governmental Approvals....................................................................... 24
8.8 Compliance with Requirements................................................................. 24
8.9 Books and Records............................................................................ 24
8.10 Notice of Litigation......................................................................... 24
8.11 Notice of Certain Events..................................................................... 25
8.12 Opinions and Notices......................................................................... 25
8.13 Defaults of Others........................................................................... 25
8.14 Security of Project Facilities............................................................... 25
8.15 ERISA........................................................................................ 25
8.16 Payment of Taxes and Claims.................................................................. 26
8.17 Maintenance of Property and Existence........................................................ 26
8.18 Sale of Assets, Merger, Subsidiaries and Tradenames.......................................... 26
8.19 Other Borrowings and Contingent Liabilities.................................................. 26
8.20 Ownership and Management..................................................................... 27
8.21 Financial Statements......................................................................... 27
8.22 Interim Financial Statements................................................................. 27
8.23 List of Personal Property.................................................................... 27
8.24 Tax Appeals.................................................................................. 28
8.25 Copies of Leases............................................................................. 28
8.26 Maintenance and Furnishing of Project Facilities; Substitutions and Removals................. 28
8.27 Deposit Accounts............................................................................. 29
8.28. Optional Redemption of Bonds and Other Payments.............................................. 29
9. Negative Covenants of the Borrower.................................................................. 30
9.1 Liens on Project Facilities.................................................................. 30
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9.2 Liens on Personal Property................................................................... 30
9.3 Transfers of Project Facilities or Bond Document Obligations................................. 31
9.4 Leases....................................................................................... 31
9.5 Easements.................................................................................... 31
9.6 Amendments to Documents...................................................................... 31
9.7 Nature of Business........................................................................... 31
10. [Reserved].......................................................................................... 31
11. Events of Default and Remedies Upon Default......................................................... 31
11.1 Events of Default............................................................................ 31
11.2 Remedies Upon Default........................................................................ 33
11.3 Cumulative Remedies; No Waiver............................................................... 34
12. Miscellaneous....................................................................................... 35
12.1 Actions...................................................................................... 35
12.2 Nonliability of the Bank..................................................................... 35
12.3 No Representations by the Bank............................................................... 35
12.4 No Third Parties Benefited................................................................... 36
12.5 Indemnity by the Borrower.................................................................... 36
12.6 Commissions.................................................................................. 37
12.7 Binding Effect............................................................................... 37
12.8 Execution in Counterparts.................................................................... 37
12.9 Prior Agreements; Amendments; Consents....................................................... 37
12.10 Cumulative Remedies; No Waiver............................................................... 37
12.11 Inclusion of Expenditures in Indebtedness.................................................... 37
12.12 Survival of Representations and Warranties................................................... 37
12.13 Notices...................................................................................... 38
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12.14 Further Assurances........................................................................... 39
12.15 Governing Law................................................................................ 39
12.17 Severability of Provisions................................................................... 39
12.17 Headings..................................................................................... 39
12.18 Time of the Essence.......................................................................... 39
12.19 Waiver of Jury Trial......................................................................... 39
12.20 Warrant of Attorney.......................................................................... 39
Exhibit A.1 Series 2001A Letter of Credit
Exhibit A.2 Series 2001B Letter of Credit
Exhibit B Project Site
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REIMBURSEMENT AGREEMENT
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This Reimbursement Agreement is entered into as of August 1, 2001, by and
between PECO II, INC., an Ohio corporation, (the "Borrower") and THE HUNTINGTON
NATIONAL BANK, a national banking association (the "Bank").
1. Definitions And Accounting Terms.
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1.1 Defined Terms. As used in this Reimbursement Agreement, the
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following terms shall have the meaning set forth respectively after each:
"Agreement" means this Reimbursement Agreement, either as originally
executed or as it may from time to time be supplemented or amended.
"ALTA Policy" means the policy of title insurance covering the
Project Site required pursuant to Section 5.1.1 of this Agreement.
"Beneficial Owner" means, with respect to a Bond, a person with a
Beneficial Ownership Interest therein, as evidenced to the satisfaction of the
Trustee.
"Beneficial Ownership Interest" means the right to receive payments
and notices with respect to the Bonds that are held by the Depository under a
book entry system.
"Bond Documents" means all of the instruments and agreements which
may become effective or be executed from time to time by the Issuer, the
Trustee, and/or the Borrower in connection with the Bonds, including without
limitation the following, as from time to time supplemented or amended:
(i) the Trust Indenture;
(ii) the Loan Agreement;
(iii) the Notes;
(iv) the Bond Purchase Agreement;
(v) the Bond Legislation;
(vi) the Tax Regulatory Agreement, dated as of August 1, 2001, among the
Borrower, the Issuer and the Trustee;
(vii) the Letter of Representations;
(viii) the Remarketing Agreement; and
(ix) the Offering Memorandum.
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"Bond Fund" means, the Bond Fund as defined in the Trust Indenture.
"Bond Legislation" means the Bond Legislation as defined in the Trust
Indenture.
"Bond Proceeds" means the proceeds of the Bonds, including without
limitation the amounts held from time to time by the Trustee in the Project
Fund, and any reserve or other fund, as well as any insurance or condemnation
proceeds or other assets held by the Trustee in special funds established
pursuant to the Bond Documents or otherwise, but excluding any amounts deposited
in the Bond Fund and in any fund established to comply with the rebate
requirements of Section 148 of the Internal Revenue Code of 1986, as amended.
"Bond Purchase Agreement" means the Bond Purchase Agreement dated
August 8, 2001, among the Issuer, the Borrower, the Bank and the Underwriter, as
from time to time supplemented or amended with the prior written consent of the
Bank.
"Bonds" means the $6,500,000 County of Arapahoe, Colorado Adjustable
Rate Demand Industrial Development Revenue Bonds, Series 2001 (PECO II, Inc.
Project) to be issued pursuant to the Trust Indenture for the purpose of
financing and/or refinancing the Project Costs.
"Borrower Representative" means each of one or more Persons authorized
in writing from time to time by the Borrower, to deliver certificates, requests
for disbursements and other documents and instruments to the Bank pursuant to
this Agreement and, in the absence of such designation, means any officer of the
Borrower.
"Business Day" means any day of the year, other than (a) a Saturday;
(b) a Sunday; (c) a day on which commercial banks located in the cities in which
the principal corporate trust office of the Trustee and the principal offices of
the Bank and the Remarketing Agent are located are required or authorized by law
to remain closed; or (d) a day on which the New York Stock Exchange is closed.
"Depository" means any securities depository that is a clearing agency
under federal law operating and maintaining, with its participants or otherwise,
a book entry system to record ownership of book entry interests in the Bonds,
and to effect transfers of book entry interests in Bonds, and includes and means
initially The Depository Trust Company (a limited purpose trust company), New
York, New York.
"Determination of Taxability" means a Determination of Taxability as
determined in accordance with the terms of the Trust Indenture.
"Disbursement" means each of the disbursements by the Trustee from the
Project Fund pursuant to this Agreement and the Bond Documents.
"Event of Default" means each of those events so designated in Section
11.1 of this Agreement.
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"Financing Statements" means the UCC-1 financing statements required
pursuant to Section 4.1 of this Agreement, as from time to time supplemented or
amended.
"Fiscal Year" means the fiscal year of the Borrower.
"Issuer" means the County of Arapahoe, Colorado, a county and
political subdivision duly organized and existing under the laws of the State of
Colorado.
"Letters of Credit" means the letters of credit to be issued by the
Bank pursuant to this Agreement in the form attached hereto as Exhibit A.1 and
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A.2, respectively, either as originally executed or as it they from time to time
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be extended, renewed or replaced pursuant to this Agreement.
"Letter of Credit Documents" means, collectively, this Agreement and
the Security Documents, as from time to time supplemented or amended.
"Letter of Representations" means the blanket Letter of
Representations from the Issuer and the Trustee to the Depository, as
supplemented and amended from time to time.
"Loan Agreement" means the Loan Agreement of even date herewith, by
and between the Issuer and the Borrower, as from time to time supplemented or
amended with the written consent of the Bank.
"Mortgage" means the Deed of Trust, Assignment of Rents, and Security
Agreement of even date herewith executed and delivered by the Borrower for the
benefit of the Bank, as from time to time supplemented or amended.
"Notes" means the Series 2001A Note and the Series 2001B Note (as
defined in the Loan Agreement) of the Borrower payable to the Trustee, dated
August 8, 2001, in the form attached to the Loan Agreement as Exhibit C.
"Offering Memorandum" means the Offering Memorandum dated August 8,
2001 with respect to the Bonds, as amended and supplemented in accordance with
the terms of the Bond Purchase Agreement and the Remarketing Agreement.
"Participant" means any financial institution which may become liable
for funding a portion of draws under the Letter of Credit pursuant to the terms
of a participation agreement between the Bank and the Participant.
"Permitted Encumbrances" means the utility, access and other
easements, rights-of-way, mineral rights, restrictions and exceptions of record
encumbering the Project Site and approved by the Bank for inclusion as
exceptions in the policy of title insurance in favor of the Bank insuring the
lien of the Mortgage on the Project Site, as from time to time supplemented or
amended with the prior written consent of the Bank.
3
"Person" means and includes an individual, corporation, partnership,
limited liability company, trust, unincorporated organization or association and
a government or any department or agency thereof.
"Prime Rate" means the interest rate per annum established by The
Huntington National Bank from time to time as such bank's prime commercial rate
based on its consideration of economic, money market, business and competitive
factors, and is not necessarily such bank's most favored rate. Subject to any
minimum or maximum rate limitations specified by applicable law, the Prime Rate
will automatically and immediately change from time to time effective as of the
effective date of each such change in the prime commercial rate of such bank.
"Project" means the facility for the manufacture of communications
power systems, power distribution equipment and systems integration equipment
and services, to be located on the Project Site, and the acquisition,
construction, installation, renovation and equipping thereof.
"Project Costs" means all costs of any nature whatsoever incurred by
or on behalf of the Borrower in connection with the acquisition, construction,
installation, renovation and equipping of the Project.
"Project Facilities" means the Project Site and the Project, together
with any additions, modifications and substitutions to those facilities or any
other improvements to the Project Site.
"Project Site" means the real property described in Exhibit B hereto,
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and any additions thereto, less any removals therefrom, made in the manner and
to the extent provided in the Mortgage and this Agreement, and all existing
improvements, fixtures, furniture, equipment and machinery located thereon or
used in connection therewith.
"Remarketing Agent" means the Remarketing Agent as designated from
time to time pursuant to the provisions of the Trust Indenture.
"Remarketing Agreement" means the Remarketing Agreement of even date
herewith between the Borrower and the Remarketing Agent, as from time to time
supplemented or amended.
"Security Agreement" means the Security Agreement (Equipment,
Fixtures, Inventory, and Receivables), dated as of even date herewith from the
Borrower to the Bank, as from time to time supplemented or amended.
"Security Documents" means, collectively, the Mortgage, the Security
Agreement, the Financing Statements, and any other mortgage, security agreement,
guaranty, financing statement or assignment now, heretofore or hereafter
executed to secure the obligations of the Borrower under this Agreement, in each
case either as originally executed or as the same may from time to time be
supplemented or amended.
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"Series 2001A Bonds" means a portion of the Bonds in the original
aggregate principal amount of $2,000,000 designated "County of Arapahoe,
Colorado Adjustable Rate Demand Industrial Development Revenue Bonds, Series
2001A (PECO II, Inc. Project.)"
"Series 2001B Bonds" means a portion of the Bonds in the original
aggregate principal amount of $4,500,000 designated "County of Arapahoe,
Colorado Adjustable Rate Demand Industrial Development Revenue Bonds, Series
2001B (PECO II, Inc. Project.)"
"Trustee" means The Huntington National Bank, a national banking
association, with its principal corporate trust office located in Columbus,
Ohio, or its successors as trustee under the Trust Indenture.
"Trust Indenture" means the Trust Indenture of even date herewith
executed and delivered by the Issuer and the Trustee, as from time to time
supplemented or amended.
"Underwriter" means Huntington Capital Corp., an Ohio corporation.
1.2 Use of Defined Terms. Any defined term used in the plural shall
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refer to all members of the relevant class, and any defined term used in the
singular shall refer to any number of the members of the relevant class.
1.3 Accounting Terms. All accounting terms not specifically defined
----------------
in this Agreement shall be construed in conformity with, and all financial data
required to be submitted by this Agreement shall be prepared in conformity with,
generally accepted accounting principles ("GAAP"), applied on a consistent
basis.
1.4 Exhibits. All Exhibits to this Agreement, either as now existing
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or as the same may from time to time be supplemented or amended, are
incorporated herein by this reference.
