Exhibit 10.5
LETTER OF CREDIT
AND
REIMBURSEMENT AGREEMENT
by and between
ALCORE, INC.
and
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
Dated as of May 1, 1997
--------------------------------------------------------------------------------
$2,600,000
Maryland Industrial Development Financing Authority
Economic Development Revenue Bonds
(Alcore, Inc. Facility)
1997 Issue
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TABLE OF CONTENTS
(This Table of Contents is not a part of the Agreement
but rather is for the convenience of reference only.)
PAGE
ARTICLE I
DEFINITIONS......................................................................................... 2
1.1 Definitions.......................................................................... 2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE BORROWER....................................... 12
2.1 Incorporation........................................................................ 12
2.2 Power and Authority.................................................................. 12
2.3 Financial Condition.................................................................. 12
2.4 Title to Assets...................................................................... 13
2.5 Contingent Liabilities............................................................... 13
2.6 Litigation........................................................................... 13
2.7 Taxes................................................................................ 13
2.8 Contract or Restriction Affecting Borrower........................................... 13
2.9 Trademarks, Franchises and Licenses.................................................. 13
2.10 No Default........................................................................... 14
2.11 Governmental Authority............................................................... 14
2.12 No Untrue Statements................................................................. 14
2.13 ERISA Requirements................................................................... 14
2.14 Pollution and Environmental Control; Hazardous Substances............................ 14
2.15 Facility............................................................................. 15
2.16 Labor Relations...................................................................... 15
ARTICLE III REIMBURSEMENT AND OTHER PAYMENTS..................................................... 15
3.1 Letter of Credit..................................................................... 15
3.2 Reimbursement and Other Payments..................................................... 16
3.3 Tender Advances...................................................................... 17
3.4 Commission and Fees.................................................................. 17
3.5 Increased Costs Due to Change in Law................................................. 17
3.6 Computation.......................................................................... 18
3.7 Payment Procedure.................................................................... 18
3.8 Business Days........................................................................ 18
3.9 Reimbursement of Expenses............................................................ 18
3.10 Extension of Expiration Date......................................................... 18
3.11 Obligations Absolute................................................................. 18
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ARTICLE IV SECURITY............................................................................. 19
4.1 Security............................................................................. 20
4.2 Additional Liens..................................................................... 20
4.3 Casualty and Liability Insurance Required............................................ 20
4.4 General Requirements Applicable to Insurance......................................... 21
4.5 Advance by Bank...................................................................... 22
4.6 Borrower to Make up Deficiency in Insurance Coverage................................. 22
4.7 Eminent Domain....................................................................... 22
4.8 Application of Net Proceeds of Insurance and Eminent Domain.......................... 22
4.9 Parties to Give Notice............................................................... 23
ARTICLE V AFFIRMATIVE COVENANTS................................................................ 23
5.1 Repayment of Obligations............................................................. 23
5.2 Performance Under Reimbursement Agreement and Security Instruments................... 23
5.3 Financial and Business Information about the Borrower................................ 24
5.4 Notice of Certain Events............................................................. 27
5.5 Corporate Existence.................................................................. 28
5.6 Maintenance of Properties; Insurance................................................. 28
5.7 Conduct of Business and Maintenance of Existence..................................... 28
5.8 Compliance with Laws................................................................. 28
5.9 Accounting; Inspection of Books and Records.......................................... 29
5.10 Information about the Facility....................................................... 29
5.11 Taxes and Liens...................................................................... 29
5.12 Comply with ERISA.................................................................... 29
ARTICLE VI NEGATIVE COVENANTS................................................................... 30
6.1 Restriction on Liens................................................................. 30
6.2 Limitation on Guarantees............................................................. 30
6.3 No Voluntary Prepayment of Debt...................................................... 30
6.4 Change of Management................................................................. 30
6.5 Change in Fiscal Year................................................................ 30
6.6 Transactions with Other Persons...................................................... 31
ARTICLE VII CONDITIONS TO ISSUANCE OF LETTER OF CREDIT........................................... 31
7.1 Conditions on Issuance............................................................... 31
7.2 Additional Conditions Precedent to Issuance of the Letter of Credit.................. 34
7.3 Conditions Precedent to Each Tender Advance.......................................... 34
ARTICLE VIII DEFAULT.............................................................................. 35
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8.1 Events of Default.................................................................... 35
8.2 No Remedy Exclusive.................................................................. 38
8.3 Anti-marshalling Provisions.......................................................... 38
8.4 Confession of Judgment............................................................... 38
ARTICLE IX MISCELLANEOUS........................................................................ 38
9.1 Indemnification...................................................................... 38
9.2 Transfer of Letter of Credit......................................................... 39
9.3 Reduction of Letter of Credit........................................................ 39
9.4 Liability of the Bank................................................................ 39
9.5 Successors and Assigns............................................................... 40
9.6 Notices.............................................................................. 40
9.7 Amendment............................................................................ 41
9.8 Effect of Delay and Waivers.......................................................... 41
9.9 Counterparts......................................................................... 41
9.10 Severability......................................................................... 41
9.11 Cost of Collection................................................................... 41
9.12 Set Off.............................................................................. 42
9.13 Governing Law........................................................................ 42
9.14 References........................................................................... 42
9.15 Taxes, Etc........................................................................... 42
9.16 Consent to Jurisdiction, Waiver of Jury Trial........................................ 42
9.17 Indirect Means....................................................................... 43
9.18 Entire Agreement..................................................................... 43
9.19 Authority to Act on Behalf of the Bank............................................... 43
ARTICLE X ACQUISITION OF FACILITY.............................................................. 43
10.1 Covenants by Borrower with Respect to Acquisition of Facility........................ 43
10.2 Enforcement of Remedies Against Contractors and Subcontractors
and Their Sureties................................................................... 45
10.3 Application of Proceeds of the Bonds................................................. 45
10.4 Conditions Precedent to the Bank's Approval of Requisitions
for Disbursements from Facility Fund................................................. 48
10.5 Financing Sign on Property; Publicity................................................ 51
10.6 Establishment of Completion Date..................................................... 51
ARTICLE XI ARBITRATION.......................................................................... 52
11.1 Arbitration.......................................................................... 52
11.2 Judicial Reference................................................................... 52
11.3 Remedies............................................................................. 52
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11.4 Selection of Arbitrator or Referee................................................... 53
11.5 Miscellaneous........................................................................ 53
Exhibit A - Irrevocable Letter of Credit......................................................... A-1
Exhibit B - Borrower's Counsel Opinion........................................................... B-1
Exhibit C - Bond Counsel Reliance Letter......................................................... C-1
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LETTER OF CREDIT AND
REIMBURSEMENT AGREEMENT
THIS LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT is dated as of May 1,
1997 (the "Agreement" or "Reimbursement Agreement") and made by and between
ALCORE, INC., a Delaware corporation (the "Borrower"), and FIRST UNION NATIONAL
BANK OF NORTH CAROLINA, a national banking association organized and existing
under the laws of the United States with its principal offices located in
Charlotte, North Carolina (the "Bank");
W I T N E S S E T H:
WHEREAS, arrangements have been made pursuant to a Trust Indenture of
even date herewith by and between the Maryland Industrial Development Financing
Authority (the "Issuer"), First Union National Bank of Virginia (in such
capacity, the "Trustee") and Branch Banking and Trust Company, as Credit
Facility Trustee (the "Credit Facility Trustee") (as amended, the "Indenture")
for the issuance and sale by the Issuer of its Maryland Industrial Development
Financing Authority Economic Development Revenue Bonds (Alcore, Inc. Facility)
1997 Issue in the original aggregate principal amount of $2,600,000 (the
"Bonds"); and
WHEREAS, the proceeds from the sale of the Bonds have been loaned to
the Borrower pursuant to a Loan Agreement of even date herewith, by and between
the Issuer and the Borrower (as amended or supplemented, the "Loan Agreement")
to finance (a) the acquisition by the Borrower of a certain facility to consist
of and include (a) the acquisition by the Borrower of two adjacent parcels of
land containing approximately 7.26 acres located in the aggregate in the
Riverside Business Park and known as Lot 17 with a street address of 1324, and
Lot 18 with a street address of 0000 Xxxxx Xxxx Xxxx in Belcamp, Harford County,
Maryland (the "Facility Site"), together with and all improvements located
thereon including, without limitation, a building containing approximately
50,000 square feet (the "Building"), (b) the renovation and expansion of such
building to add approximately 15,000 square feet (the "Addition," and
collectively with the existing building, the "Improvements"), (c) the
acquisition and installation of certain necessary and useful machinery and
equipment (the "Equipment"), and (d) the acquisition of such other interests in
land or improvements as may be necessary or suitable for the foregoing,
including roads and rights of access, utilities and other necessary site
preparation facilities, all of which shall be used by the Borrower in its
business of making honeycomb aluminum products (such Facility Site, Improvements
and Equipment being hereinafter collectively referred to as the "Facility"); and
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WHEREAS, the Maryland Department of Business and Economic Development
(the "Department") has agreed to make a loan to Harford County, Maryland (the
"County") from the Maryland Industrial and Commercial Redevelopment Fund in the
principal amount of $810,000, the proceeds of which have been or will be
reloaned by the County to the Borrower to finance the acquisition of the
Facility (the "MICRF Loan") pursuant to the terms of a letter dated February 24,
1997 to the County from the State;
WHEREAS, the County also has agreed (a) to make a loan to the Borrower
in the principal amount of $60,000, the proceeds of which shall be used by the
Borrower to finance the acquisition of the Facility (the "County Loan"); and (b)
to provide to the Borrower a tax credit in the amount of $30,000 to be applied
over a five year period (the "Tax Credit");
WHEREAS, in order to enhance the marketability of the Bonds, the
Borrower has requested that the Bank issue an irrevocable direct-pay letter of
credit in the form attached as Exhibit A (such letter of credit or any successor
or substitute letter of credit issued by the Bank herein individually and
collectively called the "Letter of Credit") in an amount of up to $2,704,000, of
which $2,600,000 will support the principal of the Bonds, and $104,000 will
support up to 120 days' interest on the Bonds at an assumed rate of 12% per
annum; and, the Bank has agreed to issue the Letter of Credit pursuant to this
Reimbursement Agreement; and
WHEREAS, as a condition precedent to the issuance of the Letter of Credit,
the Bank has required the Borrower to enter into an interest rate hedge
arrangement (the "Hedge") with a counterparty acceptable to the Bank (the "Hedge
Counterparty") pursuant to the terms and conditions of a swap agreement or
similar interest rate hedging agreement (as amended from time to time, the
"Hedge Agreement").
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, including the covenants, terms and conditions
hereinafter appearing, and to induce the Bank to issue the Letter of Credit, the
Borrower does hereby covenant and agree with the Bank as follows:
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ARTICLE I
DEFINITIONS
1.1 Definitions. All words and terms defined in Article I of the Loan
Agreement shall have the same meanings in this Agreement, unless otherwise
specifically defined herein. The terms defined in this Article I have, for all
purposes of this Agreement, the meanings specified hereinabove or in this
Article, unless defined elsewhere herein or the context clearly requires oth
erwise.
"Account Debtor" shall have the same meaning assigned to such term in
the Security Agreement.
"Acquisition" or "acquisition" has the meaning specified for such term
in Article 1.1 of the Loan Agreement.
"Act of Bankruptcy" means the occurrence and continuation of any of the
events and/or actions described in Sections 8.1 (i), 8.1 (j) or 8.1 (k) with
respect to the Borrower and/or the Guarantor.
"Addition" means the addition containing approximately 15,000 square
feet to be made to the Building.
"Affiliate" shall mean, with respect to any Person, any other person
(i) directly or indi rectly controlling (including, but not limited to, all
directors and officers and such person), con trolled by, or under direct or
indirect common control with, such person or (ii) that directly or indirectly
owns more than 5% of the voting securities of such Person. A person shall be
deemed to control a corporation if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such corporation, whether through the ownership or voting
securities, by contract or otherwise.
"Agreement" shall mean this Letter of Credit and Reimbursement
Agreement, as the same may from time to time be amended, modified or
supplemented in accordance with the terms hereof.
"Bankruptcy Code" means 11 U.S.C. ss. 101 et seq., as amended.
"Bank's Inspector" means Construction and Development Services, L.C.
"Bond Documents" means, collectively, the Loan Agreement, the Note,
the Indenture, the Bonds, the Remarketing Agreement, the Tender Agency
Agreement, the Placement
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Agreement and the Placement Memorandum, as the same may be amended, modified or
supplemented from time to time in accordance with their respective terms.
"Borrower's Obligations" means, collectively, the Letter of Credit
Obligations, the Bond Obligations, the Revolving Credit Obligations and the
Hedge Obligations.
"Bond Obligations" means the Borrower's obligations to the Issuer
under the Bond Documents.
"Building" means the building containing approximately 50,000 square
feet located on the Facility Site.
"Business Day" shall mean any day not a Saturday, Sunday or legal
holiday, on which commercial banks in Charlotte, North Carolina are open for
business.
"Closing Date" means the date on which the Bonds and the Letter of
Credit are issued.
"Collateral" means all real and property of the Borrower and/or the
Guarantor with respect to which the Bank, the Issuer, the Trustee, FUNBMD and/or
the Hedge Counterparty have been granted a lien or security interest pursuant to
the Security Instruments.
"Commitment Letter" means that certain commitment letter from the Bank
to the Borrower dated January 15, 1997, and accepted and executed by the
Borrower on or before the date of issuance of the Bonds.
"Completion Certificate" means the executed certificate of completion
described in Section 10.3(f) hereof.
"Consistent Basis" means, in reference to the application of Generally
Accepted Accounting Principles, that the accounting principles observed in the
period referred to are comparable in all material respects to those applied in
the preceding period, except as to any changes consented to by the Bank.
"Consolidated Cash Flow Coverage Ratio" means the sum of net profit, taxes,
interest expenses, depreciation and amortization divided by the sum of all
current maturities of long term debt and capital lease obligations and interest
expense of the Borrower, the Guarantor and their Consolidated Subsidiaries.
"Consolidated Current Assets" means the aggregate amount of all assets of
the Borrower, the Guarantor and their Consolidated Subsidiaries which would, in
accordance with generally accepted accounting principles, be defined as current
assets.
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"Consolidated Current Liabilities" means the aggregate amount of all
current liabilities of the Borrower, the Guarantor and their Consolidated
Subsidiaries, as determined in accor dance with generally accepted accounting
principles, but in any event shall include all liabili ties except those having
a maturity date which is more than one (1) year from the date as of which such
computation is being made.
"Consolidated Current Ratio" means the ratio of Consolidated Current
Assets divided by Consolidated Current Liabilities.
"Consolidated Debt" means at any date the Debt of the Borrower, the
Guarantor and their Consolidated Subsidiaries, determined on a consolidated
basis as of such date.
"Consolidated Subsidiary" means with respect to any Person at any date,
any Subsid iary of such Person or other entity, the accounts of which would be
consolidated with those of such Person in its consolidated financial statements
if such statements were prepared as of such date in accordance with generally
accepted accounting principles.
"Consolidated Capital Expenditures" means, for any period, the additions to
property, plant and equipment and other capital expenditures of the Borrower,
the Guarantor and their Consolidated Subsidiaries for such period (including,
without limitation, gross leases to be capitalized under generally accepted
accounting principles and leasehold improvements), as the same are or would be
set forth in a consolidated statement of cash flows of the Borrower, the
Guarantor and their Consolidated Subsidiaries for such period, but excluding (to
the extent that they would otherwise be included) any such expenditures made for
the replacement or restora tion of assets to the extent financed by condemnation
awards or proceeds of insurance received with respect to the loss or taking of
or damage to the asset or assets being replaced or restored.
"Consolidated Tangible Net Worth" means at any date total assets (less
Intangible Assets) minus total liabilities (including Subordinated Debt) of the
Borrower, the Guarantor and their Consolidated Subsidiaries. For purposes of
this definition, "Intangible Assets" means all in tangible assets of the
Borrower, the Guarantor and their Consolidated Subsidiaries including, without
limitation, goodwill, franchises, patents, licenses, trademarks, copyrights,
service marks, advances to Affiliates and related parties, trade names and brand
names.
"County" means Harford County, Maryland.
"County Security Agreement" means the Deed of Trust from the Borrower
to the County, as the same may be amended, modified or supplemented from time to
time in accordance with the terms thereof.
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"County Documents" means, collectively, the County Note, the County
Security Agreement and all other instruments and documents executed and
delivered to evidence, secure or in connection with, the County Loan, as amended
from time to time.
"County Note" means the Deed of Trust Note in the principal amount of
$60,000 made or to be made by the Borrower payable to the County evidencing the
Borrower's obligations to the County in connection with the County Loan, as
amended from time to time.
"County Loan" means the loan from the County to the Borrower in the
principal amount of the County Note, as described in the Recitals hereof.
"Debt" of any Person means, at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services (other than trade accounts payable arising in the ordinary course of
business), (iv) all obligations of such Person as lessee under capital leases,
(v) all obligations of such Person to purchase securities or other property
which arise out of or in connection with the sale of the same or substantially
similar securities or property, (vi) all non-contingent obligations, all
contingent obligations of such Person to reimburse any bank or other person in
respect of amounts paid under a letter of credit, bankers' acceptance or similar
instrument, (vii) all obligations of others secured by a lien on any asset of
such Person, whether or not such obligation is assumed by such Person and (viii)
all obligations of others guaranteed by such Person.
"Deed of Trust" or "Mortgage" means the Deed of Trust and Security
Agreement of even date herewith from the Borrower to certain trustees for the
benefit of the Bank, the Issuer, FUNBMD and the Hedge Counterparty to secure the
Borrower's Obligations, as amended, restated, modified or supplemented from time
to time.
"Eminent Domain" means the taking of title to, or the temporary use of,
the Collateral or any part thereof to eminent domain or condemnation
proceedings, or any voluntary conveyance of any part of the Collateral during
the pendency of, or as a result of a threat of, such proceedings.
"Event of Default" shall have the meaning specified in Article VIII
hereof.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment
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or to emissions, discharges or releases of pollutants, contaminants, petroleum
or petroleum products, chemicals or industrial, toxic or hazardous substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, petroleum or petroleum products, chemicals
or industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"Environmental Report" means that certain Phase I Environmental Site
Assessment, originally dated November, 1989, and updated as of February 28,
1997, prepared by Geo-Technology Associates, Inc.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, including any rules and regulations promulgated thereunder.
"ERISA Group" means the Borrower, the Guarantor, any Subsidiary of
either the Borrower and the Guarantor, and all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any Subsidiary, are treated
as a single employer under Section 414 of the Internal Revenue Code.
"Expiration Date" means May 15, 2000, the expiration date of the Letter
of Credit, as such date may be extended pursuant to the terms of Section 3.10
hereof.
"Facility" means (a) the Facility Site, (b) the Improvements, including
(without limitation) the Addition and the Building, (c) the Equipment, and (d)
such other interests in land or improvements as may be necessary and suitable
for the foregoing, including roads and rights of access, utilities and other
necessary site preparation facilities.
"Facility Site" means those two parcels of land containing in the
aggregate approximately 7.26 acres of land located in the Riverside Industrial
Park, Belcamp, Harford County, Maryland and known as Lot 17 with a street
address of 0000 Xxxxx Xxxx Xxxx, and Lot 18 with a street address of 0000 Xxxxx
Xxxx Xxxx (as more particularly described in the Deed of Trust) and any and all
Improvements.
"FUNBMD" means First Union National Bank of Maryland, a national
banking association, and its successors and assigns.
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"Generally Accepted Accounting Principles" means those principles of
accounting set forth in pronouncements of the Financial Accounting Standards
board and its predecessors or pronouncements of the American Institute of
Certified Public Accountants or those principles of accounting which have other
substantial authoritative support and are applicable in the circumstances as of
the date of application, as such principles are form time to time supplemented
or amended.
"Guaranty" means the Guaranty Agreement dated of even date herewith
executed and delivered by the Guarantor in favor of the Bank to guaranty payment
and performance of the Letter of Credit Obligations, as the same may be amended,
restated or supplemented as therein permitted.
"Guarantor" means Xxxx Industries, Inc., a Delaware corporation, the
parent company of the Borrower, and any successor or assign permitted under the
Guaranty.
"Hedge" means the interest rate swap or similar hedge arrangement
between the Borrower and the Hedge Counterparty.
"Hedge Agreement" means the agreement between the Borrower and the
Hedge Counterparty executed in connection with the Hedge.
"Hedge Counterparty" means the First Union National Bank of Maryland in
its capacity as counterparty to the Hedge Agreement with whom the Borrower has
entered the Hedge.
"Hedge Documents" means, collectively, the Hedge Agreement and all
other documents executed and delivered to evidence, secure, or in connection
with, the Hedge.
"Hedge Obligations" means all of the Borrower's obligations to the
Hedge Counterparty under the Hedge Documents.
"Indebtedness for Money Borrowed" means all indebtedness in respect of
money borrowed, including (without limitation) the deferred purchase price of
any property or asset or indebtedness evidenced by a promissory note, bond,
guaranty or similar written obligation for the payment of money (including but
not limited to, conditional sales or similar title retention agreements).
"Indenture" means the Indenture described in the Recitals of this
Agreement.
"Landlord's Waiver" means, collectively, the landlord's waivers
executed and delivered by each owner of space rented by the Borrower or the
Guarantor, which are required by the Bank
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as a condition precedent to the issuance of the Letter of Credit, as described
in Section 7.1(v) hereof.
"Letter of Credit Documents" means, collectively, this Agreement, the
Letter of Credit, the Security Instruments, the Guaranty, and all other
instruments and documents executed and delivered to evidence or secure the
Letter of Credit Obligations.
"Letter of Credit Obligations" means the obligations of the Borrower to
the Bank hereunder and under the other Letter of Credit Documents in connection
with the Letter of Credit.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, the Borrower or any Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset.
"Long Term Debt" means liabilities with maturity dates greater than one (1)
year from the date as of which such computation in being made.
"Material Adverse Effect" means (a) any material adverse effect upon the
condition (financial or otherwise), results of operations, properties, assets,
business or prospects of the Borrower or of the Guarantor, or of the Borrower
and the Guarantor and their Consolidated Subsidiaries, taken as a whole; (b) a
material adverse effect on the ability of the Borrower to consummate the
transactions contemplated hereby; (c) a material adverse effect on the ability
of the Borrower to perform its obligations under this Agreement or (d) a
material adverse effect on the rights and remedies of the Bank under this
Agreement.
"MICRF Documents" means, collectively, the MICRF Note, the MICRF
Security Agreement, and all other instruments and documents executed and
delivered to evidence or secure the MICRF Loan.
"MICRF Loan" means the loan from the County to the Borrower in the
principal amount of the MICRF Note as described in the Recitals hereof.
"MICRF Note" means the Reloan Note from the Borrower to the County in
the principal amount of $810,000 evidencing the Borrower's obligations to the
County in connection with the MICRF Loan under the MICRF Documents.