2. Bonds. The Borrower contemplates entry into the Bond Documents to
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which it is a party in order to cause the issuance of the Bonds, so that the
Bond Proceeds may be used to finance and/or refinance the cost of the
acquisition, construction, installation, renovation and equipping of the
Project.
3. Letters of Credit.
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3.1 Series 2001A Letter of Credit. The Borrower has requested the
-----------------------------
Bank to issue an irrevocable direct pay letter of credit in the form attached
hereto as Exhibit "A.1" (the "Series 2001A Letter of Credit") in an aggregate
amount not exceeding $2,029,590, of which (a) an amount not exceeding $2,000,000
shall be available to pay the principal amount of the Series 2001A Bonds and the
portion of purchase or redemption price corresponding to principal of the Series
2001A Bonds, and (b) an amount not exceeding $29,590 shall be available to pay
for up to 45 days' interest accrued on the Series 2001A Bonds and the portion of
purchase or redemption price corresponding to interest on the Series 2001A Bonds
at the actual interest rate on the Series 2001A Bonds not to exceed a maximum
interest rate of 12% per annum, all as more particularly
5
provided in the Series 2001A Letter of Credit. The Bank is willing to issue the
Series 2001A Letter of Credit on the terms and conditions contained in this
Agreement and the other Letter of Credit Documents.
3.2 Series 2001B Letter of Credit. The Borrower has requested the
-----------------------------
Bank to issue an irrevocable direct pay letter of credit in the form attached
hereto as Exhibit "A.2" (the "Series 2001B Letter of Credit") in an aggregate
amount not exceeding $4,566,576, of which (a) an amount not exceeding $4,500,000
shall be available to pay the principal amount of the Series 2001B Bonds and the
portion of purchase or redemption price corresponding to principal of the Series
2001B Bonds, and (b) an amount not exceeding $66,576 shall be available to pay
for up to 45 days' accrued interest on the Series 2001B Bonds and the portion of
purchase or redemption price corresponding to interest on the Series 2001B Bonds
at the actual interest rate on the Series 2001B Bonds not to exceed a maximum
interest rate of 12% per annum, all as more particularly provided in the Series
2001B Letter of Credit. The Bank is willing to issue the Series 2001B Letter of
Credit on the terms and conditions contained in this Agreement and the other
Letter of Credit Documents.
4. Letter of Credit Documents.
--------------------------
4.1 Security Documents. In consideration of the Bank's entry into
------------------
this Agreement and the other Letter of Credit Documents, and as security for the
prompt payment when due of all sums of principal, interest and purchase price
advanced by the Bank pursuant to the Letter of Credit as well as for payment of
any other sums owing pursuant to this Agreement or any of the other Letter of
Credit Documents, together with any and all extensions, renewals, modifications
and amendments thereof and as security for the performance and observance of all
of the covenants, agreements and conditions contained in the Letter of Credit,
this Agreement and all of the other Letter of Credit Documents, the Borrower
shall, at its sole expense, execute and deliver or cause to be executed and
delivered to the Bank and record or cause to be recorded, if appropriate, the
following documents, each of which shall be in such form and content, and
executed by such persons and/or entities, as the Bank shall in its reasonable
discretion require:
(a) the Mortgage;
(b) the Security Agreement; and
(c) the Financing Statements.
4.2 Other Documents and Actions. The Borrower agrees to execute,
---------------------------
acknowledge and/or deliver or cause to be executed, acknowledged and/or
delivered to the Bank such other instruments, agreements and other documents,
and to take such actions, upon request by the Bank, as the Bank may reasonably
request in order to carry out the purposes of this Agreement and the other
Letter of Credit Documents and the transactions contemplated thereby and to
protect and/or further the validity, priority and/or enforceability of the
Security Documents or subject to the Security Documents and the security
interest and/or lien thereby created, any property, together with any renewals,
additions, substitutions, replacements or
6
betterments thereto, intended by the terms of this Agreement or the other Letter
of Credit Documents to be covered by the Security Documents.
4.3 Right of Set-Off Against the Borrower; Additional Collateral.
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(a) Upon the occurrence and during the continuance of any
Event of Default hereunder, the Bank is hereby authorized at any time and from
time to time, without notice to the Borrower (any such notice being expressly
waived by the Borrower) and to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by the Bank
to or for the credit or the account of the Borrower, against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement or
the other Letter of Credit Documents, irrespective of whether or not the Bank
shall have made any demand hereunder and although such obligations may be
unmatured.
(b) The Bank agrees promptly to notify the Borrower and the
Trustee after any such set-off and application, provided that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of the Bank under this Section 4.3 are in addition to other rights
and remedies (including, without limitation, other rights of set-off) which the
Bank may have.
5. Conditions to Issuance, Disbursements and Closing.
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5.1 Conditions to Issuance. The obligation of the Bank to issue the
----------------------
Letter of Credit is subject to the following conditions precedent, unless
specifically waived in writing by the Bank:
5.1.1 The Bank shall have received all the following, each of
which shall be in form and substance satisfactory to the Bank:
(a) manually executed counterparts of the Letter of Credit
Documents and the Bond Documents and the fees and expenses required by Section
6.1 of this Agreement to be paid on the date of issuance of the Letter of
Credit;
(b) a copy of the Articles of Incorporation of the Borrower,
as amended, certified by the Secretary of State of Ohio, the Code of
Regulations, as amended, of the Borrower, certified by the Secretary or an
Assistant Secretary of the Borrower, a certificate of the Secretary of State of
Ohio as to the Borrower's good standing as a corporation duly organized and
existing under the laws of the State of Ohio, and a certificate of the Secretary
of State of Colorado as to the authorization of the Borrower to do business as a
foreign corporation in the State of Colorado;
(c) copies of such currently effective licenses, permits and
approvals of governmental authorities as are necessary to evidence the legal
authority of the Borrower to operate the Project;
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(d) corporate resolutions in form and substance satisfactory to
the Bank and certified to the date of issuance of the Letters of Credit by the
Secretary or Assistant Secretary of the Borrower authorizing the Borrower's
execution and delivery of the Letter of Credit Documents and the Bond Documents
to which it is a party and empowering the signatories thereto to act on behalf
of the Borrower;
(e) all of the opinions, certificates, and other documents
specified in, or requested by the Bank, the Issuer, the Underwriter or the
Borrower pursuant to the Bond Purchase Agreement;
(f) written opinions of the Borrower's Ohio and Colorado
counsel, in form and substance satisfactory to the Bank, covering such matters
relating to the Borrower, the Project, the Letter of Credit Documents and the
Bond Documents as may be required by the Bank;
(g) a written opinion of bond counsel, in form and substance
satisfactory to the Bank, covering such matters relating to the Issuer and the
Bond Documents as may be required by the Bank;
(h) a current property survey of the Project Site certified to
the Bank and the title insurance company issuing the ALTA Policy prepared by a
registered surveyor in conformity with the Bank's survey standards and locating
all access roads, easements and other encumbrances set forth in the ALTA Policy;
(i) (i) a standard ALTA mortgagee title insurance commitment, in
form and substance and issued by a title insurance company satisfactory to the
Bank, together with satisfactory evidence of reinsurance of a portion of the
title insurance company's obligations under the final policy of title insurance
if required by the Bank in its discretion, naming the Bank as insured in a
policy amount of not less than $6,596,166, reflecting the Borrower's marketable
title in and to the Project Facilities and containing only exceptions acceptable
to the Bank; (ii) in the event the title insurance commitment shows restrictive
covenants affecting the Project Site, evidence that such restrictive covenants
are not now being violated and will not be violated by the development,
construction and renovation of the Project Facilities thereon; and (iii) after
closing and recording, a final policy of title insurance on the ALTA 1970
(Revised 1984) form naming the Bank as insured, containing no exceptions for
filed or unfiled mechanics' or materialmen's liens, the rights of parties in
possession or as to matters of survey, together with such other endorsements and
coverages as may from time to time be required by the Bank, and insuring the
Mortgage as a valid first lien on the Project, subject only to Permitted
Encumbrances, all in conformity to the Bank's title insurance requirements;
(j) certificates of insurance and certified copies of policies
in accordance with the Bank's insurance requirements and the other insurance
requirements set forth in the Mortgage;
(k) an opinion of counsel acceptable to the Bank, to the effect
that, in connection with the offer and sale of the Bonds and the issuance of the
Letter of Credit, it is not
8
necessary to register any security under the Securities Act of 1933, as amended,
or the securities laws of any State or, if such registration is necessary, that
all necessary registrations have been made; and the Bank shall, if requested by
the Bank, be supplied with a Blue Sky memorandum in form and content acceptable
to the Bank;
(l) current Uniform Commercial Code searches made in such places
as the Bank may specify, covering the Borrower, showing no filings relating to,
or which could relate to, the tangible and intangible personal property of the
Borrower other than those made hereunder and under the Security Documents and
Bond Documents;
(m) evidence satisfactory to the Bank that there is satisfactory
ingress and egress to the Project Site;
(n) a current "Phase One" environmental report regarding
hazardous wastes, toxic materials and other environmental hazards on the Project
Site, which report shall be certified by an environmental consultant and shall
conform in all respects with the Bank's "Phase One Environmental Report
Requirements." If warranted by the Phase One environmental report, the Borrower
shall provide a detailed audit of the same matters. Such consultant must appear
on the Bank's list of approved environmental consultants or be specifically
approved in writing by the Bank;
(o) evidence satisfactory to the Bank indicating that no portion
of the Project Site is located in a flood hazard area designated by the U.S.
Department of Housing and Urban Development;
(p) receipt with respect to the Project Facilities of (i)
evidence that public water, sewer, and other required utilities are available at
the Project Site and that the capacity of each such utility is sufficient to
adequately service the Project Facilities, (ii) copies of the applicable
occupancy permits with respect to the Project and evidence that the Project and
its use comply with all applicable building and other governmental laws,
regulations and requirements, and (iii) evidence that the Project Site is
finally and unappealably zoned to permit the existing and proposed uses of the
Project Site and the Project Facilities;
(q) evidence that the Project Site comprises one or more
separate tax parcels;
(r) evidence that all approvals required for the development,
construction, renovation, equipping, use and operation of the Project have been
granted by all governmental authorities having jurisdiction;
(s) an appraisal of the Project Facilities in form and amount
acceptable to the Bank on the date of issuance by an MAI appraiser acceptable to
the Bank and confirmed by the Bank's review appraiser; and
(t) current financial statements for the Borrower, in form and
substance satisfactory to the Bank.
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5.1.2 The Bank shall have received confirmation to its satisfaction
that the Security Documents and Bond Documents have been duly executed,
acknowledged, delivered and recorded or filed as appropriate.
5.1.3 The Bonds shall have been duly executed and delivered, and all
of the Bonds shall have been sold and the purchase price for the Bonds received
by the Trustee, as required pursuant to the Bond Documents, simultaneously with
the issuance of the Letter of Credit.
5.1.4 The Bank shall have received, in form and substance
satisfactory to the Bank, such additional certificates, documents, consents or
opinions as the Bank may reasonably request.
5.2 Bank's Consent to Disbursements. The Bank's written consent
-------------------------------
shall be required as a condition precedent to each Disbursement.
5.3 Disbursement Requests. The Bank's consent to Disbursements
---------------------
shall be given, subject to the conditions contained in Section 5.4 of this
Agreement, only upon written request of the Borrower signed by a Borrower's
Representative.
5.4 Conditions to Disbursement. The Bank's consent to
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Disbursements required pursuant to Section 5.3, above, shall be given only
following satisfaction of each of the following conditions, unless waived by the
Bank:
5.4.1 The Borrower shall be in full compliance with all of the
conditions set forth in Section 5.1, above, and all of such conditions shall
have been satisfied, as of the date of the Disbursement;
5.4.2 There shall have occurred no Event of Default which
remains unwaived or uncured or event which, with the giving of notice or the
passage of time, or both, would constitute an Event of Default and, if the Bank
shall so require, the Bank shall have received a certificate to that effect
signed by a Borrower's Representative;
5.4.3 The representations and warranties contained in Section
7.1 through 7.12 below, shall be correct on and as of the date of the
Disbursement as though made on and as of that date and, if so requested by the
Bank, the Bank shall have received a certificate to that effect signed by a
Borrower's Representative;
5.4.4 The Borrower shall, at its sole expense, have delivered
or caused to be delivered to the Bank originals of the "date down" endorsements
to the ALTA Policy as may from time to time be reasonably required by the Bank;
and
5.4.5 On and as of the date of the Bank's consent to the
Disbursement, the Borrower shall have complied in all material respects with all
applicable laws, ordinances, regulations and other requirements relating to the
Project, and all necessary consents or
10
approvals of any court or governmental department, public body, authority,
commission, board, bureau, agency or instrumentality shall have been regularly
and finally received with respect thereto, to the extent reasonably obtainable
by the date of such Disbursement, including without limitation each of the
following as applicable:
(a) all zoning, land use and planning requirements;
(b) subdivision and/or parcel map requirements;
(c) construction and building permit requirements; and,
if the Bank shall so require, the Bank shall have received, dated as of the date
of the Bank's consent to the Disbursement, a certificate signed by a Borrower's
Representative that, to the best of the Borrower's knowledge, such requirements
have been complied with; and
5.4.6 The Borrower shall be in compliance with all of the terms
and conditions imposed by the Bond Documents in connection with such
Disbursement and, if the Bank shall so require, the Bank shall have received a
certificate to that effect signed by a Borrower's Representative.