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"MICRF Security Agreement" means the Deed of Trust from the Borrower to
the County securing the principal amount of the MICRF Loan, as the same may be
amended, modified or supplemented from time to time in accordance with the terms
thereof.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
"Net Proceeds" means, when used with respect to any insurance proceeds
or award resulting from, or other amount received in connection with, Eminent
Domain, shall mean the gross proceeds, aware or other amount, less all expenses
(including attorneys' fees) incurred in the realization thereof.
"Note" means the promissory note of the Borrower of even date herewith
in the amount of $2,600,000, issued by the Borrower to the Issuer to evidence
the Bond Obligations under the Bond Documents, as amended, restated, modified or
supplemented from time to time.
"Officer's Certificate" means the Certificate of the President, or
Chief Financial Officer of the Borrower.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Liens" means liens in favor of the Bank and any of the
following liens securing any indebtedness of the Borrower, the Guarantor or any
Subsidiaries on their property, real or personal, whether now owned or hereafter
acquired:
(a) Liens created by the Letter of Credit Documents, the Bond
Documents, the Hedge Documents, or the Revolving Credit Documents;
(b) Other Liens in favor of the Bank, FUNBMD or the Issuer;
(c) Liens for taxes not yet due or Liens for taxes being contested
in good faith and by appropriate proceedings for which adequate reserves
(in the good faith judgment of the management of the Borrower) have been
established;
(d) Liens imposed by law securing the charges, claims, demands or
levies of carriers, warehousemen, mechanics and other like persons which
were incurred in the ordinary
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course of business which (A) do not in the aggregate materially detract
from the value of the property or assets subject to such Lien or materially
impair the use thereof in the operation of the business of the Borrower or
any Subsidiary or (B) are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture
or sale of the property or assets subject to such lien; and
(e) Liens (other than any Liens imposed by ERISA or pursuant to
any Environmental Law) not securing debt of the Borrower or derivatives
obligations of the Borrower incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety bonds (other than
appeal bonds), bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations incurred in the
ordinary course of business.
(f) Encumbrances described in the Commitment for Title Insurance
(No. 1970014) issued by Commonwealth Land Title Insurance Company with
respect to the Mortgage.
(g) Any Lien created by the MICRF Security Agreement or the
County Security Agreement covering any portion of the Facility so long
as it is subordinate to all Liens described in subparagraph (a) above.
"Person" means an individual, partnership, corporation, limited
liability company, trust, unincorporated organization, association, joint
venture or a government or agency or political subdivision or instrumentality
thereof.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (a) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group, or (b) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Plans" means the plans and specifications for the Facility previously
approved by the Bank.
"Pledge Agreement" means the Pledge Agreement even date herewith from
the Borrower to the Bank, as amended, restated or supplemented from time to
time.
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"Projected Completion Date" means December 15, 1997.
"Property" means the Facility Site.
"Reimbursement Rate" means the fluctuating rate of interest which is at
all times equal to the Prime Rate per annum provided, however, that if an Event
of Default shall have occurred and be continuing, the Reimbursement Rate shall
be equal to a fluctuating rate of interest which is at all times equal to the
Prime Rate plus 2% per annum.
"Revolving Credit Agreement" means the Credit Agreement dated November
22, 1996 by and between FUNBMD, the Borrower and the Guarantor, as amended,
restated, modified or supplemented from time to time.
"Revolving Credit Documents" means, collectively, the Revolving Credit
Agreement, the Revolving Credit Security Agreement, the Revolving Credit Note
and all other instruments and documents executed and delivered to evidence,
secure or in connection with, the Revolving Credit Facility.
"Revolving Credit Facility" means the revolving line of credit facility
in the principal amount of $6,000,000 made available by FUNBMD to the Borrower
and the Guarantor pursuant to the provisions of the Revolving Credit Agreement.
"Revolving Credit Note" means the Note dated November 22, 1996 made by
the Borrower and the Guarantor payable to FUNBMD in the principal amount of
$6,000,000, as amended, restated or modified from time to time.
"Revolving Credit Obligations" means all obligations of the Borrower
and the Guarantor to the Bank under the Revolving Credit Documents.
"Revolving Credit Security Agreement" means the Security Agreement
dated November 22, 1996 by and between the FUNBMD, the Borrower and the
Guarantor to secure the Borrower's obligations and the Guarantor's obligations
under the Revolving Credit Documents.
- 12 -
"Security Agreement" means the Security Agreement of even date herewith by and
between the Borrower and the Bank, as amended, restated, modified or
supplemented from time to time.
"Security Instruments" means collectively, the Deed of Trust, the
Pledge Agreement, the Security Agreement, the Guaranty, the Landlord's Waiver
and any and all other agreements or instruments now or hereafter executed and
delivered by the Borrower or any other Person in connection with, or as security
for the payment or performance of, the Letter of Credit or this Agreement, as
such agreements may be amended, modified or supplemented from time to time in
accordance with their respective terms.
"State" means the State of Maryland.
"Subordination Agreement" means the Subordination Agreement to be
entered into by and among the Borrower, the Guarantor, the Department, the
County, the Bank, the Hedge Counterparty and FUNBMD, as amended, restated, or
supplemented from time to time.
"Subordinated Debt" means the MICRF Loan, the County Loan, and with respect
to any Person, means all other Debt which (a) bears interest at rates not
greater than such Person shall reasonably determine to be the prevailing market
rate, at the time such Subordinated Debt is issued, for interest on comparable
subordinated debt issued by comparable issuers, (b) is subordinated in right of
payment to such Person's indebtedness, obligations and liabilities to the Bank
under the Letter of Credit Documents pursuant to payment and subordination
provisions satisfactory in form and substance to the Bank, and (c) is issued
pursuant to loan documents having covenants and events of default that are
satisfactory in form and substance to the Bank but that in no event are less
favorable, including with respect to rights of acceleration, to the Borrower
than the terms hereof.
"Subsidiary" means, as to any Person, (i) any corporation more than 50%
of whose stock of any class or classes having by the terms thereof ordinary
voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a 50% equity interest at the time. Unless the context
indicates otherwise, all references herein to Subsidiaries are references to
Subsidiaries of the Borrower.
"Tax Credit" means the tax credit granted by the County to the Borrower
in the amount of $30,000 to be applied over a five-year period, as described in
the Recitals hereof.
- 13 -
"Tender Advance" has the meaning assigned to that term in Section 3.3
of this Agreement.
"Tender Draft" has the meaning assigned to that term in the Letter of
Credit.
"Termination Date" means the last day a drawing is available under the
Letter of Credit.
"Trustee" means any Person or group of Persons at the time serving as
trustee under the Indenture.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
The Borrower represents and warrants to the Bank and the Issuer (which
representations and warranties shall survive the delivery of the documents
mentioned herein and the issuance of the Letter of Credit) that:
2.1 Incorporation. Borrower is a corporation duly organized, existing
and in good standing under the laws of State of Delaware, is qualified to do
business and is in good standing in the State of Maryland, and has the power to
own its properties and to carry on its business as now being conducted, and, is
duly qualified and in good standing as a foreign entity to do business in every
jurisdiction in which the failure to be so qualified would have a natural
adverse effect on the business of the Borrower.
2.2 Power and Authority. Borrower is duly authorized under all
applicable provisions of law to execute, deliver and perform this Agreement, and
all corporate action on its part required for the lawful execution, delivery and
performance hereof has been duly taken; and this Agreement, upon the due
execution and delivery hereof, will be the valid and binding obligation of
Borrower enforceable in accordance with its terms subject to the effect of
applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws
affecting creditors' rights generally and to principles of equity, regardless of
whether applied in a proceeding in equity or law. Neither the execution of this
Agreement, nor the fulfillment of or compliance with its provisions and terms,
will (a) conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a violation of or default under the Articles of
Incorporation or Bylaws of the Borrower or any other organizational documents of
Borrower or any Subsidiary, or any agreement or instrument to which Borrower or
any Subsidiary is now a party or to the best knowledge of the Borrower any
applicable law, regulation, judgment, writ, order or decree to which Borrower or
any Subsidiary or any of their respective properties are subject, or (b) create
any lien, charge or encumbrance upon any of the property or assets of the
Borrower pursuant to the terms of any agreement or instrument to which the
Borrower is a party or by which it or any
- 14 -
of its properties, are bound, except pursuant to the Security Instruments and
the MICRF Security Agreement.
2.3 Financial Condition. The financial statement of Borrower for the
fiscal year ending as of December 31, 1996, copies of which have been furnished
to the Bank, are correct and complete in all material respects and fairly
presents the financial condition of Borrower as at the dates of such financial
statements and the results of its operations for such periods. The Borrower does
not have any material direct or contingent liabilities as of the date of this
Agreement which are not provided for or reflected in or referred to in such
financial statements or in notes thereto. Such financial statements have been
prepared in accordance with Generally Accepted Accounting Principles applied on
a Consistent Basis maintained throughout the period involved. There has been no
material adverse change in the business, properties or condition, financial or
otherwise, of Borrower since the date of the December 31, 1996 year end
financial statement.
2.4 Title to Assets. Borrower has good and marketable title to its
properties and assets, including the properties and assets reflected in the
financial statements and notes thereto described in Section 2.3 hereof, except
for such assets as have been disposed of since the date of said financial
statements in the ordinary course of business or as are no longer useful in the
conduct of its businesses, and all such properties and assets are free and clear
of all liens, mortgages, pledges, encumbrances or charges of any kind except
liens reflected in such financial statements or otherwise now or hereafter
permitted hereunder or pursuant hereto.
2.5 Contingent Liabilities. Borrower has not guaranteed any obligations
of others and is not, to the best of its knowledge, contingently liable in any
manner for any repayment of any borrowings, direct or indirect, except as
otherwise permitted hereunder or as disclosed in the financial statements and
notes thereto described in Section 2.3 hereof or as otherwise disclosed to the
Bank from time to time.
2.6 Litigation. There are no pending or, to the best of its knowledge,
threatened actions, suits or proceedings before any court, arbitrator or
governmental or administrative body or agency which may materially adversely
affect the properties, business or condition, financial or otherwise, of
Borrower except as disclosed in the financial statements and notes thereto
described in Section 2.3 or as otherwise disclosed to the Bank in writing from
time to time.
2.7 Taxes. Borrower has filed all tax returns required to be filed by
it and all taxes due with respect thereto have been paid, and no controversy in
respect of additional taxes, state, federal or foreign, of Borrower is pending,
or, to the knowledge of Borrower, threatened, except as otherwise disclosed to
the Bank in writing from time to time.
- 15 -
2.8 Contract or Restriction Affecting Borrower. Borrower is not a party
to nor is it bound by any contract or agreement or subject to any charter or
other corporate restrictions, or subject to the renegotiation of any contract,
which does or may materially and adversely affect the business, properties or
condition, financial or otherwise, of Borrower, except for any contract,
agreement or restrictions disclosed or reflected in the financial statements and
notes thereto described in Section 2.3 hereof or as otherwise disclosed to the
Bank from time to time.
2.9 Trademark, Franchises and Licenses. Borrower owns, possesses, or
has the right to use all necessary patents, licenses, franchises, trademarks,
trademark rights, trade names, trade name rights and copyrights to conduct its
businesses as now conducted, without known conflict with any patent, license,
license, franchise, trademark, trade name, or copyright of any other Persons,
except as disclosed to the Bank in writing from time to time.
2.10 No Default. Borrower is not in default in the performance,
observance or fulfillment of any of its material obligations, covenants or
conditions contained in any agreement or instrument to which it is a party.
2.11 Government Authority. Borrower has received the written approval
of all federal, state, local and foreign governmental authorities, if any,
necessary to carry out the terms of this Agreement, and no further governmental
consents or approvals are required in the making or performance of this
Agreement by the Borrower.
2.12 No Untrue Statements. Neither this Agreement nor any reports,
schedules, certificates, information, exhibits, agreements or instruments
heretofore or simultaneously with the execution of this Agreement delivered to
the Issuer, the Bank or the Trustee by Borrower in connection with the
negotiation of this Agreement or the issuance and sale of the Bonds contains any
material misrepresentation or untrue statement of any material fact or omits to
state any material fact necessary to make this Agreement or any such reports,
schedules, certificates, information, exhibits, agreements or instruments in
light of the circumstances under which made or materially misleading.
2.13 ERISA Requirements. Borrower has not incurred any material
accumulated funding deficiency within the meaning of ERISA, or incurred any
material liability to the Pension Benefit Agreement Corporation established
under ERISA (or any successor thereto under ERISA) in connection with any
employee pension benefit plan established or maintained by it or by any Person
under common control with any of them (within the meaning of Section 414(c) of
the Internal Revenue Code of 1986, as amended, or of Section 400(b) of ERISA),
or in which employees of any of them are entitled to participate. No Reportable
Event (as defined in ERISA) in connection with any such plan has occurred or is
continuing, except as disclosed in writing to the Bank from time to time.
- 16 -
2.14 Pollution and Environmental Control, Hazardous Substances. The
Borrower has obtained all permits, licenses and other authorizations which are
required under, and is in material compliance with, all Federal, state, and
local laws and regulations relating to pollution, reclamation or protection of
the environment, including laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants or hazardous or toxic materials
or wastes into air, water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants or hazardous or toxic substances, materials
or wastes. Neither the Borrower, nor to the Borrower's best knowledge any
previous owner of the Facility, has disposed of any hazardous substances on any
portion of the Facility except as otherwise disclosed in the Environmental
Report. As used in this subparagraph, "hazardous substances" shall have the
meaning set forth in the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. ss. 9601, et seq., and the regulations adopted pursuant
to such act.
2.15 Facility. The construction and operation of the Facility, as
described in the Plans, complies in all respects with presently existing or
amended zoning and other land use restrictions affecting all or any portion of
the Property, including without limitation any restrictive covenants.
2.16 Labor Relations. The Borrower is not engaged in any unfair labor
practice that could have a material adverse effect on the Borrower. There is (i)
no significant unfair labor practice complaint pending against the Borrower, to
the best knowledge of the Borrower, threatened against it, before the National
Labor Relations Board, and no significant grievance or significant arbitration
proceedings arising out of or under any collective bargaining agreement is so
pending against the Borrower or, to the best knowledge of the Borrower,
threatened against it, (ii) no significant strike, labor dispute, slowdown or
stoppage pending against the Borrower or, to the best knowledge of the Borrower,
threatened against the Borrower and (iii) to the best knowledge of the Borrower,
no union representation question existing with respect to the employees of the
Borrower and, to the best knowledge of the borrower, no union organizing
activities are taking place.
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ARTICLE III
REIMBURSEMENT AND OTHER PAYMENTS
3.1 Letter of Credit. The Bank agrees, on the terms and conditions
hereinafter set forth, to issue and deliver the Letter of Credit in favor of the
Credit Facility Trustee in substantially the form of Exhibit A attached hereto
upon fulfillment of the applicable conditions set forth in Article VII hereof.
The Bank agrees that any and all payments under the Letter of Credit will be
made with the Bank's own funds.
3.2 Reimbursement and Other Payments. Except as otherwise provided in
Section 3.3 below, the Borrower shall pay to the Bank:
(a) on or before 3:00 P.M. on the date that any amount is drawn
under the Letter of Credit, a sum (together with interest on such
sum from the date such amount is drawn until the same is paid, at the
rate per annum provided in clause (b) of this Section 3.2) equal to
such amount so drawn under the Letter of Credit plus, to the extent
permitted by applicable law, any and all reasonable charges and
expenses which the Bank may pay or incur relative to the Letter of
Credit;
(b) on demand, interest on any and all amounts remaining unpaid
by the Borrower when due hereunder from the date such amounts become
due until payment thereof in full, at a fluctuating interest rate
per annum equal at all times to the lesser of the then applicable
Reimbursement Rate or the highest lawful rate permitted by applicable
law;
(c) on demand, any and all reasonable expenses incurred by the
Bank in enforcing any rights under this Agreement and the other
Security Instruments; and
(d) on demand all charges, commissions, costs and expenses set
forth in Sections 3.4, 3.5 and 3.9 hereof.
3.3 Tender Advances.
(a) If the Bank shall make any payment of that portion of the
purchase price corresponding to principal and interest of the Bonds
drawn under the Letter of Credit pursuant to a Tender Draft and the
conditions set forth in Section 7.3 shall have been fulfilled, such
payment shall constitute a tender advance made by the Bank to the
Borrower on the date and in the amount of such payment (a "Tender
Advance"); provided that if the conditions of said Section 7.3 have not
been fulfilled, the amount so drawn
- 18 -
pursuant to the Tender Draft shall be payable in accordance with the
terms of Section 3.2(a) above. Notwithstanding any other provision
hereof, the Borrower shall repay the unpaid amount of each Tender
Advance, together with all unpaid interest thereon, on the earlier to
occur of: (i) such date as any Bonds purchased pursuant to a Tender
Draft are resold as provided in paragraph 3.3(d) hereof; (ii) on the
date one year following the date of such Tender Advance; or (iii) the
Termination Date. The Borrower may prepay the outstanding amount of any
Tender Advance in whole or in part, together with accrued interest to
the date of such prepayment on the amount prepaid. The Borrower shall
notify the Bank prior to 11:00 A.M. Charlotte, North Carolina time on
the date of such prepayment of the amount to be prepaid.
(b) The Borrower shall pay interest on the unpaid amount of
each Tender Advance from the date of such Tender Advance until such
amount is paid in full, payable monthly, in arrears, on the first day
of each month during the term of each Tender Advance and on the date
such amount is paid in full, at a fluctuating interest rate per annum
in effect from time to time equal to the Prime Rate, provided that the
unpaid amount of any Tender Advance which is not paid when due shall
bear interest at the lower of the then applicable Reimbursement Rate or
the highest rate permitted by applicable law, payable on demand and on
the date such amount is paid in full.
(c) Pursuant to the Pledge Agreement the Borrower has agreed
that, in accordance with the terms of the Indenture, Bonds purchased
with proceeds of any Tender Draft shall be delivered by the Tender
Agent to the Bank or its designee to be held by the Bank or its
designee in pledge as collateral securing the Borrower's payment
obligations to the Bank hereunder. Bonds so delivered to the Bank or
its designee shall be registered in the name of the Borrower, as
provided for in Section 3 of the Pledge Agreement.
(d) Prior to or simultaneously with the resale of Pledged
Bonds, the Borrower shall prepay the then outstanding Tender Advances
(in the order in which they were made) by paying to the Bank an amount
equal to the sum of (i) the amounts advanced by the Bank pursuant to
the corresponding Tender Drafts relating to such Bonds, plus (ii) the
aggregate amount of accrued and unpaid interest on such Tender
Advances. Such payment shall be applied by the Bank in reimbursement of
such drawings (and as prepayment of Tender Advances resulting from such
drawings in the manner described above), and, upon receipt by the Bank
of a certificate completed and signed by the Trustee in substantially
the form of Annex F to the Letter of Credit, the Borrower irrevocably
authorizes the Bank to rely on such certificate and to reinstate the
Letter of Credit in accordance therewith. Funds held by the Tender
Agent as a result of sales of the Pledged Bonds by the Remarketing
Agent shall be paid to the Bank by the Tender Agent to be
- 19 -
applied to the amounts owing by Borrower to the Bank pursuant to this
paragraph (d). Upon payment to the Bank of the amount of such Tender
Advance to be prepaid, together with accrued interest on such Tender
Advance to the date of such prepayment on the amount to be prepaid, the
principal amount outstanding of Tender Advances shall be reduced by the
amount of such prepayment and interest shall cease to accrue on the
amount prepaid.
3.4 Commission and Fees.
(a) The Borrower shall pay to the Bank a fee or commission at
the rate of 1.0% per annum on the amount to be drawn under the Letter
of Credit (computed on the date that such commission is payable) from
and including the date of issuance of the Letter of Credit until the
Termination Date, payable: (i) as to the first year of the initial
period for which the Letter of Credit is issued ending May 15, 1998, on
such date of issuance; and (ii) thereafter payable annually in advance
on May 15th of each year.
(b) The Borrower shall pay to the Bank, upon transfer of the
Letter of Credit in accordance with its terms, a fee of $1,000.
(c) The Borrower shall pay to the Bank, upon each drawing upon
the Letter of Credit in accordance with its terms, a fee of $100 per
drawing.
(d) The Borrower shall pay to the Bank upon any substitution
of the Letter of Credit with another Credit Facility (for a reason
other than termination of the Letter of Credit by the Bank in
accordance with Section 3.10 hereof), a substitution fee equal to
$1,000.
3.5 Increased Costs Due to Change in Law. In the event of any change
in any existing or future law, regulation, ruling or other interpretation having
influence over the Bank which shall either: (a) impose, modify or make
applicable any reserve, special deposit, capital requirement, assessment or
similar requirement against the Letter of Credit; or (b) impose on the Bank any
other condition regarding the Letter of Credit, and the result of any event
referred to in clause (a) or (b) above shall be to increase the cost (including
a reasonable allocation of resources) or decrease the yield to the Bank of
issuing or maintaining the Letter of Credit (which increase in cost shall be the
result of the Bank's reasonable allocation of the aggregate of such cost
increases or yield decreases resulting from such events), then, upon demand by
the Bank, the Borrower shall immediately pay to the Bank, from time to time as
specified by the Bank, additional amounts which shall be sufficient to
compensate the Bank for such increased cost or decreased yield. A statement of
charges submitted by the Bank shall be conclusive, absent manifest error, as to
the amount owed.
- 20 -
3.6 Computation. All payments of interest, commission and other
charges under this Agreement shall be computed on the per annum basis of a
year of 360 days and calculated for the actual number of days elapsed.
3.7 Payment Procedure. All payments made by the Borrower under this
Agreement shall be made to the Bank in lawful currency of the United States of
America and in immediately available funds at the Bank's office in Charlotte,
North Carolina before 12:00 Noon (Charlotte, North Carolina time) on the date
when due, except that the time for payments made pursuant to Section 3.2(a)
shall be on or before 3:00 p.m.
3.8 Business Days. If the date for any payment hereunder falls on a
day which is not a Business Day, then for all purposes of this Agreement the
same shall be deemed to have fallen on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
payments of interest or commission, as the case may be.
3.9 Reimbursement of Expenses. Borrower will pay all reasonable legal
fees (computed without regard to any statutory presumption) incurred by the Bank
in connection with the preparation, and delivery of this Agreement, the Letter
of Credit, the Security Instruments, any and all other execution agreements and
transactions contemplated hereby and thereby, by the Bond Documents (including
any amendments hereto or thereto or consents or waivers hereunder or thereunder)
and by the MICRF Documents, and will also pay all fees, charges or taxes for the
recording or filing of Security Instruments. The Borrower will also pay for all
reasonable out-of-pocket expenses of the Bank in connection with the
administration of the Letter of Credit, this Agreement and the Security
Instruments. The Borrower will, upon request, promptly reimburse the Bank for
all amounts expended, advanced or incurred by the Bank to collect or satisfy any
obligation of the Borrower under this Agreement or any Security Instrument, or
to enforce the rights of the Bank under this Agreement or any Security
Instrument, which amounts will include, without limitation, all court costs,
reasonable attorneys' fees, fees of auditors and accountants and investigation
expenses incurred by the Bank in connection with any such matters.