6. Reimbursement and Other Payments; Extension.
-------------------------------------------
6.1 Reimbursement and Other Payments. The Borrower hereby agrees to
--------------------------------
pay to the Bank:
(a) on the date of any Principal Drawing or Interest Drawing (as
such terms are defined in the Letter of Credit), a sum equal to the amount of
such Principal Drawing or Interest Drawing plus the sum of $50 for each such
Principal or Interest Drawing made on the Letter of Credit;
(b) the portion of any Remarketing Drawing (as defined in the
Letters of Credit) used by the Trustee to pay the principal portion of Bonds or
Beneficial Ownership Interests duly tendered, or deemed tendered, for purchase
and not remarketed on the applicable Bond Purchase Date (as defined in the Trust
Indenture) shall be due and payable to the Bank ninety (90) days after the date
of such Remarketing Drawing or on the date the Pledged Bonds (as defined in
Section 6.6 below) which were the subject of such Remarketing Drawing are
remarketed, whichever shall first occur, and the unreimbursed portion of the
Remarketing Drawing shall bear interest from the date of such Remarketing
Drawing until payment of such portion thereof in full at the interest rate
provided in subsection (d) of this Section 6.1, payable on the first business
day of each month, commencing on the first business day of the month following
the month in which such Remarketing Drawing occurs. The portion of a Remarketing
Drawing used by the Trustee to pay the interest portion of the purchase price of
Bonds or Beneficial Ownership Interests duly tendered, or deemed tendered, for
purchase on the applicable Bond Purchase Date shall be paid on the date of such
Remarketing Drawing, together with the sum of $50 for each such Remarketing
Drawing. Any payment of interest on Bonds held by the Bank pursuant to Section
6.6 hereof, if and when received by the Bank, shall be
11
applied by the Bank to the payment of interest owed by the Borrower pursuant to
the first sentence of this Section 6.1(b);
(c) on demand, all reasonable amounts expended, advanced or
incurred by the Bank to satisfy any obligation of the Borrower under this
Agreement or any other Letter of Credit Document or to enforce the rights of the
Bank under this Agreement or any other Letter of Credit Document or Bond
Document (including without limitation any costs incurred by the Bank in
connection with any insolvency or bankruptcy proceeding affecting the Borrower,
or any tenant, sub-tenant, licensee or occupant with respect to any portion of
the Project, or any guarantor of the Borrower's obligations under this Agreement
or any of the Security Documents), which amounts will include all court costs,
reasonable attorneys' fees, fees of auditors and accountants and investigation
expenses reasonably incurred by the Bank in connection with any such matter;
(d) on demand, except as otherwise provided herein, interest on
any and all amounts unpaid by the Borrower to the Bank when due under this
Agreement or any other Letter of Credit Document from the date such amounts
become due until paid in full at a fluctuating rate per annum (computed on the
basis of a year of 360 days but calculated on the actual number of days
outstanding) equal to two percent (2%) per annum in excess of the Prime Rate;
provided, however, that amounts drawn under a Remarketing Drawing pursuant to
the first sentence of subsection (b) of this Section 6.1 shall bear interest at
an interest rate per annum equal to one percent (1%) in excess of the Prime Rate
from the date of such Remarketing Drawing until such amounts are due and
payable, and thereafter at a rate equal to two percent (2%) per annum in excess
of the Prime Rate;
(e) on demand, any other amounts owing to the Bank by the
Borrower under this Agreement or any of the other Letter of Credit Documents;
(f) on the date of issuance of the Letters of Credit: (i) all
attorneys' fees and out-of-pocket expenses incurred by the Bank counsel and bond
counsel in connection with the negotiation, preparation and execution of this
Agreement, the Letters of Credit and any and all of the other Letter of Credit
Documents and security documents in connection therewith, the Bond Documents and
the transactions contemplated thereby (including any amendments hereto or
thereto or consents or waivers hereunder or thereunder); and (ii) all fees,
charges or taxes for the recording or filing of Security Documents paid by the
Bank;
(g) on the date of issuance of the Letter of Credit, the initial
annual fee equal to $65,961.66 (the "Annual Fee"), being 1.00% of the original
stated amount of the Letters of Credit, for the period from the date of issuance
of the Letter of Credit through August 15, 2002; and
(h) for each subsequent year that a Letter of Credit remains in
effect, the Borrower will pay to the Bank for the one-year period commencing on
the 16th day of August of such year (a "Fee Period") an Annual Fee equal to
1.00% of the undrawn amount available to be drawn under such Letter of Credit on
such date (which amount will take into
12
account all reductions or increases in such undrawn amount through such August
16), payable in advance on the August 1 immediately preceding the commencement
of such Fee Period.
If subsequent to the payment of an Annual Fee under this subsection, any amount
is reinstated under a Letter of Credit which increases the undrawn amount
available to be drawn under such Letter of Credit to an amount greater than the
amount on which such fee was calculated (the "Increase Amount"), the Borrower
will pay to the Bank the Annual Fee on the Increase Amount within five days of
demand therefor by the Bank. In no event shall the Bank have any obligation to
make reimbursement or to otherwise account to the Borrower in respect of fees
paid by the Borrower as a result of any reduction in the undrawn amount under a
Letter of Credit and/or any later adjustment to a fixed rate of interest on the
Bonds secured thereby at less than the maximum interest rate of 12% per annum.
If at any point in time the Borrower fixes the interest rate on a series of
Bonds at a rate less than the maximum rate of 12% per annum, the letter of
credit fee due and payable annually thereafter shall be due and payable on the
undrawn amount of such Letter of Credit representing the actual rate of interest
on the Bonds for the next respective Fee Period, if fixed for such Fee Period,
but if the rate of interest on the Bonds can vary during such Fee Period, the
annual letter of credit fee shall be calculated on the assumed maximum interest
rate of 12% per annum. Provided, however, that upon termination of all
obligations of the Bank under a Letter of Credit, receipt by the Bank of such
original Letter of Credit for cancellation, receipt of all payments pursuant to
this Agreement with respect thereto, purchase of all Pledged Bonds held by the
Bank pursuant to Section 6.6 hereof with respect thereto and if there exists no
default on the part of the Borrower hereunder, the Bank agrees to refund to the
Borrower a portion of the Annual Fee paid in advance with respect to such Letter
of Credit by the Borrower, the amount of such refund to be determined by
multiplying the amount of such Annual Fee paid in advance by a fraction, the
numerator of which is the number of days remaining in the period for which such
fee has been paid following termination of such Letter of Credit and the
denominator of which is the total number of days in such period.
6.2 Payments. All payments by the Borrower to the Bank hereunder
--------
shall be made in lawful currency of the United States of America and in
immediately available funds before 2:00 p.m., Columbus, Ohio time on the date
when such payment is due at the office of the Bank at 7 Easton Oval - EA4E63,
Columbus, Ohio 43219, Attention: International Division, Letter of Credit
Department, or at such other location as the Bank shall designate to the
Borrower from time to time in writing. Any payment received and accepted by the
Bank after such time shall be considered for all purposes (including the
calculation of interest, to the extent permitted by law) as having been made on
the Bank's next following business day (as defined in the Letter of Credit).
If the date for any payment hereunder falls on a day that is not
a business day, then for all purposes of this Agreement the same shall be deemed
to have fallen on the next following business day, and such extension of time
shall in such case be included in the computation of payments of interest.
6.3 Increased Costs Due to Change in Law. If any change in any law
------------------------------------
or regulation or in the interpretation thereof by any court or administrative
agency shall either (i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against or
13
in connection with letters of credit issued by the Bank or against commitments
by any Participant in connection with participation in letters of credit similar
to the commitment made by such Participant under its participation agreement
with the Bank, if any, or (ii) impose on the Bank or any Participant any other
condition regarding this Agreement or a Letter of Credit (other than changes in
the rates of income taxation generally applicable to the Bank or any
Participant), and the result of any such event shall be to increase the cost to
the Bank of issuing or maintaining such Letter of Credit or to increase the
costs to any Participant of maintaining its commitments under its participation
agreement (which increase in cost shall be determined by the Bank's or such
Participant's reasonable allocation of the aggregate of such cost increases
resulting from such events), then (a) the Bank or the Participant (as the case
may be) shall so notify the Borrower, and (b) upon receipt of such notice from
the Bank or the Participant (as the case may be), the Borrower shall promptly
pay to the Bank or to the Participant (as the case may be) from time to time as
specified by the Bank or the Participant (as the case may be) additional amounts
which shall be sufficient to compensate the Bank or the Participant (as the case
may be) for such increased costs, together with interest on each such amount for
the period from the date of such notice until payment in full thereof at the
Prime Rate plus two percent (2%) (computed on the basis of a year of 360 days
but calculated on the actual number of days outstanding). A certificate setting
forth in reasonable detail such increased cost incurred by the Bank or the
Participant as a result of any such event, submitted by the Bank or the
Participant to the Borrower, shall be prima facie evidence, absent manifest
----- -----
error, as to the amount thereof.
6.4 Obligations Absolute. The obligations of the Borrower under
--------------------
this Agreement shall be absolute, unconditional and irrevocable, and shall be
paid and performed strictly in accordance with the terms of this Agreement,
under all circumstances whatsoever, including, without limitation, the following
circumstances:
(a) any lack of validity or enforceability of the Letter of
Credit, or any of the Letter of Credit Documents or the Bond Documents or any
other agreement or instrument related thereto;
(b) any amendment or waiver of, or any consent to departure
from, the terms of the Letter of Credit or any of the Letter of Credit Documents
or the Bond Documents or any other agreement or instrument related thereto;
(c) the existence of any claim, set-off, defense or other right
which the Issuer or the Borrower may have at any time against the Trustee, any
beneficiary or any transferee of a Letter of Credit (or any Person for whom the
Trustee, any such beneficiary or any such transferee may be acting), the Bank or
any other Person, whether in connection with this Agreement, such Letter of
Credit, any of the other Letter of Credit Documents, the Bonds or any other
agreement or instrument related thereto, or in connection with the Project or
any unrelated transaction;
(d) any statement, draft or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect, or any statement therein being untrue or inaccurate in any respect
whatsoever (except to the extent
14
acceptance or reliance upon any such statement, draft or other document is a
result of the Bank's gross negligence or willful misconduct);
(e) the surrender or impairment of any security for the
performance or observance of the terms of this Agreement, any of the other
Letter of Credit Documents or any other agreement related thereto; or
(f) any other circumstance, happening or omission whatsoever,
whether or not similar to any of the foregoing, provided, that such
circumstance, happening or omission is not a result of the Bank's gross
negligence or willful misconduct.
6.5 Termination and Extension of Letters of Credit. Each Letter of
----------------------------------------------
Credit shall terminate in accordance with the terms and conditions of such
Letter of Credit; provided, however, that, subject to such terms and conditions,
the Expiration Date, as set forth in such Letter of Credit, may be extended
pursuant to, and otherwise in accordance with, the following terms and
conditions:
(a) On August 16, 2006, and on each successive August 16
thereafter, if the Extension Notice (as hereinafter described) with respect to a
Letter of Credit shall have theretofore been timely delivered by the Bank to the
Borrower and the Trustee, the Expiration Date thereof shall be extended for one
full year. If the Expiration Date is so extended on any such August 16, the
Trustee shall, not later than thirty (30) days thereafter surrender such
outstanding Letter of Credit to the Bank and accept, upon such surrender, a
substitute irrevocable letter of credit in the form of Exhibit A.1 or A.2, as
appropriate, to this Agreement, dated the date of such substitution and having
an Expiration Date which is one year later than the Expiration Date, but
otherwise having terms identical to the surrendered Letter of Credit. In lieu of
surrendering such Letter of Credit and accepting a substitute therefor, the
Trustee may accept a written notice of extension from the Bank notifying the
Trustee that the Bank has extended the Expiration Date for a period of one year.