3.10 Extension of Expiration Date; Substitution of Another Credit
Facility. The Bank hereby agrees that the Letter of Credit shall automatically
be extended for successive one-year terms from the then applicable Expiration
Date unless (i) the Bank shall have notified the Borrower and the Trustee in
writing at least 120 days prior to the Expiration Date, as extended from time to
time pursuant to Section 3.10, that the Bank will not extend such applicable
Expiration Date or (ii) the Letter of Credit is otherwise terminated in
accordance with its terms. In the event that another Credit Facility is
substituted for the Letter of Credit for a reason other than termination by the
Bank in accordance with this Section 3.10, the Borrower shall pay a substitution
fee of $1,000, as provided in Section 3.4(d) hereof.
- 21 -
3.11 Obligations Absolute. The obligations of the Borrower under this
Agreement shall be absolute, unconditional and irrevocable, and shall be paid
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, the Bonds, any of the other Bond Documents, any of the
Security Instruments 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, the Bonds, any of the other Bond
Documents, any of the Security Instruments or any other agreement or
instrument related thereto;
(c) the existence of any claim, set off, defense or other right
which either the Borrower or the Issuer may have at any time against
the Credit Facility Trustee, any beneficiary or any transferee of the
Letter of Credit (or any Person for whom the Credit Facility Trustee,
any such beneficiary or any such transferee may be acting), the Bank
or any other Person, whether in connection with this Agreement, the
Security Instruments, the Letter of Credit, the Bond Documents, the
Facility or any unrelated transaction;
(d) any statement, draft or other document presented under the
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, provided the Company shall be
under no obligation to make any payment hereunder resulting from the
Bank's negligence in accepting any such forged or fraudulent draft or
document; or
(e) the surrender or impairment of any security for the
performance or observance of any of the terms of this Agreement.
- 22 -
ARTICLE IV
SECURITY
4.1 Security. As security for the full and timely payment and
performance by the Borrower of the Borrower's Obligations, the Borrower shall on
the date hereof deliver to the Bank the Security Instruments, conveying to the
Bank duly perfected liens upon and security interests in the Collateral related
thereto, subject only to Permitted Liens.
As additional security for the Borrower's Letter of Credit Obligations,
the Borrower hereby assigns and pledges to the Bank, its successors and assigns,
and grants to the Bank, its successors and assigns, a continuing security
interest in and lien on the following:
(a) The interest of the Borrower in the Facility Fund (as
defined in the Indenture), in the Bond Fund (as defined in the Indenture) and in
all subaccounts created and maintained under any of such funds.
(b) The interest of the Borrower in any and all funds,
securities, instruments, documents, and other property which are at any time
paid to, deposited with, under the control of, or in the possession of the Bank
or any of its agents, branches, affiliates, correspondents or others acting on
its behalf (this security interest and lien is intended to be in addition to any
right of set-off or banker's lien that the Bank may otherwise enjoy under
applicable law).
The Borrower agrees, that with respect to the security described
in this Section, the Bank, its successors and assigns, shall have all of the
rights and remedies of a secured party under the Maryland Uniform Commercial
Code; provided, however, that Borrower shall nevertheless be free to withdraw
from time to time or otherwise obtain access to any of the funds described in
subparagraph (a) above (other than the funds pledged under the Pledge
Agreement), except upon the occurrence of an Event of Default which has occurred
and is continuing.
[4.2 THIS SECTION INTENTIONALLY DELETED.]
4.3 Casualty and Liability Insurance Required. The Borrower will keep
the Collateral continuously insured against such risks as are customarily
insured against by businesses of like size and type engaged in the same or
similar operations including, without limiting the generality of any other
covenants contained herein or in the Bond Documents or Security Instruments:
- 23 -
(a) casualty insurance on the Collateral in an amount not less
than the full insurable value thereof, against loss or damage by theft,
fire and lightning and other hazards ordinarily included under uniform
broad form standard extended coverage policies, limited only as may be
provided in the standard form of extended coverage endorsement at the
time in use in the State of Maryland;
(b) general comprehensive liability insurance against claims
for bodily injury, death or property damage occurring on, in or about
the Collateral (such coverage to include provisions waiving subrogation
against the Bank) in amounts not less than $1,000,000 with respect to
bodily injury to any one person, $1,000,000 with respect to bodily
injury to two or more persons in any one accident and $1,000,000 with
respect to property damage resulting from any one occurrence;
(c) liability insurance with respect to the operation of its
facilities under the workers' compensation laws of the State of
Maryland;
(d) business interruption insurance with respect to a material
interruption in the operation of its facilities; and
(e) if at any time the Facility is in an area that has been
identified by the Secretary of Housing and Urban Development as having
special flood and mudslide hazards, the Borrower shall purchase and
maintain a flood insurance policy satisfactory to the Bank.
provided, however, that the insurance so required may be provided by blanket
policies now or hereafter maintained by the Borrower.
4.4 General Requirements Applicable to Insurance.
(a) Each insurance policy obtained in satisfaction of the
requirements of Section 4.3 hereof:
(i) shall be by such insurer (or insurers) as shall
be financially responsible, qualified to do in the
State, and of recognized standing;
(ii) shall be in such form and have such provisions
(including, without limitation, the loss payable
clause, the waiver of subrogation clause, if any,
the deductible amount, if any, and the standard
mortgagee endorsement clause), as are
- 24 -
generally considered standard provisions for the
type of insurance involved and are acceptable in
all respects to the Bank and the Issuer;
(iii) shall prohibit cancellation or substantial
modification, termination or lapse in coverage by the
insurer without at least 30 days prior written notice
to the Bank and the Issuer; and
(iv) without limiting the generality of the foregoing,
all insurance policies carried on the Collateral
shall name the Bank, FUNBMD, the Hedge Counterparty,
the Issuer and the Borrower as loss payees and a
parties insured thereunder, as the interests may
appear, and any loss thereunder shall be made payable
and shall be applied as provided in Section 4.8
hereof).
(b) Prior to expiration of any such policy, the Borrower shall
furnish the Bank and the Issuer with evidence satisfactory to the Bank
that the policy or certificate has been renewed or replaced or is no
longer required by this Agreement.
4.5 Advances by Bank. In the event the Borrower shall fail to
maintain, or cause to be maintained, (i) the full insurance coverage required
pursuant to Section 4.3 or (ii) the Collateral in good repair and good operation
condition, the Bank may (but shall be under no obligation to), after 10 days
written notice to the Borrower and the Issuer and the failure of the Borrower to
obtain the required insurance or to commence (and complete with due diligence)
the making of the required repairs, renewals and replacements, contract for the
required policies of insurance and pay the premiums on the same or make any
required repairs, renewals and replacements; and the Borrower agrees to
reimburse the Bank to the extent of the amounts so advanced with interest
thereon at a rate per annum equal to the then applicable Reimbursement Rate or
the maximum rate permitted by law, whichever is lower, from the date of advance
to the date of reimbursement. Any amounts so advanced by the Bank shall become
an additional obligation of the Borrower secured by the Security Instruments.
4.6 Borrower to Make up Deficiency in Insurance Coverage. The Borrower
agrees to the extent that the Borrower shall not carry insurance required by
Section 4.3 hereof, it shall pay promptly to the Bank, for application in
accordance with the provisions of Section 4.8(b)(ii) hereof, such amount as
would have been received as Net Proceeds (as hereinafter defined) by the Bank,
under the provisions of Section 4.8(b)(ii) hereof had such insurance been
carried to the extent required.
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4.7 Eminent Domain. In the event that title to, or the temporary use
of, the Collateral or any part thereof shall be taken by Eminent Domain, the Net
Proceeds received as a result of such Eminent Domain shall be applied as
provided in Section 4.8(b) hereof.
4.8 Application of Net Proceeds of Insurance and Eminent Domain.
(a) The Net Proceeds of the insurance carried pursuant to the
provisions of Sections 4.3(c), 4.3(d) and, if practicable, 7.1(c)
hereof shall be applied by the Borrower toward extinguishment of the
defect or claim or satisfaction of the liability with respect to which
such insurance proceeds may be paid.
(b) The Net Proceeds of the insurance carried with respect to
the Collateral pursuant to the provisions of Sections 7.1(c) (if not
applied pursuant to clause (a) of this Section 4.8), 4.3(a) and 4.3(b)
hereof (excluding the Net Proceeds of any business interruption
insurance, which shall be paid to the Borrower), and the Net Proceeds
resulting from Eminent Domain shall be paid and applied as follows:
(i) if Bonds shall then be outstanding under the
Indenture and no drawing under the Letter of Credit
shall theretofore have been presented which has not
been reimbursed by the Borrower (other than a Tender
Advance), or if the obligations under the Note are
then outstanding and no Event of Default has occurred
hereunder or under the Note and is then continuing,
then in the manner and at the times provided therefor
in Section 6.8 of the Loan Agreement, provided,
however, that in the event the Borrower wishes to
rebuild or replace any portion of the Facility
pursuant to Section 6.8(b)(ii) of the Loan Agreement,
any such rebuilding or replacement is subject to the
approval of the Bank; and
(ii) in all other cases, to the payment or reduction,
as the case may be, of the obligations of the Borrower
and the Issuer hereunder, with such allocations to
principal, interest, commissions, charges and expenses
as the Bank may elect.
4.9 Parties to Give Notice. In case of any material damage to or
destruction of all or any part of the Collateral, the Borrower shall give prompt
notice thereof to the Bank. In case of a taking or proposed taking of all or any
part of the Collateral or any right therein by Eminent Domain, the Borrower
shall give prompt notice to the Bank and the Issuer. Each such notice shall
describe generally the nature and extent of such damage, destruction, taking,
loss, proceeding or negotiations.
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ARTICLE V
AFFIRMATIVE COVENANTS
Until all the obligations of the Borrower hereunder to be performed and
paid shall have been performed and paid in full, and for so long as the Letter
of Credit shall be outstanding, the Borrower covenants and agrees that, unless
the Bank and the Issuer consent otherwise in writing:
5.1 Repayment of Obligations. The Borrower will promptly repay the
payment obligations of the Borrower hereunder and under the Security Instruments
when due, according to the terms of this Agreement and the Security Instruments.
5.2 Performance Under Reimbursement Agreement and Security Instruments.
The Borrower will, and will cause each of its Subsidiaries to, perform all
obligations required to be performed by each of them under the terms of this
Agreement, the Security Instruments, the Revolving Credit Documents and any
other agreements now or hereafter existing or entered into between the Borrower,
its Subsidiaries and the Bank, subject to any applicable notice and cure
provisions contained therein.
5.3 Financial and Business Information about the Borrower. The Borrower
shall cause to be delivered to the Bank:
(a) Quarterly Financial Statements. As soon as available and in
any event within 50 days after the end of each quarter of each fiscal year
of the Guarantor, a consolidated and consolidating balance sheet of the
Guarantor and all Consolidated Subsidiaries as of the end of such fiscal
quarter (with all supporting schedules), the related consolidated and
consolidating statements of income and cash flows of the Guarantor and all
Consolidated Subsidiaries for such quarter, and a profit and loss statement
of the Guarantor and its Consolidated Subsidiaries, setting forth in each
case in comparative form the figures for the corresponding quarter of the
Guarantor's previous fiscal year, all certified (subject to normal year-end
audit adjustments) as to fairness of presentation, generally accepted
accounting principles and consistency by the chief financial officer or
chief accounting officer of the Borrower.
(b) Annual Financial Statements. As soon as available and in any
event within 120 days after the end of each fiscal year of the Guarantor, a
consolidated and consolidating balance sheet of the Guarantor and all
Consolidated Subsidiaries as of the end of such fiscal year and the related
consolidated and consolidating statements of income and cash flows for such
fiscal year, setting forth in each case in comparative form the figures for
the previous fiscal year, all in reasonable detail and accompanied by an
opinion thereon by Coopers & Xxxxxxx or other independent public
accountants satisfactory to the Bank, which opinion shall
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not be qualified as to the scope of the audit and which shall state that
such consolidated financial statements present fairly the consolidated
financial position of the Guarantor and its Consolidated Subsidiaries as of
the date of such financial statements and the results of their operations
for the period covered by such financial statements in conformity with
Generally Accepted Accounting Principles applied on a Consistent Basis
(except for changes in the application of which such accountants concur)
and shall not contain any "going concern" or like qualification or
exception or qualification arising out of the scope of the audit.
(c) Officer's Certificate. Simultaneously with the delivery of
each set of financial statements referred to in subsections (a) and (b)
above, a certificate of the chief financial officer or chief accounting
officer of the Guarantor, (i) stating whether there exists on the date of
such certificate any Event of Default and, if any Event of Default then
exists, setting forth the details thereof and the action which the Borrower
is taking or proposes to take with respect thereto, and (ii) stating
whether, since the date of the most recent previous delivery of financial
statements pursuant to subsections (a) and (b) of this Section, there has
been any material adverse change in the condition (financial or otherwise),
results of operations, properties, assets, business or prospects of the
Borrower or the Guarantor, or of the Borrower, the Guarantor and all
Consolidated Subsidiaries, considered as a whole, and, if so, the nature of
such material adverse change.
(d) Accountant's Certificate. Simultaneously with the delivery of
each set of financial statements referred to in subsection (a) above, a
statement of the firm of independent public accountants which reported on
such statements as to whether anything has come to their attention to cause
them to believe that any Event of Default existed on the date of such
statements and whether the Borrower is in compliance with the Financial
Covenants and confirming the statements set forth in the officer's
certificate delivered simultaneously therewith pursuant to subsection (c)
above.
(e) Event of Default. Forthwith upon the occurrence of any Event
of Default, a certificate of the chief financial officer or chief
accounting officer of the Borrower setting forth the details thereof and
the action which the Borrower is taking or proposes to take with respect
thereto.
(f) Litigation. As soon as reasonably practicable after obtaining
knowledge of the commencement of, or of a material threat of the
commencement of, an action, suit, proceeding or investigation against the
Borrower or any of its Subsidiaries which could materially adversely affect
its condition (financial or otherwise), the Collateral, results of
operations, properties, assets, business or prospects of the Borrower and
its Consolidated Subsidiaries, considered as a whole, or could otherwise
have a Material Adverse Effect or which in any manner questions the
validity of this Agreement or any of the other transactions
- 28 -
contemplated hereby or thereby, an explanation of the nature of such
pending or threatened action, suit, proceeding or investigation and such
additional information as may be reasonably requested by the Bank.
(g) Auditors' Management Letters. Promptly upon receipt thereof,
copies of each report submitted to the Borrower or any of its Consolidated
Subsidiaries by independent public accountants in connection with any
annual, interim or special audit made by them of the books of the Borrower
or any of its Consolidated Subsidiaries including, without limitation, each
report submitted to the Borrower or any of its Consolidated Subsidiaries
concerning its accounting practices and systems and any final comment
letter submitted by such accountants to management in connection with the
annual audit of the Borrower and its Consolidated Subsidiaries.
(h) Tax Returns. Within 30 days after filing, copies of (i) all
federal, state and local income tax returns filed by the Borrower or any
Subsidiary, (ii) all quarterly reports by the Borrower or any Subsidiary on
Form 941, and (iii) all annual FUTA tax returns of the Borrower or any
Subsidiary.
(i) ERISA Matters. If and when any member of the ERISA Group (i)
gives or is required to give notice to the PBGC of any "reportable event"
(as defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of ERISA,
or knows that the plan administrator of any Plan has given or is required
to give notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA
or notice that any Multiemployer Plan is in reorganization, is insolvent or
has been terminated, a copy of such notice; (iii) receives notice from the
PBGC under Title IV of ERISA of an intent to terminate, impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or
appoint a trustee to administer any Plan, a copy of such notice; (iv)
applies for a waiver of the minimum funding standard under Section 412 of
the Internal Revenue Code, a copy of such application; (v) gives notice of
intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment-or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could
reasonably be expected to result in the imposition of a lien or the posting
of a bond or other security, a certificate of the chief financial officer
or the chief accounting officer of the Borrower setting forth details as to
such occurrence and action, if any, which the Borrower or applicable member
of the ERISA Group is required or proposes to take.
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(j) Environmental Matters. Promptly, upon receipt of any
complaint, order, citation, notice or other written communication from any
Person with respect to, or upon the Borrower's obtaining knowledge of, (i)
the existence or alleged existence of a violation of any applicable
Environmental Law in connection with any property now or previously owned,
leased or operated by the Borrower or any of its Subsidiaries, (ii) any
release on such property or any part thereof in a quantity that is
reportable under any applicable Environmental Law and (iii) any pending or
threatened proceeding for the termination, suspension or non-renewal of any
permit required under any applicable Environmental Law, in each case in
which there is a reasonable likelihood of an adverse decision or
determination which could result in a Material Adverse Effect.
(k) Other Information. From time to time such additional financial
or other information regarding the condition (financial or otherwise),
results of operations, properties, assets, business or prospects of the
Borrower or any of its Subsidiaries as the Bank may reasonably request.
- 30 -
5.4 Notice of Certain Events. The Borrower shall promptly, after
any officer of the Borrower learns or obtains knowledge of the occurrence
thereof, give written notice to the Bank of:
(a) any written notice of a violation received by the Borrower
or any of its Subsidiaries from any governmental regulatory body or law
enforcement authority which, if such violation were established, would
have a Material Adverse Effect on the business of the Borrower or any
of its Subsidiaries or the value of the Collateral;
(b) any labor controversy that has resulted in a strike or other
work action materially affecting the Borrower or any of its
Subsidiaries;
(c) any attachment, uninsured judgment, lien, levy or order in
an amount exceeding $50,000 (other than Permitted Liens) that may be
placed on or assessed against or threatened against the Borrower, any
of its Subsidiaries, the Guarantor or the Collateral;
(d) any other matter that has resulted in a Material Adverse
Effect on the financial condition of the Borrower and its Subsidiaries
as a whole or the Guarantor;
(e) the removal of inventory, other than by consumption or sale
in the ordinary course of business, from the places where inventory is
located on the date hereof to other places, with information as to the
new places where such inventory shall be maintained;
(f) the acquisition or leasing of material items of new
equipment, or the removal of material items of equipment from the
places where such items or equipment is located on the date hereof to
other places, with information as to the places such new or removed
equipment shall be maintained;
(g) the acquisition or leasing by the Borrower or any of its
Subsidiaries of any material additional real property, or the transfer
or termination of tenancy of any material existing personal or real
property, and the Borrower shall, if requested by the Bank, deliver
such other information relating to any such acquisition, leasing,
transfer or termination of tenancy as the Bank may reasonably request;
(h) any material changes, additions or deletions as to the
material contracts of the Borrower or its Subsidiaries, which changes,
additions or deletions result in a change to the contract amount in
excess of $500,000; and
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(i) any breach or violation of or noncompliance with any covenant
or condition of this Agreement.
5.5 Payment of Obligations. The Borrower will pay and discharge, and
will cause each of its Subsidiaries to pay and discharge, as the same shall
become due and payable, (a) all their respective obligations and liabilities,
including all claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like persons which, in any such case, if
unpaid, might by law give rise to a lien upon any of their properties or assets,
and (b) all lawful taxes, assessments and charges or levies made upon their
properties or assets, by any governmental body, agency or official, except where
any of the items in clause (a) or (b) of this Section 5.2 may be diligently
contested in good faith by appropriate proceedings and the Borrower or such
Subsidiary shall have set aside on its books, if required under generally
accepted accounting principles, appropriate reserves for the accrual of any such
items.
5.6 Maintenance of Property; Insurance.
(a) Maintenance of Properties. The Borrower will keep, and will
cause each of its Subsidiaries to keep, all property, including the
Collateral, useful and necessary in their respective businesses in good
working order and condition, subject to ordinary wear and tear.
(b) Insurance. The Borrower will maintain, and will cause each of
its Subsidiaries to maintain, insurance with financially sound and
responsible companies in such amounts (and with such risk retentions) and
against such risks as is usually carried by owners of similar businesses
and properties in the same general areas in which the Borrower and its
Subsidiaries operate. The Borrower will deliver to the Bank and the Issuer
upon request from time to time full information as to the insurance
carried.
5.7 Conduct of Business and Maintenance of Existence. The Borrower will
continue, and will cause each of its Subsidiaries to continue, to engage in
business of the same general type as now conducted by the Borrower and its
Subsidiaries, and will preserve, renew and keep in full force and effect, and
will cause each of its Subsidiaries to preserve, renew and keep in full force
and effect, their respective corporate existence and their respective rights,
privileges and franchises necessary or desirable in the normal conduct of
business; provided that nothing in this Section shall prohibit the merger of a
Subsidiary into the Borrower or the merger or consolidation of a Subsidiary with
or into another Person if the corporation surviving such consolidation or merger
is a Subsidiary and if, in each case, after giving effect thereto, no Event of
Default shall have occurred.
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5.8 Compliance with Laws. The Borrower will comply, and will cause each
of its Subsidiaries to comply, with all applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities (including, without
limitation, Environmental Laws, ERISA and the rules and regulations thereunder)
except (a) where the necessity of compliance therewith is contested in good
faith by appropriate proceedings or (b) where noncompliance could not reasonably
be expected to have a Material Adverse Effect.
5.9 Accounting; Inspection of Property, Books and Records. The Borrower
will keep, and will cause each of its Subsidiaries to keep, proper books of
record and account in which full, true and correct entries in conformity with
generally accepted accounting principles shall be made of all dealings and
transactions in relation to their respective businesses and activities, will
maintain, and will cause each of its Subsidiaries to maintain, their respective
fiscal reporting periods on the present basis and will permit, and will cause
each of its Subsidiaries to permit, representatives of the Bank and the Issuer
to visit and inspect any of their respective properties, to examine and make
copies from any of their respective books and records and to discuss their
respective affairs, finances and accounts with their officers, employees and
independent public accountants, all at such reasonable times and as often as may
reasonably be desired.
5.10 Information about the Facility. Upon request by the Bank (and in
any event no later than the first advance of Loan proceeds for construction
costs), the Borrower will furnish to the Bank in form satisfactory to the Bank,
(a) a copy of the construction contract with the general contractor who shall
construct the Facility; (b) architect's or engineer's certification that all
work has been done and materials installed in compliance with plans and
specifications; (c) a complete set of plans and specifications of the Facility,
which plans and specifications are to be in full compliance with all building
codes and local ordinances; and (d) proof as to payment of construction bills,
lien waivers, inspection reports, statements showing itemization of present and
prospective expenditures, a statement of items due and unpaid, and, if
applicable, a list of items necessary for completion of the Facility.
5.11 Taxes and Liens. The Borrower shall promptly pay, or cause to be
paid, all taxes, assessments or other governmental charges which may lawfully be
levied or assessed upon the income or profits of the Borrower or upon any
property, real, personal or mixed, belonging to the Borrower or upon any part
thereof, and also any lawful claims for labor, material and supplies which, if
unpaid, might become a lien or charge against any such property; provided,
however, the Borrower shall not be required to pay or cause to be paid any such
tax, assessment, charge, levy or claim so long as the validity thereof shall be
actively contested in good faith by proper proceedings and, if requested by the
Bank, reserves with respect thereto acceptable to the Borrower's independent
certified public accountants shall be established and maintained; but provided
further that any such tax, assessment, charge, levy or claim shall be paid
forthwith upon
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the commencement of proceedings to foreclose any lien securing the same unless a
surety bond satisfactory to the Bank is obtained and delivered to the Bank.
5.12 Comply with ERISA. The Borrower and its Consolidated
Subsidiaries shall at all times make prompt payment of contributions required to
meet the minimum funding standards set forth in ERISA with respect to any
employee benefit plan; promptly after the filing thereof, furnish to the Bank
copies of any annual report required to be filed under ERISA in connection with
each employee benefit plan; not withdraw from participation in, permit the
termination or partial termination of, or permit the occurrence of any other
event with respect to any employee benefit plan that could result in liability
to the Pension Benefit Guaranty Corporation; notify the Bank as soon as
practicable of any "reportable event" (as defined in Section 4043(b) of ERISA)
and of any additional act or condition arising in connection with any employee
benefit plan which the Borrower or any of its Subsidiaries believe might
constitute grounds for the termination thereof by the Pension Benefit Guaranty
Corporation or for the appointment by the appropriate United States district
court of a trustee to administer such plan; and furnish to the Bank upon the
Bank's request, such additional information about any employee benefit plan as
may be reasonably requested. Neither the Borrower nor any of its Subsidiaries
will permit the occurrence of any "prohibited transaction" (as defined in
ERISA).
ARTICLE VI
NEGATIVE COVENANTS
Until all the obligations to be performed and paid hereunder shall have
been performed and paid in full, and for so long as the Letter of Credit shall
be outstanding, unless the Bank and the Issuer shall otherwise consent in
writing, the Borrower will not, and will not permit any Subsidiary to, either
directly or indirectly:
6.1 Restriction on Liens. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or
with respect to any property or assets of any kind (real or personal, tangible
or intangible) of the Borrower or any such Subsidiary whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with recourse to the
Borrower or any of its Subsidiaries) or assign any right to receive income, or
file or permit the filing of any financing statement under the Uniform
Commercial Code as in effect in any applicable jurisdiction or any other similar
notice of Lien under any similar recording or notice statute; provided that the
provisions of this Section shall not prevent the creation, incurrence,
assumption or existence of the Permitted Liens.
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6.2 Limitation on Guarantees. Neither the Borrower nor any of its
Subsidiaries shall guarantee any debt of any Person or Persons.
6.3 No Voluntary Prepayment of Subordinated Debt and Long Term Debt.
The Borrower will not, and will not permit any of its Subsidiaries to, directly
or indirectly, redeem, retire, purchase, acquire, defease or otherwise make any
payment with respect to the principal of any Long Term Debt at a date in advance
of its legal obligations to do so.
6.4 Change of Management. The Borrower will not make any material
change of management.
6.5 Change in Fiscal Year. The Borrower shall not, without the Bank's
prior consent, change its fiscal year.
6.6 Transactions with Other Persons. The Borrower will not, and will
not permit any of its Subsidiaries to, enter into any agreement with any Person
whereby any of them shall agree to any restriction on the right of the Borrower
or any of its Subsidiaries to amend or waive any of the provisions of this
Agreement or any other Letter of Credit Document.
ARTICLE VII
CONDITIONS TO ISSUANCE OF LETTER OF CREDIT
7.1 Conditions on Issuance. On or prior to the date hereof, the
Borrower shall have furnished to the Bank and the Issuer, in form satisfactory
to the Bank and the Issuer, the following:
(a) two executed counterparts of this Agreement;
(b) executed counterparts of each of the Bond Documents (except
for the Note and the Bonds, as to which a specimen copy may be
delivered) and the Security Instruments;
(c) a mortgagee title insurance commitment dated the date of
this Agreement, together with evidence that all premiums for such
commitment have been paid and that a conforming policy will be issued,
which policy shall: (i) be in an amount not less than
- 35 -
$3,000,000; (ii) ensure that the Deed of Trust creates a valid first
lien on the property covered by such Deed of Trust free and clear of
all defects and encumbrances (except those acceptable to the Bank);
(iii) name the Bank and the Issuer and the other beneficiaries
thereunder as insured parties thereunder; (iv) be the form of ALTA Loan
Policy-1992 (amended 10-17-92) or other form approved by the Bank and
the Issuer; and (v) contain such endorsements and effective coverage as
the Bank and the Issuer may reasonably request;
(d) a physical survey containing maps or plats of the perimeter
or boundaries of the Facility certified to the Bank, the Issuer and the
title insurance company, in a manner acceptable to each of them, dated
a date satisfactory to the Bank, the Issuer and the title insurance
company, by an independent professional licensed land surveyor
satisfactory to the Bank and the title insurance company, which survey
shall indicate the following: (i) the locations on such site of all the
buildings, structures and other improvements and the established
building setback lines insofar as the foregoing structures and other
improvements and the established building setback lines insofar as the
foregoing affect the perimeter or boundary of such property; (ii) the
lines of streets abutting the site and width thereof; (iii) all access
and other easements appurtenant to the site or necessary or desirable
to use the site; (iv) all roadways, paths, driveways, easements,
encroachments and overhanging projections and similar encumbrances
affecting the site, whether recorded, apparent from a physical
inspection of the site or otherwise known to the surveyor; (v) any
encroachment on any adjoining property by the building structures and
improvements on the site; and (vi) if the site is described as being on
a filed map, a legend relating the survey to said map, all informed
satisfactory to the Bank and the Issuer; together with certification
from an independent professional licensed land surveyor satisfactory to
the Bank and the Issuer as to the location of the Facility or any
property covered by the Deed of Trust in any "special flood hazard"
area within the meaning of the Federal Flood Disaster Protection Act of
1973, or such other form of survey acceptable to the Bank and the
Issuer;
(e) evidence of compliance with the insurance requirements
contained herein (upon which there shall be affixed appropriate
mortgage, loss payee and/or additional insured clauses);
(f) opinions dated the date hereof addressed to, and in form and
substance acceptable to, the Bank and the Issuer, from the Issuer's
counsel and Bond Counsel, as to such matters as the Bank and the Issuer
may reasonably require;
- 36 -
(g) an opinion of counsel for the Borrower and the Guarantor
dated the date hereof addressed to the Bank and the Issuer, and
substantially in the form attached hereto as Exhibit B, or otherwise in
form and substance reasonably acceptable to, the Bank;
(h) a certified copy of the Borrower's corporate resolutions
and the Guarantor's corporate resolutions authorizing the execution and
delivery of the Letter of Credit Documents, the Bond Documents, the
Hedge Documents, the MICRF Documents and the County Documents;
(i) (1) a copy of the Certificate of Incorporation of the
Borrower and the Guarantor and (2) certificates dated no earlier than
30 days prior to the date of issuance of the Bonds of the Maryland
State Department of Assessments and Taxation as to the good standing of
the Borrower and of the Secretary of State for the State of Delaware as
to the good standing of the Borrower and the Guarantor;
(j) an opinion from Miles & Stockbridge and Chewanney X. Xxxxx,
Esquire, Co-Bond Counsel, or a letter in substantially the form of
Exhibit C hereto consenting to the Bank's reliance on certain opinions
delivered by such counsel in form and substance satisfactory to the
Bank and its counsel;
(k) copies of all governmental approvals required in connection
with the issuance of the Bonds and the Facility, including resolutions
of the Issuer and the County authorizing the issuance of the Bond;
(l) evidence of payment to the Bank of the initial annual letter
of credit commission pursuant to Section 3.4 of this Agreement;
(m) evidence satisfactory to the Bank and the Issuer that any
documents (including, without limitation, financing statements)
required to be recorded or filed in order to create, in favor of the
Bank, a perfected lien on and security interest in all real and
personal property covered by the Deed of Trust and the Security
Agreement have been properly (or will be promptly) recorded or filed in
each office in each jurisdiction required in order to create, in favor
of the Bank, a perfected lien on and security interest in the
respective Collateral described therein; and the Bank and the Issuer
shall have received evidence of all such recordation and acknowledgment
copies of all such filings (or, in lieu thereof, the Bank and the
Issuer shall have received other evidence satisfactory to the Bank and
the Issuer that all such filings have been or will be made), and the
Bank and the Issuer shall have received evidence that all necessary
recordation and filing fees and all documentary taxes and other
expenses related to such filings or recordations have been or will be
paid in full;
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(n) an executed counterpart of the Commitment Letter;
(o) the Environmental Report and a reliance letter from the
company which prepared the Environmental Report authorizing the Bank
and the Issuer to rely upon the Environmental Report to the same extent
as if the Environmental Report had been addressed to the Bank and the
Issuer, and such additional reports and remediation (if applicable) as
the Bank may require;
(p) the appraisal described in the Commitment Letter, together
with all other documents and information relating to the Facility as
specifically set forth in the Commitment Letter (including, without
limitation, Schedule A attached thereto);
(q) an executed counterpart of the Guaranty;
(r) a copy of the resolution passed by the County indicating
its approval of the MICRF Loan, the County Loan and the Tax Credit,
which approval of the MICRF Loan and the Tax Credit shall be subject
only to the expiration of a 60-day referendum period.;
(s) evidence satisfactory to the Bank that (i) the County has
approved substantially final forms of all MICRF Documents, all County
Document and the Subordination Agreement, and (ii) the County Loan will
be fully funded by August 31, 1997;
(t) evidence satisfactory to the Bank that (i) the Maryland
Board of Public Works has approved the MICRF Loan and the MICRF Loan
Documents, and (ii) the MICRF Loan will be fully funded no later than
August 31, 1997;
(u) executed counterparts of all Hedge Documents;
(v) executed counterparts of each Landlord's Waiver; and
(w) such other documents, instruments and certifications as the
Bank or the Issuer may reasonably require.
7.2 Additional Conditions Precedent to Issuance of the Letter of
Credit.
(a) The obligation of the Bank to the Letter of Credit shall
be subject to the further conditions precedent that on the date of
issuance the following statements shall be true and the Bank and the
Issuer shall have received a certificate signed by an authorized
officer of the Borrower, dated the date of issuance, stating that:
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(i) The representations and warranties contained in
Article II of this Agreement, Section 2.2 of the Loan
Agreement, and in the Security Instruments are correct in
all material respects on and as of the date of issuance
of the Letter of Credit as though made on and as of such
date; and
(ii) No event has occurred or would result from the
issuance of the Letter of Credit, which constitutes an
Event of Default or would constitute an Event of Default
but for the requirement that notice be given or time
elapse or both; and
(b) there shall have been no introduction of or change in, or
in the interpretation of, any law or regulation that would make it
unlawful or unduly burdensome for the Bank to issue the Letter of
Credit, no outbreak or escalation of hostilities or other calamity or
crisis affecting the Bank, no suspension of or material limitation on
trading on the New York Stock Exchange or any other national securities
exchange, no declaration of a general banking moratorium by United
States or North Carolina banking authorities, and no establishment of
any new restrictions on transactions in securities or on banks
materially affecting the free market for securities or the extension of
credit by banks.
7.3 Condition Precedent to Each Tender Advance. Each payment made by
the Bank under the Letter of Credit pursuant to a Tender Draft shall constitute
a Tender Advance hereunder only if on the date of such payment the following
statements shall be true:
(i) The representations and warranties contained in
Article II of this Agreement, Section 2.2 of the Loan
Agreement, and in the Security Instruments are correct in
all material respects on and as of the date of such
Tender Advance as though made on and as of such date; and
(ii) No event has occurred or would result from such
Tender Advance, which constitutes an Event of Default or
would constitute an Event of Default but for the
requirement that notice be given or time elapse or both.
Unless the Borrower shall have previously advised the Bank in writing or the
Bank has actual knowledge that one or more of the above statements is no longer
true, the Borrower shall be deemed to have represented and warranted, on the
date of payment by the Bank under the Letter of Credit pursuant to a Tender
Draft, that on the date of such payment the above statements are true and
correct.
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ARTICLE VIII
DEFAULT
8.1 Event of Default. Each of the following shall constitute an Event
of Default under this Agreement, whereupon all obligations of the Borrower
hereunder, whether then owing or contingently owing, will, at the option of the
Bank or its successors or assigns, immediately become due and payable by the
Borrower without presentation, demand, protest or notice of any kind, all of
which are hereby expressly waived, and the Borrower will pay the reasonable
attorneys' fees incurred by the Bank, or its successors or assigns, in
connection with such Event of Default or recourse against any Collateral held by
the Bank, or its successors or assigns, as security for the obligations
hereunder:
(a) Failure of the Borrower to pay when due (i) any payment of
principal, interest, commission, charge or expense referred to in
Article III hereof and (ii) any payment of principal or interest
referred to in Section 3.3 hereof; or
(b) Without the prior written consent of the Bank, failure of
the Borrower, the Guarantor and their Consolidated Subsidiaries to
maintain the following financial conditions, determined in accordance
with Generally Accepted Accounting Principles:
(i) a Consolidated Current Ratio, measured quarterly,
of not less than 1.00 to 1.00;
(ii) a Consolidated Tangible Net Worth, measured
quarterly, of not less than $9,800,000;
(iii) a ratio of (A) Consolidated Debt (including
Subordinated Debt) to (B) Consolidated Tangible Net
Worth, of not more than 1.00 to 1.00, measured quarterly;
(iv) a Consolidated Cash Flow Coverage Ratio equal
to at least 1.25 to 1.00, measured quarterly;
(c) Unless previously approved by the Bank, the Borrower, the
Guarantor or any of their Consolidated Subsidiaries makes or acquires any
investment in any Person, exclusive of loans and advances to employees in
the ordinary course of business, which loans or advances, in the aggregate,
at any time in excess of $500,000 outstanding;
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(d) Unless previously approved by the Bank, the Borrower, the
Guarantor or any of their Consolidated Subsidiaries makes Consolidated
Capital Expenditures for any fiscal year in excess of $2,000,000 in the
aggregate, excluding Consolidated Capital Expenditures for the
Facility;
(e) Unless previously approved by the Bank in writing, the
Borrower, the Guarantor or any of their Consolidated Subsidiaries
shall, directly or indirectly, become liable for any Consolidated Debt,
contingent or direct, if, giving effect to such additional Debt on a
pro forma basis, causes the aggregate amount of the Debt of the
Borrower, the Guarantor and their Consolidated Subsidiaries (excluding
Debt outstanding with the Bank, FUNBMD or the County), to exceed
$500,000;
(f) The occurrence of an "event of default" or an "Event of
Default" (beyond any applicable cure period) under any of the (i)
Security Instruments, (ii) the Bond Documents, (iii) the Revolving
Credit Documents, (iv) the MICRF Documents; (v) the County Documents,
or (vi) the Hedge Documents;
(g) The Borrower defaults (beyond any applicable cure period)
in the payment of principal or interest on any other Indebtedness for
Money Borrowed (other than in indebtedness to the Bank arising
hereunder) beyond any period of grace provided with respect thereto, or
in the performance of any other agreement, term or conditions contained
in any agreement under which any such obligation is created, if the
effect of such default is to cause, or permit the holder or holders of
such obligation to cause such obligation to become due prior to its
stated maturity, and the acceleration of such obligation would have a
material and adverse effect on the business or financial condition of
the Borrower; or
(h) Any representation, warranty, certification or statement
made by the Borrower herein, or in any writing furnished by or on
behalf of the Borrower in connection with the loan by the Issuer under
the Loan Agreement or pursuant to this Agreement, or any of the
Security Instruments shall have been false, misleading or incomplete in
any material respect on the date as of which made; or
(i) The commencement of the liquidation or dissolution of the
Borrower, or suspension of the business of the Borrower or filing by
the Borrower of a voluntary petition in bankruptcy or a voluntary
petition or an answer seeking reorganization, arrangement, readjustment
of its debts or for any other relief under the Bankruptcy Reform Act of
1978, as amended (the "Bankruptcy Code"), or under any other insolvency
act or law, state or Federal, now or hereafter existing, or any other
action of Borrower indicating its consent to, approval of, or
acquiescence in any such petition or proceeding,
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or the application by the Borrower for (or the consent or acquiescence
to) the appointment of a receiver or a trustee of the Borrower or an
assignment for the benefit of creditors, the inability of the Borrower
or the admission by the Borrower in writing of its inability to pay its
debts as they mature; or
(j) The filing of an involuntary petition against the Borrower
in bankruptcy or seeking reorganization, arrangement, readjustment of
its debts or for any other relief under the Bankruptcy Code or under
any other insolvency act or law, state or federal, now or hereafter
existing, or the involuntary appointment of a receiver or trustee of
the Borrower or for all or a substantial part of its property, and the
continuance of any of such action for (90) days undismissed or
undischarged; or the issuance of an order for attachment, execution or
similar process against any substantial part of the property of the
Borrower and the continuance of any such order for (90) days
undismissed or undischarged; or
(k) The entry of an order in any proceedings against the
Borrower decreeing the dissolution or split-up of the Borrower; or
(l) The entry of a final judgment against the Borrower, which
with other outstanding final judgments against the Borrower exceeds an
aggregate of $100,000, if within thirty (30) days after entry thereof
such judgment shall not have been discharged or bonded or execution
thereof stayed pending appeal, or if within thirty (30) days after the
expiration of any such stay such judgment shall not have been
discharged or bonded; or
(m) There occurs an abandonment or change in ownership of the
Facility; or
(n) The dissolution or termination of the existence of the
Borrower or the Guarantor;
(o) The Borrower defaults in the performance or observance of
any provision of this Agreement (other than those described above in
this Section 8.1) and such default is not cured within 30 days after
notice thereof is sent to the Borrower;
(p) The MICRF Loan is not funded by August 31, 1997;
then upon the occurrence of an Event of Default and at any time thereafter, the
Bank may (i) pursuant to Section 902 of the Indenture, advise the Credit
Facility Trustee that an Event of Default has occurred and instruct the Credit
Facility Trustee to declare the principal of all Bonds then outstanding and
interest thereon to be immediately due and payable, and (ii) proceed hereunder,
and under any of the Security Instruments and, to the extent therein provided,
under the Bond Documents, in such order as it may elect and the Bank shall have
no obligation to
- 42 -
proceed against any Person or exhaust any other remedy or remedies which it may
have and without resorting to any other security, whether held by or available
to the Bank.
8.2 No Remedy Exclusive. No remedy herein conferred upon or reserved to
the Bank is intended to be exclusive of any other available remedy or remedies,
but each and every such remedy shall be cumulative and shall be in addition to
any other remedy given hereunder, under the Security Instruments, or now or
hereafter existing at law or in equity or by statute.
8.3 Anti-Marshalling Provisions. The right is hereby given by the
Borrower to the Bank to make releases (whether in whole or in part) of all or
any part of the Collateral under the Security Instruments agreeable to the Bank
without notice to, or the consent, approval or agreement of other parties and
interests, including junior lienors, which releases shall not impair in any
manner the validity of or priority of the liens and security interest in the
remaining Collateral conferred under such documents, nor release the Borrower
from the liability for the obligations hereby secured. Notwithstanding the
existence of any other security interest in the Collateral held by the Bank, the
Bank shall have the right to determine the order in which any or all of the
Collateral shall be subjected to the remedies provided therein, or in the
Security Instruments. The Borrower hereby waives any and all rights to require
the marshalling of assets in connection with the exercise of any of the remedies
permitted by applicable law or provided herein or therein.
8.4 Confession of Judgment. Upon the occurrence of an Event of Default,
the Borrower authorizes the clerk or any attorney designated by the Bank or any
clerk of any court of record to appear for it in any court of record and confess
judgment against it without prior hearing, in favor of the Bank for and in the
amount equal to such of the obligations of the Borrower which have been due and
payable under Section 8.1 hereof plus interest accrued and unpaid thereon, all
other amounts then due and payable hereunder, costs of suit and an attorney's
fee in an amount equal to fifteen percent (15%) of such obligations plus all
accrued and unpaid interest thereon, provided, however, (a) if the actual
attorney's fees incurred by the Bank are less than 15% of such obligations (plus
all accrued and unpaid interest thereon), the Bank will refund (to the extent
actually collected) to the Borrower an amount equal to the difference between
15% of such obligations (plus all accrued and unpaid interest thereon) and the
amount of such actual attorney's fees (after all of such obligations have been
paid in full), or (b) if the actual attorney's fees incurred by the Bank or
other holder hereof exceed 15% of such obligations (plus all accrued and unpaid
interest thereon, whether by reason of judgment being contested or otherwise,
the Borrower will pay to the Bank on demand the amount of any such excess. The
authority and power to appear for and enter judgment against the Borrower shall
not be exhausted by one or more exercises thereof, or by any imperfect exercise
thereof, and shall not be extinguished by any judgment entered pursuant thereto.
Such authority and power may be exercised on one or more occasions, from time to
time, in the same or different jurisdictions, as often as the Bank shall deem
necessary or desirable, for all of which this Agreement shall be a sufficient
warrant.
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ARTICLE IX
MISCELLANEOUS
9.1 Indemnification. The Borrower hereby indemnifies and holds the Bank
harmless from and against any and all claims, damages, losses, liabilities,
costs or expenses whatsoever which the Bank may incur (or which may be claimed
against the Bank by any Person); (i) by reason of or in connection with the
execution and delivery or transfer of, or payment or failure to pay under, the
Letter of Credit, provided that the Borrower shall not be required to indemnify
the Bank for any claims, damages, losses, liabilities, costs or expenses to the
extent, but only to the extent, caused by (A) the willful misconduct or gross
negligence of the Bank in connection with paying drafts presented under the
Letter of Credit or (B) the Bank's willful or grossly negligent failure to pay
under the Letter of Credit (other than in connection with a court order) after
the presentation to it by the Credit Facility Trustee or a successor corporate
fiduciary under the Indenture of a site draft and certificate strictly complying
with the terms and conditions of the Letter of Credit; or (ii) by reason of or
in connection with the execution, delivery or performance of any of the Related
Documents or any transaction contemplated by any thereof. In addition, if the
Borrower has generated, stored, or disposed of any hazardous substances on the
Property, the Borrower agrees to indemnify the Bank against any liability, cost
and expense, including reasonable attorneys' fees, arising out of or resulting
from any such generation, storage, disposal or location. Anything herein to the
contrary notwithstanding, nothing in this Section 9.1 is intended or shall be
construed to limit the Borrower's reimbursement obligation contained in Article
III hereof. Without prejudice to the survival of any other obligation of the
Borrower, the indemnities and obligations of the Borrower contained in this
Section 9.1 shall survive the payment in full of amounts payable pursuant to
Article III and the Termination Date.