(b) Not later than 90 days prior to August 16, 2006, and,
provided the Bank has theretofore timely given the Borrower and the Trustee the
Extension Notice, not later than 90 days prior to each subsequent August 16,
through and including August 16, 2020, the Bank may, in its sole and absolute
discretion, by notice in writing given by the Bank to the Borrower and the
Trustee (the "Extension Notice"), advise the Borrower and the Trustee that the
Expiration Date of a Letter of Credit will be extended in accordance with
paragraph (a) of this Section 6.5.
15
6.6 Pledge of Remarketing Bonds and Beneficial Ownership Interests.
--------------------------------------------------------------
(a) As security for the payment and performance of all
obligations of the Borrower to the Bank hereunder and under the other Letter of
Credit Documents, the Borrower hereby agrees that upon the making of a
Remarketing Drawing (as defined in the Letters of Credit, respectively) the
Borrower will forthwith deliver or cause to be delivered (or recorded through
the Depository) to the Bank Bonds or Beneficial Ownership Interests secured by
such Letter of Credit free and clear of all other liens and encumbrances in an
aggregate principal amount equal to the amount of such Remarketing Drawing, less
(i) any portion of such Remarketing Drawing representing interest on the Bonds
or Beneficial Ownership Interests so purchased, and (ii) the amounts the Bank is
reimbursed by 2:00 p.m. Columbus, Ohio time on the Bond Purchase Date
corresponding to the date of such Remarketing Drawing (collectively, the
"Pledged Bonds"), and the Borrower hereby grants to the Bank a security interest
in the Pledged Bonds and in the proceeds thereof.
(b) The Borrower hereby agrees to deliver or cause to be
delivered immediately (or recorded through the Depository) to the Bank the
Pledged Bonds which shall be registered by the Trustee (or recorded through the
Depository) in the names of the Borrower as pledgor and the Bank as pledgee,
with the Borrower's endorsements of the Pledged Bonds so delivered to the order
of the Bank. The Borrower further agrees to record through the Depository (if
the Pledged Bonds are held by a Depository in a book entry system) or cause the
Trustee to enter into its registration books (if the Bonds are not held by a
Depository in a book entry system), as the address to which payments of
principal, premium, if any, and interest with respect to Pledged Bonds are to be
sent, the Bank's address for notices pursuant to Section 12.13 hereof as in
effect from time to time.
(c) If the Borrower shall become entitled to receive or shall
receive any Pledged Bonds, any payment of interest with respect to the Pledged
Bonds, or any and all other proceeds thereof, the Borrower shall accept any such
items as the Bank's agent, shall hold them in trust for the Bank, and shall
deliver them forthwith to the Bank in the exact form received, with the
Borrower's endorsement to the order of the Bank when necessary, to be held by
the Bank, subject to the terms hereof, as security for the payment and
performance of all obligations of the Borrower hereunder and under the other
Letter of Credit Documents, except that the Bank shall credit all payments and
proceeds received by the Bank directly against the Borrower's obligations under
Section 6.1 of this Agreement as provided below.
(d) All principal, premium, if any, and interest paid on the
Pledged Bonds shall be retained by the Bank (or if received by the Borrower
shall be forthwith delivered by it to the Bank in the original form received)
and applied by the Bank to the payment of amounts due the Bank from the Borrower
hereunder and under the other Letter of Credit Documents.
(e) If the Borrower makes or causes to be made to the Bank a
payment of a Remarketing Drawing pursuant to Section 6.1(b) hereof, or a
Remarketing Agent resells Pledged Bonds on behalf of the Borrower, the Bank
agrees to release from the lien of this Agreement and deliver (or record through
the Depository) to the Borrower or the Remarketing
16
Agent, as the case may be, Pledged Bonds, endorsed in blank without recourse (if
not held by a Depository in a book entry system) in an aggregate principal
amount equal to the amount of such payment with respect to principal so made, or
the principal amount of the Pledged Bonds so resold to the extent that the
proceeds of such resale are delivered to the Bank.
(f) In addition to the rights and remedies granted to the Bank
in this Agreement, the Bank shall have all of the rights and remedies of a
secured party under Chapter 1309 of the Ohio Revised Code and such other rights
and remedies as are granted to a secured party in similar situations to the
extent of the security interest granted under paragraph (a) above.
(g) The Borrower shall be liable for the deficiency if the
proceeds of any sale or other disposition of the Pledged Bonds by the Bank are
insufficient to pay all amounts to which the Bank is entitled, including
principal and interest as provided herein, and the reasonable fees of any
outside attorneys employed by the Bank to collect such deficiency.
6.7 Reinstatement.
-------------
(a) In connection with any Remarketing Drawing, upon receipt by
the Trustee of Pledged Bonds or Beneficial Ownership Interests for the Bank's
benefit in the aggregate principal amount equal to the unpaid amount of the
principal portion of such Remarketing Drawing delivered (or recorded through the
Depository) by the Borrower or on its behalf, registered or recorded in the name
of the Borrower as pledgor and the Bank as pledgee in accordance with Section
6.6 hereof, the Trustee's right to draw on the related Letter of Credit shall
automatically be reinstated in an amount equal to the principal portion plus the
interest portion of such Remarketing Drawing, or the aggregate principal amount
of such Bonds plus the interest portion of such Remarketing Drawing, as the case
may be.
(b) In the event of an Interest Drawing, the Stated Amount of
the related Letter of Credit shall automatically be reinstated in the amount of
the related Interest Drawing at the close of business on the tenth day following
the date of such drawing unless the Bank shall have delivered to the Trustee a
notice in the form of Exhibit 5 to such Letter of Credit in the event the Bank
has not been reimbursed for such drawing or an Event of Default has occurred
under this Agreement and is continuing.
7. Representations and Warranties by the Borrower. As a material
----------------------------------------------
inducement to the Bank's entry into this Agreement and the transactions
contemplated hereby, the Borrower represents and warrants to the Bank, as of the
date of this Agreement and as of the date of issuance of the Letter of Credit,
that:
7.1 Organization of the Borrower. The Borrower is a corporation duly
----------------------------
organized, validly existing and in good standing under the laws of the State of
Ohio and is duly licensed to transact business as a foreign corporation in the
State of Colorado. The Borrower (a) has all requisite power and authority to
conduct its business and to own and lease its properties, (b) is duly qualified
to do business in every jurisdiction in which the nature of business conducted
by it makes such qualification necessary or where failure to so qualify would
have a material, adverse effect on its business or financial condition or its
performance of its obligations
17
under the Letter of Credit Documents, or the Bond Documents, and (c) is duly and
validly licensed and holds all permits and approvals necessary for the conduct
of the business in which it is engaged and for the intended use of the Project
Facilities. The Borrower is governed by its Articles of Incorporation, as
amended, and Code of Regulations, as amended, true and correct copies of which
have been delivered to the Bank, which documents have not been further restated,
amended or modified and remain in full force and effect.
7.2 Execution, Delivery and Performance of Letter of Credit Documents
-----------------------------------------------------------------
and Bond Documents.
------------------
7.2.1 The Borrower has all requisite power and authority to
execute and deliver, and to perform all of its obligations under, the Letter of
Credit Documents and the Bond Documents, and shall execute and deliver to the
Bank, prior to the issuance of the Letters of Credit and as a condition thereto,
a certificate evidencing the due authorization of the signing corporate
officer(s) of the Borrower to the execution of the Letter of Credit Documents
and Bond Documents and the entry by the Borrower into the transactions
contemplated thereby.
7.2.2 The execution and delivery by the Borrower of, and the
performance by the Borrower of all of its obligations under, each Letter of
Credit Document and Bond Document have been duly authorized by all necessary
corporate action and do not and will not:
(a) require any consent or approval not heretofore obtained of
any shareholder, director or officer of the Borrower;
(b) violate any provision of, or require any consent not
heretofore obtained under the Articles of Incorporation or Code of Regulations
of the Borrower, or any action or resolution of its shareholders or Board of
Directors, or any committee thereof.
(c) result in or require the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest, claim, charge, right
of others, or other encumbrance of any nature (other than as contemplated under
the Letter of Credit Documents and the Bond Documents) upon or with respect to
any property or assets now owned or leased or hereafter acquired by the
Borrower;
(d) violate any provision of any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award presently in effect
having applicability to the Borrower; or
(e) result in a breach of or constitute a default under, or
cause or permit the acceleration of any obligation owed under, any indenture or
loan or credit agreement, lease, or instrument to which the Borrower is a party
or by which the Borrower or any of its property or assets is bound or affected.
7.2.3 At the time of execution of this Agreement, the Borrower
is not in default in any respect that is materially adverse to the interests of
the other parties to the Letter of
18
Credit Documents or the Bond Documents or the holders of the Bonds or that would
have any material adverse effect on the financial condition of the Borrower or
the conduct of its business under any law, rule, regulation, order, writ,
judgment, injunction, decree, determination, award, indenture, agreement, lease
or instrument described in Section 7.2.2(d) or Section 7.2.2(e), above.
7.2.4 No authorization, consent, approval, order, license,
exemption from, or filing or registration or qualification with, any court or
governmental department, public body, authority, commission, board, bureau,
agency, or instrumentality, not heretofore obtained or not reasonably obtainable
by the date of issuance and delivery of the Letters of Credit is or will be
required to authorize, or is otherwise required in connection with the
following:
(a) the execution and delivery by the Borrower of, and the
performance by the Borrower of all of its obligations under, the Letter of
Credit Documents and the Bond Documents, or
(b) the creation of the liens, security interests, or other
charges or encumbrances described in the Letter of Credit Documents and the Bond
Documents.
7.2.5 The officers of the Borrower executing the Letter of
Credit Documents and the Bond Documents on behalf of the Borrower are fully
authorized to do so.
7.2.6 Each of the Letter of Credit Documents and the Bond
Documents, when executed and delivered, will constitute the legal, valid, and
binding obligations of the Borrower (to the extent the Borrower is a party
thereto or obligated thereunder), enforceable against the Borrower in accordance
with its terms, except to the extent that its enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws and
equitable principles in effect from time to time affecting the rights of
creditors generally as such laws and insolvency, reorganization or moratorium
relate to the Borrower, and subject to limitations which may be imposed on
equitable remedies.
7.3 Financial Statements. The Borrower has furnished to the Bank the
--------------------
current financial statements for the Borrower, and such statements and any other
financial statements or reports with respect to the Borrower submitted by the
Borrower to the Bank fairly present the financial position of the Borrower as of
the date thereof.
7.4 No Material, Adverse Change. There has been no material, adverse
---------------------------
change in the condition, financial or otherwise, of the Borrower since the dates
of the financial statements described in Section 7.3, above.
7.5 Tax Liability. The Borrower has filed all tax returns (federal,
-------------
state and local) required to be filed and has paid all taxes shown thereon to be
due and payable by the Borrower, and all property taxes due, including interest
and penalties, if any; provided, however, that the Borrower shall not be
required to pay and discharge any such tax so long as the legality thereof shall
be promptly and actively contested in good faith and by appropriate proceedings.
19
The Borrower has established and will maintain adequate reserves for tax
liabilities, if any (including any tax liabilities contested pursuant to this
Section 7.5).
7.6 Compliance with Laws. The Borrower is and shall remain in
--------------------
compliance in all material respects with all laws, regulations and requirements
applicable to its business and has obtained all authorization, consents,
approvals, orders, licenses, exemptions from, and has accomplished all filings
or registrations or qualifications with, any court or governmental department,
public body, authority, commission, board, bureau, agency or instrumentality,
that are necessary for the transaction of its business.
7.7 Litigation. There are no material actions, suits, or proceedings
----------
pending or threatened against or affecting the Borrower, the Project, the
Project Facilities, or assets of the Borrower before any court or governmental
department, public body, authority, commission, board, bureau, agency or
instrumentality.
7.8 Compliance with Requirements. The Borrower has obtained and
----------------------------
examined all conditions, covenants, restrictions, easements, reservations,
rights of way and all applicable laws, ordinances, regulations, use permits,
occupancy permits, building permits and other requirements affecting or relating
to the Project and the Project Facilities of which it has knowledge after due
investigation or affecting or relating to acquisition, construction,
installation, renovation and equipping of the Project, and to best of the
Borrower's knowledge after due investigation the Project Facilities do not and
will not violate any of the same in any material respect and the intended use of
the Project Facilities will not be materially affected thereby.