9.2 Transfer of Letter of Credit. The Letter of Credit may be
transferred and assigned in accordance with the terms of the Letter of Credit.
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9.3 Reduction of Letter of Credit.
(a) The Letter of Credit is subject to reduction pursuant to
its terms.
(b) If the amount available to be drawn under the Letter of
Credit shall be permanently reduced in accordance with the terms
thereof, then the Bank shall have the right to require the Credit
Facility Trustee to surrender the Letter of Credit to the Bank and to
issue on such date, in substitution for such outstanding Letter of
Credit, a substitute irrevocable letter of credit, substantially in the
form of the Letter of Credit but with such changes therein as shall be
appropriate to give effect to such reduction, dated such date, for the
amount to which the amount available to be drawn under the letter of
Credit shall have been reduced.
9.4 Liability of the Bank. The Borrower, to the extent permitted by
applicable law, assumes all risks of the acts or omissions of the Trustee, the
Credit Facility Trustee and any beneficiary or transferee of the Letter of
Credit with respect to its use of the Letter of Credit. Neither the Bank nor any
of its officers, directors, employees, agents or consultants shall be liable or
responsible for:
(a) the use which may be made of the Letter of Credit or for any
acts or omissions of the Credit Facility Trustee or any beneficiary
or transferee in connection therewith;
(b) the validity, sufficiency or genuineness of documents, or
of any endorsement(s) thereon, even if such documents should in fact
prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged;
(c) payment by the Bank against presentation of documents which
do not comply with the terms of the Letter of Credit, including
failure of any documents to bear any reference or adequate reference to
the Letter of Credit; or
(d) any other circumstances whatsoever in any way related to the
making or failure to make payment under the Letter of Credit;
except only that the Borrower shall have a claim against the Bank, and the Bank
shall be liable to the Borrower, to the extent but only to the extent, of any
direct, as opposed to consequential damages suffered by the Borrower which the
Borrower proves were caused by (i) willful misconduct or gross negligence of the
Bank in determining whether documents presented under the Letter of Credit
complied with the terms of the Letter of Credit or (ii) willful failure of the
Bank to pay under the Letter of Credit after the presentation to it by the
Credit Facility Trustee or
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a successor trustee under the Indenture of a sight draft and certificate
strictly complying with the terms and conditions of the Letter of Credit. In
furtherance and not in limitation of the foregoing, the Bank may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
9.5 Successors and Assigns. This Agreement shall be binding upon the
Borrower, its successors and assigned and all rights against the Borrower
arising under this Agreement shall be for the sole benefit of the Bank, it
successors and assigns, all of whom shall be entitled to enforce performance and
observance of this Agreement to the same extent as if they were parties hereto.
The Bank will not sell or assign the obligations of the Borrower hereunder to
any competitor of the Borrower, as reasonably determined by the Bank.
9.6 Notices. All notices, requests and demands to or upon the
respective parties hereto shall be deemed to have been given or made when hand
delivered or mailed first class, certified or registered mail, postage prepaid,
addressed as follows or to such other address as the parties hereto shall have
been notified pursuant to this Section 9.6:
Borrower: Alcore, Inc.
0000 Xxxxx Xxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx,
President/General Manager
With a copy to: Xxxxxx Xxxxx, Esquire
Ballard, Spahr, Xxxxxxx & Xxxxxxxxx
Suite 1900
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Bank: First Union National Bank of North Carolina
Two First Union Center, T-7
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: International Operations
With a copy to: Xxxxx X. Xxxxxx, Esquire
Piper & Marbury
0000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
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except in cases where it is expressly herein provided that such notice, request
or demand is not effective until received by the party to whom it is addressed,
in which event said notice, request or demand shall be effective only upon
receipt by the addressee.
9.7 Amendment. The Agreement may be amended, modified or discharged
only upon an agreement in writing of the Borrower and the Bank.
9.8 Effect of Delay and Waivers. No delay or omission to exercise any
right or power accruing upon any default, omission or failure of performance
hereunder shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to time
and as often as may be deemed expedient. In order to entitle the Bank to
exercise any remedy now or hereafter existing at law or in equity or by statute,
it shall not be necessary to give any notice, other than such notice as may be
herein expressly required. In the event any provision contained in this
Agreement should be breached by any party and thereafter waived by the other
party so empowered to act, such waiver shall be limited to the particular breach
hereunder. No waiver, amendment, release or modification of this Agreement shall
be established by conduct, custom or course of dealing, but solely by an
instrument in writing duly executed by the parties thereunto duly authorized by
this Agreement.
9.9 Counterparts. This Agreement may be executed simultaneously in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
9.10 Severability. The invalidity or unenforceability of any one or
more phrases, sentences, clauses or Sections contained in this Agreement shall
not affect the validity or enforceability of the remaining portions of this
Agreement, or any part thereof.
9.11 Cost of Collection. The Borrower shall be liable for the payment
of all fees and expenses, including attorneys' fees (computed without regard to
any statutory presumption), reasonably incurred in connection with the
enforcement of this Agreement.
9.12 Set Off. Upon the occurrence of an Event of Default hereunder,
the Bank is hereby authorized, without notice to the Borrower, to set off,
appropriate and apply and all monies, securities and other properties of the
Borrower hereafter held or received by or in transit to the Bank from or for the
Borrower, against the obligations of the Borrower irrespective of whether the
Bank shall have made any demand hereunder or under any Security Instrument.
9.13 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland.
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9.14 References. The words "herein", "hereof", "hereunder" and other
words of similar import when used in this Agreement refer to this Agreement as a
whole, and not to any particular article, section or subsection.
9.15 Taxes, Etc. Any taxes (excluding income taxes) payable or ruled
payable by federal or state authority in respect to the Letter of Credit, this
Agreement or the Security Instruments shall be paid by the Borrower upon demand
by the Bank, together with interest and penalties, if any.
9.16 CONSENT TO JURISDICTION, WAIVER OF JURY TRIAL. THE BORROWER
HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE COURT WITHIN HARFORD COUNTY,
MARYLAND OR ANY FEDERAL COURT LOCATED WITHIN THE STATE OF MARYLAND, FOR ANY
PROCEEDING TO WHICH THE BANK IS A PARTY AND CONSENTS THAT ALL SERVICE OF
PROCESS BE MADE BY REGISTERED OR CERTIFIED MAIL DIRECTED TO THE BORROWER AT THE
ADDRESS INDICATED IN SECTION 9.6 OR AT SUCH OTHER ADDRESS AS THE BORROWER MAY
HAVE DESIGNATED IN WRITING TO THE BANK, AND SERVICE SO MADE SHALL BE DEEMED TO
BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER
DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID AND PROPERLY
ADDRESSED. TO THE EXTENT PERMITTED BY LAW, THE BORROWER VOLUNTARILY AND
KNOWINGLY WAIVES TRIAL BY JURY AND WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED
ON LACK OF JURISDICTION OR IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT
OF ANY PROCEEDING INSTITUTED HEREUNDER, OR ARISING OUT OF OR IN CONNECTION WITH
THIS REIMBURSEMENT AGREEMENT, OR ANY PROCEEDING TO WHICH THE BANK IS A PARTY,
INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF OR IN CONNECTION WITH ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF THE BANK OR THE BORROWER, AND THE BORROWER CONSENTS TO THE GRANTING
OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. IN THE
EVENT THAT THE BORROWER'S WAIVER OF JURY TRIAL HEREIN SHALL BE DETERMINED TO BE
INVALID OR UNENFORCEABLE AS A MATTER OF LAW, THE BORROWER AND THE BANK AGREE
THAT THE PROVISIONS OF ARTICLE XI HEREOF SHALL GOVERN AS TO THE MATTERS SET
FORTH THEREIN. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE BANK TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF
THE BANK TO BRING ANY ACTION AND PROCEEDING AGAINST THE BORROWER OR THE
COLLATERAL IN THE COURTS OF ANY JURISDICTION THAT HAS JURISDICTION OVER THE
BORROWER OR THE COLLATERAL.
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9.17 Indirect Means. Any act which the Borrower is prohibited from
doing shall not be done indirectly through a Subsidiary or by any other
indirect means.
9.18 Entire Agreement. This Agreement and the other Letter of Credit
Documents shall completely and fully supersede all other prior agreements
(including, the Commitment Letter), both written and oral, between the Bank and
the Borrower relating to the Letter of Credit and the obligations of the
Borrower to the Bank in regard thereto.
9.19 Authority to Act on Behalf of the Bank. With respect to the
acquisition of the Facility and disbursement of funds therefor, the Bank hereby
authorizes FUNBMD to take any actions as may be necessary to carry out the
purposes of this Agreement, including, without limitation, the giving or
withholding of consents or approvals related to disbursements from the Facility
Fund, on behalf of the Bank.
ARTICLE X
ACQUISITION OF FACILITY
10.1 Covenants by Borrower With Respect to Acquisition of Facility.
Subject to the provisions of Section 10.3 below, on the Closing Date, the
Borrower shall acquire the Facility Site and the Building, and proceeds of the
Loan will be advanced in an amount sufficient to pay for costs of such
acquisition, plus costs of issuance of the Bonds to the extent permitted by Bond
Counsel. All disbursements of Loan proceeds after the Closing Date shall be made
in accordance with the provisions of this Section 10.1. With respect to the
acquisition of the Facility, the Borrower hereby covenants and agrees with the
Bank and the Issuer that:
(a) Time of Completion. It will cause the acquisition of the
Facility to be prosecuted with diligence and continuity in accordance with the
Plans and will complete, on or before the Projected Completion Date, (i) the
renovation of and construction of the Addition and any other Improvements in
accordance with the Plans, and (ii) the purchase and installation of the
Equipment in the Facility, all of which shall be completed free and clear of
liens, security interests or claims (except for Permitted Liens.)
(b) Building Permits. All necessary building and other
governmental permits have been obtained with respect to the Facility or will be
obtained prior to commencing the particular work for which they are required.
(c) Plans and Specifications; Changes in Construction Contracts.
The Plans are satisfactory to the Borrower, have been approved (or will be
prior to commencing the
- 49 -
particular work for which approvals are required), to the extent required by
applicable law or any effective restrictive covenant, respectively, by all local
authorities and the beneficiary of any such covenant; the Plans to be approved
have also been approved by the Borrower, the Bank, and the Bank's Inspector; all
construction, if any, heretofore performed on the Improvements has been
performed within the perimeter of the Property in accordance with the Plans and
in accordance with any restrictive covenants applicable thereto; there are no
material structural defects in the Improvements; and no material violation of
any law exists with respect to the Property. The Borrower shall not permit any
changes in the Plans (after they have been delivered to the Bank) or any change
orders in the construction contracts for the Facility (after they have been
delivered to the Bank) which would increase the amount thereof without the prior
written consent of the Bank and any governmental authorities having jurisdiction
if such consent is required.
(d) Inspection. The Borrower will permit the Bank and its
representatives (including but not limited to the Bank's Inspector) to enter
upon any of the Property, to inspect the Facility and all materials at the
Facility Site, and will cooperate, and cause the contractors of the Borrower to
cooperate, with the Bank and the Bank's Inspector in connection with any such
inspections.
(e) Delivery of Certain Documents to Bank. The Borrower will
deliver to the Bank, on demand, copies of any contracts, bills of sale,
statements, receipted vouchers or agreements, under which the Borrower claims
title to any materials, fixtures or articles incorporated in any of the Facility
or subject to the lien of the Security Instruments.
(f) Correction of Defects. The Borrower, upon demand by the
Bank, will commence and proceed promptly and diligently to correct any
structural defect in the Facility or any departure from the Plans not approved
as herein provided. The Bank shall determine in its reasonable discretion
whether the Borrower is acting promptly and diligently. No approval by the Bank
of any disbursements by the Trustee from the Facility Fund will constitute a
waiver of the Bank's right to require compliance with this covenant with respect
to any such defects or departures from the Plans and Specifications.
(g) Identification of Contractors, Subcontractors and
Suppliers. At the Bank's request, the Borrower will deliver to the Bank the
names of all persons with whom it intends to contract for the acquisition of the
Facility or for the furnishing of labor or materials therefor, and a copy of
each contract, subcontract and agreement relating thereto, and obtain the
approval of the Bank prior to executing any contract or any subcontract with
respect to the acquisition of the Facility.
(h) Books and Records. During the acquisition of the Facility,
the Borrower will keep adequate records and books of account with respect to
the Facility and will permit the Bank,
- 50 -
by its agents, accountants and attorneys, to visit and inspect the Facility and
examine such records and books of account and to discuss the affairs, finances
and accounts pertaining thereto with representatives and agents of the Borrower
at such reasonable times as may be requested by the Bank.
(i) Compliance with Restrictions, etc. The Borrower will
comply (in all material respects) with all applicable building restrictions,
zoning ordinances, building codes, environmental protection requirements and
other governmental requirements applicable to the Facility.
(j) Payment of Contractors. The Borrower will promptly pay or
cause to be paid all of the contractors, subcontractors and materialmen
performing work in connection with the Facility the amounts justly due to them,
and receive the disbursements from the Facility Fund, and apply such
disbursements solely for the purpose of paying the costs of the completion of
the Facility.
No person contracting with the Borrower with respect to the
acquisition of the Facility shall have the right to be reimbursed by the Bank or
the Trustee under any circumstances whatsoever. The participation of the Bank
and the Trustee in the transactions contemplated hereby shall not in any way be
construed as obligating the Bank or the Trustee to any person or entity for the
payment of any expense incurred with respect to the acquisition of the Facility.
(k) Location Surveys. As soon as the footings and foundations
(if any) of the Addition are in (if deemed necessary by the Bank), the Borrower
shall cause to be delivered to the Bank a location survey prepared by surveyor
approved by the Bank showing the location of the Addition in relation to the
boundary lines thereof and setback restrictions applicable thereto and stating
that such location is in compliance with all setback and other applicable
restrictions. As construction of the Addition progresses, and upon their
completion, the Borrower will supply such further location surveys as the Bank
may reasonably require from time to time to assure itself that the Addition does
not extend beyond such boundary lines and setback and other restrictions.
10.2 Enforcement of Remedies Against Contractors and Subcontractors and
Their Sureties. The Borrower covenants that it will take such action and
institute such proceedings as shall be necessary to cause and require all
contractors, subcontractors, and material suppliers to complete their contracts
related to the Facility diligently in accordance with the terms of such
contracts, including (without limitation) the correcting of any defective work.
10.3 Application of Proceeds of the Bonds.
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(a) General. Pursuant to Section 401 of the Indenture, the
proceeds of the Bonds will be deposited into the Facility Fund and will be
disbursed from the Facility Fund to the Borrower or for the account of the
Borrower to pay the costs of the acquisition of the Facility, or to reimburse
the Borrower for the payment of the costs of the acquisition of the acquisition
of the Facility, approved by the Bank, as the acquisition of the Facility
progresses. Disbursements shall be made only against requisitions in the form
attached to the Indenture as Exhibit A and made a part thereof, which
requisitions must be signed by an authorized officer of the Borrower and
approved by the Bank pursuant to the procedures set forth herein and in the
Indenture.
The Bank, subject to the terms and provisions hereof, will
approve disbursements of the proceeds of the Bonds from the Facility Fund as
follows:
(i) A portion of such proceeds may be advanced to pay
the costs of issuance of the Bonds.
(ii) A portion of such proceeds may be
advanced to pay for costs of the acquisition of the
Facility Site and the renovation and construction of the
Improvements, which amount shall not exceed 75% of the
"As Built" appraised value of the Facility Site and all
Improvements based upon the Plans (which "As Built"
appraised value equals $2,875,000).
(iii) A portion of such proceeds may be advanced to pay
for the costs of the acquisition of the new Equipment,
which amount shall not exceed 80% of the costs of such
new Equipment (which costs are estimated to be $335,000).
(iv) A portion of such proceeds may be advanced to pay
for other costs of the Facility approved by the Bank and
the Trustee.
The amount of the difference, if any, between the total amount of the
costs of the Facility and the aggregate amount of the disbursements from the
Facility Fund permitted by this paragraph shall be paid by the Borrower from
sources other than the proceeds of the Bonds.
(b) Amounts Remaining After Completion. Upon completion of
the Facility all moneys remaining in the Facility Fund shall be transferred to
the Bond Fund and applied in accordance with Section 4.4 of the Loan Agreement.
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(c) Disbursement Procedure. All requisitions for disbursements
of moneys on deposit in the Facility Fund (other than transfers from the
Facility Fund to the Bond Fund), as well as all requisitions for disbursements
of proceeds of the County Loan and the MICRF Loan, shall be subject to the prior
written approval of the Bank. Each requisition shall (i) contain a breakdown of
amounts requested from each such funding source, and (ii) include a request for
some amount to be disbursed from the Facility Fund. The Bank shall have a period
of ten (10) Business Days within which to approve any requisition and shall not
be required to approve requisitions more than once each month. All disbursements
from the Facility Fund (except for transfers from the Facility Fund to the Bond
Fund) will be made by the Trustee. The Bank shall forward all approved
requisitions for funding from the County Loan or the MICRF Loan to the
appropriate party for funding under the County Loan Documents or the MICRF Loan
Documents, as applicable. At the Bank's direction all amounts disbursed from any
source shall be advanced directly to the Borrower unless the Bank, in its sole
direction, requires that any disbursements be made directly to any contractor,
or to subcontractors, laborers, materialmen or persons furnishing labor,
services, materials or equipment used or to be used on or in connection with the
acquisition of the Facility, or to any combination thereof, or to pay any loan
fees, taxes, inspection fees, recording charges, legal fees and any other
outstanding amounts due relating to Facility and the full cost of its
completion. Any such disbursement or payment shall be deemed to have been made
to the Borrower or for its account. Upon receipt of any funds requested by
requisition, the Borrower immediately shall apply such funds to payments of the
costs of the acquisition of the Facility for which such funds are requested by
the requisition.
(d) Disbursements for Costs of the Facility Other than the
Direct Costs of Construction and Renovation. Requisitions for costs of the
acquisition of the Facility, other than the direct costs of construction and
renovation, must (i) include an itemization of the costs for which payment is
requested, (ii) have attached thereto invoices evidencing such costs, (iii)
indicate that the delivery and installation of any Equipment for which payment
is requested has been completed, and (iv) at the Bank's request, have attached
thereto any additional documents or information (including any financing
statements or amendments to financing statements and all filing fees necessary
for the filing thereof) reasonably required by the Bank in order to create or
perfect, or continue the perfection of, the Bank's security interest in any
Equipment or other property.
(e) Disbursements for the Direct Costs of Construction and
Renovation. Requisitions for direct costs of construction and renovation of the
Facility must (i) include the AIA approved progress payment form, which must be
signed by the Borrower and the Borrower's architect, engineer or construction
manager and (ii) be approved by the Bank's Inspector, not to be unreasonably
delayed, conditioned or withheld. Disbursements for direct costs of construction
and renovation of the Facility shall be subject to retention (the "Retainage")
in an amount equal to ten percent (10%) of the value of the work performed and
materials in place with respect to such
- 53 -
work. The Retainage with respect to the Facility may be released upon compliance
with the conditions set forth in paragraph (f) of this Section 10.3.
(f) Final Disbursement for the Direct Costs of Construction and
Renovation. The final disbursement for direct costs of construction and
renovation, and the Retainage with respect to the Facility will be withheld
until the Bank has been furnished with and approved (i) a copy of a certificate
of completion signed by the Borrower and the Borrower's architect or the
Borrower's engineer or the Borrower's construction manager stating that the
construction and renovation of the Facility has been completed pursuant to and
in compliance with (A) the applicable Plans (the "Completion Certificate"), and
(B) all applicable zoning and building laws, ordinances, and regulations; (ii)
final waivers of liens from all materialmen, contractors and subcontractors;
(iii) a copy of the "as built" survey with respect to the Facility; (iv)
evidence of hazard insurance meeting the requirements of Section 6.3 of the Loan
Agreement covering the Facility; (v) a copy of the permanent use and occupancy
certificate authorizing use and occupancy of the Facility in such form as those
governmental agencies having jurisdiction customarily issue upon completion of
improvements and readiness thereof for use in Harford County, Maryland; and (vi)
an updated title insurance policy, if required by the Bank.
(g) Disbursements for Materials Not Incorporated in the Facility.
The Bank will not approve requisitions for disbursements from the Facility Fund
for materials which are not physically incorporated into the Facility, other
than for materials actually delivered to the site and stored in a place secured
and insured against theft, vandalism and other damage, all in a manner
satisfactory to the Bank.
(h) Deficiency. If at any time, either on the Closing Date or
thereafter, moneys on deposit in the Facility Fund, plus anticipated proceeds of
the MICRF Loan and the County Loan, are, in the opinion of the Bank, in its sole
discretion, insufficient to pay for all costs of the Facility, the Borrower
shall (i) complete, or cause to be completed, the Facility and pay or finance,
or cause to be paid or financed, that portion of the costs of the Facility as
may be in excess of the moneys available therefor in the Facility Fund, and (ii)
immediately, upon receipt of notice from the Bank, pay to the Bank, from funds
other than the proceeds of the Bonds, for deposit in the Facility Fund, a sum of
money which, when added to the moneys then on deposit in the Facility Fund, will
be sufficient to pay all costs of the Facility not yet paid. Immediately upon
receipt of proceeds of the MICRF Loan and the County Loan, the Borrower shall
apply such funds to payment of Facility costs prior to any further disbursements
of amounts on deposit in the Facility Fund, and shall provide the Bank with
evidence of such payment. Neither the Issuer nor the Bank make any warranty,
either express or implied, that the proceeds of the Bonds will be sufficient to
pay all of the costs of the Facility. If the Borrower finances any portion of
the costs of the Facility pursuant to the provisions of this Section from
sources other than the proceeds of the Bonds, it shall not be entitled to any
reimbursement therefor from the Issuer, from the Trustee, from the
- 54 -
Bank, or from any Bondholder, nor shall it be entitled to any abatement or
diminution of any payments required by the Bond Documents or the Letter of
Credit Documents.
(i) No Liability to Third Parties. Neither the issuance of the
Bonds nor the loan of the proceeds thereof to the Borrower shall in any way be
construed as obligating the Issuer or the Bank or the Trustee to any person for
the payment of any expense incurred with respect to the Facility, and no person
contracting with the Borrower in connection with the construction of the
Facility shall be reimbursed by the Issuer or the Bank or the Trustee under any
circumstances whatsoever. Neither the Bank nor the Trustee nor the Issuer shall
in any event be responsible or liable to any person other than the Borrower for
the disbursement of or failure to disburse proceeds of any of the Bonds, or any
part thereof, and neither any contractor, subcontractor nor material or
equipment supplier shall have any right or claim against the Bank, the Trustee
or the Issuer under this Letter of Credit Agreement or in connection with the
administration hereof.