7.9 Statements. Any certificate or written statement or the most
----------
recent projections furnished prior to the issuance of the Letter of Credit by
the Borrower to the Bank, the Issuer, the Trustee or any other Person in
connection with the negotiation of this Agreement or any of the other Letter of
Credit Documents or the Bond Documents or the transactions contemplated thereby
to the best knowledge of the Borrower after reasonable inquiry does not contain
any untrue statement of a material fact and does not omit any material fact
necessary to make the statements contained herein or therein, in the light of
the circumstances under which they were made, not misleading.
7.10 Pension Plan Liabilities. No pension plan for the benefit of
------------------------
the Borrower's employees ("Pension Plan") has been terminated; the Borrower has
not incurred any liability to the Pension Benefit Guaranty Corporation other
than for required insurance premiums which have been paid when due; no
Reportable Event described in Section 4043 ("Reportable Event") of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or in the
regulations issued thereunder, or other event or condition which presents a risk
of termination of any Pension Plan by the Pension Benefit Guaranty Corporation
has occurred; the Borrower has not withdrawn from any pension plan prescribed in
Section 4001(a)(3) of ERISA, as amended by the Multiemployer Pension Plan
Amendment Act of 1980, as amended ("Multiemployer Plan") in a complete
withdrawal or a partial withdrawal; and no Pension Plan, and no other employee
pension benefit plan described in Section 3 of ERISA to which the Borrower is a
party, has
20
engaged in a transaction prohibited under Sections 406 or 407 of ERISA or under
Section 4975 of the Internal Revenue Code of 1986, as amended.
7.11 Environmental Protection. The Borrower (a) has no actual
------------------------
knowledge of the permanent placement, burial or disposal of any Hazardous
Substances (as hereinafter defined) on any real property owned, leased, or used
by the Borrower including, but not limited to, the Project Site (the
"Premises"), of any spills, releases, discharges, leaks, or disposal of
Hazardous Substances that have occurred or are presently occurring on, under, or
onto the Premises, or of any spills, releases, discharges, leaks or disposal of
Hazardous Substances that have occurred or are occurring off the Premises as a
result of the Borrower's improvement, operation, or use of the Premises which
would result in non-compliance with any of the Environmental Laws (as
hereinafter defined); (b) is and has been in compliance with all applicable
Environmental Laws; (c) knows of no pending or threatened environmental civil,
criminal or administrative proceedings against the Borrower relating to
Hazardous Substances; (d) knows of no facts or circumstances that would give
rise to any future civil, criminal or administrative proceeding against the
Borrower relating to Hazardous Substances; and (e) will not permit any of its
employees, agents, contractors, subcontractors, or any other person occupying or
present on the Premises to generate, manufacture, store, dispose or release on,
about or under the Premises any Hazardous Substances which would result in the
Premises not complying with the Environmental Laws.
As used herein, "Hazardous Substances" shall mean and include all hazardous
and toxic substances, wastes, materials, compounds, pollutants and contaminants
(including, without limitation, asbestos, polychlorinated biphenyls, and
petroleum products) which are included under or regulated by the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
(S)9601, et seq., the Toxic Substances Control Act, as amended, 15 U.S.C.
-------
(S)2601, et seq., the Resource Conservation and Recovery Act, as amended, 42
-------
U.S.C. (S)6901, et seq., the Water Quality Act of 1987, as amended, 33 U.S.C.
-------
(S)1251, et seq., and the Clean Air Act, as amended, 42 U.S.C. (S)7401, et seq.,
------- -------
and any other federal, state or local statute, ordinance, law, code, rule,
regulation or order regulating or imposing liability (including strict
liability) or standards of conduct regarding Hazardous Substances (hereinafter
the "Environmental Laws"), but does not include such substances as are
permanently incorporated into a structure or any part thereof in such a way as
to preclude their subsequent release into the environment, or the permanent or
temporary storage or disposal of household hazardous substances, and which are
thereby exempt from or do not give rise to any violation of the Environmental
Laws.
The Borrower hereby indemnifies the Bank and holds the Bank harmless from
and against any loss, damage, cost, expense or liability (including strict
liability) directly or indirectly arising out of, or attributable to, the
generation, storage, release, threatened release, discharge, disposal or
presence of Hazardous Substances on, under or about the Premises (whether by the
Borrower, or any employees, agents, contractors or subcontractors of the
Borrower, or any predecessor in title or any third persons occupying or present
on the Premises), or the breach of any of the representations and warranties
regarding the Premises, including, without limitation: (a) those damages or
expenses arising under the Environmental Laws; (b) the costs of any repair,
cleanup or detoxification of the Premises, including the soil and ground water
thereof, and the
21
preparation and implementation of any closure, remedial or other required plans;
(c) damage to any natural resources; and (d) all reasonable costs and expenses
incurred by the Bank in connection with clauses (a), (b) and (c) including, but
not limited to, reasonable attorneys' fees.
The indemnification provided for herein shall not apply to any losses,
liabilities, damages, injuries, expenses or costs which: (i) arise from the
gross negligence or willful misconduct of the Bank, or (ii) relate to Hazardous
Substances placed or disposed of on the Premises after the Bank acquires title
to the Premises through foreclosure or otherwise.
7.12 Year 2000 Compliance. (1) Borrower has (a) undertaken a
--------------------
detailed inventory, review, and assessment of all areas within and affecting its
business and operations that could be adversely affected by its failure to be
Year 2000 Compliant (as hereinafter defined) on a timely basis; (b) developed a
plan and time line for becoming Year 2000 Compliant on a timely basis; and (c)
to date, implemented that plan in accordance with the specified timetable in all
material respects;
(2) The Borrower reasonably anticipates that it will be Year 2000
Compliant on a timely basis; and
(3) Borrower shall deliver to the Bank: (a) immediately upon
becoming aware of the existence of any condition or event which constitutes or
will constitute, but for the passage of time or giving of notice or both, the
failure of the Borrower to be Year 2000 Compliant, a written notice specifying
the nature and period of existence thereof and what action the Borrower is
taking or proposes to take with respect thereto; and (b) at the request of Bank,
such information, documentation and materials as Bank may from time to time
reasonably require including, but not limited to, (i) the Borrower's Year 2000
plan and time line, (ii) any management or other letters from the Borrower's
accountants addressing or mentioning the Borrower's Year 2000 Compliance, and
(iii) such other information, documentation and materials as Bank may reasonably
request from time to time in order to confirm that the Borrower is Year 2000
Compliant and the method(s) used by the Borrower to become Year 2000 Compliant.
As used herein, "Year 2000 Compliant" shall mean that all software,
embedded microchips and other processing capabilities utilized by the Borrower
or its key suppliers, vendors and customers will correctly process, sequence,
and calculate, without interruption, all date and date related data for all
dates to, through and after January 1, 2000, including leap year calculations,
and shall recognize, store and transmit date data in a format which clearly
indicates the correct century.
8. Affirmative Covenants of the Borrower. For so long as any obligation
-------------------------------------
of the Borrower in connection with the Bond Documents, this Agreement or any of
the other Letter of Credit Documents remains outstanding, the Borrower shall,
unless the Bank otherwise consents in writing:
8.1 Protection of Lien on Project Facilities. Maintain the lien
----------------------------------------
created by the Mortgage as a first lien, subject only to Permitted Encumbrances,
upon the Project Facilities, and
22
take such actions and execute and deliver to the Bank such instruments and
documents as the Bank may reasonably require from time to time in connection
therewith.
8.2 Protection of Security Interest in Personal Property. Maintain
----------------------------------------------------
the liens created by the Mortgage and the Security Agreement as first liens upon
the personal property comprising a portion of the Project Facilities and upon
all other tangible and tangible personal property of the Borrower, and take such
actions and execute and deliver to the Bank such instruments and documents as
the Bank may reasonably require from time to time in connection therewith,
including without limitation any form UCC-1 or UCC-2 financing statements,
continuation statements or other instruments and documents extending or
perfecting the security interest of the Bank in and to such personal property as
it may exist from time to time.
8.3 Payment of Taxes, Assessments and Charges. Pay all taxes,
-----------------------------------------
assessments, charges and levies imposed by any public authority which are or may
become a lien affecting the Project Facilities or any part thereof, provided,
however, that the Borrower shall not be required to pay and discharge any such
tax, assessment, charge or levy so long as (a) the legality thereof shall be
promptly and actively contested in good faith and by appropriate proceedings and
(b) the Borrower maintains reserves adequate to pay any liabilities contested
pursuant to this Section 8.3.
8.4 Undisbursed Bond Proceeds. If at any time it shall reasonably
-------------------------
appear to the Bank that the undisbursed portion of the Bond Proceeds and the
Borrower's equity funding are insufficient to pay for all work done or to be
done and all other expenses for the completion of the Project and to satisfy all
of the Borrower's obligations under this Agreement, the other Letter of Credit
Documents and the Bond Documents with respect thereto (including without
limitation all carrying costs of the Project and the payment of all lien claims
or rights to a claim for past work, supplies or materials), the Borrower shall,
within ten days following notice from the Bank to the Borrower of such
insufficiency, deposit with the Trustee in cash, or instruments satisfactory to
the Trustee and the Bank, the amount the Bank deems to be such insufficiency, or
otherwise demonstrate to the satisfaction of the Bank the availability of such
amount at times sufficient to meet all of such obligations of the Borrower, and
the Bank shall not be required to approve any further Disbursements unless and
until such deposit is made. Any amounts so deposited shall be placed in the
Project Fund and held and disbursed in accordance with the provisions of the
Trust Indenture for the disbursement of monies deposited therein.
8.5 Insurance. Keep the Project Facilities insured in accordance
---------
with and comply with the insurance provisions of the Mortgage.
8.6 Escrow for Taxes, Assessments and Insurance. The Borrower shall
-------------------------------------------
deposit monthly with the Bank an amount equal to one-twelfth (1/12) of the
annual real estate taxes and assessments, and insurance premiums on the Project
Facilities, provided, however, that the deposit of such sums shall be waived as
long as the Borrower provides the Bank with satisfactory evidence of timely
payment of such taxes and insurance and no Event of Default has occurred and is
continuing.
23
8.7 Governmental Approvals. Deliver to the Bank, from time to time
----------------------
at the Bank's request, in form and substance satisfactory to the Bank, evidence
that the Borrower has complied in all material respects with all applicable
laws, ordinances, regulations and other requirements relating to the Project
Facilities, and that all necessary consents or approvals of any court or
governmental department, public body, authority, commission, board, bureau,
agency or instrumentality have been regularly and finally received with respect
to the Project Facilities, including without limitation each of the following as
applicable:
(a) all zoning, land use and planning requirements;
(b) all subdivision and/or parcel map requirements;
(c) all environmental statutes, rules, regulations and
requirements;
(d) all requirements imposed by any public utility in connection
with the use of the Project Facilities or the supply of utilities thereto; and
(e) all requirements imposed in connection with any use permit,
occupancy permit, building permit or other permit or approval required by any
governmental authority in connection with the Project Facilities.
8.8 Compliance with Requirements. Comply with the lessor's
----------------------------
obligations under any occupancy leases to tenants of the Project Facilities, or
any portion thereof, and all conditions, covenants, restrictions, easements,
reservations, rights, rights of way and all applicable laws, ordinances,
regulations, use permits, occupancy permits, building permits and other
requirements, including without limitation those affecting or relating to the
Project Site, the construction, installation , renovation and equipping of the
Project thereon or the Borrower's operations thereon of the Project Facilities.
8.9 Books and Records. The Borrower shall each maintain full and
-----------------
complete books of account and other records reflecting the results of its
operations (in conjunction with any other ventures as well as specifically with
respect to the Project Facilities) in accordance with generally accepted
accounting principles applied on a consistent basis, and provide to the Bank,
promptly after request by the Bank therefor, such financial statements and other
information pertaining to the Borrower and the assets and operations of the
Borrower as the Bank may from time to time request. The Bank and its duly
authorized agents shall have the right to examine and make copies of all of the
books and records of the Borrower at reasonable times and at reasonable
intervals.
8.10 Notice of Litigation. Give notice to the Bank, within 10 days
--------------------
of the Borrower's learning thereof, of any of the following:
(a) any litigation materially affecting or relating to the
Project Facilities;
24
(b) any dispute between the Borrower and any municipal or other
governmental authority relating to the Project Facilities; and
(c) any threat or commencement of proceedings in condemnation or
eminent domain relating to the Project Facilities.
8.11 Notice of Certain Events. The Borrower shall promptly notify
------------------------
the Bank if (a) the Borrower learns of the occurrence of any event which
constitutes, or will, with the passage of time or the giving of notice or both,
constitute an Event of Default or a default under this Agreement or any of the
other Letter of Credit Documents or any of the Bond Documents, together with a
detailed statement by the Borrower specifying the nature thereof and what action
the Borrower is taking or proposes to take with respect thereto, or (b) the
Borrower receives any notice from, or the taking of any other action by, the
holder of any promissory note, debenture or other evidence of indebtedness of
the Borrower or of any security (as defined in the Securities Act of 1933, as
amended) of the Borrower with respect to a claimed default, together with a
detailed statement by the Borrower specifying the notice given or other action
taken by such holder and the nature of the claimed default and what action the
Borrower is taking or proposes to take with respect thereto, or (c) the Borrower
learns of the existence of any legal, judicial or regulatory proceedings
affecting the Borrower or any of its properties or assets in which the amount
involved is material and is not covered by insurance or which, if adversely
determined, would cause a material, adverse change in the business, prospects,
profits, properties, assets or condition (financial or otherwise) of the
Borrower, or (d) there shall occur or exist any other event or condition causing
a material, adverse change in the business, prospects, profits, properties,
assets or condition (financial or otherwise) of the Borrower.
8.12 Opinions and Notices. The Borrower shall deliver to the Bank,
--------------------
concurrently with the delivery thereof to the Trustee, a copy of each opinion of
counsel and notice given pursuant to the Bond Documents, addressed to the Bank.
8.13 Defaults of Others. Use its best efforts to cure or cause to
------------------
be cured all defaults of the Issuer or the Trustee under the Bond Documents, if
economically practical and/or required in order to avoid an Event of Default
under the Bonds.
8.14 Security of Project Facilities. The Borrower shall take such
------------------------------
measures to protect the physical security of the Project Facilities as the Bank
may reasonably deem advisable.
8.15 ERISA. With respect to each of the Borrower's pension plans,
-----
if any, the Borrower shall: (a) at all times make prompt payment of
contributions required to meet the minimum funding standards set forth in
Section 302 through 305 of ERISA with respect to any such plan, (b) promptly,
after the filing thereof, furnish to the Bank copies of each annual report
required to be filed pursuant to Section 103 of ERISA in connection with any
such plan for the plan year, including any certified financial statements or
actuarial statements required pursuant to said Section 103, (c) notify the Bank
immediately of any fact, including, but not limited to, any "Reportable Event",
as that term is defined in Section 4043 of ERISA, arising in connection with the
plan which might constitute grounds for termination thereof by the Pension
Benefit Guaranty Corporation or for the appointment by the appropriate United
States District Court of a
25
trustee to administer the plan, (d) notify the Bank of any "Prohibited
Transaction" as that term is defined in Section 406 of ERISA, (e) not engage in
any such Prohibited Transaction and (f) not terminate any such plan in a manner
which could result in the imposition of a lien on the property of the Borrower
pursuant to Section 4068 of ERISA.
8.16 Payment of Taxes and Claims. The Borrower will pay before they
---------------------------
become delinquent (a) all taxes, assessments and governmental charges or levies
imposed upon it or its property; and (b) all claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords, bailees and other like persons
which, if unpaid, might result in the creation of a lien or encumbrance upon its
property, provided that items of the foregoing description need not be paid
--------
while being contested in good faith and by appropriate proceedings and provided
--------
further that adequate book reserves have been established with respect thereto
and provided further that the Borrower's title to, and its right to use, its
--------
property is not affected thereby.
8.17 Maintenance of Property and Existence. The Borrower shall (a)
-------------------------------------
maintain its property in good condition and make all renewals, replacements,
additions, betterments and improvements thereto which are deemed necessary by
the Borrower; (b) maintain, with financially sound and reputable insurers,
insurance with respect to its property and business against such casualties and
contingencies, of such types (including but not limited to fire and casualty,
public liability, products liability, larceny, embezzlement or other criminal
misappropriation insurance); (c) keep true books of records and accounts in
which full and correct entries will be made of all its business transactions,
and reflect in its financial statements adequate accruals and appropriations to
reserves; (d) do or cause to be done all things necessary (i) to preserve and
keep in full force and effect the Borrower's existence, rights and franchises,
and (ii) except as provided in Section 8.18 hereof, maintain the Borrower's
status as a corporation duly organized, validly existing and in good standing
under the laws of the state of its organization; (e) not acquire, incur or
assume directly or indirectly, any material contingent liability in connection
with the release of any toxic or hazardous waste or substance into the
environment, or dispose of, or allow to be disposed of, or otherwise release
hazardous or toxic substances or solid wastes on or into any of the real
property of the Borrower, and (f) not be in material violation of any laws,
ordinances, or governmental rules and regulations or fail to obtain any
licenses, permits, franchises or other governmental authorizations necessary to
the ownership of its property or to the conduct of its business, which violation
or failure to obtain might materially and adversely affect the business,
prospects, profits, properties or condition (financial or otherwise) of the
Borrower.
8.18 Sale of Assets, Merger, Subsidiaries and Tradenames. The
---------------------------------------------------
Borrower will not, without the prior written consent of the Bank, sell, lease,
transfer or otherwise dispose of, all, or substantially all, of its assets. The
Borrower will not, without the prior written consent of the Bank, consolidate
with or merge into any other entity, or permit any other entity to consolidate
with or merge into it. The Borrower has no subsidiaries and will not create or
acquire any subsidiaries or conduct business under any tradename, without the
prior written consent of the Bank, which consent shall not be unreasonably
withheld.
8.19 Other Borrowings and Contingent Liabilities. Except for the
-------------------------------------------
obligations of the Borrower under the Bond Documents, the Letter of Credit
Documents, other indebtedness
26
to the Bank, and purchase money financing transactions secured by the item or
items being purchased, the Borrower will not (a) create or incur extensions of
credit or indebtedness, including without limitation, any indebtedness for
borrowed money or advances, letters of credit, or capitalized lease agreements
except in the ordinary course of business, or (b) guarantee, indorse or
otherwise become surety for or upon the obligations of others, except by
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business.
8.20 Ownership and Management. The Borrower shall not permit any
------------------------
material change in its ownership or management.
8.21 Financial Statements. Deliver, or cause to be delivered, to the
--------------------
Bank the following:
(a) Promptly and in any event within 90 days after the end of
each Fiscal Year, consolidated and consolidating financial statements for the
Borrower for such Fiscal Year, audited and certified by an independent
accounting firm acceptable to the Bank, along with any management letters
written by such firm;
(b) Copies of all such regular or periodic financial statements
or financial reports as the Borrower shall send to its shareholders;
(c) Copies of all such regular or periodic reports which are
available for public inspection which the Borrower may be required to file with
any Federal or state department, bureau, commission or agency, including without
limitation tax returns, as may from time to time be requested by the Bank; and
(d) Promptly and in any event within 90 days after the end of
each Fiscal Year, a certification of the chief executive officer or chief
financial officer of the Borrower that to the officer's actual knowledge, no
Event of Default or an event which, with the passage of time or giving of
notice, or both, would be an Event of Default has occurred and the Borrower is
in compliance with all covenants and agreements made by the Borrower and
contained in this Agreement or any of the Letter of Credit Documents or Bond
Documents.
8.22 Interim Financial Statements. Deliver to the Bank within 30
----------------------------
days after the end of each fiscal quarter:
(a) financial statements, including a balance sheet and
statements of income and surplus, and cash flow certified by the chief executive
officer or chief financial officer of the Borrower, as fairly representing the
Borrower's financial condition as of the end of such period, and
(b) such further information as the Bank may reasonably
require.
8.23 List of Personal Property. Deliver to the Bank, from time to
-------------------------
time, within thirty (30) days of the Bank's request therefor, a list of all of
the personal property securing repayment of the Borrower's obligations under the
Letter of Credit Documents, or if such a list
27
has been delivered, deletions and additions since the immediate prior delivered
list, but such list shall not be required to be delivered more frequently than
annually.
8.24 Tax Appeals. Bring, maintain and diligently prosecute any and
-----------
all actions, appeals and proceedings which are reasonably available to the
Borrower in order to challenge, reverse or set aside a Determination of
Taxability (as defined in the Trust Indenture).
8.25 Copies of Leases. Give written notice to the Bank of the
----------------
entry by the Borrower into any lease or other agreement pursuant to which any
Person is given any right to occupy or use any portion of the Project
Facilities, together with true and correct copies of each such lease or other
agreement. Each such lease or other agreement shall be subject to approval by
the Bank, which approval shall not be unreasonably withheld, and each such lease
or other agreement shall be assigned to the Bank as additional security for the
obligations of the Borrower. At the Bank's option, all such leases and other
agreements shall be subordinated to the Mortgage.
8.26 Maintenance and Furnishing of Project Facilities; Substitutions
---------------------------------------------------------------
and Removals. Maintain its properties, including without limitation the Project
------------
Facilities, and each portion thereof (including without limitation equipment,
machinery and fixed assets) in good condition and repair, said condition and
repair to be in line with that of comparable facilities; and not permit any
waste with respect thereto; provided, however, that if the Borrower, in its
reasonable discretion, determines that any item of personal property
constituting a part of the Project Facilities shall have become inadequate,
obsolete, worn-out, unsuitable, undesirable or unnecessary or should be
replaced, the Borrower may remove such items providing that the Borrower shall:
(a) substitute and install as part of the Project Facilities
property of equal or greater utility and value (but not necessarily fulfilling
the same function in the operation of the Project Facilities) as the removed
property, which such substituted property shall be free from all liens and
encumbrances (other than Permitted Encumbrances) and shall become part of the
Project Facilities; or
(b) in the case of removal of property without substitution,
promptly pay, if the aggregate of all such removals during any calendar year
exceeds $25,000 as hereinafter provided, to the Trustee for deposit in the Bond
Fund (as defined in the Trust Indenture), or if the Bonds have been paid in full
(or deemed to be paid and discharged pursuant to the provisions of Article IX of
the Trust Indenture) but amounts remain due under this Agreement to the Bank, an
amount equal to (i) if the removed property is sold or scrapped, the proceeds of
such sale or the scrap value thereof, or (ii) if the removed property is used as
a trade-in for property not to be installed as part of the Project Facilities,
the trade-in credit received by the Borrower.
If, prior to any such removal, the Borrower shall have acquired and
installed personal property with its own funds which have become a part of the
Project Facilities, the Borrower may credit the amount so spent against the
requirement that it either substitute other property or make payment under this
Section on account of such removal, provided that such previously
28
acquired and installed property meets the requirements for substituted property
under subsection (a) of this Section.
The Borrower shall promptly report to the Bank and the Trustee each such
removal, substitution, sale or other disposition having an annual aggregate
value in excess of $25,000 and shall pay to the Trustee or to the Bank, if
applicable, such amounts as are required by the provisions of the preceding
subsection (b) of this Section promptly after the sale, trade-in or other
disposition requiring such payment; provided, however, that no such payment need
be made until the amount to be paid to the Trustee or to the Bank, if the Bonds
have been paid in full (or are deemed to have been paid and discharged under
Article IX of the Trust Indenture) but amounts remain due under this Agreement,
on account of all such sales, trade-ins or other dispositions not previously
paid aggregates in any calendar year at least $25,000.
At the request of the Bank, the Borrower shall deliver to the Bank such
instruments, including financing statements and amendments thereto, as are
necessary or advisable to perfect the Bank's lien upon and security interest in
any personal property installed in substitution for any property removed
pursuant to this Section. Upon the request of the Borrower and compliance by
the Borrower with the terms of this Section, the Bank shall execute and deliver
to the Borrower appropriate instruments releasing any property removed pursuant
to this Section from the liens and security interests created by the Security
Documents.
8.27 Deposit Accounts. The Borrower shall maintain its primary
----------------
deposit accounts with the Bank.
8.28. Optional Redemption of Bonds and Other Payments. (a) The
------------------------------------------------
Borrower shall cause the Series 2001A Bonds to be optionally redeemed in
accordance with the provisions of Section 4.01(c) of the Trust Indenture, on the
first Business Day of August in the following principal amounts in the years
specified below:
Year of Redemption on
the First Business Principal Amount
Day of August to be Redeemed
--------------------- ----------------
2017 $180,000
2018 420,000
2019 450,000
2020 460,000
2021 (Final Maturity) 490,000
(b) The Borrower shall cause the Series 2001B Bonds to be optionally
redeemed in accordance with the provisions of Section 4.01(c) of the Trust
Indenture, on the first Business Day of August in the following principal
amounts in the years specified below:
29
Year of Redemption on
the First Business Principal Amount
Day of August to be Redeemed
--------------------- ----------------
2002 $210,000
2003 210,000
2004 220,000
2005 230,000
2006 240,000
2007 250,000
2008 270,000
2009 280,000
2010 290,000
2011 310,000
2012 320,000
2013 330,000
2014 350,000
2015 370,000
2016 390,000
2017 (Final Maturity) 230,000
The Borrower shall make a payment on or before the last Business Day
of each month commencing with the last Business Day of August, 2001 (each, a
"Principal Payment Date"), to the Trustee for deposit in the Bond Fund
maintained by the Trustee pursuant to the Trust Indenture in an amount equal to
one-twelfth of the principal amount of Bonds to be so optionally redeemed on the
next following first Business Day of August. The final payment due on the
Principal Payment Date immediately prior to the maturity date of the Bonds shall
be an amount equal to the principal amount of Bonds outstanding less the amount
then on deposit in the Bond Fund and available to reimburse the Bank for any
drawings under the Letters of Credit.