10.4 Conditions Precedent to the Bank's Approval of Requisitions for
Disbursements from Facility Fund. The Bank shall not be obligated to approve any
requisition for disbursement until it shall have received a requisition meeting
the requirements of Section 402 of the Indenture, and until all of the following
conditions precedent shall have been fully met and complied with in all
respects:
(a) No Event of Default. No Event of Default shall have
occurred and be continuing hereunder.
(b) Sufficient Time to Complete Facility. There shall be
sufficient time in the opinion of the Bank to complete the Facility not later
than the Projected Completion Date.
(c) Permits. The Borrower shall have delivered to the Bank
copies of all permits required for the work for which a requisition has been
submitted.
(d) Waivers of Liens; Receipts. The Borrower shall have furnished
to the Bank waivers of liens and receipts of payment as to each contractor and
each subcontractor for all work performed to the date of the last previous
requisition and waivers of liens as to each supplier for materials included in
the last previous requisition, within 30 days from the date of funding of the
last previous requisition, or prior to the next requisition, whichever shall
first occur.
(e) Delivery of Contracts. The Borrower shall have delivered to
the Bank copies of any contracts, public works agreements and other agreements
executed by the Borrower in connection with the construction or renovation of
the Facility, all of which must have been approved by the Bank.
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(f) Title Continuation Report. At the option of the Bank, the
title insurance company insuring the title to the Real Property shall have
issued a title continuation or endorsement showing that the fee simple title to
the Real Property is clear of liens (other than Permitted Liens) to the date of
such disbursement and that no financing statements affecting the Property, or
any part thereof, other than in favor of the Issuer, the Bank and the Trustee,
or in connection with Permitted Liens, have been filed.
(g) Compliance with Plans and Specifications. The Borrower
shall have delivered to the Bank three sets of Plans, signed and sealed by the
Borrower's architect and approved by the Bank. The Borrower shall have certified
to the Bank, and the Bank's Inspector shall have confirmed, that all
construction work which has been completed on the Facility with respect to which
the requisition is being submitted is in conformity with the applicable Plans.
Upon the request of the Bank, the Borrower will specify the nature of any
deviations from such Plans and Specifications.
(h) Proper Application of Prior Disbursements. The Bank
shall have received, upon the Bank's request, evidence satisfactory to it that
all prior disbursements have been properly applied to costs of the Facility.
(i) Location Surveys. With respect to any new construction,
the Bank shall have received a current location survey showing (i) that all new
construction is within the property lines and in compliance with all applicable
setbacks, location and area requirements, and (ii) that there is no change in
conditions which could adversely affect the security for any of the obligations
of the Borrower under this Agreement.
(j) Sufficient Funds to Complete Facility. The sum of the
funds being requisitioned, plus all prior disbursements by the Trustee, plus the
aggregate of all retentions and undisbursed funds, plus the proceeds of the
County Loan and the MICRF Loan, shall be sufficient, in the sole opinion of the
Bank, to complete the Facility in accordance with the applicable Plans. In the
event that the Borrower is required to deposit moneys in the Facility Fund in
order to pay the costs of completing the Facility pursuant to Section 10.3(h)
hereof, the Borrower shall have made such deposit.
(k) Quality and Quantity of Construction. The Bank shall have
received (i) evidence acceptable to the Bank in its sole discretion that
construction work performed and materials in place to the date of the
requisition are satisfactory both as to the quality and quantity, and that the
subsoil is suitable for the continued construction of the Facility, and (ii) a
certification from the Bank's Inspector that the work performed is in compliance
with all applicable governmental requirements.
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(l) Events Required Prior to Disbursements for Construction or
Renovation. Notwithstanding any other provisions of this Agreement, prior to any
disbursement of proceeds of the Bonds for costs of construction or renovation
(specifically excluding acquisition costs of the Property and soft costs related
to the acquisition of the Property), the Bank shall received (i) satisfactory
evidence that (A) the proceeds of the MICRF Loan and the County Loan have been
advanced to the Borrower, and (B) the County has agreed to subordinate the
County Loan; (ii) a counterpart original of the Subordination Agreement (in the
form approved by the Bank prior to closing) duly executed by all parties
thereto; (iii) a satisfactory opinion of counsel to the Borrower regarding the
validity and enforceability of the Subordination Agreement; and (iv) a
satisfactory payment and performance bond from the general contractor.
(m) Documents Required Prior to Disbursements for Equipment.
Notwithstanding any other provisions of this Agreement, prior to any
disbursement of the proceeds of the Bonds for costs of each item of Equipment,
the Bank must have received and approved satisfactory evidence that the proceeds
of the MICRF Loan have been advanced to the Borrower (as described in
subparagraph (l) above), and all of the following items:
(i) a specific description of such equipment,
including name of manufacturer, manufacturer's I.D.
number or serial number and any other information
reasonably requested by the Bank in order to
sufficiently describe the equipment being financed
so that the Bank's security interest in such
equipment is adequately and may be or will be
adequately perfected, upon delivery to Borrower of
such item of Equipment.
(ii) an amendment to this Agreement, if
necessary in the sole opinion of the Bank, pursuant
to which the Borrower specifically grants to the
Bank a security interest in such equipment (or
Borrower's interest therein in respect of equipment
on order but not yet received), and
(iii) a financing statement or amendment to
financing statement, if necessary in the sole
opinion of the Bank, together with all filing fees
therefor, to be filed among the appropriate
financing statement records in order to perfect such
security interest.
(n) Final Disbursement. If the disbursement is the final
disbursement for the costs of the Facility, in order to obtain the Bank's
approval of such disbursement (including the Retainage), in addition to the
satisfaction of all conditions set forth in this Section, the Borrower
- 57 -
shall have provided (i) the Completion Certificate, appropriately completed, and
the accompanying documents described therein, and (ii) evidence satisfactory to
Lender that an affidavit of completion has been recorded in the appropriate
governmental office Harford County, Maryland.
(o) Construction and Engineer's Contracts. The Borrower shall
cause each of the Borrower's general contractor, all sub-contractors specified
by the Bank, and the Borrower's engineer to execute an agreement to complete
which will provide, among other things, that upon request by the Bank, they will
continue to provide the services called for by their contracts with the Borrower
following an Event of Default. The Borrower will cause to agree to give the Bank
and the Issuer notice of a default and an opportunity to cure under their
contracts with the Borrower and to acknowledge the existence of the Bank's
interests in the Facility.
10.5 Financing Sign on Property: Publicity. The Borrower authorizes the
Bank to place signs at the Property at any reasonable locations selected by the
Bank and the Issuer (during the construction of the Facility), and to prepare
and furnish news releases to the news media or any other publications selected
by the Bank and the Issuer advertising the fact that financial assistance for
the Facility has been obtained from the Bank and the Issuer, and the details of
such financial assistance (but in no event any confidential information
regarding Borrower or its business). Any sign placed on the Property by the
Borrower which identifies the Facility shall identify the Bank and the Issuer as
the parties providing financing for the Facility. Any such news releases must be
first approved by the Borrower, which will not unreasonably withhold its
approval.
10.6 Establishment of Completion Date. The Completion Date shall be
established by the delivery to the Trustee by the Borrower of the Completion
Certificate (appropriately completed) executed by the Borrower and approved in
writing by the Bank. The Completion Certificate delivered to the Bank shall have
attached thereto the items described in Section 10.3(f) hereof.
Notwithstanding the foregoing, the Completion Certificate shall state
that it is given without prejudice to any rights against third parties which may
exist at the date of such Completion Certificate or which may subsequently come
into being. It shall be the duty of the Borrower to cause the Completion
Certificate to be furnished as soon as the construction and renovation of the
Facility shall have been completed.
ARTICLE XI
ARBITRATION
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11.1 Arbitration. Except as otherwise specifically set forth in this
Agreement or agreed to in writing by the Borrower and the Bank and except as
expressly provided otherwise in Section 11.3 below, in the event that the
Borrower's waiver of trial by jury contained in Section 9.16 of this Agreement
is determined to be invalid or unenforceable as a matter of law, then any
action, dispute, claim or controversy between the parties, whether sounding in
contract, tort, or otherwise, arising under this Agreement or any proceeding to
which the Bank is a party, including any actions based upon, arising out of, or
in connection with any course of conduct, course of dealing, statement (whether
oral or written), or actions of the Bank or the Borrower ("Dispute" or
"Disputes"), shall be resolved by arbitration as set forth in this Annex. Such
Disputes shall be resolved by binding arbitration in accordance with Title 9 of
the United States Code, as amended, and the Commercial Arbitration Rules of the
American Arbitration Association ("AAA"), as in effect from time to time (the
"Rules"). In the event of any inconsistency between the Rules and the provisions
of this Annex, the provisions of this Annex shall supersede the Rules. All
statutes of limitations that would otherwise be applicable shall apply to any
arbitration proceeding hereunder. In any arbitration proceeding subject to the
provisions of this Annex, the arbitrator is specifically empowered to decide (by
documents only, or with a hearing, at the arbitrator's sole discretion)
pre-hearing motions that are substantially similar to pre-hearing motions to
dismiss and motions for summary adjudication. Judgment upon the award rendered
may be entered in any court having jurisdiction. Whenever an arbitration is
required, the parties shall select an arbitrator in the manner provided in
Section 11.4 below.
11.2 Judicial Reference. If a Dispute is not submitted to arbitration
as provided in Section 1 above for any reason, but become the subject of a
judicial action, at any point in the proceeding, any party may elect to have any
specific questions of fact or law, or all questions of fact or law, determined
by a reference accordance with Rule 53 of the North Carolina Rules of Civil
Procedure (or the equivalent rule of another State, as applicable). A party
shall not waive the right to request such judicial reference for any remaining
questions of fact or law to be decided by virtue of the party's initiating or
participating in judicial or other proceedings or by failure to request such a
reference up to any point in a judicial proceeding. Whenever such an election is
made, the parties shall designate to the court a single referee selected in the
manner provided in Section 11.4 below. Judgment upon the award rendered shall be
entered in the court in which such proceeding was commenced.
11.3 Remedies. No provision of, nor the exercise of any rights under,
Sections 11.1 or 11.2 above shall limit or otherwise affect the right of the
Bank (a) to proceed and foreclose against any of the Collateral by the exercise
of a power of sale available under the Security Instruments and applicable law,
(b) to exercise any self help remedies available under this Agreement or the
Security Instruments and applicable law, including, without limitation, set off,
or to exercise any other nonjudicial rights and remedies available to it under
any of the Security Instruments or this Agreement and applicable law, or (c) to
obtain provisional or ancillary
- 59 -
remedies, including, without limitation, injunctive relief and the appointment
of a receiver, from a court having jurisdiction before, during or after the
pendency of any arbitration or referral. The Bank's pursuit of provisional or
ancillary remedies, or its exercise of self help and other nonjudicial remedies,
shall not constitute a waiver of its right to submit the Dispute to arbitration
or judicial reference.
11.4 Selection of Arbitrator or Referee. Whenever an arbitration is
required under Section 11.1 above or a referral is required under Section 11.2
above, the arbitrator or referee shall be selected in accordance with this
Section 11.4. Except as otherwise provided, the arbitrator or referee shall be
an attorney or retired judge selected in accordance with the Rules of the AAA.
Any arbitrator or referee selected under this Section 11.4 shall be
knowledgeable in the subject matter of the Dispute. Qualified retired judges
shall be selected through panels maintained by AAA, or any North Carolina
Superior Court (or a court, of an equivalent or higher level, of another State)
or private organization providing such services. A single arbitrator who is an
attorney but is not a retired judge shall have the power to render a maximum
award of $100,000. Where any party makes timely written request prior to
appointment of the arbitrator, or whether the claim of any party exceeds
$100,000, the arbitrator shall be a retired judge formerly sitting on the bench
in a North Carolina Superior Court or any higher State court (or a court, of an
equivalent level, of another State), or a retired Federal court judge formerly
sitting on the bench of a United States Court of Appeals or any Federal District
Court. A single arbitrator who is a retired judge shall have the power to render
a maximum award of $1,000,000. Where any party seeks an award in excess of
$1,000,000, the Dispute shall be decided by a majority vote of three
arbitrators, at least one of whom shall meet the requirements for retired judges
set forth herein. For purposes of this Section 11.4, the computation of the
maximum award an arbitrator may make shall include any amounts awarded for
arbitration fees, attorneys fees and all other related costs provided by Section
11.5 below.
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11.5 Miscellaneous. This Agreement shall be interpreted, and the
resolution of all Disputes and the rights and liabilities of the parties shall
be determined, in accordance with the internal laws (as opposed to conflicts of
law provisions) of the State of North Carolina; provided that any arbitration
questions arising under this Annex on dispute resolution shall by governed in
accordance with Title 9 of the United States Code, as amended. This Section of
the Agreement, constitutes the entire agreement of the parties with respect to
its subject matter and supersedes all prior discussions, arrangements,
negotiations and other communications on dispute resolution. To the extent any
provision of this Section is prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Section. The provisions of this Section shall survive any termination or
expiration of this Agreement until payment in full of the obligations
thereunder, unless the parties otherwise expressly agree in writing. The
arbitrator shall have the power to award to the prevailing party recovery of all
costs, expenses and fees incurred by it (including reasonable attorneys' fees,
administrative fees, arbitrators' fees, and court costs), and in particular, but
without limitation of the foregoing, shall have the power to aware to either
party hereto, whether or not such party shall be the prevailing party in an
arbitration, recovery of all costs, expenses and fees incurred by it (including
reasonable attorneys' fees, administrative fees, arbitrators' fees, and
- 61 -
court costs), but only to the extent payable or reimbursable by the other party
under the applicable provisions of this Agreement.
IN WITNESS WHEREOF, the Borrower and the Bank have caused this
Agreement to be executed in their respective names and their respective seals to
be hereunto affixed and attested by their duly authorized representatives, all
as of the date first above written.
BORROWER:
ATTEST: ALCORE, INC.
By: By: (SEAL)
Name: Name: Xxxxxx X. Xxxxx
Title: Title: President/General Manager
(CORPORATE SEAL)
BANK:
WITNESS: FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By: (SEAL)
Name: Xxxx Xxxxxx
Title: Assistant Vice President
- 62 -
EXHIBIT A
IRREVOCABLE LETTER OF CREDIT
Date:__________, 1997
LETTER OF CREDIT NO. ________
Branch Banking and Trust
Company, as Credit Facility Trustee
000 Xxxx Xxxx Xxxxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Corporate Trust Department
Ladies and Gentlemen:
We hereby issue to you, Branch Banking and Trust Company, as Credit
Facility Trustee under the Trust Indenture dated as of May 1, 1997 between the
Maryland Industrial Development Financing Authority (the "Issuer"), First Union
National Bank of Virginia, as Trustee, and you (as amended or supplemented, the
"Indenture"), pursuant to which the Maryland Industrial Development Financing
Authority Economic Development Revenue Bonds (Alcore, Inc. Facility) 1997 Issue
in the original principal amount of $2,600,000 (the "Bonds") have been issued,
this Irrevocable Letter of Credit No. ______________ (the "Letter of Credit")
for the account of Alcore, Inc. (the "Borrower") in the amount of $2,704,000
(the "Initial Stated Amount") and, as from time to time reduced and reinstated
as hereinafter provided, the "Amount Available," of which (i) subject to the
provisions below reducing amounts available hereunder, $2,600,000 (as from time
to time reduced and reinstated as hereinafter provided, the "Principal Amount
Available") shall be available for the payment of principal or the portion of
the purchase price corresponding to principal of the Bonds and (ii) subject to
the provisions below reducing amounts available hereunder, $104,000 (as from
time to time reduced and reinstated as hereinafter provided, for the "Interest
Amount Available") shall be available for the payment of up to 120 days'
interest or the portion of the purchase price corresponding to interest on the
Bonds at an assumed rate of 12% per annum. Subject to such aggregate limits and
to the conditions set forth herein, funds may be drawn upon hereunder (i) with
respect to payment of the unpaid principal amount or the portion of purchase
price corresponding to the principal of the Bonds and (ii) with respect to
payment of up to 120 days' interest accrued and payable or the portion of
purchase price corresponding to interest accrued on the Bonds on or prior to
their stated maturity date. This Letter of Credit is effective immediately and
expires as of the close of business at our
A-1
Presentation Office (as hereinafter defined) on _________, 2000 (as may be
extended from time to time as hereinafter described, the "Stated Termination
Date") or earlier as hereinafter provided. This Letter of Credit shall be
extended automatically for successive one-year terms from the then applicable
Stated Termination Date unless we give you, or any successor Credit Facility
Trustee, written notice of our election not to renew this Letter of Credit at
least one hundred twenty (120) days prior to the applicable Stated Termination
Date by U. S. certified mail, return receipt requested or unless this Letter of
Credit is otherwise terminated in accordance with its terms. All drawings under
this Letter of Credit will be paid with our own funds.
We hereby irrevocably authorize you to draw on us, in an aggregate
amount not to exceed the Amount Available and in accordance with the terms and
conditions and subject to the reductions in amount as hereinafter set forth, (1)
in a single drawing (subject to the provisions contained in the next following
paragraph) by your draft drawn on us at sight, presented for payment on a day on
which banks in the State of North Carolina are open for the transaction of
business of the nature required pursuant to the Loan Agreement and the Indenture
(each as defined in the Bonds) (a "Business Day") and referring therein to the
number of this Letter of Credit, and accompanied by your written and completed
certificate signed by you in the form of Annex A attached hereto (such draft
accompanied by such certificate being your "Interest Draft"), an amount not
exceeding the Interest Amount Available on the date of such drawing; (2) in one
or more drawings by one or more of your drafts drawn on us at sight, presented
for payment on a Business Day and referring therein to the number of this Letter
of Credit, and accompanied by your written completed certificate signed by you
in the form of Annex B attached hereto (any such draft accompanied by such
certificate being your "Tender Draft"), and aggregate amount not exceeding the
Amount Available on the date of such drawing; (3) in one or more drawings by one
or more of your drafts drawn on us at sight, presented for payment on a Business
Day and referring therein to the number of this Letter of Credit, and
accompanied by your written and completed certificate signed by you in the form
of Annex C attached hereto (any such draft accompanied by such certificate being
your "Partial Redemption Draft"), an aggregate amount not exceeding the Amount
Available on the date of such drawing; (4) in a single drawing by your draft
drawn on us at sight presented for payment on a Business Day and referring
therein to the number of this Letter of Credit, and accompanied by your written
and completed certificate signed by you in the form of Annex D hereto (any such
draft accompanied by such certificate being your "Conversion Draft"), an amount
not exceeding the Amount Available on the date of such drawing; and (5) in a
single drawing by your draft drawing on us at sight, presented for payment on a
Business Day and referring therein to the number of this Letter of Credit, and
accompanied by your written and completed certificate signed by you in the form
of Annex E attached hereto (such draft accompanied by such certificate being
your "Final Draft"), an amount not exceeding the Amount Available on the date of
such drawing.
A-2
If you shall draw on us by an Interest Draft and you shall not have
received from us within ten (10) calendar days from the date of our payment in
respect of such drawing a notice to the effect that we have not been reimbursed
for such drawing and that the interest portion of the Letter of Credit will not
be reinstated, then (x) your right to draw on us in a single drawing by your
Interest Draft under clause (1) of the immediately preceding paragraph shall be
automatically reinstated and (y) effective as of the eleventh (11th) calendar
day from the date of our payment in respect of such drawing, you shall again be
authorized to draw on us by your Interest Draft in accordance with said clause
(1). The provisions of this paragraph providing for the reinstatement of your
right to draw on us by your Interest Draft in a succeeding single drawing shall
be applicable to each successive drawing by your Interest Draft under clause (1)
of the immediately preceding paragraph so long as this Letter of Credit shall
not have terminated as set forth below.
Upon our honoring any Tender Draft presented by you hereunder, the
Amount Available under this Letter of Credit shall be automatically reduced by
the amount drawn under such Tender Draft, the Principal Amount Available to be
drawn hereunder by you shall be automatically reduced by an amount equal to the
principal component of such Tender Draft and the Interest Amount Available to be
drawn hereunder by you shall be automatically reduced by an amount equal to the
amount of the interest component of such Tender Draft.
Upon our honoring any Partial Redemption Draft presented by you
hereunder, the Amount Available under this Letter of Credit shall be
automatically and permanently reduced by the amount drawn under any such Partial
Redemption Draft, the Principal Amount Available to be drawn hereunder by you
shall be automatically and permanently reduced by an amount equal to the
principal component of such Partial Redemption Draft honored by us hereunder and
the Interest Amount Available to be drawn hereunder by you shall be
automatically and permanently reduced by an amount equal to the amount of the
interest which would accrue on an amount of principal equal to the principal
component of such Partial Redemption Draft for one hundred twenty (120) days at
an assumed rate of twelve percent (12%) per annum.
Upon our honoring any Conversion Draft presented by you hereunder, the
Amount Available under this Letter of Credit shall be automatically and
permanently reduced by the amount drawn under any such Conversation Draft, the
Principal Amount Available to be drawn hereunder by you shall be automatically
and permanently reduced by an amount equal to the principal component of such
Conversation Draft honored by us hereunder, and the Interest Amount Available to
be drawn hereunder by you shall be automatically and permanently reduced by an
amount equal to the amount of the interest component of any such Conversation
Draft honored by us hereunder.
A-3
The Amount Available, the Principal Amount Available and the Interest
Amount Available drawn under this Letter of Credit with respect to any Tender
Draft shall be reinstated as provided in this paragraph to the extent, but only
to the extent, that we are reimbursed by or on behalf of the Borrower in
immediately available funds delivered to us at the Presentation Office on or
before 3:00 p.m. (Charlotte, North Carolina time) on a Business Day for any
amount drawn in respect of principal and interest under any Tender Draft. If we
receive such reimbursement by or on behalf of the Borrower, all in strict
conformity with the terms and conditions of this Letter of Credit, after 3:00
p.m. (Charlotte, North Carolina time) on a Business Day prior to the termination
hereof, such reimbursement will be honored as stated above as if received on the
next succeeding Business Day. Any amount received by us from or on behalf of the
Borrower in reimbursement of amounts drawn hereunder by a Tender Draft shall, if
accompanied by your completed certificate signed by you in the form of Annex F
attached hereto, be applied to the extent of the amount received by us and
indicated therein to reimburse us for amounts drawn hereunder by your Tender
Drafts and we will confirm to you the amount of the Principal Amount Available
and the Interest Amount Available reinstated by such reimbursement by delivering
to you the executed and completed acknowledgment accompanying the form of Annex
F delivered by you in connection with such reimbursement. The Amount Available,
the Principal Amount Available and the Interest Amount Available shall be
reinstated only in compliance with the provisions of this paragraph.