9. Negative Covenants of the Borrower. For so long as any obligation of
----------------------------------
the Borrower in connection with this Agreement or any of the other Letter of
Credit Documents remains outstanding, the Borrower shall not, unless the Bank
otherwise consents in writing, which consent shall not be unreasonably withheld:
9.1 Liens on Project Facilities. Create or cause or suffer to become
---------------------------
effective any mortgage, deed of trust or like lien or encumbrance affecting the
Project Facilities or any portion of the same, except for the lien of the
Mortgage, Permitted Encumbrances, and taxes and assessments not delinquent.
9.2 Liens on Personal Property. Install in, or otherwise use in
--------------------------
connection with, the Project Facilities any personal property comprising a
portion of the Project Facilities under any security agreements, installment
purchase agreements or similar agreements however denominated (other than the
Security Documents) whereby the right is reserved or accrues to anyone to remove
or repossess any such items or whereby any Person other than the Bank reserves
or acquires a lien upon such items, except for purchase money security interests
arising
30
in connection with the purchase by the Borrower of personal property, which
security interests are not outstanding for more than 60 days.
9.3 Transfers of Project Facilities or Bond Document Obligations.
------------------------------------------------------------
Assign or delegate any of the Borrower's obligations under the Bonds, this
Agreement or any of the other Letter of Credit Documents or Bond Documents, or,
except as otherwise expressly provided in the Mortgage, sell, lease, exchange,
convey, mortgage, assign, pledge, encumber or otherwise transfer the Project
Site, the Project Facilities, or any interest therein (except for (a)
dispositions of personal property permitted pursuant to Section 8.26 hereof, (b)
encumbrances permitted by the Mortgage, (c) leases permitted pursuant to Section
9.4 hereof and (d) easements, licenses, rights of way or title restrictions
granted pursuant to Section 9.5 hereof).
9.4 Leases. Enter into any leases or other agreements pursuant to
------
which any Person is given any right to occupy any portion of the Project
Facilities except in compliance with the applicable provisions of the Mortgage.
9.5 Easements. Grant, convey or cause to be effective any easement,
---------
license, right of way, or title restriction or limitation affecting the Project
Facilities or any portion of the same without the express prior written consent
of the Bank (which consent shall not be unreasonably withheld); provided,
however, that the Borrower may grant routine easements which are reasonably
necessary and required by governmental or quasi-governmental entities or utility
companies for the furnishing of utilities or services to the Project Facilities
without the requirement of such consent by the Bank, so long as such easements
shall not materially weaken, diminish or impair the security of the Mortgage or
interfere with the intended use of the Project Facilities.
9.6 Amendments to Documents. Enter into or agree to any amendment,
-----------------------
change or modification of, or any waiver of any provision of, or grant any
consent in respect of, the Trust Indenture, the Bonds or any of the Letter of
Credit Documents or Bond Documents.
9.7 Nature of Business. Change its principal business from the
------------------
business of the manufacture of products for the telecommuncations industry.
10. [Reserved]
11. Events of Default and Remedies Upon Default.
-------------------------------------------
11.1 Events of Default. The occurrence of any one or more of the
-----------------
following, whatever the reason therefor, shall constitute an Event of Default
hereunder:
(a) The Borrower shall fail to pay any amount of principal,
purchase price or interest or any other sum owing under this Agreement or any
other Letter of Credit Document on the due date thereof; or
(b) The Borrower shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement on its part to be
performed or observed
31
(other than those terms, covenants or agreements contained in Sections 8.3 or
8.5 hereof) and such failure shall continue for a period of thirty (30) days
after written notice of such failure by the Bank to the Borrower, or the
Borrower shall fail to perform or observe any term, covenant or agreement
contained in any other Letter of Credit Document on its part to be performed or
observed (other than those terms, covenants or agreements contained in Sections
4 or 5 of the Mortgage) and the continuance thereof through the expiration of
any applicable grace period provided in such Letter of Credit Document.
(c) The Borrower shall fail to perform or observe any term,
covenant or agreement contained in (i) Sections 8.3 or 8.5 of this Agreement, or
(ii) Sections 4 or 5 of the Mortgage; or
(d) The Borrower shall fail to cause the optional redemption of
Notes as provided in Section 8.28 hereof; or
(e) The occurrence of an Event of Default (as that term is
defined in the Trust Indenture) under the Trust Indenture, except for an Event
of Default described in Section 7.01(g) or (h) of the Trust Indenture, or the
occurrence of an event of default under the terms of any other Bond Document or
any Letter of Credit Document, or the obligation to make payment on the Bonds is
accelerated for any reason other than the occurrence of an Event of Default
described in Section 7.01(g) or (h) of the Trust Indenture; or
(f) The Borrower shall fail to perform or observe any term,
covenant or agreement contained in any of the Bond Documents on its part to be
performed or observed and the continuance thereof through the expiration of any
applicable grace period provided in the Bond Documents; or
(g) Any covenant, representation or warranty in any of the
Letter of Credit Documents or Bond Documents or in any certificate, agreement,
instrument or other document made or delivered pursuant to or in connection with
any of the Letter of Credit Documents or Bond Documents proves to have been
incorrect in any material respect when made; or
(h) The Borrower shall fail to pay any indebtedness owing to any
person other than the Bank totaling in the aggregate in excess of $50,000, for
borrowed money owing by the Borrower or any interest or premium thereon, for a
period of thirty (30) consecutive days after such indebtedness, interest or
premium is due, whether such indebtedness shall become due by scheduled
maturity, by required prepayment, by acceleration, by demand or otherwise, or
the Borrower shall fail to perform for a period of thirty (30) consecutive days
beyond any period of grace with respect thereto any term, covenant or agreement
on the Borrower's part to be performed under any agreement or instrument
evidencing or securing or relating to such indebtedness owing by the Borrower
when required to be performed, if, in each case, the effect of such failure is
to accelerate, or to permit the holder or holders of such indebtedness or the
trustee or trustees under any such agreement or instrument to accelerate, the
maturity of such indebtedness, unless such failure to perform shall be waived in
writing by the holder or holders of such indebtedness or such trustee or
trustees; or
32
(i) Final judgment for the payment of money to any Person other
than the Bank shall be rendered against the Borrower, in excess of $50,000, net
of any reimbursement to which the Borrower may be entitled, and the same shall
remain undischarged for a period of thirty (30) consecutive days during which
execution shall not be effectively stayed; or
(j) The Borrower shall (i) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian, (ii) admit in
writing the Borrower's inability to pay the Borrower's debts generally as they
become due, (iii) make a general assignment for the benefit of creditors, (iv)
be adjudicated bankrupt or insolvent, (v) commence a voluntary case under the
federal bankruptcy laws of the United States of America or file a voluntary
petition or answer seeking reorganization, an arrangement with creditors or an
order for relief or seek to take advantage of any insolvency law or file an
answer admitting the material allegations of a petition filed against the
Borrower in any bankruptcy, reorganization or insolvency proceeding; or action
shall be taken by the Borrower for the purpose of effecting any of the
foregoing, or (vi) if without the application, approval or consent of the
Borrower, a proceeding shall be instituted in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency, reorganization,
dissolution, winding up, liquidation, a composition or arrangement with
creditors, a readjustment of debts, the appointment of a trustee, receiver,
liquidator or custodian or the like of the Borrower, or of all or any
substantial part of the assets of the Borrower, or other like relief in respect
thereof under any bankruptcy or insolvency law, and, if such proceeding is being
contested by the Borrower in good faith, the same shall (A) result in the entry
of an order for relief or any such adjudication or appointment or (B) continue
undismissed, pending and unstayed, for any period of 60 consecutive days; or
(k) The Project Facilities suffer a loss by fire or other
casualty in excess of $50,000 and such loss is not fully insured and any
deficiency in the amount of insurance proceeds paid with respect to such loss is
not deposited with the Bank within ten (10) days of the determination of such
deficiency; or
(l) The Project Facilities, or any material portion thereof, are
subject to a material condemnation proceeding; or
(m) The Borrower defaults under the terms and provisions of any
other obligation owed to the Bank by the Borrower, or the occurrence of a
default under any document or instrument evidencing or securing such obligation
and the continuance thereof through the expiration of any applicable grace
period provided in such document or instrument; or
(n) The Bank reasonably believes that the ability of the
Borrower to make its payments and perform its obligations under this Agreement
or the other Letter of Credit Documents has been materially, adversely impaired.
11.2 Remedies Upon Default. Upon the occurrence of any Event of
---------------------
Default, the Bank may, at its option, do any or all of the following:
33
(a) Declare the principal of all amounts owing under this
Agreement and the other Letter of Credit Documents (including all obligations
secured by the Security Documents) and all other indebtedness of the Borrower to
the Bank, together with interest thereon, to be forthwith due and payable,
regardless of any other specified maturity or due date, without notice of
default, presentment or demand for payment, protest or notice of nonpayment or
dishonor, or other notices or demands of any kind or character, and without the
necessity of prior recourse to any security;
(b) Implement any remedies available to the Bank under or in
connection with the Bond Documents, including without limitation instructing the
Trustee, in the Bank's sole discretion, to accelerate the maturity of the Bonds
and causing and paying a full or partial drawing under each of the Letters of
Credit (whether or not any amounts have previously been paid under such Letter
of Credit) and exercising all of the rights and remedies available to the Bank
in connection therewith;
(c) If the Event of Default may be cured by the Bank by taking
actions or making payments of money, the Bank shall have the right (but not the
obligation) to take such actions (including without limitation the retention of
attorneys and the commencement or prosecution of actions on its own behalf or on
behalf of the Borrower), make such payments and pay for the costs of such
actions (including without limitation attorneys' fees and court costs) from its
own funds; provided, that the taking of such actions at the Bank's expense or
the making of such payments by the Bank out of the Bank's own funds shall not be
deemed to cure such Event of Default, and the same shall not be so cured unless
and until the Borrower shall have reimbursed the Bank for such payment, together
with interest at the Prime Rate plus two percent (2%), from the date of such
payment until the date of reimbursement. If the Bank advances its own funds for
such purposes, such funds shall be secured by the Security Documents,
notwithstanding that such advances may cause the total amount advanced hereunder
to exceed the amount committed to be advanced pursuant to this Agreement, and
the Borrower shall immediately upon demand reimburse the Bank therefore with
interest at the Prime Rate plus two percent (2%), from the date of such advance
until the date of reimbursement; and
(d) Exercise any and all of its rights under the Letter of
Credit Documents or the Bond Documents, or otherwise as a secured creditor,
including, without limitation, foreclosing on any security, and exercising any
other rights with respect to security whether under the Security Documents or
any other agreement or as provided by law, all in such order and in such manner
as the Bank in its sole discretion may determine.
11.3 Cumulative Remedies; No Waiver. All remedies of the Bank
------------------------------
provided for herein are cumulative and shall be in addition to any and all other
rights and remedies provided in the Letters of Credit, the Security Documents,
the Bond Documents or any of the Letter of Credit Documents, or provided by law
from time to time. The exercise of any right or remedy by the Bank hereunder
shall not in any way constitute a cure or waiver of default hereunder or under
the Letters of Credit, the Security Documents, the Bond Documents, or any of the
Letter of Credit Documents, nor invalidate any notice of default or any act done
pursuant to any such notice, nor prejudice the Bank in the exercise of any
rights hereunder or under the Letter of Credit, the Security Documents, the Bond
Documents or the Letter of Credit Documents, unless
34
in the exercise of said right, the Bank realizes all amounts owed to it under
the Letters of Credit, this Agreement, the Security Documents, the Bond
Documents and the Letters of Credit Documents and all Events of Default are
cured. No waiver by the Bank of any default or breach by the Borrower hereunder
shall be implied from any omission by the Bank to take action on account of such
default if such default persists or is other than the default expressly made the
subject of the waiver. Any such express waiver shall be operative only for the
time and to the extent therein stated. Any waiver of any covenant, term or
condition contained herein shall not be construed as a waiver of any subsequent
breach of the same covenant, term or condition. The consent or approval by the
Bank to or of any act by the Borrower shall not be deemed to waive or render
unnecessary consent or approval to or of any subsequent act.
12. Miscellaneous.
-------------
12.1 Actions. The Bank shall have the right to commence, appear in
-------
and defend any action or proceeding affecting the rights or duties of the
Borrower hereunder or the payment of any funds, and in connection therewith the
Bank may pay necessary expenses, employ counsel and pay reasonable attorneys'
fees. The Borrower agrees to pay to the Bank, on demand, all costs and expenses
incurred by the Bank in connection therewith, including without limitation
reasonable attorneys' fees, together with interest from the date of expenditure
at the Prime Rate plus two percent (2%) (computed on the basis of a year of 360
days but calculated on the actual number of days outstanding). The Borrower's
obligation to repay such expenses shall be secured by the Security Documents.
12.2 Nonliability of the Bank. The Borrower acknowledges and agrees
------------------------
that:
(a) The Bank shall not be responsible or liable to the Borrower
for the use which may be made of the Letters of Credit or for any acts or
omissions of the Trustee or any beneficiary or transferee in connection
therewith;
(b) The Bank shall not be responsible or liable to the Borrower
for the validity, sufficiency or genuineness of documents (except as to the
Bank's signatures thereon), or of any endorsements thereon, even if such
documents should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent, or forged (except to the extent acceptance
or reliance upon such documents is a result of the Bank's gross negligence or
willful misconduct); and
(c) The Bank shall not be responsible or liable to the Borrower
as a result of any circumstances in any way related to the making or failure to
make payment under the Letters of Credit, other than as a result of the gross
negligence or willful misconduct of the Bank.
12.3 No Representations by the Bank. By accepting or approving
------------------------------
anything required to be observed, performed or fulfilled, or to be given to the
Bank pursuant to this Agreement or any of the other Letter of Credit Documents
or Bond Documents, including any certificate, financial statement, survey,
appraisal or insurance policy, the Bank shall not be deemed to have warranted or
represented the sufficiency, legality, effectiveness or legal effect of
35
the same, or of any term, provision or condition thereof, and such acceptance or
approval thereof shall not be or constitute any warranty or representation to
anyone with respect thereto by the Bank. The Bank may accept documents in
connection with a drawing under a Letter of Credit which appear on their face to
be in order, without responsibility for further investigation, regardless of any
notice or information to the contrary and may accept documents in connection
with any of the other Letter of Credit Documents or Bond Documents which appear
on their face to be in order, without responsibility for further investigation.
12.4 No Third Parties Benefited. This Agreement is made for the
--------------------------
purpose of defining and setting forth certain obligations, rights and duties of
the Borrower and Bank in connection with the Letters of Credit. It is made for
the sole protection of the Borrower and the Bank, and the Bank's successors and
assigns. No other Person shall have any rights of any nature hereunder or by
reason hereof, except to the extent that the Trustee is expressly granted rights
hereunder, or Participants are granted rights hereunder pursuant to
participation agreements with the Bank.
12.5 Indemnity by the Borrower. The Borrower hereby indemnifies and
-------------------------
holds harmless the Bank and the Participants and their respective directors,
officers, agents and employees (collectively the "indemnitees") from and
against:
(a) any and all claims, demands, actions or causes of action
that are asserted against any indemnitee by any Person if the claim, demand,
action or cause of action directly or indirectly relates to a claim, demand,
action or cause of action that the Person has or asserts against the Issuer or
the Borrower, whether in connection with the Letters of Credit, the Bonds, any
of the Bond Documents, any of the Letter of Credit Documents or this Agreement,
or otherwise;
(b) any and all claims, demands, actions or causes of action
that are asserted against any indemnitee by any Person and arising from or in
connection with (i) any statement or omission, actual or alleged, in the Bond
Documents, or (ii) any breach or default, actual or alleged, of the
representations, warranties, covenants, conditions or agreements contained in
this Agreement or any of the other Letter of Credit Documents or in any of the
Bond Documents; and
(c) any and all liabilities, losses, costs or expenses
(including court costs and attorneys' fees) that any indemnitee suffers or
incurs as a result of the assertion of any claim, demand, action or cause of
action specified in Section 12.5(a) or Section 12.5(b) of this Agreement.
Any obligation or liability of the Borrower to any indemnitee as
provided in this Section 12.5 shall be secured by the Security Documents. The
indemnity contained in this Section 12.5 shall not extend to any claims,
demands, actions, causes of action, liabilities, losses, costs or expenses which
result solely from the gross negligence or willful misconduct of the Bank or to
the information set forth in Appendix A to the Official Statement.
36
12.6 Commissions. The Borrower hereby indemnifies and holds the Bank
-----------
harmless from any responsibility, cost and/or liability, including any
attorneys' fees incurred, in connection with any claim by any Person for the
payment of any commission, charge or brokerage fee in connection with the Bonds
or any of the other transactions contemplated in connection with this Agreement
arising from any action taken, directly or indirectly, by or on behalf of the
Borrower.
12.7 Binding Effect. This Agreement shall be binding upon and inure
--------------
to the benefit of the Borrower and its successors and assigns and the Bank and
its successors and assigns, subject to the provisions of Sections 8.18 of this
Agreement. The Bank is authorized in its sole discretion to participate
interests in the Letter of Credit and security therefor to Participants.
12.8 Execution in Counterparts. This Agreement and any other Letter
-------------------------
of Credit Document may be executed in any number of counterparts and any party
hereto or thereto may execute any counterpart, each of which when executed and
delivered will be deemed to be an original and all of which counterparts of this
Agreement or any other Letter of Credit Document, as the case may be, taken
together will be deemed to be but one and the same instrument. The execution of
this Agreement or any other Letter of Credit Document by any party hereto or
thereto will not become effective until counterparts hereof or thereof, as the
case may be, have been executed by all the parties hereto or thereto.
12.9 Prior Agreements; Amendments; Consents. This Agreement contains
--------------------------------------
the entire agreement between the Bank and Borrower with respect to the subject
matter hereof, and all prior negotiations, understandings and agreements with
respect thereto are superseded by this Agreement. No amendment, modification,
supplement, termination or waiver of any provision of this Agreement or any of
the Letter of Credit Documents, and no consent to any departure by the Borrower
therefrom, may in any event be effective unless in writing signed by the Bank,
and then only in the specific instance and for the specific purpose given.
12.10 Cumulative Remedies; No Waiver. The rights, powers and
------------------------------
remedies of the Bank under the Letter of Credit Documents are cumulative and not
exclusive of any right, power or remedy provided by law or equity or otherwise.
No failure or delay on the part of the Bank in exercising any right, power or
remedy may be, or may be deemed to be, a waiver thereof; nor may any single or
partial exercise of any right, power or remedy preclude any other or further
exercise of any other right, power or remedy.
12.11 Inclusion of Expenditures in Indebtedness. All sums paid or
-----------------------------------------
expended by the Bank under the terms of this Agreement shall bear interest at
the Prime Rate plus two percent (2%) (calculated on the basis of a year of 360
days but calculated on the actual number of days outstanding), except as
otherwise provided herein, from the date such sums are paid or expended, shall
be secured by the Security Documents and shall be immediately due and payable by
the Borrower upon demand.
12.12 Survival of Representations and Warranties. All representations
------------------------------------------
and warranties of the Borrower contained herein or in any other Letter of Credit
Document will
37
survive the delivery of the Letters of Credit, and are material and have been or
will be relied upon by the Bank, notwithstanding any investigation made by or on
behalf of the Bank. For the purpose of the foregoing, all statements contained
in any certificate, agreement or other writing delivered by or on behalf of the
Borrower pursuant hereto or pursuant to any other Letter of Credit Document or
in connection with the transactions contemplated hereby or thereby shall be
deemed to be covenants, representations and warranties of the Borrower contained
herein or in the other Letter of Credit Documents, as the case may be.
12.13 Notices. Unless otherwise expressly provided hereunder, all
-------
notices, requests, demands, directions and other communications provided for in
this Agreement and under any of the other Letter of Credit Documents must be in
writing and must be mailed, telecopied, telegraphed, delivered or sent by Telex
or cable to the appropriate party at its address as follows:
If to the Borrower:
PECO II, Inc.
1376 State Route 598
P.O. Box 910
Galion, Ohio 44833
Attention: Mr John Maag, Chief Financial Officer
Telecopier: (419) 468-9164
If to the Bank:
The Huntington National Bank
2313 Village Park Court
Mansfield, Ohio 44906
Attention: Mr. Glenn McClelland
Telecopier: (419) 747-7108
With a copy to:
The Huntington National Bank
7 Easton Oval - EA4E63
Columbus, Ohio 43219
Attention: International Division,
Letter of Credit Department
Telecopier: (614) 331-5862
Addresses for purposes of notice may be changed from time to time by written
notice sent to the other party and the Trustee in accordance with this Section
12.13. Any notice, request, demand, direction or other communication given by
telegram, telecopy, Telex or cable must be confirmed within 24 hours by letter
mailed or delivered to the appropriate party at such party's respective address.
If any notice, request, demand, direction or other communication is given by
mail it will be effective upon the earlier of (a) 48 hours after deposit in the
U.S. Mail, certified or
38
registered mail, return receipt requested, postage prepaid or (b) if given by
telegraph, telecopy, cable or Telex, when delivered.
12.14 Further Assurances. The Borrower shall, at its expense and
------------------
without expense to the Bank, do, execute and deliver such further acts and
documents as the Bank from time to time reasonably requires for the purpose of
assuring and confirming unto the Bank the rights hereby created or intended now
or hereafter so to be, or for carrying out the intention or facilitating the
performance of the terms of any Letter of Credit Document, or for assuring the
validity of any security interest or lien under any Security Document.
12.15 Governing Law. This Agreement shall be governed by, and
-------------
construed and enforced in accordance with, the laws of the State of Ohio.
12.16 Severability of Provisions. Any provision in any Letter of
--------------------------
Credit Document that is held to be inoperative, unenforceable or invalid shall
be inoperative, unenforceable or invalid without affecting the remaining
provisions, and to this end the provisions of all Letter of Credit Documents are
declared to be severable.
12.17 Headings. Article and section headings in this Agreement are
--------
included for convenience of reference only and are not part of this Agreement
for any other purpose.
12.18 Time of the Essence. Time is of the essence for all purposes
-------------------
under this Agreement and the other Letter of Credit Documents.
12.19 Waiver of Jury Trial. THE BANK AND THE BORROWER, AFTER
--------------------
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER OF THEM MAY HAVE TO A TRIAL
BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY
RELATED INSTRUMENT OR AGREEMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREBY, OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN), OR ACTIONS OF EITHER OF THEM WITH RESPECT THERETO. THIS WAIVER SHALL
NOT IN ANY WAY EFFECT THE BANK'S ABILITY TO PURSUE REMEDIES PURSUANT TO ANY
WARRANT OF ATTORNEY OR COGNOVIT PROVISION CONTAINED HEREIN OR IN ANY RELATED
INSTRUMENT OR AGREEMENT. NEITHER THE BORROWER NOR THE BANK SHALL SEEK TO
CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY ACTION IN WHICH A JURY TRIAL HAS
BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT
BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY
RESPECT OR RELINQUISHED BY EITHER THE BORROWER OR THE BANK EXCEPT BY A WRITTEN
INSTRUMENT EXECUTED BY BOTH OF THEM.
12.20 Warrant of Attorney. The Borrower authorizes any attorney-
-------------------
at-law to appear in any Court of Record in the State of Ohio or in any other
state or territory of the United States after the above indebtedness becomes
due, whether by acceleration or otherwise, to waive
39
the issuing and service of process, and to confess judgment against the Borrower
in favor of the Bank for the amount then appearing due, together with costs of
suit, and thereupon to waive all error and all rights of appeal and stays of
execution. The attorney-at-law authorized hereby to appear for the Borrower may
be an attorney-at-law representing the Bank, and the Borrower hereby expressly
waives any conflict of interest that may exist by virtue of such representation.
The Borrower also agrees that the attorney-at-law acting for the Borrower as set
forth in this Section may be compensated by the Bank for such services.
IN WITNESS WHEREOF, the Borrower and the Bank have each caused this
Agreement to be executed on its behalf of its duly authorized officer as of the
date first above written.
WARNING--BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT
OR ANY OTHER CAUSE.
PECO II, INC.
By_____________________________
Title__________________________
THE HUNTINGTON NATIONAL BANK
By_____________________________
Title__________________________
40