Each draft and certificate presented hereunder shall be dated the date
of its presentation and each such draft and certificate shall be presented at
our office located at Two First Union Center, T-7, Charlotte, North Carolina
28202-0742, Attention: International Operations (or at any other office in the
State of North Carolina which may be designated by us by written notice
delivered to you at least three Business Days prior to a date on which interest
is payable on the Bonds) (the "Presentation Office") and shall be presented on a
Business Day. If we receive any of your drafts and certificates at such office,
all in strict conformity with the terms and conditions of this Letter of Credit,
not later than 11:00 a.m. (Charlotte, North Carolina time) on a Business Day on
or prior to the termination hereof, we will honor the same by initiating the
wire of funds by 2:30 p.m. (Charlotte, North Carolina time) on the same day in
accordance with your payment instructions. If we receive any of your drafts and
certificates at such office, all in strict conformity with the terms and
conditions of this Letter of Credit, after 11:00 a.m. (Charlotte, North Carolina
time) on a Business Day prior to the termination hereof, we will honor the same
on the next succeeding Business Day by initiating the wiring of funds by 2:30
p.m. (Charlotte, North Carolina time) in accordance with your payment
instructions. If requested by you, payment under this Letter of Credit may be
made by wire transfer of Federal Reserve Bank of Richmond funds to your account
in a bank of the Federal Reserve wire system or by deposit of same day funds
into a designated account that you maintain with us.
A-4
In connection with the presentation of any Tender Draft or Conversion
Draft, Bonds in aggregate principal amount equal to the principal amount of such
Tender Draft or Conversion Draft shall be delivered to the Bank or its designee
as promptly as practicable, and in any event within five Business Days after
such presentation, registered in the name of the Bank, or its designee, as
pledgee of the Borrower, pledged to the Bank pursuant to the Pledge Agreement.
With respect to any Tender Draft, the Bank agrees that it shall not release any
Bonds pledged to it until the Trustee shall have received the Bank's executed
acknowledgment accompanying the form of Annex F attached hereto notifying the
Trustee that the Letter of Credit has been reinstated so that the Amount
Available, as so reinstated, shall equal or exceed the aggregate principal and
120 days' interest calculated at an assumed rate of 12% per annum on all Bonds
for which drawings are available hereunder after giving effect to such release.
Upon the earliest of (i) our honoring your Final Draft presented
hereunder, (ii) the second day following the date on which we receive a
certificate signed by you stating that the interest rate on the Bonds has been
converted to a fixed interest rate, (iii) the date on which we receive a
certificate signed by you stating that the Borrower has provided and you have
accepted an Alternate Letter of Credit in accordance with the terms of the
Indenture which is effective the date of such certificate, or (iv) the Stated
Termination Date, this Letter of Credit shall terminate.
This Letter of Credit is transferable only in its entirety to any
transferee whom you certify to us has succeeded you as Credit Facility Trustee
under the Indenture, and may be successively transferred. Transfer of the Amount
Available under this Letter of Credit to such transferee shall be effected by
the presentation to us of this Letter of Credit accompanied by a certificate in
the form of Annex G attached hereto and payment of the transfer commission
referred to therein. Upon such presentation we shall forthwith transfer the same
to your transferee or, if so requested by your transferee, issue a letter of
credit to your transferee with provisions therein consistent with this Letter of
Credit.
This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein
(including, without limitation, the Bonds or the Indenture), except only the
certificates and the drafts referred to herein which are hereby incorporated by
reference; and any such reference shall not be deemed to incorporate herein by
reference any documents, instrument or agreement except for such certificates
and such drafts.
Except as otherwise provided herein, this Letter of Credit shall be
governed by and construed in accordance with the Uniform Customs and Practice
for Documentary Credits (1993 Revisions), International Chamber of Commerce
Publication No. 500 (the "UCP") and, to the extent not inconsistent therewith,
the laws of the State of North Carolina. Communications with
A-5
respect to this Letter of Credit other than presentations of drafts and
certificates hereunder shall be in writing and shall be addressed to us at Two
First Xxxxx Xxxxxx, X-0, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000, Attention:
International Operations, specifically referring to the number of this Letter of
Credit.
Notwithstanding anything to the contrary in Article 17 of the UCP, if
this Letter of Credit expires during an interruption of business as described in
Article 17, the Bank will honor draws under this Letter of Credit that are made
within ten (10) days after the resumption of business by the Bank.
Very truly yours,
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By:
Name: Xxxx Xxxxxx
Title: Vice President
A-6
Annex A
[Form of Certificate for Interest Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT
OF UP TO 120 DAYS' INTEREST
Irrevocable Letter of Credit No.
The undersigned, a duly authorized officer of the undersigned Credit
Facility Trustee (the "Credit Facility Trustee"), hereby certifies to First
Union National Bank of North Carolina (the "Bank"), with reference to
Irrevocable Letter of Credit No. __________ (the "Letter of Credit; the terms
defined therein and not otherwise defined herein being used herein as therein
defined) issued by the Bank in favor of the Credit Facility Trustee, as follows:
(1) The Credit Facility Trustee in the Trustee or a
Co-Trustee under the Indenture for the holders of the Bonds.
(2) The Credit Facility Trustee is making a drawing under the
Letter of Credit with respect to a payment of interest on the
Bonds, which payment is due and payable on a regular Interest
Payment Date. On the record date for such Interest Payment
Date, none of such Bonds for which interest is drawn pursuant
to the draft were held of record by the Borrower, or by the
Bank, or its designee, as pledgee of the Borrower.
(3) [The Interest Draft accompanying this Certificate is the
first Interest Draft presented by the Credit Facility Trustee
under the Letter of Credit.]* [The Interest Draft last
presented by the Credit Facility Trustee under the Letter of
Credit was honored and paid by the Bank on _______________,
_______, and the Credit Facility Trustee has not received a
notice within ten days of presentation of such Interest Draft
from the Bank that the Bank has not been reimbursed.]**
(4) The amount of the Interest Draft accompanying this
Certificate is $__________. It was computed in compliance with
the terms and conditions of the Bonds and the Indenture and
does not exceed the Interest Amount Available to be drawn by
the Credit Facility Trustee under the Letter of Credit.
(5) Upon receipt by the undersigned of the amount demanded
hereby, (a) the undersigned will apply the same directly to
the payment when due of the interest amount owing on account
of the Bonds pursuant to the Indenture, (b) no portion of said
amount shall be applied by the undersigned for any other
purpose, and (c) no portion of said amount shall be commingled
with other funds held by the undersigned.
IN WITNESS WHEREOF, the Credit Facility Trustee has executed and
delivered this Certificate as of the ______ day of ________________, 19__.
A-A-1
BRANCH BANKING AND TRUST
COMPANY, as Credit Facility Trustee
By:
Name:
Title:
* To be used in the Certificate relating to the first Interest Draft only.
** To be used in each Certificate relating to each Interest Draft other than
the first Interest Draft.
A-A-2
Annex B
[Form of Certificate for Tender Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT
OF PRINCIPAL PURCHASE PRICE AND PORTION OF PURCHASE
PRICE CORRESPONDING TO INTEREST OF BONDS TENDERED
Irrevocable Letter of Credit No.
The undersigned, a duly authorized officer of the undersigned Credit
Facility Trustee (the "Credit Facility Trustee"), hereby certifies to First
Union National Bank of North Carolina (the "Bank"), with reference to
Irrevocable Letter of Credit No. ________ (the "Letter of Credit"; the terms
defined herein and not otherwise defined herein being used herein as therein
defined) issued by the Bank in favor of the Credit Facility Trustee, as follows:
(1) The Credit Facility Trustee is the Trustee of a
Co-Trustee under the Indenture for the holders of the Bonds.
(2) The Credit Facility Trustee is making a drawing under the
Letter of Credit with respect to a payment, upon a tender of
all or less than all of the Bonds, which are Outstanding (as
defined in the Indenture), of the unpaid principal amount of
the Bonds and accrued interest thereon to be purchased as a
result of such tender pursuant to the terms of Article III of
the Indenture (other than Bonds, presently held of record by
the Borrower, or by the Bank, or its designee, as pledgee of
the Borrower) which payment is due on the date on which this
Certificate and the Tender Draft it accompanies are being
presented to the Bank.
(3) The amount of the Tender Draft accompanying this
Certificate is equal to the sum of (i) $________________ being
drawn in respect of the payment of unpaid principal of Bonds
(other than Bonds presently held of record by the Borrower or
by the Bank, or its designee, as pledgee of the Borrower) to
be purchased as a result of a tender, which amount does not
exceed the Principal Amount Available under the Letter of
Credit, and (ii) $____________ being drawn in respect of the
payment of _________ days' [not to exceed 120 days'] accrued
and unpaid interest on such Bonds constituting a portion of
the purchase price of such Bonds being purchased as a result
of a tender, which amount does not exceed the Interest Amount
Available under the Letter of Credit.
(4) The Credit Facility Trustee shall, pursuant to the Pledge
Agreement, deliver or cause to be delivered to the Bank or its
designee a principal amount of Bonds equal to the principal
amount of the Tender
A-B-1
Draft accompanying this Certificate as promptly as
practicable, and in any event within five Business Days after
presentation of the Tender Draft accompanying this
Certificate.
(5) Upon receipt by the undersigned of the amount demanded
hereby, (a) the undersigned will apply the same directly to
the payment when due of the purchase price of Bonds tendered
pursuant to the Indenture, (b) no portion of said amount shall
be applied by the undersigned for any other purpose, and (c)
no portion of said amount shall be commingled with other funds
held by the undersigned.
(6) The amount of the Tender Draft accompanying this
Certificate was computed in compliance with the terms and
conditions of the Bonds and the Indenture and does not exceed
the Amount Available under the Letter of Credit.
The Credit Facility Trustee acknowledges that, pursuant to the terms of
the Letter of Credit, upon the Bank's honoring of the Tender Draft accompanying
this Certificate, (i) the Amount Available under the Letter of Credit shall be
automatically reduced by the aggregate amount of such Tender Draft, (ii) the
Principal Amount Available under the Letter of Credit shall be automatically
reduced by an amount equal to the amount of the principal component of such
draft set forth in paragraph 3 above, and (iii) the Interest Amount Available
under the Letter of Credit shall be automatically reduced by an amount equal to
the amount of the interest component of such draft set forth in paragraph 3
above, each subject to reinstatement as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Credit Facility Trustee has executed and
delivered this Certificate as of the _____ day of ______________, _____.
BRANCH BANKING AND TRUST
COMPANY, as Credit Facility Trustee
By:
Name:
Title:
A-B-2
Annex C
[Form of Certificate for Partial Redemption Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT
OF PRINCIPAL AND UP TO 120 DAYS' INTEREST UPON
PARTIAL REDEMPTION
Irrevocable Letter of Credit No.
The undersigned, a duly authorized officer of the undersigned Credit
Facility Trustee (the "Credit Facility Trustee"), hereby certifies to First
Union National Bank of North Carolina (the "Bank"), with reference to
Irrevocable Letter of Credit No. _________ (the "Letter of Credit"; the terms
defined therein and not otherwise defined herein being used herein as therein
defined) issued by the Bank in favor of the Credit Facility Trustee, as follows:
(1) The Credit Facility Trustee is the Trustee or a Co-Trustee
under the Indenture for the holders of the Bonds.
(2) The Credit Facility Trustee is making a drawing under the
Letter of Credit with respect to a payment, upon redemption of
less than all of the Bonds which are Outstanding (as defined
in the Indenture), of the unpaid principal amount of, and up
to 120 days' accrued and unpaid interest on, the Bonds to be
redeemed pursuant to the Indenture (other than Bonds presently
held of record by the Borrower, or by the Bank, or its
designee, as pledgee of the Borrower).
(3) The amount of the Partial Redemption Draft accompanying
this Certificate is $_____________ and is equal to the sum of
(i) $____________ being drawn in respect of the payment of
unpaid principal of Bonds (other than Bonds presently held of
record by the Borrower or by Bank, or its designee, as pledgee
of the Borrower) to be redeemed, which amount does not exceed
the Principal Amount Available under the Letter of Credit and
(ii) $______________ being drawn in respect of the payment of
______ days' [not to exceed 120 days'] accrued and unpaid
interest on such bonds, which amount does not exceed the
Interest Amount Available under the Letter of Credit.
(4) The amount of the Partial Redemption Draft accompanying
this Certificate was computed in accordance with the terms and
conditions of the Bonds and the Indenture and does not exceed
the amount Available under the Letter of Credit.
(5) This Certificate and the Partial Redemption Draft it
accompanies are dated, and are being presented to the Bank on,
the date on which the unpaid principal amount of, and accrued
and unpaid interest on,
A-C-1
Bonds to be redeemed are due and payable under the Indenture
upon redemption of less than all of the Bonds which are
Outstanding (as defined in the Indenture).
(6) Upon receipt by the undersigned of the amount demanded
hereby (a) the undersigned will apply the same directly to the
payment when due of the principal amount of and accrued and
unpaid interest on the Bonds pursuant to the Indenture, (b) no
portion of said amount shall be applied by the undersigned for
any other purpose and (c) no portion of said amount shall be
commingled with other funds held by the undersigned.
The Credit Facility Trustee acknowledges that, pursuant to the terms of
the Letter of Credit, upon the Bank's honoring the Partial Redemption Draft
accompanying this Certificate, (i) the Amount Available under the Letter of
Credit shall be permanently reduced by the aggregate amount of such Partial
Redemption Draft, (ii) the Principal Amount Available under the Letter of Credit
shall be permanently reduced by an amount equal to the amount of the principal
component of such draft set forth in paragraph 3 above and (iii) the Interest
Amount Available under the Letter of Credit shall be permanently reduced by
$_____________, which is equal to an amount of interest which would accrue on an
amount of principal equal to the principal component set forth in paragraph 3
above for a period of one hundred twenty (120) days at a maximum rate of twelve
percent (12%) per annum.
IN WITNESS WHEREOF, the Credit Facility Trustee has executed and
delivered this Certificate as of the _______ day of _____________, 19___.
BRANCH BANKING AND TRUST
COMPANY, as Credit Facility Trustee
By:
Name:
Title:
A-C-2
Annex D
[Form of Certificate for Conversion Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE
PAYMENT OF PRINCIPAL PLUS ACCRUED INTEREST
UPON A MANDATORY PURCHASE
(CONVERSION TO A FIXED INTEREST RATE)
Irrevocable Letter of Credit No.
The undersigned, a duly authorized officer of the undersigned Credit
Facility Trustee (the "Credit Facility Trustee"), hereby certifies to First
Union National Bank of North Carolina (the "Bank"), with reference to
Irrevocable Letter of Credit No. _________ (the "Letter of Credit"; the terms
defined therein and not otherwise defined herein being used herein as therein
defined) issued by the Bank in favor of the Credit Facility Trustee, as follows:
(1) The Credit Facility Trustee is the Trustee or a Co-Trustee
under the Indenture for the holders of the Bonds.
(2) The Credit Facility Trustee is making a drawing under the
Letter of Credit with respect to a payment, upon a mandatory
tender for purchase pursuant to Section 202(e) and Section
701(e) of the Indenture (conversion to a Fixed Interest Rate
within the meaning of the Indenture) of all or less than all
of the Bonds which are Outstanding (as defined in the
Indenture), of the unpaid principal amount of, and up to 120
days' accrued and unpaid interest on, the Bonds to be so
purchased (other than Bonds presently held of record by the
Borrower, or the Bank, or its designee, as pledgee of the
Borrower), which payment is due on the date on which this
Certificate and the Conversation Draft it accompanies are
being presented to the Bank.
(3) The amount of the Conversion Date accompanying this
Certificate is $_____________ and is equal to the sum of (i)
$_______________ being drawn in respect of the payment of
unpaid principal of Bonds (other than Bonds presently held of
record by the Borrower, or by the Bank, or its designee, as
pledgee of the Borrower) to be purchased, which amount does
not exceed the Principal Amount Available under the Letter of
Credit, and (ii) $_________ being drawn in respect of the
payment of _______ days' [not to exceed 120 days'] accrued and
unpaid interest on such Bonds, which amount does not exceed
the Interest Amount Available under the Letter of Credit.
(4) The amount of the Conversation Draft accompanying this
Certificate was computed in compliance with the terms and
conditions of the Bonds and the Indenture and does not exceed
the Amount Available under the Letter of Credit.
A-D-1
(5) Upon receipt by the undersigned of the amount demanded
hereby, (a) the undersigned will apply the same directly to
the payment when due of the principal amount of, interest
accrued unpaid on, the Bonds pursuant to the Indenture, (b) no
portion of said amount shall be applied by the undersigned for
any other purpose and (c) no portion of said amount shall be
commingled with other funds held by the undersigned.
(6) The Credit Facility Trustee shall, pursuant to the Pledge
Agreement, deliver or cause to be delivered to the Bank or its
agent a principal amount of Bonds equal to the principal
amount of the Conversion Draft accompanying this Certificate
as promptly as practicable, and in any event within five
Business Days after presentation of the Conversation Draft
accompanying this Certificate.
IN WITNESS WHEREOF, the Credit Facility Trustee has executed and
delivered this Certificate as of the _____ day of ______________, 19____.
BRANCH BANKING AND TRUST
COMPANY, as Credit Facility Trustee
By:
Name:
Title:
A-D-2
Annex E
[Form of Certificate for Final Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF
PRINCIPAL PLUS ACCRUED INTEREST, UPON STATED OR ACCELERATED
MATURITY OR OPTIONAL OR MANDATORY REDEMPTION AS A WHOLE
Irrevocable Letter of Credit No.
The undersigned, a duly authorized officer of the undersigned Credit
Facility Trustee (the "Credit Facility Trustee"), hereby certifies to First
Union National Bank of North Carolina (the "Bank"), with reference to
Irrevocable Letter of Credit No. _______ (the "Letter of Credit") the terms
defined therein and not otherwise defined herein being used herein as therein
defined) issued by the Bank in favor of the Credit Facility Trustee, as follows:
(1) The Credit Facility Trustee is the Trustee or a Co-Trustee
under the Indenture for the holders of the Bonds.
(2) The Credit Facility Trustee is making a drawing under the
Letter of Credit with respect to a payment, either at stated
maturity, upon acceleration, or as a result of a redemption as
a whole pursuant to the Indenture of the unpaid principal
amount of and up to 120 days' accrued and unpaid interest on
all of the Bonds which are "Outstanding" within the meaning of
the Indenture (other than Bonds presently held of record by
the Borrower or by the Bank, or its designee, as pledgee of
the Borrower).
(3) The amount of the Final Draft accompanying this
Certificate is $____________ and is equal to the sum of (i)
$____________ being drawn in respect of the payment of unpaid
principal of Bonds (other than Bonds presently held of record
by the Borrower or by the Bank, or its designee, as pledgee of
the Borrower), which amount does not exceed the Principal
Amount Available under the Letter of Credit, and (ii)
$___________ being drawn in respect of the payment of
______________ days' [not to exceed 120 days] accrued and
unpaid interest on such Bonds, which amount does not exceed
the Interest Amount Available under the Letter of Credit.
(4) The amount of the Final Draft accompanying this
Certificate was computed in compliance with the terms and
conditions of the Bonds and the Indenture and does not exceed
the Amount Available under the Letter of Credit.
(5) Upon receipt by the undersigned of the amount demanded
hereby, (a) the undersigned will apply the same directly to
the payment when due of the principal amount and accrued and
unpaid interest thereon owing on account of the Bonds pursuant
to the Indenture, (b) no portion of said amount shall
A-E-1
be applied by the undersigned for any other purpose and (c) no
portion of said amount shall be commingled with other funds
held by the undersigned.
IN WITNESS WHEREOF, the Credit Facility Trustee has executed and
delivered this Certificate as of the ______ day of __________________, 19___.
BRANCH BANKING AND TRUST
COMPANY, as Credit Facility Trustee
By:
Name:
Title:
A-E-2
Annex F
[For of Reinstatement Certificate for Tender Draft]
CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS AVAILABLE
UNDER IRREVOCABLE LETTER OF CREDIT NO.
The undersigned, a duly authorized officer of the undersigned Credit
Facility Trustee (the "Credit Facility Trustee"), hereby certifies to First
Union National Bank of North Carolina (the "Bank"), with reference to
Irrevocable Letter of Credit No. _______ (the "Letter of Credit"; the terms
defined therein and not otherwise defined herein being used herein as therein
defined) issued by the Bank in favor of the Credit Facility Trustee, as follows:
(1) The Credit Facility Trustee is the Trustee or a Co-Trustee
under the Indenture for the holders of the Bonds.
(2) The amount of $_________ paid to you today by or on behalf
of the Borrower is a payment made to reimburse you, pursuant
to Section ______ of the Letter of Credit and Reimbursement
Agreement dated as of May 1, 1997 (as amended or supplemented,
the "Reimbursement Agreement") between the Borrower and the
Bank, for amounts drawn under the Letter of Credit by Tender
Drafts. The Credit Facility Trustee hereby requests that you
reinstate the Letter of Credit upon receipt of such payment in
an amount equal to the amount of Payment so received.
(3) Of the amount referred to in paragraph (2), $___________
represents the aggregate principal amount of Bonds resold or
to be sold on behalf of the Borrower.
(4) Of the amount referred to in paragraph (2), $___________
represents accrued and unpaid interest on the Bonds.
IN WITNESS WHEREOF, the Credit Facility Trustee has executed and
delivered this Certificate as of the ______ day of ________________, 19___.
BRANCH BANKING AND TRUST
COMPANY, as Credit Facility Trustee
By:
Name:
Title:
A-F-1
ACKNOWLEDGMENT
The Bank hereby confirms to the Credit Facility or the Trustee that the
Principal Amount Available under the Letter of Credit has been reinstated by the
amount $______________ and the Interest Amount Available under the Letter of
Credit has been reinstated by the amount of $_________________.
This _______ day of _______________, 19___.
BRANCH BANKING AND TRUST
COMPANY, as Credit Facility Trustee
By:
Name:
Title:
A-F-2
Annex G
[Form of Transfer Certificate]
INSTRUCTION TO TRANSFER
First Union National Bank of
North Carolina
Two First Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: International Operations
Re: Your Irrevocable Letter of Credit No.
-------------------------------------
Ladies and Gentlemen:
For value received, the undersigned beneficiary (the "Transferor")
hereby irrevocably transfer to:
[Name of Transferee]
[Address]
(the "Transferee") all rights of the Transferor with respect to the
above-referenced Letter of Credit, including the right to draw under said Letter
of Credit in the Amount Available. Said Transferee has succeeded the Transferor
as Credit Facility Trustee under that certain Trust Indenture dated as of May 1,
1997 by and between the Maryland Industrial Development Financing Authority (the
"Issuer"), First Union National Bank of North Carolina as initial Trustee
thereunder and Branch Banking and Trust Company, as initial Credit Facility
Trustee thereunder (as amended or supplemented, the "Indenture"), all with
respect to the Maryland Industrial Development Financing Authority Economic
Development Revenue Bonds (Alcore, Inc. Facility)
A-G-1
1996 Issue in the original principal amount of $2,600,000 (the "Bonds"), and has
complied with the provisions of the Indenture.
By virtue of this transfer, the Transferee shall have the sole rights
as beneficiary of said Letter of Credit, including sole rights relating to any
past or future amendments thereof, whether increases or extensions or otherwise.
All amendments are to be advised directly to the Transferee without necessity of
any consent of or notice to the Transferor.
By its signature below, the Transferee acknowledges that it has duly
succeeded the Transferor as Credit Facility Trustee pursuant to the Trust
Indenture.
The advice of such Letter of Credit is returned herewith, along with a
transfer fee of $1,000.00, and we ask you to endorse the transfer on the reverse
side thereof and to forward it directly to the Transferee with your customary
notice of transfer.
Very truly yours,
BRANCH BANKING AND TRUST
COMPANY, as Credit Facility Trustee
By:
Name:
Title:
(CORPORATE SEAL)
Acknowledged by:
[Insert name of Transferee]
By:
[insert name and title of
authorized officer]
A-G-2
(CORPORATE SEAL)
A-G-3
EXHIBIT B
---------
Opinion of
Borrower's Counsel
May __, 1997
Maryland Industrial Development
Financing Authority
Baltimore, Maryland
Harford County, Maryland
Xxx Xxx, Xxxxxxxx 00000
First Union National Bank
of Virginia, as Trustee,
Richmond, Virginia
First Union National Bank
of North Carolina,
as Letter of Credit Bank,
as Placement Agent,
as Remarketing Agent and
as Hedge Counterparty
Branch Banking and Trust Company,
as Credit Facility Trustee
Wilson, North Carolina
First Union National Bank of Maryland
as Secured Party
Baltimore, Maryland
Ladies and Gentlemen:
We have acted as special counsel to Alcore, Inc. a Delaware
corporation (the "Borrower"), and Xxxx Industries, Inc., a Delaware corporation
(the "Guarantor"), in connection
with: (a) the issuance and sale on the date hereof by Maryland Industrial
Development Financing Authority (the "Issuer") of the Issuer's $2,600,000
Economic Development Revenue Bonds (Alcore, Inc. Facility) 1997 Issue (the
"Bonds"), and the loan of the proceeds of the Bonds by the Issuer to the
Borrower; and (b) the issuance on the date hereof by First Union National Bank
of North Carolina (in such capacity, the "Bank") of its Irrevocable Letter of
Credit of even date herewith (the "Letter of Credit") to Branch Banking and
Trust Company (the "Credit Facility Trustee"), as security for the payment of
the principal of and interest on and the purchase price of the Bonds.
In our capacity as counsel to the Borrower, we have examined
the following:
1. The Trust Indenture dated as of May 1, 1997 by and among
the Issuer, First Union National Bank of Virginia (the "Trustee") and the Credit
Facility Trustee.
2. The Loan Agreement dated as of May 1, 1997 (the "Loan
Agreement") by and between the Issuer and the Borrower.
3. The Letter of Credit.
4. The Letter of Credit and Reimbursement Agreement dated as
of May 1, 1997 (the "Reimbursement Agreement") by and between the Bank and the
Borrower.
5. The Placement Letter Agreement dated as of May 1, 1997 (the
"Placement Letter Agreement") by and among First Union National Bank of North
Carolina, as Placement Agent, the Issuer and the Borrower.
6. The Remarketing Agreement dated as, of May 1, 1997 (the
"Remarketing Agreement"), by and between First Union National Bank of North
Carolina, as Remarketing Agent, and the Borrower.
7. The Deed of Trust and Security Agreement dated as of May 1,
1997 (the "Deed of Trust") executed by the Borrower in favor of Xxxxxx X.
Xxxxxxxxx and Xxxxx X. Xxxxx, as Trustees with respect to the real property and
improvements thereto located at 1324 and 0000 Xxxxx Xxxx Xxxx, Xxxxxxx, Xxxxxxxx
00000 (the "Facility").
8. The Guaranty Agreement dated as of May 1, 1997 (the
"Guaranty") executed by the Borrower in favor of the Bank and First Union
National Bank of Maryland, in its capacity as hedge counterparty (the "Hedge
Counterparty").
9. The Security Agreement dated as of May 1, 1997 (the
"Security Agreement") executed by the Borrower and the Guarantor in favor of the
Bank, the Issuer and the Hedge Counterparty.
10. The Financing Statement naming the Issuer as Debtor and
the Credit Facility Trustee and the Trustee as Secured Parties.
11. The Financing Statement naming the Borrower and the
Guarantor as Debtor, naming the Issuer, the Bank, the Hedge Counterparty and
First Union National Bank of Maryland, in its capacity as lender under an
existing line of credit (FUNBMD") as Secured Parties, and naming the Trustee,
the Credit Facility Trustee and the Bank as Assignees (the "Financing
Statement").
12. The Pledge Agreement dated as of May 1, 1997 (the "Pledge
Agreement") by and between the Borrower and the Letter of Credit Bank.
13. The Tender Agency Agreement dated as of May 1, 1997 (the
"Tender Agency Agreement") by and between the Borrower and the Letter of Credit
Bank, in its capacity as Tender Agent.
14. The Intercreditor Agreement dated as of May 1, 1997 (the
"Intercreditor Agreement") by and among the Issuer, the Trustee, the Credit
Facility Trustee, the Borrower, the Bank, the Hedge Counterparty and FUNBMD.
15. The Borrower's Tax Certificate and Compliance Agreement of
even date herewith executed all delivered by the Borrower (the "Compliance
Agreement").
16. Such other laws, records, documents, certificates,
opinions and instruments as we deem necessary in order to render this opinion.
17. The certificate of incorporation and by-laws of the
Borrower, applicable resolutions of the Board of Directors of the Borrower, a
certificate of good standing with respect to the Borrower issued by the
Secretary of State of the State of Delaware and a certificate of good standing
issued by the Maryland State Department of Assessments and Taxation
(collectively, the "Borrower's Governing Documents").
18. The certificate of incorporation and by-laws of the
Guarantor, applicable resolutions of the Board of Directors of the Guarantor,
and a certificate of good standing with respect to the Guarantor issued by the
Secretary of State of the State of Delaware (collectively, the "Guarantor's
Governing Documents").
The Loan Agreement, the Reimbursement Agreement, the
Remarketing Agreement, the Placement Letter Agreement, the Deed of Trust, the
Security Agreement, the Guaranty, the Financing Statement, the Pledge Agreement,
the Tender Agency Agreement, the Intercreditor Agreement, the Compliance
Agreement, the Subordination Agreement and are hereinafter sometimes
collectively referred to as the "Documents".
We have also examined and relied upon the original or copies
(certified or otherwise identified to our satisfaction) of such records,
documents, instruments and certificates, and have made such other
investigations, as in our judgment are necessary to enable us to render the
opinions expressed below.
We also have reviewed the opinion of even date rendered by
Xxxxx & Xxxxxx, P.C., Xxx Hills, New York, in connection with the transactions
contemplated by the Documents, upon which opinion we have exclusively relied, as
to the opinions expressed therein, in rendering the opinion expressed below.
As to various questions of fact material to our opinion, we
have relied upon the representations and warranties made by the Borrower and the
Guarantor in the Documents and upon certain other certifications of facts made
by the Borrower, upon which representations, warranties and certifications we
believe we are justified in relying. We have discussed such representations and
warranties with officers of the Borrower and Guarantor, and we have no actual
knowledge of any matters contrary to such representations and warranties.
In basing the opinions and other matters set forth herein on
"our knowledge," the words "our knowledge" signify that, in the course of our
representation of the Borrower and the Guarantor in matters for which the
Borrower and the Guarantor have engaged us as counsel, no information has come
to our attention that would give us actual knowledge or actual notice that any
such opinions or other matters are inaccurate or that any of the documents,
representations, warranties and certifications on which we have relied are
inaccurate and incomplete. Except as otherwise stated herein, we have undertaken
no independent investigation or verification of such matters. We intend to limit
the words "our knowledge" and similar language used herein to the knowledge of
the lawyers within our firm who have worked on matters for the Borrower and the
Guarantor.
In reaching the opinions set forth below, we have assumed, and
to our knowledge, there are no facts inconsistent with, the following:
(a) Each of the parties thereto (other than the Borrower and
the Guarantor) has duly and validly executed and delivered each instrument,
document and agreement executed in connection with the transactions contemplated
in the Documents to which such party is a
signatory, and such party's obligations set forth therein are its legal, valid
and binding obligations, enforceable in accordance with their respective terms.
(b) Each person executing any such instrument, document or
agreement on behalf of any such party (other than the Borrower and the
Guarantor) is duly authorized to do so.
(c) Each natural person executing any such instrument,
document or agreement is legally competent to do so.
(d) There are no oral or written modifications of, or
amendments to, the Documents, and there has been no waiver of any of the
provisions of the Documents by actions or conduct of the parties or otherwise.
(e) As to due recordation of the Deed of Trust and the
existence or priority of the lien of the Deed of Trust, and all other matters of
title, you are relying upon the title insurance commitment issued by
Commonwealth Land Title Insurance Company (the "Title Company") and upon the
judgment and lien searches conducted by _________ dated __________, 1997 (the
"Search Report");
(f) All documents submitted to us as originals are authentic,
all documents submitted to us as certified or photostatic copies conform to the
original document, all signatures (other than the Borrower's and the
Guarantor's) on all documents submitted to us for examination are genuine, all
notarizations on all documents are legal and valid, and all public records
reviewed are accurate and complete.
(g) All descriptions of property in which a security interest
subject to the Maryland Uniform Commercial Code is intended to be created under
the Documents, as contained in the Documents, reasonably identify the property
described or intended to be described, and the Borrower and the Guarantor have
or will have rights in such property within the meaning of Section 9-203(l)(c)
of the Maryland Uniform Commercial Code.
(h) Valid consideration has been given to the Borrower and to
the Guarantor for the execution, delivery and performance by the Borrower of the
Documents, and for the execution, delivery and performance by the Guarantor of
the Documents to which the Guarantor is a party.
Based upon the foregoing and subject to the assumptions
exceptions, qualifications and limitations set forth herein, it is our opinion,
as of the date hereof, that:
(1) The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
authorized to transact business in the State of Maryland.
(2) The Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(3) The Borrower and Guarantor have full right, power and
authority to own their respective properties, to carry on their respective
businesses, to execute and deliver the Documents to which each of them is a
party, and to perform all of their respective obligations thereunder. The
Borrower and the Guarantor have all powers, governmental licenses,
authorizations, consents and approvals which are material to the operation of
their respective businesses.
(4) The Documents to which the Borrower is a party have been
duly authorized, executed and delivered by the Borrower and constitute valid and
legally binding obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms.
(5) The Guaranty and each of the other Documents to which the
Guarantor is a party have been duly authorized, executed and delivered by the
Guarantor and constitute valid and legally binding obligations of Guarantor,
enforceable against Guarantor in accordance with their terms.
(6) To our knowledge, no approval, consent, order,
authorization, permit, license or exemption of, or registration, declaration or
filing with, any federal, state or local governmental, regulatory or public
agency, authority or court is required in connection with the execution and
delivery by the Borrower and the Guarantor of the Documents to which each of
them is a party.
(7) The execution and delivery of the Documents to which the
Borrower is a party do not, and performance by the Borrower of its obligations
thereunder will not, violate, conflict with or constitute a default under (i)
any provision of the Borrower's Governing Documents, (ii) any provision of law,
rule or regulation or, to our actual knowledge, any order of any court or other
agency of government to which the Borrower is subject, or (iii) any indenture,
agreement or other instrument to which the Borrower is a party or by which it or
its property is bound and of which we have actual knowledge. The execution and
delivery of, and performance by the Borrower of its obligations under, the
Documents to which the Borrower is a party will not result in the creation or
imposition of any lien, charge or encumbrance of any nature, other than the
liens by the Documents.
(8) The execution and delivery of the Guaranty and each of the
other Documents to which the Guarantor is a party does not, and performance by
the Guarantor of its obligations thereunder will not, violate, conflict with or
constitute a default under (i) any provision of the Guarantor's Governing
Documents, (ii) any provision of law, rule or regulation or, to our actual
knowledge, any order of any court or other agency of government to which the
Guarantor is subject, or (iii) any indenture, agreement or other instrument to
which the Guarantor is a party or by which it or its property is bound and of
which we have actual knowledge. The execution and delivery of, and performance
by the Guarantor of its obligations under, the Guaranty and each of the other
Documents to which the Guarantor is a party will not result in the creation or
imposition of any lien, charge or encumbrance of any nature, other than the
liens created by the Documents.
(9) To our knowledge, based upon the Search Report and
representations made to us by officers of the Borrower and the Guarantor, there
is no action, suit, proceeding or investigation at law or in equity by or before
any court, governmental instrumentality or other agency now pending or
threatened in writing against the Borrower or the Guarantor or any of the
Borrower's or the Guarantor's properties or rights which, if determined
adversely to the Borrower or the Guarantor, would impair or materially affect
(i) the Borrower's or the Guarantor's right to carry on its business
substantially as now conducted, (ii) the value of the collateral securing the
Borrower's or the Guarantor's obligations under the Documents, (iii) the
Borrower's or the Guarantor's ability to carry out its obligations under the
Documents to which it is a party, or (iv) the validity or enforceability of each
of the Documents executed by the Borrower or the Guarantor. To our knowledge,
neither the Borrower nor the Guarantor is in default with respect to any order,
judgment, writ, injunction, decree or demand of any court or governmental
authority.
(10) The Financing Statement is in proper form for filing with
the Maryland State Department of Assessments and Taxation and among the Land
Records of Harford County, Maryland. Upon the proper filing of the Financing
Statement, there will have been created under the Documents, and the Borrower
and the Guarantor will have granted to the Issuer, the Bank, the Hedge
Counterparty and FUNBMD, a valid perfected security interest in and upon the
property described in the Financing Statement, but only to the extent that a
security interest may be perfected in such property by filing under the Maryland
Uniform Commercial Code.
(11) The Deed of Trust is in proper form for recording among
the Land Records of Harford County, Maryland. Upon the proper recording of the
Deed of Trust among such Land Records, there will have been created under the
Deed of Trust, and the Borrower will have granted to the Trustees named therein,
a valid and enforceable perfected lien and security interest in and upon the
real and personal property, respectively, described in the Deed of Trust, but
only to the extent that a lien or security interest, as the case may be, may be
perfected upon such real or personal property by filing among the Land Records
of Harford County, Maryland.
The enforceability of the Documents may be subject to (a) the
exercise of judicial discretion in accordance with general principals of equity
(whether applied by a court of law or by a court of equity), which may limit the
availability of enforcement of certain remedies; (b) the valid exercise of the
constitutional powers of the United States of America and of the sovereign
police and taxing powers of state or other governmental units having
jurisdiction; and (c) bankruptcy, insolvency, reorganization, moratorium and
other similar laws heretofore or hereafter enacted affecting creditor's rights,
to the extent constitutionally applicable. Without limiting the generality of
the foregoing, under the Bankruptcy Reform Act of 1978, as amended, provisions
of the Documents, providing for acceleration of maturity in the event of
insolvency or bankruptcy may be invalid, and the rights and remedies of
acceleration and foreclosure, if any, under such circumstances may not be
enforceable.
Certain remedies and other provisions of the Documents may not
be enforceable; nevertheless, such unenforceability will not render the
Documents invalid as a whole or preclude (a) the judicial enforcement of the
obligation of the Borrower or the Guarantor to repay the amounts owing under the
Documents, together with interest thereon (to the extent not deemed a penalty),
as provided in the Documents, (b) the acceleration of the obligation of the
Borrower or the Guarantor to repay such principal, together with such interest,
upon a default by the Borrower or the Guarantor in the payment of such principal
or interest, and (c) the foreclosure in accordance with applicable law of the
liens and security interests created by the Documents upon maturity or upon the
acceleration pursuant to (b) above.
In addition to the qualifications and assumptions set forth
above, the opinions set forth herein are also subject to the following
qualifications:
(i) The provisions regarding the remedies available to any
party on default as set forth in the Documents are subject to certain procedural
requirements which, with regard to several of the remedies, are not reflected in
the Documents. These procedural requirements affect and may restrict rights and
remedies stated to be available to the parties to the Documents.
(ii) We express no opinion on the enforceability of the
self-help, non-judicial remedies provided in certain of the Documents, such as
those regarding the rights, without judicial process, upon default, to enter
upon, to take possession of, to collect, retain, use, or enjoy the rents,
issues, and profits from, and to manage any security subject to the liens and
security interests created by the Documents.
(iii) We express no opinion on the enforceability of any
provisions of the Documents that entitle any party thereto, as a matter of
right, to the appointment of a receiver after the occurrence of a default.
(iv) We express no opinion on the enforceability of any
provisions of the Documents imposing increased interest rates and/or late
payment charges upon delinquency in payment or the occurrence of a default,
liquidated damages, or prepayment premiums, to the extent they are deemed to be
penalties or forfeitures.
(v) We express no opinion on the enforceability of any
provisions requiring any party to waive or alter procedural, judicial, or
substantive rights, such as rights to notice, right to a jury trial, statutes of
limitations, appraisal or valuation rights, and marshalling of assets, and other
such procedural, judicial or substantive rights.
(vi) We express no opinion on the enforceability of any
provisions permitting modifications of the Documents only if in writing.
(vii) We express no opinion on the enforceability of any
provision stating that the provisions of the Documents are severable.
(viii) We have not made or undertaken to make any
investigation of the state of title to any real property or any personal
property constituting security for the obligation of the Borrower or the
Guarantor under the Documents. We express no opinion concerning title to any
real property or any personal property, not do we express any opinion concerning
the existence of encumbrances upon any property (other than the creation by the
Documents of the lien and security interests insofar as described in the
opinions set forth in Paragraphs (9) and (10) above) or the priority of any
security interests or liens created by the Documents. It is our understanding
that, with regard to these matters, you are relying exclusively on the title
insurance commitment and title insurance policy issued by the Title Company and
upon financing statement record searches performed by others.
(ix) The enforceability of any instrument referred to herein
may be limited to the extent that remedies are sought for a breach that a court
concludes is immaterial or does not adversely affect the non-defaulting party.
(x) We express no opinion on the application of federal or
state securities laws to the transactions contemplated in the Documents.
(xi) The enforceability of any instrument referred to herein
may be limited by any unconscionable or inequitable conduct on the Issuer's, the
Trustee's, the Credit Facility Trustee's, the Bank's or FUNBMD's part, defenses
arising from the Issuer's, the Trustee's, the Credit Facility Trustee's, the
Bank's or FUNBMD's failure to act in accordance with the terms and conditions of
the Documents, defenses arising as a consequence of the passage of time or
defenses arising as a result of the Issuer's, the Trustee's the Credit Facility
Trustee's, the Bank's or FUNBMD's failure to act reasonably or in good faith.
(xii) We express no opinion with respect to any security
interest created under any of the Documents which purport to secure any present
or future obligations or liabilities of the Borrower or the Guarantor (other
than the respective obligations and liabilities of the Borrower or the Guarantor
created or arising under the Documents) that are determined, in the case of
obligations or liabilities of the Borrower or of the Guarantor created in the
future, not to constitute "future advances" within the meaning of Section
9-204(3) of the Maryland Uniform Commercial Code, are determined not to have
been within the contemplation of the Borrower, the Issuer, the Trustee, the
Credit Facility Trustee, the Bank or FUNBMD at the time the Documents were
executed, or are determined not to be of the same character or class as the
respective obligations and liabilities of the Borrower or of the Guarantor to
the Issuer, the Trustee, the Credit Facility Trustee, the Bank or FUNBMD created
or arising under the Documents.
(xiii) We express no opinion with respect to compliance by the
Borrower with any law, order, rule or regulation relating to the development of
the Facility or the construction or operation of any improvements by the
Borrower on the Facility.
(xiv) We express no opinion with respect to any matters
affecting zoning, subdivision or other matters affecting the use, occupancy or
operation of the real property encumbered by the Deed of Trust, including
environmental laws.
(xv) We express no opinion as to the laws of any jurisdiction
other than the laws of the State of Maryland and the laws of the United States
of America, and we express no opinion as to the enforceability of any choice of
laws provisions contained in any of the Documents. As to matters of Delaware
law, we have relied upon the opinion of Xxxxx & Xxxxxx, P.C., referred to above.
The opinion expressed herein concern only the effect of the laws (excluding the
principles of conflict of laws) of the State of Maryland and the United States
of America as currently in effect. We assume no obligation to supplement this
opinion if any applicable laws change after the date hereof or if we become
aware of any facts that might change the opinions expressed herein after the
date hereof. We call your attention to the fact that the Remarketing Agreement
provides that it is governed by the laws of the State of North Carolina and the
Interest Rate Swap Agreement that is governed by the State of New York.
This opinion letter is to be interpreted in accordance with
the report of the Special Joint Committee on Lawyers' Opinions in Commercial
Transactions of the Maryland State Bar Association, Inc. and The Bar Association
of Baltimore City dated January 18, 1989.
Except for legal advice and assistance to the Borrower in
connection with its preparation of information concerning the Borrower and the
Facility to be included in the Private Placement Memorandum dated May 15, 1997
with respect to the Bonds (the "Private Placement Memorandum"), we have not
participated in the preparation of the Private Placement
Memorandum. To our knowledge, we believe that the statements and information
contained in the Private Placement Memorandum under the headings "USE OF
PROCEEDS," "THE FACILITY," and "LITIGATION" (to the extent that litigation
affecting the Borrower is described under that heading) and in Appendix A to the
Private Placement Memorandum do not contain any untrue statement of material
fact. We do not express any opinion or belief as to the accuracy or completeness
of any other statements or information contained in the Private Placement
Memorandum; however, nothing has come to our attention which would lead us to
believe that the Private Placement Memorandum contains any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (except that we express no opinion
about (a) the information concerning the validity and tax-exempt status of the
Bonds, (b) the information concerning the Bank or the Issuer, or (c) the
financial and statistical data contained in the Private Placement Memorandum).
No person or entity other than the addresses and their
respective counsel may rely on this opinion without our prior written consent.
Very truly yours,
EXHIBIT C
[FORM OF BOND COUNSEL RELIANCE LETTER]
________, 1997
First Union National Bank of
North Carolina
One First Union Center, CORP-3
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
RE: Maryland Industrial Development Financing Authority
Economic Development Revenue Bonds
(Alcore, Inc. Facility)
1997 Issue in the principal amount of $2,600,000
------------------------------------------------
Ladies and Gentlemen:
Reference is made to the Trust Indenture dated as of May 1, 1997 between,
the Maryland Industrial Development Financing Authority (the "Issuer"), First
Union National Bank of Virginia, as Trustee, and Branch Banking and Trust
Company, as Credit Facility Trustee, pursuant to which the Maryland Industrial
Development Financing Authority Economic Development Revenue Bonds (Alcore,
Facility) 1997 Issue in the principal amount of $2,600,000 (the "Bonds") were
issued as of the date hereof.
Delivered herewith is a signed copy of our opinion of even date herewith
relating to the validity of the Bonds and to other matters as set forth therein.
Please be advised that you are entitled to rely upon such opinion as if such
opinion had also been addressed to you. Terms defined in such opinion are used
herein with the same meanings.
Very truly yours,
